SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 2004
CORNERSTONE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Tennessee 000-30497 62-1175427
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(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
5319 Highway 153,
Chattanooga, Tennessee 37343
(Address of principal executive offices)
(423) 385-3000
(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report.)
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Item 9. Regulation FD Disclosure.
This information furnished under "Item 9. Regulation FD Disclosure" is provided under "Item 12. Results of Operation and Financial Condition" in accordance with SEC Release No. 33-8216.
On January 21, 2004, the Registrant issued a press release reporting earnings results for the fiscal quarter ending on December 31, 2003.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release dated January 21, 2004 reporting earnings results for the fiscal quarter ending on December 31, 2003.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CORNERSTONE BANCSHARES, INC.
Date: January 21, 2004 By: \s\ Nathaniel F. Hughes
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Nathaniel F. Hughes,
President and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release dated January 21, 2004 reporting earnings
results for the fiscal quarter ending on December 31, 2003.
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Exhibit 99.1
Cornerstone Bancshares, Inc. Announces 4th Quarter 2003 Financial Results
HIXSON, Tenn., Jan. 21 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:
Cornerstone Bancshares, Inc saw its 4th quarter earnings increase to $488 thousand or $.39 a share for the fourth quarter and $1.882 million for 2004 or $1.52 a share. This is over the previously announced and twice raised earnings estimate of $1.50. The Company's Board of Directors and Management are very pleased with 2003's performance and are very optimistic toward 2004. The earnings estimate the Company is projecting is $1.88 a share a 23.7% increase. To share this success with the Company's shareholders the Board of Directors declared a $0.10 cash dividend to be paid January 26, 2004. This year successfully completes the Company's five year business plan that brought in new management in 1999 and now has seen earnings grow to a level above the Bank's peer comparisons. Average loan growth is at 31% over the same quarter in 2002 and continues to see loan growth in the business lending part of the loan portfolio and is looking for ways to further leverage this segment of the Chattanooga market. Three factors have made Cornerstone's earnings growth so explosive first, the Bank, due to loan origination fees, has a very high net interest margin 4.98% when compared to peers, second, earning assets as a percentage of total assets have grown to 94%, third, non interest income has increased 31% compared with 2002. All of which bode well for future earnings. On the horizon the Bank is in the final stages of completing our new Ooltewah Branch and expects the branch to open during the second quarter of 2004.
The asset quality remained at the superior level during 2003 as non- performing loans as a percentage of average total loans dropped to 0.09% while 30-day past due loans as a percentage of total loans dropped to 0.20%. The Bank net charge off's for the year were $125 thousand while the Bank set aside a $545 thousand provision to maintain its target 1.25% loan loss allowance and even with the outstanding growth in the Bank's loan portfolio, the Bank's loan loss allowance was 1.28%. The Bank believes strongly that the most conservative approach should be used with the loan loss allowance and should align with any risk associated with the loan portfolio.
Cornerstone Bancshares, Inc. 4th quarter 2003 earnings of $488 thousand represents a 58.1% increase over the 4th quarter in 2002 earnings of $309 thousand. Earnings per share for the 4th quarter 2003 was $0.39 compared to $0.25 per share for the 4th quarter of 2002.
Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 4 branches and $200 million in assets specializing in business financial services.
CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of December 31, 2003
(in thousands)
Three Months
Ending Dec 31 %
EARNINGS SUMMARY 2003 2002 Change
Interest income $2,979 $2,594 14.86%
Interest expense 797 827 -3.71%
Net interest income 2,182 1,766 23.56%
Provision for loan loss 135 263 -48.75%
Net interest income after provision 2,047 1,503 36.23%
Noninterest income 308 236 30.32%
Noninterest expense 1,550 1,261 22.88%
Pretax income 805 478 68.54%
Income taxes 317 169 87.57%
Net income $488 $309 58.12%
Earnings per common share $0.39 $0.25
Weighted average common shares
outstanding 1,243,167 1,233,167
CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of December 31, 2003
(in thousands)
Year-to-Date
Ending Dec 31 %
EARNINGS SUMMARY 2003 2002 Change
Interest income $11,327 $9,702 16.74%
Interest expense 3,211 3,309 -2.96%
Net interest income 8,116 6,394 26.94%
Provision for loan loss 545 683 -20.26%
Net interest income after provision 7,571 5,710 32.58%
Noninterest income 1,242 947 31.12%
Noninterest expense 5,741 4,928 16.49%
Pretax income 3,072 1,729 77.65%
Income taxes 1,190 668 78.22%
Net income $1,882 $1,061 77.30%
Earnings per common share $1.52 $0.86
Weighted average common shares
outstanding 1,239,417 1,233,167
Three Months
AVERAGE BALANCE Ending Dec 31 %
SHEET SUMMARY 2003 2002 Change
Loans, net of unearned income $153,455 $117,486 30.62%
Investment securities & Other 25,381 23,875 6.31%
Earning assets 178,836 141,360 26.51%
Total assets 189,651 152,840 24.08%
Noninterest bearing deposits 19,706 16,453 19.77%
Interest bearing transaction deposits 50,644 39,182 29.25%
Certificates of deposit 79,723 69,764 14.28%
Total deposits 150,073 125,399 19.68%
Other interest bearing liabilities 21,436 11,480 86.72%
Shareholder's equity 16,805 15,057 11.61%
Year-to-Date
AVERAGE BALANCE Ending Dec 31 %
SHEET SUMMARY 2003 2002 Change
Loans, net of unearned income $141,585 $107,676 31.49%
Investment securities & Other 25,668 24,182 6.15%
Earning assets 167,253 131,858 26.84%
Total assets 178,202 143,557 24.13%
Noninterest bearing deposits 18,017 14,607 23.34%
Interest bearing transaction deposits 47,766 38,663 23.54%
Certificates of deposit 74,109 65,159 13.74%
Total deposits 139,892 118,429 18.12%
Other interest bearing liabilities 20,973 9,646 117.43%
Shareholder's equity 16,113 14,649 9.99%
Three Months Year-to-Date
Ending Dec 31 Ending Dec 31
SELECTED RATIOS 2003 2002 2003 2002
Average equity to
average assets 8.86% 9.85% 9.04% 10.20%
Average net loans to
average total assets 80.91% 76.87% 79.45% 75.01%
Return on average assets 1.03% 0.81% 1.06% 0.74%
Return on average total equity 11.62% 8.21% 11.68% 7.25%
Book value per common share $13.52 $12.21
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SOURCE Cornerstone Bancshares, Inc.
-0- 01/21/2004
/CONTACT: Frank Hughes, Investor Relations of Cornerstone Bancshares,
Inc., +1-423-385-3009, or fhughes@cscb-chatt.com/
/Web site: http://www.cscbank.com /
(CSBQ)
CO: Cornerstone Bancshares, Inc.
ST: Tennessee
IN: FIN
SU: ERN