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Cornerstone Community Bancorp Reports Financial Results For the Second Quarter Ended June 30, 2018

Cornerstone Community Bancorp (OTC Pink: CRSB) announced today its financial results for the second quarter ended June 30, 2018.

The Company reported net income of $664,000 for the three months ended June 30, 2018 compared to net income of $508,000 for the same period last year. Diluted earnings per share were $0.44 for the three months ended June 30, 2018 compared to $0.37 for the same period last year.

The return on average assets for the three months ended June 30, 2018 was 1.11% and the return on average equity was 13.13%.

For the six months ended June 30, 2018, the Company reported net income of $1,226,000 compared to net income of $898,000 for the same period last year. Diluted earnings per share were $0.83 for the six months ended June 30, 2018 compared to $0.67 for the same period last year.

The return on average assets for the six months ended June 30, 2018 was 1.04% and the return on average equity was 12.71%.

President and CEO, Jeff Finck, stated, “We had another excellent quarter. Our recent capital raise positions us well for continued growth. In the second half of the year, we expect our existing Red Bluff office will move into our newly constructed Red Bluff building along the riverfront.”

Net Interest Income

Net interest income increased to $2,371,000 for the quarter ended June 30, 2018 compared to $1,985,000 for the same quarter last year. For the six months ended June 30, 2018, net interest income increased to $4,599,000 compared to $3,768,000 for the same period last year.

Provision for credit losses

The Company recorded a $40,000 provision for credit losses for the quarter ended June 30, 2018 compared to no provision for the same period last year. For the six months ended June 30, 2018, the Company recorded a $104,000 provision for credit losses compared to $150,000 for the same period last year.

Non-Interest Income

Non-interest income for the quarter ended June 30, 2018 was $158,000 compared to $216,000 for the quarter ended June 30, 2017. For the six months ended June 30, 2018, non-interest income was $319,000 compared to $591,000 for the same period last year.

Non-Interest Expense

Non-interest expense was $1,546,000 for the quarter ended June 30, 2018 compared to $1,339,000 for the same period last year. For the six months ended June 30, 2018, non-interest expense was $3,124,000 compared to $2,683,000 for the same period last year.

Balance Sheet

The Company had total assets at June 30, 2018 of $244.8 million compared to $210.6 million at June 30, 2017.

Total loans, net of unearned income at June 30, 2018 were $194.0 million compared to $169.1 million at June 30, 2017, representing an increase of $24.9 million, or 14.7%.

Total deposits were $211.8 million at June 30, 2018 compared to total deposits of $179.1 million at June 30, 2017, representing an increase of $32.7 million, or 18.3%.

Credit Quality

The allowance for loan losses was $1,947,000, or 1.00% of loans, net of unearned income at June 30, 2018, compared to $1,778,000, or 1.05% of loans, net of unearned income at June 30, 2017. There were no nonperforming assets at June 30, 2018 compared to $4,000 at June 30, 2017.

Capital

At June 30, 2018, shareholders’ equity totaled $21.0 million compared to $16.8 million at June 30, 2017. Book value per share increased by 10.6% to $14.97 per share at June 30, 2018 compared to $13.53 per share at June 30, 2017. During the second quarter of 2018, the Company completed a private placement of $2.1 million of its common stock. In the offering, the Company issued 119,285 shares of its common stock at a purchase price of $17.5 per share. The proceeds from the offering will be used to support the Company’s continued organic growth.

About Cornerstone Community Bancorp

Cornerstone Community Bancorp, a bank holding company headquartered in Red Bluff, California, serves the Red Bluff and Redding communities through its wholly-owned subsidiary, Cornerstone Community Bank with a headquarters office in Red Bluff and two banking offices in Redding. The Bank provides commercial banking services to small and mid-size businesses, including professional service firms, real estate developers and investors and not-for-profit organizations and to their owners and other 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 Bancorp 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 Bancorp’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 Bancorp is engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than Cornerstone Community Bancorp; 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 Bancorp does not undertake to update forward-looking statements to reflect subsequent circumstances or events.

CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
06/30/1803/31/1812/31/1709/30/1706/30/17
ASSETS
Cash and due from banks $ 4,139 $ 3,364 $ 4,630 $ 4,465 $ 3,516
Federal funds sold 20 20 20 20 20
Interest-bearing deposits 24,066 24,932 17,077 24,930 13,739
Investment securities 10,651 10,942 12,274 12,486 12,793
Loans held for sale - 1,849 - - 2,603
Loans, net of unearned income 193,989 188,883 184,814 173,452 169,070
Allowance for loan losses (1,947 ) (1,907 ) (1,847 ) (1,847 ) (1,778 )
Loans, net 192,042 186,976 182,967 171,605 167,292
Premises and equipment, net 6,958 5,846 5,121 3,102 2,006
Other assets 6,877 6,753 6,950 7,001 8,605
Total assets $ 244,753 $ 240,682 $ 229,039 $ 223,609 $ 210,574
LIABILITIES
Deposits:
Demand noninterest-bearing $ 44,751 $ 42,223 $ 38,348 $ 37,977 $ 33,101
Demand interest-bearing 29,565 27,514 26,311 25,434 24,610
Money market and savings 72,319 73,936 68,715 65,909 59,759
Time deposits of less than $100,000 19,482 17,959 18,510 18,333 19,020
Time deposits of $100,000 or more 45,671 45,933 44,731 43,658 42,565
Total deposits 211,788 207,565 196,615 191,311 179,055
Federal Home Loan Bank borrowings 6,000 9,000 9,000 9,000 9,000
Subordinated debentures 4,897 4,895 4,892 4,890 4,887
Interest payable and other liabilities 1,021 933 821 955 868
Total liabilities 223,706 222,393 211,328 206,156 193,810
SHAREHOLDERS' EQUITY
Common stock 15,551 13,429 13,333 13,258 13,115
Retained Earnings 5,507 4,843 4,282 4,113 3,557
Accumulated other comprehensive income (loss) (11 ) 17 96 82 92
Total shareholders' equity 21,047 18,289 17,711 17,453 16,764
Total liabilities and shareholders' equity $ 244,753 $ 240,682 $ 229,039 $ 223,609 $ 210,574
Total equity / total assets 8.60 % 7.60 % 7.73 % 7.81 % 7.96 %
Book value per share $ 14.97 $ 14.22 $ 13.99 $ 13.90 $ 13.53
CORNERSTONE COMMUNITY BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands)
Three months ended

Six months ended
06/30/1803/31/1806/30/1706/30/1806/30/17
INTEREST INCOME
Loans $ 2,673 $ 2,531 $ 2,209 $ 5,204 $ 4,208
Federal funds sold - - - - -
Investment securities 78 78 78 156 159
Other 124 88 76 212 141
Total interest income 2,875 2,697 2,363 5,572 4,508
INTEREST EXPENSE
Deposits:
Interest-bearing demand 13 14 10 27 21
Money market and savings 145 127 95 272 189
Time deposits 227 203 146 430 272
Other 119 125 127 244 258
Total interest expense 504 469 378 973 740
Net interest income 2,371 2,228 1,985 4,599 3,768
Provision for credit losses 40 64 - 104 150
Net interest income after provision
for credit losses 2,331 2,164 1,985 4,495 3,618
NON-INTEREST INCOME
Service charges on deposit accounts 58 49 46 107 90
Gain on sale of loans - 17 78 17 321
Gain (loss) on sale of other real estate owned - - - - -
Gain (loss) on sale of securities - - - - -
Other non-interest income 100 95 92 195 180
Total non-interest income 158 161 216 319 591
OPERATING EXPENSES
Salaries and benefits 814 876 732 1,690 1,469
Premises and fixed assets 148 150 134 298 278
Other 584 552 473 1,136 936
Total operating expenses 1,546 1,578 1,339 3,124 2,683
Income before income taxes 943 747 862 1,690 1,526
Income taxes 279 185 354 464 628
NET INCOME $ 664 $ 562 $ 508 $ 1,226 $ 898
EARNINGS PER SHARE
Basic earnings per share $ 0.48 $ 0.44 $ 0.41 $ 0.93 $ 0.73
Diluted earnings per share $ 0.44 $ 0.39 $ 0.37 $ 0.83 $ 0.67
Average common shares outstanding 1,371,656 1,276,923 1,239,256 1,324,551 1,236,632
Average common and equivalent
shares outstanding 1,515,943 1,424,197 1,358,631 1,470,417 1,349,363
PERFORMANCE MEASURES
Return on average assets 1.11 % 0.96 % 0.99 % 1.04 % 0.89 %
Return on average equity 13.13 % 12.26 % 12.23 % 12.71 % 10.97 %
Net interest margin 4.23 % 4.10 % 4.04 % 4.17 % 3.91 %
Efficiency ratio 61.13 % 66.05 % 60.84 % 63.52 % 61.55 %

Contacts:

Cornerstone Community Bancorp
Jeffrey P. Finck, 530-222-1460
President & CEO
or
Patrick E. Phelan, 530-222-1460
Chief Financial Officer

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