Cornerstone Community Bancorp Reports Financial Results For the Third Quarter Ended September 30, 2024

Barchart · 10/16 17:50

Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the third quarter ended September 30, 2024.

The Company reported a net loss of $5,431,000 for the three months ended September 30, 2024 compared to net income of $1,920,000 for the same period last year. Diluted loss per share was $(3.56) for the three months ended September 30, 2024 compared to diluted earnings per share of $1.26 for the same period last year.

During the third quarter, the Company charged-off three related agricultural loans in the aggregate amount of $9.4 million due to the deteriorating financial condition of the borrowers. This represented 100% of the Company’s exposure. Although two of the loans were secured by certain equipment and all three loans have guarantors, any future recoveries cannot be reasonably predicted. As a result of these charge-offs, the Company recorded a $9.4 million provision for credit losses on loans for the third quarter.

For the nine months ended September 30, 2024, the Company reported a net loss of $2,594,000 compared to net income of $5,479,000 for the same period last year. Diluted loss per share was $(1.70) for the nine months ended September 30, 2024 compared to earnings per share of $3.60 for the same period last year.

President and CEO Matt Moseley stated, “On August 1st, the bank charged off an agricultural loan relationship which negatively impacted net income by approximately $7 million or $4.60 per share and reversed the associated interest accrual for that relationship totaling $558 thousand; both of which reduced net income and the latter reduced net interest margin for the quarter. We expect some level of recovery from the bank’s collateral but the timing and amount is still unknown. Core earnings, absent of the charge off, were approximately $1.6 million or $1.04 per share. The bank is well positioned to generate solid earnings going forward and did not have any past due or non-accrual loans as of 9/30/24.”

Net Interest Income

Net interest income decreased to $4,420,000 for the quarter ended September 30, 2024 compared to $5,646,000 for the same quarter last year. For the nine months ended September 30, 2024, net interest income decreased to $14,412,000 compared to $16,366,000 for the same period last year.

The tax-equivalent net interest margin was 2.75% for the quarter ended September 30, 2024 compared to 3.68% for the same quarter of last year. For the nine months ended September 30, 2024, the tax-equivalent net interest margin was 3.04% compared to 3.69% for the same period last year. The tax-equivalent net interest margin was negatively impacted during the third quarter by the reversal of accrued interest income on the three charged-off loans mentioned above and the acceleration of interest expense as a result of a call by the Company on one of its callable time deposits. The tax-equivalent net interest margin would have been 3.16% for the three months ended September 30, 2024 and 3.18% for the nine months ended September 30, 2024 without the impact from these two items.

Provision for credit losses on loans

The Company recorded a $9.4 million provision for credit losses on loans for the three months ended September 30, 2024 compared to $200,000 for the three months ended September 30, 2023. For the nine months ended September 30, 2024, the Company recorded a $9.7 million provision for credit losses on loans compared to $530,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended September 30, 2024 was $354,000 compared to $369,000 for the quarter ended September 30, 2023. For the nine months ended September 30, 2024, noninterest income was $1,077,000 compared to $1,031,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $3,085,000 for the quarter ended September 30, 2024 compared to $3,168,000 for the same period last year. For the nine months ended September 30, 2024, non-interest expense was $9,598,000 compared to $9,276,000 for the same period last year.

Balance Sheet

Total loans, net of unearned income, at September 30, 2024 were $487.1 million compared to $470.1 million at September 30, 2023.

Total deposits were $589.1 million at September 30, 2024 compared to total deposits of $575.7 million at September 30, 2023.

Credit Quality

The allowance for credit losses on loans was $6,164,000, or 1.27% of loans, net of unearned income, at September 30, 2024, compared to $5,813,000, or 1.24% of loans, net of unearned income, at September 30, 2023. There were no nonperforming assets at September 30, 2024 compared to $229,000 at September 30, 2023.

Capital

At September 30, 2024, shareholders’ equity totaled $40.9 million compared to $38.5 million at September 30, 2023. At September 30, 2024, the Company's book value per common share was $27.44 compared to $26.01 at September 30, 2023.

At September 30, 2024, the Bank’s estimated total risk-based capital ratio was 12.01% and its tier 1 capital to risk weighted assets ratio was 10.88%. 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 2023), 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)
 
 
 
09/30/24 06/30/24 03/31/24 12/31/23 09/30/23
 
ASSETS
Cash and due from banks

$

9,127

 

$

7,571

 

$

6,389

 

$

8,623

 

$

5,492

 

Federal funds sold

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Interest bearing deposits in other financial institutions

 

40,306

 

 

43,025

 

 

45,955

 

 

19,694

 

 

23,970

 

Available for sale debt securities, at fair value

 

90,616

 

 

89,089

 

 

90,767

 

 

93,065

 

 

90,086

 

Loans held for sale

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loans, net of unearned income

 

487,125

 

 

498,048

 

 

488,179

 

 

482,212

 

 

470,060

 

Allowance for credit losses on loans

 

(6,164

)

 

(6,126

)

 

(5,957

)

 

(5,813

)

 

(5,813

)

Loans, net

 

480,962

 

 

491,922

 

 

482,222

 

 

476,399

 

 

464,247

 

Premises and equipment, net

 

14,405

 

 

14,418

 

 

14,433

 

 

14,326

 

 

14,437

 

Other assets

 

33,780

 

 

32,514

 

 

30,812

 

 

30,827

 

 

31,241

 

Total assets

$

669,197

 

$

678,537

 

$

670,578

 

$

642,934

 

$

629,472

 

 
LIABILITIES
Deposits:
Demand noninterest-bearing

$

91,936

 

$

102,419

 

$

99,278

 

$

101,396

 

$

100,791

 

Demand interest-bearing

 

166,505

 

 

167,720

 

 

159,542

 

 

166,221

 

 

190,645

 

Money market and savings

 

186,186

 

 

176,644

 

 

182,797

 

 

174,882

 

 

176,373

 

Time deposits

 

144,443

 

 

148,582

 

 

148,384

 

 

122,035

 

 

107,894

 

Total deposits

 

589,069

 

 

595,365

 

 

590,001

 

 

564,534

 

 

575,703

 

Borrowings and other obligations

 

20,000

 

 

20,000

 

 

20,000

 

 

20,000

 

 

-

 

Subordinated debentures

 

11,788

 

 

11,781

 

 

11,775

 

 

11,769

 

 

11,762

 

Interest payable and other liabilities

 

7,409

 

 

5,637

 

 

4,252

 

 

3,464

 

 

3,512

 

Total liabilities

 

628,266

 

 

632,784

 

 

626,028

 

 

599,767

 

 

590,977

 

 
SHAREHOLDERS' EQUITY
Common stock

 

15,337

 

 

15,268

 

 

15,231

 

 

15,163

 

 

15,130

 

Retained Earnings

 

35,045

 

 

40,476

 

 

39,033

 

 

37,639

 

 

35,747

 

Accumulated other comprehensive income (loss)

 

(9,452

)

 

(9,991

)

 

(9,714

)

 

(9,635

)

 

(12,382

)

Total shareholders' equity

 

40,930

 

 

45,754

 

 

44,550

 

 

43,167

 

 

38,495

 

Total liabilities and shareholders' equity

$

669,197

 

$

678,537

 

$

670,578

 

$

642,934

 

$

629,472

 

 
Total equity / total assets

 

6.12

%

 

6.74

%

 

6.64

%

 

6.71

%

 

6.12

%

Book value per share

$

27.44

 

$

30.78

 

$

29.99

 

$

29.16

 

$

26.01

 

Shares outstanding

 

1,491,692

 

 

1,486,692

 

 

1,485,472

 

 

1,480,472

 

 

1,479,862

 

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
 
 
 
 
Three months ended Nine months ended
09/30/24 06/30/24 09/30/23 09/30/24 09/30/23
 
INTEREST INCOME
Loans

$ 6,795

$ 7,363

$ 6,517

$ 21,164

$ 18,023

Federal funds sold

-

-

-

-

3

Investment securities

819

792

739

2,339

2,197

Other

650

611

558

1,680

1,692

Total interest income

8,264

8,766

7,814

25,183

21,915

 
INTEREST EXPENSE
Deposits:
Interest-bearing demand

378

331

289

1,010

745

Money market and savings

1,268

1,217

798

3,631

2,052

Time deposits

1,806

1,722

933

4,960

2,306

Other

392

389

148

1,170

446

Total interest expense

3,844

3,659

2,168

10,771

5,549

 
Net interest income

4,420

5,107

5,646

14,412

16,366

Provision for credit losses on loans

9,400

169

200

9,713

530

Net interest income after provision
for credit losses

(4,980)

4,938

5,446

4,699

15,836

 
NON-INTEREST INCOME
Service charges on deposit accounts

69

72

63

216

200

Gain on sale of loans

-

-

-

-

-

Gain (loss) on sale of other real estate owned

-

-

-

-

-

Gain (loss) on sale of securities

-

-

-

-

-

Other non-interest income

285

295

306

861

831

Total non-interest income

354

367

369

1,077

1,031

 
OPERATING EXPENSES
Salaries and benefits

1,615

1,880

1,781

5,296

5,098

Premises and fixed assets

266

265

268

798

847

Other

1,204

1,165

1,119

3,504

3,331

Total operating expenses

3,085

3,310

3,168

9,598

9,276

 
Income (loss) before income taxes

(7,711)

1,995

2,647

(3,822)

7,591

Income taxes (benefit)

(2,280)

552

727

(1,228)

2,112

 
NET (LOSS) INCOME

$ (5,431)

$ 1,443

$ 1,920

$ (2,594)

$ 5,479

 
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share

$ (3.65)

$ 0.97

$ 1.30

$ (1.75)

$ 3.70

Diluted earnings (loss) per share

$ (3.56)

$ 0.94

$ 1.26

$ (1.70)

$ 3.60

Average common shares outstanding

1,487,344

1,486,370

1,479,862

1,486,016

1,479,862

Average common and equivalent
shares outstanding

1,525,781

1,529,714

1,524,640

1,528,514

1,524,029

 
PERFORMANCE MEASURES
Return on average assets

-3.24%

0.86%

1.21%

-0.52%

1.18%

Return on average equity

-51.59%

12.86%

19.58%

-7.93%

19.51%

Tax-equivalent net interest margin

2.75%

3.21%

3.68%

3.04%

3.69%

Efficiency ratio

64.62%

60.47%

52.67%

61.97%

53.32%