CHINO, Calif., Jan. 18, 2019 (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 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.
| 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 | % | ||||||||||||