UNITED STATES
SECURITIES AND EXCHANGE COMMISSION |
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934 |
| Date of Report (Date of earliest event reported)October 22, 2007 |
| (Exact name of registrant as specified in its charter) |
| CA | | 000-52098 | | 20-4797048 |
| (State of incorporation) | | (Commission File Number) | | (IRS Employer |
| | | | | Identification No.) |
| |
| 14345 Pipeline Avenue | | | | |
| Chino, California | | | | 91710 |
| Address of Principal Executive Offices | | | | Zip Code |
(909) 393-8880
Registrant’s telephone number, including area code |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02 Results of Operations and Financial Condition
On October 22, 2007 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Exhibit 99.1. Press release dated October 22, 2007
For Immediate Release
| Date: | | October 22, 2007 |
| Contact: | | Dann H. Bowman |
| Title: | | President and Chief Executive Officer |
| Phone: | | (909) 393-8880 |
| OTCBB Symbol: | | CCBC |
CHINO COMMERCIAL BANCORP REPORTS 12.5% INCREASED EARNINGS PER SHARE FOR THIRD QUARTER
Chino, California… The Board of Directors of Chino Commercial Bancorp, the parent company of Chino Commercial Bank NA, announced the results of operations for the third quarter ended September 30, 2007 with net diluted earnings per share of $0.27 as compared with $0.24 per diluted share, or an increase of 12.50% from the same quarter last year. Total net earnings for the quarter-end were $209,476 as compared with net earnings of $212,472 for the same quarter of 2006, a 1.41% reduction.
Dann H. Bowman, President and Chief Executive Officer stated, “The share repurchase plan approved by the Board of Directors last year is helping to increase earnings per share, even though higher operating expenses moderately reduced nominal profits in the third quarter and year-to-date. The Bank’s loan quality remains very strong with no sub-prime loans on the books, and only one loan being charged off this year for $9,011. Overall, the Bank is performing well and we are pleased with our prospects for continued growth and expansion.” Earnings year-to-date were $612,466 or $0.77 per diluted shares for the nine months ended September 30, 1007, as compared with net earnings of $754,645 or $0.85 per diluted share for the same period last year. The slight reduction of income of $2,996 for the third quarter was attributed to a decrease in net interest income of $149,306 which was a resul t of increased interest-bearing deposit accounts and interest expense on trust preferred securities of $51,000. This was partially offset by a $78,502 increase in non-interest income. General and administrative expenses decreased $65,825 in the third quarter resulting from depreciation expense reductions as older furniture and equipment reached full depreciation, reduced legal and professional fee expenses, and a reduction in other expenses. These combined income and expense items, which were not experienced in 2006 lowered pre-tax earnings by roughly $5,800 in the third quarter.
Interest income increased $149,728 while interest expense increased $359,470 in the nine months ended September 30, 2007 compared to the same period in 2006. The reduction in income for the nine-month period is partially attributed to an increase in FDIC assessments from $6,997 in 2006 to $36,247 in 2007 and interest expense on trust preferred securities of $152,887 which were not present during the same nine-month period last year. The year-to-date earnings were also impacted by an increase in the provision for loan loss reserves of $33,199 over the
same period last year. Income from service charges on deposit accounts increased by approximately $182,600 in the nine months ended September 30, 2007. These combined income and expense items, which were not experienced in 2006, lowered pre-tax earnings by roughly $251,400 year-to-date.
Net earnings for the nine months ended September 30, 2007 represent an annualized return on average equity of 13.40% and a return on average assets of 0.96% compared to net earnings for the nine months ended September 30, 2006, which represented a return on average equity of 13.75% and return on average assets of 1.13% .
At September 30, 2007, total assets were $84.3 million, a decline of $6.2 million or 6.8% from December 31, 2006.
Loans increased $2.0 million during the nine months from $51.8 million at December 31, 2006 to an outstanding balance of $53.8 million at September 30, 2007. This represents a 3.8% increase in outstanding loans.
Total deposits declined by 5.9% to $74.8 million at September 30, 2007, a decrease from $79.5 million at December 31, 2006. The Company’s core deposits represent 96.9% of the total deposits.
The Company posted net interest income for quarters ended September 30, 2007 and September 30, 2006 of $1,022,467 and $1,171,773, respectively. For nine months ended September 30, the Company posted net interest income of $3,209,364 and $3,419,106 for 2007 and 2006, respectively. Average interest-earning assets were $75.9 million with average interest-bearing liabilities of $30.5 million, yielding a net interest margin of 5.64% for the nine months ended September 30, 2007 as compared to average interest-bearing assets of $79.7 million with average interest-bearing liabilities of $24.0 million, yielding a net interest margin of 5.72% for the nine months ended September 30, 2006.
Non-interest income totaled $256,077 for the three months ended September 30, 2007, or a 44.2% increase from $177,575 earned during the third quarter of 2006. Non-interest income increased 40.1% for the nine months ended September 30, 2007 totaling $697,236 as compared to $497,845 for the six months ended September 30, 2006. Service charges on deposit accounts accounted for the majority of the increase in non-interest income.
General and administrative expenses were $895,791 and $2,816,860 for the three and nine months ended September 30, 2007 as compared to $961,616 and $2,608,993 for the three and nine months ended September 30, 2006. The largest component of general and administrative expenses was salary and benefits expense of $461,870 for the third quarter of 2007 as compared to $432,901 for the three months ended September 30, 2006. Year-to-date comparisons of salary and benefits expense reports $1,440,026 for nine months ended September 2007 and $1,275,274 for the same period in 2006. The increase in Salaries and benefits expenses was reflective of staff increases, salary increases, incentive compensation, and the increase in retirement plan accruals.
Income tax expense was $127,718 and $371,071 for the three and nine months ended September 30, 2007 as compared to $130,506 and $480,309 for the same periods of 2006. The effective income tax rate for 2007 and 2006 is approximately 38%.
| Forward-Looking Statements |
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about the Bank’s plans, objectives, management’s expectations, intentions, relationships, opportunities, and technology and market condition statements. When used in these presentations, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or words of similar meaning, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingenci es, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
| CHINO COMMERCIAL BANCORP |
| CONSOLIDATED BALANCE SHEET |
| September 30, 2007 and December 31, 2006 |
| |
| | | September 30, 2007 | | December 31, 2006 |
| ASSETS: | | Unaudited | | Audited |
| Cash and due from banks | | $ | 4,770,730 | | | $ | 4,201,391 | |
| Federal funds sold and Due from banks time | | | 8,483,000 | | | | 13,316,000 | |
| Cash and cash equivalents | | | 13,253,730 | | | | 17,517,391 | |
| Interest-bearing deposits in other banks | | | | | | | | |
| Investment securities available for sale | | | 8,652,588 | | | | 11,839,152 | |
| Investment securities held to maturity (fair value approximates | | | | | | | | |
| $4,032,000 at September 30, 2007 and $4,696,000 at December 31, 2006) | | | 4,065,866 | | | | 4,784,277 | |
| Total investments | | | 12,718,454 | | | | 16,623,429 | |
| Loans | | | | | | | | |
| Construction | | | 2,140,784 | | | | 1,925,067 | |
| Real estate | | | 40,035,309 | | | | 37,521,967 | |
| Commercial | | | 10,801,353 | | | | 11,655,290 | |
| Installment | | | 780,977 | | | | 670,765 | |
| Gross loans | | | 53,758,423 | | | | 51,773,089 | |
| Unearned fees and discounts | | | (103,830 | ) | | | (136,046 | ) |
| Loans net of unearned fees and discount | | | 53,654,593 | | | | 51,637,043 | |
| Allowance for loan losses | | | (712,999 | ) | | | (615,808 | ) |
| Net loans | | | 52,941,594 | | | | 51,021,235 | |
| |
| Restricted stock | | | 648,650 | | | | 627,500 | |
| Accrued interest receivable | | | 320,134 | | | | 385,764 | |
| Fixed assets, net | | | 2,130,305 | | | | 2,222,503 | |
| Prepaid & other assets | | | 2,272,387 | | | | 2,076,976 | |
| Total assets | | $ | 84,285,254 | | | $ | 90,474,798 | |
| |
| LIABILITIES: | | | | | | | | |
| Deposits | | | | | | | | |
| Non-interest bearing | | $ | 44,779,682 | | | $ | 53,845,147 | |
| Interest Bearing | | | 29,992,856 | | | | 25,608,988 | |
| Total deposits | | | 74,772,538 | | | | 79,454,135 | |
| Accrued interest payable | | | 50,515 | | | | 61,477 | |
| Accrued expenses & other payables | | | 507,066 | | | | 412,745 | |
| Subordinated debentures | | | 3,093,000 | | | | 3,093,000 | |
| Total liabilities | | | 78,423,119 | | | | 83,021,357 | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
| Common stock, authorized 10,000,000 shares with no par value, issued | | | | | | | | |
| and outstanding 714,732 shares and 808,214 shares at September 30, | | | | | | | | |
| 2007 and December 31, 2006, respectively. | | | 2,772,681 | | | | 5,022,984 | |
| Retained earnings | | | 3,119,838 | | | | 2,507,373 | |
| Accumulated other comprehensive loss | | | (30,384 | ) | | | (76,916 | ) |
| Total equity | | | 5,862,135 | | | | 7,453,441 | |
| Total liabilities & equity | | $ | 84,285,254 | | | $ | 90,474,798 | |
| CHINO COMMERCIAL BANCORP |
| CONSOLIDATED STATEMENTS OF INCOME |
| (unaudited) |
| |
| | | For the three months ended | | For the nine months ended |
| | | September 30 | | September 30 |
| | | 2007 | | 2006 | | 2007 | | 2006 |
| Interest income | | | | | | | | |
| Interest on investment securities | | $ 140,237 | | $ 207,770 | | $ 454,288 | | $ 642,514 |
| Interest on Federal funds and Due from banks time | | 124,356 | | 135,459 | | 423,222 | | 468,019 |
| Interest and fee income on loans | | 1,010,948 | | 954,770 | | 3,013,734 | | 2,630,983 |
| Total interest income | | 1,275,541 | | 1,297,999 | | 3,891,244 | | 3,741,516 |
| Interest expense | | | | | | | | |
| Deposits | | 201,811 | | 125,166 | | 528,093 | | 320,750 |
| Other borrowings | | 51,263 | | 1,060 | | 153,787 | | 1,660 |
| Total interest expense | | 253,074 | | 126,226 | | 681,880 | | 322,410 |
| Net interest income | | 1,022,467 | | 1,171,773 | | 3,209,364 | | 3,419,106 |
| Provision for loan losses | | 45,559 | | 44,754 | | 106,203 | | 73,004 |
| Net interest income after | | | | | | | | |
| provision for loan losses | | 976,908 | | 1,127,019 | | 3,103,161 | | 3,346,102 |
| Non-interest income | | | | | | | | |
| Service charges on deposit accounts | | 223,438 | | 149,386 | | 595,859 | | 413,260 |
| Other miscellaneous fee income | | 9,607 | | 7,161 | | 26,410 | | 15,082 |
| Dividend income from restricted stock | | 7,639 | | 7,366 | | 28,152 | | 23,916 |
| Income from bank owned life insurance | | 15,393 | | 13,662 | | 46,815 | | 45,587 |
| Total non-interest income | | 256,077 | | 177,575 | | 697,236 | | 497,845 |
| General and administrative expenses | | | | | | | | |
| Salaries and employee benefits | | 461,870 | | 432,901 | | 1,440,026 | | 1,275,274 |
| Occupancy and equipment | | 77,122 | | 105,556 | | 257,445 | | 307,509 |
| Data and item processing | | 79,197 | | 60,536 | | 224,555 | | 183,247 |
| Advertising and marketing | | 37,837 | | 30,700 | | 113,208 | | 70,678 |
| Legal and professional fees | | 75,974 | | 116,397 | | 231,344 | | 205,760 |
| Insurance | | 8,141 | | 6,217 | | 22,686 | | 18,557 |
| Directors' fees and expenses | | 19,382 | | 21,950 | | 59,633 | | 66,306 |
| Other expenses | | 136,268 | | 187,359 | | 467,963 | | 481,662 |
| Total general & administrative expenses | | 895,791 | | 961,616 | | 2,816,860 | | 2,608,993 |
| Income before income tax expense | | 337,194 | | 342,978 | | 983,537 | | 1,234,954 |
| Income tax expense | | 127,718 | | 130,506 | | 371,071 | | 480,309 |
| Total income | | $ 209,476 | | $ 212,472 | | $ 612,466 | | $ 754,645 |
| Basic earnings per share | | $ 0.29 | | $ 0.26 | | $ 0.83 | | $ 0.92 |
| Diluted earnings per share | | $ 0.27 | | $ 0.24 | | $ 0.77 | | $ 0.85 |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | By:/s/ Sandra F. Pender
Sandra F. Pender
Vice President and Chief Financial Officer |
