CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank, (OTCBB:CRSB), announced today its financial results for the second quarter ended June 30, 2012.

The Bank reported net income of $253,000 for the three months ended June 30, 2012 representing an increase of $65,000, or 35%, compared to net income of $188,000 for the same period last year. Diluted earnings per share for the three months ended June 30, 2012 were $0.20 compared to $0.15 for the same period last year. Net income for the six months ended June 30, 2012 was $472,000, or $0.37 per diluted share compared to net income of $318,000, or $0.26 per diluted share, for the first six months of 2011.

The return on average assets for the three months ended June 30, 2012 was 1.00% compared to 0.95% for the same period last year. The return on average equity was 9.47% for the three months ended June 30, 2012 compared to 8.04% for the same period last year. For the six months ended June 30, 2012, the return on average assets was 0.96% and the return on average equity was 8.99% compared to 0.81% and 6.92%, respectively, for the first six months of 2011.

President and CEO, Jeffrey Finck stated, "The second quarter was our twelfth consecutive profitable quarter. The new Redding branch is off to a solid start as it significantly contributed to the Bank’s 32% growth in total assets year-over-year."

Net Interest Income

Net interest income of $1,182,000 for the quarter ended June 30, 2012 represented an increase of $259,000, or 28%, from $923,000 for the same quarter one year earlier. The net interest margin increased to 4.90% during the quarter ended June 30, 2012 compared to 4.87% during the same quarter last year. For the six months ended June 30, 2012, net interest income was $2,177,000 compared to $1,819,000 for the first six months of 2011 representing an increase of $358,000, or 20%. The net interest margin decreased to 4.68% for the first six months of 2012 compared to 4.89% during the same period last year.

Provision for credit losses

The provision for credit losses for the quarter ended June 30, 2012 was $135,000 compared to $61,000 for the quarter ended June 30, 2011. The provision for credit losses for the six months ended June 30, 2012 was $135,000 compared to $89,000 for the six months ended June 30, 2011.

Non-Interest Income

The Bank’s non-interest income for the quarter ended June 30, 2012 was $122,000 compared to $61,000 for the quarter ended June 30, 2011. For the six months ended June 30, 2012, non-interest income was $237,000 compared to $124,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $940,000 for the quarter ended June 30, 2012 compared to $1,018,000 for the same period one year earlier. Non-interest expense for the quarter ended June 30, 201l included a $252,000 charge related to the exit from the indirect auto lending business. For the six months ended June 30, 2012, non-interest expense was $1,855,000 compared to $1,819,000 for the same period last year, representing an increase of $36,000, or 2%.

Income Taxes

During the quarter ended June 30, 2012, the Bank recognized an income tax benefit of $24,000 compared to $283,000 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 June 30, 2012 of $102.8 million, compared to $77.9 million at June 30, 2011, representing growth of $24.9 million, or 32%.

Total loans outstanding at June 30, 2012, net of unearned income, were $68.5 million compared to $58.0 million at June 30, 2011, representing an increase of $10.5 million, or 18%.

Total deposits were $91.4 million at June 30, 2012 compared to total deposits of $67.8 million at June 30, 2011, representing an increase of $23.6 million, or 35%.

Credit Quality

The allowance for loan losses was $1,325,000, or 1.93% of total loans at June 30, 2012, compared to $1,140,000, or 1.97% of total loans, at June 30, 2011. Nonperforming assets at June 30, 2012 were $85,000 compared to $220,000 at June 30, 2011.

The bank recognized $80,000 in net loan charge-offs during the six months ended June 30, 2012, representing 0.25% of average loans on an annualized basis.

Capital Adequacy

At June 30, 2012, shareholders’ equity totaled $10.9 million compared to $9.7 million at June 30, 2011. At June 30, 2012, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.29%, 13.03% and 10.26%, 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)              

 

  06/30/12       03/31/12       12/31/11       09/30/11       06/30/11     ASSETS Cash and due from banks $ 3,507 $ 3,542 $ 1,957 $ 1,944 $ 1,542 Federal funds sold - - - - - Interest-bearing deposits 2,200 615 445 3,790 1,945 Investment securities 26,129 27,132 22,173 13,652 14,496 Loans held for sale 336 379 - - - Loans, net of unearned income 68,459 63,433 64,504 60,595 57,980 Allowance for loan losses   (1,325 )     (1,246 )     (1,270 )     (1,180 )     (1,140 ) Loans, net 67,134 62,187 63,234 59,415 56,840 Premises and equipment, net 1,165 1,172 1,226 1,105 1,067 Other assets   2,354       2,291       2,312       1,917       2,014   Total assets $ 102,825     $ 97,318     $ 91,347     $ 81,823     $ 77,904     LIABILITIES Deposits: Demand noninterest-bearing $ 12,648 $ 12,789 $ 11,833 $ 9,995 $ 8,256 Demand interest-bearing 13,100 11,916 12,928 9,013 7,145 Money market and savings 42,072 37,762 32,322 33,393 33,833 Time deposits of less than $100,000 8,949 7,851 8,841 8,376 9,088 Time deposits of $100,000 or more   14,628       15,076       14,718       10,449       9,433   Total deposits 91,397 85,394 80,642 71,226 67,755 Other borrowings - 1,000 - - - Other liabilities   557       529       535       577       492   Total liabilities   91,954       86,923       81,177       71,803       68,247     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 741 714 685 656 627 Accumulated deficit (2,178 ) (2,431 ) (2,650 ) (2,858 ) (3,035 ) Accumulated other comprehensive income (loss)   349       153       176       263       106   Total shareholders' equity   10,871       10,395       10,170       10,020       9,657   Total liabilities and shareholders' equity $ 102,825     $ 97,318     $ 91,347     $ 81,823     $ 77,904     CAPITAL ADEQUACY Tier I leverage ratio 10.26 % 10.64 % 10.89 % 11.87 % 11.65 % Tier I risk-based capital ratio 13.03 % 13.51 % 13.27 % 14.11 % 14.23 % Total risk-based capital ratio 14.29 % 14.77 % 14.52 % 15.36 % 15.49 % Total equity / total assets 10.57 % 10.68 % 11.13 % 12.25 % 12.40 % Book value per share $ 9.06 $ 8.66 $ 8.48 $ 8.35 $ 8.05     CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)                 Three months ended Six months ended   06/30/12       03/31/12       06/30/11     06/30/12       06/30/11     INTEREST INCOME Loans $ 1,180 $ 990 $ 963 $ 2,170 $ 1,900 Federal funds sold - - - - - Investment securities 181 180 124 361 244 Other   3       2       2     5       3   Total interest income   1,364       1,172       1,089     2,536       2,147     INTEREST EXPENSE Deposits: Interest-bearing demand 7 6 4 13 7 Money market and savings 100 93 98 193 197 Time deposits 75 78 64 153 124 Other   -       -       -     -       -   Total interest expense   182       177       166     359       328     Net interest income 1,182 995 923 2,177 1,819 Provision for credit losses   135       -       61     135       89  

Net interest income after provision for credit losses

  1,047       995       862     2,042       1,730     NON-INTEREST INCOME Service charges on deposit accounts 29 23 20 52 38 Gain on sale of SBA loans - - 20 - 37 Gain on sale of securities - - - - - Other non-interest income   93       92       21     185       49   Total non-interest income   122       115       61     237       124     OPERATING EXPENSES Salaries and benefits 499 478 628 977 1,024 Premises and fixed assets 119 114 96 233 186 Other   322       323       294     645       609   Total operating expenses   940       915       1,018     1,855       1,819     Income before income taxes 229 195 (95 ) 424 35 Income taxes (24 ) (24 ) (283 ) (48 ) (283 )                 NET INCOME $ 253     $ 219     $ 188   $ 472     $ 318     EARNINGS PER SHARE Basic earnings per share $ 0.21     $ 0.18     $ 0.16   $ 0.39     $ 0.27   Diluted earnings per share $ 0.20     $ 0.17     $ 0.15   $ 0.37     $ 0.26   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

  1,278,307       1,258,330       1,244,141     1,268,494       1,238,466     PERFORMANCE MEASURES Return on average assets 1.00 % 0.93 % 0.95 % 0.96 % 0.81 % Return on average equity 9.47 % 8.49 % 8.04 % 8.99 % 6.92 % Net interest margin 4.90 % 4.44 % 4.87 % 4.68 % 4.89 % Efficiency ratio 72.09 % 82.43 % 103.46 % 76.84 % 93.62 %