Chino Commercial Bancorp Reports Quarterly and Full Year Earnings

CHINO, Calif., Jan. 19, 2018 (GLOBE NEWSWIRE) —

The Board of Directors of Chino Commercial Bancorp (OTC:CCBC), the parent company of Chino Commercial Bank, N.A., announced the net earnings for the Bank and the consolidated holding company, for the fourth quarter ended December 31, 2017, with net earnings before taxes of $588 thousand, or an increase of 9.1%, compared with earnings before taxes of $539 thousand for the same quarter last year.  Net after-tax income for the fourth quarter ending December 31, 2017 was $280 thousand, which represents a 14.9% decrease, compared with net income of $329 thousand for the same quarter last year.  The decrease in net income for the fourth quarter 2017 was attributable to a one-time deferred tax adjustment in order to comply with the Tax Reform Act signed into law in December 2017.  Net income per basic and diluted share for the fourth quarter of 2017 was $0.18 as compared to $0.27 for the same quarter last year. 

The Company’s net after-tax income for the full year ended December 31, 2017 increased 8.1% to $1.571 million as compared with net earnings of $1.453 million for the same period in 2016. Even though net after-tax earnings were higher in 2017 as compared with 2016, because of additional shares issued during the year, the basic and diluted earnings per share were $1.17 in 2017 as compared with $1.18 in 2016.

Dann H. Bowman, President and Chief Executive Officer, stated, “The Company had an excellent year in 2017, posting new record levels of Deposits, Loans, Revenue and Net Earnings.  The Tax Reform Act will reduce the corporate income tax rate beginning in 2018; however, for 2017 it resulted in a one-time increased tax burden, because of the reduction to the Company’s deferred tax asset.

“In 2017 the Company raised $4.4 million in additional capital and issued 318,088 shares of additional common stock. The capital raise was oversubscribed and will allow the Company to offer new products and expand into new markets. The Bank recently filed an application with the Office of the Comptroller of the Currency to establish a fourth branch office in Upland.  We are excited about expanding into this community, which we believe will significantly contribute to the Company’s growth and profitability.”

Financial Condition

At December 31, 2017, total assets were $192.8 million, an increase of $17.7 million or 10.1% over $175.1 million at December 31, 2016.  Total deposits increased by 8.4% or $11.6 million during the year to $149.1 million, compared to $137.6 million as of December 31, 2016. At December 31, 2017, the Company’s core deposits represent 90.8% of the total deposits.

Gross loans increased by 11.9% or $13.0 million as of December 31, 2017 to $122.6 million, as compared with $109.5 million as of December 31, 2016.  The Bank did not have any nonperforming loans for the quarter ended December 31, 2017, and one nonperforming loan as of December 31, 2016, respectively.  OREO properties remained at zero as of December 31, 2017 and December 31, 2016, respectively.

Earnings

The Company posted net interest income of $1.6 million and $1.5 million for the three months ended December 31, 2017 and 2016, respectively, or an increase of $158 thousand or 10.7%.  Average interest-earning assets were $179.4 million with average interest-bearing liabilities of $101.0 million, yielding a net interest margin of 3.62% for the fourth quarter of 2017, as compared to the average interest-earning assets of $161.8 million with average interest-bearing liabilities of $85.9 million, yielding a net interest margin of 3.64% for the fourth quarter of 2016.

Non-interest income totaled $372 thousand for the fourth quarter of 2017, or a decrease of 3.0% as compared with $383 thousand earned during the same quarter last year. Service charges on deposit accounts increased by $43 thousand or 18.0% to $241 thousand, primarily due to an increase in income from returned items, overdraft charges, and analysis fees. Dividend income from restricted stock decreased to $40.1 thousand for the fourth quarter of 2017, compared to $99 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 fourth quarter of 2017 and 2016, respectively.

General and administrative expenses were $1.3 million for the three months ended December 31, 2017, and December 31, 2016, respectively. The largest component of general and administrative expenses was salary and benefits expense of $803 thousand for the fourth quarter of 2017, as compared to $791 thousand for the same quarter last year. Regulatory assessments remained consistent at about $38 thousand for the fourth quarter of 2017 and 2016, respectively. Advertising and marketing expenses increased by $28 thousand or 122.7% to $50 thousand in the fourth quarter of 2017 from $23 thousand for the same period last year.  The Company engaged a marketing company to assist with advertising efforts during 2017.

Income tax expense was $307 thousand which represents an increase of $98 thousand or 47.03% for the three months ended December 31, 2017 as compared to $209 thousand for the three months ended December 31, 2016. The effective income tax rate for the fourth quarter of 2017 and 2016 is approximately 52.3% and 38.8%, respectively.  The increase in the income tax expense as well as the effective tax rate is entirely attributed to the deferred tax adjustment recorded to comply with the Tax Reform Act signed into law in December 2017.

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, and 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  
December 31, 2017 and December 31, 2016  
   
  December 31, 2017   December 31, 2016  
  (unaudited)   (audited)  
ASSETS:                
Cash and due from banks   34,157,668     $ 30,498,888    
Total cash and cash equivalents   34,157,668       30,498,888    
                 
Interest-bearing deposits in other banks   1,240,000       2,480,000    
Investment securities available for sale   3,131,027       3,924,102    
Investment securities held to maturity (fair value approximates                
$21,104,000 at December 31, 2017 and $18,240,000 at December 31, 2016)   21,389,552       18,407,741    
Total investments   25,760,579       24,811,843    
Loans                
Real estate   99,585,847       87,306,627    
Commercial   22,679,268       21,822,341    
Installment   337,455       424,818    
Gross loans   122,602,570       109,553,786    
Unearned fees and discounts   (365,091 )     (348,359 )  
Loans net of unearned fees and discount   122,237,479       109,205,427    
Allowance for loan losses   (2,094,723 )     (1,845,447 )  
Net loans   120,142,756       107,359,980    
                 
Fixed assets, net   5,875,381       6,000,404    
Accrued interest receivable   531,771       295,102    
Stock investments, restricted, at cost   2,084,129       1,935,300    
Bank-owned life insurance   3,386,754       3,285,963    
Other assets   861,969       904,338    
Total assets $   192,801,007     $   175,091,818    
                 
LIABILITIES:                
Deposits                
Non-interest bearing  $   74,766,694     $   68,613,998    
Interest bearing                
NOW and money market   47,030,167       52,873,006    
Savings   7,897,948       5,165,730    
Time deposits less than $250,000   5,727,789       4,438,254    
Time deposits of $250,000 or greater   13,703,790       6,471,260    
Total deposits   149,126,388       137,562,248    
                 
Accrued interest payable   65,160       27,902    
Borrowings from Federal Home Loan Bank (FHLB)     20,000,000         20,000,000    
Accrued expenses & other payables   1,012,535       872,374    
Subordinated notes payable to subsidiary trust   3,093,000       3,093,000    
Total liabilities   173,297,083       161,555,524    
                 
SHAREHOLDERS’ EQUITY                
Common stock, authorized 10,000,000 shares with no par value, issued and                
outstanding 1,549,420 shares at December 31, 2017 and 1,231,332 issued                
and outstanding at December 31, 2016, respectively.   10,502,558       6,089,466    
Retained earnings   9,020,564       7,449,608    
Accumulated other comprehensive income/(loss)   (19,198 )     (2,780 )  
Total shareholders’ equity   19,503,924       13,536,294    
Total liabilities & shareholders’ equity $   192,801,007     $   175,091,818    
                 
                 

 

CHINO COMMERCIAL BANCORP  
CONSOLIDATED STATEMENTS OF NET INCOME  
   
  For the three months ended   For the year ended  
  December 31   December 31  
    2017       2016       2017       2016    
  (unaudited)   (unaudited)   (unaudited)   (audited)  
Interest income                                
Interest and fee income on loans $ 1,562,601     $ 1,418,399     $ 6,086,085     $ 5,465,664    
Interest on federal funds sold and FRB deposits   117,777       40,673       359,557       129,894    
Interest on time deposits in banks   5,353       7,945       26,398       38,596    
Interest on investment securities   145,098       121,584       552,510       545,090    
Total interest income   1,830,829       1,588,601       7,024,550       6,179,244    
                                 
Interest Expense                                
Interest on deposits   107,280       73,516       366,492       268,336    
Other borrowings   87,061       36,216       305,524       142,676    
Total interest expense   194,341       109,732       672,016       411,012    
Net interest income   1,636,488       1,478,869       6,352,534       5,768,232    
Provision for loan losses   100,000       40,000       210,000       199,950    
                                 
Net interest income after provision for loan losses   1,536,488       1,438,869       6,142,534       5,568,282    
                                 
Non-interest income                                
Service charges on deposit accounts   284,681       241,256       1,202,933       1,062,812    
Other miscellaneous income   21,323       16,521       75,684       180,347    
Dividend income from restricted stock   40,681       99,694       149,983       221,499    
Income from bank-owned life insurance   25,336       25,891       100,791       102,716    
Total non-interest income   372,021       383,362       1,529,391       1,567,374    
                                 
Non-interest expenses                                
Salaries and employee benefits   803,215       791,133       3,051,474       2,882,535    
Occupancy and equipment   110,354       102,348       424,856       416,781    
Data and item processing   88,103       86,049       335,582       316,821    
Advertising and marketing   50,321       22,598       127,371       76,074    
Legal and professional fees   46,706       46,227       196,082       184,900    
Regulatory assessments   37,929       37,611       150,753       141,000    
Insurance   9,102       8,608       34,475       34,180    
Directors’ fees and expenses   29,638       26,983       120,214       108,013    
Other expenses   145,455       162,168       512,940       594,311    
Total non-interest expenses   1,320,823       1,283,725       4,953,747       4,754,615    
Income before income tax expense   587,686       538,506       2,718,178       2,381,041    
Income tax expense   307,328       209,030       1,147,224       927,938    
Net income $   280,358     $   329,476     $   1,570,954     $   1,453,103    
                                 
Basic earnings per share  $   0.18     $   0.27     $   1.17     $   1.18    
Diluted earnings per share  $   0.18     $   0.27     $   1.17     $   1.18    
                                 
                                 
Tax rate   52.3 %     38.8 %     42.2 %     39.0 %  
                                 
                                 

 

    For the three months ended   For the year ended  
    December 31   December 31  
      2017       2016       2017       2016    
KEY FINANCIAL RATIOS                                  
(unaudited)                                  
Annualized return on average equity     6.25 %     9.82 %     10.45 %     11.31 %  
Annualized return on average assets     0.58 %     0.75 %     0.84 %     0.85 %  
Net interest margin     3.62 %     3.64 %     3.70 %     3.70 %  
Core efficiency ratio     65.76 %     68.93 %     62.85 %     64.82 %  
Net chargeoffs/(recoveries) to average loans     -0.01 %     -0.01 %     -0.04 %     0.02 %  
                                   
AVERAGE BALANCES                                  
(thousands, unaudited)                                  
Average assets   $   194,156     $   176,301     $   186,548     $   170,152    
Average interest-earning assets   $   179,445     $   161,809     $   171,802     $   155,719    
Average gross loans   $   117,395     $   106,639     $   113,587     $   101,710    
Average deposits   $   149,863     $   143,072     $   144,370     $   136,436    
Average equity   $   17,946     $   13,416     $   15,037     $   12,848    
                                   
                                   
                                   
CREDIT QUALITY   End of period          
(unaudited)   December 31, 2017   December 31, 2016          
                   
Non-performing loans   $   –     $   521,696            
                                   
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     1.71 %     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     10.12 %     7.73 %                  
Net loans to deposits     80.56 %     78.04 %                  
Non-interest bearing deposits to total deposits     50.14 %     49.88 %                  
Total capital to total risk-weighted assets     18.43 %     15.37 %                  
Tier 1 capital to total risk-weighted assets     19.76 %     15.32 %                  
Tier 1 leverage ratio     13.41 %     10.24 %                  
Common equity tier 1     19.76 %     15.32 %                  
                                   

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