Cornerstone Community Bank | Chattanooga Banking

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

Cornerstone Bancshares, Inc saw its 3rd quarter earnings increase to $1.55 million or $.48 a share and $4.37 million year to date an increase of 46.4% while book earnings per share increased to $1.35 versus $.99, an increase of 36.4%. 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 5.72%. Leading the growth in deposits were certificates of deposit which on average grew 28.9% over the same period in 2005. The Bank experienced continued exceptional loan growth as the loan portfolio finished the quarter with an average 3rd quarter balance of $287 million, up 17.3% 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 $350 million in assets for the 3rd quarter of 2006 up from $294 million during the 3rd quarter of 2005 an increase of 18.7%. 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.

The asset quality improved slightly and remained at the superior level during the first three quarters of 2006 as non-performing assets as a percentage of average total loans remained at 0.36%. The Bank had net charge offs of $90 thousand during the third quarter and $203 thousand year to date, while providing $1,058 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 three quarters of 2006, and as a result Cornerstone was able to maintain a 1.53% allowance for possible loan losses compared to average loans.

Cornerstone Bancshares Inc. 3rd quarter 2006 earnings of $1.55 million represent a 25.7% increase over the 3rd quarter in 2005 earnings of $1,230 thousand. Earnings per share for the 3rd quarter 2006 were $0.48 compared to $0.40 per share for the 3rd quarter of 2005.

Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and $350 million in assets specializing in business financial services.

CORNERSTONE BANCSHARES, INC. Selected Financial Information as of September 30, 2006 (in thousands) Three Months Ending September 30 EARNINGS SUMMARY	2006	2005	% Change
Interest income Interest expense Net interest income Provision for loan loss Net interest income after provision Noninterest income Noninterest expense Pretax income Income taxes Net income Earnings per common share Weighted average common shares outstanding (1)	$7,534 2,781 4,753 205 4,548 418 2,423 2,543 997 $1,546 $0.48 3,250,815	$5,438 1,642 3,796 350 3,446 492 1,970 1,968 738 $1,230 $0.40 3,061,312	38.54% 69.37% 25.21% -41.43% 31.98%- 15.04% 22.99% 29.22% 35.09% 25.69% 20.00%
Year-to-Date Ending September 30 EARNINGS SUMMARY
Interest income Interest expense Net interest income Provision for loan loss Net interest income after provision Noninterest income Noninterest expense Pretax income Income taxes Net income Earnings per common share Weighted average common shares outstanding	$21,229 7,375 13,854 1,058 12,796 1,535 7,221 7,110 2,745 $4,365 $1.35 3,235,682	$14,604 4,204 10,400 900 9,500 1,064 5,731 4,833 1,851 $2,982 $0.99 3,012,731	45.36% 75.43% 33.21% 17.56% 34.69% 44.27% 26.00% 47.11% 48.30% 46.38% 36.36%
Three Months AVERAGE BALANCE Ending September 30 SHEET SUMMARY
Loans, net of unearned income Investment securities & Other Earning assets Total assets Noninterest bearing deposits Interest bearing transaction deposits Certificates of deposit Total deposits Other interest bearing liabilities Shareholder’s equity	287,354 43,486 330,840 349,508 35,752 92,026 136,164 263,942 46,708 36,359	$245,014 32,092 277,106 294,367 35,371 83,245 105,662 224,278 39,125 28,901	17.28% 35.50% 19.39% 18.73% 1.08% 10.55% 28.87% 17.69% 19.38% 25.81%
Year-to-Date AVERAGE BALANCE Ending September 30 SHEET SUMMARY
Loans, net of unearned income Investment securities & Other Earning assets Total assets Noninterest bearing deposits Interest bearing transaction deposits Certificates of deposit Total deposits Other interest bearing liabilities Shareholder’s equity	$280,166 38,817 318,983 338,902 36,139 91,970 129,905 258,014 43,715 34,917	$228,142 32,393 260,535 276,952 33,853 78,093 98,427 210,373 37,328 27,486	22.80% 19.83% 22.43% 22.37% 6.75% 17.77% 31.98% 22.65% 17.11% 27.04%
Three Months Ending September 30 SELECTED RATIOS
Average equity to average assets Average net loans to average total assets Return on average assets Return on average total equity Actual Equity on September 30, Actual # shares outstanding on September 30 Book value per common share	10.40% 82.22% 1.77% 17.01% $36,864,528 3,253,159 $11.33	9.82% 83.23% 1.67% 17.02% $30,042,401 3,072,334 $9.78
Year-to-Date Ending September 30 SELECTED RATIOS
Average equity to average assets Average net loans to average total assets Return on average assets Return on average total equity Actual Equity on September 30, Actual # shares outstanding on September 30 Book value per common share

This entry was posted on Friday, October 13th, 2006 at 8:00 am.