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.

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 Ratios	3/31/2023			3/31/2022
(unaudited)
Annualized return on average equity	14.26	%		12.23	%
Annualized return on average assets	1.16	%		0.92	%
Net interest margin	3.37	%		4.17	%
Core efficiency ratio	56.71	%		65.16	%
Net chargeoffs/(recoveries) to average loans	-0.008	%		-0.0001
Average Balances
(thousands, unaudited)
Average assets	401,948			389,889
Average interest-earning assets	382,782			242,900
Average interest-bearing liabilities	168,672			152,877
Average gross loans	181,642			170,405
Average deposits	328,562			330,352
Average equity	32,770			29,454
	End of period
	3/31/2023			12/31/2022
Credit Quality
Non-performing loans	527,388			404,095
Non-performing loans to total loans	0.30	%		0.22	%
Non-performing loans to total assets	0.12	%		0.10	%
Allowance for credit losses to total loans	2.54	%		2.26	%
Nonperforming assets as a percentage of total loans and OREO	0.30	%		0.22	%
Allowance for credit losses to non-performing loans	856.74	%		1014.74	%
Other Period-end Statistics
Shareholders equity to total assets	7.61	%		8.09	%
Net loans to deposits	54.16	%		52.32	%
Non-interest bearing deposits to total deposits	60.34	%		60.51	%
Company Leverage Ratio	9.64	%		9.27	%