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Saturday, July 20, 2013 – Daily News 3B Cornerstone Community Bank reports results for Second Quarter Cornerstone Community Bank announced recently its financial results for the second quarter ended June 30, 2013. The Bank reported net income of $282,000 for the three months ended June 30, 2013 representing an increase of $29,000, or 11%, compared to net income of $253,000 for the same period last year. Diluted earnings per share for the three months ended June 30, 2013 were $0.22 compared to $0.20 for the same period last year. Net income for the six months ended June 30, 2013 was $522,000, or $0.40 per diluted share compared to net income of $472,000, or $0.37 per diluted share, for the six months ended June 30, 2012. The return on average assets for the three months ended June 30, 2013 was 0.97% compared to 1.00% for the same period last year. The return on aver- age equity was 9.24% for the three months ended June 30, 2013 compared to 9.47% for the same period last year. For the six months ended June 30, 2013, the return on average assets was 0.91% and the return on average equity was 8.63% compared to 0.96% and 8.99%, respectively, for the six months ended June 30, 2012. "Cornerstone Community Bank continues to deliver solid growth. Our year-over-year total loan growth was 24% and our year-over-year deposit growth was 16%," said President and CEO Jeff Finck. Net Interest Income Net interest income of $1,162,000 for the quarter ended June 30, 2013 represented a decrease of $20,000, or 2%, from $1,182,000 for the same quarter one year earlier. The net interest margin decreased to 4.20% during the quarter ended June 30, 2013 compared to 4.90% during the same quarter last year. For the six months ended June 30, 2013, net interest income was $2,369,000 compared to $2,177,000 for the six months ending June 30, 2012 representing an increase of $192,000, or 9%. The net interest margin decreased to 4.34% for the six months ended June 30, 2013 compared to 4.68% for the six months ended June 30, 2012. Provision for credit losses There was no provision for credit losses for the quarter ended June 30, 2013 compared to $135,000 for the quarter ended June 30, 2012. The provision for credit losses for the six months ended June 30, 2013 was $85,000 compared to $135,000 for the six months ended June 30, 2012. Non-Interest Income The Bank's non-inter- est income for the quarter ended June 30, 2013 was $234,000 compared to $122,000 for the quarter ended June 30, 2012. For the six months ended June 30, 2013, non-interest income was $373,000 compared to $237,000 for the same period last year. Non-Interest Expense Non-interest expense was $1,114,000 for the quarter ended June 30, 2013 compared to $940,000 for the same period one year earlier. For the six months ended June 30, 2013, non-interest expense was $2,135,000 compared to $1,855,000 for the same period last year. Balance Sheet The Bank had total assets at June 30, 2013 of $118.3 million, compared to $102.8 million at June 30, 2012, representing growth of $15.5 million, or 15%. Total loans outstanding, including loans held for sale, at June 30, 2013, were $85.0 million compared to $68.8 million at June 30, 2012, representing an increase of $16.2 million, or 24%. Total deposits were $105.9 million at June 30, 2013 compared to total deposits of $91.4 million at June 30, 2012, representing an increase of $14.5 million, or 16%. Credit Quality The allowance for loan losses was $1,450,000, or 1.76% of loans, net of unearned income at June 30, 2013, compared to $1,325,000, or 1.94% of loans, net of unearned income at June 30, 2012. Nonperforming assets at June 30, 2013 were $268,000 compared to $85,000 at June 30, 2012. The bank recognized $96,000 in net loan charge-offs during the six months ended June 30, 2013, representing 0.24% of average loans. Capital Adequacy At June 30, 2013, shareholders' equity totaled $12.0 million compared to $10.9 million at June 30, 2012. At June 30, 2013, the total risk-based capital ratio, tier one capital ratio, and leverage ratio was 13.71%, 12.45% and 10.06%, respectively, all exceeding the regulatory standards for "well-capitalized" institutions of 10.00%, 6.00% and 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 branch 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.bankcornerstone.co m. AP Exclusive: Pension funds keep elective travel SACRAMENTO (AP) — California's two public pension systems continued to fly top officials around the globe for conferences, workshops and speaking engagements even after Gov. Jerry Brown ordered a ban on discretionary travel while the state was trying to emerge from years of budget deficits. Board members, executives and fund managers attended educational conferences in Hyannis Port, Mass., mingled with heads of state at the Clinton Global Initiative in New York and traveled to corporate governance seminars in Rio de Janeiro, according to travel expenses from 2011 and 2012 obtained by The Associated Press through public records requests. Overall, the California Public Employees' Retirement System spent nearly $1.4 million during that two-year period on travel for 84 board members, executives, portfolio managers and investment officers. The California State Teachers' Retirement System spent $1 million in the same period on 44 toplevel officials. While some travel expenses were for due diligence related to the pension funds' investments, there appeared to be nonessential trips to attend industry association conferences in Toronto, networking opportunities with traders and hedge fund managers in Europe and educational seminars in Boston and Washington, D.C. For example, a 2011 trip to a meeting about climate change in South Africa by a top CalPERS portfolio manager cost the fund $5,500. The pension funds did not release itemized expenses or receipts, citing the time and cost it would require to compile the data. The funds instead released general descriptions indicating whether the trip was for a meeting, conference or forum. Representatives for the pension funds said that while an effort was made to comply with the spirit of Brown's cost-cutting effort, travel expenses are part of the necessary business expenses for a fund that invests globally. ''We can't turn a blind eye on any of our investments despite their location,'' CalPERS spokesman Brad Pacheco said in a prepared statement. ''Travel is limited to only areas that help to achieve CalPERS' longterm investment goals and objectives.'' State Sen. Mimi Walters, who advocates for public pension reforms, said it's hard to justify those kinds of trips when ''every penny counts.'' ''People managing our pensions are the very people who should be watching out for the taxpayer and spending money wisely, and not wasting it,'' said Walters, R-Irvine. CalPERS manages a $260 billion fund for 1.6 million state and local government employees, retirees and their families. CalSTRS spokesman Michael Sicilia said the $166 billion teachers' pension fund restricted the number of staff allowed on out-of-state trips after the governor issued his travel edict. He also said fund executives conduct meetings by phone when possible. The AP found that overall travel spending in the teachers' retirement fund declined in the year after the governor issued his executive order in April 2011 but rose at CalPERS. Overall spending in the teachers' fund fell from $547,381 in 2011 to $461,033 in 2012, while CalPERS' travel costs rose from $671,370 to $693,869 in the same period. Complete travel expenses were not available before 2011. Even though Brown lacks direct oversight of the pension systems, he had asked all state entities, including the pension funds, to review their travel expenses while the state was trying to close a multibillion dollar budget deficit in its general fund, which contributed $2.2 billion to CalPERS and $1.3 billion to CalSTRS this past fiscal year. The funds have a combined unfunded liability estimated at $170 billion. The Democratic governor requested agencies ''reduce unnecessary costs'' to conferences, networking opportunities or professional development courses. ''Our fiscal challenges demand that we take a much closer look at how taxpayer dollars are being spent within state government,'' Brown said in issuing his order. ''Now is not the time to attend conferences, travel to meetings or take out-of-state field trips, and this executive order puts an end to it.'' The governor's office declined to comment on the AP's findings. Brown himself participated in a trade mission to China in April, a trip organized by the Bay Area Council, a business group. Delegates who traveled with the governor paid for his trip. The spending records requested by AP show a number of trips for conferences, including: — CalPERS senior portfolio manager Anne Simpson made an East Coast swing in June 2011 to attend three educational conferences, including a meeting put on by the Robert F. Kennedy Center for Justice and Human Rights in Hyannis Port, Mass. Her expenses added up to $4,505. — CalPERS chief investment officer Joseph Dear, board member George Diehr and portfolio manager Laurie Weir attended the Clinton Global Initiative in September 2011 to meet executives and heads of state at the New York gathering convened by former President Bill Clinton. Their combined expenses to the public employee pension fund totaled $9,849, including a stop in Boston for Dear. — Christopher Ailman, CalSTRS' chief investment officer, traveled to Miami, London, Paris and Rio de Janeiro in 2011 and 2012 to attend conferences on corporate governance. He charged the system $21,962 for the gatherings put on by the International Corporate Governance Network. Dear also went to Harvard Business School's Venture Capital and Private Equity Conference in May last year. The conference website bills itself as a highly anticipated student-run conference where, ''each year, hundreds of students, alumni, faculty, and industry professionals gather to share knowledge and experience.'' The fund said Dear chairs several pension fund organizations and speaks at academic conferences on institutional investor issues. Senior investment officer Theodore Eliopoulos filed the most expenses at $85,105 with CalPERS over a two-year period, but the fund said most of his travel was reimbursed by ''investment partnerships,'' meaning others paid for the costs. His trips, including ones to St. Petersburg and Beijing, primarily were to conduct due diligence on investment options, the fund said. He was followed by CalPERS senior portfolio manager Anne Simpson, who charged $80,694 in that same time period for trips that took her to educational and industry conferences in London, Copenhagen and Paris. Simpson also spent $5,529 traveling to Durban, South Africa, in December 2011 to attend the World Climate Summit, which acts as a ''climate leadership springboard for CEOs and other business, finance and government leaders,'' according to the website. The pension fund said her travel is focused on engaging underperforming companies, which include meetings with corporate board members and man- agers to discuss corporate governance. At CalSTRS, director of corporate governance Anne Sheehan filed the most expenses at $78,135. She traveled across the country from San Diego to Washington, D.C., and across the Atlantic several times for convention meetings and forums. CalSTRS portfolio manager Janice Hester Amey accrued $71,415 in expenses, the second highest in that same period. While she went to numerous board and stockholder meetings, she also traveled to Asia for a conference and served as a panel speaker in Chicago. Ailman, chief investment officer at CalSTRS, had the fund's third highest expense filings at $61,900. He was among four CalSTRS and four CalPERS executives who attended various International Corporate Governance Network conferences held around the world. The fund said Ailman serves on the ICGN's board, which requires his participation. Sicilia, the spokesman for the teachers fund, said Ailman's reduced travel has resulted in a downgrade of his United Airlines frequent flyer status from gold to silver. Your account representative will be by soon to discuss its significance. If you can't wait call Greg Stevens at (530) 527-2151 ext. 105 or email gstevens@redbluffdailynews.com DAILY NEWS RED BLUFF TEHAMA COUNTY www.redbluffdailynews.com