Cornerstone Bank President Frank Hughes

The parent company of Cornerstone Bank in Chattanooga reported its fourth consecutive quarter of profits on Tuesday, booking a $112,822 net income gain in the final three months of 2011.

Cornerstone Bancshares ended 2011 with net income for the year of more than $1.03 million, compared with a $4.7 million loss by the bank in the previous year.

Income was boosted by a 42 percent drop in non-accruing loans from $13.6 million in 2010 to approximately $7.9 million in 2011. Net charge-offs declined 46 percent for the year, from $4.1 million in 2010 to $2.2 million in 2011. The allowance for loan losses was reduced 19 percent for the year from $9.1 million in 2010 to $7.4 million in 2011.

"We are greatly encouraged by the continued improvement made in nearly every area across the board," Cornerstone President Frank Hughes said in a quarterly earnings announcement. "With positive net earnings all four quarters of 2011 and the ability to make our quarterly preferred stock dividend payments, I'd say we're definitely moving in the right direction."

Cornerstone declared the payment of its quarterly preferred stock dividend for all shareholders of record as of Sept. 30, 2011, at a rate of 62.5 cents per share, payable on Feb. 28.

Cornerstone has raised more than $10 million in new preferred stock toward its goal of raising an extra $15 million in capital. The stock offering is designed to improve its balance sheet and ultimately be removed from regulators' consent order restricting Cornerstone's activities after heavy losses during the recession.

"Prospects for the local economy and a strong community bank like Cornerstone are definitely bright," Cornerstone Chairman Miller Welborn said.

Cornerstone is a single-bank holding company with $425 million in assets from five branches in the Chattanooga area.