SOURCE: Centrue Financial Corporation

August 09, 2011 16:15 ET

Centrue Financial Corporation Announces 2011 Second Quarter Results

ST. LOUIS, MO--(Marketwire - Aug 9, 2011) - Centrue Financial Corporation (OTCQB: TRUE)

Second Quarter 2011 Highlights

  • Second quarter of 2011 net loss was $2.4 million, compared to a $3.5 million net loss for the first quarter of 2011 and a $3.9 million net loss in the second quarter of 2010.
  • The second quarter 2011 net interest margin equaled 3.13%, representing increases of 4 basis points from 3.09% recorded in the first quarter of 2011 and 34 basis points from 2.79% reported the second quarter of 2010.
  • Nonperforming loans declined $11.8 million, or 18.5%, from first quarter 2011 and $41.3 million, or 44.3%, from June 30, 2010.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE), parent company of Centrue Bank, reported a second quarter net loss of $2.4 million, or $0.48 per common diluted share, compared to a net loss of $3.5 million, or $0.65 per common diluted share in the first quarter of 2011 and a net loss of $3.9 million, or $0.73 per common diluted share for the second quarter in 2010. For the first half of 2011, the Company reported a net loss of $5.9 million, or $1.14 per common diluted share, as compared to a net loss of $10.2 million, or $1.84 per common diluted share, for the same period in 2010.

"Our results for the period continue the positive trends we saw in the first quarter as our loan provision expense and operating loss decreased," remarked President & CEO Thomas A. Daiber. "We still have more work to do on improving asset quality but we were able to make meaningful progress in reducing our problem loans and assets and are now directing more of our resources to expanding existing customer relationships as well as developing new business. The strengthening of our net interest margin along with continued expense control also contributed to an improvement in this quarter's results."

Securities

Total securities equaled $230.3 million at June 30, 2011, representing a decrease of $14.6 million, or 6.0%, from March 31, 2011 and an increase of $0.4 million, or 0.2%, from year-end 2010. The net increase from year-end 2010 was largely related to enhancing the Company's liquidity position through reinvesting dollars from the loan portfolio into security instruments with shorter durations. During the second quarter of 2011, the Company evaluated its security portfolio and recorded a $0.1 million non-cash other-than-temporary impairment charge related to one CDO.

Loans

Total loans equaled $660.9 million, representing decreases of $49.6 million, or 7.0%, from March 31, 2011 and $61.0 million, or 8.5%, from year-end 2010. The net decrease from year-end 2010 was related to a combination of normal attrition, pay-downs, loan charge-offs, transfers to OREO and strategic initiatives to reduce balance sheet risk. Due to economic conditions, we have also experienced a decrease in loan demand as many borrowers continue to reduce their debt.

Funding and Liquidity

Total deposits equaled $866.0 million, representing decreases of $56.5 million, or 6.1%, from March 31, 2011 and $65.1 million, or 7.0%, from year-end 2010. The net decrease from year-end 2010 was largely related to strategic initiatives to reduce higher costing time deposits and collateralized local public agency deposits.

Due to continued uncertainty in the financial markets, liquidity strategies are conservatively postured in an effort to mitigate adverse pressure on liquidity levels. The Bank's overall liquidity position remained relatively unchanged during the second quarter of 2011 largely due to a reduction in the loan portfolio, net of gross charge-offs and transfers to OREO.

Credit Quality

The key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 3.69% at June 30, 2011, compared to 4.37% at December 31, 2010 and 5.35% at June 30, 2010. Management evaluates the sufficiency of the allowance for loan losses based on the combined total of specific allocations, historical loss and qualitative components and believes that the allowance for loan losses represented probable incurred credit losses inherent in the loan portfolio at June 30, 2011.
  • The provision for loan losses for the second quarter of 2011 was $3.3 million, a decrease from $4.3 million recorded in the first quarter of 2011 and $7.6 million recorded in the second quarter of 2010. The second quarter of 2011 provision level was driven by:
    • sustained level of nonperforming loans and new credits that migrated to nonperforming status that have required current specific allocation estimates;
    • elevated charge-offs of previously accrued specific allocations that impact historical loss levels;
    • elevated past due loans;
    • weakening guarantor positions due to adverse economic conditions;
    • continued deteriorating collateral values, reflecting the impact of the adverse economic climate on the Company's borrowers.
  • Net loan charge-offs for the second quarter of 2011 were $8.0 million, or 1.16% of average loans, compared with $6.7 million, or 0.91% of average loans, for the first quarter of 2011 and $7.0 million, or 0.86% of average loans, for the second quarter of 2010. Loan charge-offs during the second quarter of 2011 were largely influenced by the credit performance of the Company's land development, construction and commercial real estate portfolio. These charge-offs reflect management's continuing efforts to align the carrying value of these assets with the value of underlying collateral based upon more aggressive disposition strategies and recognizing falling property values. Because these loans are collateralized by real estate, losses occur more frequently when property values are declining and borrowers are losing equity in the underlying collateral. Management believes we are recognizing losses in our portfolio through provisions and charge-offs as credit developments warrant.
  • Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $51.9 million at June 30, 2011, from $63.7 million at March 31, 2011 and $70.0 million at December 31, 2010. The $11.8 million decrease from the first quarter of 2011 to the second quarter of 2011 was mainly due to the charge-off of nonaccrual loans and the transfer of the property securing the credits into OREO. The $51.9 million recorded at June 30, 2011 included $45.5 million in nonaccrual loans and $6.4 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 7.86% at June 30, 2011, compared to 8.97% at March 31, 2011 and 9.70% at December 31, 2010.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 46.92% at June 30, 2011, compared to 45.64% at March 31, 2011 and 45.02% at December 31, 2010.
  • Other real estate owned ("OREO") increased to $35.6 million at June 30, 2011, from $28.6 million at March 31, 2011 and $25.6 million at December 31, 2010. In the second quarter of 2011, management converted collateral securing problem loans to properties ready for disposition in the net amount of $10.5 million. Second quarter additions were offset by $2.4 million in dispositions and $1.1 million in additional valuation adjustments, reflective of existing market conditions and more aggressive disposition strategies.
  • Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $87.5 million at June 30, 2011, from $92.3 million at March 31, 2011 and $95.6 million at December 31, 2010. The ratio of nonperforming assets to total assets was 8.56% at June 30, 2011, 8.60% at March 31, 2011 and 8.65% at December 31, 2010.

Net Interest Margin

The net interest margin was 3.13% for the second quarter of 2011, representing increases of 4 basis points from 3.09% recorded in the first quarter of 2011 and 34 basis points from 2.79% reported in the second quarter of 2010. The increase in the second quarter 2011 net interest margin, as compared to the same period in 2010, was primarily due to increased utilization of interest rate floors on a majority of variable rate loans and a reduction in the Company's cost of interest-bearing liabilities due to maturity of higher rate time deposits and the decline in market interest rates. These factors were partially offset by the cost of retaining surplus liquidity, average loan volume decline, the cost of carrying higher balances of nonaccrual loans and the impact of nonaccrual loan interest reversals.

Noninterest Income and Expense

Noninterest income totaled $2.7 million for the three months ended June 30, 2011, compared to $2.8 million for the same period in 2010. Excluding credit impairment charges on CDO securities and gains related to the sale of OREO and other assets from both periods, noninterest income decreased $0.7 million or 20.0%. This $0.7 million decrease was primarily due to a decrease of $0.6 million in gains on sale of securities.

Total noninterest expense for the second quarter of 2011 and 2010 was $9.6 million. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.8 million, or 8.6%. This $0.8 million decline in expenses was spread over various categories, including salaries and employee benefits, net occupancy costs, furniture and equipment, marketing and amortization expense.

Capital Management
As reflected in the following table, both the Company and unit Centrue Bank were considered "adequately-capitalized" under regulatory defined capital ratios as of June 30, 2011 and December 31, 2010:

Adequately- Capitalized Thresholds
Centrue Financial Centrue Bank
Jun 30, 2011 Dec 31, 2010 Jun 30, 2011 Dec 31, 2010
Carrying amounts ($millions):
Total risk-based capital $ 67.5 $ 76.5 $ 73.0 $ 78.2
Tier 1 risk-based capital $ 44.3 $ 58.0 $ 63.3 $ 67.8
Capital ratios:
Total risk-based capital 8.8 % 9.4 % 9.6 % 9.7 % 8.0 %
Tier 1 risk-based capital 5.8 % 7.1 % 8.4 % 8.4 % 4.0 %
Tier 1 leverage ratio 4.2 % 5.1 % 6.0 % 6.0 % 4.0 %

Total regulatory capital ratios decreased since year-end 2010 as a result of net operating losses for the first six months of 2011.

About the Company

Centrue Financial Corporation is a regional financial services company headquartered in St. Louis, Missouri and devotes special attention to personal service. The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central Illinois down to the metropolitan St. Louis area.

Further information about the Company is available at its website at http://www.centrue.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Accompanying Financial Statements and Tables

Accompanying this press release is the following unaudited financial information:

  • Unaudited Highlights
  • Unaudited Consolidated Balance Sheets
  • Unaudited Consolidated Statements of Income
  • Unaudited Selected Quarterly Consolidated Financial Data
Centrue Financial Corporation
Unaudited Highlights
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Operating Highlights
Net income (loss) $ (2,424 ) $ (3,925 ) $ (5,882 ) $ (10,185 )
Return on average total assets (0.92 )% (1.23 )% (1.10 )% (1.59 )%
Return on average stockholders' equity (25.19 ) (15.10 ) (29.49 ) (19.11 )
Net interest margin 3.13 2.79 3.11 2.83
Efficiency ratio 81.82 84.81 82.42 83.03
Per Share Data
Diluted earnings (loss) per common share $ (0.48 ) $ (0.73 ) $ (1.14 ) $ (1.84 )
Book value per common share $ 0.73 $ 11.77 $ 0.73 $ 11.77
Tangible book value per common share $ (0.23 ) $ 8.01 $ (0.23 ) $ 8.01
Diluted weighted average common shares outstanding 6,048,405 6,043,176 6,048,405 6,043,176
Period end common shares outstanding 6,048,405 6,043,176 6,048,405 6,043,176
Stock Performance Data
Market price:
Quarter-end $ 0.60 $ 2.00 $ 0.60 $ 2.00
High $ 0.78 $ 3.49 $ 1.18 $ 4.18
Low $ 0.25 $ 1.89 $ 0.25 $ 1.89
Period end price to book value 82.19 % 16.99 % 82.19 % 16.99 %
Period end price to tangible book value (260.87 )% 24.97 % (260.87 )% 24.97 %
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands)
June 30, December 31,
2011 2010
ASSETS
Cash and cash equivalents $ 45,863 $ 82,945
Securities available-for-sale 221,127 219,475
Restricted securities 9,190 10,470
Loans 660,882 721,871
Allowance for loan losses (24,358 ) (31,511 )
Net loans 636,524 690,360
Bank-owned life insurance 30,902 30,403
Mortgage servicing rights 2,340 2,425
Premises and equipment, net 24,935 25,687
Other intangible assets, net 5,754 6,293
Other real estate owned 35,618 25,564
Other assets 10,003 11,540
Total assets $ 1,022,256 $ 1,105,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 112,986 $ 118,667
Interest-bearing 753,051 812,438
Total deposits 866,037 931,105
Federal funds purchased and securities sold under agreements to repurchase 16,180 16,188
Federal Home Loan Bank advances 58,059 71,059
Notes payable 10,533 10,623
Series B mandatory redeemable preferred stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 12,998 12,378
Total liabilities 984,695 1,062,241
Stockholders' equity
Series A convertible preferred stock 500 500
Series C cumulative perpetual preferred stock 31,120 30,810
Common stock 7,454 7,454
Surplus 74,780 74,721
Retained earnings (accumulated deficit) (54,047 ) (46,861 )
Accumulated other comprehensive income (loss) (132 ) (1,589 )
59,675 65,035
Treasury stock, at cost (22,114 ) (22,114 )
Total stockholders' equity 37,561 42,921
Total liabilities and stockholders' equity $ 1,022,256 $ 1,105,162
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Interest income
Loans $ 8,836 $ 10,773 $ 18,117 $ 22,021
Securities
Taxable 1,088 1,613 2,085 3,346
Exempt from federal income taxes 177 258 392 536
Federal funds sold and other 37 38 68 65
Total interest income 10,138 12,682 20,662 25,968
Interest expense
Deposits 2,213 4,049 4,700 8,420
Federal funds purchased and securities sold under agreements to repurchase 10 12 21 30
Federal Home Loan Bank advances 355 579 767 1,160
Series B mandatory redeemable preferred stock 4 4 8 8
Subordinated debentures 274 259 544 513
Notes payable 91 92 181 180
Total interest expense 2,947 4,995 6,221 10,311
Net interest income 7,191 7,687 14,441 15,657
Provision for loan losses 3,250 7,550 7,500 16,900
Net interest income (loss) after provision for loan losses 3,941 137 6,941 (1,243 )
Noninterest income
Service charges 1,189 1,299 2,251 2,719
Mortgage banking income 302 167 709 486
Electronic banking services 565 528 1,092 1,012
Bank-owned life insurance 250 257 499 512
Securities gains, net 379 1,012 379 1,014
Total other-than-temporary impairment losses (107 ) (3,921 ) (499 ) (5,762 )
Portion of loss recognized in other comprehensive income (before taxes) - 2,004 - 2,238
Net impairment on securities (107 ) (1,917 ) (499 ) (3,524 )
Gain (loss) on sale of OREO (92 ) 1 (48 ) 10
Gain on sale of other assets - 1,268 63 1,470
Other income 198 191 362 429
2,684 2,806 4,808 4,128
Noninterest expenses
Salaries and employee benefits 3,460 3,701 7,093 7,472
Occupancy, net 704 943 1,424 1,731
Furniture and equipment 421 519 860 1,043
Marketing 67 82 127 189
Supplies and printing 77 98 141 196
Telephone 204 194 408 373
Data processing 375 397 739 779
FDIC insurance 824 853 1,674 1,707
Loan processing and collection costs 511 602 1,102 1,114
OREO valuation adjustment 1,097 330 1,297 1,987
Amortization of intangible assets 263 321 539 660
Other expenses 1,574 1,570 2,973 2,845
9,577 9,610 18,377 20,096
Income (loss) before income taxes (2,952 ) (6,667 ) (6,628 ) (17,211 )
Income tax expense (benefit) (528 ) (2,742 ) (746 ) (7,026 )
Net income (loss) $ (2,424 ) $ (3,925 ) $ (5,882 ) $ (10,185 )
Preferred stock dividends 501 478 995 951
Net income (loss) for common stockholders $ (2,925 ) $ (4,403 ) $ (6,877 ) $ (11,136 )
Basic earnings (loss) per common share $ (0.48 ) $ (0.73 ) $ (1.14 ) $ (1.84 )
Diluted earnings (loss) per common share $ (0.48 ) $ (0.73 ) $ (1.14 ) $ (1.84 )

Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Per Share Data)
Quarters Ended
6/30/11 3/31/11 12/31/10 09/30/10 06/30/10
Statement of Income
Interest income $ 10,138 $ 10,524 $ 11,368 $ 11,508 $ 12,682
Interest expense (2,947 ) (3,274 ) (3,636 ) (4,369 ) (4,995 )
Net interest income 7,191 7,250 7,732 7,139 7,687
Provision for loan losses 3,250 4,250 10,450 7,250 7,550
Net interest income (loss) after provision for loan losses 3,941 3,000 (2,718 ) (111 ) 137
Noninterest income 2,684 2,124 3,263 3,427 2,806
Noninterest expense 9,577 8,800 26,514 9,279 9,610
Income (loss) before income taxes (2,952 ) (3,676 ) (25,969 ) (5,963 ) (6,667 )
Income tax expense (benefit) (528 ) (218 ) 13,246 10,440 (2,742 )
Net income (loss) $ (2,424 ) $ (3,458 ) $ (39,215 ) $ (16,403 ) $ (3,925 )
Net income (loss) for common stockholders $ (2,925 ) $ (3,952 ) $ (39,704 ) $ (16,887 ) $ (4,403 )
Per Share
Basic earnings (loss) per common share $ (0.48 ) $ (0.65 ) $ (6.56 ) $ (2.79 ) $ (0.73 )
Diluted earnings (loss) per common share (0.48 ) (0.65 ) (6.56 ) (2.79 ) (0.73 )
Cash dividends on common stock NM NM NM NM NM
Dividend payout ratio for common stock NM NM NM NM NM
Book value per common share $ 0.73 $ 1.09 $ 1.61 $ 8.97 $ 11.77
Tangible book value per common share (0.23 ) 0.10 0.57 5.26 $ 8.01
Basic weighted average common shares outstanding 6,048,405 6,048,405 6,048,405 6,046,075 6,043,176
Diluted weighted average common shares outstanding 6,048,405 6,048,405 6,048,405 6,046,075 6,043,176
Period-end common shares outstanding 6,048,405 6,048,405 6,048,405 6,048,405 6,043,176
Balance Sheet
Securities $ 230,317 $ 244,923 $ 229,945 $ 282,226 $ 307,846
Loans 660,882 710,529 721,871 764,585 792,289
Allowance for loan losses 24,358 29,089 31,511 43,390 42,378
Assets 1,022,256 1,073,836 1,105,162 1,179,684 1,226,769
Deposits 866,037 922,483 931,105 958,032 993,270
Stockholders' equity 37,561 39,766 42,921 85,048 101,947
Earnings Performance
Return on average total assets (0.92 )% (1.28 )% (13.54 )% (5.36 )% (1.23 )%
Return on average stockholders' equity (25.19 ) (33.49 ) (188.05 ) (64.59 ) (15.10 )
Net interest margin 3.13 3.09 3.07 2.69 2.79
Efficiency ratio (1) 81.82 83.02 75.83 82.62 84.81
Asset Quality
Nonperforming assets to total end of period assets 8.56 % 8.60 % 8.65 % 10.15 % 8.91 %
Nonperforming loans to total end of period loans 7.86 8.97 9.70 12.44 11.76
Net loan charge-offs to total average loans 1.16 0.91 2.98 0.80 0.86
Allowance for loan losses to total end of period loans 3.69 4.09 4.37 5.67 5.35
Allowance for loan losses to nonperforming loans 46.92 45.64 45.02 45.63 45.49
Nonperforming loans $ 51,915 $ 63,731 $ 69,990 $ 95,096 $ 93,158
Nonperforming assets 87,533 92,312 95,554 119,791 109,340
Net loan charge-offs 7,981 6,672 22,329 6,238 7,016
Capital
Total risk-based capital ratio 8.78 % 8.99 % 9.35 % 10.20 % 10.72 %
Tier 1 risk-based capital ratio 5.75 5.92 7.09 7.96 8.51
Tier 1 leverage ratio 4.23 4.17 5.08 5.75 6.01
(1) Calculated as noninterest expense less amortization of intangibles and expenses related to other real estate owned divided by the sum of net interest income before provisions for loan losses and total noninterest income excluding securities gains and losses and gains on sale of assets.
NM Not meaningful.

Contact Information

  • Contact:
    Thomas A. Daiber
    President and
    Chief Executive Officer
    Centrue Financial Corporation
    Email Contact

    Kurt R. Stevenson
    Senior Executive Vice President
    and Chief Financial Officer
    Centrue Financial Corporation
    Email Contact