Exhibit 99.1

Cornerstone Bancshares, Inc. Reports Fourth Quarter 2010 Earnings

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--March 4, 2011--Cornerstone Bancshares, Inc. (OTC Bulletin Board: CSBQ) today announced the following:

Cornerstone Bancshares, Inc. today reported a net loss available to common shareholders of $(4.74) million, or $(0.73) per diluted common share for 2010, a 42.1 percent improvement from the $(8.18) million loss, or $(1.26) per diluted common share reported for 2009. The 2010 loss includes a $2.5 million write-off of goodwill from the purchase of the former Bank of East Ridge in 1997. The goodwill is an accounting adjustment and is a “non cash item.” Cornerstone’s earnings without the goodwill write-off would have been a net loss of approximately $(2.2) million or $(0.34) per diluted share for 2010. During the fourth quarter of 2010, management elected to adjust its allowance for loan and lease losses (“ALLL”) methodology to a more conservative approach. The change in methodology resulted in a fourth quarter 2010 provision expense of approximately $3.2 million. The provision expense in the fourth quarter of 2010 brought the total provision expense for 2010 to $7.3 million, which brought Cornerstone’s ALLL to approximately $9.1 million as of December 31, 2010. The $9.1 million in ALLL is comprised, in part, of approximately $3.7 million for loans identified with specific impairment while the remaining $5.4 million is allocated to the general loan portfolio.

“I am greatly encouraged by the positive trends and significant improvements made year-over-year,” said Cornerstone’s President Frank Hughes. “We had positive cash-flow from operating activities all four quarters of 2010, which was a dramatic turnaround from the previous year.” he said. “Given our bank’s conservative loan loss allowance approach and our improved asset quality position, management expects minimal loan loss provision expense for 2011, which should translate positively to net income and greater value for all of Cornerstone’s stakeholders.”

Specific trends include:

  • Continued improvement in asset quality
  • Significant reduction in past-dues
  • Loan loss allowance above that of peer banks
  • Increase in net interest margin

Total loans were $285.25 million at yearend, which were managed down by $51 million from the yearend of 2009. Construction and development loans, the highest risk-weighted category of loan classification, were down by more than 50 percent from the previous year, ($50 million in 2009 to $23 million in 2010). In addition, $1.645 million of OREO property sold in the fourth quarter of 2010, and nearly 50 percent of the OREO properties are currently rented or contracted to sell by the end of the second quarter of 2011. Past-due loans, which represent the first step in the collection cycle, decreased from $5.0 million at the end of 2009 to $2.3 million at the end of 2010, an amount that compares very favorably with peer banks of equal size.

In an effort to fortify its capital position, Cornerstone launched a 10% cumulative, convertible preferred stock offering in the third quarter of 2010. After the offering period ends June 30, 2011, the preferred stock will be traded publicly on the Over-The-Counter Bulletin Board, under the ticker symbol CSBQP.

“With the entry of Volkswagen, Amazon, Alstom Power, Wacker Chemical and other major corporations in our region, the local economic forecast is incredibly bright,” said Chairman Miller Welborn. “Our goal is to further strengthen Cornerstone’s foundations, so that we are solidly positioned to take advantage of the opportunities that lie ahead, for many years to come.”

Cornerstone is a single-bank holding company, with $440 million in assets, serving the Chattanooga, Tennessee MSA, with five branches throughout Chattanooga and one loan production office in Dalton, Georgia. Locally owned and locally 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 discussed in Cornerstone’s Form 10-K and other filings with the Securities and Exchange Commission.


The following information was filed by Smartfinancial Inc. (SMBK) on Monday, March 7, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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