EX-99.1 3 v111509_ex99-1.htm
 
Exhibit 99.1
 
Cornerstone Bancshares, Inc. Announces First Quarter 2008 Financial Results
Friday, April 17, 2008 8:00 PM
- PR Newswire
 
Chattanooga, Tenn., April 17, 2008 /PRNewswire-FirstCall via COMTEX/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:
 
Cornerstone Bancshares, Inc. experienced an earnings contraction for the first quarter 2008 as a result of margin compression brought on by the Federal Reserve’s 300 basis point reduction in the federal funds rate and the corresponding reduction in the banking industry’s prime rate. Cornerstone’s net interest margin decreased 135 basis points from 5.68% for the first quarter of 2007 to 4.33% for the first quarter of 2008. This decrease was due primarily to the timing in repricing of loans which are tied to the Cornerstone Community Bank’s prime rate and the majority of the bank’s certificates of deposit which are generally fixed for a one-year period of time. The lag in repricing will take approximately six months to catch up and within that time frame the net interest margin level should reach the low that the Bank will experience. Cornerstone saw its first quarter 2008 earnings decrease to $1.01 million versus $1.65 million, a decrease of 38.6% from first quarter 2007 while book earnings per share decreased in the first quarter of 2008 to $0.16 versus $0.25, a decrease of 36.9% over first quarter 2007. The Bank continued to increase its loan portfolio during the first quarter of 2008, which increased to $386 million an improvement of 20.5% over the first quarter of 2007. Notably, commercial real estate loans, lead all loan classifications. The Company’s performance metrics pulled back to normal peer levels, Return on assets was 0.91% for the first quarter of 2008 compared to 1.75% during the first quarter in 2007. Return on equity was 10.93% during the first quarter in 2008 compared to 16.83% in 2007.

Presently the Company is operating at an 8.32% leverage ratio and has the ability to continue to grow, but will spend the remainder of 2008 building capital until the economic environment improves.

Asset quality declined from the superior level during first quarter of 2008. Non-performing loans as a percentage of average total loans increased to 0.63% while loans over 30 days past due as a percentage of total loans increased to 1.88%.
 
Cornerstone Bancshares, Inc. is a one-bank holding company with $450 million in assets which serves the Chattanooga, Tennessee MSA with 5 branches. It also has loan production offices in Dalton, Georgia and Knoxville, Tennessee. The company specializes 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:
Frank Hughes, President & COO of Cornerstone Bancshares, Inc.
Phone number: 423-385-3009
 
 
 
 
CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of March 31, 2008
(in thousands)
 
   
Three Months
      
Year-to-Date
      
   
Ending March 31
  
%
  
Ending March 31
  
%
  
EARNINGS SUMMARY
  
2008
  
2007
  
Change
  
2008
  
2007
  
Change
  
Interest income
  
$
8,060
  
$
8,107
    
-0.6
%
$
8,060
  
$
8,107
    
-0.6
%
Interest expense
    
3,470
   
3,133
   
10.7
%
   3,470    
3,133
   
10.7
%
Net interest income
    
4,590
   
4,974
   
-7.7
%
   4,590    
4,974
   
-7.7
%
Provision for loan loss
    
317
   
2
   
15750.0
%
   317    
2
   
15750.0
%
Net interest income after provision
    
4,273
   
4,972
   
-14.1
%
   4,273    
4,972
   
-14.1
%
Noninterest income
    
394
   
375
   
5.2
%
   394    
375
   
5.2
%
Noninterest expense
    
3,097
   
2,747
   
12.7
%
   3,097    
2,747
   
12.7
%
Pretax income
    
1,571
   
2,600
   
-39.6
%
   1,571    
2,600
   
-39.6
%
Income taxes
    
556
   
948
   
-41.4
%
   556    
948
   
-41.4
%
Net income
  
$
1,015
  
$
1,652
    
-38.6
%
 $ 1,015  
$
1,652
    
-38.6
%
                                 
Earnings per common share
  
$
0.16
  
$
0.25
    
-36.9
%
 $ 0.16  
$
0.25
    
-36.9
%
Weighted average common shares outstanding (1)
    
6,336,202
   
6,511,951
          6,336,202    
6,511,951
       
 
   
Three Months
      
Year-to-Date
      
AVERAGE BALANCE
  
Ending March 31
  
%
  
Ending March 31
  
%
  
SHEET SUMMARY
  
2008
  
2007
  
Change
  
2008
  
2007
  
Change
  
Loans, net of unearned income
  
$
386,056
  
$
320,296
    
20.5
%
$
386,056
  
$
320,296
    
20.5
%
Investment securities & Other
    
42,456
   
37,111
   
14.4
%
  
42,456
   
37,111
   
14.4
%
Earning assets
    
428,512
   
357,407
   
19.9
%
  
428,512
   
357,407
   
19.9
%
Total assets
    
446,473
   
378,146
   
18.1
%
  
446,473
   
378,146
   
18.1
%
Noninterest bearing deposits
    
44,503
   
38,315
   
16.2
%
  
44,503
   
38,315
   
16.2
%
Interest bearing transaction deposits
    
93,410
   
90,466
   
3.3
%
  
93,410
   
90,466
   
3.3
%
Certificates of deposit
    
182,539
   
147,624
   
23.7
%
  
182,539
   
147,624
   
23.7
%
Total deposits
    
320,452
   
276,405
   
15.9
%
  
320,452
   
276,405
   
15.9
%
Other interest bearing liabilities
    
86,642
   
60,080
   
44.2
%
  
86,642
   
60,080
   
44.2
%
Shareholder's equity
    
37,131
   
39,252
   
-5.4
%
  
37,131
   
39,252
   
-5.4
%

 
  
Three Months
      
Year-to-Date
      
   
Ending March 31
      
Ending March 31
      
SELECTED RATIOS
  
2008
  
2007
      
2008
  
2007
      
   
 
  
 
      
 
  
 
      
Average equity to average assets
    
8.32
%
  
10.38
%
        
8.32
%
  
10.38
%
       
Average net loans to average total assets
    
86.47
%
  
84.70
%
        
86.47
%
  
84.70
%
      
Return on average assets
    
0.91
%
  
1.75
%
        
0.91
%
  
1.75
%
      
Return on average total equity
    
10.93
%
  
16.83
%
        
10.93
%
  
16.83
%
      
Actual Equity on Mar. 31,
  
$
36,754,223
  
$
39,578,839
                          
Actual # shares outstanding on Mar. 31,
    
6,319,718
   
6,515,118
                         
Book value per common share
 
$
5.82
  
$
6.07