EX-99.1 3 cb8514ex991.htm EXHIBIT 99.1

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 4th Quarter 2006 Financial Results on
January 12, 2007

          HIXSON, Tenn., Jan. 12 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

          Cornerstone Bancshares, Inc saw its 4th quarter earnings increase to $1.45 million or $0.22 a share and $5.81 million year to date or $0.90 a share an increase of 26.4% over 2005’s earnings per share of $0.71.  The earnings were $0.025 a share better than its $0.875 earning per share guidance given in June.  The better than expected Company performance was a direct result of the continued above average net interest margin for the fourth quarter of 5.80% compared to comparable peer bank average of 4.23%.  The Bank’s loan portfolio finished the quarter with an average 4th quarter balance of $296 million, up 13.6% over the same period in 2005.  During the 4th quarter Cornerstone reevaluated the amortization of its intangible asset for Eagle Financial Inc. and accelerated the amortization by an additional $182 thousand.  The Corporation also set up and funded a corporate foundation to assist the Bank in civic and community gifting.  The foundation was initially funded with $500 thousand and will give 5% of its corpus annually.  These two non operating expenses reduced the quarterly and annual earnings by $430 thousand after taxes.

          Currently, Cornerstone has 6.5 million shares outstanding and expects earnings per share to increase to $1.00 per share in 2007 an increase of 11.1%.  During the fourth quarter Cornerstone completed the formation of a Loan Production Office in Dalton, GA and expects to assist small businesses in North GA with asset based loans from both Cornerstone Community Bank and Eagle Financial, Inc.

          The asset quality remained at the superior level during 2006 as non- performing loans as a percentage of average total loans remained at 0.37% while past due loans as a percentage of total loans decreased to 0.50%.  The Bank had net charge offs of $191 thousand during the fourth quarter and $394 thousand year to date, while providing $1.1 million 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 2006, and as a result the Bank was able to maintain a 1.33% allowance for possible loan losses.

          Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and one loan production office with $375 million in assets specializing in business financial services.

CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of December 31, 2006
(in thousands)

 

 

Three Months
Ending December 31

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Interest income

 

$

7,936

 

$

6,064

 

 

30.87

%

Interest expense

 

 

2,931

 

 

1,872

 

 

56.57

%

Net interest income

 

 

5,005

 

 

4,192

 

 

19.39

%

Provision for loan loss

 

 

49

 

 

502

 

 

-90.24

%

Net interest income after provision

 

 

4,956

 

 

3,690

 

 

34.31

%

Noninterest income

 

 

370

 

 

382

 

 

-3.14

%

Noninterest expense

 

 

3,297

 

 

2,024

 

 

62.90

%

Pretax income

 

 

2,029

 

 

2,048

 

 

-0.93

%

Income taxes

 

 

582

 

 

706

 

 

-17.56

%

Net income

 

$

1,447

 

$

1,342

 

 

7.82

%

Earnings per common share

 

$

0.22

 

$

0.21

 

 

4.19

%

Weighted average common shares outstanding (1)

 

 

6,505,405

 

 

6,286,298

 

 

 

 


 

 

Year-to-Date
Ending December 31

 

%
Change

 

 

 

 

 

EARNINGS SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Interest income

 

$

29,165

 

$

20,669

 

 

41.11

%

Interest expense

 

 

10,306

 

 

6,076

 

 

69.62

%

Net interest income

 

 

18,859

 

 

14,593

 

 

29.23

%

Provision for loan loss

 

 

1,107

 

 

1,402

 

 

-21.04

%

Net interest income after provision

 

 

17,752

 

 

13,191

 

 

34.58

%

Noninterest income

 

 

1,861

 

 

1,334

 

 

39.51

%

Noninterest expense

 

 

10,473

 

 

7,644

 

 

37.01

%

Pretax income

 

 

9,140

 

 

6,881

 

 

32.83

%

Income taxes

 

 

3,328

 

 

2,557

 

 

30.15

%

Net income

 

$

5,812

 

$

4,324

 

 

34.41

%

Earnings per common share

 

$

0.90

 

$

0.71

 

 

26.36

%

Weighted average common shares outstanding (1)

 

 

6,479,441

 

 

6,091,250

 

 

 

 

 

 

Three Months
Ending December 31

 

%
Change

 

AVERAGE BALANCE

 

 

 

SHEET SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Loans, net of unearned income

 

 

295,787

 

$

260,384

 

 

13.60

%

Investment securities & Other

 

 

47,095

 

 

31,582

 

 

49.12

%

Earning assets

 

 

342,882

 

 

291,966

 

 

17.44

%

Total assets

 

 

362,059

 

 

311,794

 

 

16.12

%

Noninterest bearing deposits

 

 

39,773

 

 

37,334

 

 

6.53

%

Interest bearing transaction deposits

 

 

96,763

 

 

82,384

 

 

17.45

%

Certificates of deposit

 

 

140,064

 

 

115,688

 

 

21.07

%

Total deposits

 

 

276,600

 

 

235,405

 

 

17.50

%

Other interest bearing liabilities

 

 

44,922

 

 

42,939

 

 

4.62

%

Shareholder’s equity

 

 

38,131

 

 

31,088

 

 

22.66

%

 

 

Year-to-Date
Ending December 31

 

%
Change

 

AVERAGE BALANCE

 

 

 

SHEET SUMMARY

 

2006

 

2005

 

 

 

 

 

 

Loans, net of unearned income

 

$

284,105

 

$

236,265

 

 

20.25

%

Investment securities & Other

 

 

40,904

 

 

32,681

 

 

25.16

%

Earning assets

 

 

325,009

 

 

268,946

 

 

20.85

%

Total assets

 

 

344,741

 

 

286,218

 

 

20.45

%

Noninterest bearing deposits

 

 

37,056

 

 

34,730

 

 

6.70

%

Interest bearing transaction deposits

 

 

93,178

 

 

79,175

 

 

17.69

%

Certificates of deposit

 

 

132,465

 

 

102,778

 

 

28.88

%

Total deposits

 

 

262,699

 

 

216,683

 

 

21.24

%

Other interest bearing liabilities

 

 

44,019

 

 

38,743

 

 

13.62

%

Shareholder’s equity

 

 

35,728

 

 

28,883

 

 

23.70

%

 

 

Three Months
Ending December 31

 

 

 

 

 

 

 

 

 

 

SELECTED RATIOS

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

10.53

%

 

9.97

%

 

 

 

Average net loans to average total assets

 

 

81.70

%

 

83.51

%

 

 

 

Return on average assets

 

 

1.59

%

 

1.72

%

 

 

 

Return on average total equity

 

 

15.06

%

 

17.27

%

 

 

 

Actual Equity on December 31,

 

$

38,055,477

 

$

32,446,364

 

 

 

 

Actual # shares outstanding on December 31

 

 

6,503,318

 

 

6,402,668

 

 

 

 

Book value per common share (1)

 

$

5.85

 

$

5.07

 

 

 

 


 

 

Year-to-Date
Ending December 31

 

 

 

 

 

 

 

 

 

 

SELECTED RATIOS

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

 

10.36

%

 

10.09

%

 

 

 

Average net loans to average total assets

 

 

82.41

%

 

82.55

%

 

 

 

Return on average assets

 

 

1.69

%

 

1.51

%

 

 

 

Return on average total equity

 

 

16.27

%

 

14.97

%

 

 

 

Actual Equity on December 31,

 

 

 

 

 

 

 

 

 

 

Actual # shares outstanding on December 31

 

 

 

 

 

 

 

 

 

 

Book value per common share (1)

 

 

 

 

 

 

 

 

 

 

SOURCE  Cornerstone Bancshares, Inc.
           -0-                                                  01/12/2007
           /CONTACT:  Frank Hughes, President & COO of Cornerstone Bancshares, Inc., +1-423-385-3009/
           /Web site:  http://www.cscbank.com /
           (CSBQ)