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Chino Commercial Bancorp Reports Quarterly and Full Year Earnings

CHINO, Calif., Jan. 19, 2018 (GLOBE NEWSWIRE) --

The Board of Directors of Chino Commercial Bancorp (OTC:CCBC), the parent company of Chino Commercial Bank, N.A., announced the net earnings for the Bank and the consolidated holding company, for the fourth quarter ended December 31, 2017, with net earnings before taxes of $588 thousand, or an increase of 9.1%, compared with earnings before taxes of $539 thousand for the same quarter last year. Net after-tax income for the fourth quarter ending December 31, 2017 was $280 thousand, which represents a 14.9% decrease, compared with net income of $329 thousand for the same quarter last year. The decrease in net income for the fourth quarter 2017 was attributable to a one-time deferred tax adjustment in order to comply with the Tax Reform Act signed into law in December 2017. Net income per basic and diluted share for the fourth quarter of 2017 was $0.18 as compared to $0.27 for the same quarter last year.

The Company’s net after-tax income for the full year ended December 31, 2017 increased 8.1% to $1.571 million as compared with net earnings of $1.453 million for the same period in 2016. Even though net after-tax earnings were higher in 2017 as compared with 2016, because of additional shares issued during the year, the basic and diluted earnings per share were $1.17 in 2017 as compared with $1.18 in 2016.

Dann H. Bowman, President and Chief Executive Officer, stated, “The Company had an excellent year in 2017, posting new record levels of Deposits, Loans, Revenue and Net Earnings. The Tax Reform Act will reduce the corporate income tax rate beginning in 2018; however, for 2017 it resulted in a one-time increased tax burden, because of the reduction to the Company’s deferred tax asset.

"In 2017 the Company raised $4.4 million in additional capital and issued 318,088 shares of additional common stock. The capital raise was oversubscribed and will allow the Company to offer new products and expand into new markets. The Bank recently filed an application with the Office of the Comptroller of the Currency to establish a fourth branch office in Upland. We are excited about expanding into this community, which we believe will significantly contribute to the Company’s growth and profitability.”

Financial Condition

At December 31, 2017, total assets were $192.8 million, an increase of $17.7 million or 10.1% over $175.1 million at December 31, 2016. Total deposits increased by 8.4% or $11.6 million during the year to $149.1 million, compared to $137.6 million as of December 31, 2016. At December 31, 2017, the Company’s core deposits represent 90.8% of the total deposits.

Gross loans increased by 11.9% or $13.0 million as of December 31, 2017 to $122.6 million, as compared with $109.5 million as of December 31, 2016. The Bank did not have any nonperforming loans for the quarter ended December 31, 2017, and one nonperforming loan as of December 31, 2016, respectively. OREO properties remained at zero as of December 31, 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 December 31, 2017 and 2016, respectively, or an increase of $158 thousand or 10.7%. Average interest-earning assets were $179.4 million with average interest-bearing liabilities of $101.0 million, yielding a net interest margin of 3.62% for the fourth quarter of 2017, as compared to the average interest-earning assets of $161.8 million with average interest-bearing liabilities of $85.9 million, yielding a net interest margin of 3.64% for the fourth quarter of 2016.

Non-interest income totaled $372 thousand for the fourth quarter of 2017, or a decrease of 3.0% as compared with $383 thousand earned during the same quarter last year. Service charges on deposit accounts increased by $43 thousand or 18.0% to $241 thousand, primarily due to an increase in income from returned items, overdraft charges, and analysis fees. Dividend income from restricted stock decreased to $40.1 thousand for the fourth quarter of 2017, compared to $99 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 about $25 thousand in the fourth quarter of 2017 and 2016, respectively.

General and administrative expenses were $1.3 million for the three months ended December 31, 2017, and December 31, 2016, respectively. The largest component of general and administrative expenses was salary and benefits expense of $803 thousand for the fourth quarter of 2017, as compared to $791 thousand for the same quarter last year. Regulatory assessments remained consistent at about $38 thousand for the fourth quarter of 2017 and 2016, respectively. Advertising and marketing expenses increased by $28 thousand or 122.7% to $50 thousand in the fourth quarter of 2017 from $23 thousand for the same period last year. The Company engaged a marketing company to assist with advertising efforts during 2017.

Income tax expense was $307 thousand which represents an increase of $98 thousand or 47.03% for the three months ended December 31, 2017 as compared to $209 thousand for the three months ended December 31, 2016. The effective income tax rate for the fourth quarter of 2017 and 2016 is approximately 52.3% and 38.8%, respectively. The increase in the income tax expense as well as the effective tax rate is entirely attributed to the deferred tax adjustment recorded to comply with the Tax Reform Act signed into law in December 2017.

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 therefrom, and 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
December 31, 2017 and December 31, 2016
December 31, 2017 December 31, 2016
(unaudited) (audited)
ASSETS:
Cash and due from banks 34,157,668 $30,498,888
Total cash and cash equivalents 34,157,668 30,498,888
Interest-bearing deposits in other banks 1,240,000 2,480,000
Investment securities available for sale 3,131,027 3,924,102
Investment securities held to maturity (fair value approximates
$21,104,000 at December 31, 2017 and $18,240,000 at December 31, 2016) 21,389,552 18,407,741
Total investments 25,760,579 24,811,843
Loans
Real estate 99,585,847 87,306,627
Commercial 22,679,268 21,822,341
Installment 337,455 424,818
Gross loans 122,602,570 109,553,786
Unearned fees and discounts (365,091) (348,359)
Loans net of unearned fees and discount 122,237,479 109,205,427
Allowance for loan losses (2,094,723) (1,845,447)
Net loans 120,142,756 107,359,980
Fixed assets, net 5,875,381 6,000,404
Accrued interest receivable 531,771 295,102
Stock investments, restricted, at cost 2,084,129 1,935,300
Bank-owned life insurance 3,386,754 3,285,963
Other assets 861,969 904,338
Total assets$ 192,801,007 $ 175,091,818
LIABILITIES:
Deposits
Non-interest bearing $ 74,766,694 $ 68,613,998
Interest bearing
NOW and money market 47,030,167 52,873,006
Savings 7,897,948 5,165,730
Time deposits less than $250,000 5,727,789 4,438,254
Time deposits of $250,000 or greater 13,703,790 6,471,260
Total deposits 149,126,388 137,562,248
Accrued interest payable 65,160 27,902
Borrowings from Federal Home Loan Bank (FHLB) 20,000,000 20,000,000
Accrued expenses & other payables 1,012,535 872,374
Subordinated notes payable to subsidiary trust 3,093,000 3,093,000
Total liabilities 173,297,083 161,555,524
SHAREHOLDERS' EQUITY
Common stock, authorized 10,000,000 shares with no par value, issued and
outstanding 1,549,420 shares at December 31, 2017 and 1,231,332 issued
and outstanding at December 31, 2016, respectively. 10,502,558 6,089,466
Retained earnings 9,020,564 7,449,608
Accumulated other comprehensive income/(loss) (19,198) (2,780)
Total shareholders' equity 19,503,924 13,536,294
Total liabilities & shareholders' equity$ 192,801,007 $ 175,091,818

CHINO COMMERCIAL BANCORP
CONSOLIDATED STATEMENTS OF NET INCOME
For the three months ended For the year ended
December 31 December 31
2017 2016 2017 2016
(unaudited) (unaudited) (unaudited) (audited)
Interest income
Interest and fee income on loans$1,562,601 $1,418,399 $6,086,085 $5,465,664
Interest on federal funds sold and FRB deposits 117,777 40,673 359,557 129,894
Interest on time deposits in banks 5,353 7,945 26,398 38,596
Interest on investment securities 145,098 121,584 552,510 545,090
Total interest income 1,830,829 1,588,601 7,024,550 6,179,244
Interest Expense
Interest on deposits 107,280 73,516 366,492 268,336
Other borrowings 87,061 36,216 305,524 142,676
Total interest expense 194,341 109,732 672,016 411,012
Net interest income 1,636,488 1,478,869 6,352,534 5,768,232
Provision for loan losses 100,000 40,000 210,000 199,950
Net interest income after provision for loan losses 1,536,488 1,438,869 6,142,534 5,568,282
Non-interest income
Service charges on deposit accounts 284,681 241,256 1,202,933 1,062,812
Other miscellaneous income 21,323 16,521 75,684 180,347
Dividend income from restricted stock 40,681 99,694 149,983 221,499
Income from bank-owned life insurance 25,336 25,891 100,791 102,716
Total non-interest income 372,021 383,362 1,529,391 1,567,374
Non-interest expenses
Salaries and employee benefits 803,215 791,133 3,051,474 2,882,535
Occupancy and equipment 110,354 102,348 424,856 416,781
Data and item processing 88,103 86,049 335,582 316,821
Advertising and marketing 50,321 22,598 127,371 76,074
Legal and professional fees 46,706 46,227 196,082 184,900
Regulatory assessments 37,929 37,611 150,753 141,000
Insurance 9,102 8,608 34,475 34,180
Directors' fees and expenses 29,638 26,983 120,214 108,013
Other expenses 145,455 162,168 512,940 594,311
Total non-interest expenses 1,320,823 1,283,725 4,953,747 4,754,615
Income before income tax expense 587,686 538,506 2,718,178 2,381,041
Income tax expense 307,328 209,030 1,147,224 927,938
Net income$ 280,358 $ 329,476 $ 1,570,954 $ 1,453,103
Basic earnings per share $ 0.18 $ 0.27 $ 1.17 $ 1.18
Diluted earnings per share $ 0.18 $ 0.27 $ 1.17 $ 1.18
Tax rate 52.3% 38.8% 42.2% 39.0%

For the three months ended For the year ended
December 31 December 31
2017 2016 2017 2016
KEY FINANCIAL RATIOS
(unaudited)
Annualized return on average equity 6.25% 9.82% 10.45% 11.31%
Annualized return on average assets 0.58% 0.75% 0.84% 0.85%
Net interest margin 3.62% 3.64% 3.70% 3.70%
Core efficiency ratio 65.76% 68.93% 62.85% 64.82%
Net chargeoffs/(recoveries) to average loans -0.01% -0.01% -0.04% 0.02%
AVERAGE BALANCES
(thousands, unaudited)
Average assets $ 194,156 $ 176,301 $ 186,548 $ 170,152
Average interest-earning assets $ 179,445 $ 161,809 $ 171,802 $ 155,719
Average gross loans $ 117,395 $ 106,639 $ 113,587 $ 101,710
Average deposits $ 149,863 $ 143,072 $ 144,370 $ 136,436
Average equity $ 17,946 $ 13,416 $ 15,037 $ 12,848
CREDIT QUALITY End of period
(unaudited) December 31, 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 1.71% 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 10.12% 7.73%
Net loans to deposits 80.56% 78.04%
Non-interest bearing deposits to total deposits 50.14% 49.88%
Total capital to total risk-weighted assets 18.43% 15.37%
Tier 1 capital to total risk-weighted assets 19.76% 15.32%
Tier 1 leverage ratio 13.41% 10.24%
Common equity tier 1 19.76% 15.32%

Source:Chino Commercial Bancorp

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