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Chino Commercial Bancorp Reports Quarterly Results

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CHINO, Calif., Oct. 24, 2011 /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, 2011 with net income of $120,113, a 38.1% reduction from net income of $194,041 for the same quarter last year. The net income for the most recent quarter represents $0.16 per diluted share, as compared with earnings of $0.26 per diluted share from the same quarter last year. The Company's profit year-to-date increased 9.6% to $273,474 or $0.37 per diluted share as compared with net earnings of $249,519 or $0.35 per dilute share for the same period last year.

Dann H. Bowman, President and Chief Executive Officer stated, "The fundamental economic conditions in the Inland Empire appear to be improving.  At September 30, 2011 the Bank had only one delinquent loan, which has subsequently been paid in full.  Similarly, the Bank also had only one foreclosed property and no pending foreclosures.  

Many of our small business customers are beginning to see improved sales levels, and moderately better business conditions.  We are pleased that we are in a strong position to help the small business customers in the Inland Empire, which are the engines for job creation in our community."

Financial Condition

The Company's total assets were $106.2 million at September 30, 2011, a decrease of $7.7 million, or 6.8% as compared to total assets of $113.9 million at December 31, 2010. The most significant changes in the Company's balance sheet during the nine months ended September 30, 2011 are outlined below:

Total deposits decreased from $103.0 million at December 31, 2010 to $94.9 million at September 30, 2011, a 7.8% decrease. Noninterest-bearing deposits increased to $44.7 million at September 30, 2011, an increase of $2.8 million or 6.7% from December 31, 2010. Total interest-bearing deposits decreased from $61.1 million at December 31, 2010 to $50.2 million at September 30, 2011, a 17.8% decrease in the nine months of 2011. This was done by design to eliminate higher yielding deposits. The ratio of non-interest bearing deposits to total deposits increased from 40.7% at December 31, 2010 to 47.1% at September 30, 2011.

The Company experienced a decrease in interest-earning assets of 8.7% to $92.6 million in the nine months of 2011, primarily in total investments which decreased to $25.5 million at September 30, 2011, compared to $36.2 million at December 31, 2010. This was caused by the liquidation of lower-yielding interest earning deposits in other banks to pay off higher-yielding interest bearing deposits. The reduction in assets was also part of a managed strategy to enable the Bank to maintain its tier 1 leverage capital ratio at or above 9.0% as agreed with bank regulators pending a capital raise which is expected to commence in the fourth quarter of 2011.

Nonperforming assets were comprised of 14 loans and one foreclosed property totaling $4.8 million at September 30, 2011, compared to 11 loans and one foreclosed property totaling $4.7 million at December 31, 2010. The Company's nonperforming assets at September 30, 2011 and December 31, 2010 were 8.36% and 7.67%, respectively, of the total loans and OREO. Allowance for loan losses to non-performing loans was 35.30% and 34.60% at September 30, 2011 and December 31, 2010, respectively. All but one of the loans classified as nonperforming as of September 30, 2011, totaling $277,012, are current and paying as agreed.

Earnings

The Company decreased its provision for loan losses 85.8% or $13,423 to $2,221 for the three months ended September 30, 2011 and reduced its provision 46.9% or $248,336 to $281,660 for the nine months ended September 30, 2011. The decreased provisions in 2011 were primarily the result of a reduction in loan charge-offs.

The Company posted net interest income for the quarters ended September 30, 2011 and September 30, 2010 of $870,314 and $1,005,347, respectively. For the nine months ended September 30, the Company posted net interest income of $2,797,124 and $2,935,421 for 2011 and 2010, respectively. Loan interest income decreased $178,601, or 16.9%, to $877,470 for third quarter of 2011 compared with the third quarter of 2010. The decrease in interest income from loans was $378,269, or 11.9%, comparing the nine months ended September 30, 2011 with the same period in 2010. For the nine months ended September 30, 2011, investment income decreased $160,640 or 26.1% to $455,931 as compared to the nine months ended September 30, 2010.

Interest expense on deposits decreased $124,688, or 57.0%, comparing the quarters ended September 30, 2011 with September 30, 2010. On a year-to-date comparison, interest on deposits decreased $394,226, or 56.2%, in 2011 compared to the same period in 2010. Interest from investments decreased $82,977, or 38.4% for the quarter ended September 30, 2011 compared to the same period in 2010.

Non-interest income totaled $327,655 for the three months ended September 30, 2011, or a 22.9% decrease from $424,989 earned in the third quarter of 2010. The decrease in non-interest income was due to a gain on sale of repossessed equipment of $127,839 partially offset by the recognition of the provision to the valuation allowance on OREO for $29,700 in the third quarter of 2010 that was not repeated in the same quarter of 2011. Non-interest income increased 0.1% for the nine months ended September 30, 2011 to $1,038,768, as compared to $1,037,752 for the nine months ended September 30, 2010. The major contributor to the increase was service charges on deposit accounts. The increase was due to increased activity as the Company has not increased its per-item service charges.

Non-interest expenses were $1,011,489 for the three months ended September 30, 2011 as compared to $1,105,290 for the three months ended September 30, 2010, an 8.5% decrease. Non-interest expenses increased $69,428 to $3,148,761 for the nine months of 2011 compared to the same period in 2010. The largest component of non-interest expense was salaries and benefits expense of $538,909 for the third quarter and $1,647,203 for the nine months of 2011 compared to $543,501 and $1,637,951 for the same periods in 2010, representing an 0.8% decrease and a 0.6% increase, respectively.

Legal and other professional fees increased 1.4% and 62.2% or $1,486 and $119,266, respectively, during the three and nine months ended September 30, 2011 compared to the same periods in 2010 as a result of increased loan collection activity, regulatory matters, and complexity of SEC related filings.

Regulatory assessments expense decreased $30,438 or 53.9% in the third quarter of 2011 versus 2010 and increased $15,179 or 9.4% in the nine months of 2011 versus 2010 due to anticipated increased assessment rates that were accrued and reversed as the increase did not materialize.

Other components of non-interest expense that affected the changes were occupancy and equipment expenses which decreased $25,676 for the three month period ended September 30, 2011 compared to the same period in 2010, due to the differences between rental expense in 2010 and depreciation expense in 2011 for the Company's recently-purchased main office. Occupancy and equipment expenses increased $9,656 for the nine month period ended September 30, 2011 compared to the same period in 2010, due to the opening of the Rancho Cucamonga Branch in April 2010. The prior year would include only six months occupancy expense, while 2011 includes nine months occupancy expense for the new facility. Data and item processing expenses decreased slightly by $4,616, or 5.1% for the comparable three month and $14,729, or 5.6% for the comparable nine month period due to the additional branch.

Income tax expenses were $64,146 and $131,997 for the three and nine months ended September 30, 2011, as compared to income tax expenses of $115,361 and $114,325 for the same periods of 2010.

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 there from, changes in interest rates, loan portfolio performance, and other factors detailed in the Company's SEC filings.

CHINO COMMERCIAL BANCORP

CONSOLIDATED BALANCE SHEET

September 30, 2011 and December 31, 2010



September 30, 2011


December 31, 2010


(unaudited)


(audited)

ASSETS:




Cash and due from banks

$                4,247,020


$               3,041,114

Federal Funds Sold

10,265,998


4,660,527

Total cash and cash equivalents

14,513,018


7,701,641





Interest-bearing deposits in other banks

11,693,252


19,378,252

Investment securities available for sale

3,300,162


4,706,994

Investment securities held to maturity (fair value approximates




$10,783,000 at September 30, 2011 and $12,302,000 at December 31, 2010)

10,473,853


12,153,915

Total investments

25,467,267


36,239,161

Loans




Real estate

47,444,517


51,459,881

Commercial

8,774,804


8,411,117

Installment

665,715


649,455

Gross loans

56,885,036


60,520,453

Unearned fees and discounts

(26,467)


(27,204)

Loans net of unearned fees and discount

56,858,569


60,493,249

Allowance for loan losses

(1,537,195)


(1,442,153)

Net loans

55,321,374


59,051,096





Accrued interest receivable

276,861


382,943

Restricted stock

667,700


626,250

Fixed assets, net

6,500,191


6,342,670

Foreclosed assets

439,317


516,534

Prepaid & other assets

2,989,232


3,053,531

Total assets

$            106,174,960


$           113,913,826





LIABILITIES:




Deposits




Non-interest bearing

$              44,706,172


$             41,909,584

Interest Bearing




NOW and money market

30,883,549


36,241,586

Savings

1,670,988


2,085,092

Time deposits less than $100,000

4,998,019


6,377,430

Time deposits of $100,000 or greater

12,656,416


16,385,864

Total deposits

94,915,144


102,999,556





Accrued interest payable

109,425


104,967

Accrued expenses & other payables

759,295


700,046

Subordinated notes payable to subsidiary trust

3,093,000


3,093,000

Total liabilities

98,876,864


106,897,569

STOCKHOLDERS' EQUITY




Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 748,314 shares at September 30, 2011 and at December 31, 2010.







2,750,285


2,750,285

Retained earnings

4,463,681


4,190,208

Accumulated other comprehensive income

84,130


75,764

Total stockholders' equity

7,298,096


7,016,257

Total liabilities & stockholders' equity

$            106,174,960


$           113,913,826



CHINO COMMERCIAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



For the three months ended


For the six months ended


September 30,


September 30,


2011


2010


2011


2010

Interest income






Investment securities and due from banks

$ 133,204


$ 216,181


$ 455,931


$ 616,571

Interest on Federal funds sold

4,616


2,759


8,651


2,759

Interest and fee income on loans

877,470


1,056,071


2,793,245


3,171,514

Total interest income

1,015,290


1,275,011


3,257,827


3,790,844

Interest expense








Deposits

94,013


218,701


307,740


701,966

Other interest expense

0


0


75


569

Other borrowings

50,963


50,963


152,888


152,888

Total interest expense

144,976


269,664


460,703


855,423

Net interest income

870,314


1,005,347


2,797,124


2,935,421

Provision for loan losses

2,221


15,644


281,660


529,996

Net interest income after








provision for loan losses

868,093


989,703


2,515,464


2,405,425

Non-interest income








Service charges on deposit accounts

298,241


300,166


892,317


862,307

Gain on sale of foreclosed assets

0


(29,700)


61,151


(29,551)

Other miscellaneous income

9,299


134,094


24,805


148,769

Dividend income from restricted stock

2,783


2,961


8,342


4,418

Income from bank-owned life insurance

17,332


17,468


52,153


51,809

Total non-interest income

327,655


424,989


1,038,768


1,037,752

General and administrative expenses








Salaries and employee benefits

538,909


543,501


1,647,203


1,637,951

Occupancy and equipment

98,992


124,668


325,794


316,138

Data and item processing

86,777


91,393


277,962


263,233

Advertising and marketing

14,947


16,347


42,183


45,228

Legal and professional fees

108,861


107,375


311,084


191,818

Regulatory assessments

26,051


56,489


177,418


162,239

Insurance

10,587


9,958


30,236


27,950

Directors' fees and expenses

17,321


16,541


54,097


50,959

Other expenses

109,044


139,018


282,784


383,817

Total general & administrative expenses

1,011,489


1,105,290


3,148,761


3,079,333

Income before income tax expense

184,259


309,402


405,471


363,844

Income tax expense

64,146


115,361


131,997


114,325

Net income

$ 120,113


$ 194,041


$ 273,474


$ 249,519

Basic earnings per share  

$       0.16


$       0.26


$       0.37


$       0.35

Diluted earnings per share

$       0.16


$       0.26


$       0.37


$       0.35



CHINO COMMERCIAL BANCORP

Other Financial Information


CREDIT QUALITY

End of period

(unaudited)

September 30, 2011


December 31, 2010

Non-performing loans

$              4,354,071


$            4,167,573

Non-performing loans to total loans

7.65%


6.89%

Non-performing loans to total assets

4.10%


3.66%

Allowance for loan losses to total loans

2.70%


2.38%

Nonperforming assets as a percentage of total loans and OREO

8.36%


7.67%

Allowance for loan losses to non-performing loans

35.30%


34.60%





OTHER PERIOD-END STATISTICS




(unaudited)

September 30, 2011


December 31, 2010

Shareholders equity to total assets

6.87%


6.16%

Loans to deposits

59.93%


58.76%

Non-interest bearing deposits to total deposits

47.10%


40.69%




For the three months ended


For the nine months ended


September 30


September 30


2011


2010


2011


2010

KEY FINANCIAL RATIOS








(unaudited)








Annualized return on average equity

6.65%


11.30%


5.07%


5.04%

Annualized return on average assets

0.46%


0.67%


0.34%


0.29%

Net interest margin

3.78%


3.92%


3.99%


3.94%

Core efficiency ratio

84.43%


82.98%


83.42%


79.47%

Net chargeoffs to average loans

-0.12%


0.03%


0.31%


0.82%









AVERAGE BALANCES








(thousands, unaudited)








Average assets

$  104,712


$  115,921


$ 107,492


$ 113,362

Average interest-earning assets

$    91,289


$  101,743


$   93,678


$   99,488

Average gross loans

$    58,679


$    60,019


$   59,425


$   60,651

Average deposits

$    93,509


$  105,039


$   96,219


$ 101,726

Average equity

$      7,227


$      6,872


$     7,193


$     6,596



SOURCE Chino Commercial Bancorp



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