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SMARTFINANCIAL INC. Director's Dealing 2007

Mar 3, 2007

32627_dirs_2007-03-02_315aff4b-54bd-429a-9e46-f63e8cdf1b2f.zip

Director's Dealing

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SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: CORNERSTONE BANCSHARES INC (CSBQ)
CIK: 0001038773
Period of Report: 2007-03-01

Reporting Person: LEE JERRY D (Director, Executive Vice Pres. & SLA)

Derivative Transactions

Date Security Exercise Price Code Shares A/D Expiration Underlying Ownership
2007-03-01 Stock Options $15.24 A 6500 Acquired 2017-03-01 Cornerstone Bancshares, Inc. (6500) Direct

Holdings (Non-Derivative)

Security Shares Ownership
Common Stock 5000 Direct
Common Stock 48000 Indirect
Common Stock 38000 Indirect
Common Stock 2400 Indirect

Holdings (Derivative)

Security Exercise Price Expiration Underlying Shares Ownership
Stock Options $4.39 2015-03-01 Cornerstone Bancshares, Inc. (146400) 146400 Direct
Stock Options $13.25 2016-03-01 Cornerstone Bancshares, Inc. (13000) 13000 Direct

Footnotes

F1: On December 18, 2006 the common stock of Cornerstone Bancshares, Inc. split 2-for-1, resulting in the reporting person's ownership of 2,500 additional shares of common stock.

F2: On December 18, 2006 the common stock of Cornerstone Bancshares, Inc. split 2-for-1, resulting in the reporting person's ownership of 24,000 additional shares of common stock.

F3: On December 18, 2006 the common stock of Cornerstone Bancshares, Inc. split 2-for-1, resulting in the reporting person's ownership of 19,000 additional shares of common stock.

F4: On December 18, 2006 the common stock of Cornerstone Bancshares, Inc. split 2-for-1, resulting in the reporting person's ownershipf of 1,200 additional shares of common stock.

F5: This option was previously reported as covering 73,200 shares at an exercise price of $8.79 per share, but was adjusted to reflect the stock split that occured on December 18, 2006.

F6: The exercise date is determined by a vesting schedule: 30% the second year from grant date, 30% the third year from grant date, 40% the fourth year from grant date.

F7: This option was previously reported as covering 6,500 shares at an exercise price of $26.50 per share, but was adjusted to reflect the stock split that occured on December 18, 2006.