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 21, 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 October 21, 2013, the Registrant issued a press release reporting earnings results for the fiscal quarter ended September 30, 2013.

 

 

Item 9.01. Financial Statements and Exhibits.

 

(c) Exhibits

 

99.1 Press release dated October 21, 2013 reporting earnings results for the fiscal quarter ended September 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: October 21, 2013    
  By: /s/ Nathaniel F. Hughes  
  Nathaniel F. Hughes,  
  President and Chief Executive Officer  

 

 

 

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

 

 

CHATTANOOGA, Tenn. -- October 21, 2013 -- (PR Newswire) Cornerstone Bancshares, Inc. (“Cornerstone”; OTC Bulletin Board: CSBQ; CSBQP), holding company of Cornerstone Community Bank (“Bank”), today announced net income of $429,000 for the third quarter of 2013. This marks the eleventh consecutive quarter of positive earnings for Cornerstone and an increase of 17.9 percent from net income of $364,000 for the same quarter of 2012. Net income for the year increased 23.9 percent from $1,031,000 in 2012 to $1,277,000 in 2013 at quarter-end.

 

Quarterly financial highlights year-over-year include:

 

· 17.9% increase in net income
· 9.2% increase in net interest income
· 3.8% increase in total loans
· 33.3% decrease in Other Real Estate Owned (OREO)
· 37.3% decrease in total nonperforming assets

 

“We continue to make steady, gradual progress in nearly all sectors of the Bank,” said Cornerstone's President and Chief Executive Officer Frank Hughes. “We are especially pleased with the significant reduction of OREO and related expenses,” he said. “The key to the Bank’s success is the disposition of our nonperforming assets.”

Based on positive earnings in preceding quarters, Cornerstone continued paying its quarterly Preferred Stock dividend. The most recent payment, made on August 22, 2013, marks the tenth consecutive quarterly dividend payment since the new security was issued in the third quarter of 2010. As of December 31, 2012, Cornerstone had sold all 600,000 shares of the convertible, preferred stock, successfully raising $15 million in new capital and refortifying its capital foundation for the future.

 

“Cornerstone is in a solid position to grow and thrive right along with the Chattanooga community,” said Cornerstone’s Chairman Miller Welborn. “We will continue to keep a laser-sharp focus on smart business fundamentals and taking care of our customers, employees and shareholders.”

 

Founded in 1996, Cornerstone is a single-bank holding company, with $430 million in assets, serving the Chattanooga, Tennessee MSA, with five full-service branch locations throughout Chattanooga. Locally owned and 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 : Frank Hughes, Cornerstone President & CEO, 423-385-3009

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Third Quarter Financial Highlights

September 30, 2013 and 2012

(Unaudited)

 

(Amounts in thousands, except per common share data)   2013     2012     % Change  
Balance Sheet Data at September 30                        
Total assets   $ 429,681     $ 425,179       1.1  
Interest-earning assets     400,929       391,685       2.4  
Loans     284,181       273,820       3.8  
Foreclosed assets     14,924       22,376       (33.3 )
Deposits     340,756       328,963       3.6  
Other interest-bearing liabilities     47,249       56,555       (16.5 )
Shareholders' equity     40,150       38,128       5.3  
Loan to deposit ratio     83.40 %     83.24 %     0.2  
Tier 1 leverage ratio (Bank, est)     8.45 %     8.30 %     1.8  
Total risk-based capital ratio (Bank, est)     12.91 %     12.84 %     0.5  
Outstanding common shares     6,547       6,500       0.7  
Book value per common share   $ 3.86     $ 3.99       (3.3 )
Tangible book value per common share   $ 3.86     $ 3.99       (3.3 )
Market value per common share as of September 30   $ 2.45     $ 1.95       25.6  
                         
Loan Quality Data                        
Nonaccruing loans     4,095       7,971       (48.6 )
Loans past due 90 days – accruing     -       -       -  
Net charge-offs YTD     3,282       2,220       47.8  
Allowance for loan losses     3,159       5,280       (40.2 )
Allowance for loan losses to total loans     1.11 %     1.93 %        
Nonperforming assets to total assets     4.43 %     7.14 %        
                         
Performance Data for the Year                        
Net income   $ 1,277     $ 1,031       23.8  
Return on average assets     0.40 %     0.33 %        
Return on average equity     4.17 %     3.77 %        
Net interest margin     3.81 %     3.73 %        
Per common share data:                        
Net income – basic   $ 0.01     $ 0.02          
Net income – diluted   $ 0.01     $ 0.02          
Common dividends   $ -     $ -          
Preferred dividends & accretion per common   $ 0.18     $ 0.14          
Average shares (000s):                        
Basic common stock     6,547       6,500          
Diluted common stock     6,675       6,559          
Preferred stock (actual)     600       494          

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Quarterly Earnings Summary

 

    (Unaudited)  
    2013     2012     Q3-13 /  
      Third       Second       First       Fourth       Third     Q3-12  
(Amounts in thousands)     Quarter       Quarter       Quarter       Quarter       Quarter     % Chg  
Interest income                                                
Loans, including fees   $ 4,294     $ 4,079     $ 4,142     $ 4,718     $ 4,242       1.2  
Securities and interest-bearing deposits at other financial institutions     457       482       440       440       478       (4.4 )
Federal funds sold and other earning assets     10       15       21       16       15       (36.7 )
    Total interest income     4,760       4,576       4,603       5,174       4,735       0.5  
Interest expense                                                
Deposits     563       587       603       673       756       (25.6 )
Short-term borrowings     21       17       18       17       22       (2.1 )
FHLB advances and other borrowing     285       316       341       391       394       (27.7 )
    Total interest expense     869       920       962       1,081       1,172       (25.8 )
Net interest income     3,891       3,656       3,641       4,093       3,563       9.2  
Provision for losses     -       -       300       330       100       (100.0 )
Net interest income after the provision for loan losses     3,891       3,656       3,341       3,763       3,463       12.4  
Noninterest income                                                
Customer service fees     218       202       188       201       198       10.3  
Other noninterest income     13       19       18       13       12       4.2  
Gain on sale of assets     39       477       149       27       48       (18.7 )
    Total noninterest income     270       698       355       241       258       4.6  
Noninterest expense                                                
Salaries and employee benefits     1,619       1,623       1,597       1,600       1,566       3.4  
Net occupancy and equipment     334       340       337       408       355       (6.0 )
Depository insurance     162       161       160       121       237       (31.7 )
Foreclosed asset expense (1)     382       798       129       156       314       21.6  
Other operating expense     967       780       752       1,192       731       32.3  
    Total noninterest expense     3,464       3,702       2,975       3,477       3,203       8.1  
Income before income taxes     698       652       721       527       518       34.7  
Income tax expense     268       256       269       156       154       73.8  
Net income   $ 429     $ 396     $ 452     $ 371     $ 364       18.1  
                                                 
Preferred stock dividends & accretion on preferred stock discount     393       393       393       393       325       20.8  
                                                 
Net income available to common     36       3       59       (22 )     39       (6.6 )
                                                 
Net income per common share:                                                
  Basic   $ 0.01     $ 0.00     $ 0.01     $ -     $ 0.01       -  
  Diluted   $ 0.01     $ 0.00     $ 0.01     $ -     $ 0.01       -  
Average basic shares     6,547       6,547       6,547       6,500       6,500       0.7  
Average common diluted shares     6,693       6,671       6,671       6,503       6,503       2.9  
Performance Ratios                                                
Return on average equity     4.25 %     4.22 %     4.40 %     3.81 %     3.88 %     9.7  
Return on average assets     0.40 %     0.38 %     0.42 %     0.35 %     0.35 %     14.6  
Net interest margin     3.89 %     3.70 %     3.79 %     4.21 %     3.70 %     5.2  
Average equity     40,382       37,501       41,135       38,926       37,501       7.7  
Average assets     431,068       418,443       426,827       420,608       418,443       3.0  
Average interest-earning assets     400,539       389,458       395,921       391,197       389,458       2.8  

 

(1) Includes OREO adjustments to fair value

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Loss Allowance and Asset Quality Review

 

    2013     2012  
      Third       Second       First        Fourth        Third  
(Amounts in thousands)     Quarter       Quarter       Quarter       Quarter       Quarter  
                                         
Allowance for loan losses                                        
Balance at beginning of period   $ 5,095     $ 5,669     $ 6,141     $ 5,280     $ 6,029  
Provision for loan losses     -       -       300       330       100  
Net charge-offs     (1,936 )     (574 )     (772 )     531       (849 )
Balance at end of period   $ 3,159     $ 5,095     $ 5,669     $ 6,141     $ 5,280  
                                         
As a % of loans     1.11 %     1.85 %     2.08 %     2.22 %     1.93 %
As a % of nonperforming loans     77.13 %     74.02 %     89.07 %     102.24 %     66.26 %
As a % of nonperforming assets     16.61 %     19.79 %     20.60 %     23.32 %     17.40 %
                                         
Net charge-offs as a % of  loans (a)     2.73 %     0.83 %     1.13 %     -0.77 %     1.24 %
                                         
Risk element assets                                        
Accruing troubled debt restructured   $ 3,121     $ 3,465     $ 5,442     $ 5,316     $ 5,328  
Loans past due 30-89 days   $ 1,659     $ 5,111     $ 4,032     $ 6,594     $ 3,819  
                                         
Nonaccruing loans   $ 4,095     $ 5,864     $ 6,364     $ 6,005     $ 7,971  
Loans past due 90 days – accruing     -       -       -       -       -  
Total nonperforming loans   $ 4,095     $ 6,883     $ 6,364     $ 6,005     $ 7,971  
Foreclosed assets (b)©   $ 14,924     $ 18,867     $ 21,159     $ 20,300     $ 22,376  
Total nonperforming assets     19019.225       25750       27523.237       26337       30347  
                                         
                                         
Nonperforming loans as a % of loans     1.44 %     2.49 %     2.33 %     2.17 %     2.91 %
Nonperforming assets as a % of loans                                        
   and other real estate owned     6.36 %     8.73 %     9.37 %     8.86 %     10.25 %
                                         
Total loans     284,181       276,062       272,550       276,992       273,820  

 

(a) Annualized
(b) Properties sold during 3rd Q 2013  $        3,753    
(c) Properties under contract to sell   $        1,196    

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Net Interest Margin Analysis

Taxable Equivalent Basis

 

    Three months ended  
    September 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   $ 281,341     $ 4,294       6.05 %   $ 270,109     $ 4,241       6.23 %
Investment securities     104,261       457       1.89 %     91,889       478       2.36 %
Other earning assets     14,937       9       0.24 %     27,460       16       0.23 %
  Total earning assets     400,539     $ 4,760       4.75 %     389,458     $ 4,735       4.89 %
Allowance for loan losses     (3,933 )                     (5,892 )                
Cash and other assets     34,462                       34,878                  
TOTAL ASSETS   $ 431,068                     $ 418,443                  
                                                 
Liabilities and Shareholders' Equity                                                
                                                 
Interest-bearing liabilities:                                                
Interest-bearing demand deposits   $ 25,388     $ 10       0.16 %   $ 26,357     $ 21       0.32 %
Savings deposits     12,858       7       0.22 %     10,702       10       0.36 %
MMDA's     78,715       100       0.50 %     56,761       114       0.79 %
Time deposits     166,401       445       1.06 %     189,882       612       1.28 %
Federal funds purchased and securities sold under agreements to repurchase     25,102       22       0.34 %     19,471       22       0.45 %
Federal Home Loan Bank and other borrowings     29,012       285       3.90 %     37,336       394       4.19 %
  Total interest-bearing liabilities     337,476       869       1.02 %     340,509       1,173       1.37 %
Net interest spread           $ 3,891       3.73 %           $ 3,562       3.53 %
Noninterest-bearing demand deposits     51,727                       40,722                  
Accrued expenses and other liabilities     1,483                       (288 )                
Shareholders' equity     40,382                       37,501                  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 431,068                     $ 418,443                  
Net yield on earning assets                     3.89 %                     3.70 %
                                                 
Taxable equivalent adjustment:                                                
  Loans             0                       0          
  Investment securities             39                       69          
          Total adjustment             39                       69          

  

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Net Interest Margin Analysis

Taxable Equivalent Basis

 

    Nine months ended  
    September 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   $ 276,606     $ 12,515       6.05 %   $ 266,187     $ 12,571       6.31 %
Investment securities     97,786       1,379       2.10 %     91,827       1,563       2.58 %
Other earning assets     23,232       45       0.26 %     25,535       44       0.23 %
  Total earning assets     397,624     $ 13,939       4.74 %     383,549     $ 14,179       5.02 %
Allowance for loan losses     (5,053 )                     (6,345 )                
Cash and other assets     36,808                       35,968                  
TOTAL ASSETS   $ 429,379                     $ 413,172                  
                                                 
Liabilities and Shareholders' Equity                                                
                                                 
Interest-bearing liabilities:                                                
Interest-bearing demand deposits   $ 26,477     $ 46       0.23 %   $ 26,526     $ 65       0.33 %
Savings deposits     12,235       22       0.24 %     10,317       29       0.37 %
MMDA's     76,729       319       0.56 %     47,625       305       0.86 %
Time deposits     167,406       1,366       1.09 %     191,378       1,946       1.36 %
Federal funds purchased and securities sold under agreements to repurchase     22,330       56       0.34 %     22,309       77       0.46 %
Federal Home Loan Bank and other borrowings     31,142       941       4.04 %     39,990       1,281       4.28 %
  Total interest-bearing liabilities     336,319       2,750       1.09 %     338,145       3,703       1.46 %
Net interest spread           $ 11,189       3.65 %           $ 10,475       3.55 %
Noninterest-bearing demand deposits     50,338                       38,684                  
Accrued expenses and other liabilities     1,865                       (163 )                
Shareholders' equity     40,857                       36,507                  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 429,379                     $ 413,172                  
Net yield on earning assets                     3.81 %                     3.73 %
                                                 
Taxable equivalent adjustment:                                                
  Loans             0                       0          
  Investment securities             156                       212          
          Total adjustment             156                       212          

 

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Loan Stratification

 

    2013           2012              
  Third     % of     Third     % of     % Dollar  
(Amounts in thousands)   Quarter     Total     Quarter     Total       Change  
Non-residential real estate                                        
    Owner occupied   $ 66,143       23.3     $ 61,229       22.4       8.0  
    Non-owner occupied     66,454       23.4       65,501       23.9       1.5  
    Multi-family real estate     8,295       2.9       8,626       3.2       (3.8 )
    1-4 family construction     9,865       3.5       6,305       2.3       56.5  
    Commercial land and lot development     23,162       8.1       21,767       7.9       6.4  
Total non-residential real estate     173,919       61.2       163,428       59.7       6.4  
Residential real estate                                        
    First mortgage - 1-4 family     43,776       15.4       43,454       15.9       0.7  
    Second mortgage - 1-4 family     2,028       0.7       3,138       1.1       (35.4 )
    Home equity lines     15,847       5.6       15,832       5.8       0.1  
Total residential real estate     61,651       21.7       62,424       22.8       (1.2 )
Total real estate loans     235,570       82.9       225,852       82.5       4.3  
                                         
Commercial     38,095       13.4       38,196       13.9       (0.3 )
Agricultural & other     8,381       2.9       7,533       2.8       11.3  
Consumer     2,135       0.8       2,239       0.8       (4.6 )
Total loans, net of unearned fees   $ 284,181       100.0     $ 273,820       100.0       3.8  

  

 
 

 

Cornerstone Bancshares, Inc. and Subsidiary

Consolidated Balance Sheets

  

    Unaudited        
    September 30,     December 31,  
ASSETS   2013     2012  
                 
Cash and due from banks   $ 2,148,352     $ 3,222,139  
Interest-bearing deposits at other financial institutions     19,106,638       56,173,099  
Total cash and cash equivalents     21,254,990       59,395,238  
                 
Securities available for sale     95,282,416       76,096,646  
Securities held to maturity (fair value approximates                
$37,589 and $46,212 at September 30, 2013 and December 31, 2012, respectively)     36,620       45,086  
Federal Home Loan Bank stock, at cost     2,322,900       2,322,900  
Loans, net of allowance for loan losses of                
$3,158,766 and $6,141,281 at September 30, 2013 and December 31, 2012, respectively     281,021,767       270,850,465  
Bank premises and equipment, net     5,094,668       5,399,340  
Accrued interest receivable     1,221,841       1,213,778  
Foreclosed assets     14,923,933       20,332,313  
Other assets     8,522,148       7,790,634  
     Total assets   $ 429,681,283     $ 443,446,400  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Deposits:                
Noninterest-bearing demand deposits   $ 54,452,293     $ 60,053,838  
Interest-bearing demand deposits     25,463,874       30,178,624  
Savings deposits and money market accounts     90,665,979       80,994,239  
Time deposits     170,174,142       173,653,892  
Total deposits     340,756,288       344,880,593  
                 
Accrued interest payable     100,129       120,558  
Federal funds purchased and securities sold under                
agreements to repurchase     20,508,655       19,587,387  
Federal Home Loan Bank advances and other borrowings     26,740,000       37,175,000  
Other liabilities     1,426,357       794,026  
Total liabilities     389,531,429       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, respectively     14,875,081       14,821,546  
Common stock - $1.00 par value; 20,000,000 shares authorized;                
6,709,199 shares issued in 2013 and 2012;                
6,547,074 and 6,500,396 shares outstanding in 2013 and 2012     6,547,074       6,500,396  
Additional paid-in capital     21,517,620       21,390,486  
Accumulated deficit     (3,110,707 )     (3,274,986 )
Accumulated other comprehensive income     320,786       1,451,394  
Total stockholders' equity     40,149,854       40,888,836  
Total liabilities and stockholders' equity   $ 429,681,283     $ 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 months ended     Nine months ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
INTEREST INCOME                                
Loans, including fees   $ 4,293,583     $ 4,241,492     $ 12,514,688     $ 12,571,193  
Investment securities     457,299       478,172       1,379,322       1,563,433  
Federal funds sold & other earning assets     9,510       15,647       45,515       44,075  
Total interest income     4,760,392       4,735,311       13,939,525       14,178,701  
                                 
INTEREST EXPENSE                                
Time deposits     445,397       612,286       1,365,993       1,946,341  
Other deposits     117,327       144,157       386,791       398,859  

Federal funds purchased and securities

   sold under agreements to repurchase

    21,435       21,889       56,258       77,193  
Federal Home Loan Bank advances and other borrowings     284,882       394,066       941,269       1,281,010  
Total interest expense     869,041       1,172,398       2,750,311       3,703,403  
                                 
Net interest income before provision for loan losses     3,891,351       3,562,913       11,189,214       10,475,298  
Provision for losses     -       100,000       300,000       100,000  
Net interest income after provision for loan losses     3,891,351       3,462,913       10,889,214       10,375,298  
                                 
NONINTEREST INCOME                                
Customer service fees     218,304       197,509       608,087       602,107  
Net gains from sale of securities     -       -       424,971       -  
Net gains from sale of loans and other assets     39,164       48,199       240,746       124,109  
Other noninterest income     12,500       12,944       48,968       51,844  
Total noninterest income     269,968       258,652       1,322,772       778,060  
                                 
NONINTEREST EXPENSE                                
Salaries and employee benefits     1,619,030       1,566,359       4,838,822       4,727,049  
Net occupancy and equipment expense     333,850       354,555       1,011,335       1,038,296  
Depository insurance     161,956       236,927       482,920       682,830  
Foreclosed assets, net     381,847       314,088       1,308,995       945,163  
Other operating expenses     967,888       731,090       2,500,107       2,307,172  
Total noninterest expenses     3,464,571       3,203,019       10,142,179       9,700,510  
                                 
Income before provision for income taxes     696,748       518,546       2,069,807       1,452,848  
Provision for income taxes     268,200       154,300       793,100       421,500  
                                 
Net income     428,548       364,246       1,276,707       1,031,348  
                                 
Preferred stock dividend requirements     375,000       308,893       1,125,000       854,780  
Accretion on preferred stock discount     17,845       16,370       53,535       46,079  
                                 
Net income available to common shareholders   $ 35,703     $ 38,983     $ 98,172     $ 130,489  
                                 
EARNINGS PER COMMON SHARE                                
Basic   $ 0.01     $ 0.01     $ 0.01     $ 0.02  
Diluted   $ 0.01     $ 0.01     $ 0.01     $ 0.02  
                                 
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 nine months ended September 30, 2013

 

                            Accumulated        
                Additional           Other     Total  
    Preferred     Common     Paid-in     Accumulated     Comprehensive     Stockholders'  
    Stock     Stock     Capital     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     -       -       96,793       -       -     $ 96,793  
                                                 
   Issuance of common stock     -       46,678       30,341       -       -     $ 77,019  
                                                 
   Preferred stock dividends     -       -       -       (1,058,893 )     -     $ (1,058,893 )
                                                 
   Accretion on preferred stock     53,535       -       -       (53,535 )     -       -  
                                                 
   Net income     -       -       -       1,276,707       -     $ 1,276,707  
                                                 
Unrealized holding gains (losses) on securities available for sale, net of reclassification adjustment and taxes     -       -       -       -       (1,130,608 )   $ (1,130,608 )
                                                 
BALANCE, September 30, 2013   $ 14,875,081     $ 6,547,074     $ 21,517,620     $ (3,110,707 )   $ 320,786     $ 40,149,854  

 

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