Cornerstone Community Bancorp Reports Financial Results For the Second Quarter Ended June 30, 2022

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07/21/2022 - 02:40 PM

RED BLUFF, Calif.--(BUSINESS WIRE)-- Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the second quarter ended June 30, 2022.

The Company reported net income of $1,706,000 for the three months ended June 30, 2022 compared to net income of $1,816,000 for the same period last year. Diluted earnings per share were $1.12 for the three months ended June 30, 2022 compared to $1.20 for the same period last year.

The return on average assets for the three months ended June 30, 2022 was 1.18% and the return on average equity was 20.33%. The tax-equivalent net interest margin was 3.32% for the three months ended June 30, 2022 compared to 3.33% for the same period last year and the efficiency ratio was 49.80% for the three months ended June 30, 2022 compared to 42.68% for the same period last year.

For the six months ended June 30, 2022, the Company reported record net income of $3,381,000 compared to net income of $3,863,000 for the same period last year. Diluted earnings per share were $2.21 for the six months ended June 30, 2022 compared to $2.58 for the same period last year.

The return on average assets for the six months ended June 30, 2022 was 1.17% and the return on average equity was 19.23%.

President and CEO, Matt Moseley stated, “We produced solid returns in the second quarter even with the added expenses involved with opening our Anderson branch earlier this year and adding staff in some key positions in order to create the infrastructure needed for the bank’s continued growth.”

Net Interest Income

Net interest income increased to $4,605,000 for the quarter ended June 30, 2022 compared to $4,239,000 for the same quarter last year. For the six months ended June 30, 2022, net interest income increased to $8,955,000 compared to $8,456,000 for the same period last year.

Provision for credit losses

Provision for credit losses were $55,000 for the quarter ended June 30, 2022 compared to $100,000 for the same quarter last year. For the six months ended June 30, 2022, the Company recorded a $73,000 provision for credit losses compared to $500,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended June 30, 2022 was $266,000 compared to $377,000 for the quarter ended June 30, 2021. For the six months ended June 30, 2022, non-interest income was $530,000 compared to $1,254,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $2,426,000 for the quarter ended June 30, 2022 compared to $1,970,000 for the same period last year. For the six months ended June 30, 2022, non-interest expense was $4,669,000 compared to $3,783,000 for the same period last year.

Balance Sheet

Total loans, net of unearned income, at June 30, 2022 were $399.2 million compared to $390.7 million at June 30, 2021.

Total deposits were $539.6 million at June 30, 2022 compared to total deposits of $473.3 million at June 30, 2021.

Credit Quality

The allowance for loan losses was $5,132,000, or 1.29% of loans, net of unearned income, at June 30, 2022, compared to $4,509,000, or 1.15% of loans, net of unearned income, at June 30, 2021. There were no nonperforming assets at June 30, 2022 and June 30, 2021.

Capital

At June 30, 2022, shareholders’ equity totaled $31.7 million compared to $33.8 million at June 30, 2021. At June 30, 2022, the Company's book value per common share was $21.51 compared to $22.93 at March 31, 2022 and $23.22 at June 30, 2021. During the six months ended June 30, 2022, increasing interest rates resulted in a decline in the fair value of available for sale investment securities. This impact is reflected in the decline in accumulated other comprehensive income (AOCI) to ($9,805,000) at June 30, 2022, compared to ($5,995,000) at March 31, 2022 and $22,000 at June 30, 2021. Excluding AOCI, book value increased to $28.16 at June 30, 2022, compared to $27.00 at March 31, 2022 and $23.21 at June 30, 2021.

AOCI has no effect on Cornerstone Community Bank’s (the Bank) regulatory capital ratios as the Bank opted to exclude it from regulatory capital calculations. At June 30, 2022, the Bank’s total risk-based capital ratio was 13.00% and its tier 1 capital to risk weighted assets ratio was 11.80%. The Bank remains well capitalized under the regulatory framework for prompt corrective action.

About Cornerstone Community Bancorp

Cornerstone Community Bancorp, a bank holding company headquartered in Red Bluff, California, serves the Red Bluff, Redding and Anderson communities through its wholly-owned subsidiary, Cornerstone Community Bank with a headquarters office in Red Bluff, two banking offices in Redding and one in Anderson. 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 Coronavirus Aid, Relief and Economic Security Act of 2022), 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)

	06/30/22			03/31/22			12/31/21			09/30/21			06/30/21

ASSETS
Cash and due from banks	$	5,230		$	4,175		$	4,552		$	4,765		$	5,450
Federal funds sold		121			121			121			2,600			2,256
Interest-bearing deposits		48,277			73,629			77,933			24,636			28,549
Investment securities		102,692			99,748			108,253			110,470			75,258
Loans held for sale		-			-			-			-			-
Loans, net of unearned income		399,156			375,369			387,374			388,532			390,748
Allowance for loan losses		(5,132	)		(5,077	)		(5,059	)		(4,909	)		(4,509	)
Loans, net		394,024			370,292			382,315			383,623			386,239
Premises and equipment, net		14,691			14,757			14,784			13,567			13,013
Other assets		20,588			16,930			15,622			14,863			14,972
Total assets	$	585,623		$	579,652		$	603,580		$	554,524		$	525,737

LIABILITIES
Deposits:
Demand noninterest-bearing	$	130,249		$	131,136		$	174,282		$	141,734		$	126,107
Demand interest-bearing		131,623			126,331			131,368			131,964			126,724
Money market and savings		201,106			196,653			163,946			150,149			150,086
Time deposits		76,576			78,167			78,111			76,291			70,386
Total deposits		539,554			532,287			547,707			500,138			473,303
Borrowings and other obligations		-			-			5,000			5,000			5,000
Subordinated debentures		11,732			11,726			11,720			11,715			11,709
Interest payable and other liabilities		2,631			1,899			2,134			2,151			1,933
Total liabilities		553,917			545,912			566,561			519,004			491,945

SHAREHOLDERS' EQUITY
Common stock		15,079			15,009			14,913			14,814			14,771
Retained Earnings		26,432			24,726			23,051			21,084			18,999
Accumulated other comprehensive income (loss)		(9,805	)		(5,995	)		(945	)		(378	)		22
Total shareholders' equity		31,706			33,740			37,019			35,520			33,792
Total liabilities and shareholders' equity	$	585,623		$	579,652		$	603,580		$	554,524		$	525,737

Total equity / total assets		5.41	%		5.82	%		6.13	%		6.41	%		6.43	%
Book value per share	$	21.51		$	22.93		$	25.31		$	24.37		$	23.22
Shares outstanding		1,474,091			1,471,591			1,462,591			1,457,591			1,455,091

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)

	Three months ended									Six months ended
	06/30/22			03/31/22			06/30/21			06/30/22			06/30/21

INTEREST INCOME
Loans	$	4,485		$	4,348		$	4,379		$	8,833		$	8,830
Federal funds sold		-			-			1			-			3
Investment securities		464			371			217			835			379
Other		146			58			53			204			85
Total interest income		5,095			4,777			4,650			9,872			9,297

INTEREST EXPENSE
Deposits:
Interest-bearing demand		64			46			45			110			92
Money market and savings		147			117			93			264			180
Time deposits		131			107			114			238			238
Other		148			157			159			305			331
Total interest expense		490			427			411			917			841

Net interest income		4,605			4,350			4,239			8,955			8,456
Provision for credit losses		55			18			100			73			500
Net interest income after provision for credit losses		4,550			4,332			4,139			8,882			7,956

NON-INTEREST INCOME
Service charges on deposit accounts		62			71			59			133			117
Gain on sale of loans		-			-			135			-			835
Gain (loss) on sale of other real estate owned		-			-			-			-			-
Gain (loss) on sale of securities		-			-			-			-			(45	)
Other non-interest income		204			193			183			397			347
Total non-interest income		266			264			377			530			1,254

OPERATING EXPENSES
Salaries and benefits		1,219			1,146			968			2,365			1,647
Premises and fixed assets		194			191			154			385			332
Other		1,013			906			848			1,919			1,804
Total operating expenses		2,426			2,243			1,970			4,669			3,783

Income before income taxes		2,390			2,353			2,546			4,743			5,427
Income taxes		684			678			730			1,362			1,564

NET INCOME	$	1,706		$	1,675		$	1,816		$	3,381		$	3,863

EARNINGS PER SHARE
Basic earnings per share	$	1.16		$	1.14		$	1.25		$	2.30		$	2.66
Diluted earnings per share	$	1.12		$	1.09		$	1.20		$	2.21		$	2.58
Average common shares outstanding		1,472,168			1,469,258			1,453,915			1,470,721			1,450,856
Average common and equivalent shares outstanding		1,529,540			1,532,163			1,510,621			1,530,890			1,497,565

PERFORMANCE MEASURES
Return on average assets		1.18	%		1.15	%		1.35	%		1.17	%		1.45	%
Return on average equity		20.33	%		18.22	%		22.17	%		19.23	%		24.24	%
Tax-equivalent net interest margin		3.32	%		3.17	%		3.33	%		3.25	%		3.38	%
Efficiency ratio		49.80	%		48.61	%		42.68	%		49.23	%		38.96	%