Exhibit 99.1
Cornerstone Bancshares, Inc. Revises 4th Quarter 2007 Financial Results on February 13, 2008
CHATTANOOGA, Tenn., Feb. 13 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:
Cornerstone Bancshares, Inc announced that it will revise its previously stated fourth quarter earnings resulting in a 2007 year-end profit of $871 thousand, adjusted from a previous net income of $4.93 million. Earnings for the 4th quarter were reported at $1.16 million or $0.18 a share and were reduced to a loss of $2.9 million or ($0.45) per share. The reduction in earnings is a result of an apparent customer misuse of funds that Bank management detected, resulting in a $6.5 million (before tax) loan loss provision to cover the future potential charge-off. Management discovered irregularities in February 2008 after an internal compliance investigation. Since the misappropriation existed in 2007, accounting guidelines require the provision for loss be realized in the same year.
Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 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.
Media Contact: Amy Walker Cherry, VP Strategic Services
Phone: (423)421-5391 or (423) 385-3097
CORNERSTONE BANCSHARES, INC. | | | | | | | | | | | | | |
Selected Financial Information (Revised) | | | | | | | | | | | | | |
as of December 31, 2007 | | | | | | | | | | Page 1 | | | |
| (in thousands) | | | | | | | | | | | | | |
| | | Three Months | | | | Year-to-Date | | | |
| | | Ending December 31 | | | | Ending December 31 | | | |
| EARNINGS SUMMARY | | 2007 | | 2006 | | Change | | 2007 | | 2006 | | Change | |
| Interest income | | $ | 8,877 | | $ | 7,936 | | | 12 | % | $ | 34,784 | | $ | 29,165 | | | 19.3 | % |
| Interest expense | | | 4,026 | | | 2,931 | | | 37 | % | | 14,414 | | | 10,306 | | | 39.9 | % |
| Net interest income | | | 4,851 | | | 5,005 | | | -3 | % | | 20,370 | | | 18,859 | | | 8.0 | % |
| Provision for loan loss | | | 7,209 | | | 49 | | | 14612 | % | | 10,409 | | | 1,107 | | | 840.3 | % |
| Net interest income after provision | | | (2,357 | ) | | 4,956 | | | -148 | % | | 9,961 | | | 17,752 | | | -43.9 | % |
| Noninterest income | | | 461 | | | 370 | | | 25 | % | | 1,695 | | | 1,861 | | | -8.9 | % |
| Noninterest expense | | | 2,811 | | | 3,297 | | | -15 | % | | 10,926 | | | 10,473 | | | 4.3 | % |
| Pretax income | | | (4,707 | ) | | 2,029 | | | -332 | % | | 730 | | | 9,140 | | | -92.0 | % |
| Income taxes | | | (1,803 | ) | | 582 | | | -410 | % | | (141 | ) | | 3,328 | | | -104.2 | % |
| Net income | | $ | (2,904 | ) | $ | 1,447 | | | -301 | % | $ | 871 | | $ | 5,812 | | | -85.0 | % |
| | | | | | | | | | | | | | | | | | | | |
| Earnings per common share | | $ | (0.45 | ) | $ | 0.22 | | | -303 | % | $ | 0.13 | | $ | 0.90 | | | -85.1 | % |
Weighted average common shares outstanding | | | 6,445,663 | | | 6,505,405 | | | | | | 6,499,205 | | | 6,479,441 | | | | |
| | | Three Months | | | | Year-to-Date | | | |
| AVERAGE BALANCE | | Ending December 31 | | | | Ending December 31 | | | |
| SHEET SUMMARY | | 2007 | | 2006 | | Change | | 2007 | | 2006 | | Change | |
| Loans, net of unearned income | | $ | 378,173 | | $ | 295,787 | | | 28 | % | $ | 353,278 | | $ | 284,105 | | | 24.3 | % |
| Investment securities & Other | | | 37,779 | | | 47,095 | | | -20 | % | | 38,433 | | | 40,904 | | | -6.0 | % |
| Earning assets | | | 415,952 | | | 342,882 | | | 21 | % | | 391,711 | | | 325,009 | | | 20.5 | % |
| Total assets | | | 434,992 | | | 362,059 | | | 20 | % | | 413,043 | | | 344,741 | | | 19.8 | % |
| Noninterest bearing deposits | | | 43,761 | | | 39,773 | | | 10 | % | | 41,503 | | | 37,056 | | | 12.0 | % |
| Interest bearing transaction deposits | | | 94,720 | | | 96,763 | | | -2 | % | | 92,135 | | | 93,178 | | | -1.1 | % |
| Certificates of deposit | | | 189,264 | | | 140,064 | | | 35 | % | | 168,670 | | | 132,465 | | | 27.3 | % |
| Total deposits | | | 327,745 | | | 276,600 | | | 18 | % | | 302,308 | | | 262,699 | | | 15.1 | % |
| Other interest bearing liabilities | | | 64,146 | | | 44,922 | | | 43 | % | | 67,759 | | | 44,019 | | | 53.9 | % |
| Shareholder's equity | | | 41,259 | | | 38,131 | | | 8 | % | | 40,737 | | | 35,728 | | | 14.0 | % |
| | | | Three Months | | | | | | Year-to-Date | | | | |
| | | | Ending December 31 | | | | | | Ending December 31 | | | | |
| SELECTED RATIOS | | | 2007 | | | 2006 | | | | | | 2007 | | | 2006 | | | | |
Average equity to average assets | | | 9.48 | % | | 10.53 | % | | | | | 9.86 | % | | 10.36 | % | | | |
Average net loans to average total assets | | | 86.94 | % | | 81.70 | % | | | | | 85.53 | % | | 82.41 | % | | | |
| Return on average assets | | | -2.65 | % | | 1.59 | % | | | | | 0.21 | % | | 1.69 | % | | | |
| Return on average total equity | | | -27.93 | % | | 15.18 | % | | | | | 2.14 | % | | 16.27 | % | | | |
| Actual Equity on December 31, | | $ | 36,327,350 | | $ | 38,055,477 | | | | | | | | | | | | | |
| Actual # shares outstanding on December 31 | | | 6,369,718 | | | 6,503,318 | | | | | | | | | | | | | |
| Book value per common share | | $ | 5.70 | | $ | 5.85 | | | | | | | | | | | | | |
