Cornerstone Community Bancorp Reports Financial Results For the Third Quarter Ended September 30, 2020

RED BLUFF, Calif.--()--Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the third quarter ended September 30, 2020.

The Company reported net income of $1,236,000 for the three months ended September 30, 2020 compared to net income of $872,000 for the same period last year. Diluted earnings per share were $0.81 for the three months ended September 30, 2020 compared to $0.57 for the same period last year.

The return on average assets for the three months ended September 30, 2020 was 1.05% and the return on average equity was 17.36%. The tax-equivalent net interest margin was 2.99% for the three months ended September 30, 2020 compared to 4.15% for the same period last year and the efficiency ratio declined to 52.81% for the three months ended September 30, 2020 compared to 58.13% for the same period last year.

For the nine months ended September 30, 2020, the Company reported net income of $2,567,000 compared to net income of $2,568,000 for the same period last year. Diluted earnings per share were $1.68 for the nine months ended September 30, 2020 compared to $1.69 for the same period last year.

The return on average assets for the nine months ended September 30, 2020 was 0.85% and the return on average equity was 12.49%.

Net income for the nine months ended September 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 had another solid quarter with strong growth in loans and deposits. Credit quality remains excellent with no nonperforming assets.”

Net Interest Income

Net interest income increased to $3,376,000 for the quarter ended September 30, 2020 compared to $2,817,000 for the same quarter last year. For the nine months ended September 30, 2020, net interest income increased to $9,371,000 compared to $8,137,000 for the same period last year.

The Company's tax-equivalent net interest margin was 2.99% for the second quarter of 2020 and 3.28% for the nine months ended September 30, 2020.

Provision for credit losses

There was no provision for credit losses recorded for the quarter ended September 30, 2020 compared to $40,000 for the same quarter last year. For the nine months ended September 30, 2020, the Company recorded a $1,600,000 provision for credit losses compared to $240,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended September 30, 2020 was $296,000 compared to $204,000 for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, non-interest income was $894,000 compared to $1,005,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,939,000 for the quarter ended September 30, 2020 compared to $1,756,000 for the same period last year. For the nine months ended September 30, 2020, non-interest expense was $5,247,000 compared to $5,287,000 for the same period last year.

Income Taxes

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

Balance Sheet

Interest-bearing deposits increased $46.3 million at September 30, 2020 compared to September 30, 2019. Investment securities increased $45.1 million at September 30, 2020 compared to September 30, 2019. Both increases were 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 September 30, 2020 were $342.4 million compared to $233.3 million at September 30, 2019. The increase was due, in large part, to the $82 million in SBA PPP loans originated during the year.

Total deposits were $371.5 million at September 30, 2020 compared to total deposits of $270.2 million at September 30, 2019. The increase was primarily due to increases in deposits from SBA PPP borrowers.

Borrowings and other obligations were $78.1 million at September 30, 2020 compared to 3.0 million at September 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 1.17% of loans, net of unearned income at September 30, 2020, compared to $2,317,000, or 0.99% of loans, net of unearned income at September 30, 2019. There were no nonperforming assets at September 30, 2020 and $32,000 at September 30, 2019.

Capital

At September 30, 2020, shareholders’ equity totaled $28.9 million compared to $24.8 million at September 30, 2019. Book value was $19.38 per share at September 30, 2020 compared to $17.34 per share at September 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)
 
 
 
09/30/20 06/30/20 03/31/20 12/31/19 09/30/19
 
ASSETS
Cash and due from banks

$

5,455

 

$

6,350

 

$

4,965

 

$

6,038

 

$

9,271

 

Federal funds sold

 

5,045

 

 

10,402

 

 

17,385

 

 

4,575

 

 

21,117

 

Interest-bearing deposits

 

62,110

 

 

73,310

 

 

18,928

 

 

2,825

 

 

15,779

 

Investment securities

 

50,699

 

 

16,173

 

 

13,144

 

 

13,355

 

 

5,577

 

Loans held for sale

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loans, net of unearned income

 

342,416

 

 

333,620

 

 

250,353

 

 

241,662

 

 

233,342

 

Allowance for loan losses

 

(4,009

)

 

(4,009

)

 

(3,859

)

 

(2,409

)

 

(2,317

)

Loans, net

 

338,407

 

 

329,611

 

 

246,494

 

 

239,253

 

 

231,025

 

Premises and equipment, net

 

10,992

 

 

11,095

 

 

11,180

 

 

11,216

 

 

11,297

 

Other assets

 

12,577

 

 

11,882

 

 

11,330

 

 

11,093

 

 

10,428

 

Total assets

$

485,285

 

$

458,823

 

$

323,426

 

$

288,355

 

$

304,494

 

 
LIABILITIES
Deposits:
Demand noninterest-bearing

$

103,824

 

$

96,395

 

$

58,357

 

$

52,352

 

$

59,432

 

Demand interest-bearing

 

104,819

 

 

90,633

 

 

51,608

 

 

52,058

 

 

52,024

 

Money market and savings

 

87,035

 

 

79,550

 

 

77,273

 

 

74,560

 

 

81,926

 

Time deposits of less than $100,000

 

21,103

 

 

22,925

 

 

26,503

 

 

18,395

 

 

18,957

 

Time deposits of $100,000 or more

 

54,695

 

 

51,919

 

 

54,274

 

 

56,016

 

 

57,854

 

Total deposits

 

371,476

 

 

341,422

 

 

268,015

 

 

253,381

 

 

270,193

 

Borrowings and other obligations

 

78,136

 

 

83,136

 

 

23,000

 

 

3,000

 

 

3,000

 

Subordinated debentures

 

4,923

 

 

4,920

 

 

4,917

 

 

4,914

 

 

4,911

 

Interest payable and other liabilities

 

1,854

 

 

1,765

 

 

1,382

 

 

1,235

 

 

1,543

 

Total liabilities

 

456,389

 

 

431,243

 

 

297,314

 

 

262,530

 

 

279,647

 

 
SHAREHOLDERS' EQUITY
Common stock

 

15,462

 

 

15,440

 

 

15,336

 

 

15,264

 

 

15,146

 

Retained Earnings

 

13,077

 

 

11,841

 

 

10,557

 

 

10,510

 

 

9,626

 

Accumulated other comprehensive income (loss)

 

357

 

 

299

 

 

219

 

 

51

 

 

75

 

Total shareholders' equity

 

28,896

 

 

27,580

 

 

26,112

 

 

25,825

 

 

24,847

 

Total liabilities and shareholders' equity

$

485,285

 

$

458,823

 

$

323,426

 

$

288,355

 

$

304,494

 

 
Total equity / total assets

 

5.95

%

 

6.01

%

 

8.07

%

 

8.96

%

 

8.16

%

Book value per share

$

19.38

 

$

18.50

 

$

17.63

 

$

17.79

 

$

17.34

 

Shares outstanding

 

1,491,041

 

 

1,491,041

 

 

1,481,041

 

 

1,452,041

 

 

1,433,041

 

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
 
 
 
 
Three months ended Nine months ended
09/30/20 06/30/20 09/30/19 09/30/20 09/30/19
 
INTEREST INCOME
Loans

$

3,695

 

$

3,612

 

$

3,376

 

$

10,663

 

$

9,716

 

Federal funds sold

 

1

 

 

4

 

 

61

 

 

22

 

 

135

 

Investment securities

 

161

 

 

82

 

 

55

 

 

333

 

 

173

 

Other

 

33

 

 

45

 

 

113

 

 

123

 

 

314

 

Total interest income

 

3,890

 

 

3,743

 

 

3,605

 

 

11,141

 

 

10,338

 

 
INTEREST EXPENSE
Deposits:
Interest-bearing demand

 

51

 

 

40

 

 

40

 

 

126

 

 

89

 

Money market and savings

 

79

 

 

119

 

 

243

 

 

384

 

 

665

 

Time deposits

 

198

 

 

260

 

 

397

 

 

789

 

 

1,114

 

Other

 

186

 

 

171

 

 

108

 

 

471

 

 

333

 

Total interest expense

 

514

 

 

590

 

 

788

 

 

1,770

 

 

2,201

 

 
Net interest income

 

3,376

 

 

3,153

 

 

2,817

 

 

9,371

 

 

8,137

 

Provision for credit losses

 

-

 

 

150

 

 

40

 

 

1,600

 

 

240

 

Net interest income after provision for credit losses

 

3,376

 

 

3,003

 

 

2,777

 

 

7,771

 

 

7,897

 

 
NON-INTEREST INCOME
Service charges on deposit accounts

 

49

 

 

46

 

 

64

 

 

167

 

 

194

 

Gain on sale of loans

 

-

 

 

-

 

 

-

 

 

186

 

 

417

 

Gain (loss) on sale of other real estate owned

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain (loss) on sale of securities

 

91

 

 

-

 

 

-

 

 

91

 

 

-

 

Other non-interest income

 

156

 

 

158

 

 

140

 

 

450

 

 

394

 

Total non-interest income

 

296

 

 

204

 

 

204

 

 

894

 

 

1,005

 

 
OPERATING EXPENSES
Salaries and benefits

 

979

 

 

392

 

 

907

 

 

2,310

 

 

2,749

 

Premises and fixed assets

 

200

 

 

257

 

 

228

 

 

709

 

 

620

 

Other

 

760

 

 

761

 

 

621

 

 

2,228

 

 

1,918

 

Total operating expenses

 

1,939

 

 

1,410

 

 

1,756

 

 

5,247

 

 

5,287

 

 
Income before income taxes

 

1,733

 

 

1,797

 

 

1,225

 

 

3,418

 

 

3,615

 

Income taxes

 

497

 

 

513

 

 

353

 

 

851

 

 

1,047

 

 
NET INCOME

$

1,236

 

$

1,284

 

$

872

 

$

2,567

 

$

2,568

 

 
EARNINGS PER SHARE
Basic earnings per share

$

0.83

 

$

0.86

 

$

0.61

 

$

1.73

 

$

1.79

 

Diluted earnings per share

$

0.81

 

$

0.84

 

$

0.57

 

$

1.68

 

$

1.69

 

Average common shares outstanding

 

1,491,041

 

 

1,485,217

 

 

1,433,041

 

 

1,485,661

 

 

1,432,766

 

Average common and equivalent shares outstanding

 

1,522,872

 

 

1,523,322

 

 

1,519,531

 

 

1,526,516

 

 

1,518,688

 

 
PERFORMANCE MEASURES
Return on average assets

 

1.05

%

 

1.18

%

 

1.18

%

 

0.85

%

 

1.23

%

Return on average equity

 

17.36

%

 

18.92

%

 

14.18

%

 

12.49

%

 

14.50

%

Tax-equivalent net interest margin

 

2.99

%

 

3.06

%

 

4.15

%

 

3.28

%

 

4.28

%

Efficiency ratio

 

52.81

%

 

42.00

%

 

58.13

%

 

51.12

%

 

57.83

%

 

Contacts

Jeffrey P. Finck
President & CEO
530.222.1460

Patrick E. Phelan
Chief Financial Officer
530.222.1460

Contacts

Jeffrey P. Finck
President & CEO
530.222.1460

Patrick E. Phelan
Chief Financial Officer
530.222.1460