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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 %