SOURCE: Centrue Financial Corporation

Centrue Financial Corporation

March 14, 2014 16:15 ET

Centrue Financial Corporation Announces 2013 Results

OTTAWA, IL--(Marketwired - Mar 14, 2014) - Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: CFCB) (PINKSHEETS: CFCB)

Highlights

  • Full year 2013 net income was $3.7 million or $0.24 per common diluted share compared to a net loss of $3.9 million or ($0.99) in 2012.
  • Full year 2013 net income for the Company's principal subsidiary, Centrue Bank (the "Bank"), was $6.1 million compared to a net loss of $2.5 million in 2012.
  • Fourth quarter of 2013 net loss was $0.3 million, compared to a net loss of $0.2 million fourth quarter of 2012.
  • The Bank posted net income of $16 thousand for the fourth quarter of 2013 compared to net income of $49 thousand for the fourth quarter of 2012.
  • The Company and Bank's results for the fourth quarter were impacted by $1.1 million in provision expense and $0.6 million in other real estate owned ("OREO") expenses. Offsetting these expense items were gains from security sales, a $0.4 million decline in loan workout expenses, increased electronic banking income and OREO sales. 
  • Fourth quarter 2013 net interest margin was stable at 3.34%, a 9 basis point increase from the 3.25% reported in the fourth quarter of 2012. The bank's net interest margin was 3.47% in the fourth quarter of 2013 compared to 3.39% for the fourth quarter of 2012.
  • Performing loans have increased by $15.7 million compared to year-end 2012 which have helped to bolster the net interest margin. This has been accomplished by reducing nonperforming loans through charge-offs and pay downs and replacing them with new loan growth.
  • Centrue Bank remained "well-capitalized" at the end of the fourth quarter of 2013.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: CFCB), parent company of Centrue Bank, reported fourth quarter net loss of $0.3 million, or ($0.14) per common diluted share, compared to a net loss of $0.2 million or ($0.11) per common diluted share for the fourth quarter 2012. For the twelve months of 2013, the Company reported net income of $3.7 million, or $0.24 per common diluted share, as compared to a net loss of $3.9 million, or ($0.99) per common diluted share, for the same period in 2012. Net gains on securities in 2013 were $5.3 million compared to $1.4 million in 2012.

"We continue to make meaningful improvement in several of the key areas of the bank as asset quality issues are reduced and greater emphasis is placed on efforts to grow sales and expand existing customer relationships," remarked Kurt R. Stevenson, President & CEO. "We have been able to improve our net interest margin, as we reduce funding costs and replace nonperforming assets with new performing loans." 

Securities

Total securities equaled $163.9 million at December 31, 2013, representing a decrease of $37.5 million, or 18.6%, from December 31, 2012. The net decrease from fourth quarter 2012 was driven largely by public funds and time deposit money that matured and was not renewed and normal security portfolio amortization that was not reinvested. In addition, certain substandard securities with unrealized gains were sold during the year with proceeds used to fund loan growth.

Loans

Performing loans increased $15.7 million since December 31, 2012. This has been accomplished by reducing nonperforming loans through charge-offs and pay downs and replacing them with new loan growth. Total loans equaled $566.2 million, representing an increase of $7.2 million, or 1.3%, from December 31, 2012. The net increase from year-end 2012 was related to new loans being booked above the level of normal attrition, pay-downs, loan charge-offs and transfers to OREO. Economic conditions remain relatively unchanged from prior years, with decreased loan demand and very strong competition for new commercial loans.

Funding and Liquidity

Total deposits equaled $754.3 million, representing a decrease of $31.0 million, or 3.9%, from December 31, 2012. Core deposits improved over year-end 2012 by $15.5 million or 3.3%. The net decrease from year-end 2012 was largely related to maturing time deposits not being renewed and public funds being drawn down by school districts due to diminished state assistance.

The Bank's overall liquidity position remains strong with funding available for any new loan opportunities.

Credit Quality

The Bank's key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 2.06% at December 31, 2013, compared to 3.39% at December 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 December 31, 2013.
  • The provision for loan losses for the fourth quarter of 2013 was $1.1 million, a decrease from the $1.3 million recorded in the fourth quarter of 2012. The fourth quarter of 2013 provision level decrease was driven by decreasing levels of nonperforming loans and stabilizing collateral values on troubled loans. Full year provision expense was $3.4 million in 2013 compared to $9.7 million in 2012.
  • Net loan charge-offs for the fourth quarter of 2013 were $1.0 million, or 0.17% of average loans, compared with $3.4 million, or 0.60% of average loans, for the fourth quarter of 2012. Loan charge-offs during the fourth 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.
  • Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $29.1 million at December 31, 2013, from $37.6 million at December 31, 2012. The $8.5 million decrease from the fourth quarter of 2012 to the fourth quarter of 2013 was due to a combination of successful loan workout strategies, charge-offs referenced above and transfers to OREO. The $29.1 million recorded at December 31, 2013 includes $16.3 million in nonaccrual loans and $12.8 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 5.13% at December 31, 2013 and 6.72% at December 31, 2012.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 40.06% at December 31, 2013, compared to 50.40% at December 31, 2012.
  • Other real estate owned decreased to $23.3 million at December 31, 2013, a decrease from $29.3 million at December 31, 2012. In the fourth quarter of 2013, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.7 million. Fourth quarter additions were more than offset by $1.0 million in dispositions and $0.4 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 $52.4 million at December 31, 2013, a decrease of $14.5 million from the $66.9 million held at December 31, 2012. The ratio of nonperforming assets to total assets was 5.93% at December 31, 2013 and 7.40% at December 31, 2012.
  • The past due ratio was 4.38% at December 31, 2013 compared to 7.36% at December 31, 2012. Action Listed Loans (classified and criticized loans) declined to $71.5 million at December 31, 2013 from $80.8 million at December 31, 2012.

Net Interest Margin

The Company's net interest margin was 3.34% for the fourth quarter of 2013, a 9 basis point increase over the 3.25% reported in the fourth quarter of 2012. The Bank's net interest margin was 3.47% for the fourth quarter of 2013, an 8 basis point increase to the fourth quarter 2012 net interest margin. The volatility of the net interest margin is being affected by several factors including: falling yields in the securities and loan portfolios, an increase in earning assets of $15.0 million, decreasing cost of funds, timing issues on the reinvestment of security proceeds and the removal of nonperforming loans out of earning assets. Comparing the fourth quarter period, the yield on funding was flat to the prior quarter while the yield on earning assets was up 12 basis points. Interest expense for the fourth quarter of 2013 was $0.3 million less than the same quarter in 2012 which is a 21.1% reduction.

Noninterest Income and Expense

Noninterest income totaled $3.1 million for the fourth quarter ended December 31, 2013, compared to $3.3 million for the same period in 2012. Excluding gains related to the sale of OREO, securities and other assets and mortgage servicing rights fair value adjustments, noninterest income for the period was $0.6 million below what it was in the same period a year ago. This $0.6 million decrease was mainly due to decreases in mortgage banking income, rental income and revenue on bank-owned life insurance. For the twelve months ended December 31, 2013, noninterest income was $16.7 million compared to $13.9 million for the same period in 2012. When excluding the same items from above, year-to-date noninterest income for 2013 was $1.3 million below the comparable period for 2012. The main drivers of this decline have been in mortgage banking, income from OREO and bank-owned life insurance categories.

Total noninterest expense for the fourth quarter of 2013 was $8.4 million, which was $0.1 million above the same period in 2012. Excluding OREO Valuation Adjustments taken in both periods, noninterest expense levels were down by $0.1 million. For the twelve months ended December 31, 2013, noninterest expense was $33.5 million which was $0.1 million below the same period in 2012. When excluding the OREO Valuation Adjustments, year-to-date noninterest expense was $0.1 million above the comparable amount for 2012. Loan processing and collection costs saw the largest decrease along with furniture and equipment expense from the prior year, but were offset by higher expenses in salaries, occupancy and data processing. Debt collection expense was down $0.7 million dollars or 58.0% from 2013 compared to 2012 as asset quality issues continue to improve.

Capital Management

As reflected in the following table, Centrue Bank was considered "well-capitalized" and the Company was considered "adequately-capitalized" under regulatory defined capital ratios as of December 31, 2013. The improvement in regulatory capital during 2013 for the Company occurred from positive operating results and the reversal of preferred stock dividends. Following the U.S. Treasury's auction of the Series C Preferred Stock, at a significant discount to par value, the Company has determined its ability to pay preferred dividends are diminished due to inadequate liquidity and regulatory restrictions on dividends payments at this time. Previously accrued but undeclared preferred dividends on Series A & C Preferred Stock were then reversed back into capital. The Bank's regulatory defined capital ratios have improved 94 to 150 basis points when you compare December 31, 2012 to December 31, 2013.

                         
    Centrue Financial     Centrue Bank  
    Dec 31, 2013     Dec 31, 2012     Dec 31, 2013     Dec 31, 2012  
Capital ratios:                        
  Total risk-based capital   10.22 %   8.25 %   11.91 %   10.41 %
  Tier 1 risk-based capital   7.39 %   4.65 %   10.65 %   9.14 %
  Tier 1 leverage ratio   5.22 %   3.39 %   7.52 %   6.58 %
                           

About the Company

Centrue Financial Corporation is a regional financial services company headquartered in Ottawa, Illinois 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  
    12/31/13     9/30/13     6/30/13     3/31/13     12/31/12  
Balance Sheet                                        
  Assets                                        
    Cash and cash equivalents   $ 70,748     $ 97,982     $ 51,393     $ 80,420     $ 63,271  
    Securities     163,869       142,149       186,734       204,077       201,369  
    Loans     566,171       560,774       567,814       551,519       559,014  
    Allowance for loan losses     (11,637 )     (11,540 )     (15,457 )     (16,488 )     (18,948 )
    Other real estate owned     23,318       24,092       25,985       25,426       29,305  
    Other assets     70,409       70,175       70,492       70,044       69,763  
      Total assets     882,878       883,632       886,961       914,998       903,774  
  Liabilities and stockholders' equity                                        
    Deposits     754,345       754,583       748,507       805,279       785,337  
    Non-deposit funding     83,409       84,791       92,054       64,892       74,309  
    Other liabilities     9,253       17,872       17,499       16,749       16,212  
      Total liabilities     847,007       857,246       858,060       886,920       875,858  
    Stockholders' equity     35,871       26,386       28,901       28,078       27,916  
      Total liabilities and stockholders' equity   $ 882,878     $ 883,632     $ 886,961     $ 914,998     $ 903,774  
Statement of Income                                        
    Interest income   $ 7,109     $ 7,040     $ 6,891     $ 7,141     $ 7,361  
    Interest expense     (1,002 )     (1,030 )     (1,072 )     (1,155 )     (1,270 )
    Net interest income     6,107       6,010       5,819       5,986       6,091  
    Provision for loan losses     1,075       900       850       600       1,250  
    Net interest income (loss) after provision for loan losses     5,032       5,110       4,969       5,386       4,841  
    Noninterest income     3,105       3,067       7,649       2,878       3,250  
    Noninterest expense     8,446       8,257       8,610       8,203       8,289  
    Income (loss) before income taxes     (309 )     (80 )     4,008       61       (198 )
    Income tax expense (benefit)     -       -       -       -       (46 )
    Net income (loss)   $ (309 )   $ (80 )   $ 4,008     $ 61     $ (152 )
    Net income (loss) for common stockholders   $ (868 )   $ (633 )   $ 3,461     $ (480 )   $ (686 )
Per Share                                        
    Book value per common share   $ 0.45     $ (1.12 )   $ (0.70 )   $ (0.84 )   $ (0.87 )
    Tangible book value per common share     (0.11 )     (1.71 )     (1.34 )     (1.51 )     (1.58 )
    Common shares outstanding (1)     6,063,441       6,063,441       6,063,441       6,063,441       6,063,441  
Earnings Performance                                        
    Return on average total assets     (0.14) %     (0.04) %     1.80 %     0.03 %     (0.07) %
    Return on average stockholders' equity     (4.60 )     (1.15 )     58.57       0.90       (2.14 )
    Net interest margin     3.34       3.21       3.11       3.21       3.25  
    Efficiency ratio (2)     85.01       84.41       90.05       88.55       83.98  
    Bank net interest margin     3.47       3.34       3.24       3.34       3.39  
Asset Quality                                        
    Nonperforming assets to total end of period assets     5.93 %     5.72 %     6.72 %     6.72 %     7.40 %
    Nonperforming loans to total end of period loans     5.13       4.72       5.93       6.54       6.72  
    Net loan charge-offs to total average loans     0.17       0.85       0.34       0.55       0.60  
    Allowance for loan losses to total end of period loans     2.06       2.06       2.72       2.99       3.39  
    Allowance for loan losses to nonperforming loans     40.06       43.63       45.92       45.73       50.40  
    Nonperforming loans   $ 29,052     $ 26,452     $ 33,662     $ 36,055     $ 37,592  
    Nonperforming assets     52,370       50,544       59,647       61,481       66,897  
    Net loan charge-offs     976       4,817       1,881       3,062       3,372  
Capital (3)                                        
    Total risk-based capital ratio     10.22 %     8.78 %     8.76 %     8.27 %     8.25 %
    Tier 1 risk-based capital ratio     7.39       5.50       5.53       4.67       4.65  
    Tier 1 leverage ratio     5.22       3.86       3.90       3.33       3.39  
   
(1) Common shares outstanding are the exact amount for period end, quarterly averages, and diluted shares.
(2) 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.
(3) The improvement in regulatory capital and ratios during 2013 for the Company occurred from positive operating results and the reversal of preferred stock dividends.

Contact Information

  • Contact:
    Daniel R. Kadolph
    Chief Financial Officer
    Centrue Financial Corporation
    Email Contact
    (815) 431-2838