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Cornerstone Community Bancorp Reports Financial Results for the Second Quarter Ended June 30, 2020

RED BLUFF, Calif.–(BUSINESS WIRE)–Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the second quarter ended June 30, 2020.

The Company reported net income of $1,284,000 for the three months ended June 30, 2020 compared to net income of $911,000 for the same period last year. Diluted earnings per share were $0.84 for the three months ended June 30, 2020 compared to $0.60 for the same period last year.

The return on average assets for the three months ended June 30, 2020 was 1.18% and the return on average equity was 18.92%. The net interest margin was 3.06% for the three months ended June 30, 2020 compared to 4.36% for the same period last year and the efficiency ratio declined to 42.00% for the three months ended June 30, 2020 compared to 56.05% for the same period last year.

For the six months ended June 30, 2020, the Company reported net income of $1,331,000 compared to net income of $1,696,000 for the same period last year. Diluted earnings per share were $0.87 for the six months ended June 30, 2020 compared to $1.12 for the same period last year.

The return on average assets for the six months ended June 30, 2020 was 0.72% and the return on average equity was 9.90%.

Net income for the six months ended June 30, 2020 reflects a $1.6 million provision for credit losses related to the economic uncertainties of the COVID-19 pandemic.

President and CEO, Jeff Finck stated, “We’ve funded $82 million in Small Business Administration Paycheck Protection Program loans, with an average loan size of $129,000, to 637 businesses, positively impacting over 10,000 employees throughout the greater Redding and Red Bluff areas. We’ve also helped 145 of our customers with loan payment relief requests.”

Net Interest Income

Net interest income increased to $3,153,000 for the quarter ended June 30, 2020 compared to $2,691,000 for the same quarter last year. For the six months ended June 30, 2020, net interest income increased to $5,995,000 compared to $5,320,000 for the same period last year.

The Company’s net interest margin was 3.06% for the second quarter of 2020, down 103 basis points from 4.09% for the first quarter of 2020 primarily due to the decrease in short and long term interest rates that occurred in the first quarter and the increase in the percentage of interest earning assets invested in interest-bearing deposits.

Provision for credit losses

The Company recorded a $150,000 provision for credit losses for the quarter ended June 30, 2020 compared to $110,000 for the same quarter last year. For the six months ended June 30, 2020, the Company recorded a $1,600,000 provision for credit losses compared to $200,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended June 30, 2020 was $204,000 compared to $476,000 for the quarter ended June 30, 2019. For the six months ended June 30, 2020, non-interest income was $598,000 compared to $801,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,410,000 for the quarter ended June 30, 2020 compared to $1,775,000 for the same period last year. For the six months ended June 30, 2020, non-interest expense was $3,308,000 compared to $3,531,000 for the same period last year. The decreases in non-interest expense were primarily due to lower salaries and benefits expense from Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”)-related deferred loan origination costs.

Income Taxes

The provision for income taxes for the six months ended June 30, 2020 was impacted by tax benefits from the exercise of stock options.

Balance Sheet

Interest-bearing deposits increased $65.1 million at June 30, 2020 compared to June 30, 2019. The increase was primarily due to increases in SBA PPP borrowers’ deposit accounts and the Company’s participation in the Federal Reserve’s Paycheck Protection Program Liquidity Facility.

Total loans, net of unearned income at June 30, 2020 were $333.6 million compared to $222.2 million at June 30, 2019. The increase was due, in large part, to the $82 million in SBA PPP loans originated.

Total deposits were $341.4 million at June 30, 2020 compared to total deposits of $256.2 million at June 30, 2019. The increase was primarily due to increases in deposits from SBA PPP borrowers.

Borrowings and other obligations were $83.1 million at June 30, 2020 compared to 3.0 million at June 30, 2019. The increase was primarily due to the Company’s participation in the Federal Reserve’s Paycheck Protection Program Liquidity Facility.

Credit Quality

The allowance for loan losses was $4,009,000, or 1.20% of loans, net of unearned income at June 30, 2020, compared to $2,345,000, or 1.06% of loans, net of unearned income at June 30, 2019. There were no nonperforming assets at June 30, 2020 and $99,000 at June 30, 2019.

Capital

At June 30, 2020, shareholders’ equity totaled $27.6 million compared to $24.0 million at June 30, 2019. Book value per share was $18.50 per share at June 30, 2020 compared to $16.71 per share at June 30, 2019.

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 release may contain certain forward-looking statements that are based on management’s current expectations regarding economic, legislative, and regulatory issues that may impact Cornerstone Community Bancorp’s earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, natural disasters (such as wildfires and earthquakes), pandemics such as COVID-19 and the economic impact caused directly by the disease and by government responses thereto, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017 and the Coronavirus Aid, Relief and Economic Security Act of 2020), interruptions of utility service in our markets for sustained periods, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting Cornerstone Community Bancorp’s operations, pricing, products and services. 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)
 
 
 
06/30/20 03/31/20 12/31/19 09/30/19 06/30/19
 
ASSETS
Cash and due from banks

$

6,350

 

$

4,965

 

$

6,038

 

$

9,271

 

$

11,122

 

Federal funds sold

 

10,402

 

 

17,385

 

 

4,575

 

 

21,117

 

 

13,520

 

Interest-bearing deposits

 

73,310

 

 

18,928

 

 

2,825

 

 

15,779

 

 

8,166

 

Investment securities

 

16,173

 

 

13,144

 

 

13,355

 

 

5,577

 

 

7,010

 

Loans held for sale

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income

 

333,620

 

 

250,353

 

 

241,662

 

 

233,342

 

 

222,199

 

Allowance for loan losses

 

(4,009

)

 

(3,859

)

 

(2,409

)

 

(2,317

)

 

(2,345

)

Loans, net

 

329,611

 

 

246,494

 

 

239,253

 

 

231,025

 

 

219,854

 

Premises and equipment, net

 

11,095

 

 

11,180

 

 

11,216

 

 

11,297

 

 

11,316

 

Other assets

 

11,882

 

 

11,330

 

 

11,093

 

 

10,428

 

 

18,359

 

Total assets

$

458,823

 

$

323,426

 

$

288,355

 

$

304,494

 

$

289,347

 

 
LIABILITIES
Deposits:
Demand noninterest-bearing

$

96,395

 

$

58,357

 

$

52,352

 

$

59,432

 

$

54,439

 

Demand interest-bearing

 

90,633

 

 

51,608

 

 

52,058

 

 

52,024

 

 

48,839

 

Money market and savings

 

79,550

 

 

77,273

 

 

74,560

 

 

81,926

 

 

79,614

 

Time deposits of less than $100,000

 

22,925

 

 

26,503

 

 

18,395

 

 

18,957

 

 

19,331

 

Time deposits of $100,000 or more

 

51,919

 

 

54,274

 

 

56,016

 

 

57,854

 

 

53,940

 

Total deposits

 

341,422

 

 

268,015

 

 

253,381

 

 

270,193

 

 

256,163

 

Borrowings and other obligations

 

83,136

 

 

23,000

 

 

3,000

 

 

3,000

 

 

3,000

 

Subordinated debentures

 

4,920

 

 

4,917

 

 

4,914

 

 

4,911

 

 

4,908

 

Interest payable and other liabilities

 

1,765

 

 

1,382

 

 

1,235

 

 

1,543

 

 

1,325

 

Total liabilities

 

431,243

 

 

297,314

 

 

262,530

 

 

279,647

 

 

265,396

 

 
SHAREHOLDERS’ EQUITY
Common stock

 

15,440

 

 

15,336

 

 

15,264

 

 

15,146

 

 

15,122

 

Retained Earnings

 

11,841

 

 

10,557

 

 

10,510

 

 

9,626

 

 

8,753

 

Accumulated other comprehensive income (loss)

 

299

 

 

219

 

 

51

 

 

75

 

 

76

 

Total shareholders’ equity

 

27,580

 

 

26,112

 

 

25,825

 

 

24,847

 

 

23,951

 

Total liabilities and shareholders’ equity

$

458,823

 

$

323,426

 

$

288,355

 

$

304,494

 

$

289,347

 

 
Total equity / total assets

 

6.01

%

 

8.07

%

 

8.96

%

 

8.16

%

 

8.28

%

Book value per share

$

18.50

 

$

17.63

 

$

17.79

 

$

17.34

 

$

16.71

 

Shares outstanding

 

1,491,041

 

 

1,481,041

 

 

1,452,041

 

 

1,433,041

 

 

1,433,041

 

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
Three months ended Six months ended
06/30/20 03/31/20 06/30/19 06/30/20 06/30/19
INTEREST INCOME
Loans

$

3,612

 

$

3,356

 

$

3,210

 

$

6,968

 

$

6,340

 

Federal funds sold

 

4

 

 

17

 

 

60

 

 

21

 

 

74

 

Investment securities

 

82

 

 

90

 

 

55

 

 

172

 

 

118

 

Other

 

45

 

 

45

 

 

80

 

 

90

 

 

201

 

Total interest income

 

3,743

 

 

3,508

 

 

3,405

 

 

7,251

 

 

6,733

 

 
INTEREST EXPENSE
Deposits:
Interest-bearing demand

 

40

 

 

35

 

 

27

 

 

75

 

 

49

 

Money market and savings

 

119

 

 

186

 

 

206

 

 

305

 

 

422

 

Time deposits

 

260

 

 

331

 

 

373

 

 

591

 

 

717

 

Other

 

171

 

 

114

 

 

108

 

 

285

 

 

225

 

Total interest expense

 

590

 

 

666

 

 

714

 

 

1,256

 

 

1,413

 

Net interest income

 

3,153

 

 

2,842

 

 

2,691

 

 

5,995

 

 

5,320

 

Provision for credit losses

 

150

 

 

1,450

 

 

110

 

 

1,600

 

 

200

 

Net interest income after provision
for credit losses

 

3,003

 

 

1,392

 

 

2,581

 

 

4,395

 

 

5,120

 

 
NON-INTEREST INCOME
Service charges on deposit accounts

 

46

 

 

72

 

 

85

 

 

118

 

 

130

 

Gain on sale of loans

 

 

 

186

 

 

268

 

 

186

 

 

417

 

Gain (loss) on sale of other real estate owned

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of securities

 

 

 

 

 

 

 

 

 

 

Other non-interest income

 

158

 

 

136

 

 

123

 

 

294

 

 

254

 

Total non-interest income

 

204

 

 

394

 

 

476

 

 

598

 

 

801

 

 
OPERATING EXPENSES
Salaries and benefits

 

392

 

 

939

 

 

908

 

 

1,331

 

 

1,842

 

Premises and fixed assets

 

257

 

 

252

 

 

210

 

 

509

 

 

392

 

Other

 

761

 

 

707

 

 

657

 

 

1,468

 

 

1,297

 

Total operating expenses

 

1,410

 

 

1,898

 

 

1,775

 

 

3,308

 

 

3,531

 

Income before income taxes

 

1,797

 

 

(112

)

 

1,282

 

 

1,685

 

 

2,390

 

Income taxes

 

513

 

 

(159

)

 

371

 

 

354

 

 

694

 

 
NET INCOME

$

1,284

 

$

47

 

$

911

 

$

1,331

 

$

1,696

 

 
EARNINGS PER SHARE
Basic earnings per share

$

0.86

 

$

0.03

 

$

0.64

 

$

0.90

 

$

1.18

 

Diluted earnings per share

$

0.84

 

$

0.03

 

$

0.60

 

$

0.87

 

$

1.12

 

Average common shares outstanding

 

1,485,217

 

 

1,480,668

 

 

1,433,041

 

 

1,482,942

 

 

1,432,627

 

Average common and equivalent
shares outstanding

 

1,523,322

 

 

1,532,685

 

 

1,519,821

 

 

1,528,547

 

 

1,518,216

 

 
PERFORMANCE MEASURES
Return on average assets

 

1.18

%

 

0.06

%

 

1.34

%

 

0.72

%

 

1.26

%

Return on average equity

 

18.92

%

 

0.71

%

 

15.47

%

 

9.90

%

 

14.67

%

Net interest margin

 

3.06

%

 

4.09

%

 

4.36

%

 

3.48

%

 

4.35

%

Efficiency ratio

 

42.00

%

 

58.65

%

 

56.05

%

 

50.17

%

 

57.69

%

 

Contacts

Jeffrey P. Finck

President & CEO

530.222.1460

Patrick E. Phelan

Chief Financial Officer

530.222.1460

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