Cornerstone Community Bank Reports Financial Results for the Fourth Quarter and Full Year Ended December 31, 2012

RED BLUFF, Calif.--()--Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the fourth quarter and full year ended December 31, 2012.

The Bank reported net income of $325,000 for the three months ended December 31, 2012 representing an increase of $117,000, or 56%, compared to net income of $208,000 for the same period last year. Diluted earnings per share for the three months ended December 31, 2012 were $0.25 compared to $0.17 for the same period last year. Net income for the year ended December 31, 2012 was $1,211,000, or $0.95 per diluted share compared to net income of $703,000, or $0.57 per diluted share, for the year ended December 31, 2011.

The return on average assets for the three months ended December 31, 2012 was 1.19% compared to 0.95% for the same period last year. The return on average equity was 11.16% for the three months ended December 31, 2012 compared to 8.25% for the same period last year. For the year ended December 31, 2012, the return on average assets was 1.17% and the return on average equity was 11.06% compared to 0.87% and 7.34%, respectively, for the year ended December 31, 2011.

President and CEO, Jeffrey Finck stated, “We are pleased with our 2012 performance. The significant growth in loans, deposits and net income has been a direct result of the tremendous efforts made by our employees, Board of Directors and shareholders. We thank our valued customers for their business and we look forward to continuing to provide the exceptional service they have become accustomed to.”

Net Interest Income

Net interest income of $1,107,000 for the quarter ended December 31, 2012 represented an increase of $132,000, or 14%, from $975,000 for the same quarter one year earlier. The net interest margin decreased to 4.22% during the quarter ended December 31, 2012 compared to 4.64% during the same quarter last year. For the year ended December 31, 2012, net interest income was $4,347,000 compared to $3,758,000 for the year ending December 31, 2011 representing an increase of $589,000, or 16%. The net interest margin decreased to 4.42% for the year ended December 31, 2012 compared to 4.86% for the year ended December 31, 2011.

Provision for credit losses

There was no provision for credit losses for the quarter ended December 31, 2012 compared to $110,000 for the quarter ended December 31, 2011. The provision for credit losses for the year ended December 31, 2012 was $285,000 compared to $259,000 for the year ended December 31, 2011.

Non-Interest Income

The Bank’s non-interest income for the quarter ended December 31, 2012 was $168,000 compared to $84,000 for the quarter ended December 31, 2011. For the year ended December 31, 2012, non-interest income was $859,000 compared to $318,000 for the same period last year. The increase in non-interest income for the year ended December 31, 2012 was primarily due to increases in mortgage loan fee income and a severance-related accrual reversal.

Non-Interest Expense

Non-interest expense was $974,000 for the quarter ended December 31, 2012 compared to $894,000 for the same period one year earlier. For the year ended December 31, 2012, non-interest expense was $3,806,000 compared to $3,583,000 for the same period last year, representing an increase of $223,000, or 6%.

Income Taxes

During the quarter ended December 31, 2012, the Bank recognized an income tax benefit of $24,000 compared to $153,000 for the same period last year. These benefits were primarily due to the recognition of deferred tax assets.

Balance Sheet

The Bank had total assets at December 31, 2012 of $111.7 million, compared to $91.3 million at December 31, 2011, representing growth of $20.4 million, or 22%.

Total loans outstanding at December 31, 2012, net of unearned income, were $73.8 million compared to $64.5 million at December 31, 2011, representing an increase of $9.3 million, or 14%.

Total deposits were $99.7 million at December 31, 2012 compared to total deposits of $80.6 million at December 31, 2011, representing an increase of $19.1 million, or 24%.

Credit Quality

The allowance for loan losses was $1,460,000, or 1.98% of loans, net of unearned income at December 31, 2012, compared to $1,270,000, or 1.97% of loans, net of unearned income at December 31, 2011. Nonperforming assets at December 31, 2012 were $392,000 compared to $185,000 at December 31, 2011.

The bank recognized $94,000 in net loan charge-offs during the year ended December 31, 2012, representing 0.14% of average loans.

Capital Adequacy

At December 31, 2012, shareholders’ equity totaled $11.8 million compared to $10.2 million at December 31, 2011. At December 31, 2012, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.55%, 13.29% and 10.32%, 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)
         
 
12/31/12   09/30/12   06/30/12   03/31/12   12/31/11
 
ASSETS
Cash and due from banks $ 3,091 $ 2,389 $ 3,507 $ 3,542 $ 1,957
Federal funds sold - - - - -
Interest-bearing deposits 4,936 1,120 2,200 615 445
Investment securities 27,143 28,672 26,129 27,132 22,173
Loans held for sale 791 573 336 379 -
Loans, net of unearned income 73,820 72,240 68,459 63,433 64,504
Allowance for loan losses   (1,460 )     (1,469 )     (1,325 )     (1,246 )     (1,270 )
Loans, net 72,360 70,771 67,134 62,187 63,234
Premises and equipment, net 1,070 1,126 1,165 1,172 1,226
Other assets   2,301       2,294       2,354       2,291       2,312  
Total assets $ 111,692     $ 106,945     $ 102,825     $ 97,318     $ 91,347  
 
LIABILITIES
Deposits:
Demand noninterest-bearing $ 22,366 $ 15,104 $ 12,648 $ 12,789 $ 11,833
Demand interest-bearing 14,893 15,594 13,100 11,916 12,928
Money market and savings 37,634 39,509 42,072 37,762 32,322
Time deposits of less than $100,000 8,965 9,047 8,949 7,851 8,841
Time deposits of $100,000 or more   15,795       14,991       14,628       15,076       14,718  
Total deposits 99,653 94,245 91,397 85,394 80,642
Other borrowings - 1,000 - 1,000 -
Other liabilities   248       279       557       529       535  
Total liabilities   99,901       95,524       91,954       86,923       81,177  
 
SHAREHOLDERS' EQUITY
Common stock 11,959 11,959 11,959 11,959 11,959
Additional paid-in capital 801 772 741 714 685
Accumulated deficit (1,439 ) (1,764 ) (2,178 ) (2,431 ) (2,650 )
Accumulated other comprehensive income (loss)   470       454       349       153       176  
Total shareholders' equity   11,791       11,421       10,871       10,395       10,170  
Total liabilities and shareholders' equity $ 111,692     $ 106,945     $ 102,825     $ 97,318     $ 91,347  
 
CAPITAL ADEQUACY
Tier I leverage ratio 10.32 % 10.12 % 10.26 % 10.64 % 10.89 %
Tier I risk-based capital ratio 13.29 % 13.17 % 13.03 % 13.51 % 13.27 %
Total risk-based capital ratio 14.55 % 14.43 % 14.29 % 14.77 % 14.52 %
Total equity / total assets 10.56 % 10.68 % 10.57 % 10.68 % 11.13 %
Book value per share $ 9.83 $ 9.52 $ 9.06 $ 8.66 $ 8.48
 
 
CORNERSTONE COMMUNITY BANK
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
         
 
Three months ended Year ended
12/31/12   09/30/12   12/31/11 12/31/12   12/31/11
 
INTEREST INCOME
Loans $ 1,096 $ 1,067 $ 1,014 $ 4,333 $ 3,920
Federal funds sold - - - - -
Investment securities 176 172 126 709 487
Other   5       3       2     13       7  
Total interest income   1,277       1,242       1,142     5,055       4,414  
 
INTEREST EXPENSE
Deposits:
Interest-bearing demand 6 7 7 26 18
Money market and savings 90 99 91 382 380
Time deposits 73 73 69 299 257
Other   1       -       -     1       1  
Total interest expense   170       179       167     708       656  
 
Net interest income 1,107 1,063 975 4,347 3,758
Provision for credit losses   -       150       110     285       259  

Net interest income after provision for credit losses

  1,107       913       865     4,062       3,499  
 
NON-INTEREST INCOME
Service charges on deposit accounts 25 23 23 100 84
Gain on sale of SBA loans - - - - 37
Gain on sale of securities - - - - 37
Other non-interest income   143       431       61     759       160  
Total non-interest income   168       454       84     859       318  
 
OPERATING EXPENSES
Salaries and benefits 529 497 466 2,003 1,935
Premises and fixed assets 120 125 109 478 403
Other   325       355       319     1,325       1,245  
Total operating expenses   974       977       894     3,806       3,583  
 
Income before income taxes 301 390 55 1,115 234
Income taxes (24 ) (24 ) (153 ) (96 ) (469 )
               
NET INCOME $ 325     $ 414     $ 208   $ 1,211     $ 703  
 
EARNINGS PER SHARE
Basic earnings per share $ 0.27     $ 0.35     $ 0.17   $ 1.01     $ 0.59  
Diluted earnings per share $ 0.25     $ 0.32     $ 0.17   $ 0.95     $ 0.57  
Average common shares outstanding   1,200,000       1,200,000       1,200,000     1,200,000       1,200,000  

Average common and equivalent shares outstanding

  1,286,221       1,283,926       1,212,071     1,277,192       1,225,350  
 
PERFORMANCE MEASURES
Return on average assets 1.19 % 1.54 % 0.95 % 1.17 % 0.87 %
Return on average equity 11.16 % 14.88 % 8.25 % 11.06 % 7.34 %
Net interest margin 4.22 % 4.10 % 4.64 % 4.42 % 4.86 %
Efficiency ratio 76.39 % 64.40 % 84.42 % 73.11 % 87.90 %

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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