UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


DESCRIPTION: HTTP:||WWW.SEC.GOV|ARCHIVES|EDGAR|DATA|1038773|000114420413024191|IMAGE_001.JPG

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) July 29, 2013

 

CORNERSTONE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

 

Tennessee 000-30497 62-1173944

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

835 Georgia Avenue, Chattanooga, Tennessee   37402
(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):

 

  £ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  £ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  £ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  £ 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 July 29, 2013, the Registrant issued a press release reporting earnings results for the fiscal quarter ended June 30, 2013.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(c) Exhibits
 
99.1 Press release dated July 29, 2013, reporting earnings results for the fiscal quarter ended June 30, 2013.

 

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)  
     
     
Date: July 29, 2013    
  By: /s/ Nathaniel F. Hughes  
  Nathaniel F. Hughes,  
  President and Chief Executive Officer  

  

 

 

Cornerstone Bancshares, Inc. Reports Positive Earnings for Second Quarter of 2013

 

CHATTANOOGA, Tenn.—(PR Newswire) – July 29, 2013 -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ; CSBQP) today announced the following:

 

Cornerstone Bancshares, Inc. (“Cornerstone”), parent company of Cornerstone Community Bank (“Bank”), reported continued positive earnings for the second quarter of 2013, with a net income of approximately $396,000 for the quarter ended June 30, 2013. This marks the tenth consecutive quarter of positive earnings for Cornerstone and represents a 27.5 percent increase in net income year-over-year.

 

Average assets grew 4.3 percent and the return on average assets increased 22 percent for the quarter, compared with the same quarter the previous year. Average equity increased 12.7 percent, and the return on average equity increased 16.3 percent. Market value per common share was $2.01 as of June 30, 2013, a 14.9 percent increase in value over the previous year.

 

Other improvements year-over-year at quarter’s end include:

 

· Increase in total assets
· Increase in total loans
· Increase in total deposits
· Increase in net interest margin

 

“We definitely have some positive momentum, and things are continuing to trend in the right direction,” said Cornerstone’s President Frank Hughes. “Our main priorities for the immediate future are focusing on core Chattanooga relationships and loan growth.”

Founded in 1996, Cornerstone is a single-bank holding company, with $435 million in assets, serving the Chattanooga, Tennessee MSA, with five full-service branch locations throughout Chattanooga and one loan production office in Dalton, Georgia. Locally owned and locally operated, Cornerstone specializes in providing a comprehensive range of customized financial solutions for businesses and individuals.

 

Certain of the statements made in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements, including statements regarding the intent, belief or current expectations of Cornerstone and its management regarding the company’s strategic directions, prospects and future results, involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which Cornerstone operates, governmental regulations, the company’s competitive environment, cyclical and seasonal fluctuations in its operating results, and other risks.

 

Contact:

N. Frank Hughes

President & CEO

423-385-3009

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Second Quarter Financial Highlights

June 30, 2013 and 2012

(Unaudited)

 

(Amounts in thousands, except per common share data)   2013     2012     % Change  
Balance Sheet Data at June 30                        
Total assets   $ 435,334     $ 420,874       3.4  
Interest-earning assets     403,917       387,995       4.1  
Loans     276,062       263,749       4.7  
Foreclosed assets     18,867       22,144       (14.8 )
Deposits     339,199       321,740       5.4  
Other interest-bearing liabilities     54,647       60,909       (10.3 )
Shareholders' equity     40,234       36,759       9.5  
Loan to deposit ratio     81.39 %     81.98 %     (0.7 )
Tier 1 leverage ratio (Bank, est)     8.36 %     8.24 %     1.5  
Total risk-based capital ratio (Bank, est)     13.05 %     13.11 %     (0.5 )
Outstanding common shares     6,547       6,500       0.7  
Book value per common share   $ 3.88     $ 3.96       (2.1 )
Tangible book value per common share   $ 3.88     $ 3.96       (2.1 )
Market value per common share as of June 30   $ 2.01     $ 1.75       14.9  
                         
Loan Quality Data                        
Nonaccruing loans     5,864       7,124       (17.7 )
Loans past due 90 days – accruing     -       -       -  
Net charge-offs YTD     1,346       1,371       (1.8 )
Allowance for loan losses     5,095       6,029       (15.5 )
Allowance for loan losses to total loans     1.85 %     2.29 %        
Nonperforming assets to total assets     5.68 %     6.95 %        
                         
Performance Data for the Year                        
Net income   $ 848     $ 667       27.1  
Return on average assets     0.39 %     0.32 %        
Return on average equity     4.22 %     3.63 %        
Net interest margin     3.79 %     3.73 %        
Per common share data:                        
Net income – basic   $ 0.01     $ 0.01          
Net income – diluted   $ 0.01     $ 0.01          
Common dividends   $ -     $ -          
Preferred dividends & accretion   $ 786     $ 576          
Average shares (000s):                        
Basic common stock     6,547       6,500          
Diluted common stock     6,665       6,581          
Preferred stock (actual)     600       448          

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Quarterly Earnings Summary

 

    (Unaudited)  
    2013     2012         Q2-13 /  
      Second       First       Fourth       Third       Second       Q2-12  
(Amounts in thousands)     Quarter       Quarter       Quarter       Quarter       Quarter       % Chg  
Interest income                                                
Loans, including fees   $ 4,079     $ 4,142     $ 4,718     $ 4,242     $ 4,186       (2.5 )
Securities and interest-bearing deposits at other financial institutions     482       440       440       478       618       (22.0 )
Federal funds sold and other earning assets     15       21       16       15       13       9.3  
    Total interest income     4,576       4,603       5,174       4,735       4,817       (5.0 )
Interest expense                                                
Deposits     587       603       673       756       768       (23.6 )
Short-term borrowings     17       18       17       22       23       (27.4 )
FHLB advances and other borrowing     316       341       391       394       426       (25.8 )
    Total interest expense     920       962       1,081       1,172       1,217       (24.5 )
Net interest income     3,656       3,641       4,093       3,563       3,600       1.6  
Provision for loan losses     -       300       330       100       -        N/A   
Net interest income after the                                                
  provision for loan losses     3,656       3,341       3,763       3,463       3,600       1.6  
Noninterest income                                                
Customer service fees     201       188       201       198       207       (2.8 )
Other noninterest income     19       18       13       12       19       0.2  
Gain on sale of assets     477       149       27       48       26       1,718.8  
    Total noninterest income     697       355       241       258       252       176.7  
Noninterest expense                                                
Salaries and employee benefits     1,623       1,597       1,600       1,566       1,570       3.4  
Net occupancy and equipment     340       337       408       355       348       (2.4 )
Depository insurance     161       160       121       237       207       (22.1 )
Foreclosed asset expense (1)     798       129       156       314       481       66.1  
Other operating expense     780       752       1,192       731       817       (4.5 )
    Total noninterest expense     3,702       2,975       3,477       3,203       3,423       8.1  
Income before income taxes     652       721       527       518       429       52.0  
Income tax expense     256       269       156       154       118       116.9  
Net income   $ 396     $ 452     $ 371     $ 364     $ 311       27.3  
                                                 
Preferred stock dividends & accretion on preferred stock discount     393       393       393       325       296       32.8  
                                                 
Net income / (loss) available to common     3       59       (22 )     39       15       (79.8 )
                                                 
Net income / (loss) per common share:                                                
  Basic   $ 0.00     $ 0.01     $ -     $ 0.01     $ -       -  
  Diluted   $ 0.00     $ 0.01     $ -     $ 0.01     $ -       -  
Average basic shares     6,547       6,547       6,500       6,500       6,500       0.7  
Average common diluted shares     6,671       6,671       6,503       6,503       6,581       1.4  
Performance Ratios                                                
Return on average equity     3.86 %     4.40 %     3.81 %     3.88 %     3.42 %     12.9  
Return on average assets     0.37 %     0.42 %     0.35 %     0.35 %     0.30 %     22.0  
Net interest margin     3.77 %     3.79 %     4.21 %     3.70 %     3.87 %     (2.6 )
Average equity     41,065       41,135       38,926       37,501       36,423       12.7  
Average assets     430,196       426,827       420,608       418,443       412,305       4.3  
Average interest-earning assets     395,517       395,921       391,197       389,458       380,631       3.9  

 

(1) Includes OREO adjustments to fair value

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Loss Allowance and Asset Quality Review

 

    2013     2012  
      Second       First        Fourth        Third       Second  
(Amounts in thousands)     Quarter       Quarter       Quarter       Quarter       Quarter  
                                         
Allowance for loan losses                                        
Balance at beginning of period   $ 5,669     $ 6,141     $ 5,280     $ 6,029     $ 6,024  
Provision for loan losses     -       300       330       100       -  
Net charge-offs     (574 )     (772 )     531       (849 )     5  
Balance at end of period   $ 5,095     $ 5,669     $ 6,141     $ 5,280     $ 6,029  
                                         
As a % of loans     1.85 %     2.08 %     2.22 %     1.93 %     2.29 %
As a % of nonperforming loans     86.88 %     89.38 %     102.24 %     66.26 %     84.63 %
As a % of nonperforming assets     20.60 %     20.61 %     23.32 %     17.40 %     20.60 %
                                         
Net charge-offs as a % of  loans (a)     0.83 %     1.13 %     -0.77 %     1.24 %     -0.01 %
                                         
Risk element assets                                        
Accruing troubled debt restructured   $ 3,465     $ 5,442     $ 5,316     $ 5,328     $ 2,775  
Loans past due 30-89 days   $ 4,867     $ 4,732     $ 6,534     $ 3,685     $ 2,495  
                                         
Nonaccruing loans   $ 5,864     $ 6,342     $ 6,006     $ 7,968     $ 7,124  
Loans past due 90 days – accruing     -       -       -       -       -  
Total nonperforming loans   $ 5,864     $ 6,342     $ 6,006     $ 7,968     $ 7,124  
Repossessed assets     -       -       32       39       83  
Other real estate owned (b)(c)   $ 18,867     $ 21,159     $ 20,300     $ 22,337     $ 22,061  
Total nonperforming assets   $ 24,731     $ 27,501     $ 26,338     $ 30,344     $ 29,268  
                                         
                                         
Nonperforming loans as a % of loans     2.12 %     2.33 %     2.17 %     2.91 %     2.70 %
Nonperforming assets as a % of loans                                        
   and other real estate owned     8.39 %     9.36 %     8.86 %     10.25 %     10.24 %
                                         
Total loans     276,062       272,550       276,992       273,820       263,749  

 

(a) Annualized        
(b) Properties sold during 2nd Q 2013   $ 2,438  
(c) Properties under contract to sell   $ 2,907  

  

 
 

  

Cornerstone Bancshares, Inc. and Subsidiary

Net Interest Margin Analysis

Taxable Equivalent Basis

 

    Three months ended  
    June 30  
(Amounts in thousands)                                    
Assets   2013     2012  
      Average       Income/       Yield/       Average       Income/       Yield/  
Earning assets:     Balance       Expense       Rate       Balance       Expense       Rate  
Loans, net of unearned income   $ 272,718     $ 4,079       6.00 %   $ 262,598     $ 4,186       6.39 %
Investment securities     102,164       482       2.13 %     94,949       618       2.91 %
Other earning assets     20,635       15       0.28 %     23,084       13       0.23 %
  Total earning assets     395,517     $ 4,576       4.70 %     380,631     $ 4,817       5.15 %
Allowance for loan losses     (5,315 )                     (6,028 )                
Cash and other assets     39,994                       37,702                  
TOTAL ASSETS   $ 430,196                     $ 412,305                  
                                                 
Liabilities and Shareholders' Equity                                                
                                                 
Interest-bearing liabilities:                                                
Interest-bearing demand deposits   $ 25,640     $ 16       0.24 %   $ 28,332     $ 23       0.33 %
Savings deposits     12,214       8       0.25 %     10,387       9       0.36 %
MMDA's     77,206       108       0.56 %     46,639       101       0.87 %
Time deposits     167,078       455       1.09 %     189,169       635       1.35 %
Federal funds purchased and securities                                                
  sold under agreements to repurchase     20,752       17       0.32 %     21,198       23       0.44 %
Federal Home Loan Bank and other borrowings     31,740       316       3.99 %     40,028       426       4.27 %
  Total interest-bearing liabilities     334,630       920       1.10 %     335,751       1,217       1.45 %
Net interest spread           $ 3,657       3.60 %           $ 3,600       3.70 %
Noninterest-bearing demand deposits     52,401                       40,829                  
Accrued expenses and other liabilities     2,100                       (698 )                
Shareholders' equity     41,065                       36,423                  
TOTAL LIABILITIES AND                                                
  SHAREHOLDERS' EQUITY   $ 430,196                     $ 412,305                  
Net yield on earning assets                     3.77 %                     3.87 %
                                                 
Taxable equivalent adjustment:                                                
  Loans             0                       0          
  Investment securities             60                       71          
          Total adjustment             60                       71          

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Net Interest Margin Analysis

Taxable Equivalent Basis

 

    Six months ended  
    June 30  
(Amounts in thousands)                                    
Assets   2013     2012  
    Average     Income/     Yield/     Average     Income/     Yield/  
Earning assets:     Balance       Expense       Rate       Balance       Expense       Rate  
Loans, net of unearned income   $ 274,199     $ 8,221       6.05 %   $ 264,205     $ 8,330       6.36 %
Investment securities     94,495       922       2.27 %     91,795       1,085       2.70 %
Other earning assets     26,668       36       0.27 %     24,913       28       0.23 %
  Total earning assets     395,362     $ 9,179       4.75 %     380,913     $ 9,443       5.07 %
Allowance for loan losses     (5,622 )                     (6,574 )                
Cash and other assets     38,780                       36,169                  
TOTAL ASSETS   $ 428,521                     $ 410,508                  
                                                 
Liabilities and Shareholders' Equity                                                
                                                 
Interest-bearing liabilities:                                                
Interest-bearing demand deposits   $ 27,031     $ 35       0.26 %   $ 26,611     $ 44       0.33 %
Savings deposits     11,919       15       0.25 %     10,123       19       0.38 %
MMDA's     75,719       219       0.58 %     43,006       192       0.90 %
Time deposits     167,919       921       1.11 %     192,139       1,334       1.40 %
Federal funds purchased and securities                                                
  sold under agreements to repurchase     20,920       35       0.34 %     23,744       55       0.47 %
Federal Home Loan Bank and other borrowings     32,224       656       4.11 %     41,331       887       4.33 %
  Total interest-bearing liabilities     335,732       1,881       1.13 %     336,954       2,532       1.52 %
Net interest spread           $ 7,298       3.62 %           $ 6,912       3.56 %
Noninterest-bearing demand deposits     49,632                       37,654                  
Accrued expenses and other liabilities     2,058                       (105 )                
Shareholders' equity     41,099                       36,005                  
TOTAL LIABILITIES AND                                                
  SHAREHOLDERS' EQUITY   $ 428,521                     $ 410,508                  
Net yield on earning assets                     3.79 %                     3.73 %
                                                 
Taxable equivalent adjustment:                                                
  Loans             0                       0          
  Investment securities             142                       142          
          Total adjustment             142                       142          

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Stratification 

 

       2013           2012              
     Second     % of     Second     % of     % Dollar  
(Amounts in thousands)     Quarter     Total     Quarter     Total     Change  
Non-residential real estate                                        
    Owner occupied   $ 61,292       22.2     $ 60,068       22.8       2.0  
    Non-owner occupied     67,240       24.4       61,671       23.4       9.0  
    Multi-family real estate     7,451       2.7       10,279       3.9       (27.5 )
    1-4 family construction     8,269       3.0       5,477       2.1       51.0  
    Commercial land and lot development     21,332       7.7       17,210       6.5       24.0  
Total non-residential real estate     165,584       60.0       154,705       58.7       7.0  
Residential real estate                                        
    First mortgage - 1-4 family     43,282       15.7       42,333       16.1       2.2  
    Second mortgage - 1-4 family     2,129       0.8       3,252       1.2       (34.5 )
    Home equity lines     14,483       5.2       16,180       6.1       (10.5 )
Total residential real estate     59,894       21.7       61,765       23.4       (3.0 )
Total real estate loans     225,478       81.7       216,470       82.1       4.2  
                                         
Commercial     40,586       14.7       36,765       13.9       10.4  
Agricultural & other     7,994       2.9       8,528       3.2       (6.3 )
Consumer     2,004       0.7       1,986       0.8       0.9  
Total loans, net of unearned fees   $ 276,062       100.0     $ 263,749       100.0       4.7  

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Balance Sheets

 

    Unaudited        
    June 30,     December 31,  
ASSETS   2013     2012  
                 
Cash and due from banks   $ 1,600,127     $ 3,222,139  
Interest-bearing deposits at other financial institutions     27,100,735       56,173,099  
Total cash and cash equivalents     28,700,862       59,395,238  
                 
Securities available for sale     99,777,449       76,096,646  
Securities held to maturity (fair value approximates                
$43,630 and $46,212 at June 30, 2013 and December 31, 2012, respectively)     40,014       45,086  
Federal Home Loan Bank stock, at cost     2,322,900       2,322,900  
Loans, net of allowance for loan losses of                
$5,094,740 and $6,141,281 at June 30, 2013 and December 31, 2012 respectively     270,967,656       270,850,465  
Bank premises and equipment, net     5,183,270       5,399,340  
Accrued interest receivable     1,152,927       1,213,778  
Foreclosed assets     18,866,526       20,332,313  
Other assets     8,322,485       7,790,634  
     Total assets   $ 435,334,089     $ 443,446,400  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Deposits:                
Noninterest-bearing demand deposits   $ 60,094,019     $ 60,053,838  
Interest-bearing demand deposits     24,613,914       30,178,624  
Savings deposits and money market accounts     90,452,881       80,994,239  
Time deposits     164,038,451       173,653,892  
Total deposits     339,199,265       344,880,593  
                 
Accrued interest payable     93,464       120,558  
Federal funds purchased and securities sold under                
agreements to repurchase     22,907,064       19,587,387  
Federal Home Loan Bank advances and other borrowings     31,740,000       37,175,000  
Other liabilities     1,160,021       794,026  
Total liabilities     395,099,814       402,557,564  
                 
Stockholders' equity:                
Preferred stock - no par value; 2,000,000 shares authorized;                
600,000 shares issued and outstanding                 
in 2013 and 2012,     14,857,236       14,821,546  
Common stock - $1.00 par value; 20,000,000 shares authorized and                
6,709,199 shares issued in 2013 and 2012;                
6,547,074 and 6,500,396 shares outstanding in 2013 and 2012, respectively     6,547,074       6,500,396  
Additional paid-in capital     21,485,355       21,390,486  
Retained deficit     (3,146,410 )     (3,274,986 )
Accumulated other comprehensive income     491,020       1,451,394  
Total stockholders' equity     40,234,275       40,888,836  
Total liabilities and stockholders' equity   $ 435,334,089     $ 443,446,400  

 

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Statements of Income

  

    Unaudited     Unaudited  
   

Three Month Ended

    Six Month Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
INTEREST INCOME                                
Loans, including fees   $ 4,079,369     $ 4,185,757     $ 8,221,105     $ 8,329,701  
Investment securities     482,117       618,255       922,023       1,085,261  
Federal funds sold & other earning assets     14,533       13,341       36,005       28,428  
Total interest income     4,576,019       4,817,353       9,179,133       9,443,390  
                                 
INTEREST EXPENSE                                
Time deposits     455,340       634,961       920,596       1,334,055  
Other deposits     131,534       133,459       269,464       254,702  
Federal funds purchased and securities                                
    sold under agreements to repurchase     16,743       23,074       34,823       55,304  
FHLB advances and other borrowings     315,948       425,737       656,387       886,944  
Total interest expense     919,565       1,217,231       1,881,270       2,531,005  
                                 
Net interest income before provision for loan losses     3,656,454       3,600,122       7,297,863       6,912,385  
Provision for loan losses     -       -       300,000       -  
Net interest income after provision for loan losses     3,656,454       3,600,122       6,997,863       6,912,385  
                                 
NONINTEREST INCOME                                
Customer service fee     201,302       207,164       389,783       404,598  
Net gains from sale of securities     424,971       -       424,971       -  
Net gains from sale of loans and other assets     52,382       26,246       201,582       75,910  
Other noninterest income     18,650       18,612       36,468       38,900  
Total noninterest income     697,305       252,022       1,052,804       519,408  
                                 
NONINTEREST EXPENSE                                
Salaries and employee benefits     1,622,501       1,569,555       3,219,792       3,160,690  
Net occupancy and equipment expense     339,606       347,928       677,485       683,741  
Depository insurance     161,120       206,866       320,964       409,649  
Foreclosed assets, net     798,456       480,755       927,148       631,075  
Other operating expense     780,045       818,255       1,532,219       1,612,336  
Total noninterest expense     3,701,728       3,423,359       6,677,608       6,497,491  
                                 
Income before provision for income taxes     652,031       428,785       1,373,059       934,302  
Provision for income taxes     256,000       118,200       524,900       267,200  
                                 
Net income     396,031       310,585       848,159       667,102  
                                 
Preferred stock dividend requirements     375,000       280,031       750,000       545,887  
Accretion on preferred stock discount     17,845       15,241       35,690       29,709  
                                 
Net income available to common shareholders   $ 3,186     $ 15,313     $ 62,469     $ 91,506  
                                 
EARNINGS PER COMMON SHARE                                
Basic net income per common share   $ -     $ -     $ 0.01     $ 0.01  
Diluted net income per common share   $ -     $ -     $ 0.01     $ 0.01  
                                 
DIVIDENDS DECLARED PER COMMON SHARE   $ -     $ -     $ -     $ -  

 

The Notes to Consolidated Financial Statements are an integral part of these statements.

 

 
 

  

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Statement of Changes in Stockholders' Equity - Unaudited

For the six months ended June 30, 2013

 

                            Accumulated        
                Additional           Other     Total  
    Preferred     Common     Paid-in     Retained     Comprehensive     Stockholders'  
    Stock     Stock     Capital     Earnings (Deficit)     Income     Equity  
                                                 
BALANCE, December 31, 2012   $ 14,821,546     $ 6,500,396     $ 21,390,486     $ (3,274,986 )   $ 1,451,394     $ 40,888,836  
                                                 
   Stock compensation expense                     64,528                       64,528  
                                                 
   Issuance of common stock     -       46,678       30,341       -       -       77,019  
                                                 
   Preferred stock dividends     -       -       -       (683,893 )     -       (683,893 )
                                                 
   Accretion on preferred stock     35,690       -       -       (35,690 )     -       -  
                                                 
   Net income     -       -       -       848,159       -       848,159  
                                                 
   Unrealized holding gains (losses) on securities available for sale,                                        
     net of reclassification adjustment and taxes     -       -       -       -       (960,374 )     (960,374 )
                                                 
BALANCE, June 30, 2013                                                
    $ 14,857,236     $ 6,547,074     $ 21,485,355     $ (3,146,410 )   $ 491,020     $ 40,234,275  

 

The Notes to Consolidated Financial Statements are an integral part of these statements.