Dear clients and partners of Cornerstone Capital Bank,
In light of recent industry events, banks face many questions about impact, if any, to operations and stability. Due to our exceptionally strong balance sheet – as to capitalization, liquidity, and quality of assets – Cornerstone welcomes those questions, including from those seeking to establish a new relationship with our bank. We offer the following update on our financial condition from a place of confidence.
Liquidity at Cornerstone remains strong and diversified
- Unlike other banks subject to recent news coverage, we have no technology-related deposits, no exposure to cryptocurrency and no exposure to venture capital. We are not facing a liquidity crunch.
- As of Friday, March 17th, our total deposits stood at $879 million, an increase of $101 million since year end. In fact, since news of struggles at other banks emerged, our deposits increased by $9 million, or by 1% in only five banking days.
- Deposits are diversified across four primary stable sources: escrow accounts tied to our nationwide mortgage division, stable core deposits acquired via our merger last year with Roscoe Bank, term wholesale deposits with staggered maturities and institutional banking deposits with strong community bank customers across the country.
- On a balance sheet of nearly $2 billion, we hold cash and cash equivalents totaling approximately $600 million.
- Our unfunded lines of credit from various financial institutions offer significant additional funding capacity. And, our capacity is growing – we expect to add in this area by mid-2023 through a new relationship with the Federal Home Loan Bank of Dallas.
- Available for sale marketable securities equal approximately $86 million, or less than 4.5% of total assets, of which $41 million are unpledged, which could be liquidated or pledged to provide additional liquidity, if needed. While other banks face risk associated with Accumulated Other Comprehensive Income (AOCI) in connection with securities holdings, our risk is miniscule in relation to our capital base. Securities with maturities greater than 15 years are immaterial at less than $500 thousand. In fact, among the top 100 banks nearest in size to us nationally, we are ranked #2 overall in lowest AOCI as a percentage of total assets, at 0.06%. And, we currently reflect an unrealized gain in this portfolio.
- More than 95% of our depositors are fully insured. Uninsured deposits total less than 15% of total deposits.
Capital is at fortress levels
Estimated CET1, Tier 1 Risk-Based Capital, Total Risk-Based Capital and Leverage ratios stand at approximately 31.8%, 31.8%, 31.9% and 19.35% respectively – among the highest in the nation for a bank of any size.
Stress testing results demonstrate our strength – and sophistication
We are unaware of any bank our size in the country which completed a stress test within the last 18 months on the same conditions required of the largest banks in the country. In fact, our analysis extended to 7 adverse scenarios rather than the two required of the nation’s largest banks. We remain well-capitalized for regulatory purposes in all cases. In fact, our analysis suggests that we would have more than double the amount of minimum capital required by our banking regulatory agencies to achieve well-capitalized status.
Earnings remains a source of strength
Cornerstone’s audited 2022 financial statements reflect strong performance during a difficult year. Those results include one-time non-core charges related to our bank merger last year, and investments made to upgrade our mortgage servicing and digital banking capabilities. These investments are among the things that make us confident in our ability to grow relationships – and to innovate when others cannot.
Cornerstone offers a stable combined operating history dating back to 1906. Our history includes serving the financial needs of generations of families, professionals and business owners. We’ve worked tirelessly to construct balance sheet strength designed to allow us to prosper in the face of the challenges affecting our industry. Cornerstone was built to withstand volatility, and is well-prepared to assist those in need of new banking or mortgage relationships. And, your trust in us remains our top priority.
We welcome your calls and inquiries.
Marc Laird, Chairman and Co-Founder
Scott Almy, CEO