Chino Commercial Bank Posts 72.1% Increase in Pre-tax Earnings


CHINO, Calif., Oct. 25, 2004 (PRIMEZONE) -- The Board of Directors of Chino Commercial Bank, N.A. (OTCBB:CKNA) announced the results of operations for the nine months ended September 30, 2004 with net income of $411,196 a 9.8% increase over net income for the same period last year. Pre-tax earnings for the nine months ended September 30, 2004 were $644,775 a 72.1% increase over the pre-tax earnings for the same period last year. Dann H. Bowman, President and Chief Executive Officer stated, "We are very pleased with the continued growth and profitability of the Bank during the first three quarters of this year, which have surpassed last year's results. Effective January 1, 2004, the Bank became fully taxable with a net effective tax rate of 36.2%, even with this expense, the Bank is pleased to report an increase of 19.2% and 9.8% in net income after tax for the three and nine months ended September 30, 2004 as compared to the same periods for last year."

Net income per share for the nine months ended September 30, 2004 was $0.50 per share as compared to $0.46 per share for the nine months ended September 30, 2003. Net income per fully diluted share was $0.47 and $0.44 for the nine months ending September 30, 2004 and 2003 respectively. Mr. Bowman stated, "During the nine months ended September 30, 2004, average earning assets increased by 39.8% enhancing net interest income, while the Bank continued to pursue cost control measures on non-interest expenses."

The results of operations for the third quarter of 2004 reflect net income before taxes for the quarter of $244,336, an 86.8% increase over pre-tax net income of $130,761 for the same quarter last year. Net income for the three months ended September 30, 2004 was $155,970 or $0.20 per share, a 19.2% increase from net income of $130,761 or $0.16 per share for the three months ended September 30, 2003. Net income per fully diluted share was $0.18 and $0.15 for the quarters ending September 30, 2004 and 2003 respectively.

Total Assets increased by 34.1% to $78.6 million from $58.6 million at December 31, 2003. Total Deposits increased 36.1% to $72.3 million at September 30, 2004 as compared to $53.1 million at December 31, 2003. Total Loans increased 19.8% to $32.6 million at September 30, 2004 as compared to $27.2 million at December 31, 2003. On September 30, 2004, the Bank had no delinquencies greater than 30 days, nor non-accrual or non-performing loans and has no other real estate owned.

The increased earnings for the nine months ended September 30, 2004 were primarily due to an increase in the net interest margin of $443,893 or 26.8%. The Bank posted net interest income of $2,097,480 for the nine months ended September 30, 2004 as compared to $1,653,587 for the same period last year. These increases in income were partially offset by an increase in general and administrative expenses of $194,397 or 11.8% resulting primarily from an increase in Salary and benefits expense, Audit and professional fees and Other expenses. The Bank posted net interest income of $771,509 for the three months ended September 30, 2004 as compared to $594,827 for the same quarter last year. These increases in income were partially offset by an increase in general and administrative expenses of $83,436 resulting primarily from Other expenses.

Average interest-earning assets were $63.4 million with average interest-bearing liabilities of $13.4 million yielding a net interest margin of 4.42% for the nine months ended September 30, 2004 as compared to average interest-bearing assets of $45.3 million with average interest-bearing liabilities of $11.2 million yielding a net interest margin of 4.88% for the nine months ended September 30, 2003. The net interest margin continues to decline as investment securities are repriced in a lower interest rate environment.

Average interest-earning assets were $69.6 million with average interest-bearing liabilities of $14.3 million yielding a net interest margin of 4.43% for the three months ended September 30, 2004 as compared to average interest-bearing assets of $50.3 million with average interest-bearing liabilities of $11.6 million yielding a net interest margin of 4.74% for the three months ended September 30, 2003.

General and administrative expenses were $1,833,772 for the nine months ended September 30, 2004 as compared to $1,639,375 for the nine months ended September 30, 2003. The largest component of general and administrative expenses was salary and benefits expense of $908,506 for the nine months ended September 30, 2004 as compared to $835,789 for the nine months ended September 30, 2003. Salary and benefits increased due to higher average full-time equivalent staff, salary increases, accrued incentive compensation, temporary staffing expenses, and higher expenses relating to health insurance and workers' compensation for the nine months ended September 30, 2004 as compared to the nine months ended September 30, 2003. Also increased were Other expenses, primarily client service charges, which increased $53,498, Audit and professional fees expenses, which increased $30,142, and Advertising and marketing expenses, which increased $16,596.

General and administrative expenses were $648,642 for the three months ended September 30, 2004 as compared to $565,206 for the three months ended September 30, 2003. The largest component of general and administrative expenses was salary and benefits expense of $306,428 for the third quarter of 2004 as compared to $303,334 for the third quarter of 2003. Other expenses increased by $64,016 for the comparable three-month period due to primarily to increased client service charges and contributions to the reserve for off balance sheet credit commitments.

FORWARD-LOOKING STATEMENTS

The statements contained in this release that are not historical facts are forward-looking statements based upon management's current expectations and beliefs concerning future developments and their potential effect on Chino Commercial Bank. There can be no assurances that future developments affecting Chino Commercial Bank will be the same as those anticipated by management.

Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties. These include, but are not limited to, the following risks; (1) changes in performance of the financial markets; (2) changes in the demand for and market acceptance of Chino Commercial Bank's products and services; (3) changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive products and pricing; (4) the effect of Chino Commercial Bank's policies; (5) the continued availability of adequate funding sources.



                         CHINO COMMERCIAL BANK
                   STATEMENT OF FINANCIAL CONDITION

                                           September 30,  December 31,
                                               2004           2003
                                            -----------    ----------
                                            (unaudited)

 ASSETS:
 Cash and Due from Banks                    $ 6,562,526     3,588,715
 Federal Funds Sold                           8,205,000     9,350,000
                                            -----------   -----------
  Cash and Cash equivalents                  14,767,526    12,938,715

 Interest-bearing deposits at banks           6,866,000     2,388,000
 Investment Securities available for sale    15,447,443     9,463,551

 Investment Securities held to maturity
  (fair value approximates $6,218,357 at
  September 30, 2004 and $5,378,920 at
  December 31, 2003)                          6,126,574     5,327,521
 Federal Reserve Bank stock, at cost            159,600       154,450
 Federal Home Loan Bank stock, at cost          281,000       168,100
 Pacific Coast Bankers' Bank stock,
  at cost                                        50,000        50,000
 Loans
  Loans held for sale                                --       126,558
  Construction                                3,611,587       468,101
  Real estate                                22,686,617    19,639,383
  Commercial                                  5,718,314     6,475,819
  Farm/Agriculture                              349,916       360,269
  Installment                                   715,266       596,534
  Unearned fees and discounts                  (117,173)     (122,260)
  Allowance for loan losses                    (358,952)     (329,399)
                                            -----------   -----------
     Total Loans                             32,605,575    27,215,005
                                            -----------   -----------
 Fixed Assets, net                              417,947       438,393

 Accrued Interest Receivable                    244,939       189,574
 Prepaid & Other Assets                       1,618,309       267,698
                                            -----------   -----------
     Total Assets                           $78,584,913    58,601,007
                                            ===========   ===========
 LIABILITIES:
 Deposits
  Non-interest Bearing                      $57,865,854    40,769,746
  Interest Bearing
   Money market & NOW                        10,362,468     9,124,289
   Savings                                      747,005       565,012
   Time deposits of $100,000 or greater,
    due in one year                           1,601,243       897,603
   Time deposits less than $100,000,
    due in one year                           1,700,256     1,736,483
                                            -----------    ----------
     Total Deposits                          72,276,826    53,093,133
                                            -----------    ----------
 Accrued Interest Payable                        13,909        12,580
 Accrued Expenses & Other Payables              518,510       165,300
                                            -----------    ----------
     Total Liabilities                       72,809,245    53,271,013
                                            -----------    ----------
 STOCKHOLDERS' EQUITY
  Common Stock, authorized 10,000,000 shares
   with a par value of $3.33 per share and
   $5.00 per share; issued and outstanding
   818,453 and 545,646 shares at September
   30, 2004 and December 31, 2003,
   respectively                               2,728,230     2,728,230
  Additional paid-in capital                  2,590,600     2,590,893
  Retained earnings                             442,460        31,264
  Accumulated other comprehensive income
   (loss)                                        14,378       (20,393)
                                            -----------    ----------
    Total Equity                              5,775,668     5,329,994
                                            -----------    ----------
      Total Liabilities & Equity            $78,584,913    58,601,007
                                            ===========    ==========

 See accompanying notes to the financial statements.


                         CHINO COMMERCIAL BANK
                        STATEMENT OF OPERATIONS
                              (unaudited)

                                 For the              For the 
                            Three months ended    Nine months ended
                               September 30,         September 30,
                               2004     2003       2004        2003
                             --------  -------   ---------   ---------
 Interest Income
  Interest Income
   - Securities              $226,416  163,799     543,128     495,900
  Interest Income
   - Fed Funds                 34,797   19,171      94,265      52,013
  Interest and fee income
   on Loans                   555,208  456,727   1,583,618   1,247,491
                             --------  -------   ---------   ---------
    Total Interest Income     816,421  639,697   2,221,011   1,795,404
                             --------  -------   ---------   ---------
 Interest Expense
  Interest Expense
   - Deposits                  44,912   44,870     123,531     141,817
                             --------  -------   ---------   ---------
    Total Interest Expense     44,912   44,870     123,531     141,817
                             --------  -------   ---------   ---------
   Total net interest income  771,509  594,827   2,097,480   1,653,587
                             --------  -------   ---------   ---------
 Provision for loan losses     13,550   25,500      29,550      64,500
                             --------  -------   ---------   ---------
   Total net interest income
    after provision for loan
    losses                    757,959  569,327   2,067,930   1,589,087
                             --------  -------   ---------   ---------
 Non-interest income
  Service Charges on
   Deposit Accounts           109,182   79,117     309,021     230,534
  Other miscellaneous fee
   income                       1,454      528       4,288       2,349
  Income from Mortgage
   Banking                      8,073   46,995      53,934     192,061
  Income from Bank owned
   life insurance              16,310       --      43,374          --
                             --------  -------   ---------   ---------
    Total Non-interest
     income                   135,019  126,640     410,617     424,944
                             --------  -------   ---------   ---------
 General & Administrative
 Expenses
  Salaries & Benefits         306,428  303,334     908,506     835,789
  Occupancy & Equipment        65,692   64,476     188,341     187,797
  Data & Item Processing       48,988   44,312     143,997     129,922
  Advertising & Marketing      18,481   14,069      63,534      46,938
  Audit & Professional fees    38,561   36,096     133,627     103,485
  Insurance                     5,782    5,007      17,094      13,969
  Directors' fees and
   expenses                    17,734   14,952      48,444      44,744
  Other expenses              146,976   82,960     330,229     276,731
                             --------  -------   ---------   ---------
    Total general &
     administrative
     expenses                 648,642  565,206   1,833,772   1,639,375
                             --------  -------   ---------   ---------

   Net income before income
    tax expense               244,336  130,761     644,775     374,656
 Income tax expense            88,366       --     233,579          --
                             --------  -------   ---------   ---------
     Total income            $155,970  130,761     411,196     374,656
                             ========  =======   =========   =========
 Basic Earnings per share    $   0.20     0.16        0.50        0.46
                             ========  =======   =========   =========
 Diluted Earnings per share  $   0.18     0.15        0.47        0.44
                             ========  =======   =========   =========

 See accompanying notes to the financial statements.

                        CHINO COMMERCIAL BANK
                    Selected Financial Highlights

                                 For the             For the 
                           Three months ended    Nine months ended 
                              September 30,         September 30,
                           ------------------  ----------------------
                             2004      2003       2004        2003
                           --------  --------  ----------  ----------
 Selected Operating Data:
  Net interest income      $771,509  $594,827  $2,097,480  $1,653,587
  Provision for loan
   losses                    13,550    25,500      29,550      64,500
  Non-interest income       135,019   126,640     410,617     424,944
  Non-interest expense      648,642   565,206   1,833,772   1,639,375
  Net income               $155,970  $130,761  $  411,196     374,656
 Share Data:
  Basic income per share   $   0.20  $   0.16  $     0.50  $     0.46
  Diluted Income per share $   0.18  $   0.15  $     0.47  $     0.44
  Weighted average common
   shares outstanding
    Basic                   818,453   818,453     818,453     818,453
    Diluted                 884,262   857,213     880,496     849,616

 Performance Ratios:
  Return on average assets     0.81%     0.97%       0.79%       1.03%
  Return on average equity    10.92%     9.94%       9.81%       9.72%
  Equity to total assets at
   the end of the period       7.35%     8.73%       7.35%       8.73%
  Net interest spread          3.44%     3.56%       3.44%       3.59%
  Net interest margin          4.43%     4.74%       4.42%       4.88%
  Average interest-earning
   assets to average-
   bearing liabilities       486.89%   432.42%     472.60%     403.62%
  Core efficiency ratio       71.55%    78.36%      73.10%      78.31%
  Non-interest expense to
   average assets              3.39%     4.20%       3.54%       4.47%



 Selected Balance Sheet Data:                9/30/2004     12/31/2003
                                            ------------  ------------
  Total assets                             $ 78,584,913 $  58,601,007
  Investment securities held to maturity      6,126,574     5,327,521
  Investment securities available for sale   15,447,443     9,463,551
  Loans receivable, net                      32,605,575    27,215,005
  Deposits                                   72,276,826    53,093,133
  Non-interest bearing deposits              57,865,854    40,769,746
  Stockholders' equity                     $  5,775,668 $   5,329,994

 Regulatory capital ratios:
  Average equity to average assets                8.09%        10.26%
  Leverage capital                                7.51%         9.48%
  Tier I risk based                              13.90%        16.64%
  Risk-based capital                             14.87%        17.74%

 Asset Quality Ratios:
   Allowance for loan losses as a percent
     of gross loans receivable                     1.09%         1.20%
   Net charge-offs to average loans                n/a          -0.16%
   Non-performing loans to total loans             n/a           n/a

 Number of full-service customer facilities        1             1


            

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