SOURCE: Centrue Financial Corporation

May 06, 2013 16:15 ET

Centrue Financial Corporation Announces 2013 First Quarter Results

ST. LOUIS, MO--(Marketwired - May 6, 2013) -  Centrue Financial Corporation (OTCQB: TRUE) (PINKSHEETS: TRUE)

Highlights

  • First quarter of 2013 net income was $61,000, compared to a loss of $152,000 for the fourth quarter of 2012 and a loss of $500,000 in the first quarter of 2012.
  • The Company's principal subsidiary, Centrue Bank (the "Bank"), posted net income of $359,000 for the first quarter of 2013 compared to net income of $49,000 for the fourth quarter of 2012 and net income of $28,000 for the first quarter of 2012.
  • First quarter 2013 net interest margin was 3.21%, representing a decrease of 4 basis points from 3.25% reported in the fourth quarter of 2012 and a 19 basis point increase from the 3.02% reported in the first quarter of 2012.
  • Centrue Bank remains "well capitalized" at the end of the first quarter of 2013.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE), parent company of Centrue Bank, reported first quarter net income of $61,000 compared to a net loss of $152,000 for the fourth quarter of 2012.

"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."

Loans

Total loans equaled $551.5 million, representing a decrease of $7.5 million, or 1.3%, from December 31, 2012 and a decrease of $12.2 million, or 2.2%, from the same period-end in 2012. The net decrease from year-end 2012 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. Competition for new commercial loans remains strong.

Funding and Liquidity

Total deposits equaled $805.3 million, representing an increase of $20.0 million, or 2.5%, from December 31, 2012 and a decrease of $38.1 million, or 4.5%, from March 31, 2012. The net increase from year-end 2012 was largely related to initiatives aimed at deepening deposit relationships with loan customers and a general increase in deposits from existing account holders.

The Bank's overall liquidity position remained strong with available capacity for new loan opportunities.

Credit Quality
The key credit quality metrics are as follows:

  • Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased $5.8 million to $61.5 million at March 31, 2013, from $66.9 million at December 31, 2012 and $15.9 million decrease from the $77.4 million held at March 31, 2012. The ratio of nonperforming assets to total assets was 6.72% at March 31, 2013, 7.40% at December 31, 2012 and 8.05% at March 31, 2012.
  • Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased $1.5 million to $36.1 million at March 31, 2013, from $37.6 million at December 31, 2012 and $7.8 million to $43.9 million at March 31, 2012. The $7.8 million decrease from the first quarter of 2012 to the first quarter of 2013 was due to a combination of successful loan workout strategies, charge-offs and transfers to OREO. The $36.1 million recorded at March 31, 2013 included $27.1 million in nonaccrual loans and $9.0 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 6.54% at March 31, 2013, compared to 6.72% at December 31, 2012 and 7.79% at March 31, 2012.
  • Other real estate owned decreased $3.9 million to $25.4 million at March 31, 2013, from $29.3 million at December 31, 2012 and $8.1 million from $33.5 million at March 31, 2012. In the first quarter of 2013, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.2 million. First quarter additions were more than offset by $4.0 million in dispositions and $0.3 million in additional valuation adjustments, reflective of existing market conditions and more aggressive disposition strategies.
  • The allowance for loan losses to total loans was 2.99% at March 31, 2013, compared to 3.39% at December 31, 2012 and 3.61% at March 31, 2012. 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 March 31, 2013.
  • Net loan charge-offs for the first quarter of 2013 were $3.1 million, or 0.55% of average loans, compared with $3.4 million, or 0.60% of average loans, for the fourth quarter of 2012 and $2.2 million, or 0.39% of average loans, for the first quarter of 2012. Loan charge-offs during the first quarter of 2013 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. Management believes we are recognizing losses in our portfolio through provisions and charge-offs as credit developments warrant.
  • The provision for loan losses for the first quarter of 2013 was $0.6 million, a decrease from the $1.3 million recorded in the fourth quarter of 2012 and $1.4 million recorded in the first quarter of 2012. The first quarter of 2013 provision level decrease was driven by decreasing levels of nonperforming loans, stabilizing collateral values on troubled loans and light new loan demand.
  • The past due ratio was 7.79% at March 31, 2013 compared to 7.36% at December 31, 2012 and 8.21% at March 31, 2012. Action Listed Loans (classified and criticized loans) declined to $78.6 million at March 31, 2013 from $80.8 million at December 31, 2012 and $117.6 million at March 31, 2012.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 45.73% at March 31, 2013, compared to 50.40% at December 31, 2012 and 46.32% at March 31, 2012.

Net Interest Margin

The net interest margin was 3.21% for the first quarter of 2013, representing a decrease of 4 basis points from 3.25% recorded in the fourth quarter of 2012 and an increase of 19 basis points from 3.02% reported in the first quarter of 2012. The Bank's net interest margin was 3.34% for the first quarter of 2013, representing a decrease of 5 basis points from 3.39% recorded for the fourth quarter 2012 and a 13 basis point increase to the first quarter 2012 net interest margin. The volatility of the net interest margin is being affected by several factors including: falling yields in both the securities and loan portfolios, decreased loan volumes, decreasing cost of funds and the removal of nonperforming loans from the earning assets bucket.

Noninterest Income and Expense

Noninterest income totaled $2.9 million for the first quarter 2013, compared to $3.1 million for the same period in 2012. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.2 million or 7.1%. This $0.2 million decrease was mainly due to decreases in service charges and income from OREO properties.

Total noninterest expense for the first quarter of 2013 was $8.2 million, which was flat compared to the same period in 2012. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.2 million, or 2.5%. This $0.2 million decline in expenses was spread over various categories including furniture and equipment, loan processing, and collection costs. Adversely impacting expense levels were increases in telephone, data processing, 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 March 31, 2013 except for the Company's Tier 1 leverage ratio which was 3.33%.

                         
    Centrue Financial     Centrue Bank  
    Mar 31, 2013     Dec 31, 2012     Mar 31, 2013     Dec 31, 2012  
Capital ratios:                        
  Total risk-based capital   8.27 %   8.25 %   10.65 %   10.41 %
  Tier 1 risk-based capital   4.67 %   4.65 %   9.38 %   9.14 %
  Tier 1 leverage ratio   3.33 %   3.39 %   6.61 %   6.58 %
                         

Other Items

The Company plans to relocate its headquarters from St. Louis, Missouri to Ottawa, Illinois effective May 15, 2013.

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

  • Unaudited Selected Quarterly Consolidated Financial Data
   
   
Centrue Financial Corporation  
Unaudited Selected Quarterly Consolidated Financial Data  
(In Thousands, Except Per Share Data)  
                               
    Quarters Ended  
    3/31/13     12/31/12     9/30/12     6/30/12     3/31/12  
Balance Sheet                                        
  Assets                                        
  Cash and cash equivalents   $ 80,420     $ 63,271     $ 79,423     $ 48,253     $ 62,544  
  Securities     204,077       201,369       188,524       232,695       253,828  
  Loans     551,519       559,014       561,476       567,908       563,732  
  Allowance for loan losses     (16,488)       (18,948)       (21,070)       (18,234)       (20,338)  
  Other real estate owned     25,426       29,305       28,601       27,890       33,501  
  Other assets     70,044       69,763       67,871       68,062       68,536  
    Total assets     914,998       903,774       904,825       926,574       961,803  
Liabilities and stockholders' equity                                        
  Deposits     805,279       785,337       782,597       782,264       843,405  
  Non-deposit funding     64,892       74,309       77,959       97,056       70,611  
  Other liabilities     16,749       16,212       15,562       14,853       15,029  
    Total liabilities     886,920       875,858       876,118       894,173       929,045  
  Stockholders' equity     28,078       27,916       28,707       32,401       32,758  
    Total liabilities and stockholders' equity   $ 914,998     $ 903,774     $ 904,825     $ 926,574     $ 961,803  
Statement of Income                                        
  Interest income   $ 7,141     $ 7,361     $ 7,726     $ 7,956     $ 8,032  
  Interest expense     (1,155)       (1,270)       (1,428)       (1,734)       (1,989)  
  Net interest income     5,986       6,091       6,298       6,222       6,043  
  Provision for loan losses     600       1,250       5,750       1,375       1,350  
  Net interest income (loss) after provision for loan losses     5,386       4,841       548       4,847       4,693  
  Noninterest income     2,878       3,250       3,829       3,812       3,052  
  Noninterest expense     8,203       8,289       8,484       8,576       8,245  
  Income (loss) before income taxes     61       (198)       (4,107)       83       (500)  
  Income tax expense (benefit)     -       (46)       (788)       -       -  
  Net income (loss)   $ 61     $ (152)     $ (3,319)     $ 83     $ (500)  
  Net income (loss) for common stockholders   $ (480)     $ (686)     $ (3,848)     $ (440)     $ (1,017)  
Per Share                                        
  Basic earnings (loss) per common share   $ (0.08)     $ (0.11)     $ (0.63)     $ (0.07)     $ (0.17)  
  Diluted earnings (loss) per common share     (0.08)       (0.11)       (0.63)       (0.07)       (0.17)  
  Book value per common share   $ (0.84)     $ (0.87)     $ (0.74)     $ (0.13)     $ (0.07)  
  Tangible book value per common share     (1.51)       (1.58)       (1.49)       (0.92)       (0.90)  
  Basic weighted average common shares outstanding     6,063,441       6,063,441       6,063,441       6,063,441       6,063,441  
  Diluted weighted average common shares outstanding     6,063,441       6,063,441       6,063,441       6,063,441       6,063,441  
  Period-end common shares outstanding     6,063,441       6,063,441       6,063,441       6,063,441       6,063,441  
Earnings Performance                                        
  Return on average total assets     0.03 %     (0.07) %     (1.44) %     0.04 %     (0.21) %
  Return on average stockholders' equity     0.90       (2.14)       (40.93)       1.01       (6.26)  
  Net interest margin     3.21       3.25       3.20       3.11       3.02  
  Efficiency ratio (1)     88.55       73.98       79.13       83.72       89.39  
  Bank net interest margin     3.34       3.39       3.33       3.31       3.21  
Asset Quality                                        
  Nonperforming assets to total end of period assets     6.72 %     7.40 %     8.33 %     7.31 %     8.05 %
  Nonperforming loans to total end of period loans     6.54       6.72       8.32       7.01       7.79  
  Net loan charge-offs to total average loans     0.55       0.60       0.52       0.62       0.39  
  Allowance for loan losses to total end of period loans     2.99       3.39       3.75       3.21       3.61  
  Allowance for loan losses to nonperforming loans     45.73       50.40       45.08       45.79       46.32  
  Nonperforming loans   $ 36,055     $ 37,592     $ 46,739     $ 39,823     $ 43,904  
  Nonperforming assets     61,481       66,897       75,340       67,713       77,405  
  Net loan charge-offs     3,062       3,372       2,914       3,479       2,244  
Capital                                        
  Total risk-based capital ratio     8.27 %     8.25 %     8.38 %     8.76 %     9.04 %
  Tier 1 risk-based capital ratio     4.67       4.65       4.78       5.40       5.42  
  Tier 1 leverage ratio     3.33       3.39       3.38       3.82       3.78  

(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.

Contact Information

  • Contact:
    Kurt R. Stevenson
    President and
    Chief Executive Officer
    Centrue Financial Corporation
    Email Contact
    1-800-452-6045

    Daniel R. Kadolph
    Executive Vice President and
    Chief Financial Officer
    Centrue Financial Corporation
    Email Contact
    1-800-452-6045