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Chino Commercial Bancorp Reports 13% Increase in Net Earnings

CHINO, Calif., July 21, 2017 (GLOBE NEWSWIRE) -- The Board of Directors of Chino Commercial Bancorp (OTC:CCBC), the parent company of Chino Commercial Bank, N.A., announced the results of operations for the Bank and the consolidated holding company for the second quarter ended June 30, 2017 with net earnings of $420 thousand, or an increase of 13%, compared with net income of $372 thousand for the same quarter last year. Net income per basic share for the second quarter of 2017 was $0.34 as compared to $0.30 for the same quarter last year.

Dann H. Bowman, President and Chief Executive Officer stated, “In addition to the excellent second quarter earnings results, the Bank was recently recognized by the Findley Reports on Financial Institutions by receiving their highest rating of 'Super Premier Performing.' The economic strength of the Inland Empire is supporting tremendous growth opportunities for the Bank. In general, this is a very good time for the Bank and we are pleased and excited about the future.”

Financial Condition

At June 30, 2017, total assets were $180.3 million, an increase of $5.2 million or 3.0% over $175.1 million at December 31, 2016. Total deposits increased by 3.0% or $4.1 million during the year to $141.7 million, compared to $137.6 million as of December 31, 2016. At June 30, 2017, the Company’s core deposits represent 97.0% of the total deposits.

Gross loans increased by 1.7% or $1.9 million as of June 30, 2017 to $111.4 million, as compared with $109.5 million as of December 31, 2016. The Bank did not have any nonperforming loans for the quarter ended June 30, 2017, and one nonperforming loan as of December 31, 2016, respectively. OREO properties remained at zero as of June 30, 2017 and December 31, 2016, respectively.

Earnings

The Company posted net interest income of $1.6 million and $1.5 million for the three months ended June 30, 2017 and 2016, respectively, or an increase of $102 thousand or 7.0%. Average interest-earning assets were $166.1 million with average interest-bearing liabilities of $95.3 million, yielding a net interest margin of 3.78% for the second quarter of 2017, as compared to the average interest-earning assets of $149.6 million with average interest-bearing liabilities of $77.7 million, yielding a net interest margin of 3.93% for the second quarter of 2016.

Non-interest income totaled $389 thousand for the second quarter of 2017, or a decrease of 9.2% as compared with $427 thousand earned during the same quarter last year. The majority of this decrease is attributed to $77 thousand of extraordinary income recorded in the same quarter last year. Without this extraordinary income the Company would have reported a $37 thousand or 10.8% increase in non-interest income for the second quarter of 2017. Service charges on deposit accounts increased by $48 thousand or 18.0% to $317 thousand primarily due to an increase in income from returned items and overdraft charges. Dividend income from restricted stock decreased to $28 thousand for the second quarter of 2017, compared to $38 thousand for the same quarter in 2016, due to the Federal Home Loan Bank change in dividend payout percentage policy. Income from bank-owned life insurance remained consistent at $25 thousand in the second quarter of 2017 and 2016, respectively.

General and administrative expenses were $1.3 million for the three months ended June 30, 2017, as compared to $1.1 million for the second quarter of 2016. The largest component of general and administrative expenses was salary and benefits expense of $772 thousand for the second quarter of 2017, as compared to $706 thousand for the same quarter last year. Regulatory assessments remained consistent at $37 thousand for the second quarter of 2017 and 2016, respectively. Advertising and marketing expenses increased by $13 thousand or 73.7% to $30 thousand in the second quarter of 2017 from $17 thousand for the same period last year. The Company engaged a marketing company to assist with advertising efforts during the second quarter of 2017.

Income tax expense was $273 thousand for the three months ended June 30, 2017 as compared to $238 thousand for the three months ended June 30, 2016. The effective income tax rate for the second quarter of 2017 and 2016 is approximately 39.4% and 39.0%, respectively.

Forward-Looking Statements

The statements contained in this press release that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties, including but not limited to, the health of the national and California economies, the Company’s ability to attract and retain skilled employees, customers’ service expectations, the Company’s ability to successfully deploy new technology and gain efficiencies there from, changes in interest rates, loan portfolio performance, and other factors.

Contact: Dann H. Bowman, President and CEO or Melinda M. Milincu, Vice President and CFO, Chino Commercial Bancorp and Chino Commercial Bank, N.A., 14245 Pipeline Avenue, Chino, Ca. 91710, (909) 393-8880.

CHINO COMMERCIAL BANCORP
CONSOLIDATED BALANCE SHEET
June 30, 2017 and December 31, 2016
June 30, 2017 December 31, 2016
(unaudited) (audited)
ASSETS:
Cash and due from banks$29,825,751 $30,498,888
Total cash and cash equivalents 29,825,751 30,498,888
Interest-bearing deposits in other banks 2,232,000 2,480,000
Investment securities available for sale 3,531,430 3,924,102
Investment securities held to maturity (fair value approximates
$22,491,000 at June 30, 2017 and $18,240,000 at December 31, 2016) 22,496,275 18,407,741
Total investments 28,259,705 24,811,843
Loans
Commercial 17,993,486 21,822,341
Installment 514,395 424,818
Gross loans 111,447,642 109,553,786
Unearned fees and discounts (347,223) (348,359)
Loans net of unearned fees and discount 111,100,419 109,205,427
Allowance for loan losses (1,916,446) (1,845,447)
Net loans 109,183,973 107,359,980
Fixed assets, net 5,900,130 6,000,404
Accrued interest receivable 444,797 295,102
Stock investments, restricted, at cost 1,963,496 1,935,300
Bank-owned life insurance 3,336,195 3,285,963
Other assets 1,407,297 904,338
Total assets$180,321,344 $175,091,818
LIABILITIES:
Deposits
Non-interest bearing$69,565,818 $68,613,998
Interest bearing
NOW and money market 55,416,295 52,873,006
Savings 6,399,383 5,165,730
Time deposits less than $250,000 6,008,275 4,438,254
Time deposits of $250,000 or greater 4,270,436 6,471,260
Total deposits 141,660,207 137,562,248
Accrued interest payable 27,705 27,902
Borrowings from Federal Home Loan Bank (FHLB) 20,000,000 20,000,000
Accrued expenses & other payables 1,164,749 872,374
Subordinated notes payable to subsidiary trust 3,093,000 3,093,000
Total liabilities 165,945,661 161,555,524
SHAREHOLDERS' EQUITY
Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 1,231,332 shares at June 30, 2017 and December 31, 2016, respectively. 6,089,466 6,089,466
Retained earnings 8,281,651 7,449,608
Accumulated other comprehensive income/(loss) 4,566 (2,780)
Total shareholders' equity 14,375,683 13,536,294
Total liabilities & shareholders' equity$180,321,344 $175,091,818

CHINO COMMERCIAL BANCORP
CONSOLIDATED STATEMENTS OF NET INCOME
(unaudited)
For the three months ended For the year ended
June 30 June 30
2017 2016 2017 2016
Interest income
Interest and fee income on loans$1,491,361 $1,382,543 $2,959,072 $2,692,647
Interest on federal funds sold and FRB deposits 73,484 26,703 133,613 53,036
Interest on time deposits in banks 6,956 9,929 14,013 20,379
Interest on investment securities 136,547 140,819 259,292 288,658
Total interest income 1,708,348 1,559,994 3,365,990 3,054,720
Interest Expense
Interest on deposits 76,044 65,082 151,885 125,430
Other borrowings 69,244 34,181 123,377 68,432
Total interest expense 145,288 99,263 275,262 193,862
Net interest income 1,563,060 1,460,731 3,090,728 2,860,858
Provision for loan losses - 131,364 55,000 126,300
Net interest income after provision for loan losses 1,563,060 1,329,367 3,035,728 2,734,558
Non-interest income
Service charges on deposit accounts 317,394 268,928 609,037 546,801
Other miscellaneous income 18,067 95,313 36,177 117,946
Dividend income from restricted stock 27,840 37,962 72,921 72,843
Income from bank-owned life insurance 25,210 25,597 50,232 51,168
Total non-interest income 388,511 427,800 768,367 788,758
Non-interest expenses
Salaries and employee benefits 771,541 706,355 1,516,317 1,387,244
Occupancy and equipment 99,142 99,125 204,673 202,953
Data and item processing 85,765 77,128 119,445 189,667
Advertising and marketing 30,271 17,426 52,115 34,542
Legal and professional fees 73,424 40,101 110,859 87,531
Regulatory assessments 37,607 36,539 75,218 66,850
Insurance 8,685 8,539 16,689 17,010
Directors' fees and expenses 31,545 27,129 58,092 53,839
Other expenses 120,161 135,288 219,443 232,321
Total non-interest expenses 1,258,141 1,147,630 2,372,851 2,271,957
Income before income tax expense 693,430 609,537 1,431,244 1,251,359
Income tax expense 273,302 237,697 540,380 488,991
Net income$420,128 $371,840 $890,864 $762,368
Basic earnings per share$0.34 $0.30 $0.72 $0.62
Diluted earnings per share$0.34 $0.30 $0.72 $0.62
Tax rate 39.4% 39.0% 37.8% 39.1%

For the three months ended For the year ended
June 30 June 30
2017 2016 2017 2016
KEY FINANCIAL RATIOS
(unaudited)
Annualized return on average equity 11.82% 11.70% 12.72% 12.18%
Annualized return on average assets 0.93% 0.90% 0.99% 0.93%
Net interest margin 3.78% 3.93% 3.77% 3.88%
Core efficiency ratio 64.47% 60.77% 61.49% 62.25%
Net chargeoffs/(recoveries) to average loans -0.01% 0.06% -0.02% 0.05%
AVERAGE BALANCES
(thousands, unaudited)
Average assets $181,103 $165,504 $180,141 $163,906
Average interest-earning assets $166,054 $149,635 $165,432 $148,096
Average gross loans $111,967 $98,736 $111,056 $96,382
Average deposits $142,353 $132,349 $141,145 $131,014
Average equity $14,212 $12,717 $14,004 $12,516
CREDIT QUALITY End of period
(unaudited) June 30, 2017 December 31, 2016
Non-performing loans $- $521,696
Non-performing loans to total loans 0.00% 0.48%
Non-performing loans to total assets 0.00% 0.30%
Allowance for loan losses to total loans 1.72% 1.68%
Nonperforming assets as a percentage of total loans and OREO 0.00% 0.48%
Allowance for loan losses to non-performing loans n/a 353.74%
OTHER PERIOD-END STATISTICS
(unaudited)
Shareholders equity to total assets 7.97% 7.73%
Net loans to deposits 77.07% 78.04%
Non-interest bearing deposits to total deposits 49.11% 49.88%
Total capital to total risk-weighted assets 15.55% 15.37%
Tier 1 capital to total risk-weighted assets 15.69% 15.32%
Tier 1 leverage ratio 10.58% 10.24%
Common equity tier 1 15.69% 15.32%

Source:Chino Commercial Bancorp