UNITED
STATES
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)
|
October
24, 2008
|
CORNERSTONE
BANCSHARES, INC.
(Exact
name of registrant as specified in its charter)
|
Tennessee
|
000-30497
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62-1175427
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(I.R.S.
Employer
Identification
No.)
|
|
|
|
|
|
835
Georgia Avenue, Chattanooga, Tennessee
|
37343
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number, including area code
|
(423)
385-3000
|
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
2.02.
Results
of Operations and Financial Condition
On
October 17, 2008, the Registrant issued a press release reporting earnings
results for the fiscal quarter ended September 30, 2008.
Item
9.01
Financial
Statements and Exhibits.
(c)
Exhibits
|
99.1
|
Press
release dated October 17, 2008 reporting earnings results for the
fiscal
quarter ended September 30,
2008.
|
SIGNATURES
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.
|
|
|
(Registrant)
|
|
|
|
|
|
|
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Date:
October
24, 2008
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|
|
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By
:
|
\s\
Nathaniel F. Hughes
|
|
|
Nathaniel
F. Hughes,
|
|
|
President
and Chief Operating Officer
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Exhibit
99.1
Cornerstone
Bancshares, Inc. Announces Third Quarter 2008 Financial
Results
CHATTANOOGA,
Tenn
.,
Oct.
17 /PRNewswire-FirstCall/ —
Cornerstone
Bancshares, Inc.
(OTC
Bulletin Board: CSBQ) today announced the following:
Cornerstone
Bancshares, Inc
saw its
third quarter earnings increase to $860 thousand, or $0.14 a share, versus
$559
thousand during the same period in 2007, an increase of 53.8%; while
year-to-date earnings decreased to $2.95 million, compared with $3.78 million
during the same time period in 2007. Year-to-date earnings per share decreased
to $0.47 versus $0.58, a decrease of 16.4%. The decrease year over year has
mostly been caused by net interest rate margin compression of approximately
120
basis points. The compression first began when the Federal Reserve rapidly
reduced its Federal Funds rate 325 basis points then was compounded when a
liquidity crisis erupted among several of the larger financial institutions
on
Wall Street. The result was higher cost of funds, especially in the certificate
of deposit market. In most instances, the rate compressions and expansions
are
temporary; but until the inter-bank auctions and commercial paper markets
stabilize, the banking industry will see their net interest margins remain
below
historical norms. The company's net interest margin for the third quarter of
2008 was 4.11%, a slight compression compared to the year-to-date margin of
4.22%. Cornerstone believes the present market is a difficult market to grow
loans and the balance sheet, and is turning its attention to building stronger
risk management and looking for strategic partnerships with institutions that
need assistance dealing with this difficult environment.
The
Bank
continued to grow loans during 2008 but at a slower rate as loans increased
to a
year to date average of $384 million, an increase of 11.3% over the same period
during 2007. The Company's performance metrics pulled back to normal peer
levels, ROA was 0.77% for the third quarter of 2008, compared to 0.52% during
the third quarter in 2007. ROE was 9.1% during the third quarter in 2008,
compared to 5.4% in 2007.
Presently,
the Company is operating at a comfortable 8.40% 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 deteriorated to the peer level during the third quarter of 2008;
non-performing loans, as a percentage of average total loans, increased to
0.54%; while past-due loans, as a percentage of total loans, increased to
1.36%.
Cornerstone
Bancshares, Inc.
is a
one-bank holding company serving the
Chattanooga,
Tennessee
MSA,
with five branches and one loan production office in Dalton, GA, and one loan
production office in
Knoxville,
TN
,
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
September 30, 2008
(in
thousands)
|
|
|
Three
Months
|
|
|
|
|
|
|
Ending
September 30
|
|
%
|
|
|
EARNINGS
SUMMARY
|
|
2008
|
|
2007
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
7,462
|
|
$
|
9,109
|
|
|
-18.08
|
%
|
|
Interest
expense
|
|
|
3,027
|
|
|
3,785
|
|
|
-20.04
|
%
|
|
Net
interest income
|
|
|
4,436
|
|
|
5,324
|
|
|
-16.69
|
%
|
|
Provision
for loan loss
|
|
|
440
|
|
|
2,964
|
|
|
-85.15
|
%
|
Net
interest income after provision
|
|
|
3,996
|
|
|
2,361
|
|
|
69.25
|
%
|
|
Noninterest
income
|
|
|
477
|
|
|
381
|
|
|
25.26
|
%
|
|
Noninterest
expense
|
|
|
3,151
|
|
|
2,371
|
|
|
32.90
|
%
|
|
Pretax
income
|
|
|
1,321
|
|
|
370
|
|
|
256.76
|
%
|
|
Income
taxes
|
|
|
461
|
|
|
(189
|
)
|
|
-344.06
|
%
|
|
Net
income
|
|
$
|
860
|
|
$
|
559
|
|
|
53.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share
|
|
$
|
0.14
|
|
$
|
0.09
|
|
|
51.22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding (1)
|
|
|
6,319,718
|
|
|
6,520,081
|
|
|
|
|
|
|
|
Year-to-Date
|
|
|
|
|
|
|
Ending
September 30
|
|
%
|
|
|
EARNINGS
SUMMARY
|
|
2008
|
|
2007
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
$
|
23,279
|
|
$
|
25,906
|
|
|
-10.14
|
%
|
|
Interest
expense
|
|
|
9,720
|
|
|
10,388
|
|
|
-6.43
|
%
|
|
Net
interest income
|
|
|
13,559
|
|
|
15,518
|
|
|
-12.62
|
%
|
|
Provision
for loan loss
|
|
|
927
|
|
|
3,201
|
|
|
-71.04
|
%
|
Net
interest income after
provision
|
|
|
12,632
|
|
|
12,318
|
|
|
2.55
|
%
|
|
Noninterest
income
|
|
|
1,396
|
|
|
1,234
|
|
|
13.12
|
%
|
|
Noninterest
expense
|
|
|
9,464
|
|
|
8,115
|
|
|
16.62
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%
|
|
Pretax
income
|
|
|
4,564
|
|
|
5,437
|
|
|
-16.05
|
%
|
|
Income
taxes
|
|
|
1,616
|
|
|
1,662
|
|
|
-2.74
|
%
|
|
Net
income
|
|
$
|
2,948
|
|
$
|
3,775
|
|
|
-21.91
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per common share
|
|
$
|
0.47
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$
|
0.58
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|
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-19.54
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%
|
Weighted
average common
shares
outstanding
(1)
|
|
|
6,325,192
|
|
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6,517,236
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|
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Three
Months
|
|
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AVERAGE
BALANCE
|
|
Ending
September 30
|
|
%
|
|
|
SHEET
SUMMARY
|
|
2008
|
|
2007
|
|
Change
|
|
|
|
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|
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|
|
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Loans,
net of unearned income
|
|
|
381,342
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|
367,056
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|
3.89
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%
|
|
Investment
securities & Other
|
|
|
48,578
|
|
|
43,561
|
|
|
11.52
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%
|
|
Earning
assets
|
|
|
429,920
|
|
|
410,618
|
|
|
4.70
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%
|
|
Total
assets
|
|
|
449,053
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|
|
434,018
|
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|
3.46
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%
|
|
Noninterest
bearing deposits
|
|
|
41,204
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|
|
46,673
|
|
|
-11.72
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%
|
Interest
bearing transaction deposits
|
|
|
78,576
|
|
|
93,978
|
|
|
-16.39
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%
|
|
Certificates
of deposit
|
|
|
186,077
|
|
|
173,773
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|
|
7.08
|
%
|
|
Total
deposits
|
|
|
305,858
|
|
|
314,425
|
|
|
-2.72
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%
|
Other
interest bearing liabilities
|
|
|
106,041
|
|
|
75,625
|
|
|
40.22
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%
|
|
Shareholder's
equity
|
|
|
37,741
|
|
|
41,729
|
|
|
-9.56
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%
|
|
|
|
Year-to-Date
|
|
|
|
|
AVERAGE
BALANCE
|
|
Ending
September 30
|
|
%
|
|
|
SHEET
SUMMARY
|
|
2008
|
|
2007
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Loans,
net of unearned income
|
|
$
|
383,966
|
|
$
|
344,890
|
|
|
11.33
|
%
|
|
Investment
securities & Other
|
|
|
46,724
|
|
|
40,453
|
|
|
15.50
|
%
|
|
Earning
assets
|
|
|
430,690
|
|
|
385,343
|
|
|
11.77
|
%
|
|
Total
assets
|
|
|
449,257
|
|
|
407,445
|
|
|
10.26
|
%
|
|
Noninterest
bearing deposits
|
|
|
42,688
|
|
|
42,541
|
|
|
0.35
|
%
|
Interest
bearing transaction deposits
|
|
|
85,872
|
|
|
91,263
|
|
|
-5.91
|
%
|
|
Certificates
of deposit
|
|
|
183,517
|
|
|
161,730
|
|
|
13.47
|
%
|
|
Total
deposits
|
|
|
312,077
|
|
|
295,534
|
|
|
5.60
|
%
|
Other
interest bearing liabilities
|
|
|
99,347
|
|
|
68,977
|
|
|
44.03
|
%
|
|
Shareholder's
equity
|
|
|
37,408
|
|
|
40,561
|
|
|
-7.77
|
%
|
|
|
|
Three
Months
|
|
Year-to-Date
|
|
|
|
|
Ending
September 30
|
|
Ending
September 30
|
|
|
SELECTED
RATIOS
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
equity to average assets
|
|
|
8.40
|
%
|
|
9.61
|
%
|
|
8.33
|
%
|
|
9.95
|
%
|
|
Average
net loans to average total assets
|
|
|
84.92
|
%
|
|
84.57
|
%
|
|
85.47
|
%
|
|
84.65
|
%
|
|
Return
on average assets
|
|
|
0.77
|
%
|
|
0.52
|
%
|
|
0.87
|
%
|
|
1.24
|
%
|
|
Return
on average total equity
|
|
|
9.12
|
%
|
|
5.36
|
%
|
|
10.51
|
%
|
|
12.41
|
%
|
|
Actual
Equity on September 30,
|
|
$
|
37,487,451
|
|
$
|
41,273,694
|
|
|
|
|
|
|
|
|
Actual
# shares outstanding on September 30
|
|
|
6,319,718
|
|
|
6,519,718
|
|
|
|
|
|
|
|
Book
value per
common
share
|
|
$
|
5.93
|
|
$
|
6.33
|
|
|
|
|
|
|
|
