SOURCE: Centrue Financial Corporation

November 01, 2013 16:15 ET

Centrue Financial Corporation Announces 2013 Third Quarter Results

OTTAWA, IL--(Marketwired - Nov 1, 2013) -  Centrue Financial Corporation (OTCQB: TRUE) (PINKSHEETS: TRUE)

Highlights

  • Third quarter of 2013 net loss was $79.9 thousand, compared to a net loss of $3.3 million for the third quarter of 2012.
  • The Company's principal subsidiary, Centrue Bank (the "Bank"), posted net income of $0.2 million for the third quarter of 2013 compared to a net loss of $3.2 million for the third quarter of 2012.
  • The Company and Bank's results for the third quarter were impacted by $0.9 million in provision expense and $0.8 million in other real estate owned ("OREO") expenses. Partially offsetting these expense items were gains from security sales and OREO sales. 
  • The Bank's third quarter 2013 net interest margin was stable at 3.34%, a 1 basis point increase from the 3.33% reported in the third quarter of 2012.
  • Performing loans have increased by $12.9 million compared to year-end 2012. This has been accomplished by reducing nonperforming loans through charge-offs and pay downs and replacing them with new loan growth.
  • Centrue Bank remains "well-capitalized" at the end of the third quarter of 2013.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE), parent company of Centrue Bank, reported third quarter net loss of $80 thousand, or ($0.10) per common diluted share, compared to a net loss of $3.3 million or ($0.63) per common diluted share for the third quarter 2012. For the first nine months of 2013, the Company reported net income of $4.0 million, or $0.39 per common diluted share, as compared to a net loss of $3.7 million, or ($0.87) per common diluted share, for the same period in 2012.

Securities

Total securities equaled $142.1 million at September 30, 2013, representing a decrease of $59.3 million, or 29.4%, from December 31, 2012 and a decrease of $39.4 million, or 21.7%, from the same quarter in 2012. The net decrease from third quarter 2012 was primarily related to a timing difference in securities sold and the subsequent reinvestment of $30.0 million completed in October 2013.

Loans

Performing loans increased $12.9 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 $560.8 million, representing an increase of $1.8 million, or 0.3%, from December 31, 2012 and a decrease of $0.7 million from the third quarter 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 $754.6 million, representing a decrease of $30.7 million, or 3.9%, from December 31, 2012 and a decrease of $28.1 million, or 3.6%, from September 30, 2012. The net decrease from year-end 2012 was largely related to maturing time deposits not being renewed and public funds being drawn down as school districts run down their funds before property tax revenues replenish their balances. Core deposits were slightly improved over year-end 2012 and were $27.7 million above the same quarter in 2012.

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 September 30, 2013, compared to 3.75% at September 30, 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 September 30, 2013.
  • The provision for loan losses for the third quarter of 2013 was $0.9 million, a decrease from the $5.8 million recorded in the third quarter of 2012. The third quarter of 2013 provision level decrease was driven by decreasing levels of nonperforming loans and stabilizing collateral values on troubled loans.
  • Net loan charge-offs for the third quarter of 2013 were $4.8 million, or 0.85% of average loans, compared with $2.9 million, or 0.52% of average loans, for the third quarter of 2012. Loan charge-offs during the third 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 $26.5 million at September 30, 2013, from $46.7 million at September 30, 2012. The $20.2 million decrease from the third quarter of 2012 to the third quarter of 2013 was due to a combination of successful loan workout strategies, charge-offs referenced above and transfers to OREO. The $26.5 million recorded at September 30, 2013 includes $19.1 million in nonaccrual loans and $7.4 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 4.72% at September 30, 2013, compared to 6.72% at December 31, 2012 and 8.32% at September 30, 2012.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 43.63% at September 30, 2013, compared to 45.08% at September 30, 2012.
  • Other real estate owned decreased to $24.1 million at September 30, 2013, a decrease from $28.6 million at September 30, 2012. In the third quarter of 2013, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.2 million. Third quarter additions were more than offset by $1.7 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 $50.5 million at September 30, 2013, a decrease of $24.8 million from the $75.3 million held at September 30, 2012. The ratio of nonperforming assets to total assets was 5.73% at September 30, 2013, 7.40% at December 31, 2012 and 8.33% at September 30, 2012.
  • The past due ratio was 4.44% at September 30, 2013 compared to 7.40% at September 30, 2012. Action Listed Loans (classified and criticized loans) declined to $75.2 million at September 30, 2013 from $80.8 million at December 31, 2012 and $94.0 million at September 30, 2012.

Net Interest Margin

The Company's net interest margin was 3.21% for the third quarter of 2013, a 1 basis point increase over the 3.20% reported in the third quarter of 2012. The Bank's net interest margin was 3.34% for the third quarter of 2013, a 1 basis point increase to the third 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, an increase in earning assets, decreasing cost of funds and the removal of nonperforming loans out of earning assets. Comparing third quarter periods the yield on funding fell slightly more than the yield on earning assets.

Noninterest Income and Expense

Noninterest income totaled $3.1 million for the third quarter ended September 30, 2013, compared to $3.8 million for the same period in 2012. Excluding gains related to the sale of OREO, securities and other assets, noninterest income for the period was $0.4 million below what it was in the same period a year ago. This $0.4 million decrease was mainly due to decreases in mortgage banking income and revenue on bank-owned life insurance. For the nine months ended September 30, 2013, noninterest income was $13.6 million compared to $10.7 million for the same period in 2012. When excluding the same items from above, year-to-date noninterest income for 2013 was $0.7 million below the comparable period for 2012. The main drivers of this decline have been in the mortgage banking, services charges, income from OREO and bank-owned life insurance categories.

Total noninterest expense for the third quarter of 2013 was $8.3 million, which was $0.2 million below the same period in 2012. Excluding OREO Valuation Adjustments taken in both periods, noninterest expense levels were flat at $7.9 million. For the nine months ended September 30, 2013, noninterest expense was $25.1 million which was $0.2 million below the same period in 2012. When excluding the OREO Valuation Adjustments, year-to-date noninterest expense was $0.2 million above the comparable amount for 2012. Loan processing and collection costs saw the largest decrease from the prior year at $0.3 million, but were offset by higher expenses in several other categories.

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 September 30, 2013 except for the Company's Tier 1 leverage ratio which was 3.86%.

                         
    Centrue Financial     Centrue Bank  
    Sep 30, 2013     Dec 31, 2012     Sep 30, 2013     Dec 31, 2012  
Capital ratios:                        
Total risk-based capital   8.78 %   8.25 %   11.83 %   10.41 %
Tier 1 risk-based capital   5.50 %   4.65 %   10.57 %   9.14 %
Tier 1 leverage ratio   3.86 %   3.39 %   7.41 %   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  
  9/30/13     6/30/13     3/31/13     12/31/12     9/30/12  
Balance Sheet                                      
  Assets                                      
    Cash and cash equivalents $ 97,982     $ 51,393     $ 80,420     $ 63,271     $ 79,423  
    Securities   142,149       186,734       204,077       201,369       188,524  
    Loans   560,774       567,814       551,519       559,014       561,476  
    Allowance for loan losses   (11,540 )     (15,457 )     (16,488 )     (18,948 )     (21,070 )
    Other real estate owned   24,092       25,985       25,426       29,305       28,601  
    Other assets   70,175       70,492       70,044       69,763       67,871  
      Total assets   883,632       886,961       914,998       903,774       904,825  
  Liabilities and stockholders' equity                                      
    Deposits   754,583       748,507       805,279       785,337       782,597  
    Non-deposit funding   84,791       92,054       64,892       74,309       77,959  
    Other liabilities   17,872       17,499       16,749       16,212       15,562  
      Total liabilities   857,246       858,060       886,920       875,858       876,118  
    Stockholders' equity   26,386       28,901       28,078       27,916       28,707  
      Total liabilities and stockholders' equity $ 883,632     $ 886,961     $ 914,998     $ 903,774     $ 904,825  
Statement of Income                                      
      Interest income $ 7,040     $ 6,891     $ 7,141     $ 7,361     $ 7,726  
      Interest expense   (1,030 )     (1,072 )     (1,155 )     (1,270 )     (1,428 )
      Net interest income   6,010       5,819       5,986       6,091       6,298  
      Provision for loan losses   900       850       600       1,250       5,750  
      Net interest income (loss) after provision for loan losses   5,110       4,969       5,386       4,841       548  
      Noninterest income   3,067       7,649       2,878       3,250       3,829  
      Noninterest expense   8,257       8,610       8,203       8,289       8,484  
      Income (loss) before income taxes   (80 )     4,008       61       (198 )     (4,107 )
      Income tax expense (benefit)   -       -       -       (46 )     (788 )
      Net income (loss) $ (80 )   $ 4,008     $ 61     $ (152 )   $ (3,319 )
      Net income (loss) for common stockholders $ (633 )   $ 3,461     $ (480 )   $ (686 )   $ (3,848 )
Per Share                                      
      Basic earnings (loss) per common share $ (0.10 )   $ 0.57     $ (0.08 )   $ (0.11 )   $ (0.63 )
      Diluted earnings (loss) per common share   (0.10 )     0.57       (0.08 )     (0.11 )     (0.63 )
      Book value per common share $ (1.12 )   $ (0.70 )   $ (0.84 )   $ (0.87 )   $ (0.74 )
      Tangible book value per common share   (1.71 )     (1.34 )     (1.51 )     (1.58 )     (1.49 )
      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   (0.04) %     1.80 %     0.03 %     (0.07) %     (1.44) %
      Return on average stockholders' equity   (1.15 )     58.57       0.90       (2.14 )     (40.93 )
      Net interest margin   3.21       3.11       3.21       3.25       3.20  
      Efficiency ratio (1)   84.41       90.05       88.55       73.98       79.13  
      Bank net interest margin   3.34       3.24       3.34       3.39       3.33  
Asset Quality                                      
      Nonperforming assets to total end of period assets   5.72 %     6.72 %     6.72 %     7.40 %     8.33 %
      Nonperforming loans to total end of period loans   4.72       5.93       6.54       6.72       8.32  
      Net loan charge-offs to total average loans   0.85       0.34       0.55       0.60       0.52  
      Allowance for loan losses to total end of period loans   2.06       2.72       2.99       3.39       3.75  
      Allowance for loan losses to nonperforming loans   43.63       45.92       45.73       50.40       45.08  
      Nonperforming loans $ 26,452     $ 33,662     $ 36,055     $ 37,592     $ 46,739  
      Nonperforming assets   50,544       59,647       61,481       66,897       75,340  
      Net loan charge-offs   4,817       1,881       3,062       3,372       2,914  
Capital                                      
      Total risk-based capital ratio   8.78 %     8.76 %     8.27 %     8.25 %     8.38 %
      Tier 1 risk-based capital ratio   5.50       5.53       4.67       4.65       4.78  
      Tier 1 leverage ratio   3.86       3.90       3.33       3.39       3.38  

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