SEC Company Response from SMARTFINANCIAL INC. (SMBK) (CIK 0001038773) (SMBK) — Sep 9, 2011
SMARTFINANCIAL INC. (SMBK) (CIK 0001038773)
Date: Sept. 9, 2011 · CIK: 0001038773 · Accession: 0001144204-11-052186
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-30497
Referenced dates: March 30, 2010
Letter
Filed March 31, 2011 Form 10-Q for Fiscal Quarter Ended March 31, 2011 Filed May 16, 2011 File No. 000-30497
Re:
Dear Mr. McNair:
In reference to your comment letter of August 10, 2011 and with respect to your examination of Form 10-K for the year ended December 31, 2010 and Form 10-Q for the quarter ended March 31, 2011 of Cornerstone Bancshares, Inc. (“Cornerstone”), this letter sets forth our response to each comment, numbered to correspond to the Staff’s letter:
Form 10-K for Fiscal Year Ended December 31, 2010
General
1.
Please file the Item 5.07 Form 8-K identifying the voting results of your 2011 annual meeting for the election of directors.
Cornerstone’s Response:
Cornerstone completed and filed a Form 8-K indentifying the voting results of our 2011 annual meeting for the election of directors on September 9, 2011.
2.
Please revise future filings to discuss in greater detail the formal agreements with your financial regulators. In particular, provide a summary of all provisions, current compliance with each provision, management’s view of the material impact on future operations relating to the actions taken in response to the formal agreements and the potential consequences if there is a failure to comply with the agreements.
Cornerstone’s Response:
In future filings, Cornerstone will include the following information:
On April 2, 2010, Cornerstone Community Bank (the "Bank"), the wholly owned subsidiary bank of Cornerstone, entered into a Stipulation to the Issuance of a Consent Order (the "Stipulation") with the Federal Deposit Insurance Corporation (the "FDIC"). Pursuant to the Stipulation, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulations, to the issuance of a Consent Order (the "Order") by the FDIC, also effective as of April 2, 2010. On April 8, 2010, the Bank also executed a written agreement (the "Agreement") with the Tennessee Department of Financial Institutions ("TDFI").
The Order and the Agreement (collectively, the "Action Plans") contain substantially similar terms and are based on the findings of the FDIC and TDFI during their joint examination of the Bank commenced on October 8, 2009 (the "Examination"), as disclosed in the Joint Report of Examination (the "Report"). The Order and the Agreement represent agreements between the Bank, on the one hand, and the FDIC and the TDFI, respectively, on the other hand, as to areas of the Bank's operations that warrant improvement and present plans for making those improvements. The Action Plans impose no fines or penalties on the Bank.
Under the terms of each Action Plan, the Bank cannot declare or pay cash dividends without the prior written consent of certain officials of the FDIC and the TDFI (the "Joint Officials"). In addition, the Bank is restricted from extending additional credit to certain borrowers whose existing credit has been classified as "loss," "doubtful" or "substandard" or has been charged off the books of the Bank and, in each case, is uncollected. The Action Plans further require, at varying times following their respective effective dates, the Bank (or its board of directors, as appropriate) to (i) establish a committee comprised of a majority of non-employee directors to oversee the Bank's compliance with the Action Plans; (ii) prepare and implement a written capital plan to increase the Bank's Tier I Capital and achieve and maintain specified capital ratios, containing a contingency plan (including a plan to sell or merge the Bank) for implementation upon written notice from the Joint Officials in certain events; (iii) retain a bank consultant to develop a written management and staffing plan for implementation by the Bank; (iv) develop and implement specified policies and/or procedures addressing interest rate risk, appraisal weaknesses and credit underwriting and loan administration deficiencies; (v) develop and implement a written plan addressing liquidity and related measures and objectives; (vi) eliminate certain assets classified as "loss" by the FDIC or the TDFI; (vii) formulate and implement certain written plans, including an annual profit plan and budget, a comprehensive strategic plan, a plan to reduce certain impaired assets identified during the Examination, and a plan for the reduction and collection of delinquent loans; (viii) implement a system of monitoring loan documentation exceptions on an ongoing basis and implement procedures designed to reduce their future occurrence; and (ix) eliminate and/or correct the deficiencies and technical exceptions, violations of law and regulation and contraventions of policy noted in the Report. The Agreement would further require the Bank to develop and implement a written plan for the continued administration of its IT risk management practices and controls.
The Bank is required to provide written progress reports to the Joint Officials on a quarterly basis until such time as the requirements of the Action Plans have been accomplished and the FDIC has released the Bank in writing from such obligation. The Order and the Agreement will remain in effect until modified or terminated by the FDIC or the TDFI, respectively.
The Bank is in substantial compliance with the terms of the Action Plans. The Bank has provided quarterly written progress reports to the Joint Officials. The status of the Bank's compliance with the specific actions required by the Action Plans is discussed in further detail below.
The Bank's board of directors established a Consent Order Compliance Committee (the "Committee") comprised of a majority of non-employee directors to oversee the Bank's compliance with the Action Plans. The Committee's first meeting was held in May, 2010. The Committee has met monthly since that time and intends to meet monthly until the Bank's responsibilities and obligations under the Action Plans have been fulfilled.
The Bank has prepared and is implementing a capital plan. In furtherance of such capital plan, Cornerstone commenced a public offering in June, 2010 of Cornerstone’s Series A Convertible Preferred Stock (the "Preferred Shares"). Pursuant to the offering, Cornerstone is selling up to 600,000 Preferred Shares at a price of $25.00 per share.
Cornerstone anticipates that the offering will continue to be effective until December 31, 2011. To date, Cornerstone has raised approximately $7.2 million.
The Bank engaged an outside consultant to perform a management and staffing plan. The consultant submitted its findings and recommendations to the Bank's board of directors, the FDIC and the TDFI. The Bank's board of directors submitted its management plan to the Joint Officials in April 2011. Highlights of the management plan include a reorganization of the Bank’s executive management, internal loan review and credit departments. The Bank’s loan review department was assigned to the Bank’s risk management department to achieve greater independence. The Bank also assigned additional responsibilities to the Bank’s new Chief Credit Officer with respect to the credit department and the organization’s underwriting process. Next, the human resources assigned to the Bank’s collection department were reviewed. After the review, management concluded that additional personnel were needed to assist the Bank in collecting and resolving problem loans.
The Bank enhanced its liquidity policy to include additional liquidity measurements and a revised liquidity contingency funding plan. In addition to the policy updates, the Bank engaged an outside consultant to perform quarterly liquidity analysis for the Bank's Asset–Liability Committee's ("ALCO") review. The Bank's board of directors has established liquidity goals and is monitors these levels on a quarterly basis. The June 30, 2011 report was received and reviewed during the August, 2011 ALCO meeting.
The Bank engaged an outside consultant to perform quarterly interest rate risk modeling for the Bank's ALCO committee's review. The Bank's board of directors has established interest rate sensitivity goals and is monitoring these levels on a quarterly basis. The March 31, 2011 report was received and reviewed during the May, 2011 ALCO meeting.
The Bank prepared budgets for its 2011 and 2012 fiscal years and submitted the budgets to the FDIC for review.
The Bank prepared a strategic plan and submitted such strategic plan to the FDIC for review. The primary thrust of the strategic plan is to reduce the Bank's assets to approximately $405 million by December 31, 2011. The Bank intends to accomplish the reductions by disposing of securities and cash and reducing Federal Home Loan Bank funding and certificates of deposit. The Bank intends to reduce its loan portfolio to $295 million during this same period. The reduction in loans and securities will result in a decrease the Bank’s average assets. A bank’s average assets are included in the calculation of its regulatory capital ratios. A reduction in average assets will improve the regulatory capital ratios in accordance with the Action Plans.
The Bank has prepared a reduction of delinquencies action plan. The Bank has submitted this plan to the Joint Officials. Important aspects of the delinquency action plan include a prohibition against an extension of credit for the payment of interest on delinquent loans, a requirement to establish specific collection procedures to be instituted at various stages of a borrower’s delinquency and specific reporting requirements informing members of management and the board of directors about existing past due levels.
In addition, the Bank has charged off all loans classified by the Joint Officials as "loss." The Bank maintains a tracking report that it submits to the Joint Officials periodically. Finally, the Bank's board of directors has created a Loan Review Committee to review the asset quality, concentrations and problem credits within the Bank's loan portfolio.
The Bank has addressed all violations and contraventions of policy and has either corrected or is in the process of correcting each such violation or contravention.
The Bank has implemented a technical exception tracking system in order to monitor technical exceptions. In addition, the Bank has drafted and implemented new procedures aimed at reducing technical exceptions noted by regulators during their examinations of the Bank.
The Bank has not paid common dividends since the inception of the Action Plans. In 2011, Cornerstone has declared two Preferred Stock dividends. The first dividend was $0.625 per share. The first dividend was paid on May 25, 2011 following the Federal Reserve Bank of Atlanta's (the “FRBA”) approval of the dividend on May 23, 2011. Cornerstone has declared a second dividend in the amount of $0.625 per share with respect to the Preferred Shares. This dividend was also approved by the FRBA. The dividend has a record date of March 31, 2011 and a payment date of September 28, 2011.
The Bank is actively monitoring and is not aware of any new extensions of credit to prohibited classified borrowers as of June 30, 2011.
Management and the Board have carefully considered the impact of the Action Plans on the Bank’s current and future operations. Areas that have received additional attention as a result of the Action Plans include the Bank’s liquidity position, overall balance sheet structure, capital and earnings. The Bank has considered the impact of deposit interest rate restrictions that may impair the Bank’s ability to raise local certificates of deposit. Management has placed an emphasis on increasing local deposits, reducing its non-core liabilities and establishing a liquidity contingency plan to address potential problems. The Bank’s overall balance sheet structure has also been considered. The reduction in assets has impacted the Bank’s earning assets and therefore the Bank’s net interest income. To offset this reduction the Bank has reduced its cost of funds as well as its non-interest expense over the last two years. One of the primary impacts of the Order and the Agreement is the need for additional capital. Cornerstone has incurred additional time and expense to generate its Preferred Stock offering. The Preferred Stock has an annual ten percent return which will require additional earnings from the Bank to meet the annual dividend requirement. The Bank’s earnings have been impacted negatively due to the recent regulatory criticism. One example of the negative impact on earnings is the increased FDIC insurance premiums have been incurred and will continue to be at an elevated level until the Bank’s overall condition improves.
Noncompliance with the Action Plans could subject the Bank to an array of penalties, ranging from civil money penalties to a termination of the Bank's deposit insurance for more egregious violations of applicable bank rules and regulations.
Item 1. Business
Supervision and Regulation, page 5
3.
We note that you received a letter from the Federal Reserve Bank of Atlanta dated March 30, 2010 which requires the FRBA’s written approval prior to taking certain actions. To the extent this letter is still in effect, please revise your future annual and periodic reports to disclose the letter’s terms and any material effect the FRBA’s requirements have had on your operations.
Cornerstone’s Response:
In future filings, Cornerstone will provide the following:
Cornerstone received a letter dated March 30, 2010 from its primary banking regulator, the FRBA. The letter directs Cornerstone to obtain the FRBA's written approval before Cornerstone (i) incurs any indebtedness; (ii) declares or pays any dividends; (iii) redeems any corporate stock; or (iv) makes any other payment representing a reduction in its capital, except for the payment of normal and routine operating expenses. As noted above, Cornerstone has received FRBA's approval for dividends with respect to the Preferred Shares. The letter notes that the condition of the Bank has caused Cornerstone to be in "troubled condition" under Regulation Y. As a result, notice to the FRBA is required before Cornerstone undertakes any changes in senior executive management or directorships, and approval of the FRBA (with the written concurrence of the FDIC) must be obtained before Cornerstone grants or enters into any agreement to provide a golden parachute or severance payment. To date, Cornerstone is in compliance with the requirements of the FRBA letter.
To date the most significant impact of the FRBA’s letter relates to the payment of dividends on the Preferred Shares. However, Cornerstone has been able to consistently raise additional capital and the company has generated positive earnings during 2011. These two elements coupled with the Bank’s stabilization of asset quality have, in Cornerstone’s estimation, led to the approval of the Preferred Shares dividend payments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
4.
Please expand your future filings to present a discussion of the company’s critical accounting estimates.
Cornerstone’s Response:
In future filings Cornerstone will include the following information within Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A):
Critical Accounting Policies
Cornerstone’s accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. Our significant accounting policies
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CORRESP
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filename1.htm
Unassociated Document
September 9, 2011
Mr. Matt S. McNair
Attorney-Adviser
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Re:
Cornerstone Bancshares, Inc.
Form 10-K for Fiscal Year Ended December 31, 2010
Filed March 31, 2011
Form 10-Q for Fiscal Quarter Ended March 31, 2011
Filed May 16, 2011
File No. 000-30497
Dear Mr. McNair:
In reference to your comment letter of August 10, 2011 and with respect to your examination of Form 10-K for the year ended December 31, 2010 and Form 10-Q for the quarter ended March 31, 2011 of Cornerstone Bancshares, Inc. (“Cornerstone”), this letter sets forth our response to each comment, numbered to correspond to the Staff’s letter:
Form 10-K for Fiscal Year Ended December 31, 2010
General
1.
Please file the Item 5.07 Form 8-K identifying the voting results of your 2011 annual meeting for the election of directors.
Cornerstone’s Response:
Cornerstone completed and filed a Form 8-K indentifying the voting results of our 2011 annual meeting for the election of directors on September 9, 2011.
2.
Please revise future filings to discuss in greater detail the formal agreements with your financial regulators. In particular, provide a summary of all provisions, current compliance with each provision, management’s view of the material impact on future operations relating to the actions taken in response to the formal agreements and the potential consequences if there is a failure to comply with the agreements.
Cornerstone’s Response:
In future filings, Cornerstone will include the following information:
On April 2, 2010, Cornerstone Community Bank (the "Bank"), the wholly owned subsidiary bank of Cornerstone, entered into a Stipulation to the Issuance of a Consent Order (the "Stipulation") with the Federal Deposit Insurance Corporation (the "FDIC"). Pursuant to the Stipulation, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulations, to the issuance of a Consent Order (the "Order") by the FDIC, also effective as of April 2, 2010. On April 8, 2010, the Bank also executed a written agreement (the "Agreement") with the Tennessee Department of Financial Institutions ("TDFI").
The Order and the Agreement (collectively, the "Action Plans") contain substantially similar terms and are based on the findings of the FDIC and TDFI during their joint examination of the Bank commenced on October 8, 2009 (the "Examination"), as disclosed in the Joint Report of Examination (the "Report"). The Order and the Agreement represent agreements between the Bank, on the one hand, and the FDIC and the TDFI, respectively, on the other hand, as to areas of the Bank's operations that warrant improvement and present plans for making those improvements. The Action Plans impose no fines or penalties on the Bank.
Under the terms of each Action Plan, the Bank cannot declare or pay cash dividends without the prior written consent of certain officials of the FDIC and the TDFI (the "Joint Officials"). In addition, the Bank is restricted from extending additional credit to certain borrowers whose existing credit has been classified as "loss," "doubtful" or "substandard" or has been charged off the books of the Bank and, in each case, is uncollected. The Action Plans further require, at varying times following their respective effective dates, the Bank (or its board of directors, as appropriate) to (i) establish a committee comprised of a majority of non-employee directors to oversee the Bank's compliance with the Action Plans; (ii) prepare and implement a written capital plan to increase the Bank's Tier I Capital and achieve and maintain specified capital ratios, containing a contingency plan (including a plan to sell or merge the Bank) for implementation upon written notice from the Joint Officials in certain events; (iii) retain a bank consultant to develop a written management and staffing plan for implementation by the Bank; (iv) develop and implement specified policies and/or procedures addressing interest rate risk, appraisal weaknesses and credit underwriting and loan administration deficiencies; (v) develop and implement a written plan addressing liquidity and related measures and objectives; (vi) eliminate certain assets classified as "loss" by the FDIC or the TDFI; (vii) formulate and implement certain written plans, including an annual profit plan and budget, a comprehensive strategic plan, a plan to reduce certain impaired assets identified during the Examination, and a plan for the reduction and collection of delinquent loans; (viii) implement a system of monitoring loan documentation exceptions on an ongoing basis and implement procedures designed to reduce their future occurrence; and (ix) eliminate and/or correct the deficiencies and technical exceptions, violations of law and regulation and contraventions of policy noted in the Report. The Agreement would further require the Bank to develop and implement a written plan for the continued administration of its IT risk management practices and controls.
The Bank is required to provide written progress reports to the Joint Officials on a quarterly basis until such time as the requirements of the Action Plans have been accomplished and the FDIC has released the Bank in writing from such obligation. The Order and the Agreement will remain in effect until modified or terminated by the FDIC or the TDFI, respectively.
The Bank is in substantial compliance with the terms of the Action Plans. The Bank has provided quarterly written progress reports to the Joint Officials. The status of the Bank's compliance with the specific actions required by the Action Plans is discussed in further detail below.
The Bank's board of directors established a Consent Order Compliance Committee (the "Committee") comprised of a majority of non-employee directors to oversee the Bank's compliance with the Action Plans. The Committee's first meeting was held in May, 2010. The Committee has met monthly since that time and intends to meet monthly until the Bank's responsibilities and obligations under the Action Plans have been fulfilled.
The Bank has prepared and is implementing a capital plan. In furtherance of such capital plan, Cornerstone commenced a public offering in June, 2010 of Cornerstone’s Series A Convertible Preferred Stock (the "Preferred Shares"). Pursuant to the offering, Cornerstone is selling up to 600,000 Preferred Shares at a price of $25.00 per share.
Cornerstone anticipates that the offering will continue to be effective until December 31, 2011. To date, Cornerstone has raised approximately $7.2 million.
The Bank engaged an outside consultant to perform a management and staffing plan. The consultant submitted its findings and recommendations to the Bank's board of directors, the FDIC and the TDFI. The Bank's board of directors submitted its management plan to the Joint Officials in April 2011. Highlights of the management plan include a reorganization of the Bank’s executive management, internal loan review and credit departments. The Bank’s loan review department was assigned to the Bank’s risk management department to achieve greater independence. The Bank also assigned additional responsibilities to the Bank’s new Chief Credit Officer with respect to the credit department and the organization’s underwriting process. Next, the human resources assigned to the Bank’s collection department were reviewed. After the review, management concluded that additional personnel were needed to assist the Bank in collecting and resolving problem loans.
The Bank enhanced its liquidity policy to include additional liquidity measurements and a revised liquidity contingency funding plan. In addition to the policy updates, the Bank engaged an outside consultant to perform quarterly liquidity analysis for the Bank's Asset–Liability Committee's ("ALCO") review. The Bank's board of directors has established liquidity goals and is monitors these levels on a quarterly basis. The June 30, 2011 report was received and reviewed during the August, 2011 ALCO meeting.
The Bank engaged an outside consultant to perform quarterly interest rate risk modeling for the Bank's ALCO committee's review. The Bank's board of directors has established interest rate sensitivity goals and is monitoring these levels on a quarterly basis. The March 31, 2011 report was received and reviewed during the May, 2011 ALCO meeting.
The Bank prepared budgets for its 2011 and 2012 fiscal years and submitted the budgets to the FDIC for review.
The Bank prepared a strategic plan and submitted such strategic plan to the FDIC for review. The primary thrust of the strategic plan is to reduce the Bank's assets to approximately $405 million by December 31, 2011. The Bank intends to accomplish the reductions by disposing of securities and cash and reducing Federal Home Loan Bank funding and certificates of deposit. The Bank intends to reduce its loan portfolio to $295 million during this same period. The reduction in loans and securities will result in a decrease the Bank’s average assets. A bank’s average assets are included in the calculation of its regulatory capital ratios. A reduction in average assets will improve the regulatory capital ratios in accordance with the Action Plans.
The Bank has prepared a reduction of delinquencies action plan. The Bank has submitted this plan to the Joint Officials. Important aspects of the delinquency action plan include a prohibition against an extension of credit for the payment of interest on delinquent loans, a requirement to establish specific collection procedures to be instituted at various stages of a borrower’s delinquency and specific reporting requirements informing members of management and the board of directors about existing past due levels.
In addition, the Bank has charged off all loans classified by the Joint Officials as "loss." The Bank maintains a tracking report that it submits to the Joint Officials periodically. Finally, the Bank's board of directors has created a Loan Review Committee to review the asset quality, concentrations and problem credits within the Bank's loan portfolio.
The Bank has addressed all violations and contraventions of policy and has either corrected or is in the process of correcting each such violation or contravention.
The Bank has implemented a technical exception tracking system in order to monitor technical exceptions. In addition, the Bank has drafted and implemented new procedures aimed at reducing technical exceptions noted by regulators during their examinations of the Bank.
The Bank has not paid common dividends since the inception of the Action Plans. In 2011, Cornerstone has declared two Preferred Stock dividends. The first dividend was $0.625 per share. The first dividend was paid on May 25, 2011 following the Federal Reserve Bank of Atlanta's (the “FRBA”) approval of the dividend on May 23, 2011. Cornerstone has declared a second dividend in the amount of $0.625 per share with respect to the Preferred Shares. This dividend was also approved by the FRBA. The dividend has a record date of March 31, 2011 and a payment date of September 28, 2011.
The Bank is actively monitoring and is not aware of any new extensions of credit to prohibited classified borrowers as of June 30, 2011.
Management and the Board have carefully considered the impact of the Action Plans on the Bank’s current and future operations. Areas that have received additional attention as a result of the Action Plans include the Bank’s liquidity position, overall balance sheet structure, capital and earnings. The Bank has considered the impact of deposit interest rate restrictions that may impair the Bank’s ability to raise local certificates of deposit. Management has placed an emphasis on increasing local deposits, reducing its non-core liabilities and establishing a liquidity contingency plan to address potential problems. The Bank’s overall balance sheet structure has also been considered. The reduction in assets has impacted the Bank’s earning assets and therefore the Bank’s net interest income. To offset this reduction the Bank has reduced its cost of funds as well as its non-interest expense over the last two years. One of the primary impacts of the Order and the Agreement is the need for additional capital. Cornerstone has incurred additional time and expense to generate its Preferred Stock offering. The Preferred Stock has an annual ten percent return which will require additional earnings from the Bank to meet the annual dividend requirement. The Bank’s earnings have been impacted negatively due to the recent regulatory criticism. One example of the negative impact on earnings is the increased FDIC insurance premiums have been incurred and will continue to be at an elevated level until the Bank’s overall condition improves.
Noncompliance with the Action Plans could subject the Bank to an array of penalties, ranging from civil money penalties to a termination of the Bank's deposit insurance for more egregious violations of applicable bank rules and regulations.
Item 1. Business
Supervision and Regulation, page 5
3.
We note that you received a letter from the Federal Reserve Bank of Atlanta dated March 30, 2010 which requires the FRBA’s written approval prior to taking certain actions. To the extent this letter is still in effect, please revise your future annual and periodic reports to disclose the letter’s terms and any material effect the FRBA’s requirements have had on your operations.
Cornerstone’s Response:
In future filings, Cornerstone will provide the following:
Cornerstone received a letter dated March 30, 2010 from its primary banking regulator, the FRBA. The letter directs Cornerstone to obtain the FRBA's written approval before Cornerstone (i) incurs any indebtedness; (ii) declares or pays any dividends; (iii) redeems any corporate stock; or (iv) makes any other payment representing a reduction in its capital, except for the payment of normal and routine operating expenses. As noted above, Cornerstone has received FRBA's approval for dividends with respect to the Preferred Shares. The letter notes that the condition of the Bank has caused Cornerstone to be in "troubled condition" under Regulation Y. As a result, notice to the FRBA is required before Cornerstone undertakes any changes in senior executive management or directorships, and approval of the FRBA (with the written concurrence of the FDIC) must be obtained before Cornerstone grants or enters into any agreement to provide a golden parachute or severance payment. To date, Cornerstone is in compliance with the requirements of the FRBA letter.
To date the most significant impact of the FRBA’s letter relates to the payment of dividends on the Preferred Shares. However, Cornerstone has been able to consistently raise additional capital and the company has generated positive earnings during 2011. These two elements coupled with the Bank’s stabilization of asset quality have, in Cornerstone’s estimation, led to the approval of the Preferred Shares dividend payments.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
4.
Please expand your future filings to present a discussion of the company’s critical accounting estimates.
Cornerstone’s Response:
In future filings Cornerstone will include the following information within Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A):
Critical Accounting Policies
Cornerstone’s accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. Our significant accounting policies