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Chino Commercial Bancorp Reports 28% Increase In Third Quarter Earnings

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CHINO, Calif., Oct. 22, 2012 /PRNewswire/ -- The Board of Directors of Chino Commercial Bancorp (OTCBB: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, 2012 with net earnings of $153,816 or a 28.1% increase from net earnings of $120,113 for the third quarter of 2011. Net income for the most recent quarter represents $0.19 per basic share, as compared with $0.16 per basic share from the same quarter last year. The Company's profit for the nine months ended September 30, 2012 increased 76.2% to $481,970 or $0.60 per basic share as compared with net earnings of $273,474 or $0.37 per basic share for the same period in 2011.

Dann H. Bowman, President and Chief Executive Officer, stated, "We are very pleased with the performance and earnings of the Bank during the third quarter.  Not only were earnings up 28% over the same period last year, but loan quality has improved with the Bank having only two delinquent loans at quarter-end.  Year-to-date earnings reflect an annualized return on beginning equity of 8.60%, which in this low rate environment is an excellent return to our shareholders.

"The economy in the Inland Empire appears to be improving, with real estate values rising moderately and residential foreclosure rates decreasing.  Business conditions are improving with many of our small business customers and we are motivated and eager to provide financing for the businesses and consumers in our community."

Financial Condition

Total assets increased from $109.7 million at December 31, 2011 to $119.3 million at September 30, 2012, or an 8.7% increase.  Investments decreased from $26.0 million at December 31, 2011 to $23.4 million, or 10.0%, while gross loans increased from $56.8 million to $59.4 million, and federal funds sold increased from $14.2 million to $24.4 million.  Overall, earning assets increased 10.6% in the nine month period ended September 30, 2012.

The Bank's asset quality improved in the nine months ended September 30, 2012 as $439,317.26 in OREO was sold and the level of nonperforming assets to total loans and OREO moved from 7.07% at December 31, 2011 to 3.90% at September 30, 2012. Net charged-off loans were $101,692 for the nine months ended September 30, 2012 compared to $186,619 for the same period of 2011. Nonperforming loans decreased from $4.4 million at September 30, 2011 to $2.3 million at September 30, 2012, a reduction of 47%.

Balance sheet changes in the nine months ended September 30, 2012 include an increase in earning assets and an increase in deposits. Total deposits increased by $8.7 million or 8.8% to $106.8 million at September 30, 2012, compared to $98.1 million December 31, 2011. Time deposits decreased 1.0 million or 5.8% to $15.9 million at September 30, 2012 from 16.9 million at December 31, 2011. This reduction was an intentional strategy to reduce higher yielding deposits. Non-interest bearing deposits increased 8.2% to $51.1 million at September 30, 2012 from $47.2 million at December 31, 2011; and NOW and money market accounts increased 17.5% to 37.9 million at September 30, 2012 from $32.2 million at December 31, 2011.  The ratio of non-interest bearing deposits to total deposits decreased slightly from 48.1% at December 31, 2011 to 47.8% at September 30, 2012.

On September 16, 2011, the Company filed a registration statement on Form S-1 with the SEC in connection with a secondary stock offering to existing shareholders which commenced in the fourth quarter of 2011 and was extended to the general public in early 2012. The Company has received $668,442.14 in additional paid in capital from the offering. The offering closed on July 15, 2012.

Earnings

The Company posted net interest income of $923,873 and $870,314 for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, the Company posted net interest income of $2.7 million and $2.8 million for 2012 and 2011, respectively. Interest and fee income from loans increased $53,794, or 6.1% to $931,264 for the third quarter of 2012 compared with the third quarter of 2011. The decrease in interest income from loans was $101,670, or 3.6%, comparing the nine months ended September 30, 2012 with same period in 2011. For the nine months ended September 30, 2012, investment income decreased $178,172, or 39.1%, to $277,759 as compared to the nine months ended September 30, 2011.

Non-interest income totaled $314,333 for the three months ended September 30, 2012, or a 4.1% decrease from $327,655 earned during the third quarter of 2011. Non-interest income increased 6.0% for the nine months ended September 30, 2012 to $1.1 million, as compared to $1.0 million for the nine months ended September 30, 2011.  The major contributor to the increase in the nine-month period was other miscellaneous income due to reimbursement of legal expenses incurred in 2011.

The provision for loan losses decreased to $76 during the third quarter of 2012, a decrease of $2,145, as compared to $2,221 for the three months ended September 30, 2011. The Company provided $2,048 to the allowance for loan losses during the nine months ended September 30, 2012, a reduction from $281,660 for the same period in 2011. The lower provision for the nine months ended September 30, 2012 was due to a lower level of charge-offs during the period as compared to the first half of 2011 as well as a decrease in nonperforming assets.

General and administrative expenses were $995,743 and $3,036,344 for the three and nine months ended September 30, 2012, respectively, as compared to $1,011,489 and $3,148,761 for the three and nine months ended September 30, 2011. Legal and professional fees decreased $98,101 to $212,983 and regulatory assessments decreased $11,223 to $166,195 for the nine months ended September 30, 2012 compared to the same period in 2011.

Income tax expense was $278,744 for the nine months ended September 30, 2012, as compared to $131,997 for the nine months ended September 30, 2011. The effective income tax rate for the nine months ended September 30, 2012 and 2011 is approximately 36.6% and 32.6%, respectively.

Forward-Looking Statements

The statements contained in this 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.  The forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and readers are cautioned not to unduly rely on such forward-looking statements. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Factors that might cause such differences include, but are not limited to, the health of the National and California economies, the Company's ability to attract and retain skilled employees, competition in the financial services market for both deposits and loans, the Company's ability to increase its customer base, customers' service expectations, the Company's ability to successfully de­ploy new technology and gain efficiencies therefrom, the success of branch expansion, changes in interest rates, loan portfolio performance, the Company's ability to enhance its earnings capacity, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K.

CHINO COMMERCIAL BANCORP

CONSOLIDATED BALANCE SHEET

September 30, 2012 and December 31, 2011



September 30, 2012


December 31, 2011


(unaudited)


(audited)

ASSETS:




Cash and due from banks

$     3,723,692


$     3,358,177

Federal funds sold

24,362,107


14,165,877

Total cash and cash equivalents

28,085,799


17,524,054





Interest-bearing deposits in other banks

15,736,252


13,339,252

Investment securities available for sale

2,463,801


2,972,420

Investment securities held to maturity (fair value approximates $5,383,000 at September 30, 2012 and $9,861,000 at December 31, 2011)

5,162,608


9,652,630

Total investments

23,362,661


25,964,302

Loans




Construction

0


0

Real estate

47,206,181


46,184,898

Commercial

11,888,615


9,974,353

Installment

343,986


643,660

Gross loans

59,438,782


56,802,911

Unearned fees and discounts

(137,191)


(29,107)

Loans net of unearned fees and discount

59,301,591


56,773,804

Allowance for loan losses

(1,438,319)


(1,537,963)

 Net loans

57,863,272


55,235,841





Accrued interest receivable

254,082


275,976

Restricted stock

623,300


667,700

Fixed assets, net

6,309,127


6,443,753

Foreclosed assets

0


439,317

Prepaid & other assets

2,763,820


3,154,650

Total assets

$ 119,262,061


$ 109,705,593





LIABILITIES:




Deposits




Non-interest bearing 

$   51,053,088


$   47,188,644

Interest bearing




NOW and money market

37,870,150


32,241,986

Savings

1,965,306


1,809,536

Time deposits less than $100,000

4,379,976


4,700,126

Time deposits of $100,000 or greater

11,509,110


12,163,266

Total deposits

106,777,630


98,103,558





Accrued interest payable

35,314


139,646

Accrued expenses & other payables

738,591


897,363

Subordinated notes payable to subsidiary trust

3,093,000


3,093,000

Total liabilities

110,644,535


102,233,567

SHAREHOLDERS' EQUITY




Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 829,602 shares and 749,540 shares at September 30, 2012 and December 31, 2011, respectively.

3,429,254


2,760,813

Retained earnings

5,113,579


4,631,609

Accumulated other comprehensive income

74,693


79,604

Total shareholders' equity

8,617,526


7,472,026

Total liabilities & shareholders' equity

$ 119,262,061


$ 109,705,593







CHINO COMMERCIAL BANCORP

CONSOLIDATED STATEMENTS OF NET INCOME

(unaudited)










For the three months ended


For the nine months ended


September 30


September 30


2012


2011


2012


2011

Interest income








Investment securities and due from banks

$   82,697


$ 133,204


$ 277,759


$ 455,931

Interest on Federal funds sold

10,280


4,616


30,102


8,651

Interest and fee income on loans 

931,264


877,470


2,691,575


2,793,245

Total interest income

1,024,241


1,015,290


2,999,436


3,257,827

Interest expense








Deposits

83,041


94,013


248,643


307,740

Other interest expense

0


0


0


75

Other borrowings

17,327


50,963


52,795


152,888

Total interest expense

100,368


144,976


301,438


460,703

Net interest income

923,873


870,314


2,697,998


2,797,124

Provision for loan losses

76


2,221


2,048


281,660

Net interest income after








provision for loan losses

923,797


868,093


2,695,950


2,515,464

Non-interest income








Service charges on deposit accounts

286,132


298,241


876,973


892,317

Gain on sale of foreclosed assets

0


0


93,871


61,151

Other miscellaneous income

8,415


9,299


66,164


24,805

Dividend income from restricted stock

2,996


2,783


12,959


8,342

Income from bank-owned life insurance

16,790


17,332


51,141


52,153

Total non-interest income

314,333


327,655


1,101,108


1,038,768

Non-interest expenses








Salaries and employee benefits

513,382


538,909


1,633,223


1,647,203

Occupancy and equipment

111,905


98,992


318,971


325,794

Data and item processing

92,848


86,777


265,691


277,962

Advertising and marketing

13,919


14,947


38,824


42,183

Legal and professional fees

76,224


108,861


212,983


311,084

Regulatory assessments

54,872


26,051


166,195


177,418

Insurance

12,062


10,587


36,497


30,236

Directors' fees and expenses

27,167


17,321


80,207


54,097

Other expenses

93,364


109,044


283,753


282,784

Total non-interest expenses

995,743


1,011,489


3,036,344


3,148,761

Income (loss) before income tax expense

242,387


184,259


760,714


405,471

Income tax expense (benefit)

88,571


64,146


278,744


131,997

Net income (loss)

$ 153,816


$ 120,113


$ 481,970


$ 273,474

Basic earnings per share  

$      0.19


$      0.16


$      0.60


$      0.37

Diluted earnings (loss) per share 

$      0.19


$      0.16


$      0.59


$      0.37












CHINO COMMERCIAL BANCORP










For the three months ended


For the nine months ended


September 30


September 30


2012


2011


2012


2011

KEY FINANCIAL RATIOS








(unaudited)








Annualized return on average equity

7.21%


6.80%


7.82%


5.17%

Annualized return on average assets

0.56%


0.46%


0.59%


0.34%

Net interest margin

3.74%


3.78%


3.75%


3.99%

Core efficiency ratio

80.42%


84.43%


81.95%


83.42%

Net chargeoffs to average loans

0.18%


-0.12%


0.18%


0.31%









AVERAGE BALANCES








(thousands, unaudited)








Average assets

$ 110,727


$ 104,712


$ 108,751


$ 107,492

Average interest-earning assets

$   98,316


$   91,289


$   96,061


$   93,677

Average gross loans

$   58,075


$   58,679


$   56,266


$   59,425

Average deposits

$   98,234


$   93,509


$   96,449


$   96,219

Average equity

$     8,536


$     7,062


$     8,218


$     7,052







CREDIT QUALITY

End of period

(unaudited)

September 30, 2012


December 31, 2011

Non-performing loans

$           2,318,247


$          3,605,142

Non-performing loans to total loans

3.90%


6.35%

Non-performing loans to total assets

1.94%


3.29%

Allowance for loan losses to total loans

2.42%


2.71%

Nonperforming assets as a percentage of total loans and OREO

3.90%


7.07%

Allowance for loan losses to non-performing loans

62.04%


42.66%





OTHER PERIOD-END STATISTICS




(unaudited)

September 30, 2012


December 31, 2011

Shareholders equity to total assets

7.23%


6.81%

Net Loans to deposits

54.19%


56.30%

Non-interest bearing deposits to total deposits

47.81%


48.10%

 

SOURCE Chino Commercial Bancorp



RELATED LINKS
http://www.chinocommercialbank.com

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