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Chino Commercial Bancorp Reports 42% Increase in Full Year Earnings

CHINO, Calif., Jan. 18, 2019 (GLOBE NEWSWIRE) -- The Board of Directors of Chino Commercial Bancorp (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 fourth quarter and year ended December 31, 2018.  Net earnings for the fourth quarter 2018, were $595 thousand, or an increase of 112%, as compared with earnings of $280 thousand for the same quarter last year.  A significant portion of the increase in net income for the fourth quarter 2018 as compared with the same quarter 2017 was attributable to a one-time deferred tax adjustment in December 2017 which did not reoccur in 2018.  Net earnings for the fiscal year ended December 31, 2018 increased by 42% or by $660 thousand to $2.2 million, as compared to $1.6 million for fiscal year 2017.

Net earnings per basic and diluted share was $0.32 for the fourth quarter of 2018 as compared with $0.15 for the same quarter last year.  Net earnings per basic and diluted share was $1.20 for the year ended December 31, 2018, as compared with $0.84 as December 31, 2017, respectively.

Dann H. Bowman, President and Chief Executive Officer, stated, “The Company’s performance in 2018 was very strong, with the Bank reaching record levels of Deposits, Loans, Revenue and Net Earnings.  Loan quality also remains very strong, with the Bank having no delinquent loans at year-end.  In October the Bank opened its fourth location in Upland, at 300 N. Mountain Ave.  We are very excited to have a new location and the acceptance from the community has been very positive.”

Financial Condition

At December 31, 2018, total assets were $202 million, an increase of $9 million or 5% over $193 million at December 31, 2017.  Total deposits increased by 15% or $22 million to $171 million as of December 31, 2018, compared to $149 million as of December 31, 2017. At December 31, 2018, the Company’s core deposits represent 97% of the total deposits.

Gross loans increased by 8% or $10 million as of December 31, 2018 to $132 million, as compared with $123 million as of December 31, 2017.  The Bank had no non-performing loans for the quarters ended December 31, 2018, and December 31, 2017 respectively.  OREO properties remained at zero as of December 31, 2018 and December 31, 2017 respectively.

Earnings

For the year ended December 31, 2018, net interest income was $7.3 million, an increase of 15.3% or $974 thousand in comparison to $6.4 million as of December 31, 2017. The Company posted net interest income of $1.9 million and $1.6 million for the three months ended December 31, 2018 and 2017 respectively, or an increase of $291.7 thousand or 17.8%.  Average interest-earning assets were $181.8 million with average interest-bearing liabilities of $91.5 million, yielding a net interest margin of 4.21% for the fourth quarter of 2018, as compared to the average interest-earning assets of $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.

For the year ended December 31, 2018, non-interest income was $1.6 million, an increase of 2.2% or $33 thousand in comparison to $1.5 million as of December 31, 2017. Non-interest income totaled $424 thousand for the fourth quarter of 2018, or an increase of 14% as compared with $372 thousand earned during the same quarter last year. Service charges on deposit accounts increased over the fourth quarter by $58.5 thousand or 20.6% to $343 thousand, primarily due to an increase in income from returned items, overdraft charges, and analysis fees. Dividend income from restricted stock decreased to $35 thousand for the fourth quarter of 2018, compared to $41 thousand for the same quarter in 2017, 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 2018 and 2017 respectively.

For the year ended December 31, 2018, general and administrative expenses were $5.6 million, an increase of 13.4% or $662 thousand in comparison to $5.0 million as of December 31, 2017. General and administrative expenses were $1.5 million for the three months ended December 31, 2018, and $1.3 million for the same period last year. The largest component of general and administrative expenses was salary and benefits expense of $973 thousand for the fourth quarter of 2018, as compared to $803 thousand for the same quarter last year and $3.6 million and $3.1 million for the years ended December 2018 and 2017 respectively. Occupancy and equipment increase by $44.7 thousand due to the opening of our new branch in Upland during the fourth quarter of 2018.

For the year ended December 31, 2018, income tax expense was $893 thousand, a decrease of 22.2% or $255 thousand in comparison to $1.1 million as of December 31, 2017. Income tax expense was $239 thousand which represents a decrease of $68 thousand or 22.3% for the three months ended December 31, 2018, as compared to $307.3 thousand for the three months ended December 31, 2017. The effective income tax rate for the fourth quarter of 2018 and 2017 is approximately 28.6% and 52.3% respectively, and for the year ending December 31, 2018 and 2017, the effective income tax rates were 28.6% and 42.2% respectively.  The decrease in the income tax expense, as well as the effective tax rate, are entirely attributed to the new 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, 2018 and December 31, 2017
 
  December 31, 2018   December 31, 2017
  (unaudited)   (audited)
ASSETS:      
Cash and due from banks   25,451,866     $   34,157,668  
Total cash and cash equivalents   25,451,866       34,157,668  
       
Interest-bearing deposits in other banks   1,988,000         1,240,000  
Investment securities available for sale   5,914,736       3,131,027  
Investment securities held to maturity (fair value approximates      
$26,092,226 at December 31, 2018 and $21,104,000 at December 31, 2017)   26,623,343       21,389,552  
Total investments   34,526,079       25,760,579  
Loans      
Construction     -          -   
Real estate   107,902,821       99,585,847  
Commercial   24,029,989       22,679,268  
Installment   241,077       337,455  
Gross loans   132,173,887       122,602,570  
Unearned fees and discounts   (345,053 )     (365,091 )
Loans net of unearned fees and discount   131,828,834       122,237,479  
Allowance for loan losses   (2,292,478 )     (2,094,723 )
 Net loans   129,536,356       120,142,756  
       
Fixed assets, net   6,063,350       5,875,381  
Accrued interest receivable   585,506       531,771  
Stock investments, restricted, at cost   1,248,400       2,084,129  
Bank-owned life insurance   3,484,885       3,386,754  
Other assets   1,091,804       861,969  
Total assets $   201,988,246     $   192,801,007  
       
LIABILITIES:      
Deposits      
Non-interest bearing  $   83,237,014     $   74,766,694  
Interest bearing      
NOW and money market   66,046,085       47,030,167  
Savings   9,870,263       7,897,948  
Time deposits less than $250,000   7,674,742       5,727,789  
Time deposits of $250,000 or greater   4,191,717       13,703,790  
Total deposits   171,019,821       149,126,388  
       
Accrued interest payable   64,794       65,160  
Borrowings from Federal Home Loan Bank (FHLB)     5,000,000         20,000,000  
Accrued expenses & other payables   1,101,417       1,012,535  
Subordinated notes payable to subsidiary trust   3,093,000       3,093,000  
Total liabilities   180,279,032       173,297,083  
       
SHAREHOLDERS' EQUITY      
Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 1,859,132 shares at December 31, 2018 and December 31, 2017, respectively.      
     
  10,502,557       10,502,558  
Retained earnings   11,251,915       9,020,564  
Accumulated other comprehensive income/(loss)   (45,258 )     (19,198 )
Total shareholders' equity   21,709,214       19,503,924  
Total liabilities & shareholders' equity $   201,988,246     $   192,801,007  
       

 

               
CHINO COMMERCIAL BANCORP
CONSOLIDATED STATEMENTS OF NET INCOME
 
  For the three months ended   For the year ended
  December 31   December 31
   2018     2017     2018     2017 
  (unaudited)   (unaudited)   (unaudited)   (audited)
Interest income              
Interest and fee income on loans  $   1,828,378     $   1,562,601     $   7,012,709     $   6,086,085  
Interest on federal funds sold and FRB deposits     104,132         117,777         422,577         359,557  
Interest on time deposits in banks     12,151         5,353         27,899         26,398  
Interest on investment securities     204,829         145,098       659,707         552,510  
Total interest income   2,149,490       1,830,829       8,122,892       7,024,550  
               
Interest Expense              
Interest on deposits   189,493       107,280       612,912       366,492  
Other borrowings   31,785       87,061       183,636       305,524  
Total interest expense   221,278       194,341       796,548       672,016  
Net interest income   1,928,212       1,636,488       7,326,344       6,352,534  
Provision for loan losses     -          100,000       150,000       210,000  
               
   Net interest income after provision for loan losses   1,928,212       1,536,488       7,176,344       6,142,534  
               
Non-interest income              
Service charges on deposit accounts   343,216       284,681       1,262,496       1,202,933  
Other miscellaneous income   21,160       21,323       86,647       75,684  
Dividend income from restricted stock   35,101       40,681       115,362       149,983  
Income from bank-owned life insurance   24,666       25,336       98,130       100,791  
Total non-interest income   424,143       372,021       1,562,635       1,529,391  
               
Non-interest expenses              
Salaries and employee benefits   973,047       803,215       3,568,823       3,051,474  
Occupancy and equipment   155,086       110,354       522,458       424,856  
Data and item processing   102,410       88,103       390,485       335,582  
Advertising and marketing   7,075       50,321       90,359       127,371  
Legal and professional fees   37,955       46,706       150,218       196,082  
Regulatory assessments   34,435       37,929       135,419       150,753  
Insurance   9,032       9,102       35,599       34,475  
Directors' fees and expenses   29,266       29,638       117,710       120,214  
Other expenses   169,825       145,458       604,653       512,938  
Total non-interest expenses   1,518,131       1,320,826       5,615,724       4,953,745  
Income before income tax expense   834,224       587,683       3,123,255       2,718,180  
Income tax expense   238,860       307,328       892,659       1,147,224  
Net income $   595,364     $   280,355     $   2,230,596     $   1,570,956  
               
Basic earnings per share  $   0.32     $   0.15     $   1.20     $   0.84  
Diluted earnings per share  $   0.32     $   0.15     $   1.20     $   0.84  
               
         
Tax rate   28.6 %     52.3 %     28.6 %     42.2 %
               
Average shares outstanding   1,859,132       1,859,132         1,859,132       1,859,132  
EPS   0.32       0.15         1.20         0.84  
               

 

                 
    For the three months ended   For the year ended
    December 31   December 31
     2018     2017     2018     2017 
KEY FINANCIAL RATIOS                
(unaudited)                
Annualized return on average equity     11.11 %     6.25 %     12.15 %     10.45 %
Annualized return on average assets     1.22 %     0.58 %     1.16 %     0.84 %
Net interest margin     4.21 %     3.62 %     4.10 %     3.70 %
Core efficiency ratio     64.54 %     65.76 %     63.18 %     62.85 %
Net chargeoffs/(recoveries) to average loans     -0.016 %     0.01 %     -0.04 %     -0.04 %
                 
AVERAGE BALANCES                
(thousands, unaudited)                
Average assets   $   195,986     $   194,156     $   193,120     $   186,548  
Average interest-earning assets   $   181,785     $   179,445     $   178,638     $   171,802  
Average gross loans   $   129,717     $   117,395     $   127,705     $   113,587  
Average deposits   $   170,063     $   149,863     $   162,393     $   144,370  
Average equity   $   21,435     $   17,946     $   18,358     $   15,037  
                 
                 
                 
CREDIT QUALITY   End of period        
(unaudited)   December 31, 2018   December 31, 2017        
                 
Non-performing loans   $   -     $   -          
                 
Non-performing loans to total loans     0.00 %     0.00 %        
Non-performing loans to total assets     0.00 %     0.00 %        
Allowance for loan losses to total loans     1.73 %     1.71 %        
Nonperforming assets as a percentage of total loans and OREO     0.00 %     0.00 %        
Allowance for loan losses to non-performing loans     n/a       n/a          
                 
OTHER PERIOD-END STATISTICS                
(unaudited)                
Shareholders equity to total assets     10.74 %     10.12 %        
Net loans to deposits     75.74 %     80.56 %        
Non-interest bearing deposits to total deposits     48.67 %     50.14 %        
Total capital to total risk-weighted assets     19.19 %     18.43 %        
Tier 1 capital to total risk-weighted assets     20.93 %     19.76 %        
Tier 1 leverage ratio     14.82 %     13.41 %        
Common equity tier 1     20.93 %     19.76 %