EX-99.1 3 cb4477ex991.htm EXHIBIT 99.1

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 4th Quarter 2005 Financial Results on
January 13, 2006

          HIXSON, Tenn., Jan. 13 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

          Cornerstone Bancshares, Inc. saw its 4th quarter earnings increase to $1.34 million or $.43 a share and $4.32 million year to date or $1.42 a share an increase of 37.6% over 2004’s earning per share of $1.03.  The earnings were $.17 a share better than its $1.25 earning per share guidance given in September.  The surprise in Company performance is the result of the bank’s asset sensitivity that allowed Cornerstone’s assets to reprice quicker than its deposits.  The result was an above average net interest margin for the 4th quarter of 5.71% compared to comparable peer bank average of 4.45%.  The Bank’s loan portfolio finished the quarter with an average 4th quarter balance of $260 million, up 32.5% over the same period in 2004.  The company plans to continue deploying the capital raised from the 2005 stock offering and the funds raised from the expiration of its director’s stock options.  Currently, Cornerstone has 3.2 million shares outstanding and expects earnings per share to increase to $1.61 per share in 2006 an increase of 13.3%.  During the 4th quarter Cornerstone completed the purchase of the assets of Eagle Financial LLC and formed Eagle Financial Inc.  The new company will provide commercial factoring and loan brokerage services and will give the corporation a vehicle to provide new and cash deprived companies access to liquidity.  Cornerstone expects Eagle to be accretive to earning in 2006.

          The asset quality remained at the superior level during 2005 as non- performing loans as a percentage of average total loans remained at 0.28% while past due loans as a percentage of total loans remained at 0.58%.  The Bank had net charge offs of $232 thousand during the 4th quarter and $557 thousand year to date, while providing $845 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 during 2005, and as a result the Bank was able to maintain a 1.30% allowance for possible loan losses.

          Cornerstone Bancshares Inc. 4th quarter 2005 earnings of $1.34 million represents an 87.0% increase over the 4th quarter in 2004 earnings of $718 thousand.  Earnings per share for the 4th quarter 2005 were $0.43 compared to $0.29 per share for the 4th quarter of 2004.

CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of December 31, 2005
(in thousands)

 

 

Three Months
Ending Dec 31

 

 

 

 

 

 

 

%
Change

 

 

 

2005

 

2004

 

 

 

 

 

 

 

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

6,064

 

$

3,872

 

 

56.6

%

Interest expense

 

 

1,872

 

 

1,003

 

 

86.6

%

Net interest income

 

 

4,192

 

 

2,869

 

 

46.1

%

Provision for loan loss

 

 

502

 

 

255

 

 

96.9

%

Net interest income after provision

 

 

3,690

 

 

2,614

 

 

41.2

%

Noninterest income

 

 

382

 

 

297

 

 

28.4

%

Noninterest expense

 

 

2,024

 

 

1,775

 

 

14.0

%

Pretax income

 

 

2,048

 

 

1,136

 

 

80.3

%

Income taxes

 

 

706

 

 

418

 

 

68.9

%

Net income

 

$

1,342

 

$

718

 

 

87.0

%

Earnings per common share

 

$

0.43

 

$

0.29

 

 

48.9

%

Weighted average common shares outstanding (1)

 

 

3,143,149

 

 

2,503,825

 

 

 

 


 

 

Year-to-Date
Ending Dec 31

 

 

 

 

 

 

 

%
Change

 

 

 

2005

 

2004

 

 

 

 

 

 

 

EARNINGS SUMMARY

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

20,669

 

$

14,059

 

 

47.0

%

Interest expense

 

 

6,076

 

 

3,575

 

 

69.9

%

Net interest income

 

 

14,592

 

 

10,483

 

 

39.2

%

Provision for loan loss

 

 

1,402

 

 

840

 

 

66.9

%

Net interest income after provision

 

 

13,191

 

 

9,643

 

 

36.8

%

Noninterest income

 

 

1,334

 

 

1,175

 

 

13.5

%

Noninterest expense

 

 

7,644

 

 

6,655

 

 

14.9

%

Pretax income

 

 

6,881

 

 

4,164

 

 

65.3

%

Income taxes

 

 

2,557

 

 

1,593

 

 

60.5

%

Net income

 

$

4,325

 

$

2,571

 

 

68.2

%

Earnings per common share

 

$

1.42

 

$

1.03

 

 

37.6

%

Weighted average common shares outstanding (1)

 

 

3,045,625

 

 

2,491,339

 

 

 

 

 

 

Three Months
Ending Dec 31

 

 

 

 

 

 

 

%
Change

 

 

 

2005

 

2004

 

 

 

 

 

 

 

AVERAGE BALANCE
SHEET SUMMARY

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income

 

$

260,384

 

$

196,542

 

 

32.5

%

Investment securities & Other

 

 

31,582

 

 

29,494

 

 

7.1

%

Earning assets

 

 

291,966

 

 

226,036

 

 

29.2

%

Total assets

 

 

311,794

 

 

241,365

 

 

29.2

%

Noninterest bearing deposits

 

 

37,334

 

 

32,329

 

 

15.5

%

Interest bearing transaction deposits

 

 

82,384

 

 

64,163

 

 

28.4

%

Certificates of deposit

 

 

115,688

 

 

89,468

 

 

29.3

%

Total deposits

 

 

235,405

 

 

185,960

 

 

26.6

%

Other interest bearing liabilities

 

 

42,939

 

 

32,598

 

 

31.7

%

Shareholder’s equity

 

 

31,088

 

 

21,046

 

 

47.7

%

 

 

Year-to-Date
Ending Dec 31

 

 

 

 

 

 

 

%
Change

 

 

 

2005

 

2004

 

 

 

 

 

 

 

AVERAGE BALANCE
SHEET SUMMARY

 

 

 

 

 

 

 

 

 

 

Loans, net of unearned income

 

$

236,265

 

$

181,335

 

 

30.3

%

Investment securities & Other

 

 

32,681

 

 

28,333

 

 

15.3

%

Earning assets

 

 

268,946

 

 

209,668

 

 

28.3

%

Total assets

 

 

286,218

 

 

223,801

 

 

27.9

%

Noninterest bearing deposits

 

 

34,730

 

 

27,918

 

 

24.4

%

Interest bearing transaction deposits

 

 

79,175

 

 

61,125

 

 

29.5

%

Certificates of deposit

 

 

102,778

 

 

84,101

 

 

22.2

%

Total deposits

 

 

216,683

 

 

173,144

 

 

25.1

%

Other interest bearing liabilities

 

 

38,743

 

 

30,663

 

 

26.4

%

Shareholder’s equity

 

 

28,883

 

 

18,586

 

 

55.4

%

 

 

Three Months
Ending Dec 31

 

Year-to-Date
Ending Dec 31

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

SELECTED RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

9.97

%

 

8.72

%

 

10.09

%

 

8.30

%

Average net loans to average total assets

 

 

83.51

%

 

81.43

%

 

82.55

%

 

81.03

%

Return on average assets

 

 

1.72

%

 

1.19

%

 

1.51

%

 

1.15

%

Return on average total equity

 

 

17.26

%

 

13.64

%

 

14.97

%

 

13.83

%

Actual Equity on Dec. 31,

 

$

32,446,364

 

$

24,807,320

 

 

 

 

 

 

 

Actual # shares outstanding on Dec. 31,

 

 

3,201,334

 

 

2,868,823

 

 

 

 

 

 

 

Book value per common share (1)

 

$

10.14

 

$

8.65

 

 

 

 

 

 

 

(1)     Per share data is adjusted for a two for one stock split in the form of a 100% stock dividend

SOURCE  Cornerstone Bancshares, Inc.
           -0-                                                       01/13/2006
           /CONTACT:  Frank Hughes, President & Treasurer of Cornerstone Bancshares, Inc., +1-423-385-3009, or fax, +1-423-385-3100/
           /Web site:  http://www.cscbank.com/
           (CSBQ)