CRSB Cornerstone Community Bancorp (PK)

Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the first quarter ended March 31, 2013.

The Bank reported net income of $240,000 for the three months ended March 31, 2013 representing an increase of $21,000, or 10%, compared to net income of $219,000 for the same period last year. Diluted earnings per share for the three months ended March 31, 2013 were $0.19 compared to $0.17 for the same period last year.

The return on average assets for the three months ended March 31, 2013 was 0.84% compared to 0.93% for the same period last year. The return on average equity was 8.02% for the three months ended March 31, 2013 compared to 8.49% for the same period last year.

President and CEO, Jeffrey Finck stated, “We are off to a solid start in 2013 with over 20% growth in loans, deposits and income before income taxes.”

Net Interest Income

Net interest income of $1,207,000 for the quarter ended March 31, 2013 represented an increase of $212,000, or 21%, from $995,000 for the same quarter one year earlier. The net interest margin increased to 4.49% during the quarter ended March 31, 2013 compared to 4.44% during the same quarter last year.

Provision for credit losses

The provision for credit losses for the three months ended March 31, 2013 was $85,000. There was no provision for credit losses for the same period last year.

Non-Interest Income

The Bank’s non-interest income for the quarter ended March 31, 2013 was $139,000 compared to $115,000 for the quarter ended March 31, 2012.

Non-Interest Expense

Non-interest expense was $1,021,000 for the quarter ended March 31, 2013 compared to $915,000 for the same period one year earlier.

Balance Sheet

The Bank had total assets at March 31, 2013 of $115.3 million, compared to $97.3 million at March 31, 2012, representing growth of $18.0 million, or 18%.

Total loans outstanding at March 31, 2013, net of unearned income, were $80.5 million compared to $63.4 million at March 31, 2012, representing an increase of $17.1 million, or 27%.

Total deposits were $103.0 million at March 31, 2013 compared to total deposits of $85.4 million at March 31, 2012, representing an increase of $17.6 million, or 21%.

Credit Quality

The allowance for loan losses was $1,411,000, or 1.75% of loans, net of unearned income, at March 31, 2013, compared to $1,246,000, or 1.96% of loans, net of unearned income, at March 31, 2012. Nonperforming assets at March 31, 2013 were $175,000 compared to $182,000 at March 31, 2012.

The bank recognized $135,000 in net loan charge-offs during the three months ended March 31, 2013.

Capital Adequacy

At March 31, 2013, shareholders’ equity totaled $12.1 million compared to $10.4 million at March 31, 2012. At March 31, 2013, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 14.06%, 12.81% and 10.13%, respectively, all exceeding the regulatory standards for “well-capitalized” institutions of 10.00%, 6.00% and 5.00%, respectively.

About Cornerstone Community Bank

Cornerstone Community Bank is a California state-chartered bank with its headquarters office in Red Bluff and a branch office in Redding. The Bank provides commercial banking services, including a wide variety of deposit products and real estate, construction, commercial and consumer loans to small businesses, professionals and individuals. Additional information about the Bank is available on its website at www.bankcornerstone.com.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of Cornerstone Community Bank and on information available to management at the time these statements were made. There are a number of factors, many of which are beyond Cornerstone Community Bank’s control, which could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) revenues may be lower than expected; (3) changes in the interest rate environment may reduce interest margins; (4) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (5) legislative or regulatory changes, including changes in accounting standards and tax laws, may adversely affect the businesses in which Cornerstone Community Bank is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than Cornerstone Community Bank; and (7) adverse changes may occur in the securities markets or with respect to inflation. Forward-looking statements speak only as of the date they are made. Except as required by law, Cornerstone Community Bank does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

                    CORNERSTONE COMMUNITY BANK CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands)     03/31/13         12/31/12         09/30/12         06/30/12         03/31/12     ASSETS Cash and due from banks $ 4,009 $ 3,091 $ 2,389 $ 3,507 $ 3,542 Federal funds sold - - - - - Interest-bearing deposits 1,241 4,936 1,120 2,200 615 Investment securities 25,745 27,143 28,672 26,129 27,132 Loans held for sale 1,961 791 573 336 379 Loans, net of unearned income 80,467 73,820 72,240 68,459 63,433 Allowance for loan losses   (1,411 )       (1,460 )       (1,469 )       (1,325 )       (1,246 ) Loans, net 79,056 72,360 70,771 67,134 62,187 Premises and equipment, net 1,100 1,070 1,126 1,165 1,172 Other assets   2,230         2,301         2,294         2,354         2,291   Total assets $ 115,342       $ 111,692       $ 106,945       $ 102,825       $ 97,318     LIABILITIES Deposits: Demand noninterest-bearing $ 18,260 $ 22,366 $ 15,104 $ 12,648 $ 12,789 Demand interest-bearing 14,318 14,893 15,594 13,100 11,916 Money market and savings 44,996 37,634 39,509 42,072 37,762 Time deposits of less than $100,000 8,218 8,965 9,047 8,949 7,851 Time deposits of $100,000 or more   17,241         15,795         14,991         14,628         15,076   Total deposits 103,033 99,653 94,245 91,397 85,394 Other borrowings - - 1,000 - 1,000 Other liabilities   226         248         279         557         529   Total liabilities   103,259         99,901         95,524         91,954         86,923     SHAREHOLDERS' EQUITY Common stock 11,959 11,959 11,959 11,959 11,959 Additional paid-in capital 830 801 772 741 714 Accumulated deficit (1,199 ) (1,439 ) (1,764 ) (2,178 ) (2,431 ) Accumulated other comprehensive income (loss)   493         470         454         349         153   Total shareholders' equity   12,083         11,791         11,421         10,871         10,395   Total liabilities and shareholders' equity $ 115,342       $ 111,692       $ 106,945       $ 102,825       $ 97,318     CAPITAL ADEQUACY Tier I leverage ratio 10.13 % 10.32 % 10.12 % 10.26 % 10.64 % Tier I risk-based capital ratio 12.81 % 13.29 % 13.17 % 13.03 % 13.51 % Total risk-based capital ratio 14.06 % 14.55 % 14.43 % 14.29 % 14.77 % Total equity / total assets 10.48 % 10.56 % 10.68 % 10.57 % 10.68 % Book value per share $ 10.07 $ 9.83 $ 9.52 $ 9.06 $ 8.66     CORNERSTONE COMMUNITY BANK CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in Thousands)             Three months ended   03/31/13         12/31/12         03/31/12     INTEREST INCOME Loans $ 1,184 $ 1,096 $ 990 Federal funds sold - - - Investment securities 170 176 180 Other   2         5         2   Total interest income   1,356         1,277         1,172     INTEREST EXPENSE Deposits: Interest-bearing demand 6 6 6 Money market and savings 74 90 93 Time deposits 69 73 78 Other   -         1         -   Total interest expense   149         170         177     Net interest income 1,207 1,107 995 Provision for credit losses   85         -         -  

Net interest income after provision for credit losses

  1,122         1,107         995     NON-INTEREST INCOME Service charges on deposit accounts 27 25 23 Gain on sale of SBA loans - - - Gain on sale of securities - - - Other non-interest income   112     143     92   Total non-interest income   139     168     115     OPERATING EXPENSES Salaries and benefits 554 529 478 Premises and fixed assets 126 120 114 Other   341         325         323   Total operating expenses   1,021         974         915     Income before income taxes 240 301 195 Income taxes - (24 ) (24 )       NET INCOME $ 240       $ 325       $ 219     EARNINGS PER SHARE Basic earnings per share $ 0.20       $ 0.27       $ 0.18   Diluted earnings per share $ 0.19       $ 0.25       $ 0.17   Average common shares outstanding   1,200,000         1,200,000         1,200,000  

Average common and equivalent shares outstanding

  1,292,937         1,286,221         1,258,330     PERFORMANCE MEASURES Return on average assets 0.84 % 1.19 % 0.93 % Return on average equity 8.02 % 11.16 % 8.49 % Net interest margin 4.49 % 4.22 % 4.44 % Efficiency ratio 75.85 % 76.39 % 82.43 %