Cornerstone Bancshares, Inc. Announces 2nd Quarter 2006 Financial Results
HIXSON, Tenn., July 14 /PRNewswire-FirstCall/ — Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ - News) 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 | |||
| EARNINGS SUMMARY | 2006 | 2005 | Change |
| 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 | |||
| EARNINGS SUMMARY | 2006 | 2005 | Change |
| 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 AVERAGE BALANCE Ending June 30 | |||
| SHEET SUMMARY | 2006 | 2005 | Change |
| 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 AVERAGE BALANCE Ending June 30 | |||
| SHEET SUMMARY | 2006 | 2005 | Change |
| 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 Year-to-Date Ending June 30 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 | ||