Published:
Cornerstone Bancshares, Inc. Announces 2nd Quarter 2008 Financial Results
CHATTANOOGA, Tenn., July 18 /PRNewswire-FirstCall/ -- Cornerstone
Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:
Cornerstone Bancshares, Inc. saw its earnings increase to $1.1 million for the
2nd quarter of 2008 or $.17 per share compared to $1.0 million for the 1st
quarter of 2008, an increase of 5.7%. Year-to-date, Cornerstone has earned
$2.1 million or $.33 per share. These earnings represent more than a 30%
decrease from 2007 earnings period over period. The decrease from the last
year's earnings level has mostly been caused by net interest rate margin
compression of approximately 135 basis points. The compression was created
when the Federal Reserve rapidly reduced its Federal Funds rate 325 basis
points over the last several months and has been exacerbated by the severe
liquidity crisis created by large money center banks early this year. This
liquidity crisis has caused the failure of a couple of large banks such as
Bear Stearns that were heavily concentrated in housing credit risk and were
highly leveraged. As a result of this liquidity crunch other banks,
especially smaller banks, have seen the cost of funds from products such as
certificates of deposit cost 100 basis points more than would be expected
given the present Federal Funds rate during previous periods. In the past,
Cornerstone has been able to grow its balance sheet to offset interest rate
compression, but in 2008 there is much more uncertainty and not as much
readily available capital to fund such growth. Cornerstone believes the rest
of 2008 will be a challenge and will use the time to build its capital and
liquidity. The Bank continued to grow loans during 2008 but at a slower rate
as loans, especially commercial real estate loans, increased to $384 million,
an increase of 10.9% over the same period during 2007. The Company's
performance metrics pulled back to normal peer levels. ROA was 0.95% for the
second quarter of 2008 compared to 1.54% during the second quarter in 2007.
ROE was 11.5% during the second quarter in 2008 compared to 15.4% in 2007.
Presently the Company is operating at a comfortable 8.26% capital leverage
ratio and has the ability to continue to grow, but will spend the remainder of
2008 building capital until the economic environment improves.
The asset quality improved to the superior level during the second quarter
of 2008, non-performing loans as a percentage of average total loans decreased
to 0.39% while past-due loans as a percentage of total loans decreased to
.95%.
Cornerstone Bancshares, Inc. is a one-bank holding company serving the
Chattanooga, Tennessee MSA with 5 branches and one loan production office in
Dalton, Georgia and one loan production office inKnoxville, Tennessee and
$450 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
as of June 30, 2008
(in thousands)
Three Months
Ending June 30 %
EARNINGS SUMMARY 2008 2007 Change
Interest income $7,757 $8,743 -11.28%
Interest expense 3,223 3,469 -7.08%
Net interest income 4,533 5,274 -14.04%
Provision for loan loss 190 235 -19.15%
Net interest income after provision 4,343 5,039 -13.80%
Noninterest income 525 439 19.50%
Noninterest expense 3,196 3,012 6.11%
Pretax income 1,672 2,466 -32.20%
Income taxes 599 902 -33.59%
Net income $1,073 $1,564 -31.39%
Earnings per common share $0.17 $0.24 -29.25%
Weighted average common shares
outstanding 6,319,718 6,519,213
Three Months
AVERAGE BALANCE Ending June 30 %
SHEET SUMMARY 2008 2007 Change
Loans, net of unearned income 384,487 346,802 10.87%
Investment securities & other 49,141 37,034 32.69%
Earning assets 433,628 383,835 12.97%
Total assets 452,246 405,977 11.40%
Noninterest bearing deposits 42,375 38,965 8.75%
Interest bearing transaction deposits 85,682 89,308 -4.06%
Certificates of deposit 181,919 163,504 11.26%
Total deposits 309,977 291,777 6.24%
Other interest bearing liabilities 105,291 71,055 48.18%
Shareholder's equity 37,350 40,674 -8.17%
Three Months
Ending June 30
SELECTED RATIOS 2008 2007
Average equity to
average assets 8.26% 10.02%
Average net loans to
average total assets 85.02% 85.42%
Return on average assets 0.95% 1.54%
Return on average total equity 11.49% 15.38%
Actual equity on June 30, $37,099,164 $40,787,448
Actual # shares outstanding on June 30, 6,319,718 6,520,718
Book value per common share $5.87 $6.26
Year-to-Date
Ending June 30 %
EARNINGS SUMMARY 2008 2007 Change
Interest income $15,817 $16,850 -6.13%
Interest expense 6,693 6,602 1.38%
Net interest income 9,124 10,248 -10.97%
Provision for loan loss 507 237 113.92%
Net interest income after provision 8,617 10,011 -13.93%
Noninterest income 919 831 10.58%
Noninterest expense 6,293 5,775 8.96%
Pretax income 3,243 5,067 -36.00%
Income taxes 1,155 1,851 -37.59%
Net income $2,088 $3,216 -35.08%
Earnings per common share $0.33 $0.49 -32.67%
Weighted average common shares
outstanding 6,328,234 6,515,806
Year-to-Date
AVERAGE BALANCE Ending June 30 %
SHEET SUMMARY 2008 2007 Change
Loans, net of unearned income $385,294 $333,622 15.49%
Investment securities & other 45,786 37,072 23.51%
Earning assets 431,080 370,694 16.29%
Total assets 449,359 392,138 14.59%
Noninterest bearing deposits 43,438 38,641 12.41%
Interest bearing transaction deposits 89,559 89,884 -0.36%
Certificates of deposit 182,222 155,608 17.10%
Total deposits 315,219 284,133 10.94%
Other interest bearing liabilities 95,963 65,598 46.29%
Shareholder's equity 37,238 39,967 -6.83%
Year-to-Date
Ending June 30
SELECTED RATIOS 2008 2007
Average equity to
average assets 8.29% 10.19%
Average net loans to
average total assets 85.74% 85.08%
Return on average assets 0.93% 1.64%
Return on average total equity 11.21% 16.09%
Actual equity on June 30,
Actual # shares outstanding
on June 30,
Book value per common share
SOURCE Cornerstone Bancshares, Inc.
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