Cornerstone Bancshares Inc. will pay its fourth consecutive quarterly dividend to its preferred shareholders next week after the Chattanooga bank reported three consecutive quarters of profits.
Although Cornerstone continues to operate under a federal consent order, the bank earned $917,000, or 9 cents per share, in the first nine months of 2011. Cornerstone announced Wednesday that preferred stockholders as of June 30 will be paid a quarterly dividend next Tuesday of 62.5 cents per share.
The bank has issued more than $7.5 million of preferred stock, or about half of its original goal of a $15 million offering, to recapitalize Cornerstone after losses in 2008 and 2009. Launched in the fall of 2010 and extended through the end of this year, the preferred stock offering features a new class of security with a 10 percent cumulative annual dividend, and is convertible into common stock after five years.
“We are extremely pleased with the progress of the bank and are thankful that the earnings are sufficient to pay this preferred dividend,” Cornerstone President Frank Hughes said.
Cornerstone, a bank holding company with five offices and $426 million in assets, should do better than many banks because of the strength of the Chattanooga area economy, Cornerstone Chairman Miller Wellborn said.
“With recent investments by Volkswagen, Amazon, Wacker and other major corporations in Chattanooga, prospects for the local economy are very bright indeed,” Wellborn said.