EX-99.1 3 v100520_ex99-1.htm Unassociated Document
Cornerstone Bancshares, Inc. Announces 4th Quarter 2007 Financial Results on January 18, 2008
 
HIXSON, Tenn., Jan. 18 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

Cornerstone Bancshares, Inc. saw its 4th quarter earnings increase to $1.16 million or $0.18 a share from 3rd quarter 2007 of $559 thousand or $.09 per share. Year to date Cornerstone made $4.93 million or $0.76 a share a decrease of 15.4% over 2006's earnings per share of $0.90. Earning assets increased 21.3% up to $416 million lead by the Bank's loan portfolio which finished the quarter with an average 4th quarter balance of $378 million, an increase of 27.9% over the same period in 2006. This scheduled growth offset expected net interest income compression given the recent flatness of the yield curve and the high cost of funds relative to current loan rates. The net interest margin decreased from 5.80% during the last three months of 2006 to 4.64% for the last quarter of 2007. During the quarter the Bank settled an interest contract dispute in the amount of $316 thousand. The additional expense reduced the net interest margin by 30 basis points for the quarter. Without this one time charge the net interest margin would have been 4.94%. This expense reduced the 4th quarter and annual earnings by $113 thousand after taxes.

Currently, Cornerstone has 6.4 million shares outstanding and expects earnings per share to increase to a range of $.86 to $.96 per share in 2008. This increase represents an improvement over 2007 earnings ranging from of 13.2% to 26.3%. During 2007 Cornerstone opened a Loan Production Office in Knoxville, TN and created a new line of business servicing the electronic payments needs of payroll processors across the country. The Bank presently services eleven (11) processors and plans on growing the business to twenty (20) processors during 2008.

The asset quality improved slightly during the last quarter in 2007 as non-performing loans as a percentage of average total loans remained at 0.18%, while past due loans as a percentage of total loans increased to 1.14%. The Bank had net charge offs of $279 thousand during the fourth quarter and $957 thousand year to date, while providing $3.9 million to the loan loss allowance year to date. The large provision was created to fully fund the loan loss allowance for the loan growth realized during 2007 and provide $2.7 million for one credit with an alleged fraud that is operating under a forbearance agreement.

Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and one loan production office in Dalton, GA and one loan production office in Knoxville, TN and $450 million in assets specializing in business financial services.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which contains a safe harbor for forward-looking statements. The Company relies on this safe harbor in making such disclosures. The statements are based on management's current beliefs and assumptions about expectations, estimates, strategies and projections. These statements are not guarantees of future performance or results and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.


CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of December 31, 2007
(in thousands)
 
 
  
Three Months
Ending December 31
  
 
  
EARNINGS SUMMARY
    
2007
    
2006
    
%
Change
  
                     
Interest income
  
$
8,877
  
$
7,936
    
11.9
%
Interest expense
    
4,026
    
2,931
    
37.4
%
Net interest income
    
4,851
    
5,005
    
-3.1
%
Provision for loan loss
    
709
    
49
    
1346.7
%
Net interest income after provision
    
4,143
    
4,956
    
-16.4
%
Noninterest income
    
461
    
370
    
24.7
%
Noninterest expense
    
2,811
    
3,297
    
-14.7
%
Pretax income
    
1,793
    
2,029
    
-11.6
%
Income taxes
    
635
    
582
    
9.0
%
Net income
  
$
1,158
  
$
1,447
    
-19.9
%
                     
Earnings per common share
  
$
0.18
  
$
0.22
    
-19.2
%
Weighted average common shares
                    
outstanding (1)
    
6,445,663
    
6,505,405
        
 

 
  
Year-to-Date
Ending December 31
    
 
  
EARNINGS SUMMARY
    
2007
    
2006
    
%
Change
  
                     
Interest income
  
$
34,784
  
$
29,165
    
19.3
%
Interest expense
    
14,414
    
10,306
    
39.9
%
Net interest income
    
20,370
    
18,859
    
8.0
%
Provision for loan loss
    
3,909
    
1,107
    
253.1
%
Net interest income after provision
    
16,461
    
17,752
    
-7.3
%
Noninterest income
    
1,695
    
1,861
    
-8.9
%
Noninterest expense
    
10,926
    
10,473
    
4.3
%
Pretax income
    
7,230
    
9,140
    
-20.9
%
Income taxes
    
2,296
    
3,328
    
-31.0
%
Net income
  
$
4,934
  
$
5,812
    
-15.1
%
                     
Earnings per common share
  
$
0.76
  
$
0.90
    
-15.4
%
Weighted average common shares
                    
outstanding (1)
    
6,499,205
   
6,479,441
        
 

 
  
Three Months
Ending December 31
    
 
  
AVERAGE BALANCE
SHEET SUMMARY
    
2007
    
2006
    
%
Change
  
                     
Loans, net of unearned income
  
$
378,173
  
$
295,787
    
27.9
%
Investment securities & Other
    
37,779
    
47,095
    
-19.8
%
Earning assets
    
415,952
    
342,882
    
21.3
%
Total assets
    
434,992
    
362,059
    
20.1
%
Noninterest bearing deposits
    
43,761
    
39,773
    
10.0
%
Interest bearing transaction deposits
   
94,720
   
96,763
    
-2.1
%
Certificates of deposit
    
189,264
    
140,064
    
35.1
%
Total deposits
    
327,745
    
276,600
    
18.5
%
Other interest bearing liabilities
   
64,146
   
44,922
   
42.8
%
Shareholder's equity
   
41,259
   
38,131
   
8.2
%
 
2
 
 
  
Year-to-Date
Ending December 31
    
 
  
AVERAGE BALANCE
SHEET SUMMARY
    
2007
    
2006
    
%
Change
  
                     
Loans, net of unearned income
  
$
353,278
  
$
284,105
    
24.3
%
Investment securities & Other
    
38,433
    
40,904
    
-6.0
%
Earning assets
    
391,711
    
325,009
    
20.5
%
Total assets
    
413,043
    
344,741
   
19.8
%
Noninterest bearing deposits
    
41,503
    
37,056
    
12.0
%
Interest bearing transaction deposits
    
92,135
   
93,178
   
-1.1
%
Certificates of deposit
    
168,670
    
132,465
    
27.3
%
Total deposits
   
302,308
   
262,699
    
15.1
%
Other interest bearing liabilities
   
67,759
   
44,019
   
53.9
%
Shareholder's equity
   
40,737
   
35,728
   
14.0
%
 
 
  
Three Months
Ending
December 31
  
Year-to-Date
Ending
December 31
  
SELECTED RATIOS
    
2007
    
2006
    
2007
    
2006
  
                           
Average equity to
                          
average assets
    
9.48
%
  
10.53
%
  
9.86
%
  
10.36
%
Average net loans to
                          
average total assets
   
86.94
%
  
81.70
%
  
85.53
%
  
82.41
%
Return on average assets
   
1.06
%
  
1.59
%
  
1.19
%
  
1.69
%
Return on average total equity
   
11.14
%
  
15.18
%
  
12.11
%
  
16.27
%
Actual Equity on December 31,
  
$
40,389,850
  
$
38,055,477
              
Actual # shares outstanding on
                          
December 31
   
6,369,718
   
6,503,318
              
Book value per common share (1)
 
$
6.34
  
$
5.85
              
 
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