Item 1.02 Termination of a Material Definitive Agreement.

On August 17, 2012, the Federal Deposit Insurance Corporation ("FDIC") issued written confirmation to Cornerstone Community Bank's ("Bank") Board of Directors that the Consent Order entered into by the Bank with the FDIC on April 2, 2010, had been terminated. Also on August 17, 2012, the Tennessee Department of Financial Institutions issued written confirmation to the Bank's Board of Directors that the Written Agreement executed with the Bank on April 5, 2010, had been terminated.

Some of the governance and lending procedures established by the Consent Order and Written Agreement remain in place, including the requirement for approval by the Regional Director of the FDIC and the Commissioner of the Tennessee Department of Financial Institutions of any dividends declared or paid by the Bank to its parent, Cornerstone Bancshares, Inc.