The Bank reported net income of $208,000 for the three months ended December 31, 2011 representing an increase of $83,000, or 66%, compared to net income of $125,000 for the same period last year. Diluted earnings per share for the three months ended December 31, 2011 were $0.17 compared to $0.10 for the same period last year. Net income for the year ended December 31, 2011 was $703,000, or $0.57 per diluted share compared to net income of $323,000, or $0.26 per diluted share, for the year ended December 31, 2010.
The return on average assets for the three months ended December 31, 2011 was 0.95% compared to 0.65% for the same period last year. The return on average equity was 8.25% for the three months ended December 31, 2011 compared to 5.38% for the same period last year. For the year ended December 31, 2011, the return on average assets was 0.87% and the return on average equity was 7.34% compared to 0.43% and 3.54%, respectively, for the year ended December 31, 2010.
President and CEO, Jeffrey Finck stated, “We are pleased with our 2011 performance. We opened our new Redding office in the third quarter which contributed to the 20% growth in deposits during the year. We look forward to continued success in 2012.”
Net Interest Income
Net interest income of $975,000 for the quarter ended December 31, 2011 represented an increase of approximately $107,000, or 12%, from $868,000 for the same quarter one year earlier. The net interest margin decreased to 4.64% during the quarter ended December 31, 2011 compared to 4.66% during the same quarter last year. For the year ended December 31, 2011, net interest income was $3,758,000 compared to $3,133,000 for the year ended December 31, 2010, representing an increase of $625,000, or 20%. The net interest margin increased to 4.86% for the year ended December 31, 2011 compared to 4.42% for the year ended December 31, 2010.
Provision for credit losses
The provision for credit losses for the quarter ended December 31, 2011 was $110,000 compared to $160,000 for the quarter ended December 31, 2010. The provision for credit losses for the year ended December 31, 2011 was $259,000 compared to $461,000 for the year ended December 31, 2010.
Non-Interest Income
The Bank’s non-interest income for the quarter ended December 31, 2011 was $84,000 compared to $140,000 for the quarter ended December 31, 2010. For the year ended December 31, 2011, non-interest income was $318,000 compared to $454,000 for the year ended December 31, 2010.
Non-Interest Expense
Non-interest expense was $894,000 for the quarter ended December 31, 2011 compared to $723,000 for the same period one year earlier. For the year ended December 31, 2011, non-interest expense was $3,583,000 compared to $2,802,000 for the year ended December 31, 2010. In April 2011, the Bank decided to exit the indirect auto lending business. As a result of this decision, the Bank incurred $252,000 of incremental charges during the second quarter of 2011.
Income Taxes
During the year ended December 31, 2011, the Bank recognized $470,000 of deferred tax assets which added to the Bank’s net income. The Bank determined that the historical progress in earnings performance met the standards for recognition of these assets in 2011.
Balance Sheet
The Bank had total assets at December 31, 2011 of $91 million, compared to $76 million at December 31, 2010, representing growth of $15 million, or 20%.
Total loans outstanding at December 31, 2011, net of unearned income, were $65 million compared to $55 million at December 31, 2010, representing an increase of $9 million, or 17%.
Total deposits were $81 million at December 31, 2011 compared to total deposits of $67 million at December 31, 2010, representing an increase of $14 million, or 20%.
Credit Quality
The allowance for loan losses was $1,270,000, or 1.97% of total loans at December 31, 2011, compared to $1,104,000, or 2.00% of total loans, at December 31, 2010. Nonperforming assets at December 31, 2011 were $185,000 compared to $232,000 at December 31, 2010.
The bank recognized $93,000 in net loan charge-offs during the year ended December 31, 2011, representing 0.16% of average loans.
Capital Adequacy
At December 31, 2011, shareholders’ equity totaled $10.2 million compared to $9.0 million at December 31, 2010. At December 31, 2011, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.52%, 13.27% and 10.89%, respectively, all exceeding the regulatory standards for “well-capitalized” institutions of 10.00%, 6.00%, 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
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by that Act. Forward-looking statements describe future plans, strategies and expectations. Forward-looking statements are based on currently available information, expectations, assumptions, projections, and management’s judgment about the Bank, the banking industry and general economic conditions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.
Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this press release. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
| CORNERSTONE COMMUNITY BANK | ||||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
| 12/31/11 | 09/30/11 | 06/30/11 | 03/31/11 | 12/31/10 | ||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||
| Cash and due from banks | $ | 1,957 | $ | 1,944 | $ | 1,542 | $ | 1,448 | $ | 1,552 | ||||||||||||||||
| Federal funds sold | - | - | - | - | - | |||||||||||||||||||||
| Interest-bearing deposits | 445 | 3,790 | 1,945 | 4,381 | 1,535 | |||||||||||||||||||||
| Investment securities | 22,173 | 13,652 | 14,496 | 14,677 | 16,465 | |||||||||||||||||||||
| Loans held for sale | - | - | - | - | - | |||||||||||||||||||||
| Loans, net of unearned income | 64,504 | 60,595 | 57,980 | 56,800 | 55,248 | |||||||||||||||||||||
| Allowance for loan losses | (1,270 | ) | (1,180 | ) | (1,140 | ) | (1,099 | ) | (1,104 | ) | ||||||||||||||||
| Loans, net | 63,234 | 59,415 | 56,840 | 55,701 | 54,144 | |||||||||||||||||||||
| Premises and equipment, net | 1,226 | 1,105 | 1,067 | 1,042 | 777 | |||||||||||||||||||||
| Other assets | 2,312 | 1,917 | 2,014 | 1,732 | 1,855 | |||||||||||||||||||||
| Total assets | $ | 91,347 | $ | 81,823 | $ | 77,904 | $ | 78,981 | $ | 76,328 | ||||||||||||||||
| LIABILITIES | ||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||
| Demand noninterest-bearing | $ | 11,833 | $ | 9,995 | $ | 8,256 | $ | 8,075 | $ | 10,169 | ||||||||||||||||
| Demand interest-bearing | 12,928 | 9,013 | 7,145 | 6,558 | 7,416 | |||||||||||||||||||||
| Money market and savings | 32,322 | 33,393 | 33,833 | 37,385 | 31,429 | |||||||||||||||||||||
| Time deposits of less than $100,000 | 8,841 | 8,376 | 9,088 | 9,377 | 7,717 | |||||||||||||||||||||
| Time deposits of $100,000 or more | 14,718 | 10,449 | 9,433 | 8,158 | 10,309 | |||||||||||||||||||||
| Total deposits | 80,642 | 71,226 | 67,755 | 69,553 | 67,040 | |||||||||||||||||||||
| Other liabilities | 535 | 577 | 492 | 286 | 301 | |||||||||||||||||||||
| Total liabilities | 81,177 | 71,803 | 68,247 | 69,839 | 67,341 | |||||||||||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||
| Common stock | 11,959 | 11,959 | 11,959 | 11,959 | 11,959 | |||||||||||||||||||||
| Additional paid-in capital | 685 | 656 | 627 | 599 | 570 | |||||||||||||||||||||
| Accumulated deficit | (2,650 | ) | (2,858 | ) | (3,035 | ) | (3,224 | ) | (3,353 | ) | ||||||||||||||||
| Accumulated other comprehensive income (loss) | 176 | 263 | 106 | (192 | ) | (189 | ) | |||||||||||||||||||
| Total shareholders’ equity | 10,170 | 10,020 | 9,657 | 9,142 | 8,987 | |||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 91,347 | $ | 81,823 | $ | 77,904 | $ | 78,981 | $ | 76,328 | ||||||||||||||||
| CAPITAL ADEQUACY | ||||||||||||||||||||||||||
| Tier I leverage ratio | 10.89 | % | 11.87 | % | 11.65 | % | 12.06 | % | 11.85 | % | ||||||||||||||||
| Tier I risk-based capital ratio | 13.27 | % | 14.11 | % | 14.23 | % | 14.69 | % | 14.80 | % | ||||||||||||||||
| Total risk-based capital ratio | 14.52 | % | 15.36 | % | 15.49 | % | 15.95 | % | 16.05 | % | ||||||||||||||||
| Total equity / total assets | 11.13 | % | 12.25 | % | 12.40 | % | 11.57 | % | 11.77 | % | ||||||||||||||||
| Book value per share | $ | 8.48 | $ | 8.35 | $ | 8.05 | $ | 7.62 | $ | 7.49 | ||||||||||||||||
| CORNERSTONE COMMUNITY BANK | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||||||||||
| 12/31/11 | 09/30/11 | 12/31/10 | 12/31/11 | 12/31/10 | |||||||||||||||||||||||||
| INTEREST INCOME | |||||||||||||||||||||||||||||
| Loans | $ | 1,014 | $ | 1,006 | $ | 944 | $ | 3,920 | $ | 3,507 | |||||||||||||||||||
| Federal funds sold | - | - | - | - | - | ||||||||||||||||||||||||
| Investment securities | 126 | 117 | 92 | 487 | 361 | ||||||||||||||||||||||||
| Other | 2 | 2 | 5 | 7 | 25 | ||||||||||||||||||||||||
| Total interest income | 1,142 | 1,125 | 1,041 | 4,414 | 3,893 | ||||||||||||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Interest-bearing demand | 7 | 4 | 7 | 18 | 24 | ||||||||||||||||||||||||
| Money market and savings | 91 | 92 | 91 | 380 | 341 | ||||||||||||||||||||||||
| Time deposits | 69 | 64 | 75 | 257 | 394 | ||||||||||||||||||||||||
| Other | - | 1 | - | 1 | 1 | ||||||||||||||||||||||||
| Total interest expense | 167 | 161 | 173 | 656 | 760 | ||||||||||||||||||||||||
| Net interest income | 975 | 964 | 868 | 3,758 | 3,133 | ||||||||||||||||||||||||
| Provision for credit losses | 110 | 60 | 160 | 259 | 461 | ||||||||||||||||||||||||
| Net interest income after provision | |||||||||||||||||||||||||||||
| for credit losses | 865 | 904 | 708 | 3,499 | 2,672 | ||||||||||||||||||||||||
| NON-INTEREST INCOME | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | 23 | 23 | 17 | 84 | 86 | ||||||||||||||||||||||||
| Gain on sale of SBA loans | - | - | - | 37 | 11 | ||||||||||||||||||||||||
| Gain on sale of securities | - | 37 | 97 | 37 | 254 | ||||||||||||||||||||||||
| Other non-interest income | 61 | 50 | 26 | 160 | 103 | ||||||||||||||||||||||||
| Total non-interest income | 84 | 110 | 140 | 318 | 454 | ||||||||||||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||||||||||||||
| Salaries and benefits | 466 | 445 | 365 | 1,935 | 1,392 | ||||||||||||||||||||||||
| Premises and fixed assets | 109 | 108 | 75 | 403 | 287 | ||||||||||||||||||||||||
| Other | 319 | 317 | 283 | 1,245 | 1,123 | ||||||||||||||||||||||||
| Total operating expenses | 894 | 870 | 723 | 3,583 | 2,802 | ||||||||||||||||||||||||
| Income before income taxes | 55 | 144 | 125 | 234 | 324 | ||||||||||||||||||||||||
| Income taxes | (153 | ) | (33 | ) | - | (469 | ) | 1 | |||||||||||||||||||||
| NET INCOME | $ | 208 | $ | 177 | $ | 125 | $ | 703 | $ | 323 | |||||||||||||||||||
| EARNINGS PER SHARE | |||||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.17 | $ | 0.15 | $ | 0.10 | $ | 0.59 | $ | 0.27 | |||||||||||||||||||
| Diluted earnings per share | $ | 0.17 | $ | 0.15 | $ | 0.10 | $ | 0.57 | $ | 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 | 1,200,000 | 1,218,056 | 1,280,289 | 1,224,701 | 1,258,183 | ||||||||||||||||||||||||
| PERFORMANCE MEASURES | |||||||||||||||||||||||||||||
| Return on average assets | 0.95 | % | 0.89 | % | 0.65 | % | 0.87 | % | 0.43 | % | |||||||||||||||||||
| Return on average equity | 8.25 | % | 7.20 | % | 5.38 | % | 7.34 | % | 3.54 | % | |||||||||||||||||||
| Net interest margin | 4.64 | % | 5.04 | % | 4.66 | % | 4.86 | % | 4.42 | % | |||||||||||||||||||
| Efficiency ratio | 84.42 | % | 81.01 | % | 71.73 | % | 87.90 | % | 78.12 | % | |||||||||||||||||||
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