Chino Commercial Bancorp Reports 27% Increase in Net Earnings

CHINO, Calif., Oct. 20, 2017 (GLOBE NEWSWIRE) — The Board of Directors of Chino Commercial Bancorp (OTC:CCBC), the parent company of Chino Commercial Bank, N.A., announced the results of operations for the Bank and the consolidated holding company for the third quarter ended September 30, 2017 with net earnings of $459 thousand, or an increase of 27%, compared with net income of $361 thousand for the same quarter last year. Net income per basic share for the third quarter of 2017 was $0.33 as compared to $0.29 for the same quarter last year.

Dann H. Bowman, President and Chief Executive Officer stated, “In addition to the excellent third quarter earnings results, the Company also recently completed a successful stock offering, in which demand for the shares exceeded the amount of stock available. With the increase in capital and the strength of the local economy, we are very pleased and optimistic regarding growth opportunities for the Bank. In general, this is a very good time for the Bank and we are very excited about the future.”

Financial Condition

At September 30, 2017, total assets were $198.3 million, an increase of $23.2 million or 13.2% over $175.1 million at December 31, 2016. Total deposits increased by 12.5% or $17.3 million during the year to $154.8 million, compared to $137.6 million as of December 31, 2016. At September 30, 2017, the Company’s core deposits represent 90.5% of the total deposits.

Gross loans increased by 6.3% or $6.9 million as of September 30, 2017 to $116.4 million, as compared with $109.5 million as of December 31, 2016. The Bank did not have any nonperforming loans for the quarter ended September 30, 2017, and one nonperforming loan as of December 31, 2016, respectively. OREO properties remained at zero as of September 30, 2017 and December 31, 2016, respectively.

Earnings

The Company posted net interest income of $1.6 million and $1.4 million for the three months ended September 30, 2017 and 2016, respectively, or an increase of $197 thousand or 13.8%. Average interest-earning assets were $176.7 million with average interest-bearing liabilities of $101.2 million, yielding a net interest margin of 3.65% for the third quarter of 2017, as compared to the average interest-earning assets of $161.8 million with average interest-bearing liabilities of $81.3 million, yielding a net interest margin of 3.51% for the third quarter of 2016.

Non-interest income totaled $389 thousand for the third quarter of 2017, or a decrease of 1.6% as compared with $395 thousand earned during the same quarter last year. Service charges on deposit accounts increased by $8 thousand or 2.8% to $309 thousand, primarily due to an increase in income from returned items and overdraft charges. Dividend income from restricted stock decreased to $36 thousand for the third quarter of 2017, compared to $49 thousand for the same quarter in 2016, due to the Federal Home Loan Bank change in dividend payout percentage policy. Income from Bank-owned life insurance remained consistent at about $25 thousand in the third quarter of 2017 and 2016, respectively.

General and administrative expenses were $1.2 million for the three months ended September 30, 2017, and September 30, 2016, respectively. The largest component of general and administrative expenses was salary and benefits expense of $732 thousand for the third quarter of 2017, as compared to $704 thousand for the same quarter last year. Regulatory assessments remained consistent at about $37 thousand for the third quarter of 2017 and 2016, respectively. Advertising and marketing expenses increased by $6 thousand or 31.7% to $25 thousand in the third quarter of 2017 from $19 thousand for the same period last year. The Company engaged a marketing company to assist with advertising efforts during 2017.

Income tax expense was $300 thousand for the three months ended September 30, 2017 as compared to $230 thousand for the three months ended September 30, 2016. The effective income tax rate for the third quarter of 2017 and 2016 is approximately 39.5% and 38.9%, respectively.

Forward-Looking Statements

The statements contained in this press release that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward-looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties, including but not limited to, the health of the national and California economies, the Company’s ability to attract and retain skilled employees, customers’ service expectations, the Company’s ability to successfully deploy new technology and gain efficiencies therefrom, changes in interest rates, loan portfolio performance, and other factors.

Contact: Dann H. Bowman, President and CEO or Melinda M. Milincu, Vice President and CFO, Chino Commercial Bancorp and Chino Commercial Bank, N.A., 14245 Pipeline Avenue, Chino, Ca. 91710, (909) 393-8880.

   
CHINO COMMERCIAL BANCORP  
CONSOLIDATED BALANCE SHEET  
September 30, 2017 and December 31, 2016  
   
  September 30, 2017   December 31, 2016  
  (unaudited)   (audited)  
ASSETS:        
Cash and due from banks   43,683,972     $ 30,498,888    
Total cash and cash equivalents   43,683,972       30,498,888    
         
Interest-bearing deposits in other banks   2,232,000       2,480,000    
Investment securities available for sale   3,320,992       3,924,102    
Investment securities held to maturity (fair value approximates $22,090,000 at September 30, 2017 and $18,240,000 at December 31, 2016)   22,191,147       18,407,741    
Total investments   27,744,139       24,811,843    
Loans        
Real estate   97,711,885       87,306,627    
Commercial   18,223,393       21,822,341    
Installment   479,720       424,818    
Gross loans   116,414,998       109,553,786    
Unearned fees and discounts   (359,786 )     (348,359 )  
Loans net of unearned fees and discount   116,055,212       109,205,427    
Allowance for loan losses   (1,980,787 )     (1,845,447 )  
Net loans   114,074,425       107,359,980    
         
Fixed assets, net   5,862,851       6,000,404    
Accrued interest receivable   441,474       295,102    
Stock investments, restricted, at cost   1,962,226       1,935,300    
Bank-owned life insurance   3,361,418       3,285,963    
Other assets   1,158,428       904,338    
Total assets $ 198,288,933     $ 175,091,818    
         
LIABILITIES:        
Deposits        
Non-interest bearing $ 76,143,930     $ 68,613,998    
Interest bearing        
NOW and money market   50,998,655       52,873,006    
Savings   7,348,894       5,165,730    
Time deposits less than $250,000   5,690,422       4,438,254    
Time deposits of $250,000 or greater   14,642,767       6,471,260    
Total deposits   154,824,668       137,562,248    
         
Accrued interest payable   69,094       27,902    
Borrowings from Federal Home Loan Bank (FHLB)   20,000,000       20,000,000    
Accrued expenses & other payables   1,058,103       872,374    
Subordinated notes payable to subsidiary trust   3,093,000       3,093,000    
Total liabilities   179,044,865       161,555,524    
         
SHAREHOLDERS’ EQUITY        
Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 1,549,420 shares at September 30, 2017 and 1,231,332 issued and outstanding at December 31, 2016, respectively.   10,502,558       6,089,466    
Retained earnings   8,740,206       7,449,608    
Accumulated other comprehensive income/(loss)   1,304       (2,780 )  
Total shareholders’ equity   19,244,068       13,536,294    
Total liabilities & shareholders’ equity $ 198,288,933     $ 175,091,818    
         
         

   
CHINO COMMERCIAL BANCORP  
CONSOLIDATED STATEMENTS OF NET INCOME  
(unaudited)  
   
  For the three months ended   For the year ended  
  September 30   September 30  
  2017   2016   2017   2016  
Interest income                
Interest and fee income on loans $ 1,564,413     $ 1,354,618     $ 4,523,485     $ 4,047,265    
Interest on federal funds sold and FRB deposits   108,167       36,165       241,780       89,201    
Interest on time deposits in banks   7,032       10,272       21,045       30,651    
Interest on investment securities   148,121       134,864       407,413       423,522    
Total interest income   1,827,733       1,535,919       5,193,723       4,590,639    
                 
Interest Expense                
Interest on deposits   107,328       69,390       259,212       194,820    
Other borrowings   95,086       38,028       218,462       106,459    
Total interest expense   202,414       107,418       477,674       301,279    
Net interest income   1,625,319       1,428,501       4,716,049       4,289,360    
Provision for loan losses   55,000.0       30,000       110,000       164,370    
                 
Net interest income after provision for loan losses   1,570,319       1,398,501       4,606,049       4,124,990    
                 
Non-interest income                
Service charges on deposit accounts   309,215       300,936       918,252       847,737    
Other miscellaneous income   18,184       19,700       54,361       137,646    
Dividend income from restricted stock   36,381       48,962       109,302       121,805    
Income from bank-owned life insurance   25,223       25,657       75,455       76,825    
Total non-interest income   389,003       395,255       1,157,370       1,184,013    
                 
Non-interest expenses                
Salaries and employee benefits   731,943       704,158       2,248,259       2,091,401    
Occupancy and equipment   109,829       111,480       314,502       314,434    
Data and item processing   85,632       76,524       247,479       285,305    
Advertising and marketing   24,934       18,935       77,050       53,477    
Legal and professional fees   38,518       51,143       149,376       138,674    
Regulatory assessments   37,607       36,539       112,824       103,389    
Insurance   8,685       8,562       25,374       25,572    
Directors’ fees and expenses   32,484       27,192       90,576       81,030    
Other expenses   131,619       168,047       367,484       373,185    
Total non-interest expenses   1,201,251       1,202,580       3,632,924       3,466,467    
Income before income tax expense   758,071       591,176       2,130,495       1,842,536    
Income tax expense   299,516       229,917       839,896       718,908    
Net income $ 458,555     $ 361,259     $ 1,290,599     $ 1,123,628    
                 
Basic earnings per share $ 0.33     $ 0.29     $ 1.01     $ 0.91    
Diluted earnings per share $ 0.33     $ 0.29     $ 1.01     $ 0.91    
                 
           
Tax rate   39.5 %     38.9 %     39.4 %     39.0 %  
                 
                 

           
    For the three months ended   For the year ended  
    September 30   September 30  
    2017   2016   2017   2016  
KEY FINANCIAL RATIOS                  
(unaudited)                  
Annualized return on average equity     11.29 %     11.05 %     11.66 %     11.79 %  
Annualized return on average assets     0.96 %     0.82 %     0.94 %     0.89 %  
Net interest margin     3.65 %     3.51 %     3.73 %     3.73 %  
Core efficiency ratio     59.64 %     65.94 %     61.85 %     63.33 %  
Net chargeoffs/(recoveries) to average loans     -0.01 %     -0.01 %     -0.03 %     0.03 %  
                   
AVERAGE BALANCES                  
(thousands, unaudited)                  
Average assets   $ 191,547     $ 176,458     $ 183,985     $ 168,120    
Average interest-earning assets   $ 176,693     $ 161,774     $ 169,227     $ 153,680    
Average gross loans   $ 114,760     $ 104,499     $ 112,304     $ 100,087    
Average deposits   $ 145,223     $ 140,514     $ 142,519     $ 134,204    
Average equity   $ 16,246     $ 13,076     $ 14,760     $ 12,704    
                   
                   
                   
CREDIT QUALITY   End of period          
(unaudited)   September 30, 2017   December 31, 2016          
                   
Non-performing loans   $     $ 536,696            
                   
Non-performing loans to total loans     0.00 %     0.48 %          
Non-performing loans to total assets     0.00 %     0.30 %          
Allowance for loan losses to total loans     1.70 %     1.68 %          
Nonperforming assets as a percentage of total loans and OREO     0.00 %     0.48 %          
Allowance for loan losses to non-performing loans     n/a       353.74 %          
                   
OTHER PERIOD-END STATISTICS                  
(unaudited)                  
Shareholders equity to total assets     9.71 %     7.73 %          
Net loans to deposits     73.68 %     78.04 %          
Non-interest bearing deposits to total deposits     49.18 %     49.88 %          
Total capital to total risk-weighted assets     18.82 %     15.37 %          
Tier 1 capital to total risk-weighted assets     20.18 %     15.32 %          
Tier 1 leverage ratio     13.40 %     10.24 %          
Common equity tier 1     20.18 %     15.32 %