SOURCE: Centrue Financial Corporation

August 13, 2012 16:15 ET

Centrue Financial Corporation Announces 2012 Second Quarter Earnings

ST. LOUIS, MO--(Marketwire - Aug 13, 2012) - Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE)

Highlights

  • Second quarter of 2012 net income was $0.1 million, compared to a $0.5 million net loss for the first quarter of 2012 and a $2.4 million net loss in the second quarter of 2011.

  • The Company's principal subsidiary, Centrue Bank (the "Bank"), posted net income of $0.5 million for the second quarter 2012 compared to net income of $0.03 million for the first quarter of 2012 and a net loss of $2.0 million for the second quarter of 2011.

  • Nonperforming assets declined $9.7 million, or 12.5%, from first quarter 2012 and $19.8 million, or 22.6%, from June 30, 2011.

  • Centrue Bank remains "Well Capitalized" at the end of the second quarter of 2012.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE), parent company of Centrue Bank, reported a first quarter net income of $0.1 million, or ($0.07) per common diluted share, compared to a net loss of $2.4 million or ($0.48) per common diluted share for the second quarter 2011. For the first six months of 2012, the Company reported a net loss of $0.4 million, or ($0.24) per common diluted share, as compared to a net loss of $5.9 million, or ($1.14) per common diluted share, for the same period in 2011.

"Posting earnings at both the Bank and Consolidated level reinforces that the steps we are taking to improve our performance are the right ones," remarked President & CEO Kurt R. Stevenson. "Our trends continue in the right direction with positive decreases in nonperforming assets, action list loans, past dues, and charge-offs. While we continue to prudently manage expenses and strategically lower our cost of funds, we recognize that our revenue generating efforts are the key driver of sustained profitability. We will continue to focus on growing our core business by focusing on the basics of community banking -- making quality loans and servicing our depositors."

Securities

Total securities equaled $232.7 million at June 30, 2012, representing a decrease of $21.1 million, or 8.3%, from March 31, 2012 and a decrease of $5.3 million, or 2.2%, from year-end 2011. The net decrease from year-end 2011 was largely related to a strategy to enhance the Company's liquidity position as public funds and brokered deposits matured and were not replaced. On a smaller scale, some of the liquidity was used to fund loan growth. 

Loans

Total loans equaled $567.9 million, representing an increase of $4.2 million, or 0.7%, from March 31, 2012 and a decrease of $14.5 million, or 2.5%, from year-end 2011. The net decrease from year-end 2011 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 continue to experience a decrease in loan demand as many borrowers continue to reduce their debt and competition for new commercial loans is strong.

Funding and Liquidity

Total deposits equaled $782.3 million, representing decreases of $61.1 million, or 7.2%, from March 31, 2012 and $66.3 million, or 7.8%, from year-end 2011. The net decrease from year-end 2011 was largely related to strategic initiatives to reduce higher costing time deposits and collateralized local public agency deposits. Since year-end, $19.7 million of brokered deposits having rates of 2.7% matured.

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 2012.

Credit Quality

The key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 3.21% at June 30, 2012, compared to 3.65% at December 31, 2011 and 3.69% at June 30, 2011. 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, 2012.

  • The provision for loan losses for the second quarter of 2012 was $1.4 million, representing no change from the $1.4 million recorded in the first quarter of 2012 and a decrease from $3.3 million recorded in the second quarter of 2011. The second quarter of 2012 provision level reduction was driven by:

    • decreasing levels of nonperforming loans and less new credits that migrated to nonperforming status;

    • current quarter charge-off levels decreased from prior year;

    • declining trend in past due loans;

    • stabilization of collateral values.

  • Net loan charge-offs for the second quarter of 2012 were $3.5 million, or 0.62% of average loans, compared with $2.2 million, or 0.39% of average loans, for the first quarter of 2012 and $8.0 million, or 1.16% of average loans, for the second quarter of 2011. Loan charge-offs during the second quarter of 2012 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 impaired 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 $39.8 million at June 30, 2012, from $43.9 million at March 31, 2012 and $45.8 million at December 31, 2011. The $4.1 million decrease from the first quarter of 2012 to the second quarter of 2012 was mainly due to the charge-off of nonaccrual loans and the transfer of the property securing the credits into OREO. The $39.8 million recorded at June 30, 2012 included $35.5 million in nonaccrual loans and $4.3 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 7.01% at June 30, 2012, compared to 7.79% at March 31, 2012 and 7.87% at December 31, 2011.

  • The coverage ratio (allowance for loan losses to nonperforming loans) was 45.79% at June 30, 2012, compared to 46.32% at March 31, 2012 and December 31, 2011.

  • Other real estate owned decreased to $27.9 million at June 30, 2012, from $33.5 million at March 31, 2012 and $29.7 million at December 31, 2011. In the second quarter of 2012, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.8 million. Second quarter additions were offset by $5.7 million in dispositions and $0.7 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 $67.7 million at June 30, 2012, from $77.4 million at March 31, 2012 and $75.5 million at December 31, 2011. The ratio of nonperforming assets to total assets was 7.31% at June 30, 2012, 8.05% at March 31, 2012 and 7.80% at December 31, 2011.

  • The past due ratio was 7.23% at June 30, 2012 compared to 8.21% at March 31, 2012 and 10.11% at December 31, 2011. Action Listed Loans (classified and criticized loans) declined to $97.6 million from $117.5 million at March 31, 2012 and $126.6 million at December 31, 2011.

Net Interest Margin

The net interest margin was 3.11% for the second quarter of 2012, representing an increase of 9 basis points from 3.02% recorded in the first quarter of 2012 and a decrease of 2 basis points from 3.13% reported in the second quarter of 2011. The Bank's net interest margin was 3.31% for the second quarter of 2012, representing increases of 10 basis points from 3.21% recorded in the first quarter 2012 and 2 basis points from 3.29% from the second quarter of 2011. The increase in the net interest margin compared to first quarter 2012 was primarily due to a decrease in funding costs.

Noninterest Income and Expense

Noninterest income totaled $3.8 million for the three months ended June 30, 2012, compared to $2.7 million for the same period in 2011. Excluding gains related to the sale of OREO, securities and other assets, noninterest income increased $0.4 million or 16.0%. This $0.4 million increase was spread over several areas, with the largest being in income from OREO properties. Mortgage banking income increased by $0.2 million or 50.7%.

Total noninterest expense for the second quarter of 2012 was $8.6 million, a decrease of $1.0 million, compared to $9.6 million recorded during the same period in 2011. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.6 million, or 7.1%. This $0.6 million decline in expenses was spread over various categories including net occupancy costs, furniture and equipment, telephone, data processing, FDIC insurance and amortization expense. Adversely impacting expense levels were increases in marketing, loan processing, collection costs, and salary and employee benefits.

Capital Management

As reflected in the following table, unit Centrue Bank was considered "well-capitalized" and the Company was considered "adequately-capitalized" under regulatory defined capital ratios as of June 30, 2012 except for the Company's Tier 1 leverage ratio which was 3.82%.

             
    Centrue Financial     Centrue Bank  
    Jun 30, 2012     Dec 31, 2011     Jun 30, 2012     Dec 31, 2011  
Carrying amounts ($millions):                                
  Total risk-based capital   $ 60.0     $ 61.2     $ 69.5     $ 68.6  
  Tier 1 risk-based capital   $ 35.8     $ 37.2     $ 61.2     $ 60.1  
                                 
Capital ratios:                                
  Total risk-based capital     8.76 %     9.03 %     10.64 %     10.28 %
  Tier 1 risk-based capital     5.40 %     5.49 %     9.37 %     9.01 %
  Tier 1 leverage ratio     3.82 %     3.74 %     6.55 %     6.06 %

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, 2012     June 30, 2012  
    2012     2011     2012     2011  
Operating Highlights                                
Net income (loss)   $ 83     $ (2,424 )   $ (417 )   $ (5,882 )
Return on average total assets     0.04 %     (0.92 )%     (0.09 )%     (1.10 )
Return on average stockholders' equity     1.01       (25.19 )     (2.58 )     (29.49 )
Net interest margin     3.11       3.13       3.07       3.11  
Efficiency ratio     83.72       81.82       86.52       82.42  
Bank net interest margin     3.31       3.29       3.26       3.18  
                                 
Per Share Data                                
Diluted earnings (loss) per common share   $ (0.07 )   $ (0.48 )   $ (0.24 )   $ (1.14 )
Book value per common share   $ (0.13 )   $ 0.73     $ (0.13 )   $ 0.73  
Tangible book value per common share   $ (0.92 )   $ (0.23 )   $ (0.92 )   $ (0.23 )
Diluted weighted average commonshares outstanding    
6,063,441
     
6,048,405
     
6,063,441
     
6,048,405
 
Period end common shares outstanding     6,063,441       6,048,405       6,063,441       6,048,405  
                                 
Stock Performance Data                                
Market price:                                
  Quarter-end   $ 0.55     $ 0.60     $ 0.55     $ 0.60  
  High   $ 0.88     $ 0.78     $ 0.88     $ 1.18  
  Low   $ 0.51     $ 0.25     $ 0.15     $ 0.25  
   
   
Centrue Financial Corporation  
Unaudited Consolidated Balance Sheets  
(In Thousands)  
             
    June 30,     December 31,  
    2012     2011  
ASSETS                
  Cash and cash equivalents   $ 48,253     $ 69,735  
  Securities available-for-sale     225,667       228,836  
  Restricted securities     7,028       9,150  
  Loans     567,908       582,395  
  Allowance for loan losses     (18,234 )     (21,232 )
    Net loans     549,674       561,163  
  Bank-owned life insurance     31,900       31,412  
  Mortgage servicing rights     2,003       2,089  
  Premises and equipment, net     23,187       23,754  
  Other intangible assets, net     4,789       5,264  
  Other real estate owned     27,890       29,667  
  Other assets     6,183       6,914  
                   
    Total assets   $ 926,574     $ 967,984  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
  Liabilities                
    Deposits                
      Non-interest-bearing   $ 122,107     $ 134,137  
      Interest-bearing     660,157       714,501  
        Total deposits     782,264       848,638  
                 
  Federal funds purchased and securities sold under agreements to repurchase     17,766       18,036  
  Federal Home Loan Bank advances     48,057       23,058  
  Notes payable     10,345       10,440  
  Series B mandatory redeemable preferred stock     268       268  
  Subordinated debentures     20,620       20,620  
  Other liabilities     14,853       14,355  
    Total liabilities     894,173       935,415  
                 
  Stockholders' equity                
    Series A convertible preferred stock     500       500  
    Series C cumulative perpetual preferred stock     31,739       31,429  
    Common stock     7,454       7,454  
    Surplus     74,570       74,558  
    Retained earnings (accumulated deficit)     (61,831 )     (60,064 )
    Accumulated other comprehensive income (loss)     1,846       569  
      54,278       54,446  
                 
    Treasury stock, at cost     (21,877 )     (21,877 )
      Total stockholders' equity     32,401       32,569  
                       
        Total liabilities and stockholders' equity   $ 926,574     $ 967,984  
   
   
Centrue Financial Corporation  
Unaudited Consolidated Statements of Income  
(In Thousands, Except Per Share Data)  
                     
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012   2011     2012   2011  
                             
Interest income                            
  Loans   $ 6,952   $ 8,836     $ 13,989   $ 18,117  
  Securities                   -        
    Taxable     854     1,088       1,684     2,085  
    Exempt from federal income taxes     113     177       239     392  
  Federal funds sold and other     37     37       76     68  
    Total interest income     7,956     10,138       15,988     20,662  
                             
Interest expense                            
  Deposits     1,143     2,213       2,542     4,700  
  Federal funds purchased and securities sold under agreements to repurchase     10     10       21     21  
  Federal Home Loan Bank advances     190     355       376     767  
  Series B mandatory redeemable preferred stock     4     4       8     8  
  Subordinated debentures     295     274       588     544  
  Notes payable     92     91       188     181  
    Total interest expense     1,734     2,947       3,723     6,221  
                             
Net interest income     6,222     7,191       12,265     14,441  
Provision for loan losses     1,375     3,250       2,725     7,500  
Net interest income (loss) after provision for loan losses      4,847     3,941       9,540     6,941  
                             
Noninterest income                            
  Service charges     1,040     1,189       2,089     2,251  
  Mortgage banking income     455     302       942     709  
  Electronic banking services     558     565       1,090     1,092  
  Bank-owned life insurance     245     250       488     499  
  Securities gains, net     698     379       714     379  
  Total other-than-temporary impairment losses     -     (107 )     -     (499 )
  Portion of loss recognized in other comprehensive income (before taxes)     -     -       -     -  
    Net impairment on securities     -     (107 )     -     (499 )
  Gain on sale of OREO     234     (92 )     425     (48 )
  Gain on sale of other assets     -     -       -     63  
  Other income     582     198       1,116     362  
      3,812     2,684       6,864     4,808  
   
   
Centrue Financial Corporation  
Unaudited Consolidated Statements of Income  
(In Thousands, Except Per Share Data)  
                         
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
                         
Noninterest expenses                        
  Salaries and employee benefits   3,582     3,460     7,284     7,093  
  Occupancy, net   620     704     1,284     1,424  
  Furniture and equipment   283     421     667     860  
  Marketing   94     67     169     127  
  Supplies and printing   65     77     133     141  
  Telephone   179     204     354     408  
  Data processing   360     375     667     739  
  FDIC insurance   511     824     1,029     1,674  
  Loan processing and collection costs   554     511     1,090     1,102  
  OREO valuation adjustment   662     1,097     795     1,297  
  Amortization of intangible assets   238     263     475     539  
  Other expenses   1,428     1,574     2,874     2,973  
    8,576     9,577     16,821     18,377  
                         
Income (loss) before income taxes   83     (2,952 )   (417 )   (6,628 )
Income tax expense (benefit)   -     (528 )   -     (746 )
Net Income (loss)   83     (2,424 )   (417 )   (5,882 )
Preferred stock dividends   523     501     1,040     995  
Net income (loss) for common stockholders   (440 )   (2,925 )   (1,457 )   (6,877 )
                         
Basic earnings (loss) per common share   (0.07 )   (0.48 )   (0.24 )   (1.14 )
Diluted earnings (loss) per common share   (0.07 )   (0.48 )   (0.24 )   (1.14 )
   
   
Centrue Financial Corporation  
Unaudited Selected Quarterly Consolidated Financial Data  
(In Thousands, Except Per Share Data)  
                           
    Quarters Ended  
    6/30/12     3/31/12   12/31/11     9/30/11   6/30/11  
Statement of Income                                    
  Interest income   $ 7,956     $ 8,032   $ 8,957     $ 9,542   $ 10,138  
  Interest expense     (1,734 )     (1,989 )   (2,339 )     (2,665 )   (2,947 )
  Net interest income     6,222       6,043     6,618       6,877     7,191  
  Provision for loan losses     1,375       1,350     1,475       2,400     3,250  
  Net interest income (loss) after provision for loan losses     4,847       4,693     5,143       4,477     3,941  
  Noninterest income     3,812       3,052     4,561       2,566     2,684  
  Noninterest expense     8,576       8,245     9,660       12,397     9,577  
  Income (loss) before income taxes     83       (500 )   44       (5,354 )   (2,952 )
  Income tax expense (benefit)     -       -     (14 )     (606 )   (528 )
  Net income (loss)   $ 83     $ (500 ) $ 58     $ (4,748 ) $ (2,424 )
  Net income (loss) for common stockholders   $ (440 )   $ (1,017 ) $ (453 )   $ (5,253 ) $ (2,925 )
Per Share                                    
  Basic earnings (loss) per common share   $ (0.07 )   $ (0.17 ) $ (0.07 )   $ (0.87 ) $ (0.48 )
  Diluted earnings (loss) per common share     (0.07 )     (0.17 )   (0.07 )     (0.87 )   (0.48 )
  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   $ (0.13 )   $ (0.07 ) $ (0.10 )   $ (0.03 ) $ 0.73  
  Tangible book value per common share     (0.92 )     (0.90 )   (0.97 )     (0.94 )   (0.23 )
  Basic weighted average common shares outstanding     6,063,441       6,063,441     6,059,028       6,048,405     6,048,405  
  Diluted weighted average common shares outstanding     6,063,441       6,063,441     6,059,028       6,048,405     6,048,405  
  Period-end common shares outstanding     6,063,441       6,063,441     6,063,441       6,048,405     6,048,405  
Balance Sheet                                    
  Securities   $ 232,695     $ 253,828   $ 237,986     $ 245,236   $ 230,317  
  Loans     567,908       563,732     582,395       620,450     660,882  
  Allowance for loan losses     18,234       20,338     21,232       23,314     24,358  
  Assets     926,574       961,803     967,984       1,008,953     1,022,256  
  Deposits     782,264       843,405     848,638       862,117     866,037  
  Stockholders' equity     32,401       32,758     32,569       32,961     37,561  
Earnings Performance                                    
  Return on average total assets     0.04 %     (0.21 )%   0.02 %     (1.85 )%   (0.92 )%
  Return on average stockholders' equity     1.01       (6.26 )   0.71       (50.99 )   (25.19 )
  Net interest margin     3.11       3.02     3.09       3.14     3.13  
  Efficiency ratio (1)     83.72       89.39     89.03       78.00     81.82  
  Bank net interest margin     3.31       3.21     3.27       3.31     3.29  
Asset Quality                                    
  Nonperforming assets to total end of period assets     7.31 %     8.05 %   7.80 %     8.02 %   8.56 %
  Nonperforming loans to total end of period loans     7.01       7.79     7.87       7.73     7.86  
  Net loan charge-offs to total average loans     0.62       0.39     0.59       0.54     1.16  
  Allowance for loan losses to total end of period loans     3.21       3.61     3.65       3.76     3.69  
  Allowance for loan losses to nonperforming loans     45.79       46.32     46.32       48.59     46.92  
  Nonperforming loans   $ 39,823     $ 43,904   $ 45,835     $ 47,982   $ 51,915  
  Nonperforming assets     67,713       77,405     75,502       80,894     87,533  
  Net loan charge-offs     3,479       2,244     3,557       3,445     7,981  
Capital                                    
  Total risk-based capital ratio     8.76 %     9.04 %   9.03 %     8.51 %   8.78 %
  Tier 1 risk-based capital ratio     5.40       5.42     5.49       5.15     5.75  
  Tier 1 leverage ratio     3.82       3.78     3.74       3.70     4.23  

(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
    Chief Financial Officer
    Centrue Financial Corporation
    Email Contact