EX-99.1 3 cb6373ex991.htm EXHIBIT 99.1

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 2nd Quarter 2006 Financial Results

          HIXSON, Tenn., July 14 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

          Cornerstone Bancshares, Inc. saw its 2nd quarter earnings increase to $1.46 million or $.45 a share and $2.82 million year to date, an increase of 60.8% while book earnings per share increased to $.87 versus $.59, an increase of 47.5%.  The earnings growth was the result of continued balance sheet growth and core deposit growth coupled with an increase in Cornerstone’s net interest margin to 5.89%.  Leading the growth in deposits were certificates of deposit which on average grew 33.7% over the same period in 2005.  The Bank experienced continued exceptional loan growth as the loan portfolio finished the quarter with an average 2nd quarter balance of $281 million, up 23.2% over the same period in 2005.  The loan growth was concentrated in the business sector especially in asset based and commercial real estate lending as more customers choose customer service and went with a local organization that partnered with its customers.  Asset growth followed in line with loan growth as the Bank averaged $338 million in assets for the 2nd quarter of 2006 up from $279 million during the 2nd quarter of 2005 an increase of 21.0%.  The elevated net interest margin is due to increased number of participated loan servicing fees and a timing difference between the Bank’s repricing of assets and liabilities.

          Due to the above mentioned performance Cornerstone’s Board announces an updated earnings projection for nominal EPS during 2006.  EPS guidance has been increased from $1.62 per share to $1.75 per share.

          The asset quality improved slightly and remained at the superior level during the first half of 2006 as non-performing assets as a percentage of average total loans decreased to 0.36%.  The Bank had net charge offs of $82 thousand during the second quarter and $113 thousand year to date, while providing $853 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 2006, and as a result Cornerstone was able to maintain a 1.52% allowance for possible loan losses compared to average loans.

          Cornerstone Bancshares, Inc. 2nd quarter 2006 earnings of $1.46 million represent a 60.4% increase over the 2nd quarter in 2005 earnings of $912 thousand.  Earnings per share for the 2nd quarter 2006 were $0.45 compared to $0.30 per share for the 2nd quarter of 2005.

          Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and $340 million in assets specializing in business financial services.

CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of June 30, 2006
(in thousands)

 

 

Three Months
Ending June 30

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Interest income

 

$

7,184

 

$

4,844

 

 

48.31

%

Interest expense

 

 

2,438

 

 

1,427

 

 

70.85

%

Net interest income

 

 

4,746

 

 

3,417

 

 

38.89

%

Provision for loan loss

 

 

475

 

 

340

 

 

39.71

%

Net interest income after provision

 

 

4,271

 

 

3,077

 

 

38.80

%

Noninterest income

 

 

668

 

 

271

 

 

146.49

%

Noninterest expense

 

 

2,541

 

 

1,857

 

 

36.83

%

Pretax income

 

 

2,398

 

 

1,491

 

 

60.83

%

Income taxes

 

 

935

 

 

579

 

 

61.49

%

Net income

 

$

1,463

 

$

912

 

 

60.42

%

Earnings per common share

 

$

0.45

 

$

0.30

 

 

50.00

%

Weighted average common shares outstanding

 

 

3,241,674

 

 

3,028,037

 

 

 

 


 

 

Year-to-Date
Ending June 30

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Interest income

 

$

13,695

 

$

9,166

 

 

49.41

%

Interest expense

 

 

4,594

 

 

2,563

 

 

79.24

%

Net interest income

 

 

9,101

 

 

6,603

 

 

37.83

%

Provision for loan loss

 

 

853

 

 

550

 

 

55.09

%

Net interest income after provision

 

 

8,248

 

 

6,053

 

 

36.26

%

Noninterest income

 

 

1,102

 

 

489

 

 

125.36

%

Noninterest expense

 

 

4,784

 

 

3,677

 

 

30.11

%

Pretax income

 

 

4,566

 

 

2,865

 

 

59.37

%

Income taxes

 

 

1,748

 

 

1,113

 

 

57.05

%

Net income

 

$

2,818

 

$

1,752

 

 

60.84

%

Earnings per common share

 

$

0.87

 

$

0.59

 

 

47.46

%

Weighted average common shares outstanding

 

 

3,228,545

 

 

2,988,038

 

 

 

 

 

 

Three Months
Ending June 30

 

%
Change

 

 

 

 

 

AVERAGE BALANCE SHEET SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Loans, net of unearned income

 

 

281,321

 

$

228,367

 

 

23.19

%

Investment securities & Other

 

 

37,045

 

 

34,945

 

 

6.01

%

Earning assets

 

 

318,366

 

 

263,312

 

 

20.91

%

Total assets

 

 

338,399

 

 

279,585

 

 

21.04

%

Noninterest bearing deposits

 

 

36,032

 

 

32,720

 

 

10.12

%

Interest bearing transaction deposits

 

 

96,915

 

 

81,977

 

 

18.22

%

Certificates of deposit

 

 

124,507

 

 

98,588

 

 

26.29

%

Total deposits

 

 

257,454

 

 

213,285

 

 

20.71

%

Other interest bearing liabilities

 

 

43,796

 

 

36,805

 

 

18.99

%

Shareholder’s equity

 

 

34,870

 

 

27,768

 

 

25.58

%

 

 

Year-to-Date
Ending June 30

 

%
Change

 

 

 

 

 

AVERAGE BALANCE SHEET SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Loans, net of unearned income

 

$

276,512

 

$

219,567

 

 

25.94

%

Investment securities & Other

 

 

36,443

 

 

32,547

 

 

11.97

%

Earning assets

 

 

312,955

 

 

252,114

 

 

24.13

%

Total assets

 

 

333,511

 

 

268,102

 

 

24.40

%

Noninterest bearing deposits

 

 

36,336

 

 

33,082

 

 

9.84

%

Interest bearing transaction deposits

 

 

91,944

 

 

75,474

 

 

21.82

%

Certificates of deposit

 

 

126,723

 

 

94,750

 

 

33.74

%

Total deposits

 

 

255,003

 

 

203,306

 

 

25.43

%

Other interest bearing liabilities

 

 

42,194

 

 

36,414

 

 

15.87

%

Shareholder’s equity

 

 

34,183

 

 

26,768

 

 

27.70

%


 

 

Three Months
Ending June 30

 

Year-to-Date
Ending June 30

 

 

 

 

 

SELECTED RATIOS

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

Average equity to average assets

 

 

10.30

%

 

9.93

%

 

10.25

%

 

9.98

%

Average net loans to average total assets

 

 

83.13

%

 

81.68

%

 

82.91

%

 

81.90

%

Return on average assets

 

 

1.73

%

 

1.30

%

 

0.84

%

 

0.65

%

Return on average total equity

 

 

16.78

%

 

13.14

%

 

8.24

%

 

6.55

%

Actual Equity on June 30,

 

$

35,153,346

 

$

28,386,936

 

 

 

 

 

 

 

Actual # shares outstanding on June 30,

 

 

3,243,453

 

 

3,051,334

 

 

 

 

 

 

 

Book value per common share

 

$

10.84

 

$

9.30

 

 

 

 

 

 

 

SOURCE  Cornerstone Bancshares, Inc.
          -0-                                                     07/14/2006
          /CONTACT:  Frank Hughes, President & COO of Cornerstone Bancshares, Inc.,
+1-423-385-3009/
          /Web site:  http://www.cscbank.com /