Cornerstone profits in 2012 best in 4 years

Cornerstone profits in 2012 best in 4 years

January 27th, 2013 by Dave Flessner in Business Around the Region

Cornerstone Bank President Frank Hughes

Cornerstone Bank President Frank Hughes

Photo by Miranda Harple

The parent company of Cornerstone Bank in Chattanooga tripled its fourth-quarter income compared with a year ago to boost its earnings for all of 2012 to the best yearly total in four years.

Cornerstone Bancshares Inc. reported net income of $371,000 for the fourth quarter of 2012, up from $112,822 in the same period a year ago. For all of 2012, Cornerstone earned just over $1.4 million, or 36 percent more than the $1.03 million that the bank earned in 2011.

Last year's results were the best since 2008 when Cornerstone earned $2.5 million.

The bank was aided last year by the sale of more preferred stock, completing a $15 million issue to shore up Cornerstone's balance sheet following more than $13 million in losses during 2009 and 2010. Cornerstone also improved its net interest margin from 3.55 percent in 2011 to 3.85 percent in 2012.

"We've definitely turned a corner and are extremely pleased with our continued improvement," Cornerstone's President and CEO Frank Hughes said in a quarterly earnings statement released Friday night. "Our goal is to continue strengthening Cornerstone's foundation, so that we can build for the future and continue serving our Chattanooga market."

Most of Chattanooga's banks have reported similar double-digit gains in profits for 2012 as the economy improves, troubled assets are sold and new stock is sold. CapitalMark, another Chattanooga-based banking firm, reported last week that it nearly doubled its 2012 profits to $6.75 million after selling another $10 million of common stock last fall. The biggest regional banks with branches in Chattanooga -- First Tennessee, SunTrust and Regions -- all reported higher earnings last year than in 2011.

First Security Group, the parent company of FSG Bank, has yet to report its results for 2012 next month.

Cornerstone Bank, the sixth biggest bank in Hamilton County, said its assets last year grew by 4.2 percent to nearly $422.7 million. Loans on the books increased by 3.4 percent during 2012 to $267.7 million while deposits rose 8.9 percent to $314 million.

The improved performance helped raise the value of Cornerstone's stock, which is traded on the over-the-counter market. Cornerstone shares rose nearly 53 percent last year from $1.50 per share to $2.29 per share.

Cornerstone operates five branches in Chattanooga and a loan production office in Dalton, Ga.