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Cornerstone Bancshares, Inc. saw its 2008 net income increase to $2.51 million or $0.40 a share an increase of 188.3% over 2007's earnings per share of $0.13. For the fourth quarter Cornerstone's earnings loss decreased to $436 thousand or $(0.07) a share compared to the fourth quarter 2007 loss of $2.9 million or $(0.45) per share. The fourth quarter 2008 loss and the lower than historic year-to-date earnings were a direct result of deteriorating asset quality caused by the current recession and the Bank's reduced net interest margin caused by historically low interest rates. Earning assets increased 6.6% up to $444 million lead by the Bank's security portfolio which increased 36.8% while the loan portfolio finished with an average fourth quarter 2008 balance of $392 million, an increase of 3.6% over the same period in 2007. The net interest margin decreased from 4.64% during the last three months of 2007 to 4.35% for the last quarter of 2008. During the fourth quarter of 2008 the Bank expensed $2.5 million to the loan provision to satisfy all the identified FAS 114 asset impairments and expects further impairments as the economy continues to deteriorate.
Currently, Cornerstone has 6.3 million shares outstanding and expects earnings per share to remain constant for 2009. During last quarter of 2008 Cornerstone purchased a lot in the Knoxville, TN market in the center of Farragut on Kingston Pike. The property will serve as Cornerstone's first full-service branch in the Knoxville, TN market and should be open during the first or second quarter of 2010.
The Bank's asset quality deteriorated during the last quarter in 2008 as non-performing loans as a percentage of average total loans increased to 1.09%, while past-due loans as a percentage of total loans increased to 2.1%. Cornerstone had net charge-offs of $403 thousand during the fourth quarter and $7.6 million year-to-date, while providing $3.5 million to the loan loss allowance year-to-date.
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 one loan production office in Knoxville, TN and $470 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, 2008 (in thousands) Three Months Ending December 31 % EARNINGS SUMMARY 2008 2007 Change Interest income $7,401 $8,877 -16.6% Interest expense 2,978 4,026 -26.0% Net interest income 4,423 4,851 -8.8% Provision for loan loss 2,571 7,209 -64.3% Net interest income after provision 1,852 (2,357) 178.5% Noninterest income 496 461 7.6% Noninterest expense 3,104 2,811 10.4% Pretax income (756) (4,707) 83.9% Income taxes (320) (1,803) 82.3% Net income $(436) $(2,904) 85.0% Earnings per common share $(0.07) $(0.45) 84.7% Weighted average common shares outstanding 6,312,544 6,445,663 Year-to-Date Ending December 31 % EARNINGS SUMMARY 2008 2007 Change Interest income $30,680 $34,784 -11.8% Interest expense 12,698 14,414 -11.9% Net interest income 17,982 20,370 -11.7% Provision for loan loss 3,498 10,409 -66.4% Net interest income after provision 14,484 9,961 45.4% Noninterest income 1,892 1,695 11.6% Noninterest expense 12,568 10,926 15.0% Pretax income 3,808 730 421.6% Income taxes 1,297 (141) NA Net income $2,512 $871 188.3% Earnings per common share $0.40 $0.13 196.4% Weighted average common shares outstanding 6,322,150 6,498,794 Three Months AVERAGE BALANCE Ending December 31 % SHEET SUMMARY 2008 2007 Change Loans, net of unearned income $391,885 $378,173 3.6% Investment securities & Other 51,664 37,779 36.8% Earning assets 443,550 415,952 6.6% Total assets 462,576 434,992 6.3% Noninterest bearing deposits 43,592 43,761 -0.4% Interest bearing transaction deposits 69,298 94,720 -26.8% Certificates of deposit 210,187 189,264 11.1% Total deposits 323,077 327,745 -1.4% Other interest bearing liabilities 102,379 64,146 59.6% Shareholder's equity 37,519 41,259 -9.1% Year-to-Date AVERAGE BALANCE Ending December 31 % SHEET SUMMARY 2008 2007 Change Loans, net of unearned income $385,957 $353,278 9.3% Investment securities & Other 47,965 38,433 24.8% Earning assets 433,922 391,711 10.8% Total assets 452,605 413,043 9.6% Noninterest bearing deposits 42,915 41,503 3.4% Interest bearing transaction deposits 81,706 92,135 -11.3% Certificates of deposit 190,221 168,670 12.8% Total deposits 314,842 302,308 4.1% Other interest bearing liabilities 100,109 67,759 47.7% Shareholder's equity 37,435 40,737 -8.1% Three Months Year-to-Date Ending Dec. 31 Ending Dec. 31 SELECTED RATIOS 2008 2007 2008 2007 Average equity to average assets 8.11% 9.48% 8.27% 9.86% Average net loans to average total assets 84.72% 86.94% 85.27% 85.53% Return on average assets -0.37% -2.65% 0.55% 0.21% Return on average total equity -4.61% -28.16% 6.71% 2.14% Actual Equity on December 31, $36,501,509 $36,327,350 Actual # shares outstanding on December 31 6,319,718 6,369,718 Book value per common share $5.78 $5.70
SOURCE Cornerstone Bancshares, Inc.
http://www.cscbank.com
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