Cornerstone Community Bank Reports Financial Results For the Fourth Quarter and Full Year Ended December 31, 2010

RED BLUFF, Calif.--([ BUSINESS WIRE ])--Cornerstone Community Bank, (OTCBB: CRSB), announced today its financial results for the fourth quarter ended December 31, 2010.

"We are very pleased with our 2010 performance and our sixth consecutive quarterly profit. We have the capital and liquidity to add new quality assets in 2011 to continue our growth."

The Bank reported net income of $125,000, or $0.10 per diluted share, for the three months ended December 31, 2010 compared to net income of $64,000, or $0.05 per diluted share, for the same period last year. Net income for the year ended December 31, 2010 was $323,000, or $0.26 per diluted share compared to net income of $75,000, or $0.06 per diluted share, for the year ended December 31, 2009.

President and CEO, Jeffrey Finck stated, aWe are very pleased with our 2010 performance and our sixth consecutive quarterly profit. We have the capital and liquidity to add new quality assets in 2011 to continue our growth.a

Net Interest Income

Net interest income of $868,000 for the quarter ended December 31, 2010 represented an increase of approximately $168,000, or 24%, from $700,000 for the same quarter one year earlier. For the year ended December 31, 2010, net interest income of $3,133,000 increased $479,000, or 18%, from $2,654,000 for the year ended December 31, 2009.

Provision for credit losses

The provision for credit losses for the quarter ended December 31, 2010 was $160,000 compared to $65,000 for the quarter ended December 31, 2009. For the year ended December 31, 2010, the provision for credit losses was $461,000 compared to $225,000 for the year ended December 31, 2009.

Non-Interest Income

The Banka�s non-interest income for the quarter and year ended December 31, 2010 was $140,000 and $454,000, respectively, compared to $78,000 and $280,000, respectively, for the same periods one year ago.

Non-Interest Expense

Non-interest expense was $723,000 for the quarter ended December 31, 2010 compared to $649,000 for the same period one year earlier, representing an increase of $74,000, or 11%. For the year ended December 31, 2010, non-interest expense was $2,802,000 compared to $2,633,000 for the same period of 2009, representing an increase of $169,000, or 6%. The Bank employed 20 full-time equivalent employees at December 31, 2010 compared to 19 at December 31, 2009.

The Banka�s efficiency ratio, the ratio of non-interest expense to revenues, was 71.73% during the quarter ended December 31, 2010 compared to 83.42% during the same period last year. For the year ended December 31, 2010, the efficiency ratio was 78.12% compared to 89.74% during the same period of 2009.

Balance Sheet

The Bank had total assets at December 31, 2010 of $76.3 million, compared to $70.6 million at December 31, 2009, representing growth of $5.7 million, or 8%.

Total loans outstanding at December 31, 2010, net of unearned income, were $55.2 million compared to $48.3 million at December 31, 2009, representing an increase of $6.9 million, or 14%.

Total deposits were $67.0 million at December 31, 2010 compared to total deposits of $61.7 million at December 31, 2009, representing an increase of $5.3 million, or 9%.

Credit Quality

The allowance for loan losses was $1,104,000, or 2.00% of total loans at December 31, 2010, compared to $843,000, or 1.74% of total loans, at December 31, 2009. Nonperforming assets at December 31, 2010 consisted of non-accrual loans of $232,000 compared to non-accrual loans of $1,000 at December 31, 2009.

The bank recognized $200,000 in net loan charge-offs during the year ended December 31, 2010 compared to $173,000 for the year ended December 31, 2009.

Capital Adequacy

At December 31, 2010, shareholdersa� equity totaled $9.0 million compared to $8.7 million at December 31, 2009. The total risk-based capital ratio, tier one capital ratio, and leverage ratio was 16.05%, 14.80% and 11.85%, respectively, all exceeding the regulatory standards for awell-capitalizeda institutions of 10.00%, 6.00%, 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 loan production 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.ccbca.com ].

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbors created by that Act. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words abelieve,a aexpect,a aanticipate,a aintend,a aplan,a aestimate,a or words of similar meaning, or future or conditional verbs such as awill,a awould,a ashould,a acould,a or amay.a Forward-looking statements describe future plans, strategies and expectations.Forward-looking statements are based on currently available information, expectations, assumptions, projections, and managementa�s judgment about the Bank, the banking industry and general economic conditions. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing managementa�s views as of any subsequent date.Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.

Forward-looking statements involve significant risks and uncertainties and actual results may differ materially from those presented, either expressed or implied, in this press release.Factors that might cause such differences include, but are not limited to: the Banka�s ability to successfully execute its business plans and achieve its objectives; changes in general economic, real estate and financial market conditions, either nationally or locally in areas in which the Bank conducts its operations; changes in interest rates; new litigation or changes in existing litigation; future credit loss experience; increased competitive challenges and expanding product and pricing pressures among financial institutions; legislation or regulatory changes which adversely affect the Banka�s operations or business; loss of key personnel; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies.

The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.


CORNERSTONE COMMUNITY BANK
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)



		12/31/10			09/30/10			06/30/10			03/31/10			12/31/09

ASSETS
Cash and due from banks	$	1,552		$	900		$	1,504		$	3,945		$	632
Federal funds sold		-			-			-			-			-
Interest-bearing deposits		1,535			4,235			3,126			3,701			7,123
Investment securities		16,465			14,950			18,828			14,669			12,762
Loans held for sale		-			-			-			-			128
Loans, net of unearned income		55,248			54,856			47,921			48,379			48,319
Allowance for loan losses		(1,104	)		(978	)		(863	)		(825	)		(843	)
Loans, net		54,144			53,878			47,058			47,554			47,476
Premises and equipment, net		777			771			746			767			799
Other assets		1,855			1,848			1,812			1,699			1,712
Total assets	$	76,328		$	76,582		$	73,074		$	72,335		$	70,632

LIABILITIES
Deposits:
Demand noninterest-bearing	$	10,169		$	7,577		$	5,370		$	3,964		$	6,749
Demand interest-bearing		7,416			10,309			10,274			7,876			7,967
Money market and savings		31,429			29,796			27,611			29,843			28,435
Time deposits of less than $100,000		7,717			9,055			9,194			10,392			8,931
Time deposits of $100,000 or more		10,309			10,377			11,157			11,137			9,616
Total deposits		67,040			67,114			63,606			63,212			61,698
Other liabilities		301			250			280			259			237
Total liabilities		67,341			67,364			63,886			63,471			61,935

SHAREHOLDERS' EQUITY
Common stock		11,959			11,959			11,959			11,959			11,959
Additional paid-in capital		570			541			514			488			463
Accumulated deficit		(3,353	)		(3,477	)		(3,569	)		(3,629	)		(3,676	)
Accumulated other comprehensive income (loss)		(189	)		195			284			46			(49	)
Total shareholders' equity		8,987			9,218			9,188			8,864			8,697
Total liabilities and shareholders' equity	$	76,328		$	76,582		$	73,074		$	72,335		$	70,632

CAPITAL ADEQUACY
Tier I leverage ratio		11.85	%		11.97	%		12.16	%		12.48	%		12.47	%
Tier I risk-based capital ratio		14.80	%		15.14	%		16.53	%		16.15	%		16.04	%
Total risk-based capital ratio		16.05	%		16.39	%		17.79	%		17.40	%		17.30	%
Total equity / total assets		11.77	%		12.04	%		12.57	%		12.25	%		12.31	%
Book value per share	$	7.49		$	7.68		$	7.66		$	7.39		$	7.25


CORNERSTONE COMMUNITY BANK
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)


	Three months ended									Year ended
		12/31/10			09/30/10			12/31/09			12/31/10			12/31/09

INTEREST INCOME
Loans	$	944		$	876		$	852		$	3,507		$	3,405
Federal funds sold		-			-			-			-			8
Investment securities		92			100			56			361			81
Other		5			3			21			25			100
Total interest income		1,041			979			929			3,893			3,594

INTEREST EXPENSE
Deposits:
Interest-bearing demand		7			6			5			24			15
Money market and savings		91			80			87			341			315
Time deposits		75			95			137			394			610
Other		-			-			-			1			-
Total interest expense		173			181			229			760			940

Net interest income		868			798			700			3,133			2,654
Provision for credit losses		160			205			65			461			225
Net interest income after provision
for credit losses		708			593			635			2,672			2,429

NON-INTEREST INCOME
Service charges on deposit accounts		17			21			23			86			88
Gain on sale of SBA loans		-			-			28			11			97
Gain on sale of securities		97			157			-			254			-
Other non-interest income		26			32			27			103			95
Total non-interest income		140			210			78			454			280

OPERATING EXPENSES
Salaries and benefits		365			361			311			1,392			1,276
Premises and fixed assets		75			78			69			287			302
Other		283			273			269			1,123			1,055
Total operating expenses		723			712			649			2,802			2,633

Income before income taxes		125			91			64			324			76
Income taxes		-			-			-			1			1

NET INCOME	$	125		$	91		$	64		$	323		$	75

EARNINGS PER SHARE
Basic earnings per share	$	0.10		$	0.08		$	0.05		$	0.27		$	0.06
Diluted earnings per share	$	0.10		$	0.07		$	0.05		$	0.26		$	0.06
Average common shares outstanding		1,200,000			1,200,000			1,200,000			1,200,000			1,200,000
Average common and equivalent
shares outstanding		1,280,289			1,275,429			1,200,000			1,258,183			1,200,000

PERFORMANCE MEASURES
Return on average assets		0.65	%		0.48	%		0.36	%		0.43	%		0.12	%
Return on average equity		5.38	%		3.90	%		2.91	%		3.54	%		0.87	%
Net interest margin		4.66	%		4.38	%		4.11	%		4.42	%		4.26	%
Efficiency ratio		71.73	%		70.63	%		83.42	%		78.12	%		89.74	%

Contributing Sources

Market Wire

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Cornerstone Community Bank Reports Financial Results For the Fourth Quarter and Full Year Ended December 31, 2010