SMARTFINANCIAL INC. — Director's Dealing 2008

May 28, 2008

SEC Form 3 — Initial Statement of Beneficial Ownership

Issuer: CORNERSTONE BANCSHARES INC (CSBQ)
CIK: 0001038773
Period of Report: 2008-01-01

Reporting Person: Watson Robert B (Executive Vice President)

Holdings (Non-Derivative)

Security	Shares	Ownership
Cornerstone Bancshares, Inc. Common Stock	400	Indirect

Holdings (Derivative)

Security	Exercise Price	Expiration	Underlying	Shares	Ownership
Stock Options	$3.63	2013-03-01	Cornerstone Bancshares, Inc. (8000)		Direct
Stock Options	$5.44	2014-03-01	Cornerstone Bancshares, Inc. (10000)		Direct
Stock Options	$9.23	2015-03-01	Cornerstone Bancshares, Inc. (6000)		Direct
Stock Options	$13.25	2016-03-01	Cornerstone Bancshares, Inc. (8000)		Direct
Stock Options	$15.25	2017-03-01	Cornerstone Bancshares, Inc. (5000)		Direct
Stock Options	$7.99	2018-03-01	Cornerstone Bancshares, Inc. (7000)		Direct

Footnotes

F1: The exercise date is determined by the following vesting schedule: 30% after the 2nd anniversary date, 30% after the 3rd anniversary date and 40% after the 4th anniversary date.