Cornerstone Community Bancorp Reports Financial Results for the Fourth Quarter and Full Year Ended December 31, 2018

Company Release - 1/22/2019 7:57 PM ET

RED BLUFF, Calif.--(BUSINESS WIRE)-- Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the fourth quarter and full year ended December 31, 2018.

The Company reported net income of $884,000 for the three months ended December 31, 2018 compared to net income of $184,000 for the same period last year. Diluted earnings per share were $0.57 for the three months ended December 31, 2018 compared to $0.13 for the same period last year.

The return on average assets for the three months ended December 31, 2018 was 1.36% and the return on average equity was 15.99%.

For the year ended December 31, 2018, the Company reported net income of $2,776,000 compared to net income of $1,638,000 for the same period last year. Diluted earnings per share were $1.84 for the year ended December 31, 2018 compared to $1.20 for the same period last year.

The return on average assets for the year ended December 31, 2018 was 1.13% and the return on average equity was 13.51%.

President and CEO, Jeff Finck, stated, “We are pleased with our 2018 results. The Company, once again, continues to show solid growth in loans, deposits and earnings. During 2018, our newly constructed Red Bluff building along the riverfront opened for business. In 2019, we look forward to moving down the street from our East Cypress Avenue location to our new building on Hartnell Avenue.”

Net Interest Income

Net interest income increased to $2,599,000 for the quarter ended December 31, 2018 compared to $2,226,000 for the same quarter last year. For the year ended December 31, 2018, net interest income increased to $9,660,000 compared to $8,100,000 for the same period last year.

Provision for credit losses

The Company recorded a $130,000 provision for credit losses for the quarter ended December 31, 2018. There was no provision for credit losses recorded during the same period last year. For the year ended December 31, 2018, the Company recorded a $309,000 provision for credit losses compared to $215,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended December 31, 2018 was $161,000 compared to $243,000 for the quarter ended December 31, 2017. For the year ended December 31, 2018, non-interest income was $695,000 compared to $1,223,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,677,000 for the quarter ended December 31, 2018 compared to $1,477,000 for the same period last year. For the year ended December 31, 2018, non-interest expense was $6,459,000 compared to $5,645,000 for the same period last year.

Income Taxes

Income tax expense was $69,000 for the quarter ended December 31, 2018 compared to $808,000 for the same period last year. For the year ended December 31, 2018, income tax expense was $811,000 compared to $1,825,000 for the same period last year. Fourth quarter 2017 income tax expense was impacted by a $400,000 net charge related to a revaluation of the net deferred tax asset associated with the passage of the Tax Cuts and Jobs Act. Fourth quarter and full year 2018 income tax expense was impacted by the reduction in the U.S. federal income tax rate from 34% to 21% and tax benefits from the exercise of stock options.

Balance Sheet

The Company had total assets at December 31, 2018 of $266.4 million compared to $229.0 million at December 31, 2017.

Total loans, net of unearned income at December 31, 2018 were $209.3 million compared to $184.8 million at December 31, 2017.

Total deposits were $232.3 million at December 31, 2018 compared to total deposits of $196.6 million at December 31, 2017.

Credit Quality

The allowance for loan losses was $2,152,000, or 1.03% of loans, net of unearned income at December 31, 2018, compared to $1,847,000, or 1.00% of loans, net of unearned income at December 31, 2017. There were no nonperforming assets at December 31, 2018 and December 31, 2017.

Capital

At December 31, 2018, shareholders’ equity totaled $22.1 million compared to $17.7 million at December 31, 2017. Book value per share increased by 11.2% to $15.56 per share at December 31, 2018 compared to $13.99 per share at December 31, 2017. During the second quarter of 2018, the Company completed a private placement of $2.1 million of its common stock. In the offering, the Company issued 119,285 shares of its common stock at a purchase price of $17.5 per share.

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)
 
 
12/31/18     09/30/18     06/30/18     03/31/18     12/31/17
 
ASSETS
Cash and due from banks $ 7,002 $ 5,275 $ 4,139 $ 3,364 $ 4,630
Federal funds sold 20 20 20 20 20
Interest-bearing deposits 24,730 23,686 24,066 24,932 17,077
Investment securities 9,284 9,548 10,651 10,942 12,274
Loans held for sale - - - 1,849 -
Loans, net of unearned income 209,330 202,300 193,989 188,883 184,814
Allowance for loan losses   (2,152 )       (2,022 )       (1,947 )       (1,907 )       (1,847 )
Loans, net 207,178 200,278 192,042 186,976 182,967
Premises and equipment, net 8,740 7,777 6,958 5,846 5,121
Other assets   9,407         6,930         6,877         6,753         6,950  
Total assets $ 266,361       $ 253,514       $ 244,753       $ 240,682       $ 229,039  
 
LIABILITIES
Deposits:
Demand noninterest-bearing $ 50,862 $ 49,063 $ 44,751 $ 42,223 $ 38,348
Demand interest-bearing 37,875 34,312 29,565 27,514 26,311
Money market and savings 75,015 71,729 72,319 73,936 68,715
Time deposits of less than $100,000 15,778 16,456 19,482 17,959 18,510
Time deposits of $100,000 or more   52,763         48,155         45,671         45,933         44,731  
Total deposits 232,293 219,715 211,788 207,565 196,615
Federal Home Loan Bank borrowings 6,000 6,000 6,000 9,000 9,000
Subordinated debentures 4,903 4,900 4,897 4,895 4,892
Interest payable and other liabilities   1,100         1,161         1,021         933         821  
Total liabilities   244,296         231,776         223,706         222,393         211,328  
 
SHAREHOLDERS' EQUITY
Common stock 15,001 15,584 15,551 13,429 13,333
Retained Earnings 7,058 6,173 5,507 4,843 4,282

Accumulated other comprehensive income (loss)

  6         (19 )       (11 )       17         96  
Total shareholders' equity   22,065         21,738         21,047         18,289         17,711  
Total liabilities and shareholders' equity $ 266,361       $ 253,514       $ 244,753       $ 240,682       $ 229,039  
 
Total equity / total assets 8.28 % 8.57 % 8.60 % 7.60 % 7.73 %
Book value per share $ 15.56 $ 15.47 $ 14.97 $ 14.22 $ 13.99
 
           
CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)          
 
 
Three months ended Year ended
12/31/18     09/30/18     12/31/17 12/31/18     12/31/17
 
INTEREST INCOME
Loans $ 2,966 $ 2,818 $ 2,495 $ 10,988 $ 9,068
Federal funds sold - - - - -
Investment securities 70 73 78 299 313
Other   198         155         98     565         317  
Total interest income   3,234         3,046         2,671     11,852         9,698  
 
INTEREST EXPENSE
Deposits:
Interest-bearing demand 22 21 13 70 47
Money market and savings 177 165 120 614 415
Time deposits 317 279 185 1,026 623
Other   119         119         127     482         513  
Total interest expense   635         584         445     2,192         1,598  
 
Net interest income 2,599 2,462 2,226 9,660 8,100
Provision for credit losses   130         75         -     309         215  

Net interest income after provision for credit losses

2,469 2,387 2,226 9,351 7,885
 
NON-INTEREST INCOME
Service charges on deposit accounts 59 57 47 223 181
Gain on sale of loans - 57 102 74 662
Gain (loss) on sale of other real estate owned - - - - -
Gain (loss) on sale of securities - - - - -
Other non-interest income   102         101         94     398         380  
Total non-interest income   161         215         243     695         1,223  
 
OPERATING EXPENSES
Salaries and benefits 887 865 799 3,442 3,058
Premises and fixed assets 173 156 143 627 562
Other   617         637         535     2,390         2,025  
Total operating expenses   1,677         1,658         1,477     6,459         5,645  
 
Income before income taxes 953 944 992 3,587 3,463
Income taxes 69 278 808 811 1,825
                     
NET INCOME $ 884       $ 666       $ 184   $ 2,776       $ 1,638  
 
EARNINGS PER SHARE
Basic earnings per share $ 0.63       $ 0.47       $ 0.15   $ 2.03       $ 1.32  
Diluted earnings per share $ 0.57       $ 0.43       $ 0.13   $ 1.84       $ 1.20  
Average common shares outstanding   1,407,785         1,405,541         1,261,647     1,365,944         1,244,544  

Average common and equivalent shares outstanding

1,541,133 1,551,475 1,382,565 1,508,684 1,363,429
 
PERFORMANCE MEASURES
Return on average assets 1.36 % 1.06 % 0.32 % 1.13 % 0.77 %
Return on average equity 15.99 % 12.37 % 4.11 % 13.51 % 9.63 %
Net interest margin 4.26 % 4.14 % 4.09 % 4.18 % 3.99 %
Efficiency ratio 60.76 % 61.94 % 59.82 % 62.38 % 60.55 %

Jeffrey P. Finck
President & CEO
530.222.1460

Patrick E. Phelan
Chief Financial Officer
530.222.1460

Source: Cornerstone Community Bancorp