0001144204-13-024191.txt : 20130426 0001144204-13-024191.hdr.sgml : 20130426 20130426140032 ACCESSION NUMBER: 0001144204-13-024191 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130426 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130426 DATE AS OF CHANGE: 20130426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORNERSTONE BANCSHARES INC CENTRAL INDEX KEY: 0001038773 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 621175427 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30497 FILM NUMBER: 13786569 BUSINESS ADDRESS: STREET 1: 4154 RINGGOLD RD CITY: CHATTANOOGA STATE: TN ZIP: 37412-416 BUSINESS PHONE: 4236982454 MAIL ADDRESS: STREET 1: 4154 RINGGOLD RD CITY: CHATTANOOGA STATE: TN ZIP: 37412-0416 FORMER COMPANY: FORMER CONFORMED NAME: EAST RIDGE BANCSHARES INC DATE OF NAME CHANGE: 19970507 8-K 1 v342811_8k.htm FORM 8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) April 26, 2013

 

CORNERSTONE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

 

Tennessee 000-30497 62-1173944

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

835 Georgia Avenue, Chattanooga, Tennessee   37402
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code (423) 385-3000

  

 
(Former name or former address, if changed since last report.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

£Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

£Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

£Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

£Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

  

Item 2.02. Results of Operations and Financial Condition.

 

On April 25, 2013, the Registrant issued a press release reporting earnings results for the fiscal quarter ended March 31, 2013.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(c) Exhibits
 
99.1 Press release dated April 25, 2013, reporting earnings results for the fiscal quarter ended March 31, 2013.

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CORNERSTONE BANCSHARES, INC.  
  (Registrant)  
     
     
Date: April 26, 2013    
  By: /s/ Nathaniel F. Hughes  
  Nathaniel F. Hughes,  
  President and Chief Executive Officer  

  

 

 EX-99.1 2 v342811_ex99-1.htm EXHIBIT 99.1

  

Cornerstone Bancshares, Inc. Reports Positive Earnings for First Quarter of 2013

 

 

CHATTANOOGA, TN – April 25, 2013 -- Cornerstone Bancshares, Inc. (OTCBB: CSBQ; CSBQP), parent company of Cornerstone Community Bank, today reported net income of $452,000 for the first quarter of 2013, an increase of 26.8 percent over the same quarter of 2012.

 

“I am extremely pleased with the steady, gradual progress we continue to make in strengthening the Bank and our earnings footprint,” said Cornerstone’s President and CEO Frank Hughes. “The fact that we had marked improvement in earnings, in what is the shortest and typically weakest quarter of the year, is further testament that Cornerstone is on the right track and heading in the right direction.”

 

First Quarter 2013 Highlights Year-Over-Year:

 

·Net income increased 26.8%
·Transactional deposit accounts grew 35.7%
·Loans grew 3.7%
·Non-accruing loans decreased 41.1%
·Total assets increased 3.4%
·Net interest margin increased from 3.59% to 3.79%
·Shareholders’ equity increased 13.9%
·Well-capitalized status improved

 

“Cornerstone is at an exciting new juncture and now has a solid capital foundation on which to build for the future,” said Cornerstone’s Chairman Miller Welborn. “Our goal is to continue focusing on our core competency of serving the Chattanooga market as a premier community bank and returning the greatest value possible for each of our customers and shareholders.”

Cornerstone is a single-bank holding company, with approximately $430 million in assets, serving the Chattanooga, Tennessee MSA, with five branches throughout Chattanooga and one loan production office in Dalton, Georgia. Locally owned and locally operated, Cornerstone specializes in providing a comprehensive range of customized financial solutions for businesses and individuals.

Certain of the statements made in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of Cornerstone and its management regarding the company’s strategic directions, prospects and future results, involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which Cornerstone operates, governmental regulations, the company’s competitive environment, cyclical and seasonal fluctuations in its operating results, and other risks discussed in Cornerstone’s Form 10-K and other filings with the Securities and Exchange Commission.

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

First Quarter Financial Highlights

March 31, 2013 and 2012

(Unaudited)

 

(Amounts in thousands, except per common share data)  2013   2012   % Change 
Balance Sheet Data at March 31               
Total assets  $431,710   $417,475    3.4 
Interest-earning assets   396,867    377,326    5.2 
Loans   272,550    262,788    3.7 
Foreclosed assets   21,159    18,957    11.6 
Deposits   336,903    315,816    6.7 
Other interest-bearing liabilities   52,890    64,055    (17.4)
Shareholders' equity   40,887    35,890    13.9 
Loan to deposit ratio   80.90%   83.21%   (2.8)
Tier 1 leverage ratio (Bank, est)   8.64%   8.14%   6.1 
Total risk-based capital ratio (Bank, est)   13.29%   12.99%   2.3 
Outstanding common shares   6,547    6,500    0.7 
Book value per common share  $3.98   $3.91    1.6 
Tangible book value per common share  $3.98   $3.91    1.6 
Market value per common share as of March 31  $2.20   $2.50    (12.0)
                
                
Loan Quality Data               
Nonaccruing loans   6,342    10,766    (41.1)
Loans past due 90 days – accruing   -    -    - 
Net charge-offs YTD   772    1,376    (43.9)
Allowance for loan losses   5,669    6,024    (5.9)
Allowance for loan losses to total loans   2.08%   2.29%     
Nonperforming assets to total assets   6.37%   7.12%     
                
                
Performance Data for the Year               
Net income  $452   $357    26.8 
Return on average assets   0.42%   0.35%     
Return on average equity   4.40%   4.01%     
Net interest margin   3.79%   3.59%     
Per common share data:               
Net income – basic  $0.01   $0.01      
Net income – diluted  $0.01   $0.01      
Common dividends  $-   $-      
Preferred dividends & accretion  $393   $280      
Average shares (000s):               
Basic common stock   6,547    6,500      
Diluted common stock   6,671    6,500      
Preferred stock (actual)   600    425      

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Quarterly Earnings Summary

 

   (Unaudited)     
    2013     2012    Q1-13/  
    First    Fourth    Third    Second    First    Q1-12 
(Amounts in thousands)   Quarter    Quarter    Quarter    Quarter    Quarter    % Chg 
Interest income                              
Loans, including fees  $4,142   $4,718   $4,242   $4,186   $4,144    (0.0)
Securities and interest-bearing deposits at other financial institutions   440    440    478    618    467    (5.8)
Federal funds sold and other earning assets   21    16    15    13    15    41.8 
    Total interest income   4,603    5,174    4,735    4,817    4,626    (0.5)
Interest expense                              
Deposits   603    673    756    768    820    (26.5)
Short-term borrowings   18    17    22    23    32    (44.2)
FHLB advances and other borrowing   341    391    394    426    462    (26.2)
    Total interest expense   962    1,081    1,172    1,217    1,314    (26.8)
Net interest income   3,641    4,093    3,563    3,600    3,312    9.9 
Provision for loan losses   300    330    100    -    -     N/A  
Net interest income after the                              
  provision for loan losses   3,341    3,763    3,463    3,600    3,312    0.9 
Noninterest income                              
Customer service fees   188    201    198    207    197    (4.8)
Other noninterest income   18    13    12    19    20    (11.3)
Gain on sale of assets   149    27    48    26    50    200.0 
    Total noninterest income   355    241    258    252    267    32.8 
Noninterest expense                              
Salaries and employee benefits   1,597    1,600    1,566    1,570    1,591    0.4 
Net occupancy and equipment   337    408    355    348    336    0.4 
Depository insurance   160    121    237    207    203    (21.2)
Foreclosed asset expense (1)   129    156    314    481    150    (14.2)
Other operating expense   752    1,192    731    817    794    (5.3)
    Total noninterest expense   2,975    3,477    3,203    3,423    3,074    (3.2)
Income before income taxes   721    527    518    429    505    42.8 
Income tax expense   269    156    154    118    149    80.5 
Net income  $452   $371   $364   $311   $356    27.0 
                               
Preferred stock dividends & accretion on preferred stock discount   393    393    325    296    280    40.2 
                               
Net income / (loss) available to common   59    (22)   39    15    76    (22.6)
                               
Net income / (loss) per common share:                              
  Basic  $0.01   $-   $0.01   $-   $0.01    (23.1)
  Diluted  $0.01   $-   $0.01   $-   $0.01    (24.5)
Average basic shares   6,547    6,500    6,500    6,500    6,500    0.7 
Average common diluted shares   6,671    6,503    6,503    6,581    6,586    1.3 
Performance Ratios                              
Return on average equity   4.40%   3.81%   3.88%   3.42%   4.01%   9.6 
Return on average assets   0.42%   0.35%   0.35%   0.30%   0.35%   21.4 
Net interest margin   3.79%   4.21%   3.70%   3.87%   3.59%   5.6 
Average equity   41,135    38,926    37,501    36,423    35,587    15.6 
Average assets   426,827    420,608    418,443    412,305    408,711    4.4 
Average interest-earning assets   395,921    391,197    389,458    380,631    378,335    4.6 

  

(1)Includes OREO adjustments to fair value

  

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Loss Allowance and Asset Quality Review

 

   2013   2012 
    First     Fourth     Third    Second    First 
(Amounts in thousands)   Quarter    Quarter    Quarter    Quarter    Quarter 
                          
Allowance for loan losses                         
Balance at beginning of period  $6,141   $5,280   $6,029   $6,024   $7,400 
Provision for loan losses   300    330    100    -    - 
Net charge-offs   (772)   531    (849)   5    (1,376)
Balance at end of period  $5,669   $6,141   $5,280   $6,029   $6,024 
                          
As a % of loans   2.08%   2.22%   1.93%   2.29%   2.29%
As a % of nonperforming loans   89.38%   102.24%   66.26%   84.63%   55.95%
As a % of nonperforming assets   20.61%   23.32%   17.40%   20.60%   20.27%
                          
Net charge-offs as a % of  loans (a)   1.13%   -0.77%   1.24%   -0.01%   2.10%
                          
Risk element assets                         
Accruing troubled debt restructured  $5,442   $5,316   $5,328   $2,775   $2,418 
Loans past due 30-89 days  $4,732   $6,534   $3,685   $2,495   $5,040 
                          
Nonaccruing loans  $6,342   $6,006   $7,968   $7,124   $10,767 
Loans past due 90 days – accruing   -    -    -    -    - 
Total nonperforming loans  $6,342   $6,006   $7,968   $7,124   $10,767 
Repossessed assets   5    32    39    83    - 
Other real estate owned (b)(c)  $21,159   $20,300   $22,337   $22,061   $18,957 
Total nonperforming assets  $27,506   $26,338   $30,344   $29,268   $29,724 
                          
                          
Nonperforming loans as a % of loans   2.33%   2.17%   2.91%   2.70%   4.10%
Nonperforming assets as a % of loans                         
   and other real estate owned   9.37%   8.86%   10.25%   10.24%   10.55%
                          
Total loans   272,550    276,992    273,820    263,749    262,788 

 

(a) Annualized     
(b) Properties sold during 1st Q 2013  $235 
(c) Properties under contract to sell  $2,101 

 

 
 

  

Cornerstone Bancshares, Inc. and Subsidiary

Net Interest Margin Analysis

Taxable Equivalent Basis

 

   Three months ended 
   March 31 
(Amounts in thousands)                        
Assets  2013              2012 
       Average       Income/       Yield/       Average       Income/       Yield/ 
Earning assets:   Balance    Expense    Rate    Balance    Expense    Rate 
Loans, net of unearned income  $275,696   $4,142    6.09%  $265,814   $4,144    6.27%
Investment securities   86,741    440    2.35%   88,641    467    2.43%
Other earning assets   33,484    21    0.26%   23,880    15    0.25%
  Total earning assets   395,921   $4,603    4.78%   378,335   $4,626    4.99%
Allowance for loan losses   (5,933)             (7,121)          
Cash and other assets   36,838              37,497           
TOTAL ASSETS  $426,827             $408,711           
                               
Liabilities and Shareholders' Equity                              
                               
Interest-bearing liabilities:                              
Interest-bearing demand deposits  $28,438   $20    0.29%  $24,891   $21    0.34%
Savings deposits   11,620    7    0.26%   9,859    10    0.40%
MMDA's   74,215    110    0.60%   39,373    90    0.92%
Time deposits   168,789    465    1.12%   195,111    699    1.44%
Federal funds purchased and securities                              
  sold under agreements to repurchase   21,090    18    0.35%   26,291    32    0.49%
Federal Home Loan Bank and other borrowings   32,713    340    4.22%   42,634    461    4.35%
  Total interest-bearing liabilities   336,865    962    1.16%   338,159    1,314    1.56%
Net interest spread       $3,641    3.62%       $3,312    3.43%
Noninterest-bearing demand deposits   46,812              34,479           
Accrued expenses and other liabilities   2,016              486           
Shareholders' equity   41,135              35,587           
TOTAL LIABILITIES AND                              
  SHAREHOLDERS' EQUITY  $426,827             $408,711           
Net yield on earning assets             3.79%             3.59%
                               
Taxable equivalent adjustment:                              
  Loans        0              0      
  Investment securities        62              68      
          Total adjustment        62              68      

  

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Stratification

 

       2013       2012         
      First   % of   First   % of   % Dollar 
(Amounts in thousands)     Quarter    Total   Quarter   Total   Change 
Non-residential real estate                         
    Owner occupied  $62,460    22.9   $61,830    23.5    1.0 
    Non-owner occupied   64,483    23.7    61,295    23.3    5.2 
    Multi-family real estate   8,255    3.0    10,249    3.9    (19.5)
    1-4 family construction   8,168    3.0    4,520    1.7    80.7 
    Commercial land and lot development   18,965    7.0    16,421    6.2    15.5 
Total non-residential real estate   162,331    59.6    154,315    58.7    5.2 
Residential real estate                         
    First mortgage - 1-4 family   43,429    15.9    43,372    16.5    0.1 
    Second mortgage - 1-4 family   2,185    0.8    3,528    1.3    (38.1)
    Home equity lines   16,391    6.0    15,288    5.8    7.2 
Total residential real estate   62,005    22.7    62,188    23.7    (0.3)
Total real estate loans   224,336    82.3    216,503    82.4    3.6 
                          
Commercial   38,301    14.1    34,970    13.3    9.5 
Agricultural & other   7,936    2.9    8,854    3.4    (10.4)
Consumer   1,977    0.7    2,461    0.9    (19.7)
Total loans, net of unearned fees  $272,550    100.0   $262,788    100.0    3.7 

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Balance Sheets

 

   Unaudited     
   March 31,   December 31, 
ASSETS  2013   2012 
           
Cash and due from banks  $5,074,926   $3,222,139 
Interest-bearing deposits at other financial institutions   30,826,261    56,173,099 
Total cash and cash equivalents   35,901,187    59,395,238 
           
Securities available for sale   91,125,829    76,096,646 
Securities held to maturity (fair value approximates          
$43,630 and $46,212 at March 31, 2013 and December 31, 2012, respectively)   42,579    45,086 
Federal Home Loan Bank stock, at cost   2,322,900    2,322,900 
Loans, net of allowance for loan losses of          
$5,669,215 and $6,141,281 at March 31, 2013 and December 31, 2012   266,880,672    270,850,465 
Bank premises and equipment, net   5,289,384    5,399,340 
Accrued interest receivable   1,323,499    1,213,778 
Foreclosed assets   21,159,242    20,332,313 
Other assets   7,664,340    7,790,634 
     Total assets  $431,709,632   $443,446,400 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Deposits:          
Noninterest-bearing demand deposits  $55,400,253   $60,053,838 
Interest-bearing demand deposits   26,547,365    30,178,624 
Savings deposits and money market accounts   89,564,444    80,994,239 
Time deposits   165,391,211    173,653,892 
Total deposits   336,903,273    344,880,593 
           
Accrued interest payable   91,268    120,558 
Federal funds purchased and securities sold under          
agreements to repurchase   21,150,464    19,587,387 
Federal Home Loan Bank advances and other borrowings   31,740,000    37,175,000 
Other liabilities   938,088    794,026 
Total liabilities   390,823,093    402,557,564 
           
Stockholders' equity:          
Preferred stock - no par value; 2,000,000 shares authorized;          
600,000 shares issued and outstanding           
in 2013 and 2012, respectively   14,839,391    14,821,546 
Common stock - $1.00 par value; 20,000,000 shares authorized and          
6,709,199 shares issued in 2013 and 2012;          
6,547,074 and 6,500,396 shares outstanding in 2013 and 2012, respectively   6,547,074    6,500,396 
Additional paid-in capital   21,420,827    21,390,486 
Retained deficit   (3,149,596)   (3,274,986)
Accumulated other comprehensive income   1,228,843    1,451,394 
Total stockholders' equity   40,886,539    40,888,836 
Total liabilities and stockholders' equity  $431,709,632   $443,446,400 

 

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Statements of Income

 

   Unaudited  
   Three Months Ended  
   March 31,  
   2013   2012 
         
INTEREST INCOME          
Loans, including fees  $4,141,736   $4,143,944 
Securities and interest-bearing deposits at other financial institutions   439,906    467,006 
Federal funds sold   21,472    15,087 
           
Total interest income   4,603,114    4,626,037 
           
INTEREST EXPENSE          
Time deposits   465,256    699,094 
Other deposits   137,930    121,243 
Federal funds purchased and securities          
sold under agreements to repurchase   18,080    32,230 
Federal Home Loan Bank advances and other borrowings   340,439    461,207 
           
Total interest expense   961,705    1,313,774 
           
Net interest income before provision for loan losses   3,641,409    3,312,263 
           
Provision for loan losses   300,000    - 
           
Net interest income after provision for loan losses   3,341,409    3,312,263 
           
NONINTEREST INCOME          
Customer service fees   188,481    197,434 
Other noninterest income   17,818    20,288 
Net gains from sale of loans and other assets   149,200    49,664 
           
Total noninterest income   355,499    267,386 
           
NONINTEREST EXPENSES          
Salaries and employee benefits   1,597,291    1,591,135 
Net occupancy and equipment expense   337,879    335,813 
Depository insurance   159,844    202,783 
Foreclosed assets, net   128,692    150,320 
Other operating expenses   752,174    794,081 
           
Total noninterest expenses   2,975,880    3,074,132 
           
Income before income tax expense   721,028    505,517 
           
Income tax expense   268,900    149,000 
Net income   452,128    356,517 
           
Preferred stock dividend requirements   375,000    265,856 
Accretion on preferred stock discount   17,845    14,468 
           
Net income available to common stockholders  $59,283   $76,193 
           
EARNINGS PER COMMON SHARE          
Basic  $0.01   $0.01 
Diluted   0.01    0.01 
           
DIVIDENDS DECLARED PER COMMON SHARE  $-   $- 

 

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Statement of Changes in Stockholders' Equity - Unaudited

For the three months ended March 31, 2013

 

                   Accumulated     
           Additional   Retained   Other   Total 
   Preferred   Common   Paid-in   Earnings   Comprehensive   Stockholders' 
   Stock   Stock   Capital   (Deficit)   Income   Equity 
                               
BALANCE, December 31, 2012  $14,821,546   $6,500,396   $21,390,486   $(3,274,986)  $1,451,394   $40,888,836 
                               
Issuance of common stock   -    46,678    30,341    -    -    77,019 
                               
Preferred stock dividends   -    -    -    (308,893)   -    (308,893)
                               
Accretion on preferred stock   17,845    -    -    (17,845)   -    - 
                               
Net income   -    -    -    452,128    -    452,128 
                               
Unrealized holding gains (losses) on securities available for sale,                                 
     net of reclassification adjustment and taxes   -    -    -    -    (222,551)   (222,551)
                               
BALANCE, March 31, 2013                              
   $14,839,391   $6,547,074   $21,420,827   $(3,149,596)  $1,228,843   $40,886,539 

  

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

 

 

 

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