CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the first quarter ended March 31, 2012.

The Bank reported net income of $219,000 for the three months ended March 31, 2012 representing an increase of $89,000, or 68%, compared to net income of $130,000 for the same period last year. Diluted earnings per share for the three months ended March 31, 2012 were $0.17 compared to $0.11 for the same period last year.

The return on average assets for the three months ended March 31, 2012 was 0.93% compared to 0.67% for the same period last year. The return on average equity was 8.49% for the three months ended March 31, 2012 compared to 5.76% for the same period last year.

President and CEO, Jeffrey Finck stated, “The first quarter of 2012 marked our eleventh consecutive quarterly profit. We have made solid progress in the past two years and we look forward to the continued growth of the bank.”

Net Interest Income

Net interest income of $995,000 for the quarter ended March 31, 2012 represented an increase of approximately $99,000, or 11%, from $896,000 for the same quarter one year earlier. The net interest margin decreased to 4.44% during the quarter ended March 31, 2012 compared to 4.93% during the same quarter last year.

Provision for credit losses

There was no provision for credit losses for the quarter ended March 31, 2012 compared to $28,000 for the quarter ended March 31, 2011.

Non-Interest Income

The Bank’s non-interest income for the quarter ended March 31, 2012 was $115,000 compared to $63,000 for the quarter ended March 31, 2011.

Non-Interest Expense

Non-interest expense was $915,000 for the quarter ended March 31, 2012 compared to $801,000 for the same period one year earlier. The increase in non-interest expense was primarily due to the opening of the full-service branch in Redding.

Income Taxes

During the quarter ended March 31, 2012, the Bank recognized $24,000 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 during the first quarter of 2012.

Balance Sheet

The Bank had total assets at March 31, 2012 of $97.3 million, compared to $79.0 million at March 31, 2011, representing growth of $18.3 million, or 23%.

Total loans outstanding at March 31, 2012, net of unearned income, were $63.4 million compared to $56.8 million at March 31, 2011, representing an increase of $6.6 million, or 12%.

Total deposits were $85.4 million at March 31, 2012 compared to total deposits of $69.6 million at March 31, 2011, representing an increase of $15.8 million, or 23%.

Credit Quality

The allowance for loan losses was $1,246,000, or 1.96% of total loans at March 31, 2012, compared to $1,099,000, or 1.93% of total loans, at March 31, 2011. Nonperforming assets at March 31, 2012 were $182,000 compared to $213,000 at March 31, 2011.

The bank recognized $24,000 in net loan charge-offs during the quarter ended March 31, 2012, representing 0.15% of average loans on an annualized basis.

Capital Adequacy

At March 31, 2012, shareholders’ equity totaled $10.4 million compared to $9.1 million at March 31, 2011. At March 31, 2012, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.77%, 13.51% and 10.64%, 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.

  CORNERSTONE COMMUNITY BANK CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands)         03/31/12       12/31/11       09/30/11       06/30/11       03/31/11           ASSETS Cash and due from banks $ 3,542 $ 1,957 $ 1,944 $ 1,542 $ 1,448 Federal funds sold - - - - - Interest-bearing deposits 615 445 3,790 1,945 4,381 Investment securities 27,132 22,173 13,652 14,496 14,677 Loans held for sale 379 - - - - Loans, net of unearned income 63,433 64,504 60,595 57,980 56,800 Allowance for loan losses   (1,246 )     (1,270 )     (1,180 )     (1,140 )     (1,099 ) Loans, net 62,187 63,234 59,415 56,840 55,701 Premises and equipment, net 1,172 1,226 1,105 1,067 1,042 Other assets   2,291       2,312       1,917       2,014       1,732   Total assets $ 97,318     $ 91,347     $ 81,823     $ 77,904     $ 78,981     LIABILITIES Deposits: Demand noninterest-bearing $ 12,789 $ 11,833 $ 9,995 $ 8,256 $ 8,075 Demand interest-bearing 11,916 12,928 9,013 7,145 6,558 Money market and savings 37,762 32,322 33,393 33,833 37,385 Time deposits of less than $100,000 7,851 8,841 8,376 9,088 9,377 Time deposits of $100,000 or more   15,076       14,718       10,449       9,433       8,158   Total deposits 85,394 80,642 71,226 67,755 69,553 Other borrowings 1,000 - - - - Other liabilities   529       535       577       492       286   Total liabilities   86,923       81,177       71,803       68,247       69,839     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 714 685 656 627 599 Accumulated deficit (2,431 ) (2,650 ) (2,858 ) (3,035 ) (3,224 ) Accumulated other comprehensive income (loss)   153       176       263       106       (192 ) Total shareholders' equity   10,395       10,170       10,020       9,657       9,142   Total liabilities and shareholders' equity $ 97,318     $ 91,347     $ 81,823     $ 77,904     $ 78,981     CAPITAL ADEQUACY Tier I leverage ratio 10.64 % 10.89 % 11.87 % 11.65 % 12.06 % Tier I risk-based capital ratio 13.51 % 13.27 % 14.11 % 14.23 % 14.69 % Total risk-based capital ratio 14.77 % 14.52 % 15.36 % 15.49 % 15.95 % Total equity / total assets 10.68 % 11.13 % 12.25 % 12.40 % 11.57 % Book value per share $ 8.66 $ 8.48 $ 8.35 $ 8.05 $ 7.62   CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)       Three months ended   03/31/12       12/31/11       03/31/11       INTEREST INCOME Loans $ 990 $ 1,014 $ 937 Federal funds sold - - - Investment securities 180 126 120 Other   2       2       1   Total interest income   1,172       1,142       1,058     INTEREST EXPENSE Deposits: Interest-bearing demand 6 7 3 Money market and savings 93 91 98 Time deposits 78 69 60 Other   -       -       1   Total interest expense   177       167       162     Net interest income 995 975 896 Provision for credit losses   -       110       28  

Net interest income after provision for credit losses

  995       865       868     NON-INTEREST INCOME Service charges on deposit accounts 23 23 18 Gain on sale of SBA loans - - 17 Gain on sale of securities - - - Other non-interest income   92       61       28   Total non-interest income   115       84       63     OPERATING EXPENSES Salaries and benefits 478 466 396 Premises and fixed assets 114 109 90 Other   323       319       315   Total operating expenses   915       894       801     Income before income taxes 195 55 130 Income taxes (24 ) (153 ) -           NET INCOME $ 219     $ 208     $ 130     EARNINGS PER SHARE Basic earnings per share $ 0.18     $ 0.17     $ 0.11   Diluted earnings per share $ 0.17     $ 0.17     $ 0.11   Average common shares outstanding   1,200,000       1,200,000       1,200,000  

Average common and equivalent shares outstanding

  1,258,330       1,200,000       1,232,490     PERFORMANCE MEASURES Return on average assets 0.93 % 0.95 % 0.67 % Return on average equity 8.49 % 8.25 % 5.76 % Net interest margin 4.44 % 4.64 % 4.93 % Efficiency ratio 82.43 % 84.42 % 83.52 %