SecProbe.io

CORRESP
 1
 filename1.htm

 SMARTFINANCIAL, INC.

 May 11, 2026

 VIA EDGAR FILING and E-MAIL: mateom@sec.gov

 U.S. Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, NE

 Washington, D.C. 20549

 Attn: Madeleine Mateo

 Re:
 SmartFinancial, Inc.

 Registration Statement on Form S-3

 File No. 333-295492

 Request for Acceleration of Effectiveness

 Ladies and Gentlemen:

 Pursuant to Rule 461 under
the Securities Act of 1933, as amended (the " Securities Act "), SmartFinancial, Inc. (the " Company ")
hereby requests the Securities and Exchange Commission (the " Commission ") to accelerate the effective date of the above-referenced
registration statement (the " Registration Statement ") and declare the Registration Statement effective under the Securities
Act at 4:00 p.m., Eastern Time, on May 13, 2026, or as soon thereafter as practicable. The Company also requests the Commission to specifically
confirm such effective date and time to the Company in writing.

 Sincerely,

 SMARTFINANCIAL, INC.

 By:
 /s/ William
 Y. Carroll, Jr.

 Name:
 William
 Y. Carroll, Jr.

 Title:
 President and Chief Executive Officer

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 May 5, 2026

William Y. Carroll, Jr.
President and CEO
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919

 Re: SmartFinancial, Inc.
 Registration Statement on Form S-3
 Filed May 1, 2026
 File No. 333-295492
Dear William Y. Carroll, Jr.:

 This is to advise you that we have not reviewed and will not review your
registration
statement.

 Please refer to Rules 460 and 461 regarding requests for acceleration.
We remind you
that the company and its management are responsible for the accuracy and
adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action
by the staff.

 Please contact Madeleine Joy Mateo at 202-551-3465 with any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Finance
cc: William W. Hopper, Esq.
</TEXT>
</DOCUMENT>

CORRESP
 1
 filename1.htm

 SmartFinancial, Inc.

 5401 Kingston Pike, Suite 600

 Knoxville, Tennessee 37910

 November 25, 2025

 Via EDGAR and e-mail

 U.S. Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, NE

 Washington, D.C. 20549

 Re: SmartFinancial, Inc. (the " Company ")
 Registration Statement on Form S-4

 Filed October 8, 2025 (amended
on November 25, 2025)

 File No. 333-290782

 Ladies and Gentlemen:

 Pursuant to Rule 461
under the Securities Act of 1933, as amended (the " Securities Act "), the Company hereby requests that the Securities
and Exchange Commission (the " Commission ") accelerate the effective date of the Registration Statement and declare
the Registration Statement effective under the Securities Act at 5:00 p.m., Eastern Time, on Monday, December 1, 2025, or as soon
thereafter as practicable. Please contact Will Hooper at (404) 881-4697 of Alston & Bird LLP with any questions you may have
concerning this request and to confirm when this request for acceleration has been granted.

 Sincerely,

 SmartFinancial, Inc.

 By: 
 /s/
 William Y. Carroll, Jr

 William ("Billy") Y. Carroll, Jr

 President and Chief Executive Officer

CORRESP
1
filename1.htm

SMARTFINANCIAL,
INC.

May 22, 2023

VIA EDGAR FILING and E-MAIL: mateom@sec.gov

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

Attn: Madeleine Mateo

  Re:
  SmartFinancial, Inc.

  Registration Statement on Form S-3

  File No. 333-271849

  Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461 under
the Securities Act of 1933, as amended (the “Securities Act”), SmartFinancial, Inc. (the “Company”)
hereby requests the Securities and Exchange Commission (the “Commission”) to accelerate the effective date of the above-referenced
registration statement (the “Registration Statement”) and declare the Registration Statement effective under the Securities
Act at 4:00 p.m., Eastern Time, on Friday, May 26, 2023, or as soon thereafter as practicable. The Company also requests the Commission
to specifically confirm such effective date and time to the Company in writing.

    Sincerely,

    SMARTFINANCIAL, INC.

    By:
    /s/ William Y. Carroll, Jr.

    Name:
    William Y. Carroll, Jr.

    Title:

    President and

    Chief Executive Officer

United States securities and exchange commission logo
May 18, 2023
William Y. Carroll, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919
Re:SmartFinancial, Inc.
Registration Statement on Form S-3
Filed May 11, 2023
File No. 333-271849
Dear William Y. Carroll:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Madeleine Mateo at 202-551-3465 with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance
cc:       William W. Hooper, Esq.

CORRESP
1
filename1.htm

SMARTFINANCIAL, INC.

June 28, 2021

VIA EDGAR FILING

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

Attn: Sonia Bednarowski

Re:          SmartFinancial, Inc.

Registration Statement on Form S-4

File No. 333-256870

Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461 under the Securities Act of 1933, as amended (the
 “Securities Act”), SmartFinancial, Inc. (the “Company”) hereby requests the Securities and Exchange
Commission (the “Commission”) to accelerate the effective date of the above-referenced registration statement (the
 “Registration Statement”) and declare the Registration Statement, as amended, effective under the Securities Act at
4:00 p.m., Eastern Time, on June 29, 2020, or as soon thereafter as practicable. The Company also requests the Commission to specifically
confirm such effective date and time to the Company in writing and withdraws the correspondence that the Company filed with the Commission
on June 26, 2021.

    Sincerely,

    SMARTFINANCIAL, INC.

    By:
    /s/ Ronald J. Gorczynski

    Name:
    Ronald J. Gorczynski

    Title:

    Executive Vice President and

    Chief Financial Officer

CORRESP
1
filename1.htm

SMARTFINANCIAL, INC.

June 25, 2021

VIA EDGAR FILING

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

Attn: Sonia Bednarowski

 Re: SmartFinancial, Inc.

Registration Statement on Form S-3

File No. 333-256870

Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461 under
the Securities Act of 1933, as amended (the “Securities Act”), SmartFinancial, Inc. (the “Company”)
hereby requests the Securities and Exchange Commission (the “Commission”) to accelerate the effective date of the
above-referenced registration statement (the “Registration Statement”) and declare the Registration Statement effective
under the Securities Act at 4:00 p.m., Eastern Time, on June 29, 2020, or as soon thereafter as practicable. The Company also requests
the Commission to specifically confirm such effective date and time to the Company in writing.

    Sincerely,

    SMARTFINANCIAL, INC.

    By:
    /s/ Ronald J. Gorczynski

    Name:  Ronald J.
    Gorczynski
Title:    Executive Vice President and

              Chief Financial Officer

United States securities and exchange commission logo
June 11, 2021
William Y. Carroll, Jr.
Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919
Re:SmartFinancial, Inc.
Registration Statement on Form S-4
Filed June 7, 2021
File No. 333-256870
Dear Mr. Carroll:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Sonia Bednarowski at 202-551-3666 or Justin Dobbie, Legal Branch
Chief, at 202-551-3469 with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance

CORRESP
1
filename1.htm

SMARTFINANCIAL, INC.

July 7, 2020

VIA EDGAR FILING

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

Attn: Tonya K. Aldave

    Re:
    SmartFinancial, Inc.

    Registration Statement on Form S-3

    File No. 333-239479

    Request for Acceleration of Effectiveness

Ladies and Gentlemen:

Pursuant to Rule 461
under the Securities Act of 1933, as amended (the “Securities Act”), SmartFinancial, Inc. (the “Company”)
hereby requests the Securities and Exchange Commission (the “Commission”) to accelerate the effective date of
the above-referenced registration statement (the “Registration Statement”) and declare the Registration Statement
effective under the Securities Act at 4:00 p.m., Eastern Time, on July 10, 2020, or as soon thereafter as practicable. The Company
also requests the Commission to specifically confirm such effective date and time to the Company in writing.

    Sincerely,

    SMARTFINANCIAL, INC.

    By:
    /s/ Ronald J. Gorczynski

    Name:
    Ronald J. Gorczynski

    Title:

        Executive Vice President and

        Chief Financial Officer

United States securities and exchange commission logo
July 2, 2020
William Y. Carroll, Jr.
Chief Executive Officer
SmartFinancial Inc.
5401 Kingston Pike, Ste. 600
Knoxville, TN 37919
Re:SmartFinancial Inc.
Registration Statement on Form S-3
Filed June 26, 2020
File No. 333-239479
Dear Mr. Carroll:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Tonya K. Aldave at (202) 551-3601 with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance
cc:       Mark Kanaly, Esq.

CORRESP
1
filename1.htm

SMARTFINANCIAL,
INC.

December 19, 2019

Via EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

 Re: SmartFinancial, Inc. (the “Company”) Registration Statement on Form S-4 (File
No. 333-235409), as amended (the “Registration Statement”)—Acceleration Request

Ladies and Gentlemen:

Pursuant to Rule 461
under the Securities Act of 1933, as amended (the “Securities Act”), the Company hereby requests the Securities
and Exchange Commission (the “Commission”) to accelerate the effective date of the above-referenced Registration
Statement and declare the Registration Statement, as amended, effective under the Securities Act at 4:30 p.m., Eastern Time, on
Monday, December 23, 2019, or as soon thereafter as practicable. The Company also requests the Commission to specifically confirm
such effective date and time to the Company in writing.

    Sincerely,

    SmartFinancial,
    Inc.

    By:
    /s/
    Ronald J. Gorczynski

    Ronald J. Gorczynski

    Executive Vice President
    and Chief Financial Officer

December 11, 2019
William Y. Carrol, Jr.
Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, Tennessee 37919
Re:SmartFinancial, Inc.
Registration Statement on Form S-4
Filed December 6, 2019
File No. 333-235409
Dear Mr. Carrol:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Tonya K. Aldave at (202) 551-3601 with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance
cc:       Kyle G. Healy, Esq.

CORRESP
1
filename1.htm

September 11, 2018

VIA EDGAR

Attn: Eric Envall

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street N.W.

Washington, D.C. 20549

Re: SmartFinancial, Inc. (the “Company”)

Registration Statement on Form S-4

File No. 333-227154

To Whom It May Concern:

Pursuant to Rule 461 promulgated under the Securities Act of 1933, as amended, Smartfinancial, Inc., hereby requests the acceleration of the effective date of its Registration Statement on Form S-4 (File No. 333-227154), as amended (the “Registration Statement”), so that it may become effective at 4:00 p.m. on September 13, 2018, or as soon as practicable thereafter.

The Company hereby authorizes Remington A. Shepard, of Butler Snow LLP, to orally modify or withdraw this request for acceleration.

We request that we be notified of such effectiveness by telephone call to Remington A. Shepard, of Butler Snow LLP, at (615) 651-6786.

Sincerely,

SmartFinancial, Inc.

/s C. Bryan Johnson

C. Bryan Johnson

Chief Financial Officer

September 6, 2018
William (Billy) Y. Carroll,, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919
Re:SmartFinancial, Inc.
Registration Statement on Form S-4
Filed August 31, 2018
File No. 333-227154
Dear Mr. Carroll,:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Eric Envall at (202) 551-3234 with any questions.
Sincerely,
Division of Corporation Finance
Office of Financial Services

CORRESP
1
filename1.htm

5401 Kingston Pike, Suite 600

Knoxville, TN 37919

March 13, 2018

VIA EDGAR AND ELECTRONIC MAIL

United States Securities and Exchange Commission

Division of Corporation Finance

100 F. Street, N.E.

Washington, D.C. 20549

Re:

SmartFinancial, Inc.

Registration Statement on Form S-4

Filed February 28, 2018

Amended March 12, 2018

File No. 333-223316

Ladies and Gentlemen:

In accordance with Rule 461 under the Securities Act of 1933, as amended, SmartFinancial, Inc. (the “Company”) respectfully requests that the effective date for the registration statement referred to above be accelerated so that it will be declared effective at 4:00 p.m., Eastern Time, on March 14, 2018, or as soon thereafter as is practicable.

Very truly yours,

SmartFinancial, Inc.

/s/  William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

Mail Stop 4720
March 6 , 2018

William (Billy) Y. Carroll, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike , Suite 600
Knoxville, TN  37919

Re:  SmartFinancial, Inc .
Registration Statement on Form S -4
Filed  February  28, 2018
File No. 333-223316

Dear M r. Carroll :

This is to advise you that we have not reviewed and will not review your registration
statement .

Please refer to Rule s 460 and  461 regarding requests for  acceleration .  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

You may contact  Jessica Livingston , Staff Attorney,  at 202-551-3448  with any questions.

Sincerely,

 /s/ Era Anagnosti

Era Anagnosti
Acting Assistant Director
Office of Financial Servi ces

CORRESP
1
filename1.htm

5401
Kingston Pike, Suite 600

Knoxville,
TN 37919

July
21, 2017

VIA
EDGAR AND ELECTRONIC MAIL

United
States Securities and Exchange Commission

Division
of Corporation Finance

100
F. Street, N.E.

Washington,
D.C. 20549

Re:

SmartFinancial,
Inc.

Registration
Statement on Form S-4

Filed
July 5, 2017

Amended
July 20, 2017

File
No. 333-219159

Ladies
and Gentlemen:

In
accordance with Rule 461 under the Securities Act of 1933, as amended, SmartFinancial, Inc. (the “Company”) respectfully
requests that the effective date for the registration statement referred to above be accelerated so that it will be declared effective
at 4:00 p.m. on July 24, 2017, or as soon thereafter as is practicable.

The
Company hereby acknowledges that:

1.

should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose
the Commission from taking any action with respect to the filing;

2.

the
action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does
not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing;
and

3.

the Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

    Very
truly yours,

    SmartFinancial,
Inc.

    /s/ William Y. Carroll, Jr.

    William
Y. Carroll, Jr.

    President and Chief Executive Officer

Mail Stop 4720
July 12 , 2017

William Y. Carroll, Jr.
President and Chief Executive Officer
5401 Kingston Pike, Suite 600
Knoxville, T N 37919

Re:  SmartFinancial, Inc.
 Registration Statement on Form S -4
Filed  July 6 , 2017
File No. 333-219159

Dear M r. Carroll :

This is to advise you that we have not reviewed and will not review your registration
statement s.

Please refer to Rule s 460 and  461 regarding requests for  acceleration .  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

You may contact  Jessica Livingston , Staff Attorney,  at 202-551-3448  with any questions.

Sincerely,

 /s/ Era Anagnosti

Era Anagnosti
Legal Branch Chief
Office of Financial Servi ces

cc:   Beth Sims , Esq.

CORRESP
1
filename1.htm

		Document

5401 Kingston Pike, Suite 600

Knoxville, TN 37919

January 5, 2017

VIA EDGAR AND ELECTRONIC MAIL

United States Securities and Exchange Commission

Division of Corporation Finance

100 F. Street, N.E.

Washington, D.C. 20549

Re:    SmartFinancial, Inc.

Registration Statement on Form S-3

Filed November 25, 2016

Amended December 22, 2016

File No. 333-214802

Ladies and Gentlemen:

In accordance with Rule 461 under the Securities Act of 1933, as amended, SmartFinancial, Inc. (the “Company”) respectfully requests that the effective date for the registration statement referred to above be accelerated so that it will be declared effective at 4:00 p.m. on January 9, 2017, or as soon thereafter as is practicable. There has been no material adverse impact on the results of operations or financial condition of the Company or SmartBank since December 22, 2016.

The Company hereby acknowledges that:

1.

 should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;

2.

 the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and

3.

 the Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Very truly yours,

SmartFinancial, Inc.

/s/  William Y. Carroll, Jr.

William Y. Carroll, Jr.

President and Chief Executive Officer

Mail Stop 4720
December  5, 2016

William (Billy) Y. Carroll, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919

Re: SmartFinancial, Inc.
  Registration Statement on Form S-3
Filed  November  25, 2016
  File No.  333-214802

Dear Mr. Carroll :

This is to advise you that we have not  reviewed and will not review your registration
statement .

Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.

Please  contact William H. Dorton, Staff Attorney,  at (202) 551 -3107  with any questions.

Sincerely,

/s/ Era Anagnosti

Era Anagnosti
Legal Branch Chief
Office of Financial Services

CORRESP
1
filename1.htm

5401 Kingston Pike, Suite 600

Knoxville, TN 37919

January 11, 2016

VIA EDGAR AND FACSIMILE

United States Securities and Exchange Commission

Division of Corporation Finance

100 F. Street, N.E.

Washington, D.C. 20549

 Re: SmartFinancial, Inc.

Registration Statement on Form
S-3

Filed December 22, 2015

File No. 333-208700

Ladies and Gentlemen:

In accordance with Rule 461 under the Securities
Act of 1933, as amended, the undersigned respectfully requests that the effective date for the registration statement referred
to above be accelerated so that it will be declared effective at 4:00 p.m. on January 12, 2016, or as soon thereafter as is practicable.

The Company hereby acknowledges that:

 1. should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose
the Commission from taking any action with respect to the filing;

 2. the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does
not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and

 3. the Company may not assert this action as a defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Very truly yours,

SmartFinancial, Inc.

/s/ Billy Y. Carroll, Jr.

Billy Y. Carroll, Jr.

President and Chief Executive
Officer

Mailstop 4720
December 28 , 2015

Via E -mail
Billy Y. Carroll, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, TN 37919

Re: SmartFinancial, Inc.
  Registration Statement on Form S-3
Filed  December 22 , 2015
  File No.  333-208700

Dear Mr. Carroll :

This is to advise you that we have not  reviewed and will not review your registration
statement .

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Act of 193 3 and
all applicable Securities  Act rules require.   Since the company and its management are  in
possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

In the event you request acceleration of the effective date of the pending regist ration
statement , please provide  a written statement from the company acknowledging that:

 should the Commission or the staff, acting pursuant to delegated authority, declare the
filing effective, it does not foreclose the Commission from taking any action wit h respect
to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective, does not relieve the company from its full responsibility for
the adequacy and accuracy of the disclosure in the filing; and

 the company  may not assert staff comments and the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Billy Y. Carroll, Jr.
SmartFinancial , Inc.
December 28 , 2015
Page 2

 Please refer to Rules 460 and 461 regarding requests for  acceleration .  We will consider a
written request for acceleration of the effective date of the registration statement as confirmation
of the fact that those requesting acceleration are aware of their respective responsibilities under
the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed
public offering of the registered securities .

Please  contact Eric Envall , Staff Attorney,  at (202) 551 -3234  with any questions.

Sincerely,

 /s/ Era Anagnosti

 Era Anagnosti
Legal Branch Chief
Office of Financial Services

cc: Beth Sims , Esq.

November 9, 2011
 Via Email

Gary W. Petty, Jr. Senior Vice President and Chief Financial Officer Cornerstone Bancshares, Inc. 835 Georgia Avenue Chattanooga, TN  37402
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. Petty:
We have completed our review of your f ilings.  We remind you that our comments or
changes to disclosure in res ponse to our comments do not fore close the Commission from taking
any action with respect to the company or the filings and the company may not assert staff
comments as a defense in any proceeding ini tiated by the Commission or any person under the
federal securities laws of the United States.  We urge all pers ons who are responsible for the
accuracy and adequacy of the disclosure in the fi lings to be certain that the filings include the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,
  /s/ Matt S. McNair
Matt S. McNair  Attorney-Adviser

CORRESP
1
filename1.htm

    Unassociated Document

November 9, 2011

Mr. Matt S. McNair

Attorney-Adviser

U.S. Securities and Exchange Commission

Washington, DC  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:

This letter will respond to your comments made in your telephone conversation with W. Scott McGinness, Jr. on November 8, 2011, and supplements our letter to you dated September 9, 2011.

1. This will confirm that in all future filings we will provide the information required by Item 401(e) of Regulation S-K.

2. This will confirm that our Chief Financial Officer is, and will be, a participant in the evaluation of the effectiveness of our disclosure controls and procedures for purposes of Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.

Should you have any questions or comments concerning this letter, please do not hesitate to contact W. Scott McGinness, Jr. or Frank M. Williams, Cornerstone’s counsel, at (423) 785-8284 or (423) 785-8206, respectively.

Sincerely,

Cornerstone Bancshares, Inc.

By:

/s/ Nathaniel F. Hughes

Nathaniel F. Hughes, President and Principal Executive Officer

Cornerstone Bancshares, Inc.

By:

/s/ Gary W. Petty, Jr.

Gary W. Petty, Jr., Senior Vice President and Principal Financial Officer

CORRESP
1
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

CORRESP
1
filename1.htm

    Unassociated Document

Suite 1000 Volunteer Building

832 Georgia Avenue

Chattanooga, Tennessee  37402-2289

(423) 756-6600

Fax (423) 785-8480

Frank M. Williams

Direct Dial  (423) 785-8206

Direct Fax   (423) 785-8426

fwilliams@millermartin.com

August 15, 2011

VIA EDGAR CORRESPONDENCE

Mr. David Lin

Division of Corporate Finance

Securities and Exchange Commission

100 F Street NE

Washington, DC 20549

Re:

Cornerstone Bancshares, Inc.

Form 10-K for Fiscal Year Ended December 31, 2010

Filed March 31, 2011

Form 10-Q for Fiscal Year ended March 31, 2011

Filed May 16, 2011

File No. 000-30497

Dear Mr. Lin:

We represent Cornerstone Bancshares, Inc. (“Cornerstone”) and will assist them in responding to the comment letter dated August 10, 2011 from Matt S. McNair, Attorney-Adviser.  The purpose of this letter is to confirm that Cornerstone will respond to the comment letter on or before September 9, 2011, based on your conversation with Scott McGinness of our law firm.

Please call me at (423) 785-8206 or Scott McGinness at (423) 785-8284 if your have any questions or would like to discuss anything else related to this matter.

Very truly yours,

Frank M. Williams

FMW/pym

W. Scott McGinness, Jr., Esq.

August 10, 2011
 Via Email

Gary W. Petty, Jr. Senior Vice President and Chief Financial Officer Cornerstone Bancshares, Inc. 835 Georgia Avenue Chattanooga, TN  37402
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. Petty:
 We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  Where we have requested changes in  future filings, please include a draft of your
proposed disclosures that clearly identifies new or revised disclosu res.  If you do not believe our
comments apply to your facts and circumstances or  do not believe an amendment is appropriate,
please tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, including the draf t of your proposed disclosures, we may have
additional comments.

Form 10-K for Fiscal Year Ended December 31, 2010

 General

 1. Please file the Item 5.07 Form 8-K identif ying the voting results of your 2011 annual
meeting for the election of directors.
2. Please revise future filings to discuss in greater detail the formal agreements with your
financial regulators.  In particular, provi de a summary of all provisions, current
compliance with each provision, management’s view of the material impact on future

Gary W. Petty, Jr. Cornerstone Bancshares, Inc. August 10, 2011 Page 2

 operations relating to the actions taken in re sponse to the formal agreements and the
potential consequences if there is a fa ilure to comply with the agreements.
            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 appr oval 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 materi al effect the FRBA’s requirements have had
on your operations.
 Item 7. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
 General

 4. Please expand your future filings to presen t a discussion of the company’s critical
accounting estimates.

5. Please expand your future filings to address the following:

 Provide the disclosure required by Item III(B ) of Guide III with regard to the amount
of loans due after one year that have predet ermined interest rates and have floating or
adjustable interest rates;

 Provide the disclosure required by Item  III(C)(1) of Guide III with regard to
nonaccrual, past due and restru ctured loans for 5 years;

 Provide the disclosure required by Item V(D) of Guide III with regard to the maturity
of certificates of deposit in amounts of $100,000 or more; and

 Disclose the information required by Item VII(1) weighted average interest rate
thereon and (2) the maximum amount of borrowings outstanding at any month-end
during each reported period of Guide III with regard to short-term borrowings.

Gary W. Petty, Jr. Cornerstone Bancshares, Inc. August 10, 2011 Page 3

 Item 8. Financial Statements and Supplementary Data

 Notes to the Consolidated Financial Statements

 Note 5 – Loans and Allowance for Loan Losses, pages 60-64

 6. We note that you have presented some of  the disclosures required by ASU 2010-20
outside the financial statements particul arly pursuant to ASC 310-10-50-11B(a)(3) and
(d).  Please expand future filings to include  the disclosures in th e body of the financial
statements or the notes to the financial statements.
7. Please tell us and expand future filings to provide by portfolio segment a description of
the company’s accounting policy and methodolo gy used to estimate the allowance for
credit losses pursuant to ASC 310-10-50-11B(a) and a desc ription of the policy for
charging off uncollectable financing receiv ables pursuant to ASC 310-10-50-11B(b).

8. Please expand your future filings to provide, as of the date of each statement of financial
position presented, the recorded investment in impaired loans by class of financing
receivable for the information pursuan t to ASC 310-10-50-15(a)(3) and (b).

9. Please expand your future filings to  revi se the disclosure pursuant to ASC 310-10-50-
29(b) to present the recorded investment in financing receivables by credit quality
indicator and for each credit qua lity indicator, the date or range of dates in which the
information was updated for that credit quality indicator pursuant to ASC 310-10-50-29(c).
Item 10. Directors, Executive O fficers and Corporate Governance

 10. Please tell us why you have not provided th e information required by Item 401(b) of
Regulation S-K, and related disclosures.
 Exhibits

 General

 11. Please amend your Form 10-K to file as exhib its the consent order issued by the Federal
Deposit Insurance Corporation on April 2, 2010 and the written agreement entered into
with the Tennessee Department of Financial Institutions on April 8, 2010 (unless a public
filing of the latter agreement is prohibited, in which case please advise ).  We note that the
written agreement with the Tennessee Department  of Financial Institutions was not filed
as an exhibit to the Form 8-K filed April 14, 2010 or any subsequent filings.  Please
advise.

Gary W. Petty, Jr. Cornerstone Bancshares, Inc. August 10, 2011 Page 4

 Exhibit 32

 12. We note that the certifications pursuant to Section 906 of the Sarbanes-Oxley Act are not
dated.  Please amend the Form 10-K and include dated certifications.  Confirm that future
certifications will be dated.
 Form 10-Q for Fiscal Quarter Ended March 31, 2011

 Item 4. Controls and Procedures

 13. This disclosure appears to reflect the conc lusion of your principal executive officer.
Please confirm, if accurate, that this disclo sure also reflects the conclusion of your
principal financial officer.  Revise future filings accordingly.  Refer to Item 307 of
Regulation S-K.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provi de a written statement from the company
acknowledging that:
 the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

You may contact Chris Harley  at (202) 551-3695 or Hugh West at (202) 551-3872 if you
have questions regarding comments on the financ ial statements and related matters.  Please
contact David Lin at (202) 551-3552 or me at (202) 551-3583 with any other questions.

Sincerely,
   /s/ Matt S. McNair
Matt S. McNair  Attorney-Adviser

CORRESP
1
filename1.htm

    Unassociated Document

      Cornerstone
Bancshares, Inc.

      835
Georgia Avenue

      Chattanooga,
Tennessee 37402

      Phone:
(423) 385-3000

      June 22,
2010

      VIA
EDGAR TRANSMISSION

      Division
of Corporation Finance

      United
States Securities and Exchange Commission

      100 F
Street, N.E.

      Washington,
D.C.  20549

                Re:

                Cornerstone
      Bancshares, Inc.

      Registration Statement on Form
S-1

      Filed on May 7, 2010 and Amended on
June 17, 2010

      File
No.  333-166625

      Ladies and Gentlemen:

      Cornerstone Bancshares, Inc. (the “Company”) hereby requests that
the effective date of the above-referenced Registration Statement on Form S-1
under the Securities Act of 1933, as amended (the “Registration Statement”), be
accelerated so that it will become effective on June 23, 2010, or as soon
thereafter as practicable.

      The
Company acknowledges that:

                  ·

                  should
      the Commission or its staff, acting pursuant to delegated authority,
      declare the Registration Statement effective, it does not foreclose the
      Commission from taking any action with respect to the Registration
      Statement;

                  ·

                  the
      action of the Commission or its staff, acting pursuant to delegated
      authority, in declaring the Registration Statement effective, does not
      relieve the Company from its full responsibility for the adequacy and
      accuracy of the disclosure in the Registration Statement;
    and

                  ·

                  the
      Company may not assert the declaration of effectiveness as a defense in
      any proceeding initiated by the Commission or any person under the federal
      securities laws of the United
States.

      Thank you
for your assistance.

                  Sincerely,

                  CORNERSTONE
      BANCSHARES, INC.

                  /s/
      Nathaniel F. Hughes

                  Nathaniel
      F. Hughes

                  President
      and Chief Executive Officer

CORRESP
1
filename1.htm

    Unassociated Document

    Miller
& Martin PLLC

    832
Georgia Avenue

    Chattanooga,
Tennessee 37402-2289

    Phone:
(423) 756-6600

    Facsimile:
(423) 785-8480

    June 17,
2010

    VIA EDGAR
TRANSMISSION

    Mark Webb

    Legal Branch Chief

    United States Securities and Exchange
Commission

    Division of Corporation
Finance

    100 F Street, N.E.

    Washington,
D.C.  20549

    Re:         Cornerstone Bancshares, Inc.

    Registration Statement on Form
S-1

    Filed May 7, 2010

    File
No.  333-166625

    Dear Mr. Webb:

    Cornerstone Bancshares, Inc. (the “Company,” “we,” “our” or “us”)
has received your letter dated June 3, 2010 containing comments on the Company’s
above referenced Registration Statement on Form S-1 (the “Form S-1”), filed with
the Securities and Exchange Commission (the “Commission”) on May 7, 2010. On
behalf of the Company, we have set forth below the responses of the Company to
each of the comments set forth in your letter. The Company has today filed
Amendment No. 1 to the Form S-1 with the Commission (the
“Amendment”).

    For
convenience of reference, we have set forth your comments in bold below, with
the Company’s response following each comment. Capitalized terms used but not defined
herein have the meaning ascribed to such terms in the
Amendment.

    Registration Statement on
Form S-1

    Fee
Table

              1.

              Please revise the fee table to
      register the number of shares of common stock issuable upon conversion of
      the preferred stock. If you are relying on Rule 416 with respect to stock
      splits, stock dividends, or similar transactions, so indicate in a
      footnote to the fee table.

    Response:

    As reflected in the Amendment, we have
revised the fee table to clarify that we are registering 3,000,000 shares of
common stock issuable upon conversion of the Series A Preferred Stock and, in
accordance with Rule 416, such indeterminable additional shares as may be issued
to prevent dilution resulting from stock splits, stock dividends, and similar
transactions.

      June 17,
2010

      Page
2

    Risk
Factors, page 10

              2.

              We think the disclosure in a
      number of your risk factors would be improved if it was quantified where
      quantifiable factors exist and/or examples were provided. Please revise.
      We also note that certain of your risk factors should be
      updated.

    Response:

    As reflected in the Amendment, we have
revised a number of the risk factors to provide quantitative data where
quantifiable factors exist, including with respect to the amount and percentage
of our residential construction and land development loans, the amount of these
loans that have been classified as substandard or doubtful, the balance of our
allowance for loan losses, the balance of our foreclosed properties and recent
changes to the same, and the aggregate outstanding balance of our holding
company loans.

    In addition, we have updated and
clarified several risk factors, as well as related disclosure elsewhere in the
Form S-1, where we believed it to be appropriate, including to discuss our
timely compliance with the Action Plans to date, our establishment of a loan
review committee to identify and categorize problem credits, our most recent
provision for loan losses, the impact upon us of recent adverse economic
conditions in our local markets, and recent financial regulatory reform
legislation.

    Description
of the Series A Preferred Stock, page 39

              3.

              Please revise the introductory
      paragraph to indicate that all material features of the preferred stock
      are summarized in this section. Please confirm that all disclosure
      required by Item 2.02 of Regulation S-K is included. Also, please expand
      the “Ranking” subsection to address your liabilities, including deposits,
      and to indicate what would happen to the preferred stock if Cornerstone
      Community Bank went into
receivership.

    Response:

    As reflected in the Amendment, we have
revised the introductory paragraph of the section entitled “Description of the
Series A Preferred Stock” to indicate that all material features of the Series A
Preferred Stock are summarized in that section.  As requested, we
hereby confirm that all disclosure required by Item 2.02 of Regulation S-K is
included in the Amendment.  In addition, we have expanded the
“Ranking” subsection to include the requested disclosure.

      June 17,
2010

      Page
3

    *           *           *           *

    If you have any questions or require
additional information with respect to the foregoing responses, please do not
hesitate to contact me at (423) 785-8284.

    Very
truly yours,

    /s/ W.
Scott McGinness, Jr.

    W. Scott
McGinness, Jr.

    cc:          Mr.
Michael Seaman (via facsimile: (703) 813-6983)

    Mr. Nathaniel F. Hughes (via
email)

DIVISION OF
CORPORATION FINANCE   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

June 3, 2010

 Nathaniel F. Hughes President and Chief Executive Officer Cornerstone Bancshares, Inc. 835 Georgia Avenue Chattanooga, TN  37402
Re: Cornerstone Bancshares, Inc.  Registration Statement on Form S-1
Filed May 7, 2010
  File No. 333-166625

Dear Mr. Hughes:

We have limited our review of your filing to those issues we have addressed in
our comments.  Where indicated, we think you should revise your document in response
to these comments.  If you disagree, we w ill consider your explanation as to why our
comment is inapplicable or a revision is unneces sary.  Please be as detailed as necessary
in your explanation.  In some of our comme nts, we may ask you to provide us with
information so we may better understand your  disclosure.  After reviewing this
information, we may raise additional comments.   Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.
 Registration Statement on Form S-1

Fee Table

1. Please revise the fee table to register  the number of shares of common stock
issuable upon conversion of the preferre d stock.  If you are relying on Rule 416
with respect to stock splits, stock dividends , or similar transactions, so indicate in
a footnote to the fee table.

Nathaniel F. Hughes
Cornerstone Bancshares, Inc.
June 3, 2010 Page 2  Risk Factors, page 10

 2. We think the disclosure in a number of your risk factors would be improved if it
was quantified where quantifiable factors ex ist and/or examples were provided.
Please revise.  We also note that certain of your risk factors should be updated.

Description of the Series A Preferred Stock, page 39

3. Please revise the introductory paragraph to indicate that all material features of
the preferred stock are summarized in this section.  Please confirm that all
disclosure required by Item 2.02 of Regulat ion S-K is included.  Also, please
expand the “Ranking” subsection to addr ess your liabilities, including deposits,
and to indicate what would happen to the preferred stock if Cornerstone Community Bank went into receivership.
 Closing Comments

As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we may have additional
comments after reviewing your amendment and responses to our comments.

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Act of 1933 and that they have  provided all information investors require
for an informed investment decision.  Since the company and its management are in possession of all facts relating to a company’ s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the even t the company requests acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the time of such request, acknowledging that:

• should the Commission or the staff, acting pursuant to delegated authority,
declare the filing effective, it does no t foreclose the Commission from taking
any action with respect to the filing;

• the action of the Commission or the st aff, acting pursuant to delegated
authority, in declaring the filing effective, does not relieve the company from
its full responsibility for the adequacy and accuracy of the disclosure in the
filing; and

Nathaniel F. Hughes
Cornerstone Bancshares, Inc. June 3, 2010 Page 3
• the company may not assert staff comments and the declaration of
effectiveness as a defense in any pr oceeding initiated by the Commission or
any person under the federal securities laws of the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
 We will consider a written request for acceleration of the effective date of the
registration statement as conf irmation of the fact that t hose requesting acceleration are
aware of their respective re sponsibilities under the S ecurities Act of 1933 and the
Securities Exchange Act of 1934 as they rela te to the proposed public offering of the
securities specified in the above registration statement.  We will act  on the request and,
pursuant to delegated authority, grant acceleration of the effective date.
 We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please allow ad equate time after the filing of any amendment
for further review before submitting a request for acceleration.  Please provide this request at least two business days in a dvance of the requested effective date.

Please contact Michael Seaman at (202)  551-3366 or me at (202) 551-3698 with
any questions.
Sincerely,

Mark Webb Legal Branch Chief