EX-99.1 3 v103301_ex99-1.htm
Exhibit 99.1

Cornerstone Bancshares, Inc. Revises 4th Quarter 2007 Financial Results on February 13, 2008

CHATTANOOGA, Tenn., Feb. 13 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:
 
Cornerstone Bancshares, Inc announced that it will revise its previously stated fourth quarter earnings resulting in a 2007 year-end profit of $871 thousand, adjusted from a previous net income of $4.93 million. Earnings for the 4th quarter were reported at $1.16 million or $0.18 a share and were reduced to a loss of $2.9 million or ($0.45) per share. The reduction in earnings is a result of an apparent customer misuse of funds that Bank management detected, resulting in a $6.5 million (before tax) loan loss provision to cover the future potential charge-off. Management discovered irregularities in February 2008 after an internal compliance investigation. Since the misappropriation existed in 2007, accounting guidelines require the provision for loss be realized in the same year.
 
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.
 
Media Contact: Amy Walker Cherry, VP Strategic Services
Phone: (423)421-5391 or (423) 385-3097
 
 
CORNERSTONE BANCSHARES, INC.
                          
Selected Financial Information (Revised)
                          
as of December 31, 2007
                  
Page 1
      
(in thousands)
                          
   
Three Months
      
Year-to-Date
      
   
Ending December 31
  
%
  
Ending December 31
  
%
  
EARNINGS SUMMARY
  
2007
  
2006
  
Change
  
2007
  
2006
  
Change
  
Interest income
  
$
8,877
  
$
7,936
    
12
%
$
34,784
  
$
29,165
    
19.3
%
Interest expense
    
4,026
   
2,931
   
37
%
  
14,414
   
10,306
   
39.9
%
Net interest income
    
4,851
   
5,005
   
-3
%
  
20,370
   
18,859
   
8.0
%
Provision for loan loss
    
7,209
   
49
   
14612
%
  
10,409
   
1,107
   
840.3
%
Net interest income after provision
    
(2,357
)
  
4,956
   
-148
%
  
9,961
   
17,752
   
-43.9
%
Noninterest income
    
461
   
370
   
25
%
  
1,695
   
1,861
   
-8.9
%
Noninterest expense
    
2,811
   
3,297
   
-15
%
  
10,926
   
10,473
   
4.3
%
Pretax income
    
(4,707
)
  
2,029
   
-332
%
  
730
   
9,140
   
-92.0
%
Income taxes
    
(1,803
)
  
582
   
-410
%
  
(141
)
  
3,328
   
-104.2
%
Net income
  
$
(2,904
)
$
1,447
    
-301
%
$
871
  
$
5,812
    
-85.0
%
                               
Earnings per common share
  
$
(0.45
)
$
0.22
    
-303
%
$
0.13
  
$
0.90
    
-85.1
%
Weighted average common shares 
outstanding
    
6,445,663
   
6,505,405
         
6,499,205
   
6,479,441
       
 
   
Three Months
      
Year-to-Date
      
AVERAGE BALANCE
  
Ending December 31
  
%
  
Ending December 31
  
%
  
SHEET SUMMARY
  
2007
  
2006
  
Change
  
2007
  
2006
  
Change
  
Loans, net of unearned income
  
$
378,173
  
$
295,787
    
28
%
$
353,278
  
$
284,105
    
24.3
%
Investment securities & Other
    
37,779
   
47,095
   
-20
%
  
38,433
   
40,904
   
-6.0
%
Earning assets
    
415,952
   
342,882
   
21
%
  
391,711
   
325,009
   
20.5
%
Total assets
    
434,992
   
362,059
   
20
%
  
413,043
   
344,741
   
19.8
%
Noninterest bearing deposits
    
43,761
   
39,773
   
10
%
  
41,503
   
37,056
   
12.0
%
Interest bearing transaction deposits
    
94,720
   
96,763
   
-2
%
  
92,135
   
93,178
   
-1.1
%
Certificates of deposit
    
189,264
   
140,064
   
35
%
  
168,670
   
132,465
   
27.3
%
Total deposits
    
327,745
   
276,600
   
18
%
  
302,308
   
262,699
   
15.1
%
Other interest bearing liabilities
    
64,146
   
44,922
   
43
%
  
67,759
   
44,019
   
53.9
%
Shareholder's equity
    
41,259
   
38,131
   
8
%
  
40,737
   
35,728
   
14.0
%
 
 
    
Three Months
          
Year-to-Date
        
 
    
Ending December 31
          
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
    
-2.65
%
  
1.59
%
        
0.21
%
  
1.69
%
      
Return on average total equity
    
-27.93
%
  
15.18
%
        
2.14
%
  
16.27
%
      
Actual Equity on December 31,
  
$
36,327,350
  
$
38,055,477
                          
Actual # shares outstanding on December 31
    
6,369,718
   
6,503,318
                         
Book value per common share
  
$
5.70
  
$
5.85