Cornerstone Bancshares, Inc., the parent firm of Chattanooga-based Cornerstones Bank,  announced a $1 million gain for 2011 compared to a $4.7 million loss the previous year.

Cornerstone reported net income of $112,822 for the fourth quarter of 2011, and net income of $1,030,052 for the 12 months ended Dec. 31, 2011, which represents a 122 percent improvement from the loss for the previous year.   

There was a 42 percent reduction in non-accruing loans for the year, from approximately $13.

6 million in 2010 to approximately $7.9 million in 2011.  Net charge-offs decreased 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.  Net interest margin increased 3 percent for the year, from 3.43 percent in 2010 to 3.55 percent in 2011.

“We are greatly encouraged by the continued improvement made in nearly every area across the board,” said Cornerstone’s President Frank Hughes. “We continue to work aggressively to improve asset quality, move OREO, raise capital and increase profitability,” he said.  “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 Feb. 15, 2012 for all shareholders of record as of Sept. 30, 2011, at a rate of $0.625 per share, payable on February 28, 2012.   As of Dec. 31, 2011, Cornerstone had raised in excess of $10 million in new capital through its Preferred Stock Offering.  Launched in 2010, the Offering features a Series A Convertible Preferred Stock with a 10 percent annual cumulative dividend, paid in cash quarterly if, as and when declared.  Based on the success of the capital campaign, Cornerstone recently extended the Offering until June 30, 2012, or until it reaches its ultimate goal of $15 million.

Some specific trends include:

• $10+ million capital raised through Preferred Stock Offering
• Four consecutive quarters of positive earnings for 2011
• Four consecutive payments of quarterly Preferred Stock dividends
• Significant reduction in non-accruing loans and net charge-offs
• Increase in net interest margin

“Prospects for the local economy and a strong community bank like Cornerstone are definitely bright,” said Cornerstone’s Chairman Miller Welborn.  “Our plan is to keep focusing our efforts on providing the best quality products, service and value to our customers, and the greatest return on investment for all of our shareholders.”