CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the fourth quarter and full year ended December 31, 2011.

The Bank reported net income of $208,000 for the three months ended December 31, 2011 representing an increase of $83,000, or 66%, compared to net income of $125,000 for the same period last year. Diluted earnings per share for the three months ended December 31, 2011 were $0.17 compared to $0.10 for the same period last year. Net income for the year ended December 31, 2011 was $703,000, or $0.57 per diluted share compared to net income of $323,000, or $0.26 per diluted share, for the year ended December 31, 2010.

The return on average assets for the three months ended December 31, 2011 was 0.95% compared to 0.65% for the same period last year. The return on average equity was 8.25% for the three months ended December 31, 2011 compared to 5.38% for the same period last year. For the year ended December 31, 2011, the return on average assets was 0.87% and the return on average equity was 7.34% compared to 0.43% and 3.54%, respectively, for the year ended December 31, 2010.

President and CEO, Jeffrey Finck stated, “We are pleased with our 2011 performance. We opened our new Redding office in the third quarter which contributed to the 20% growth in deposits during the year. We look forward to continued success in 2012.”

Net Interest Income

Net interest income of $975,000 for the quarter ended December 31, 2011 represented an increase of approximately $107,000, or 12%, from $868,000 for the same quarter one year earlier. The net interest margin decreased to 4.64% during the quarter ended December 31, 2011 compared to 4.66% during the same quarter last year. For the year ended December 31, 2011, net interest income was $3,758,000 compared to $3,133,000 for the year ended December 31, 2010, representing an increase of $625,000, or 20%. The net interest margin increased to 4.86% for the year ended December 31, 2011 compared to 4.42% for the year ended December 31, 2010.

Provision for credit losses

The provision for credit losses for the quarter ended December 31, 2011 was $110,000 compared to $160,000 for the quarter ended December 31, 2010. The provision for credit losses for the year ended December 31, 2011 was $259,000 compared to $461,000 for the year ended December 31, 2010.

Non-Interest Income

The Bank’s non-interest income for the quarter ended December 31, 2011 was $84,000 compared to $140,000 for the quarter ended December 31, 2010. For the year ended December 31, 2011, non-interest income was $318,000 compared to $454,000 for the year ended December 31, 2010.

Non-Interest Expense

Non-interest expense was $894,000 for the quarter ended December 31, 2011 compared to $723,000 for the same period one year earlier. For the year ended December 31, 2011, non-interest expense was $3,583,000 compared to $2,802,000 for the year ended December 31, 2010. In April 2011, the Bank decided to exit the indirect auto lending business. As a result of this decision, the Bank incurred $252,000 of incremental charges during the second quarter of 2011.

Income Taxes

During the year ended December 31, 2011, the Bank recognized $470,000 of deferred tax assets which added to the Bank’s net income. The Bank determined that the historical progress in earnings performance met the standards for recognition of these assets in 2011.

Balance Sheet

The Bank had total assets at December 31, 2011 of $91 million, compared to $76 million at December 31, 2010, representing growth of $15 million, or 20%.

Total loans outstanding at December 31, 2011, net of unearned income, were $65 million compared to $55 million at December 31, 2010, representing an increase of $9 million, or 17%.

Total deposits were $81 million at December 31, 2011 compared to total deposits of $67 million at December 31, 2010, representing an increase of $14 million, or 20%.

Credit Quality

The allowance for loan losses was $1,270,000, or 1.97% of total loans at December 31, 2011, compared to $1,104,000, or 2.00% of total loans, at December 31, 2010. Nonperforming assets at December 31, 2011 were $185,000 compared to $232,000 at December 31, 2010.

The bank recognized $93,000 in net loan charge-offs during the year ended December 31, 2011, representing 0.16% of average loans.

Capital Adequacy

At December 31, 2011, shareholders’ equity totaled $10.2 million compared to $9.0 million at December 31, 2010. At December 31, 2011, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.52%, 13.27% and 10.89%, 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 branch 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.bankcornerstone.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 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. 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)                             12/31/11         09/30/11         06/30/11         03/31/11         12/31/10     ASSETS Cash and due from banks $ 1,957 $ 1,944 $ 1,542 $ 1,448 $ 1,552 Federal funds sold - - - - - Interest-bearing deposits 445 3,790 1,945 4,381 1,535 Investment securities 22,173 13,652 14,496 14,677 16,465 Loans held for sale - - - - - Loans, net of unearned income 64,504 60,595 57,980 56,800 55,248 Allowance for loan losses   (1,270 )       (1,180 )       (1,140 )       (1,099 )       (1,104 ) Loans, net 63,234 59,415 56,840 55,701 54,144 Premises and equipment, net 1,226 1,105 1,067 1,042 777 Other assets   2,312         1,917         2,014         1,732         1,855   Total assets $ 91,347       $ 81,823       $ 77,904       $ 78,981       $ 76,328     LIABILITIES Deposits: Demand noninterest-bearing $ 11,833 $ 9,995 $ 8,256 $ 8,075 $ 10,169 Demand interest-bearing 12,928 9,013 7,145 6,558 7,416 Money market and savings 32,322 33,393 33,833 37,385 31,429 Time deposits of less than $100,000 8,841 8,376 9,088 9,377 7,717 Time deposits of $100,000 or more   14,718         10,449         9,433         8,158         10,309   Total deposits 80,642 71,226 67,755 69,553 67,040 Other liabilities   535         577         492         286         301   Total liabilities   81,177         71,803         68,247         69,839         67,341     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 685 656 627 599 570 Accumulated deficit (2,650 ) (2,858 ) (3,035 ) (3,224 ) (3,353 ) Accumulated other comprehensive income (loss)   176         263         106         (192 )       (189 ) Total shareholders' equity   10,170         10,020         9,657         9,142         8,987   Total liabilities and shareholders' equity $ 91,347       $ 81,823       $ 77,904       $ 78,981       $ 76,328     CAPITAL ADEQUACY Tier I leverage ratio 10.89 % 11.87 % 11.65 % 12.06 % 11.85 % Tier I risk-based capital ratio 13.27 % 14.11 % 14.23 % 14.69 % 14.80 % Total risk-based capital ratio 14.52 % 15.36 % 15.49 % 15.95 % 16.05 % Total equity / total assets 11.13 % 12.25 % 12.40 % 11.57 % 11.77 % Book value per share $ 8.48 $ 8.35 $ 8.05 $ 7.62 $ 7.49                               CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)         Three months ended Year ended   12/31/11         09/30/11         12/31/10     12/31/11         12/31/10     INTEREST INCOME Loans $ 1,014 $ 1,006 $ 944 $ 3,920 $ 3,507 Federal funds sold - - - - - Investment securities 126 117 92 487 361 Other   2         2         5     7         25   Total interest income   1,142         1,125         1,041     4,414         3,893     INTEREST EXPENSE Deposits: Interest-bearing demand 7 4 7 18 24 Money market and savings 91 92 91 380 341 Time deposits 69 64 75 257 394 Other   -         1         -     1         1   Total interest expense   167         161         173     656         760     Net interest income 975 964 868 3,758 3,133 Provision for credit losses   110         60         160     259         461   Net interest income after provision for credit losses   865         904         708     3,499         2,672     NON-INTEREST INCOME Service charges on deposit accounts 23 23 17 84 86 Gain on sale of SBA loans - - - 37 11 Gain on sale of securities - 37 97 37 254 Other non-interest income   61         50         26     160         103   Total non-interest income   84         110         140     318         454     OPERATING EXPENSES Salaries and benefits 466 445 365 1,935 1,392 Premises and fixed assets 109 108 75 403 287 Other   319         317         283     1,245         1,123   Total operating expenses   894         870         723     3,583         2,802     Income before income taxes 55 144 125 234 324 Income taxes (153 ) (33 ) - (469 ) 1                       NET INCOME $ 208       $ 177       $ 125   $ 703       $ 323     EARNINGS PER SHARE Basic earnings per share $ 0.17       $ 0.15       $ 0.10   $ 0.59       $ 0.27   Diluted earnings per share $ 0.17       $ 0.15       $ 0.10   $ 0.57       $ 0.26   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   1,200,000         1,218,056         1,280,289     1,224,701         1,258,183     PERFORMANCE MEASURES Return on average assets 0.95 % 0.89 % 0.65 % 0.87 % 0.43 % Return on average equity 8.25 % 7.20 % 5.38 % 7.34 % 3.54 % Net interest margin 4.64 % 5.04 % 4.66 % 4.86 % 4.42 % Efficiency ratio 84.42 % 81.01 % 71.73 % 87.90 % 78.12 %