CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank (OTCBB: CRSB) announced today its financial results for the second quarter ended June 30, 2013.

The Bank reported net income of $282,000 for the three months ended June 30, 2013 representing an increase of $29,000, or 11%, compared to net income of $253,000 for the same period last year. Diluted earnings per share for the three months ended June 30, 2013 were $0.22 compared to $0.20 for the same period last year. Net income for the six months ended June 30, 2013 was $522,000, or $0.40 per diluted share compared to net income of $472,000, or $0.37 per diluted share, for the six months ended June 30, 2012.

The return on average assets for the three months ended June 30, 2013 was 0.97% compared to 1.00% for the same period last year. The return on average equity was 9.24% for the three months ended June 30, 2013 compared to 9.47% for the same period last year. For the six months ended June 30, 2013, the return on average assets was 0.91% and the return on average equity was 8.63% compared to 0.96% and 8.99%, respectively, for the six months ended June 30, 2012.

“Cornerstone Community Bank continues to deliver solid growth. Our year-over-year total loan growth was 24% and our year-over-year deposit growth was 16%,” said President and CEO Jeff Finck.

Net Interest Income

Net interest income of $1,162,000 for the quarter ended June 30, 2013 represented a decrease of $20,000, or 2%, from $1,182,000 for the same quarter one year earlier. The net interest margin decreased to 4.20% during the quarter ended June 30, 2013 compared to 4.90% during the same quarter last year. For the six months ended June 30, 2013, net interest income was $2,369,000 compared to $2,177,000 for the six months ending June 30, 2012 representing an increase of $192,000, or 9%. The net interest margin decreased to 4.34% for the six months ended June 30, 2013 compared to 4.68% for the six months ended June 30, 2012.

Provision for credit losses

There was no provision for credit losses for the quarter ended June 30, 2013 compared to $135,000 for the quarter ended June 30, 2012. The provision for credit losses for the six months ended June 30, 2013 was $85,000 compared to $135,000 for the six months ended June 30, 2012.

Non-Interest Income

The Bank’s non-interest income for the quarter ended June 30, 2013 was $234,000 compared to $122,000 for the quarter ended June 30, 2012. For the six months ended June 30, 2013, non-interest income was $373,000 compared to $237,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,114,000 for the quarter ended June 30, 2013 compared to $940,000 for the same period one year earlier. For the six months ended June 30, 2013, non-interest expense was $2,135,000 compared to $1,855,000 for the same period last year.

Balance Sheet

The Bank had total assets at June 30, 2013 of $118.3 million, compared to $102.8 million at June 30, 2012, representing growth of $15.5 million, or 15%.

Total loans outstanding, including loans held for sale, at June 30, 2013, were $85.0 million compared to $68.8 million at June 30, 2012, representing an increase of $16.2 million, or 24%.

Total deposits were $105.9 million at June 30, 2013 compared to total deposits of $91.4 million at June 30, 2012, representing an increase of $14.5 million, or 16%.

Credit Quality

The allowance for loan losses was $1,450,000, or 1.76% of loans, net of unearned income at June 30, 2013, compared to $1,325,000, or 1.94% of loans, net of unearned income at June 30, 2012. Nonperforming assets at June 30, 2013 were $268,000 compared to $85,000 at June 30, 2012.

The bank recognized $96,000 in net loan charge-offs during the six months ended June 30, 2013, representing 0.24% of average loans.

Capital Adequacy

At June 30, 2013, shareholders’ equity totaled $12.0 million compared to $10.9 million at June 30, 2012. At June 30, 2013, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 13.71%, 12.45% and 10.06%, respectively, all exceeding the regulatory standards for “well-capitalized” institutions of 10.00%, 6.00% and 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

This press release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of Cornerstone Community Bank and on information available to management at the time these statements were made. There are a number of factors, many of which are beyond Cornerstone Community Bank’s control, which could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which Cornerstone Community Bank is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than Cornerstone Community Bank; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, Cornerstone Community Bank does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

  CORNERSTONE COMMUNITY BANK CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands)                 06/30/13       03/31/13       12/31/12       09/30/12       06/30/12     ASSETS Cash and due from banks $ 2,950 $ 4,009 $ 3,091 $ 2,389 $ 3,507 Federal funds sold - - - - - Interest-bearing deposits 2,796 1,241 4,936 1,120 2,200 Investment securities 23,104 25,745 27,143 28,672 26,129 Loans held for sale 2,603 1,961 791 573 336 Loans, net of unearned income 82,381 80,467 73,820 72,240 68,459 Allowance for loan losses   (1,450 )     (1,411 )     (1,460 )     (1,469 )     (1,325 ) Loans, net 80,931 79,056 72,360 70,771 67,134 Premises and equipment, net 1,041 1,100 1,070 1,126 1,165 Other assets   4,854       2,230       2,301       2,294       2,354   Total assets $ 118,279     $ 115,342     $ 111,692     $ 106,945     $ 102,825     LIABILITIES Deposits: Demand noninterest-bearing $ 19,892 $ 18,260 $ 22,366 $ 15,104 $ 12,648 Demand interest-bearing 16,110 14,318 14,893 15,594 13,100 Money market and savings 40,123 44,996 37,634 39,509 42,072 Time deposits of less than $100,000 11,236 8,218 8,965 9,047 8,949 Time deposits of $100,000 or more   18,578       17,241       15,795       14,991       14,628   Total deposits 105,939 103,033 99,653 94,245 91,397 Other borrowings - - - 1,000 - Other liabilities   311       226       248       279       557   Total liabilities   106,250       103,259       99,901       95,524       91,954     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 859 830 801 772 741 Accumulated deficit (917 ) (1,199 ) (1,439 ) (1,764 ) (2,178 ) Accumulated other comprehensive income (loss)   128       493       470       454       349   Total shareholders' equity   12,029       12,083       11,791       11,421       10,871   Total liabilities and shareholders' equity $ 118,279     $ 115,342     $ 111,692     $ 106,945     $ 102,825     CAPITAL ADEQUACY Tier I leverage ratio 10.06 % 10.13 % 10.32 % 10.12 % 10.26 % Tier I risk-based capital ratio 12.45 % 12.81 % 13.29 % 13.17 % 13.03 % Total risk-based capital ratio 13.71 % 14.06 % 14.55 % 14.43 % 14.29 % Total equity / total assets 10.17 % 10.48 % 10.56 % 10.68 % 10.57 % Book value per share $ 10.02 $ 10.07 $ 9.83 $ 9.52 $ 9.06     CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)                             Three months ended Six months ended   06/30/13       03/31/13       06/30/12     06/30/13       06/30/12     INTEREST INCOME Loans $ 1,143 $ 1,184 $ 1,180 $ 2,327 $ 2,170 Federal funds sold - - - - - Investment securities 163 170 181 333 361 Other   2       2       3         4       5   Total interest income   1,308       1,356       1,364         2,664       2,536     INTEREST EXPENSE Deposits: Interest-bearing demand 7 6 7 13 13 Money market and savings 75 74 100 149 193 Time deposits 64 69 75 133 153 Other   -       -       -         -       -   Total interest expense   146       149       182         295       359     Net interest income 1,162 1,207 1,182 2,369 2,177 Provision for credit losses   -       85       135         85       135  

Net interest income after provision for credit losses

  1,162       1,122       1,047         2,284       2,042     NON-INTEREST INCOME Service charges on deposit accounts 33 27 29 60 52 Gain on sale of SBA loans - - - - - Gain on sale of securities 86 - - 86 - Other non-interest income   115       112       93         227       185   Total non-interest income   234       139       122         373       237     OPERATING EXPENSES Salaries and benefits 554 554 499 1,108 977 Premises and fixed assets 128 126 119 254 233 Other   432       341       322         773       645   Total operating expenses   1,114       1,021       940         2,135       1,855     Income before income taxes 282 240 229 522 424 Income taxes - - (24 ) - (48 )                     NET INCOME $ 282     $ 240     $ 253       $ 522     $ 472     EARNINGS PER SHARE Basic earnings per share $ 0.24     $ 0.20     $ 0.21       $ 0.44     $ 0.39   Diluted earnings per share $ 0.22     $ 0.19     $ 0.20       $ 0.40     $ 0.37   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

  1,298,059       1,292,937       1,278,307         1,295,561       1,268,494     PERFORMANCE MEASURES Return on average assets 0.97 % 0.84 % 1.00 % 0.91 % 0.96 % Return on average equity 9.24 % 8.02 % 9.47 % 8.63 % 8.99 % Net interest margin 4.20 % 4.49 % 4.90 % 4.34 % 4.68 % Efficiency ratio 79.80 % 75.85 % 72.09 % 77.86 % 76.84 %  

Cornerstone Community BankJeffrey P. Finck, 530-222-1460PresidentChief Executive Officerjfinck@bankcornerstone.comorPatrick E. Phelan, 530-222-1460Executive Vice PresidentChief Financial Officerpphelan@bankcornerstone.com