Chino Commercial Bancorp Reports 30% Increase in Net Earnings


CHINO, Calif., April 21, 2023 (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 first quarter ended March 31, 2023. Net earnings for the first quarter of 2023, were $1.2 million, or an increase of 29.8%, as compared with earnings of $900 thousand for the same quarter last year. Net earnings per basic and diluted share was $0.44 for the first quarter of 2023, and $0.34 for the same quarter last year.

Dann H. Bowman, President and Chief Executive Officer, stated, “Despite the recent negative news concerning several very large banks, which were involved in tech start-ups and crypto currencies the conditions of our Bank and the local economy remain strong. Earnings for the first quarter of 2023 were up over the same quarter last year, and loan quality remains very strong.

We remain focused on the trend and direction of commercial real estate vacancy, and the demand for Office and Retail space. Rising costs of labor and goods are putting additional pressure on retail margins, and demand for office space over the near term may continue to soften as remote work and shared workspaces become more common. However, despite these headwinds, we are optimistic regarding the opportunities for growth and expansion in the Inland Empire.”  

Financial Condition

At March 31, 2023, total assets were $439.3 million, an increase of $39.4 million or 10.0% over $399.8 million at December 31, 2022. Total deposits decreased by $18.6 million or 5.5% to $318.8 million as of March 31, 2023, compared to $337.5 million as of December 31, 2022. At March 31, 2022, the Company’s core deposits represent 98.3% of the total deposits.

Gross loans increased by $2.0 million or 1.08% to $178.2 million as of March 31, 2022, compared to $176.3 million as of December 31, 2022. The Bank had two non-performing loans for the quarter ended March 31, 2023, and December 31, 2022.   OREO properties remained at zero as of March 31, 2023 and December 31, 2022 respectively.

Effective January1, 2023, the Company adopted ASU 2016-13 Financial Instrument – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The Company recorded a net decrease to retained earnings of $401.6 thousand as of January 1, 2023 for the cumulative effect of adopting ASC 326.   

Earnings

The Company posted net interest income of $3.1 million for the three months ended March 31, 2023 and $2.7 million for the same quarter last year. Average interest-earning assets were $382.8 million with average interest-bearing liabilities of $168.7 million, yielding a net interest margin of 3.37% for the first quarter of 2023, as compared to the average interest-earning assets of $242.9 million with average interest-bearing liabilities of $152.9 million, yielding a net interest margin of 4.17% for the first quarter of 2022.

Non-interest income totaled $594.8 thousand for the first quarter of 2023, or an increase of 16.2% as compared with $512.0 thousand earned during the same quarter last year. The majority of the increase is attribute to service charges on deposit accounts and other fees.

General and administrative expenses were $2.1 million for the three months ended March 31, 2023, and $2.0 million for the same period last year. The largest component of general and administrative expenses was salary and benefits expense of $1.4 million for the first quarter of 2023 and $1.2 million for the same period last year.

Income tax expense was $463 thousand, which represents an increase of $112 thousand or 31.8% for the three months ended March 31, 2023, as compared to $351.9 thousand for the three months ended March 31, 2022. The effective income tax rate for the first quarter of 2022 and 2021 were approximately 28.4% and 28.1% respectively.

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 Bankcorp and Subsidiary
Consolidated Statements of Financial Condition
March 31, 2023 and 2022
    
 31-Mar-23 31-Dec-22
 unaudited audited
Assets   
Cash and due from banks$78,176,981  $36,436,018 
Cash and cash equivalents 78,176,981   36,436,018 
    
Investment securities available for sale, net of zero allowance for credit losses 6,529,327   6,347,231 
Investment securities held to maturity, net of zero allowance for credit losses 161,396,993   160,668,959 
Total Investments 167,926,320   167,016,191 
Loans held for investment, net of allowance for credit losses of   
$4,518,359 in 2023, and $4,100,516 in 2022 173,229,811   176,555,783 
Stock investments, restricted, at cost 2,045,200   2,045,200 
Fixed assets, net 5,562,561   5,626,850 
Accrued interest receivable 1,250,737   1,153,613 
Bank owned life insurance 8,100,801   8,054,491 
Other assets 2,987,057   2,947,830 
    
Total assets$439,279,468  $399,835,974 
    
Liabilities   
Deposits   
Noninterest-bearing 191,963,504   204,189,323 
Interest-bearing 126,854,885   133,263,940 
    
Total deposits 318,818,389   337,453,262 
    
Federal Home Loan Bank advances 15,000,000   15,000,000 
Federal Reserve bank borrowings 57,000,000   - 
Subordinated debt 10,000,000   10,000,000 
Subordinated notes payable to subsidiary trust 3,093,000   3,093,000 
Accrued interest payable 267,004   124,947 
Other liabilities 1,684,100   1,815,062 
    
Total liabilities 405,862,492   367,486,270 
    
    
    
Shareholders' Equity   
Common stock, no par value, 10,000,000 shares authorized   
and 2,676,799 shares issued and outstanding   
at March 31, 2023 and December 31, 2022 10,502,558   10,502,558 
Retained earnings 25,155,080   24,269,527 
Accumulated other comprehensive loss - unrecognized   
loss on available for sale, net of taxes (2,240,661)  (2,422,382)
    
Total shareholders' equity 33,416,976   32,349,703 
    
Total liabilities and shareholders' equity$439,279,468  $399,835,974 


Chino Commercial Bankcorp and Subsidiary
Consolidated Statements of Net Income
March 31, 2023 and 2022
    
 3/31/2023 3/31/2022
 unaudited unaudited
Interest Income   
Interest and fees on loans 2,390,159  2,313,197 
Interest on investment securities 1,133,586  349,414 
Other interest income 405,234  81,413 
    
Total interest income 3,928,979  2,744,024 
    
Interest Expense   
Interest on deposits 376,861  42,517 
Interest on borrowings 371,403  206,504 
    
Total interest expense 748,264  249,021 
    
Net Interest Income 3,180,716  2,495,003 
    
Provision For Loan Losses 2,136  (204,595)
    
Net Interest Income After Provision For Loan Losses 3,178,580  2,699,598 
    
Noninterest Income   
Service charges and fees on deposit accounts 359,899  302,488 
Interchange fees 103,159  106,757 
Earnings from bank-owned life insurance 46,311  44,133 
Other miscellaneous income 85,394  58,688 
    
Total noninterest income 594,763  512,066 
    
Noninterest Expense   
Salaries and employee benefits 1,352,935  1,244,311 
Occupancy and equipment 153,591  159,763 
Other expenses 634,466  555,466 
    
Total noninterest expense 2,140,992  1,959,540 
    
Income before income tax expense 1,632,350  1,252,124 
Provision for income taxes 463,901  351,911 
    
Net Income$1,168,449 $900,213 
    
Basic earnings per share$0.44 $0.34 
    
Diluted earnings per share$0.44 $0.34 


Chino Commercial Bankcorp and Subsidiary
Financial Highlights
March 31, 2023 and 2022
    
    
Key Financial Ratios3/31/2023 3/31/2022
(unaudited)   
Annualized return on average equity14.26% 12.23%
Annualized return on average assets1.16% 0.92%
Net interest margin3.37% 4.17%
Core efficiency ratio56.71% 65.16%
Net chargeoffs/(recoveries) to average loans-0.008% -0.0001 
    
Average Balances   
(thousands, unaudited)   
Average assets401,948  389,889 
Average interest-earning assets382,782  242,900 
Average interest-bearing liabilities168,672  152,877 
Average gross loans181,642  170,405 
Average deposits328,562  330,352 
Average equity32,770  29,454 
    
  End of period
 3/31/2023 12/31/2022
Credit Quality   
Non-performing loans527,388  404,095 
Non-performing loans to total loans0.30% 0.22%
Non-performing loans to total assets0.12% 0.10%
Allowance for credit losses to total loans2.54% 2.26%
Nonperforming assets as a percentage of total loans and OREO0.30% 0.22%
Allowance for credit losses to non-performing loans856.74% 1014.74%
    
Other Period-end Statistics   
Shareholders equity to total assets7.61% 8.09%
Net loans to deposits54.16% 52.32%
Non-interest bearing deposits to total deposits60.34% 60.51%
Company Leverage Ratio9.64% 9.27%