SmartFinancial (SMBK) 8-K Cornerstone Bancshares, Inc. Announces 2nd Quarter 2005 Financial Results

Exhibit 99.1

Cornerstone Bancshares, Inc. Announces 2nd Quarter 2005 Financial Results

HIXSON, Tenn., July 15 /PRNewswire-FirstCall/ -- Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

Cornerstone Bancshares, Inc saw its 2nd quarter earnings increase to $912 thousand or $.30 a share and $1,752 thousand year to date an increase of 52.9% while book earnings per share increased to $.59 versus $.46, an increase of 27.2%. (The per share data is different than the nominal earnings due to a 500,000 stock issue completed in February 2005.) The earnings growth was the result of continued strong balance sheet growth, especially loan generation and core deposit growth. Leading the growth in deposits were interest-bearing transaction accounts, which on average grew 40.1% over the same period in 2004. Due to these continued strong results, the Board of Directors has authorized an $.08 cash dividend for stockholders payable July 11, 2005 bringing the total dividend paid during 2005 to $.18 per share compared to $.05 per share during 2004 an increase of 260%. The Bank experienced continued exceptional loan growth as the loan portfolio finished the quarter with an average 2nd quarter balance of $228 million, up 30.2% over the same period in 2004 and surpassed the Bank’s budgeted loan growth for 2004. The loan growth was concentrated in the business sector, especially in asset-based and commercial real estate lending, as more customers choose service before price and went with a local organization that partnered with its customers. Asset growth followed in line with loan growth as the Bank averaged $280 million in assets for the 2nd quarter of 2005, up from $217 million during the 2nd quarter of 2004, an increase of 28.6%. Earning assets for the Bank increased 29.6% in comparison to the 2nd quarter of 2004, driving the average earning asset ratio up to 94.3%, well above the peer bank average. The Bank created a joint venture with AGA Insurance Inc. a Chattanooga-based insurance agency to provide insurance products to its customer base with two dedicated (to the Bank’s customers) dual employees. Management and AGA are excited to have the ability to cross-sell services to both customer bases.

The asset quality deteriorated slightly, but remained at the superior level during the first half of 2005 as non-performing loans as a percentage of average total loans increased to 0.38%, while past due loans as a percentage of total loans increased to 0.32%. The Bank had net charge offs of $131 thousand during the second quarter and $161 thousand year to date, while providing $550 thousand to the loan loss allowance year to date. The large provision was created to fully fund the loan loss allowance for the loan growth realized from the first two quarters of 2005, and as a result the Bank was able to maintain a 1.34% allowance for possible loan losses.

Cornerstone Bancshares Inc. 2nd quarter 2005 earnings of $912 thousand represents a 46.5% increase over the 2nd quarter in 2004 earnings of $623 thousand. Earnings per share for the 2nd quarter 2005 was $0.30 compared to $0.25 per share for the 2nd quarter of 2004.

Cornerstone Bancshares, Inc. is a one-bank holding company serving the Chattanooga, Tennessee MSA with 5 branches and $290 million in assets specializing in business financial services.

CORNERSTONE BANCSHARES, INC.
Selected Financial Information
as of June 30, 2005
(in thousands)

	Three Months Ending June 30				% Change
EARNINGS SUMMARY	2005		2004
Interest income	$	4,844	$	3,404		42.29	%
Interest expense		1,427		818		74.50	%
Net interest income		3,417		2,586		32.10	%
Provision for loan loss		340		250		36.00	%
Net interest income after provision		3,077		2,336		31.69	%
Noninterest income		270		282		-4.23	%
Noninterest expense		1,857		1,600		16.06	%
Pretax income		1,490		1,019		46.27	%
Income taxes		579		396		45.98	%
Net income	$	912	$	623		46.46	%
Earnings per common share	$	0.30	$	0.25		20.30	%
Weighted average common shares outstanding		3,028,037		2,487,234

	Year-to-Date Ending June 30				% Change
EARNINGS SUMMARY	2005		2004
Interest income	$	9,166	$	6,482		41.41	%
Interest expense		2,563		1,625		57.66	%
Net interest income		6,604		4,857		35.97	%
Provision for loan loss		550		410		34.15	%
Net interest income after provision		6,054		4,447		36.14	%
Noninterest income		488		609		-19.80	%
Noninterest expense		3,678		3,183		15.55	%
Pretax income		2,864		1,873		52.95	%
Income taxes		1,113		727		53.07	%
Net income	$	1,752	$	1,146		52.87	%
Earnings per common share	$	0.59	$	0.46		27.24	%
Weighted average common shares outstanding		2,988,038		2,487,080

	Three Months Ending June 30				% Change
AVERAGE BALANCE SHEET SUMMARY	2005		2004
Loans, net of unearned income	$	228,367	$	175,397		30.20	%
Investment securities		34,945		27,823		25.60	%
Earning assets		263,312		203,220		29.57	%
Total assets		279,585		217,425		28.59	%
Noninterest bearing deposits		32,720		27,821		17.61	%
Interest bearing transaction deposits		81,977		58,496		40.14	%
Certificates of deposit		98,588		80,426		22.58	%
Total deposits		213,286		166,743		27.91	%
Other interest bearing liabilities		36,805		31,898		15.38	%
Shareholder’s equity		27,768		17,538		58.32	%

	Year-to-Date Ending June 30				% Change
AVERAGE BALANCE SHEET SUMMARY	2005		2004
Loans, net of unearned income	$	219,567	$	169,126		29.82	%
Investment securities		32,547		26,622		22.26	%
Earning assets		252,114		195,748		28.80	%
Total assets		268,102		208,983		28.29	%
Noninterest bearing deposits		33,082		24,876		32.99	%
Interest bearing transaction deposits		75,474		57,095		32.19	%
Certificates of deposit		94,750		80,019		18.41	%
Total deposits		203,306		161,990		25.51	%
Other interest bearing liabilities		36,414		28,283		28.75	%
Shareholder’s equity		26,768		17,487		53.07	%

	Three Months Ending June 30						Year-to-Date Ending June 30
SELECTED RATIOS	2005			2004			2005			2004
Average equity to average assets		9.93	%		8.07	%		9.98	%		8.37	%
Average net loans to average total assets		81.68	%		80.67	%		81.90	%		80.93	%
Return on average assets		1.30	%		1.15	%		1.31	%		1.10	%
Return on average total equity		13.13	%		14.20	%		13.09	%		13.11	%
Actual Book value per common share	$	9.30		$	7.02

SOURCE  Cornerstone Bancshares, Inc.
          -0-                                                            07/15/2005
          /CONTACT:  Frank Hughes, President & COO of Cornerstone Bancshares, Inc., +1-423-385-3009/
          /Web site:  http://www.cscbank.com