SOURCE: Centrue Financial Corporation

November 10, 2011 16:15 ET

Centrue Financial Corporation Announces 2011 Third Quarter Results

ST. LOUIS, MO--(Marketwire - Nov 10, 2011) - Centrue Financial Corporation (OTCQB: TRUE) (PINKSHEETS: TRUE)

Third Quarter 2011 Highlights

  • Third quarter of 2011 net loss was $4.7 million, compared to a $2.4 million net loss for the second quarter of 2011 and a $16.4 million net loss in the third quarter of 2010.
  • The third quarter 2011 net interest margin equaled 3.14%, representing increases of 1 basis points from 3.13% recorded in the second quarter of 2011 and 45 basis points from 2.69% reported the third quarter of 2010.
  • Nonperforming loans declined $3.9 million, or 7.5%, from second quarter 2011 and $47.1 million, or 49.5%, from September 30, 2010.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE), parent company of Centrue Bank, reported a third quarter net loss of $4.7 million, or $0.87 per common diluted share, compared to a net loss of $2.4 million, or $0.48 per common diluted share in the second quarter of 2011 and a net loss of $16.4 million, or $2.79 per common diluted share for the third quarter in 2010. For the first nine months of 2011, the Company reported a net loss of $10.6 million, or $2.01 per common diluted share, as compared to a net loss of $26.6 million, or $4.64 per common diluted share, for the same period in 2010.

"While we continue to make progress on reducing our problem assets, we recognize that reigniting our revenue stream is key in transitioning back to sustainable profitability," remarked President & CEO Kurt R. Stevenson. "A renewed emphasis on prudently growing top line revenue will be paramount as we continue to focus on developing and strengthening our relationships with customers. While there is no quick fix, an enhanced commitment to relationship banking, coupled with ongoing expense controls, is the quickest and most effective path to meaningful and lasting improvements in our financial results."

Securities

Total securities equaled $245.2 million at September 30, 2011, representing an increase of $14.9 million, or 6.5%, from June 30, 2011 and an increase of $15.3 million, or 6.7%, 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 more marketable security instruments thereby enhancing secondary liquidity. During the third quarter of 2011, the Company evaluated its security portfolio and recorded no other-than-temporary impairment charges.

Loans

Total loans equaled $620.5 million, representing decreases of $40.4 million, or 6.1%, from June 30, 2011 and $101.4 million, or 14.0%, 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 other real estate owned ("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 $862.1 million, representing decreases of $3.9 million, or 0.5%, from June 30, 2011 and $69.0 million, or 7.4%, from year-end 2010. The net decrease from year-end 2010 was largely related to strategic initiatives to reduce higher costing time deposits, brokered 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 third 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 3.76% at September 30, 2011, compared to 4.37% at December 31, 2010 and 5.67% at September 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 September 30, 2011.
  • The provision for loan losses for the third quarter of 2011 was $2.4 million, a decrease from $3.3 million recorded in the second quarter of 2011 and $7.3 million recorded in the third quarter of 2010. The decline in the third quarter of 2011 provision level was driven by:
    • lowering levels of nonperforming loans and less new credits that migrated to nonperforming status;
    • current quarter charge-offs decreased significantly from the prior quarter;
    • declining trend in past due loans;
    • some stabilization of collateral values.
  • Net loan charge-offs for the third quarter of 2011 were $3.4 million, or 0.54% of average loans, compared with $8.0 million, or 1.16% of average loans, for the second quarter of 2011 and $6.2 million, or 0.80% of average loans, for the third quarter of 2010. Loan charge-offs during the third 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 $48.0 million at September 30, 2011, from $51.9 million at June 30, 2011 and $70.0 million at December 31, 2010. The $3.9 million decrease from the second quarter of 2011 to the third 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 $48.0 million recorded at September 30, 2011 included $40.7 million in nonaccrual loans and $7.3 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 7.73% at September 30, 2011, compared to 7.86% at June 30, 2011 and 9.70% at December 31, 2010.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 48.59% at September 30, 2011, compared to 46.92% at June 30, 2011 and 45.02% at December 31, 2010.
  • Other real estate owned ("OREO") decreased to $32.9 million at September 30, 2011, from $35.6 million at June 30, 2011 and $25.6 million at December 31, 2010. In the third quarter of 2011, management converted collateral securing problem loans to properties ready for disposition in the net amount of $4.3 million. Third quarter additions were offset by $2.5 million in dispositions and $4.5 million in additional valuation adjustments, reflective of existing market conditions and more aggressive disposition strategies. Management periodically reviews the carrying value of other real estate owned. Any write-downs of the properties subsequent to acquisition, as well as gains or losses on disposition and income or expense from the operations of other real estate owned, are recognized in operating results in the period they are realized.
  • Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $80.9 million at September 30, 2011, from $87.5 million at June 30, 2011 and $95.6 million at December 31, 2010. The ratio of nonperforming assets to total assets was 8.02% at September 30, 2011, 8.56% at June 30, 2011 and 8.65% at December 31, 2010.

Net Interest Margin

The net interest margin was 3.14% for the third quarter of 2011, representing increases of 1 basis point from 3.13% recorded in the second quarter of 2011 and 45 basis points from 2.69% reported in the third quarter of 2010. The net interest margin for Centrue Bank was 3.31% for the third quarter of 2011, representing increases of 2 basis points from 3.29% recorded in the second quarter of 2011 and 49 basis points from 2.82% reported in the third quarter of 2010. The increase in the third 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 $2.6 million for the three months ended September 30, 2011, compared to $3.4 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 $0.2 million or 7.1%. This $0.2 million decrease was primarily due to a decrease of $0.3 million in mortgage banking income, which included a $0.1 million impairment charge on the mortgage servicing rights asset.

Total noninterest expense totaled $12.4 million for the third quarter of 2011, compared to $9.3 million for the same period in 2010. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $1.0 million, or 11.2%. This $1.0 million decline in expenses was spread over various categories, including salaries and employee benefits, furniture and equipment, marketing, supplies and printing, FDIC insurance, loan processing and collection costs, 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 September 30, 2011 and December 31, 2010, except for the Company's Tier 1 leverage ratio which was 3.7%; 4.0% is the threshold for "adequately-capitalized":

Centrue Financial Centrue Bank
Sep 30, 2011 Dec 31, 2010 Sep 30, 2011 Dec 31, 2010 Adequately-Capitalized Thresholds
Carrying amounts ($millions):
Total risk-based capital $ 62.0 $ 76.5 $ 68.4 $ 78.2
Tier 1 risk-based capital $ 37.5 $ 58.0 $ 59.3 $ 67.8
Capital ratios:
Total risk-based capital 8.5 % 9.4 % 9.5 % 9.7 % 8.0 %
Tier 1 risk-based capital 5.2 % 7.1 % 8.3 % 8.4 % 4.0 %
Tier 1 leverage ratio 3.7 % 5.1 % 5.9 % 6.0 % 4.0 %
Total regulatory capital ratios decreased since year-end 2010 as a result of net operating losses for the first nine 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 Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Operating Highlights
Net income (loss) $ (4,748 ) $ (16,403 ) $ (10,630 ) $ (26,588 )
Return on average total assets (1.85 )% (5.36 )% (1.34 )% (2.81 )%
Return on average stockholders' equity (50.99 ) (64.59 ) (36.33 ) (33.78 )
Net interest margin 3.14 2.69 3.12 2.79
Efficiency ratio 78.00 82.62 80.98 82.89
Per Share Data
Diluted earnings (loss) per common share $ (0.87 ) $ (2.79 ) $ (2.01 ) $ (4.64 )
Book value per common share $ (0.03 ) $ 8.97 $ (0.03 ) $ 8.97
Tangible book value per common share $ (0.94 ) $ 5.26 $ (0.94 ) $ 5.26
Diluted weighted average common shares outstanding 6,048,405 6,046,075 6,048,405 6,044,153
Period end common shares outstanding 6,048,405 6,048,405 6,048,405 6,048,405
Stock Performance Data
Market price:
Quarter-end $ 0.35 $ 1.66 $ 0.35 $ 1.66
High $ 0.60 $ 2.15 $ 1.18 $ 4.18
Low $ 0.22 $ 1.21 $ 0.22 $ 1.21
Period end price to book value NM 18.51 % NM 18.51 %
Period end price to tangible book value NM 31.56 % NM 31.56 %

NM Not meaningful

Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands)
September 30, December 31,
2011 2010
ASSETS
Cash and cash equivalents $ 63,296 $ 82,945
Securities available-for-sale 236,086 219,475
Restricted securities 9,150 10,470
Loans 620,450 721,871
Allowance for loan losses (23,314 ) (31,511 )
Net loans 597,136 690,360
Bank-owned life insurance 31,158 30,403
Mortgage servicing rights 2,151 2,425
Premises and equipment, net 24,526 25,687
Other intangible assets, net 5,504 6,293
Other real estate owned 32,912 25,564
Other assets 7,034 11,540
Total assets $ 1,008,953 $ 1,105,162
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 111,263 $ 118,667
Interest-bearing 750,854 812,438
Total deposits 862,117 931,105
Federal funds purchased and securities sold under agreements to repurchase 21,364 16,188
Federal Home Loan Bank advances 48,058 71,059
Notes payable 10,533 10,623
Series B mandatory redeemable preferred stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 13,032 12,378
Total liabilities 975,992 1,062,241
Stockholders' equity
Series A convertible preferred stock 500 500
Series C cumulative perpetual preferred stock 31,274 30,810
Common stock 7,454 7,454
Surplus 74,776 74,721
Retained earnings (accumulated deficit) (59,456 ) (46,861 )
Accumulated other comprehensive income (loss) 527 (1,589 )
55,075 65,035
Treasury stock, at cost (22,114 ) (22,114 )
Total stockholders' equity 32,961 42,921
Total liabilities and stockholders' equity $ 1,008,953 $ 1,105,162
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Interest income
Loans $ 8,297 $ 9,856 $ 26,414 $ 31,877
Securities
Taxable 1,047 1,377 3,132 4,723
Exempt from federal income taxes 158 247 550 783
Federal funds sold and other 40 28 108 93
Total interest income 9,542 11,508 30,204 37,476
Interest expense
Deposits 1,937 3,416 6,637 11,836
Federal funds purchased and securities sold under agreements to repurchase 11 7 32 37
Federal Home Loan Bank advances 347 573 1,114 1,733
Series B mandatory redeemable preferred stock 4 4 12 12
Subordinated debentures 277 270 821 783
Notes payable 89 99 270 279
Total interest expense 2,665 4,369 8,886 14,680
Net interest income 6,877 7,139 21,318 22,796
Provision for loan losses 2,400 7,250 9,900 24,150
Net interest income (loss) after provision for loan losses 4,477 (111 ) 11,418 (1,354 )
Noninterest income
Service charges 1,232 1,215 3,483 3,934
Mortgage banking income 341 628 1,050 1,114
Electronic banking services 552 516 1,644 1,528
Bank-owned life insurance 256 261 755 773
Securities gains, net - 899 379 1,913
Total other-than-temporary impairment losses - (569 ) (499 ) (4,153 )
Portion of loss recognized in other comprehensive income (before taxes) - 71 - 131
Net impairment on securities - (498 ) (499 ) (4,022 )
Gain (loss) on sale of OREO (12 ) 24 (60 ) 34
Gain (loss) on sale of other assets (16 ) 178 47 1,648
Other income 213 204 575 633
2,566 3,427 7,374 7,555
Noninterest expenses
Salaries and employee benefits 3,505 3,547 10,598 11,019
Occupancy, net 712 647 2,136 2,378
Furniture and equipment 407 642 1,267 1,685
Marketing 56 91 183 280
Supplies and printing 67 106 208 302
Telephone 229 194 637 567
Data processing 381 388 1,120 1,167
FDIC insurance 323 842 1,997 2,549
Loan processing and collection costs 495 675 1,597 1,789
OREO valuation adjustment 4,473 378 5,770 2,365
Amortization of intangible assets 250 307 789 967
Other expenses 1,499 1,462 4,472 4,307
12,397 9,279 30,774 29,375
Income (loss) before income taxes (5,354 ) (5,963 ) (11,982 ) (23,174 )
Income tax expense (benefit) (606 ) 10,440 (1,352 ) 3,414
Net income (loss) $ (4,748 ) $ (16,403 ) $ (10,630 ) $ (26,588 )
Preferred stock dividends 505 484 1,500 1,435
Net income (loss) for common stockholders $ (5,253 ) $ (16,887 ) $ (12,130 ) $ (28,023 )
Basic earnings (loss) per common share $ (0.87 ) $ (2.79 ) $ (2.01 ) $ (4.64 )
Diluted earnings (loss) per common share $ (0.87 ) $ (2.79 ) $ (2.01 ) $ (4.64 )
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Per Share Data)
Quarters Ended
9/30/11 6/30/11 3/31/11 12/31/10 09/30/10
Statement of Income
Interest income $ 9,542 $ 10,138 $ 10,524 $ 11,368 $ 11,508
Interest expense (2,665 ) (2,947 ) (3,274 ) (3,636 ) (4,369 )
Net interest income 6,877 7,191 7,250 7,732 7,139
Provision for loan losses 2,400 3,250 4,250 10,450 7,250
Net interest income (loss) after provision for loan losses 4,477 3,941 3,000 (2,718 ) (111 )
Noninterest income 2,566 2,684 2,124 3,263 3,427
Noninterest expense 12,397 9,577 8,800 26,514 9,279
Income (loss) before income taxes (5,354 ) (2,952 ) (3,676 ) (25,969 ) (5,963 )
Income tax expense (benefit) (606 ) (528 ) (218 ) 13,246 10,440
Net income (loss) $ (4,748 ) $ (2,424 ) $ (3,458 ) $ (39,215 ) $ (16,403 )
Net income (loss) for common stockholders $ (5,253 ) $ (2,925 ) $ (3,952 ) $ (39,704 ) $ (16,887 )
Per Share
Basic earnings (loss) per common share $ (0.87 ) $ (0.48 ) $ (0.65 ) $ (6.56 ) $ (2.79 )
Diluted earnings (loss) per common share (0.87 ) (0.48 ) (0.65 ) (6.56 ) (2.79 )
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 $ (0.03 ) $ 0.73 $ 1.09 $ 1.61 $ 8.97
Tangible book value per common share (0.94 ) (0.23 ) 0.10 0.57 5.26
Basic weighted average common shares outstanding 6,048,405 6,048,405 6,048,405 6,048,405 6,046,075
Diluted weighted average common shares outstanding 6,048,405 6,048,405 6,048,405 6,048,405 6,046,075
Period-end common shares outstanding 6,048,405 6,048,405 6,048,405 6,048,405 6,048,405
Balance Sheet
Securities $ 245,236 $ 230,317 $ 244,923 $ 229,945 $ 282,226
Loans 620,450 660,882 710,529 721,871 764,585
Allowance for loan losses 23,314 24,358 29,089 31,511 43,390
Assets 1,008,953 1,022,256 1,073,836 1,105,162 1,179,684
Deposits 862,117 866,037 922,483 931,105 958,032
Stockholders' equity 32,961 37,561 39,766 42,921 85,048
Earnings Performance
Return on average total assets (1.85 )% (0.92 )% (1.28 )% (13.54 )% (5.36 )%
Return on average stockholders' equity (50.99 ) (25.19 ) (33.49 ) (188.05 ) (64.59 )
Net interest margin 3.14 3.13 3.09 3.07 2.69
Efficiency ratio (1) 78.00 81.82 83.02 75.83 82.62
Asset Quality
Nonperforming assets to total end of period assets 8.02 % 8.56 % 8.60 % 8.65 % 10.15 %
Nonperforming loans to total end of period loans 7.73 7.86 8.97 9.70 12.44
Net loan charge-offs to total average loans 0.54 1.16 0.91 2.98 0.80
Allowance for loan losses to total end of period loans 3.76 3.69 4.09 4.37 5.67
Allowance for loan losses to nonperforming loans 48.59 46.92 45.64 45.02 45.63
Nonperforming loans $ 47,982 $ 51,915 $ 63,731 $ 69,990 $ 95,096
Nonperforming assets 80,894 87,533 92,312 95,554 119,791
Net loan charge-offs 3,445 7,981 6,672 22,329 6,238
Capital
Total risk-based capital ratio 8.51 % 8.78 % 8.99 % 9.35 % 10.20 %
Tier 1 risk-based capital ratio 5.15 5.75 5.92 7.09 7.96
Tier 1 leverage ratio 3.70 4.23 4.17 5.08 5.75
(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:
    Kurt R. Stevenson
    President and
    Chief Executive Officer
    Centrue Financial Corporation
    Email Contact

    Daniel R. Kadolph
    Interim Chief Financial Officer
    Centrue Financial Corporation
    Email Contact