Cornerstone Community Bank Reports Financial Results For the Fourth Quarter and Full Year Ended December 31, 2014

RED BLUFF, Calif.--()--Cornerstone Community Bank announced today its financial results for the fourth quarter and full year ended December 31, 2014.

The Bank reported net income of $254,000 for the three months ended December 31, 2014 compared to net income of $256,000 for the same period last year. Current quarter results were impacted by the $171,000 provision for income taxes as the Bank became fully taxable during 2014. Income before income taxes increased by 59% for the three months ended December 31, 2014 compared to the same period last year. Diluted earnings per share for the three months ended December 31, 2014 were $0.19 compared to $0.20 for the same period last year.

Net income for the year ended December 31, 2014 was $779,000, or $0.59 per diluted share compared to net income of $1,073,000, or $0.83 per diluted share, for the year ended December 31, 2013. Current year results were impacted by the $519,000 provision for income taxes as the Bank became fully taxable during 2014. Income before income taxes increased by 20% for the year ended December 31, 2014 compared to the same period last year.

The return on average assets for the three months ended December 31, 2014 was 0.68% and the return on average equity was 7.43%. For the year ended December 31, 2014, the return on average assets was 0.55% and the return on average equity was 5.91%.

President and CEO, Jeff Finck, commented “We are pleased with our fourth quarter and full year results, particularly the 59% growth in income before income taxes during the fourth quarter and the 38% growth in loans during the year. This performance and our recent formation of the bank holding company, Cornerstone Community Bancorp, position us well for future growth and opportunities.”

Yesterday, Cornerstone Community Bancorp, (OTCQB: CRSB), announced the completion of the process of forming a bank holding company and the transfer of ownership of Cornerstone Community Bank to Cornerstone Community Bancorp. On January 30, 2015, Cornerstone Community Bank became a wholly-owned subsidiary of Cornerstone Community Bancorp. Yesterday, the company’s stock began trading under the name Cornerstone Community Bancorp instead of Cornerstone Community Bank using the same ticker symbol – CRSB.

Net Interest Income

Net interest income was $1,529,000 for the quarter ended December 31, 2014 representing an increase of $292,000, or 24%, from $1,237,000 for the same period one year earlier. The net interest margin increased to 4.26% during the quarter ended December 31, 2014 compared to 4.18% during the same period last year. For the year ended December 31, 2014, net interest income was $5,764,000 compared to $4,782,000 for the year ended December 31, 2013 representing an increase of $982,000, or 21%. The net interest margin increased to 4.32% for the year ended December 31, 2014 compared to 4.24% for the year ended December 31, 2013.

Provision for credit losses

There was no provision for credit losses recorded for the quarters ended December 31, 2014 and December 31, 2013. The provision for credit losses for the year ended December 31, 2014 was $224,000 compared to $35,000 for the year ended December 31, 2013.

Non-Interest Income

The Bank’s non-interest income for the quarter ended December 31, 2014 was $162,000 compared to $154,000 for the quarter ended December 31, 2013. For the year ended December 31, 2014, non-interest income was $683,000 compared to $675,000 for the year ended December 31, 2013.

Non-Interest Expense

Non-interest expense was $1,266,000 for the quarter ended December 31, 2014 compared to $1,123,000 for the same period one year earlier. For the year ended December 31, 2014, non-interest expense was $4,925,000 compared to $4,337,000 for the same period last year.

Balance Sheet

The Bank had total assets at December 31, 2014 of $149.2 million, compared to $121.9 million at December 31, 2013, representing growth of $27.3 million, or 22%.

Total loans outstanding at December 31, 2014 were $124.5 million compared to $90.2 million at December 31, 2013, representing an increase of $34.3 million, or 38%.

Total deposits were $134.9 million at December 31, 2014 compared to total deposits of $106.1 million at December 31, 2013, representing an increase of $28.8 million, or 27%.

Credit Quality

The allowance for loan losses was $1,605,000, or 1.29% of loans, net of unearned income at December 31, 2014, compared to $1,399,000, or 1.55% of loans, net of unearned income at December 31, 2013. Nonperforming assets at December 31, 2014 were $34,000 compared to $207,000 at December 31, 2013. The bank recognized $17,000 in net loan charge-offs during the year ended December 31, 2014, representing 0.02% of average loans.

Capital Adequacy

At December 31, 2014, shareholders’ equity totaled $13.8 million compared to $12.5 million at December 31, 2013. At December 31, 2014, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 11.32%, 10.09% and 9.11%, 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 Bank is 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)
 
 
 
  12/31/14         09/30/14         06/30/14         03/31/14         12/31/13  
 
ASSETS
Cash and due from banks $ 2,750 $ 2,657 $ 4,268 $ 3,203 $ 2,025
Federal funds sold - - - - -
Interest-bearing deposits 6,070 10,401 11,113 533 875
Investment securities 11,149 11,378 14,988 15,250 21,131
Loans held for sale - - 3,072 3,134 2,726
Loans, net of unearned income 124,547 115,954 108,796 99,960 90,173
Allowance for loan losses   (1,605 )       (1,607 )       (1,464 )       (1,415 )       (1,399 )
Loans, net 122,942 114,347 107,332 98,545 88,774
Premises and equipment, net 909 958 1,010 1,049 1,109
Other assets   5,340         5,202         5,288         5,134         5,234  
Total assets $ 149,160       $ 144,943       $ 147,071       $ 126,848       $ 121,874  
 
LIABILITIES
Deposits:
Demand noninterest-bearing $ 24,707 $ 23,566 $ 23,434 $ 19,198 $ 15,984
Demand interest-bearing 21,566 15,817 17,128 19,404 17,521
Money market and savings 42,114 45,221 45,942 41,072 42,814
Time deposits of less than $100,000 18,799 17,824 17,719 13,298 11,045
Time deposits of $100,000 or more   27,746         28,656         29,321         18,579         18,736  
Total deposits 134,932 131,084 133,544 111,551 106,100
Other borrowings - - - 2,000 3,000
Other liabilities   448         510         454         464         300  
Total liabilities   135,380         131,594         133,998         114,015         109,400  
 
SHAREHOLDERS' EQUITY
Common stock 12,285 12,171 12,057 12,057 12,057
Additional paid-in capital 929 924 924 903 877
Retained Earnings 414 160 (65 ) (234 ) (365 )
Accumulated other comprehensive income (loss)   152         94         157         107         (95 )
Total shareholders' equity   13,780         13,349         13,073         12,833         12,474  
Total liabilities and shareholders' equity $ 149,160       $ 144,943       $ 147,071       $ 126,848       $ 121,874  
 
CAPITAL ADEQUACY
Tier I leverage ratio 9.11 % 8.81 % 9.70 % 9.81 % 10.00 %
Tier I risk-based capital ratio 10.09 % 10.56 % 10.57 % 11.35 % 12.02 %
Total risk-based capital ratio 11.32 % 11.81 % 11.78 % 12.60 % 13.27 %
Total equity / total assets 9.24 % 9.21 % 8.89 % 10.12 % 10.24 %
Book value per share $ 11.01 $ 10.84 $ 10.79 $ 10.59 $ 10.29
                                 
 
CORNERSTONE COMMUNITY BANK
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
 
 
Three months ended Year ended
  12/31/14         09/30/14         12/31/13     12/31/14         12/31/13  
 
INTEREST INCOME
Loans $ 1,552 $ 1,565 $ 1,200 $ 5,789 $ 4,677
Federal funds sold - - - - -
Investment securities 83 104 161 411 646
Other   17         19         10       56         29  
Total interest income   1,652         1,688         1,371       6,256         5,352  
 
INTEREST EXPENSE
Deposits:
Interest-bearing demand 5 5 6 20 25
Money market and savings 27 31 63 163 278
Time deposits 91 89 65 307 267
Other   -         -         -       2         -  
Total interest expense   123         125         134       492         570  
 
Net interest income 1,529 1,563 1,237 5,764 4,782
Provision for credit losses   -         150         -       224         35  
Net interest income after provision
for credit losses   1,529         1,413         1,237       5,540         4,747  
 
NON-INTEREST INCOME
Service charges on deposit accounts 32 31 22 108 109
Gain on sale of SBA loans - - - - -
Gain (loss) on sale of other real estate owned - (23 ) - (23 )
Gain on sale of securities - 107 - 101 86
Other non-interest income   130         136         132       497         480  
Total non-interest income   162         251         154       683         675  
 
OPERATING EXPENSES
Salaries and benefits 715 671 605 2,644 2,248
Premises and fixed assets 138 149 139 565 530
Other   413         468         379       1,716         1,559  
Total operating expenses   1,266         1,288         1,123       4,925         4,337  
 
Income before income taxes 425 376 268 1,298 1,085
Income taxes 171 151 12 519 12
                       
NET INCOME $ 254       $ 225       $ 256     $ 779       $ 1,073  
 
EARNINGS PER SHARE
Basic earnings per share $ 0.20       $ 0.18       $ 0.21     $ 0.64       $ 0.89  
Diluted earnings per share $ 0.19       $ 0.17       $ 0.20     $ 0.59       $ 0.83  
Average common shares outstanding   1,247,652         1,216,783         1,206,130       1,222,192         1,201,545  
Average common and equivalent
shares outstanding   1,339,125         1,324,252         1,307,931       1,325,511         1,300,406  
 
PERFORMANCE MEASURES
Return on average assets 0.68 % 0.60 % 0.82 % 0.55 % 0.90 %
Return on average equity 7.43 % 6.78 % 8.21 % 5.91 % 8.80 %
Net interest margin 4.26 % 4.32 % 4.18 % 4.32 % 4.24 %
Efficiency ratio 74.87 % 71.00 % 80.73 % 76.39 % 79.48 %

Contacts

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

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