Business Wire | Oct 21, 2020 04:00PM EDT

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

Oct. 21, 2020

RED BLUFF, Calif.--(BUSINESS WIRE)--Oct. 21, 2020--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 BANCORPCONSOLIDATED BALANCE SHEETS (UNAUDITED)(Dollars in Thousands) 09/30/20 06/30/20 03/31/20 12/31/19 09/30/19 ASSETSCash and due from $ 5,455 $ 6,350 $ 4,965 $ 6,038 $ 9,271 banksFederal funds sold 5,045 10,402 17,385 4,575 21,117

Interest-bearing 62,110 73,310 18,928 2,825 15,779 depositsInvestment 50,699 16,173 13,144 13,355 5,577 securitiesLoans held for sale - - - - -

Loans, net of 342,416 333,620 250,353 241,662 233,342 unearned incomeAllowance for loan (4,009 ) (4,009 ) (3,859 ) (2,409 ) (2,317 )lossesLoans, net 338,407 329,611 246,494 239,253 231,025

Premises and 10,992 11,095 11,180 11,216 11,297 equipment, netOther assets 12,577 11,882 11,330 11,093 10,428

Total assets $ 485,285 $ 458,823 $ 323,426 $ 288,355 $ 304,494

LIABILITIESDeposits:Demand $ 103,824 $ 96,395 $ 58,357 $ 52,352 $ 59,432 noninterest-bearingDemand 104,819 90,633 51,608 52,058 52,024 interest-bearingMoney market and 87,035 79,550 77,273 74,560 81,926 savingsTime deposits of 21,103 22,925 26,503 18,395 18,957 less than $100,000Time deposits of 54,695 51,919 54,274 56,016 57,854 $100,000 or moreTotal deposits 371,476 341,422 268,015 253,381 270,193

Borrowings and 78,136 83,136 23,000 3,000 3,000 other obligationsSubordinated 4,923 4,920 4,917 4,914 4,911 debenturesInterest payable 1,854 1,765 1,382 1,235 1,543 and otherliabilitiesTotal liabilities 456,389 431,243 297,314 262,530 279,647

SHAREHOLDERS'EQUITYCommon 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 357 299 219 51 75 comprehensiveincome (loss)Total shareholders' 28,896 27,580 26,112 25,825 24,847 equityTotal liabilities $ 485,285 $ 458,823 $ 323,426 $ 288,355 $ 304,494 and shareholders'equity Total equity / 5.95 % 6.01 % 8.07 % 8.96 % 8.16 %total assetsBook value per $ 19.38 $ 18.50 $ 17.63 $ 17.79 $ 17.34 shareShares outstanding 1,491,041 1,491,041 1,481,041 1,452,041 1,433,041

CORNERSTONE COMMUNITY BANCORPCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(Dollars in Thousands)Three months endedNine months ended09/30/2006/30/2009/30/1909/30/2009/30/19INTEREST INCOMELoans$

3,695

$

3,612

$

3,376

$

10,663

$

9,716

Federal funds sold1

4

61

22

135

Investment securities161

82

55

333

173

Other33

45

113

123

314

Total interest income3,890

3,743

3,605

11,141

10,338

INTEREST EXPENSEDeposits:Interest-bearing demand51

40

40

126

89

Money market and savings79

119

243

384

665

Time deposits198

260

397

789

1,114

Other186

171

108

471

333

Total interest expense514

590

788

1,770

2,201

Net interest income3,376

3,153

2,817

9,371

8,137

Provision for credit losses-

150

40

1,600

240

Net interest income after provision for credit losses3,376

3,003

2,777

7,771

7,897

NON-INTEREST INCOMEService charges on deposit accounts49

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 securities91

-

-

91

-

Other non-interest income156

158

140

450

394

Total non-interest income296

204

204

894

1,005

OPERATING EXPENSESSalaries and benefits979

392

907

2,310

2,749

Premises and fixed assets200

257

228

709

620

Other760

761

621

2,228

1,918

Total operating expenses1,939

1,410

1,756

5,247

5,287

Income before income taxes1,733

1,797

1,225

3,418

3,615

Income taxes497

513

353

851

1,047

NET INCOME$

1,236

$

1,284

$

872

$

2,567

$

2,568

EARNINGS PER SHAREBasic 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 outstanding1,491,041

1,485,217

1,433,041

1,485,661

1,432,766

Average common and equivalent shares outstanding1,522,872

1,523,322

1,519,531

1,526,516

1,518,688

PERFORMANCE MEASURESReturn on average assets1.05

%

1.18

%

1.18

%

0.85

%

1.23

%

Return on average equity17.36

%

18.92

%

14.18

%

12.49

%

14.50

%

Tax-equivalent net interest margin2.99

%

3.06

%

4.15

%

3.28

%

4.28

%

Efficiency ratio52.81

%

42.00

%

58.13

%

51.12

%

57.83

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20201021005969/en/

CONTACT: Jeffrey P. Finck President & CEO 530.222.1460

CONTACT: Patrick E. Phelan Chief Financial Officer 530.222.1460