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Cornerstone Community Bancorp Reports Financial Results For the Third Quarter Ended September 30, 2017

RED BLUFF, Calif.--(BUSINESS WIRE)-- Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the third quarter ended September 30, 2017.

The Company reported net income of $556,000 for the three months ended September 30, 2017 compared to net income of $332,000 for the same period last year. Diluted earnings per share were $0.41 for the three months ended September 30, 2017 compared to $0.25 for the same period last year.

The return on average assets for the three months ended September 30, 2017 was 1.02% and the return on average equity was 12.80%.

For the nine months ended September 30, 2017, the Company reported net income of $1,454,000 compared to net income of $896,000 for the same period last year. Diluted earnings per share were $1.07 for the nine months ended September 30, 2017 compared to $0.67 for the same period last year.

The return on average assets for the nine months ended September 30, 2017 was 0.93% and the return on average equity was 11.60%.

President and CEO, Jeff Finck, stated, “We had another great quarter with continued improvement in all of our key profitability metrics – return on average assets, return on average equity, net interest margin and efficiency ratio. Also, our new downtown Redding office is off to a good start and we look forward to its continued growth.”

Net Interest Income

Net interest income increased by 25% to $2,106,000 for the quarter ended September 30, 2017 compared to $1,686,000 for the same quarter last year. For the nine months ended September 30, 2017, net interest income increased by 21% to $5,874,000 compared to $4,860,000 for the same period last year.

Provision for credit losses

The Company recorded a $65,000 provision for credit losses for the quarter ended September 30, 2017 compared to no provision for the same period last year.

The Company recorded a $215,000 provision for credit losses for the nine months ended September 30, 2017 compared to no provision for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended September 30, 2017 was $389,000 compared to $131,000 for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, non-interest income was $980,000 compared to $503,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,485,000 for the quarter ended September 30, 2017 compared to $1,254,000 for the same period last year. For the nine months ended September 30, 2017, non-interest expense was $4,168,000 compared to $3,844,000 for the same period last year.

Balance Sheet

The Company had total assets at September 30, 2017 of $223.6 million compared to $195.5 million at September 30, 2016.

Total loans outstanding at September 30, 2017 were $173.5 million compared to $147.5 million at September 30, 2016, representing an increase of $26.0 million, or 17.6%.

Total deposits were $191.3 million at September 30, 2017 compared to total deposits of $162.6 million at September 30, 2016, representing an increase of $28.7 million, or 17.7%.

Credit Quality

The allowance for loan losses was $1,847,000, or 1.06% of loans, net of unearned income at September 30, 2017, compared to $1,621,000, or 1.10% of loans, net of unearned income at September 30, 2016. Nonperforming assets at September 30, 2017 were $3,000 compared to $16,000 at September 30, 2016.

Capital

At September 30, 2017, shareholders’ equity totaled $17.5 million compared to $15.3 million at September 30, 2016. Book value per share increased by 9.7% to $13.90 per share at September 30, 2017 compared to $12.67 per share at September 30, 2016.

About Cornerstone Community Bancorp

Cornerstone Community Bancorp, a bank holding company headquartered in Red Bluff, California, serves the Red Bluff and Redding communities through its wholly-owned subsidiary, Cornerstone Community Bank with a headquarters office in Red Bluff and two banking offices in Redding. The Bank provides commercial banking services to small and mid-size businesses, including professional service firms, real estate developers and investors and not-for-profit organizations and to their owners and other 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 Bancorp 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 Bancorp’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 Bancorp is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than Cornerstone Community Bancorp; 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 Bancorp does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
09/30/17 06/30/17 03/31/17 12/31/16 09/30/16
ASSETS
Cash and due from banks $ 4,465 $ 3,516 $ 3,809 $ 3,360 $ 2,937
Federal funds sold 20 20 20 20 20
Interest-bearing deposits 24,930 13,739 16,773 17,225 25,372
Investment securities 12,486 12,793 13,052 13,338 14,003
Loans held for sale - 2,603 - 3,974 -
Loans, net of unearned income 173,452 169,070 159,768 150,413 147,477
Allowance for loan losses (1,847 ) (1,778 ) (1,773 ) (1,623 ) (1,621 )
Loans, net 171,605 167,292 157,995 148,790 145,856
Premises and equipment, net 3,102 2,006 1,854 1,032 1,086
Other assets 7,001 8,605 6,460 6,643 6,269
Total assets $ 223,609 $ 210,574 $ 199,963 $ 194,382 $ 195,543
LIABILITIES
Deposits:
Demand noninterest-bearing $ 37,977 $ 33,101 $ 27,439 $ 23,042 $ 27,460
Demand interest-bearing 25,434 24,610 23,392 22,490 22,212
Money market and savings 65,909 59,759 60,877 62,161 65,426
Time deposits of less than $100,000 18,333 19,020 18,984 18,595 12,692
Time deposits of $100,000 or more 43,658 42,565 35,317 34,804 34,771
Total deposits 191,311 179,055 166,009 161,092 162,561
Federal Home Loan Bank borrowings 9,000 9,000 12,000 12,000 12,000
Subordinated debentures 4,890 4,887 4,885 4,883 4,880
Interest payable and other liabilities 955 868 865 746 850
Total liabilities 206,156 193,810 183,759 178,721 180,291
SHAREHOLDERS' EQUITY
Common stock 13,258 13,115 13,092 12,925 12,847
Retained Earnings 4,113 3,557 3,050 2,659 2,202
Accumulated other comprehensive income (loss) 82 92 62 77 203
Total shareholders' equity 17,453 16,764 16,204 15,661 15,252
Total liabilities and shareholders' equity $ 223,609 $ 210,574 $ 199,963 $ 194,382 $ 195,543
Total equity / total assets 7.81 % 7.96 % 8.10 % 8.06 % 7.80 %
Book value per share $ 13.90 $ 13.53 $ 13.08 $ 12.90 $ 12.67
CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
Three months ended Nine months ended
09/30/17 06/30/17 09/30/16 09/30/17 09/30/16
INTEREST INCOME
Loans $ 2,365 $ 2,209 $ 1,897 $ 6,573 $ 5,491
Federal funds sold - - - - -
Investment securities 76 78 81 235 245
Other 78 76 45 219 117
Total interest income 2,519 2,363 2,023 7,027 5,853
INTEREST EXPENSE
Deposits:
Interest-bearing demand 13 10 10 34 28
Money market and savings 106 95 83 295 224
Time deposits 166 146 110 438 339
Other 128 127 134 386 402
Total interest expense 413 378 337 1,153 993
Net interest income 2,106 1,985 1,686 5,874 4,860
Provision for credit losses 65 - - 215 -

Net interest income after provision for credit losses

2,041 1,985 1,686 5,659 4,860
NON-INTEREST INCOME
Service charges on deposit accounts 44 46 44 134 120
Gain on sale of loans 239 78 - 560 208
Gain (loss) on sale of other real estate owned - - - - (77 )
Gain (loss) on sale of securities - - - - -
Other non-interest income 106 92 87 286 252
Total non-interest income 389 216 131 980 503
OPERATING EXPENSES
Salaries and benefits 790 732 666 2,259 2,036
Premises and fixed assets 141 134 140 419 437
Other 554 473 448 1,490 1,371
Total operating expenses 1,485 1,339 1,254 4,168 3,844
Income before income taxes 945 862 563 2,471 1,519
Income taxes 389 354 231 1,017 623
NET INCOME $ 556 $ 508 $ 332 $ 1,454 $ 896
EARNINGS PER SHARE
Basic earnings per share $ 0.45 $ 0.41 $ 0.27 $ 1.17 $ 0.72
Diluted earnings per share $ 0.41 $ 0.37 $ 0.25 $ 1.07 $ 0.67
Average common shares outstanding 1,243,006 1,239,256 1,234,156 1,238,780 1,246,009

Average common and equivalent shares outstanding

1,367,810 1,358,631 1,330,424 1,356,082 1,339,521
PERFORMANCE MEASURES
Return on average assets 1.02 % 0.99 % 0.70 % 0.93 % 0.66 %
Return on average equity 12.80 % 12.23 % 8.58 % 11.60 % 7.86 %
Net interest margin 4.03 % 4.04 % 3.70 % 3.95 % 3.74 %
Efficiency ratio 59.52 % 60.84 % 69.01 % 60.81 % 71.68 %

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Cornerstone Community Bancorp
Jeffrey P. Finck, 530-222-1460
President & CEO
Patrick E. Phelan, 530-222-1460
Chief Financial Officer

Source: Cornerstone Community Bancorp