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Cornerstone Community Bancorp Reports Financial Results For the Third Quarter Ended September 30, 2022

Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the third quarter ended September 30, 2022.

The Company reported net income of $1,936,000 for the three months ended September 30, 2022 compared to net income of $2,085,000 for the same period last year. Diluted earnings per share were $1.27 for the three months ended September 30, 2022 compared to $1.38 for the same period last year.

The return on average assets for the three months ended September 30, 2022 was 1.30% and the return on average equity was 23.11%. The tax-equivalent net interest margin was 3.60% for the three months ended September 30, 2022 compared to 3.66% for the same period last year and the efficiency ratio was 49.42% for the three months ended September 30, 2022 compared to 38.37% for the same period last year.

For the nine months ended September 30, 2022, the Company reported net income of $5,317,000 compared to net income of $5,948,000 for the same period last year. Diluted earnings per share were $3.48 for the nine months ended September 30, 2022 compared to $3.96 for the same period last year.

The return on average assets for the nine months ended September 30, 2022 was 1.21% and the return on average equity was 20.48%.

President and CEO, Matt Moseley stated, “We continue to produce strong returns on assets and equity. Credit quality remains strong with no nonperforming assets. Operating expenses have increased as the bank continues to hire and build its infrastructure for future growth.”

Net Interest Income

Net interest income increased to $5,196,000 for the quarter ended September 30, 2022 compared to $4,756,000 for the same quarter last year. For the nine months ended September 30, 2022, net interest income increased to $14,151,000 compared to $13,212,000 for the same period last year.

Provision for credit losses

Provision for credit losses were $40,000 for the quarter ended September 30, 2022 compared to $400,000 for the same quarter last year. For the nine months ended September 30, 2022, the Company recorded a $113,000 provision for credit losses compared to $900,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended September 30, 2022 was $265,000 compared to $652,000 for the quarter ended September 30, 2021. For the nine months ended September 30, 2022, non-interest income was $795,000 compared to $2,013,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $2,699,000 for the quarter ended September 30, 2022 compared to $2,075,000 for the same period last year. For the nine months ended September 30, 2022, non-interest expense was $7,368,000 compared to $5,965,000 for the same period last year.

Balance Sheet

Total loans, net of unearned income, at September 30, 2022 were $400.5 million compared to $388.5 million at September 30, 2021.

Total deposits were $545.3 million at September 30, 2022 compared to total deposits of $500.1 million at September 30, 2021.

Credit Quality

The allowance for loan losses was $5,172,000, or 1.29% of loans, net of unearned income, at September 30, 2022, compared to $4,909,000, or 1.26% of loans, net of unearned income, at September 30, 2021. There were no nonperforming assets at September 30, 2022 and September 30, 2021.

Capital

At September 30, 2022, shareholders’ equity totaled $30.6 million compared to $35.5 million at September 30, 2021. At September 30, 2022, the Company's book value per common share was $20.81 compared to $24.37 at September 30, 2021. During the nine months ended September 30, 2022, increasing interest rates resulted in a decline in the fair value of available for sale investment securities. This impact is reflected in the decline in accumulated other comprehensive income (AOCI) to $(12,763,000) at September 30, 2022, compared to $(378,000) at September 30, 2021. Excluding AOCI, book value increased to $29.50 at September 30, 2022, compared to $24.63 at September 30, 2021.

AOCI has no effect on Cornerstone Community Bank’s (the Bank) regulatory capital ratios as the Bank opted to exclude it from regulatory capital calculations. At September 30, 2022, the Bank’s total risk-based capital ratio was 13.39% and its tier 1 capital to risk weighted assets ratio was 12.18%. The Bank remains well capitalized under the regulatory framework for prompt corrective action.

About Cornerstone Community Bancorp

Cornerstone Community Bancorp, a bank holding company headquartered in Red Bluff, California, serves the Red Bluff, Redding and Anderson communities through its wholly-owned subsidiary, Cornerstone Community Bank with a headquarters office in Red Bluff, two banking offices in Redding and one in Anderson. 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 Coronavirus Aid, Relief and Economic Security Act of 2022), 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 BANCORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
 
09/30/22 06/30/22 03/31/22 12/31/21 09/30/21
 
ASSETS
Cash and due from banks

$

6,011

 

$

5,230

 

$

4,175

 

$

4,552

 

$

4,765

 

Federal funds sold

 

122

 

 

121

 

 

121

 

 

121

 

 

2,600

 

Interest-bearing deposits

 

57,618

 

 

48,277

 

 

73,629

 

 

77,933

 

 

24,636

 

Investment securities

 

95,511

 

 

102,692

 

 

99,748

 

 

108,253

 

 

110,470

 

Loans held for sale

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loans, net of unearned income

 

400,480

 

 

399,156

 

 

375,369

 

 

387,374

 

 

388,532

 

Allowance for loan losses

 

(5,172

)

 

(5,132

)

 

(5,077

)

 

(5,059

)

 

(4,909

)

Loans, net

 

395,308

 

 

394,024

 

 

370,292

 

 

382,315

 

 

383,623

 

Premises and equipment, net

 

14,671

 

 

14,691

 

 

14,757

 

 

14,784

 

 

13,567

 

Other assets

 

21,261

 

 

20,588

 

 

16,930

 

 

15,622

 

 

14,863

 

Total assets

$

590,502

 

$

585,623

 

$

579,652

 

$

603,580

 

$

554,524

 

 
LIABILITIES
Deposits:
Demand noninterest-bearing

$

129,236

 

$

130,249

 

$

131,136

 

$

174,282

 

$

141,734

 

Demand interest-bearing

 

138,630

 

 

131,623

 

 

126,331

 

 

131,368

 

 

131,964

 

Money market and savings

 

201,316

 

 

201,106

 

 

196,653

 

 

163,946

 

 

150,149

 

Time deposits

 

76,121

 

 

76,576

 

 

78,167

 

 

78,111

 

 

76,291

 

Total deposits

 

545,303

 

 

539,554

 

 

532,287

 

 

547,707

 

 

500,138

 

Borrowings and other obligations

 

-

 

 

-

 

 

-

 

 

5,000

 

 

5,000

 

Subordinated debentures

 

11,738

 

 

11,732

 

 

11,726

 

 

11,720

 

 

11,715

 

Interest payable and other liabilities

 

2,892

 

 

2,631

 

 

1,899

 

 

2,134

 

 

2,151

 

Total liabilities

 

559,933

 

 

553,917

 

 

545,912

 

 

566,561

 

 

519,004

 

 
SHAREHOLDERS' EQUITY
Common stock

 

14,964

 

 

15,079

 

 

15,009

 

 

14,913

 

 

14,814

 

Retained Earnings

 

28,368

 

 

26,432

 

 

24,726

 

 

23,051

 

 

21,084

 

Accumulated other comprehensive income (loss)

 

(12,763

)

 

(9,805

)

 

(5,995

)

 

(945

)

 

(378

)

Total shareholders' equity

 

30,569

 

 

31,706

 

 

33,740

 

 

37,019

 

 

35,520

 

Total liabilities and shareholders' equity

$

590,502

 

$

585,623

 

$

579,652

 

$

603,580

 

$

554,524

 

 
Total equity / total assets

 

5.18

%

 

5.41

%

 

5.82

%

 

6.13

%

 

6.41

%

Book value per share

$

20.81

 

$

21.51

 

$

22.93

 

$

25.31

 

$

24.37

 

Shares outstanding

 

1,469,091

 

 

1,474,091

 

 

1,471,591

 

 

1,462,591

 

 

1,457,591

 

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
 
Three months ended Nine months ended
09/30/22 06/30/22 09/30/21 09/30/22 09/30/21
 
INTEREST INCOME
Loans

$

5,018

 

$

4,485

 

$

4,772

 

$

13,851

 

$

13,602

 

Federal funds sold

 

1

 

 

-

 

 

-

 

 

1

 

 

3

 

Investment securities

 

543

 

 

464

 

 

360

 

 

1,378

 

 

739

 

Other

 

354

 

 

146

 

 

35

 

 

558

 

 

120

 

Total interest income

 

5,916

 

 

5,095

 

 

5,167

 

 

15,788

 

 

14,464

 

 
INTEREST EXPENSE
Deposits:
Interest-bearing demand

 

130

 

 

64

 

 

46

 

 

240

 

 

138

 

Money market and savings

 

260

 

 

147

 

 

96

 

 

524

 

 

276

 

Time deposits

 

182

 

 

131

 

 

107

 

 

420

 

 

345

 

Other

 

148

 

 

148

 

 

162

 

 

453

 

 

493

 

Total interest expense

 

720

 

 

490

 

 

411

 

 

1,637

 

 

1,252

 

 
Net interest income

 

5,196

 

 

4,605

 

 

4,756

 

 

14,151

 

 

13,212

 

Provision for credit losses

 

40

 

 

55

 

 

400

 

 

113

 

 

900

 

Net interest income after provision for credit losses

 

5,156

 

 

4,550

 

 

4,356

 

 

 

14,038

 

 

12,312

 

 
NON-INTEREST INCOME
Service charges on deposit accounts

 

67

 

 

62

 

 

62

 

 

200

 

 

179

 

Gain on sale of loans

 

-

 

 

-

 

 

396

 

 

-

 

 

1,231

 

Gain (loss) on sale of other real estate owned

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Gain (loss) on sale of securities

 

-

 

 

-

 

 

-

 

 

-

 

 

(45

)

Other non-interest income

 

198

 

 

204

 

 

194

 

 

595

 

 

648

 

Total non-interest income

 

265

 

 

266

 

 

652

 

 

795

 

 

2,013

 

 
OPERATING EXPENSES
Salaries and benefits

 

1,408

 

 

1,219

 

 

1,048

 

 

3,773

 

 

2,695

 

Premises and fixed assets

 

227

 

 

194

 

 

150

 

 

612

 

 

590

 

Other

 

1,064

 

 

1,013

 

 

877

 

 

2,983

 

 

2,680

 

Total operating expenses

 

2,699

 

 

2,426

 

 

2,075

 

 

7,368

 

 

5,965

 

 
Income before income taxes

 

2,722

 

 

2,390

 

 

2,933

 

 

7,465

 

 

8,360

 

Income taxes

 

786

 

 

684

 

 

848

 

 

2,148

 

 

2,412

 

 
NET INCOME

$

1,936

 

$

1,706

 

$

2,085

 

$

5,317

 

$

5,948

 

 
EARNINGS PER SHARE
Basic earnings per share

$

1.31

 

$

1.16

 

$

1.43

 

$

3.61

 

$

4.09

 

Diluted earnings per share

$

1.27

 

$

1.12

 

$

1.38

 

$

3.48

 

$

3.96

 

Average common shares outstanding

 

1,473,276

 

 

1,472,168

 

 

1,456,531

 

 

1,471,582

 

 

1,452,768

 

Average common and equivalent shares outstanding

 

1,523,830

 

 

1,529,540

 

 

1,512,738

 

 

 

1,528,628

 

 

1,503,150

 

 
PERFORMANCE MEASURES
Return on average assets

 

1.30

%

 

1.18

%

 

1.53

%

 

1.21

%

 

1.48

%

Return on average equity

 

23.11

%

 

20.33

%

 

23.52

%

 

20.48

%

 

23.98

%

Tax-equivalent net interest margin

 

3.60

%

 

3.32

%

 

3.66

%

 

3.37

%

 

3.48

%

Efficiency ratio

 

49.42

%

 

49.80

%

 

38.37

%

 

49.30

%

 

39.18

%

 

Contacts

Matthew B. Moseley

President & CEO

530.222.1460

Patrick E. Phelan

Chief Financial Officer

530.222.1460

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