RED BLUFF, Calif.--(BUSINESS WIRE)--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% |
|