EX-99.1 4 cb3078ex991.htm

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 2nd Quarter 2005 Financial Results

HIXSON, Tenn., July 15 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

Cornerstone Bancshares, Inc saw its 2nd quarter earnings increase to $912 thousand or $.30 a share and $1,752 thousand year to date an increase of 52.9% while book earnings per share increased to $.59 versus $.46, an increase of 27.2%. (The per share data is different than the nominal earnings due to a 500,000 stock issue completed in February 2005.) The earnings growth was the result of continued strong balance sheet growth, especially loan generation and core deposit growth. Leading the growth in deposits were interest-bearing transaction accounts, which on average grew 40.1% over the same period in 2004. Due to these continued strong results, the Board of Directors has authorized an $.08 cash dividend for stockholders payable July 11, 2005 bringing the total dividend paid during 2005 to $.18 per share compared to $.05 per share during 2004 an increase of 260%. The Bank experienced continued exceptional loan growth as the loan portfolio finished the quarter with an average 2nd quarter balance of $228 million, up 30.2% over the same period in 2004 and surpassed the Bank’s budgeted loan growth for 2004. The loan growth was concentrated in the business sector, especially in asset-based and commercial real estate lending, as more customers choose service before price and went with a local organization that partnered with its customers. Asset growth followed in line with loan growth as the Bank averaged $280 million in assets for the 2nd quarter of 2005, up from $217 million during the 2nd quarter of 2004, an increase of 28.6%. Earning assets for the Bank increased 29.6% in comparison to the 2nd quarter of 2004, driving the average earning asset ratio up to 94.3%, well above the peer bank average. The Bank created a joint venture with AGA Insurance Inc. a Chattanooga-based insurance agency to provide insurance products to its customer base with two dedicated (to the Bank’s customers) dual employees. Management and AGA are excited to have the ability to cross-sell services to both customer bases.

The asset quality deteriorated slightly, but remained at the superior level during the first half of 2005 as non-performing loans as a percentage of average total loans increased to 0.38%, while past due loans as a percentage of total loans increased to 0.32%. The Bank had net charge offs of $131 thousand during the second quarter and $161 thousand year to date, while providing $550 thousand 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 from the first two quarters of 2005, and as a result the Bank was able to maintain a 1.34% allowance for possible loan losses.

Cornerstone Bancshares Inc. 2nd quarter 2005 earnings of $912 thousand represents a 46.5% increase over the 2nd quarter in 2004 earnings of $623 thousand. Earnings per share for the 2nd quarter 2005 was $0.30 compared to $0.25 per share for the 2nd quarter of 2004.

Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and $290 million in assets specializing in business financial services.


CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of June 30, 2005
(in thousands)

 

 

Three Months
Ending June 30

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2005

 

2004

 

 

 

 

 

 

Interest income

 

$

4,844

 

$

3,404

 

 

42.29

%

Interest expense

 

 

1,427

 

 

818

 

 

74.50

%

Net interest income

 

 

3,417

 

 

2,586

 

 

32.10

%

Provision for loan loss

 

 

340

 

 

250

 

 

36.00

%

Net interest income after provision

 

 

3,077

 

 

2,336

 

 

31.69

%

Noninterest income

 

 

270

 

 

282

 

 

-4.23

%

Noninterest expense

 

 

1,857

 

 

1,600

 

 

16.06

%

Pretax income

 

 

1,490

 

 

1,019

 

 

46.27

%

Income taxes

 

 

579

 

 

396

 

 

45.98

%

Net income

 

$

912

 

$

623

 

 

46.46

%

Earnings per common share

 

$

0.30

 

$

0.25

 

 

20.30

%

Weighted average common shares outstanding

 

 

3,028,037

 

 

2,487,234

 

 

 

 

 

 

Year-to-Date
Ending June 30

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2005

 

2004

 

 

 

 

 

 

Interest income

 

$

9,166

 

$

6,482

 

 

41.41

%

Interest expense

 

 

2,563

 

 

1,625

 

 

57.66

%

Net interest income

 

 

6,604

 

 

4,857

 

 

35.97

%

Provision for loan loss

 

 

550

 

 

410

 

 

34.15

%

Net interest income after provision

 

 

6,054

 

 

4,447

 

 

36.14

%

Noninterest income

 

 

488

 

 

609

 

 

-19.80

%

Noninterest expense

 

 

3,678

 

 

3,183

 

 

15.55

%

Pretax income

 

 

2,864

 

 

1,873

 

 

52.95

%

Income taxes

 

 

1,113

 

 

727

 

 

53.07

%

Net income

 

$

1,752

 

$

1,146

 

 

52.87

%

Earnings per common share

 

$

0.59

 

$

0.46

 

 

27.24

%

Weighted average common shares outstanding

 

 

2,988,038

 

 

2,487,080

 

 

 

 


 

 

Three Months
Ending June 30

 

%
Change

 

 

 

 

 

AVERAGE BALANCE SHEET SUMMARY

 

2005

 

2004

 

 

 

 

 

 

Loans, net of unearned income

 

$

228,367

 

$

175,397

 

 

30.20

%

Investment securities

 

 

34,945

 

 

27,823

 

 

25.60

%

Earning assets

 

 

263,312

 

 

203,220

 

 

29.57

%

Total assets

 

 

279,585

 

 

217,425

 

 

28.59

%

Noninterest bearing deposits

 

 

32,720

 

 

27,821

 

 

17.61

%

Interest bearing transaction deposits

 

 

81,977

 

 

58,496

 

 

40.14

%

Certificates of deposit

 

 

98,588

 

 

80,426

 

 

22.58

%

Total deposits

 

 

213,286

 

 

166,743

 

 

27.91

%

Other interest bearing liabilities

 

 

36,805

 

 

31,898

 

 

15.38

%

Shareholder’s equity

 

 

27,768

 

 

17,538

 

 

58.32

%

 

 

Year-to-Date
Ending June 30

 

%
Change

 

 

 

 

 

AVERAGE BALANCE SHEET SUMMARY

 

2005

 

2004

 

 

 

 

 

 

Loans, net of unearned income

 

$

219,567

 

$

169,126

 

 

29.82

%

Investment securities

 

 

32,547

 

 

26,622

 

 

22.26

%

Earning assets

 

 

252,114

 

 

195,748

 

 

28.80

%

Total assets

 

 

268,102

 

 

208,983

 

 

28.29

%

Noninterest bearing deposits

 

 

33,082

 

 

24,876

 

 

32.99

%

Interest bearing transaction deposits

 

 

75,474

 

 

57,095

 

 

32.19

%

Certificates of deposit

 

 

94,750

 

 

80,019

 

 

18.41

%

Total deposits

 

 

203,306

 

 

161,990

 

 

25.51

%

Other interest bearing liabilities

 

 

36,414

 

 

28,283

 

 

28.75

%

Shareholder’s equity

 

 

26,768

 

 

17,487

 

 

53.07

%

 

 

Three Months
Ending June 30

 

Year-to-Date
Ending June 30

 

 

 

 

 

SELECTED RATIOS

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

Average equity to average assets

 

 

9.93

%

 

8.07

%

 

9.98

%

 

8.37

%

Average net loans to average total assets

 

 

81.68

%

 

80.67

%

 

81.90

%

 

80.93

%

Return on average assets

 

 

1.30

%

 

1.15

%

 

1.31

%

 

1.10

%

Return on average total equity

 

 

13.13

%

 

14.20

%

 

13.09

%

 

13.11

%

Actual Book value per common share

 

$

9.30

 

$

7.02

 

 

 

 

 

 

 

SOURCE  Cornerstone Bancshares, Inc.
          -0-                                                            07/15/2005
          /CONTACT:  Frank Hughes, President & COO of Cornerstone Bancshares, Inc., +1-423-385-3009/
          /Web site:  http://www.cscbank.com