Company: CMTV
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001654954-25-009542
Chunk: 102

Company: COMMUNITY BANCORP /VT
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 102
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82%  8.04%

Six Months Ended June 30, 2025  2024        Return on average assets  1.29%  1.01%Return on average equity  15.05%  12.50%Dividend payout ratio (1)  35.82%  46.46%Average equity to average assets   8.57%  8.07%

(1) Dividends declared per common share divided by earnings per common share.

INTEREST INCOME VERSUS INTEREST EXPENSE (NII)

The largest component of the Company’s operating income is NII, which is the difference between interest earned on loans and investments and the interest paid on deposits and other sources of funds (i.e., borrowings).  The Company’s level of net interest income can fluctuate over time due to changes in the level and mix of earning assets and sources of funds (volume), and changes in the yield earned and costs of funds (rate).  A portion of the Company’s income from loans to local municipalities and from tax-exempt municipal investment securities is not subject to income taxes.  Because the proportion of tax-exempt items in the Company's balance sheet varies from year-to-year, to improve comparability of information, the non-taxable income shown in the tables below has been converted to a tax equivalent basis. The Company’s corporate tax rate is 21%; therefore, to equalize tax-free and taxable income in the comparison, we divide the tax-free income by 79%, with the result that every tax-free dollar is equivalent to $1.27 in taxable income for the periods presented.

The Company’s tax-exempt interest income of $827,746 and $617,843 for the three months ended June 30, 2025 and 2024, respectively, and $1.6 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively, was derived from loans to local municipalities of $42.4 million and $34.1 million, and tax-exempt municipal investment securities of $9.9 million and $10.3 million, as of June 30, 2025 and 2024, respectively.

The following table shows the reconciliation between reported NII and tax equivalent NII for the comparison periods presented.

Three Months Ended June 30, 2025  2024        Net interest income as presented $9