CHATTANOOGA, Tenn., Jan. 28, 2014 /PRNewswire/ -- Cornerstone Bancshares, Inc. ("Cornerstone"; OTC Bulletin Board: CSBQ; CSBQP), holding company of Cornerstone Community Bank ("Bank"), today announced net income of $403,000 for the fourth quarter of 2013 and $1.68 million for the year, which represents an increase of 20 percent over 2012. This marks the twelfth consecutive quarter of positive earnings for Cornerstone.
Other financial highlights year-over-year include:
-- 20% increase in net income -- 4.5% increase in loans -- 36% decrease in foreclosed assets -- 40% decrease in nonaccruals -- 10% increase in core transactional deposits
"We are extremely pleased with this solid performance for the year," said Cornerstone's President and CEO Frank Hughes. "The Bank continued to make steady progress in earnings and was able to use some of its revenue to accelerate the disposition of OREO (other real estate owned)."
Based on its positive quarterly earnings, Cornerstone was able to continue paying its Preferred Stock dividend all four quarters of 2013.
"At this new juncture of a new year, we anticipate continued improvement in asset quality and another strong year of OREO reduction," said Hughes. "Our focus will remain on taking care of our customers and delivering the greatest return on investment for all of our shareholders."
Founded in 1996, Cornerstone is a single-bank holding company, with $432 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.
Cornerstone Bancshares, Inc. and Subsidiary Fourth Quarter Financial Highlights December 31, 2013 and 2012 (Unaudited) (Amounts in thousands, except per common share data) 2013 2012 % Change --------------------------------------------------- ---- ---- -------- Balance Sheet Data at December 31 --------------------------------- Total assets $432,223 $443,446 (2.5) Interest-earning assets 406,708 411,629 (1.2) Loans 289,440 276,992 4.5 Foreclosed assets 12,926 20,332 (36.4) Deposits 341,414 344,881 (1.0) Other interest-bearing liabilities 49,714 56,762 (12.4) Shareholders' equity 40,134 40,889 (1.8) Loan to deposit ratio 84.78% 80.32% 5.5 Tier 1 leverage ratio (Bank, est) 8.56% 8.37% 2.3 Total risk-based capital ratio (Bank, est) 13.10% 12.91% 1.5 Outstanding common shares 6,547 6,500 0.7 Book value per common share $3.86 $4.01 (3.9) Tangible book value per common share $3.86 $4.01 (3.9) Market value per common share as of December 31 $2.37 $2.29 3.5 Loan Quality Data ----------------- Nonaccruing loans 3,566 6,005 (40.6) Loans past due 90 days - accruing - - - Net charge-offs YTD 3,238 1,689 91.7 Allowance for loan losses 3,203 6,141 (47.8) Allowance for loan losses to total loans 1.11% 2.22% Nonperforming assets to total assets 3.82% 5.94% Performance Data for the Year ----------------------------- Net income $1,681 $1,402 19.9 Return on average assets 0.39% 0.34% Return on average equity 4.12% 3.78% Net interest margin 3.80% 3.85% Per common share data: Net income - basic $0.02 $0.02 Net income - diluted $0.02 $0.02 Common dividends $ - $ - Preferred dividends & accretion per common $0.24 $0.20 Average shares (000s): Basic common stock 6,547 6,500 Diluted common stock 6,662 6,523 Preferred stock (actual) 600 600
Cornerstone Bancshares, Inc. and Subsidiary Quarterly Earnings Summary (Unaudited) ---------- 2013 2012 Q4-13 / Fourth Third Second First Fourth Q4-12 (Amounts in thousands) Quarter Quarter Quarter Quarter Quarter % Chg --------------------- ------- ------- ------- ------- ------- ----- Interest income Loans, including fees $4,190 $4,294 $4,079 $4,142 $4,718 (11.2) Securities and interest-bearing deposits at other financial institutions 315 457 482 440 440 (28.5) Federal funds sold and other earning assets 8 10 15 21 16 (50.5) ------------------------------------------- --- --- --- --- --- Total interest income 4,513 4,761 4,576 4,603 5,174 (12.8) --------------------- ----- ----- ----- ----- ----- Interest expense Deposits 487 563 587 603 673 (27.6) Short-term borrowings 18 21 17 18 17 3.1 FHLB advances and other borrowing 267 285 316 341 391 (31.9) --------------------------------- --- --- --- --- --- Total interest expense 772 869 920 962 1,081 (28.6) ---------------------- --- --- --- --- ----- Net interest income 3,741 3,892 3,656 3,641 4,093 (8.6) Provision for losses - - - 300 330 (100.0) -------------------- --- --- --- --- --- Net interest income after the provision for loan losses 3,741 3,892 3,656 3,341 3,763 (0.6) ------------------------- ----- ----- ----- ----- ----- Noninterest income Customer service fees 213 218 202 188 201 5.9 Other noninterest income 13 13 19 18 13 2.4 Gain on sale of assets 391 39 477 149 27 1,348.1 ---------------------- --- --- --- --- --- Total noninterest income 617 270 698 355 241 156.0 ------------------------ --- --- --- --- --- Noninterest expense Salaries and employee benefits 1,716 1,619 1,623 1,597 1,600 7.3 Net occupancy and equipment 324 334 340 337 408 (20.7) Depository insurance 162 162 161 160 121 33.9 Foreclosed asset expense (1) 693 382 798 129 156 344.2 Other operating expense 810 967 780 752 1,192 (32.0) ----------------------- --- --- --- --- ----- Total noninterest expense 3,705 3,464 3,702 2,975 3,477 6.6 ------------------------- ----- ----- ----- ----- ----- Income before income taxes 653 698 652 721 527 24.0 Income tax expense 250 268 256 269 156 60.0 ------------------ --- --- --- --- --- Net income $403 $430 $396 $452 $371 8.6 ========== ==== ==== ==== ==== ==== Preferred stock dividends & accretion on preferred stock discount 392 393 393 393 393 (0.2) Net income available to common 11 36 3 59 (22) (152.0) Net income per common share: Basic $0.00 $0.01 $0.00 $0.01 $0.00 - ===== ===== ===== ===== ===== ===== Diluted $0.00 $0.01 $0.00 $0.01 $0.00 - ======= ===== ===== ===== ===== ===== Average basic shares 6,547 6,547 6,547 6,547 6,500 0.7 Average common diluted shares 6,662 6,693 6,671 6,671 6,503 2.4 Performance Ratios Return on average equity 3.98% 4.25% 4.22% 4.40% 3.81% 4.4 Return on average assets 0.38% 0.40% 0.38% 0.42% 0.35% 7.1 Net interest margin 3.76% 3.89% 3.70% 3.79% 4.21% (10.7) Average equity 40,487 40,382 37,501 41,135 38,926 4.0 Average assets 426,660 431,068 418,443 426,827 420,608 1.4 Average interest-earning assets 398,174 400,539 389,458 395,921 391,197 1.8 (1) Includes OREO adjustments to fair value
Cornerstone Bancshares, Inc. and Subsidiary Loan Loss Allowance and Asset Quality Review 2013 2012 Fourth Third Second First Fourth (Amounts in thousands) Quarter Quarter Quarter Quarter Quarter ----------- ------- ------- ------- ------- ------- Allowance for loan losses Balance at beginning of period $3,159 $5,095 $5,669 $6,141 $5,280 Provision for loan losses - - - 300 330 Net charge-offs 44 (1,936) (574) (772) 531 --------------- --- ------ ---- ---- --- Balance at end of period $3,203 $3,159 $5,095 $5,669 $6,141 ================= ====== ====== ====== ====== ====== As a % of loans 1.11% 1.11% 1.85% 2.08% 2.22% As a % of nonperforming loans 89.81% 77.13% 74.02% 89.07% 102.26% As a % of nonperforming assets 19.42% 16.61% 19.79% 20.60% 23.32% Net charge-offs as a % of loans (a) -0.06% 2.73% 0.83% 1.13% -0.77% Risk element assets Accruing troubled debt restructured $4,251 $3,121 $3,465 $5,442 $5,316 Loans past due 30-89 days $2,250 $1,659 $5,111 $4,032 $6,594 Nonaccruing loans $3,566 $4,095 $6,883 $6,364 $6,005 Loans past due 90 days - accruing - - - - - ----------------- --- --- --- --- --- Total nonperforming loans $3,566 $4,095 $6,883 $6,364 $6,005 Foreclosed assets (b) (c) $12,926 $14,924 $18,867 $21,159 $20,332 ----------------- ------- ------- ------- ------- ------- Total nonperforming assets $16,492 $19,019 $25,750 $27,523 $26,337 Nonperforming loans as a % of loans 1.23% 1.44% 2.49% 2.33% 2.17% Nonperforming assets as a % of loans and foreclosed assets 5.45% 6.36% 8.73% 9.37% 8.86% Total loans 289,440 284,181 276,062 272,550 276,992 (a) Annualized (b) Properties sold during 4th Q 2013 $1,427 (c) Properties under contract to sell $1,017
Cornerstone Bancshares, Inc. and Subsidiary Net Interest Margin Analysis Taxable Equivalent Basis Three months ended December 31 (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 $286,003 $4,190 5.81% $276,694 $4,718 6.76% Investment securities 99,065 315 1.41% 82,917 440 2.41% Other earning assets 13,106 8 0.23% 31,586 16 0.21% ------ ------ Total earning assets 398,174 $4,513 4.53% 391,197 $5,174 5.31% ====== ====== Allowance for loan losses (3,045) (5,530) Cash and other assets 31,531 34,941 TOTAL ASSETS $426,660 $420,608 ======== ======== Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits $25,363 $9 0.14% $26,355 $21 0.32% Savings deposits 14,149 5 0.15% 11,059 9 0.34% MMDA's 74,607 73 0.39% 66,838 117 0.69% Time deposits 160,824 400 0.99% 176,882 525 1.18% Federal funds purchased and securities sold under agreements to repurchase 21,184 18 0.33% 18,343 17 0.37% Federal Home Loan Bank and other borrowings 33,095 267 3.20% 37,175 392 4.18% ------ --- ------ --- Total interest-bearing liabilities 329,222 772 0.93% 336,652 1,081 1.27% Net interest spread $3,741 3.60% $4,093 4.04% ====== ====== Noninterest-bearing demand deposits 55,398 43,662 Accrued expenses and other liabilities 1,553 1,368 Shareholders' equity 40,487 38,926 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $426,661 $420,608 ======== ======== Net yield on earning assets 3.76% 4.21% ==== ==== Taxable equivalent adjustment: Loans 0 0 Investment securities 37 63 Total adjustment 37 63 === ===
Cornerstone Bancshares, Inc. and Subsidiary Net Interest Margin Analysis Taxable Equivalent Basis Twelve months ended December 31 (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 $278,975 $16,705 5.99% $268,828 $17,289 6.43% Investment securities 98,108 1,694 1.94% 89,587 2,004 2.53% Other earning assets 20,749 54 0.26% 27,010 60 0.22% ------ ------ Total earning assets 397,832 $18,453 4.69% 385,425 $19,353 5.09% Allowance for loan losses (4,547) (6,140) Cash and other assets 35,409 35,756 TOTAL ASSETS $428,694 $415,041 ======== ======== Liabilities and Shareholders' Equity Interest-bearing liabilities: Interest-bearing demand deposits $26,196 $55 0.21% $26,483 $87 0.33% Savings deposits 12,718 27 0.22% 10,504 38 0.36% MMDA's 76,194 392 0.51% 52,454 422 0.80% Time deposits 165,748 1,766 1.07% 187,733 2,471 1.32% Federal funds purchased and securities sold under agreements to repurchase 22,041 74 0.34% 21,312 94 0.44% Federal Home Loan Bank and other borrowings 31,634 1,209 3.82% 39,282 1,673 4.26% ------ ----- ------ ----- Total interest-bearing liabilities 334,531 3,523 1.05% 337,768 4,785 1.42% Net interest spread $14,930 3.64% $14,568 3.67% ======= ======= Noninterest-bearing demand deposits 51,614 39,936 Accrued expenses and other liabilities 1,785 222 Shareholders' equity 40,764 37,115 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $428,694 $415,041 ======== ======== Net yield on earning assets 3.80% 3.85% ==== ==== Taxable equivalent adjustment: Loans 0 0 Investment securities 205 260 Total adjustment 205 260 === ===
Cornerstone Bancshares, Inc. and Subsidiary Loan Stratification 2013 2012 (Amounts in thousands) Fourth % of Fourth % of % Dollar --------------------- Quarter Total Quarter Total Change ------- ----- ------- ----- ------ Non-residential real estate Owner occupied $65,765 22.7 $58,425 21.1 12.6 Non-owner occupied 64,053 22.1 66,468 24.0 (3.6) Multi-family real estate 8,249 2.9 8,508 3.1 (3.0) 1-4 family construction 10,832 3.7 6,937 2.5 56.2 Commercial land and lot development 25,254 8.7 25,551 9.2 (1.2) ----------------------- ------ --- ------ --- Total non-residential real estate 174,153 60.1 165,889 59.9 5.0 --------------------------------- ------- ---- ------- ---- --- Residential real estate First mortgage - 1-4 family 47,931 16.6 44,145 15.9 8.6 Second mortgage - 1-4 family 1,960 0.7 3,348 1.2 (41.5) Home equity lines 18,175 6.3 15,194 5.5 19.6 ----------------- ------ --- ------ --- Total residential real estate 68,066 23.6 62,687 22.6 8.6 ----------------------------- ------ ---- ------ ---- --- Total real estate loans 242,219 83.7 228,576 82.5 6.0 Commercial 37,221 12.9 38,101 13.8 (2.3) Agricultural & other 7,493 2.6 8,378 3.0 (10.6) Consumer 2,507 0.9 1,937 0.7 29.4 -------- ----- --- ----- --- Total loans, net of unearned fees $289,440 100.0 $276,992 100.0 4.5 ================================= ======== ===== ======== ===== ===
CORNERSTONE BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31, 2013 and 2012 Unaudited 2013 2012 ---- ---- ASSETS Cash and due from banks $2,149,467 $3,222,139 Interest-bearing deposits at other financial institutions 22,702,270 56,173,099 ---------- ---------- Total cash and cash equivalents 24,851,737 59,395,238 Securities available for sale 92,208,672 76,096,646 Securities held to maturity (fair value approximates $34,909 at 2013 and $46,212 at 2012) 34,165 45,086 Federal Home Loan Bank stock, at cost 2,322,900 2,322,900 Loans, net of allowance for loan losses of $3,203,158 in 2013 and $6,141,281 in 2012 286,236,578 270,850,465 Bank premises and equipment, net 4,992,449 5,399,340 Accrued interest receivable 977,925 1,213,778 Foreclosed assets 12,925,748 20,332,313 Other assets 7,673,179 7,790,634 --------- --------- Total assets $432,223,353 $443,446,400 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand deposits $75,206,540 $60,053,838 Interest-bearing demand deposits 24,563,987 30,178,624 Savings deposits and money market accounts 86,329,930 80,994,239 Time deposits 155,313,920 173,653,892 ----------- ----------- Total deposits 341,414,377 344,880,593 Accrued interest payable 82,320 120,558 Federal funds purchased and securities sold under agreements to repurchase 22,974,117 19,587,387 Federal Home Loan Bank advances and other borrowings 26,740,000 37,175,000 Other liabilities 878,811 794,026 ------- ------- Total liabilities 392,089,625 402,557,564 Stockholders' equity: Preferred stock -no par value; 2,000,000 shares authorized; 600,000 shares issued and outstanding in 2013 and 2012 14,892,927 14,821,546 Common stock - $1.00 par value; 20,000,000 shares authorized in 2013 and 2012; 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 21,549,883 21,390,486 Accumulated deficit (3,099,451) (3,274,986) Accumulated other comprehensive income 243,295 1,451,394 ------- --------- Total stockholders' equity 40,133,728 40,888,836 Total liabilities and stockholders' equity $432,223,353 $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 Years Ended December 31, 2013, 2012, and 2011 Unaudited 2013 2012 2011 ---- ---- ---- INTEREST INCOME Loans, including fees $16,705,237 $17,288,855 $18,128,907 Securities and interest-bearing deposits at other financial institutions 1,694,292 2,003,620 2,311,690 Federal funds sold 53,502 60,404 53,139 ------ ------ ------ Total interest income 18,453,031 19,352,879 20,493,736 INTEREST EXPENSE Time deposits 1,766,237 2,471,135 3,767,582 Other deposits 473,921 546,812 424,387 Federal funds purchased and securities sold under agreements to repurchase 73,903 94,402 125,538 Federal Home Loan Bank advances and other borrowings 1,208,490 1,672,478 2,044,361 --------- --------- --------- Total interest expense 3,522,551 4,784,827 6,361,868 Net interest income before provision for loan losses 14,930,480 14,568,052 14,131,868 Provision for loan losses 300,000 430,000 445,000 ------- ------- ------- Net interest income after provision for loan losses 14,630,480 14,138,052 13,686,868 ------------ NONINTEREST INCOME Customer service fees 821,072 803,251 868,935 Other noninterest income 62,457 64,519 71,542 Net gains from sale of securities 652,421 - 107,413 Net gains from sale of loans and other assets 403,569 151,710 134,997 ------- ------- ------- Total noninterest income 1,939,519 1,019,480 1,182,887 ------------ NONINTEREST EXPENSES Salaries and employee benefits 6,555,059 6,327,226 6,117,063 Net occupancy and equipment expense 1,335,126 1,447,204 1,431,863 Depository insurance 644,918 803,902 1,052,591 Foreclosed assets, net 2,001,755 1,100,670 1,922,988 Other operating expenses 3,309,532 3,498,867 3,126,998 --------- --------- --------- Total noninterest expenses 13,846,390 13,177,869 13,651,503 ------------ Income before income tax expense 2,723,609 1,979,663 1,218,252 Income tax expense 1,042,800 577,600 188,200 --------- ------- ------- Net income 1,680,809 1,402,063 1,030,052 Preferred stock dividend requirements 1,500,000 1,229,780 651,119 Accretion on preferred stock discount 71,381 63,924 36,718 ------ ------ ------ Net income available to common stockholders $109,428 $108,359 $342,215 ============= EARNINGS PER COMMON SHARE Basic $0.02 $0.02 $0.05 Diluted 0.02 0.02 0.05 ==== ==== ==== 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 year ended December 31, 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 - - 129,056 - - 129,056 Issuance of common stock - 46,678 30,341 - - 77,019 Preferred stock dividends - - - (1,433,893) - (1,433,893) Accretion on preferred stock 71,381 - - (71,381) - - Net income - - - 1,680,809 - 1,680,809 Unrealized holding losses on securities available for sale, net of reclassification adjustment and taxes - - - - (1,208,099) (1,208,099) --- --- --- --- ---------- ---------- BALANCE, December 31, 2013 $14,892,927 $6,547,074 $21,549,883 $(3,099,451) $243,295 $40,133,728 =========== ========== =========== =========== ======== =========== The Notes to Consolidated Financial Statements are an integral part of these statements.
SOURCE Cornerstone Bancshares, Inc.