News Column

Cornerstone Community Bank Reports Financial Results for the Second Quarter Ended June 30, 2014

July 18, 2014

RED BLUFF, Calif.--(BUSINESS WIRE)-- Cornerstone Community Bank, (OTCBB:CRSB), announced today its financial results for the second quarter ended June 30, 2014.

The Bank reported net income of $169,000 for the three months ended June 30, 2014 compared to net income of $282,000 for the same period last year. Prior year results were impacted by an $86,000 gain on the sale of securities and current year results were impacted by the $115,000 provision for income taxes as the Bank became fully taxable during 2014. Diluted earnings per share for the three months ended June 30, 2014 were $0.13 compared to $0.22 for the same period last year. Net income for the six months ended June 30, 2014 was $300,000, or $0.23 per diluted share compared to net income of $522,000, or $0.40 per diluted share, for the six months ended June 30, 2013. Prior year results were impacted by an $86,000 gain on the sale of securities and current year results were impacted by the $197,000 provision for income taxes as the Bank became fully taxable during 2014.

The return on average assets for the three months ended June 30, 2014 was 0.51% compared to 0.97% for the same period last year. The return on average equity was 5.18% for the three months ended June 30, 2014 compared to 9.24% for the same period last year. For the six months ended June 30, 2014, the return on average assets was 0.46% and the return on average equity was 4.66% compared to 0.91% and 8.63%, respectively, for the six months ended June 30, 2013.

“The positive trends in loan and deposit growth continue. Year-over-year loan growth of 32% and deposit growth of 26% position the bank well for the remainder of the year,” said President and CEO Jeff Finck.

Net Interest Income

Net interest income of $1,353,000 for the quarter ended June 30, 2014 represented an increase of $191,000, or 16%, from $1,162,000 for the same quarter one year earlier. The net interest margin increased to 4.32% during the quarter ended June 30, 2014 compared to 4.20% during the same quarter last year. For the six months ended June 30, 2014, net interest income was $2,672,000 compared to $2,369,000 for the six months ending June 30, 2013 representing an increase of $303,000, or 13%. The net interest margin increased to 4.37% for the six months ended June 30, 2014 compared to 4.34% for the six months ended June 30, 2013.

Provision for credit losses

The provision for credit losses for the quarter ended June 30, 2014 was $50,000. There was no provision for credit losses for the quarter ended June 30, 2013. The provision for credit losses for the six months ended June 30, 2014 was $74,000 compared to $85,000 for the six months ended June 30, 2013.

Non-Interest Income

The Bank’s non-interest income for the quarter ended June 30, 2014 was $160,000 compared to $234,000 for the quarter ended June 30, 2013. For the six months ended June 30, 2014, non-interest income was $270,000 compared to $373,000 for the same period last year. Prior year results for both the three and six months ended June 30, 2013 included an $86,000 gain on the sale of securities.

Non-Interest Expense

Non-interest expense was $1,179,000 for the quarter ended June 30, 2014 compared to $1,114,000 for the same period one year earlier. For the six months ended June 30, 2014, non-interest expense was $2,371,000 compared to $2,135,000 for the same period last year.

Balance Sheet

The Bank had total assets at June 30, 2014 of $147.1 million, compared to $118.3 million at June 30, 2013, representing growth of $28.8 million, or 24%.

Total loans outstanding, including loans held for sale, at June 30, 2014, were $111.9 million compared to $85.0 million at June 30, 2013, representing an increase of $26.9 million, or 32%.

Total deposits were $133.5 million at June 30, 2014 compared to total deposits of $105.9 million at June 30, 2013, representing an increase of $27.6 million, or 26%.

Credit Quality

The allowance for loan losses was $1,464,000, or 1.35% of loans, net of unearned income at June 30, 2014, compared to $1,450,000, or 1.76% of loans, net of unearned income at June 30, 2013. Nonperforming assets at June 30, 2014 were $183,000 compared to $268,000 at June 30, 2013.

The bank recognized $8,000 in net loan charge-offs during the six months ended June 30, 2014, representing 0.02% of average loans on an annualized basis.

Capital Adequacy

At June 30, 2014, shareholders’ equity totaled $13.1 million compared to $12.0 million at June 30, 2013. At June 30, 2014, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 11.78%, 10.57% and 9.70%, respectively, all exceeding the regulatory standards for “well-capitalized” institutions of 10.00%, 6.00% and 5.00%, respectively.

About Cornerstone Community Bank

Cornerstone Community Bank is a California state-chartered bank with its headquarters office in Red Bluff and a branch office in Redding. The Bank provides commercial banking services, including a wide variety of deposit products and real estate, construction, commercial and consumer loans to small businesses, professionals and individuals. Additional information about the Bank is available on its website at www.bankcornerstone.com.

Forward-Looking Statements

This press release contains forward-looking statements.These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of Cornerstone Community Bank and on information available to management at the time these statements were made.There are a number of factors, many of which are beyond Cornerstone Community Bank’s control, which could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements.Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which Cornerstone Community Bankis engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than Cornerstone Community Bank; and (7) adverse changes may occur in the securities markets or with respect to inflation.Forward-looking statements speak only as of the date they are made.Except as required by law, Cornerstone Community Bank does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

 
CORNERSTONE COMMUNITY BANK
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
                   
 
06/30/14     03/31/14     12/31/13     09/30/13     06/30/13
 
ASSETS
Cash and due from banks $ 4,268 $ 3,203 $ 2,025 $ 2,717 $ 2,950
Federal funds sold - - - - -
Interest-bearing deposits 11,113 533 875 6,296 2,796
Investment securities 14,988 15,250 21,131 21,866 23,104
Loans held for sale 3,072 3,134 2,726 2,622 2,603
Loans, net of unearned income 108,796 99,960 90,173 84,751 82,381
Allowance for loan losses   (1,464 )       (1,415 )       (1,399 )       (1,397 )       (1,450 )
Loans, net 107,332 98,545 88,774 83,354 80,931
Premises and equipment, net 1,010 1,049 1,109 1,015 1,041
Other assets   5,288         5,134         5,234         4,900         4,854  
Total assets $ 147,071       $ 126,848       $ 121,874       $ 122,770       $ 118,279  
 
LIABILITIES
Deposits:
Demand noninterest-bearing $ 23,434 $ 19,198 $ 15,984 $ 20,377 $ 19,892
Demand interest-bearing 17,128 19,404 17,521 18,220 16,110
Money market and savings 45,942 41,072 42,814 41,044 40,123
Time deposits of less than $100,000 17,719 13,298 11,045 11,118 11,236
Time deposits of $100,000 or more   29,321         18,579         18,736         19,416         18,578  
Total deposits 133,544 111,551 106,100 110,175 105,939
Other borrowings - 2,000 3,000 - -
Other liabilities   454         464         300         391         311  
Total liabilities   133,998         114,015         109,400         110,566         106,250  
 
SHAREHOLDERS' EQUITY
Common stock 12,057 12,057 12,057 11,959 11,959
Additional paid-in capital 924 903 877 886 859
Accumulated deficit (65 ) (234 ) (365 ) (623 ) (917 )
Accumulated other comprehensive income (loss)   157         107         (95 )       (18 )       128  
Total shareholders' equity   13,073         12,833         12,474         12,204         12,029  
Total liabilities and shareholders' equity $ 147,071       $ 126,848       $ 121,874       $ 122,770       $ 118,279  
 
CAPITAL ADEQUACY
Tier I leverage ratio 9.70 % 9.81 % 10.00 % 9.97 % 10.06 %
Tier I risk-based capital ratio 10.57 % 11.35 % 12.02 % 12.36 % 12.45 %
Total risk-based capital ratio 11.78 % 12.60 % 13.27 % 13.61 % 13.71 %
Total equity / total assets 8.89 % 10.12 % 10.24 % 9.94 % 10.17 %
Book value per share $ 10.79 $ 10.59 $ 10.29 $ 10.17 $ 10.02
 
 

CORNERSTONE COMMUNITY BANK

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Thousands)

 
 
   

Three months ended

   

Six months ended

06/30/14     03/31/14     06/30/1306/30/14     06/30/13
           
INTEREST INCOME
Loans $ 1,397 $ 1,275 $ 1,143 $ 2,672 $ 2,327
Federal funds sold - - - - -
Investment securities 69 155 163 224 333
Other   10         10         2     20         4  
Total interest income   1,476         1,440         1,308     2,916         2,664  
 
INTEREST EXPENSE
Deposits:
Interest-bearing demand 5 5 7 10 13
Money market and savings 47 58 75 105 149
Time deposits 70 57 64 127 133
Other   1         1         -     2         -  
Total interest expense   123         121         146     244         295  
 
Net interest income 1,353 1,319 1,162 2,672 2,369
Provision for credit losses   50         24         -     74         85  

Net interest income after provision for credit losses

  1,303         1,295         1,162     2,598         2,284  
 
NON-INTEREST INCOME
Service charges on deposit accounts 26 19 33 45 60
Gain on sale of SBA loans - - - - -
Gain on sale of securities - (6 ) 86 (6 ) 86
Other non-interest income   134         97         115     231         227  
Total non-interest income   160         110         234     270         373  
 
OPERATING EXPENSES
Salaries and benefits 620 638 554 1,258 1,108
Premises and fixed assets 139 139 128 278 254
Other   420         415         432     835         773  
Total operating expenses   1,179         1,192         1,114     2,371         2,135  
 
Income before income taxes 284 213 282 497 522
Income taxes 115 82 - 197 -
                     
NET INCOME $ 169       $ 131       $ 282   $ 300       $ 522  
 
EARNINGS PER SHARE
Basic earnings per share $ 0.14       $ 0.11       $ 0.24   $ 0.25       $ 0.44  
Diluted earnings per share $ 0.13       $ 0.10       $ 0.22   $ 0.23       $ 0.40  
Average common shares outstanding   1,212,000         1,212,000         1,200,000     1,212,000         1,200,000  

Average common and equivalent shares outstanding

  1,321,752         1,316,906         1,298,059     1,319,415         1,295,561  
 
PERFORMANCE MEASURES
Return on average assets 0.51 % 0.41 % 0.97 % 0.46 % 0.91 %
Return on average equity 5.18 % 4.11 % 9.24 % 4.66 % 8.63 %
Net interest margin 4.32 % 4.42 % 4.20 % 4.37 % 4.34 %
Efficiency ratio 77.92 % 83.41 % 79.80 % 80.59 % 77.86 %
 





Cornerstone Community Bank

Jeffrey P. Finck, 530-222-1460

President

Chief Executive Officer

jfinck@bankcornerstone.com

or

Patrick E. Phelan, 530-222-1460

Executive Vice President

Chief Financial Officer

pphelan@bankcornerstone.com


Source: Cornerstone Community Bank


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