8-K

UNITED STATESSECURITIES 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) February 2, 2010 (December 16, 2009)

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 February 1, 2010, the Registrant issued a press release reporting earnings results for the fiscal quarter ended December 31, 2009.

Item 5.02.         Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b)       On December 16, 2009, Kim H. White resigned from the board of directors of Cornerstone Bancshares, Inc. (the “Company”).  Ms. White’s resignation is not the result of a disagreement with the Company.

Item 9.01.         Financial Statements and Exhibits.

(c)         Exhibits

99.1      Press release dated February 1, 2010 reporting earnings results for the fiscal quarter ended December 31, 2009.

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:   February 2, 2010
	By:	/s/ Nathaniel F. Hughes
	Nathaniel F. Hughes,
	President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 4^th Quarter 2009 Financial Results

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--February 1, 2010--Cornerstone Bancshares, Inc. (OTCBB: CSBQ) today announced the following:

Cornerstone Bancshares, Inc. (Cornerstone) announced financial results for the fourth quarter of 2009 with a net loss of $2.96 million or ($0.46) per share. Year-to-date, Cornerstone reports a net loss of $8.18 million or ($1.26) per share. The fourth quarter 2009 loss was a direct result of Cornerstone’s continued commitment to reduce problem assets, as the Bank provided $4.15 million of additional provision for loan losses. During the fourth quarter 2009, management charged off the loan portfolio’s possible losses and wrote down the Bank’s other real estate to a level that should allow the Bank to sell the property without any further material loss. If the economy does not deteriorate further in 2010, the Bank should see a material improvement in its asset quality metrics and should see improvements in earnings, as problem assets have less of a negative impact on earnings generation. Cornerstone’s net interest margin remained at a historically low rate of 3.27% year-to-date; however, management expects an improvement as the amount of nonaccrual loans decreases and the certificate of deposit portfolio re-prices to lower current rates. The Bank remains committed to reducing expenses and improving core earnings.

Cornerstone expects positive earnings in 2010, as asset quality stabilizes and the associated expenses reduce to allow the Bank’s efficiency to improve.

The Bank’s asset quality improved during the fourth quarter in 2009, as non-performing loans as a percentage of average total loans decreased to 2.14%. The Bank’s past-due loans materially improved from 5.46% at the end of third quarter 2009 to 1.30% as of the end of fourth quarter 2009. Cornerstone had net charge-offs of $5.6 million during the fourth quarter 2009. The Bank’s total non-performing assets increased to $17.5 million, as problem loans identified during the first half of 2009 progressed through the collection cycle. The Bank believes these numbers have reached their height and will begin reducing steadily during 2010.

Overall, Cornerstone is optimistic and has retained its strong core earnings platform that, once its asset quality issues improve, will return as a well-performing company.

Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA, with five full-service branches and one loan production office in Dalton, GA, and $500 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 ( Unaudited)
as of December 31, 2009
(in thousands)
	Three Months								Year-to-Date
	Ending December 31						%		Ending December 31						%
EARNINGS SUMMARY	2009			2008			Change		2009			2008			Change
Interest income	$	6,610		$	7,401		-10.7	%	$	26,308		$	30,680		-14.2	%
Interest expense		2,762			2,978		-7.3	%		11,189			12,698		-11.9	%
Net interest income		3,848			4,423		-13.0	%		15,119			17,982		-15.9	%
Provision for loan loss		4,150			2,571		61.4	%		14,899			3,528		322.3	%
Net interest income (loss) after provision		(302	)		1,852		116.3	%		220			14,454		-98.5	%
Noninterest income		(561	)		496		-213.1	%		541			1,892		-71.4	%
Noninterest expense		4,006			3,104		29.1	%		14,276			12,538		13.9	%
Pretax income (loss)		(4,869	)		(756	)	-544.1	%		(13,515	)		3,808		-454.9	%
Income taxes (benefit)		(1,904	)		(320	)	-495.8	%		(5,336	)		1,297		-511.6	%
Net income (loss)	$	(2,965	)	$	(436	)	-579.5	%	$	(8,179	)	$	2,512		-425.6	%
Earnings per common share	$	(0.46	)	$	(0.07	)	-559.8	%	$	(1.26	)	$	0.39		-425.7	%
Weighted average common shares
outstanding		6,500,396			6,493,222					6,500,396			6,502,828
	Three Months								Year-to-Date
AVERAGE BALANCE	Ending December 31						%		Ending December 31						%
SHEET SUMMARY	2009			2008			Change		2009			2008			Change
Loans, net of unearned income	$	344,606		$	391,885		-12.1	%	$	363,146		$	385,957		-5.9	%
Investment securities & Other		154,441			51,664		198.9	%		103,939			47,965		116.7	%
Earning assets		499,047			443,550		12.5	%		467,085			433,922		7.6	%
Total assets		519,520			462,576		12.3	%		484,669			452,605		7.1	%
Noninterest bearing deposits		38,028			43,592		-12.8	%		40,816			42,915		-4.9	%
Interest bearing transaction deposits		57,684			69,298		-16.8	%		63,133			81,706		-22.7	%
Certificates of deposit		305,134			210,187		45.2	%		256,551			190,221		34.9	%
Total deposits		400,845			323,077		24.1	%		360,500			314,842		14.5	%
Other interest bearing liabilities		92,990			102,379		-9.2	%		93,773			100,109		-6.3	%
Shareholders' equity		31,104			37,519		-17.1	%		33,600			37,435		-10.2	%
	Three Months								Year-to-Date
	Ending December 31								Ending December 31
SELECTED RATIOS	2009			2008					2009			2008
Average equity to
average assets		5.99	%		8.11	%				6.93	%		8.27	%
Average net loans to
average total assets		66.33	%		84.72	%				74.93	%		85.27	%
Return on average assets		-2.26	%		-0.37	%				-1.69	%		0.55	%
Return on average total equity		-37.82	%		-4.65	%				-24.34	%		6.71	%
Actual Equity on December 31,	$	27,837,479		$	36,501,509
Actual # shares outstanding on December 31,		6,500,396			6,319,718
Book value per common share	$	4.28		$	5.78

CONTACT:
Frank Hughes, 423-385-3009
President & CEO of Cornerstone Bancshares, Inc.