CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the third quarter ended September 30, 2010.

The Bank reported net income of $91,000, or $0.07 per diluted share, for the three months ended September 30, 2010 compared to net income of $74,000, or $0.06 per diluted share, for the same period last year. Net income for the nine months ended September 30, 2010 was $198,000, or $0.16 per diluted share compared to net income of $11,000, or $0.01 per diluted share, for the first nine months of 2009.

President and CEO, Jeffrey Finck stated, “We have now recorded our fifth consecutive quarterly profit. Our bank continues to be well positioned for continued growth and profitability.”

Net Interest Income

Net interest income of $798,000 for the quarter ended September 30, 2010 represented an increase of approximately $93,000, or 13%, from $705,000 for the same quarter one year earlier. For the nine months ended September 30, 2010, net interest income of $2,265,000 increased $311,000, or 16%, from $1,954,000 for the first nine months of 2009.

Non-Interest Income

The Bank’s non-interest income for the quarter and nine months ended September 30, 2010 was $210,000 and $314,000, respectively, compared to $120,000 and $202,000, respectively, for the same periods one year ago.

Non-Interest Expense

Non-interest expense was $712,000 for the quarter ended September 30, 2010 compared to $671,000 for the same period one year earlier, representing an increase of $41,000, or 6%. For the nine months ended September 30, 2010, non-interest expense was $2,079,000 compared to $1,984,000 for the same period of 2009, representing an increase of $95,000, or 5%. The Bank employed 19 full-time equivalent employees at September 30, 2010 and 2009.

The Bank’s efficiency ratio, the ratio of non-interest expense to revenues, was 70.63% during the quarter ended September 30, 2010 compared to 81.33% during the same period last year. For the nine months ended September 30, 2010, the efficiency ratio was 80.61% compared to 92.02% during the same period of 2009.

Balance Sheet

The Bank had total assets at September 30, 2010 of $76.6 million, compared to $67.0 million at September 30, 2009, representing growth of $9.6 million, or 14%.

Total loans outstanding at September 30, 2010, net of unearned income, were $54.9 million compared to $48.1 million at September 30, 2009, representing an increase of $6.7 million, or 14%.

Total deposits were $67.1 million at September 30, 2010 compared to total deposits of $58.0 million at September 30, 2009, representing an increase of $9.1 million, or 16%.

Credit Quality

The allowance for loan losses was $978,000, or 1.78% of total loans at September 30, 2010, compared to $801,000, or 1.66% of total loans, at September 30, 2009. The provision for credit losses for the quarter ended September 30, 2010 was $205,000 compared to $80,000 for the quarter ended September 30, 2009. For the nine months ended September 30, 2010, the provision for credit losses was $301,000 compared to $160,000 for the same period in the prior year.

Nonperforming assets at September 30, 2010 consisted of non-accrual loans of $248,000 compared to non-accrual loans of $57,000 at September 30, 2009.

The bank recognized $166,000 in net loan charge-offs during the nine months ended September 30, 2010 compared to $149,000 for the same period in the prior year.

Capital Adequacy

At September 30, 2010, shareholders’ equity totaled $9.2 million compared to $8.7 million at September 30, 2009. The total risk-based capital ratio, tier one capital ratio, and leverage ratio was 16.39%, 15.14% and 11.97%, 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 loan production 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.ccbca.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 can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” 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. Factors that might cause such differences include, but are not limited to: the Bank’s ability to successfully execute its business plans and achieve its objectives; changes in general economic, real estate and financial market conditions, either nationally or locally in areas in which the Bank conducts its operations; changes in interest rates; new litigation or changes in existing litigation; future credit loss experience; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Bank’s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies.

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)           09/30/10   06/30/10   03/31/10   12/31/09   09/30/09   ASSETS Cash and due from banks $ 900 $ 1,504 $ 3,945 $ 632 $ 1,334 Federal funds sold - - - - - Interest-bearing deposits 4,235 3,126 3,701 7,123 7,910 Investment securities 14,950 18,828 14,669 12,762 7,980 Loans held for sale - - - 128 374 Loans, net of unearned income 54,856 47,921 48,379 48,319 48,126 Allowance for loan losses   (978 )     (863 )     (825 )     (843 )     (801 ) Loans, net 53,878 47,058 47,554 47,476 47,325 Premises and equipment, net 771 746 767 799 829 Other assets   1,848       1,812       1,699       1,712       1,201   Total assets $ 76,582     $ 73,074     $ 72,335     $ 70,632     $ 66,953     LIABILITIES Deposits: Demand noninterest-bearing $ 7,577 $ 5,370 $ 3,964 $ 6,749 $ 6,349 Demand interest-bearing 10,309 10,274 7,876 7,967 5,613 Money market and savings 29,796 27,611 29,843 28,435 25,905 Time deposits of less than $100,000 9,055 9,194 10,392 8,931 10,103 Time deposits of $100,000 or more   10,377       11,157       11,137       9,616       10,045   Total deposits 67,114 63,606 63,212 61,698 58,015 Other liabilities   250       280       259       237       259   Total liabilities   67,364       63,886       63,471       61,935       58,274     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 541 514 488 463 446 Accumulated deficit (3,477 ) (3,569 ) (3,629 ) (3,676 ) (3,740 ) Accumulated other comprehensive income (loss)   195       284       46       (49 )     14   Total shareholders' equity   9,218       9,188       8,864       8,697       8,679   Total liabilities and shareholders' equity $ 76,582     $ 73,074     $ 72,335     $ 70,632     $ 66,953     CAPITAL ADEQUACY Tier I leverage ratio 11.97 % 12.16 % 12.48 % 12.47 % 13.05 % Tier I risk-based capital ratio 15.14 % 16.53 % 16.15 % 16.04 % 16.42 % Total risk-based capital ratio 16.39 % 17.79 % 17.40 % 17.30 % 17.68 % Total equity / total assets 12.04 % 12.57 % 12.25 % 12.31 % 12.96 % Book value per share $ 7.68 $ 7.66 $ 7.39 $ 7.25 $ 7.23   CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)               Three months ended Nine months ended 09/30/10   06/30/10   09/30/09 09/30/10   09/30/09   INTEREST INCOME Loans $ 876 $ 843 $ 874 $ 2,563 $ 2,553 Federal funds sold - - - - 8 Investment securities 100 101 25 269 25 Other   3       4       36     20       79   Total interest income   979       948       935     2,852       2,665     INTEREST EXPENSE Deposits: Interest-bearing demand 6 6 4 17 10 Money market and savings 80 83 78 250 228 Time deposits 95 110 148 319 473 Other   -       -       -     1       -   Total interest expense   181       199       230     587       711     Net interest income 798 749 705 2,265 1,954 Provision for credit losses   205       49       80     301       160  

Net interest income after provision for credit losses

  593       700       625     1,964       1,794     NON-INTEREST INCOME Service charges on deposit accounts 21 22 23 69 65 Gain on sale of SBA loans - 11 69 11 69 Gain on sale of securities 157 - 157 - Other non-interest income   32       24       28     77       68   Total non-interest income   210       57       120     314       202     OPERATING EXPENSES Salaries and benefits 361 322 332 1,027 965 Premises and fixed assets 78 67 79 212 233 Other   273       307       260     840       786   Total operating expenses   712       696       671     2,079       1,984     Income before income taxes 91 61 74 199 12 Income taxes - 1 - 1 1                 NET INCOME $ 91     $ 60     $ 74   $ 198     $ 11     EARNINGS PER SHARE Basic earnings per share $ 0.08     $ 0.05     $ 0.06   $ 0.17     $ 0.01   Diluted earnings per share $ 0.07     $ 0.05     $ 0.06   $ 0.16     $ 0.01   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

  1,275,429       1,249,272       1,200,000     1,249,371       1,200,000     PERFORMANCE MEASURES Return on average assets 0.48 % 0.33 % 0.45 % 0.36 % 0.02 % Return on average equity 3.90 % 2.66 % 3.42 % 2.91 % 0.17 % Net Interest Margin 4.38 % 4.29 % 4.38 % 4.33 % 4.32 % Efficiency ratio 70.63 % 86.35 % 81.33 % 80.61 % 92.02 %