Chino Commercial Bancorp Reports 30% Increase in Net Earnings

CHINO, Calif., Oct. 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 results of operations for the Bank and the consolidated holding company for the third quarter ended September 30, 2018, with net earnings of $595.3 thousand, or an increase of 29.8%, compared with net income of $458.5 thousand for the same quarter last year. Net income per basic and diluted share was $0.32 for the third quarter of 2018 and $0.23 for the same quarter last year.

Dann H. Bowman, President and Chief Executive Officer, stated, “The fundamentals of the Bank remain very strong. During the third quarter, not only did the Bank achieve new record levels for Deposits, Loans, Revenue and Earnings, but loan quality also remains very strong, and capital levels are high. In terms of business expansion, the Upland branch opened on October 1^st, and we are pleased and excited about the business prospects in this region, as well as the Inland Empire overall.”

Financial Condition

At September 30, 2018, total assets were $202.2 million, an increase of $9.4 million or 4.9% over $192.8 million at December 31, 2017. Total deposits increased by 17.3% or $25.7 million during the third quarter to $174.9 million, compared to $149.1 million as of December 31, 2017. At September 30, 2018, the Company’s core deposits represent 97.5% of the total deposits.

Gross loans increased by 6.8% or $8.3 million as of September 30, 2018 to $130.9 million, as compared with $122.6 million as of December 31, 2017. The Bank had one non-performing loan for the quarter ended September 30, 2018, and no non-performing loans at December 31, 2017, respectively. OREO properties remained at zero as of September 30, 2018 and December 31, 2017, respectively.

Earnings

The Company posted net interest income of $1.8 million and $1.6 million for the three months ended September 30, 2018 and 2017, respectively, or an increase of $225 thousand or 13.8%. Average interest-earning assets were $180.8 million with average interest-bearing liabilities of $95.0 million, yielding a net interest margin of 4.06% for the third quarter of 2018, as compared to the average interest-earning assets of $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.

Non-interest income totaled $380.6 thousand for the third quarter of 2018, or a decrease of 2.2% as compared with $389 thousand earned during the same quarter last year. Service charges on deposit accounts increased by $5 thousand or 1.6% to $314.2 thousand, primarily due to an increase in income from returned items, overdraft charges, and analysis fees. Dividend income from restricted stock decreased to $16 thousand for the third quarter of 2018, compared to $36.4 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 third quarter of 2018 and 2017, respectively.

General and administrative expenses were $1.4 million for the three months ended September 30, 2018, and 1.2 million for the same period last year. The largest component of general and administrative expenses was salary and benefits expense of $863 thousand for the third quarter of 2018, as compared to $732 thousand for the same quarter last year. Advertising and marketing expenses remained consistent at about $25 thousand in the third quarter of 2018 and 2017, respectively.

Income tax expense was $239 thousand which represents a decrease of $61 thousand or 20.2% for the three months ended September 30, 2018 as compared to $299.5 thousand for the three months ended September 30, 2017. The effective income tax rate for the third quarter of 2018 and 2017 is approximately 28.6% and 39.5%, 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
September 30, 2018 and December 31, 2017

	September 30, 2018			December 31, 2017
	(unaudited)			(audited)
ASSETS:
Cash and due from banks	$	31,094,564		$	34,157,668
Total cash and cash equivalents		31,094,564			34,157,668

Interest-bearing deposits in other banks		1,988,000			1,240,000
Investment securities available for sale		6,367,050			3,131,027
Investment securities held to maturity (fair value approximates
$21,394,000 at September 30, 2018 and $21,104,000 at December 31, 2017)		22,342,296			21,389,552
Total investments		30,697,346			25,760,579
Loans
Construction		-			-
Real estate		109,105,407			99,585,847
Commercial		21,525,200			22,679,268
Installment		256,443			337,455
Gross loans		130,887,050			122,602,570
Unearned fees and discounts		(374,610	)		(365,091	)
Loans net of unearned fees and discount		130,512,440			122,237,479
Allowance for loan losses		(2,268,879	)		(2,094,723	)
Net loans		128,243,561			120,142,756

Fixed assets, net		5,887,413			5,875,381
Accrued interest receivable		620,321			531,771
Stock investments, restricted, at cost		1,240,974			2,084,129
Bank-owned life insurance		3,460,219			3,386,754
Other assets		978,893			861,969
Total assets	$	202,223,291		$	192,801,007

LIABILITIES:
Deposits
Non-interest bearing	$	82,447,325		$	74,766,694
Interest bearing
NOW and money market		71,883,471			47,030,167
Savings		9,386,184			7,897,948
Time deposits less than $250,000		7,689,110			5,727,789
Time deposits of $250,000 or greater		3,456,037			13,703,790
Total deposits		174,862,127			149,126,388

Accrued interest payable		45,495			65,160
Borrowings from Federal Home Loan Bank (FHLB)		2,000,000			20,000,000
Accrued expenses & other payables		1,151,140			1,012,535
Subordinated notes payable to subsidiary trust		3,093,000			3,093,000
Total liabilities		181,151,762			173,297,083

SHAREHOLDERS' EQUITY
Common stock, authorized 10,000,000 shares with no par value, issued and outstanding 1,859,132 shares at September 30, 2018 and December 31, 2017, respectively.

		10,502,558			10,502,558
Retained earnings		10,656,551			9,020,564
Accumulated other comprehensive income/(loss)		(87,580	)		(19,198	)
Total shareholders' equity		21,071,529			19,503,924
Total liabilities & shareholders' equity	$	202,223,291		$	192,801,007


CHINO COMMERCIAL BANCORP
CONSOLIDATED STATEMENTS OF NET INCOME

	For the three months ended						For the year ended
	September 30						September 30
		2018			2017			2018			2017
	(unaudited)			(unaudited)			(unaudited)			(audited)
Interest income
Interest and fee income on loans	$	1,778,205		$	1,564,413		$	5,184,331		$	4,523,485
Interest on federal funds sold and FRB deposits		123,758			108,167			318,445			241,780
Interest on time deposits in banks		8,638			7,032			15,748			21,045
Interest on investment securities		162,810			148,121			454,877			407,413
Total interest income		2,073,411			1,827,733			5,973,401			5,193,723

Interest Expense
Interest on deposits		191,937			107,328			423,419			259,212
Other borrowings		31,527			95,086			151,852			218,462
Total interest expense		223,464			202,414			575,271			477,674
Net interest income		1,849,947			1,625,319			5,398,130			4,716,049
Provision for loan losses		20,000			55,000.00			150,000			110,000

Net interest income after provision for loan losses		1,829,947			1,570,319			5,248,130			4,606,049

Non-interest income
Service charges on deposit accounts		314,173			309,215			919,280			918,252
Other miscellaneous income		21,549			18,184			65,489			54,361
Dividend income from restricted stock		20,429			36,381			80,261			109,302
Income from bank-owned life insurance		24,453			25,223			73,465			75,455
Total non-interest income		380,604			389,003			1,138,495			1,157,370

Non-interest expenses
Salaries and employee benefits		863,178			731,943			2,595,776			2,248,259
Occupancy and equipment		131,149			109,829			367,372			314,502
Data and item processing		99,786			85,632			288,075			247,479
Advertising and marketing		25,448			24,934			83,284			77,050
Legal and professional fees		39,110			38,518			112,263			149,376
Regulatory assessments		33,928			37,607			100,984			112,824
Insurance		9,005			8,685			26,568			25,374
Directors' fees and expenses		29,482			32,484			88,444			90,576
Other expenses		145,186			131,622			434,827			367,482
Total non-interest expenses		1,376,272			1,201,254			4,097,593			3,632,922
Income before income tax expense		834,279			758,068			2,289,032			2,130,497
Income tax expense		238,910			299,516			653,799			839,896
Net income	$	595,369		$	458,552		$	1,635,233		$	1,290,601

Basic earnings per share	$	0.32		$	0.25		$	0.88		$	0.69
Diluted earnings per share	$	0.32		$	0.25		$	0.88		$	0.69


Tax rate		28.6	%		39.5	%		28.6	%		39.4	%


	For the three months ended						For the year ended
	September 30						September 30
		2018			2017			2018			2017
KEY FINANCIAL RATIOS
(unaudited)
Annualized return on average equity		11.43	%		11.29	%		10.73	%		11.66	%
Annualized return on average assets		1.20	%		0.96	%		1.11	%		0.94	%
Net interest margin		4.06	%		3.65	%		4.10	%		3.73	%
Core efficiency ratio		61.70	%		59.64	%		62.69	%		61.85	%
Net chargeoffs/(recoveries) to average loans		-0.013	%		-0.01	%		-0.02	%		-0.03	%

AVERAGE BALANCES
(thousands, unaudited)
Average assets	$	197,849		$	191,547		$	195,609		$	183,985
Average interest-earning assets	$	180,829		$	176,693		$	176,094		$	169,227
Average gross loans	$	130,398		$	114,760		$	127,027		$	112,304
Average deposits	$	172,476		$	145,223		$	161,613		$	142,519
Average equity	$	20,836		$	16,246		$	20,325		$	14,760



CREDIT QUALITY	End of period
(unaudited)	September 30, 2018			December 31, 2017

Non-performing loans	$	646,956		$	-

Non-performing loans to total loans		0.49	%		0.00	%
Non-performing loans to total assets		0.32	%		0.00	%
Allowance for loan losses to total loans		1.73	%		1.71	%
Nonperforming assets as a percentage of total loans and OREO		0.49	%		0.00	%
Allowance for loan losses to non-performing loans	n/a			n/a

OTHER PERIOD-END STATISTICS
(unaudited)
Shareholders equity to total assets		10.42	%		10.12	%
Net loans to deposits		73.34	%		80.56	%
Non-interest bearing deposits to total deposits		47.15	%		50.14	%
Total capital to total risk-weighted assets		18.67	%		18.43	%
Tier 1 capital to total risk-weighted assets		20.26	%		19.76	%
Tier 1 leverage ratio		14.26	%		13.41	%
Common equity tier 1		20.26	%		19.76	%

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Chino Commercial Bancorp Reports 30% Increase in Net Earnings

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