Cornerstone Bancshares, Inc. Announces 2nd Quarter 2008 Financial Results
[ PR Newswire · 2008-07-18 ]
CHATTANOOGA, Tenn., July 18 /PRNewswire-FirstCall/ — Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following: Cornerstone Bancshares, Inc. saw its earnings increase to $1.1 million for the 2nd quarter of 2008 or $.17 per share compared to $1.0 million for the 1st quarter of 2008, an increase of 5.7%. Year-to-date, Cornerstone has earned $2.1 million or $.33 per share. These earnings represent more than a 30% decrease from 2007 earnings period over period. The decrease from the last year's earnings level has mostly been caused by net interest rate margin compression of approximately 135 basis points. The compression was created when the Federal Reserve rapidly reduced its Federal Funds rate 325 basis points over the last several months and has been exacerbated by the severe liquidity crisis created by large money center banks early this year. This liquidity crisis has caused the failure of a couple of large banks such as Bear Stearns that were heavily concentrated in housing credit risk and were highly leveraged. As a result of this liquidity crunch other banks, especially smaller banks, have seen the cost of funds from products such as certificates of deposit cost 100 basis points more than would be expected given the present Federal Funds rate during previous periods. In the past, Cornerstone has been able to grow its balance sheet to offset interest rate compression, but in 2008 there is much more uncertainty and not as much readily available capital to fund such growth. Cornerstone believes the rest of 2008 will be a challenge and will use the time to build its capital and liquidity. The Bank continued to grow loans during 2008 but at a slower rate as loans, especially commercial real estate loans, increased to $384 million, an increase of 10.9% over the same period during 2007. The Company's performance metrics pulled back to normal peer levels. ROA was 0.95% for the second quarter of 2008 compared to 1.54% during the second quarter in 2007. ROE was 11.5% during the second quarter in 2008 compared to 15.4% in 2007.
Presently the Company is operating at a comfortable 8.26% 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 improved to the superior level during the second quarter of 2008, non-performing loans as a percentage of average total loans decreased to 0.39% while past-due loans as a percentage of total loans decreased to .95%.
Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and one loan production office in Dalton, Georgia and one loan production office in Knoxville, Tennessee 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 June 30, 2008
(in thousands)
| | | Three Months | | | |
| | | Ending June 30 | | % | |
| EARNINGS SUMMARY | | 2008 | | 2007 | | Change | |
| | | | | | | | |
| Interest income | | $ | 7,757 | | $ | 8,743 | | | -11.28 | % |
| Interest expense | | | 3,223 | | | 3,469 | | | -7.08 | % |
| Net interest income | | | 4,533 | | | 5,274 | | | -14.04 | % |
| Provision for loan loss | | | 190 | | | 235 | | | -19.15 | % |
| Net interest income after provision | | | 4,343 | | | 5,039 | | | -13.80 | % |
| Noninterest income | | | 525 | | | 439 | | | 19.50 | % |
| Noninterest expense | | | 3,196 | | | 3,012 | | | 6.11 | % |
| Pretax income | | | 1,672 | | | 2,466 | | | -32.20 | % |
| Income taxes | | | 599 | | | 902 | | | -33.59 | % |
| Net income | | $ | 1,073 | | $ | 1,564 | | | -31.39 | % |
| | | | | | | | | | | |
| Earnings per common share | | $ | 0.17 | | $ | 0.24 | | | -29.25 | % |
| Weighted average common shares outstanding | | | 6,319,718 | | | 6,519,213 | | | | |
| | | Three Months | | | |
| AVERAGE BALANCE | | Ending June 30 | | % | |
| SHEET SUMMARY | | 2008 | | 2007 | | Change | |
| | | | | | | | |
| Loans, net of unearned income | | | 384,487 | | | 346,802 | | | 10.87 | % |
| Investment securities & other | | | 49,141 | | | 37,034 | | | 32.69 | % |
| Earning assets | | | 433,628 | | | 383,835 | | | 12.97 | % |
| Total assets | | | 452,246 | | | 405,977 | | | 11.40 | % |
| Noninterest bearing deposits | | | 42,375 | | | 38,965 | | | 8.75 | % |
| Interest bearing transaction deposits | | | 85,682 | | | 89,308 | | | -4.06 | % |
| Certificates of deposit | | | 181,919 | | | 163,504 | | | 11.26 | % |
| Total deposits | | | 309,977 | | | 291,777 | | | 6.24 | % |
| Other interest bearing liabilities | | | 105,291 | | | 71,055 | | | 48.18 | % |
| Shareholder's equity | | | 37,350 | | | 40,674 | | | -8.17 | % |
| | | Three Months | |
| | | Ending June 30 | |
| SELECTED RATIOS | | 2008 | | 2007 | |
| | | | | | |
Average equity to average assets | | | 8.26 | % | | 10.02 | % |
Average net loans to average total assets | | | 85.02 | % | | 85.42 | % |
| Return on average assets | | | 0.95 | % | | 1.54 | % |
| Return on average total equity | | | 11.49 | % | | 15.38 | % |
| Actual equity on June 30, | | $ | 37,099,164 | | $ | 40,787,448 | |
| Actual # shares outstanding on June 30, | | | 6,319,718 | | | 6,520,718 | |
| Book value per common share | | $ | 5.87 | | $ | 6.26 | |
| | | Year-to-Date | | | |
| | | Ending June 30 | | % | |
| EARNINGS SUMMARY | | 2008 | | 2007 | | Change | |
| | | | | | | | |
| Interest income | | $ | 15,817 | | $ | 16,850 | | | -6.13 | % |
| Interest expense | | | 6,693 | | | 6,602 | | | 1.38 | % |
| Net interest income | | | 9,124 | | | 10,248 | | | -10.97 | % |
| Provision for loan loss | | | 507 | | | 237 | | | 113.92 | % |
| Net interest income after provision | | | 8,617 | | | 10,011 | | | -13.93 | % |
| Noninterest income | | | 919 | | | 831 | | | 10.58 | % |
| Noninterest expense | | | 6,293 | | | 5,775 | | | 8.96 | % |
| Pretax income | | | 3,243 | | | 5,067 | | | -36.00 | % |
| Income taxes | | | 1,155 | | | 1,851 | | | -37.59 | % |
| Net income | | $ | 2,088 | | $ | 3,216 | | | -35.08 | % |
| | | | | | | | | | | |
| Earnings per common share | | $ | 0.33 | | $ | 0.49 | | | -32.67 | % |
| Weighted average common shares outstanding | | | 6,328,234 | | | 6,515,806 | | | | |
| | | Year-to-Date | | | |
| AVERAGE BALANCE | | Ending June 30 | | % | |
| SHEET SUMMARY | | 2008 | | 2007 | | Change | |
| Loans, net of unearned income | | $ | 385,294 | | $ | 333,622 | | | 15.49 | % |
| Investment securities & other | | | 45,786 | | | 37,072 | | | 23.51 | % |
| Earning assets | | | 431,080 | | | 370,694 | | | 16.29 | % |
| Total assets | | | 449,359 | | | 392,138 | | | 14.59 | % |
| Noninterest bearing deposits | | | 43,438 | | | 38,641 | | | 12.41 | % |
| Interest bearing transaction deposits | | | 89,559 | | | 89,884 | | | -0.36 | % |
| Certificates of deposit | | | 182,222 | | | 155,608 | | | 17.10 | % |
| Total deposits | | | 315,219 | | | 284,133 | | | 10.94 | % |
| Other interest bearing liabilities | | | 95,963 | | | 65,598 | | | 46.29 | % |
| Shareholder's equity | | | 37,238 | | | 39,967 | | | -6.83 | % |
| | | Year-to-Date | |
| | | Ending June 30 | |
| SELECTED RATIOS | | 2008 | | 2007 | |
| | | | | | |
Average equity to average assets | | | 8.29 | % | | 10.19 | % |
Average net loans to average total assets | | | 85.74 | % | | 85.08 | % |
| Return on average assets | | | 0.93 | % | | 1.64 | % |
| Return on average total equity | | | 11.21 | % | | 16.09 | % |
| Actual equity on June 30, | | | | | | | |
| Actual # shares outstanding on June 30, | | | | | | | |
| | | | | | | |
CONTACT:
Frank Hughes
President & COO
Cornerstone Bancshares, Inc.,
+1-423-385-3009/
