SOURCE: Centrue Financial Corporation

May 01, 2014 16:15 ET

Centrue Financial Corporation Announces 2014 First Quarter Results

OTTAWA, IL--(Marketwired - May 1, 2014) -  Centrue Financial Corporation (OTCQB: CFCB) (PINKSHEETS: CFCB)

Highlights

  • First quarter of 2014 net income was $558 thousand, compared to a net loss of $309 thousand for the fourth quarter of 2013 and net income of $61 thousand in the first quarter of 2013.
  • The Company's principal subsidiary, Centrue Bank (the "Bank"), posted net income of $112 thousand for the first quarter of 2014 compared to net income of $16 thousand for the fourth quarter of 2013 and net income of $359 thousand for the first quarter of 2013.
  • First quarter 2014 net interest margin was 3.32%, representing a decrease of 2 basis points from 3.34% reported in the fourth quarter of 2013 and an 11 basis point increase from the 3.21% reported in the first quarter of 2013.
  • Centrue Bank remains "Well Capitalized" at the end of the first quarter of 2014.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: CFCB) (PINKSHEETS: CFCB), parent company of Centrue Bank, reported first quarter net income of $558 thousand, or ($0.04) per common diluted share, compared to a net loss of $309 thousand, or ($0.14) per common diluted share, for the fourth quarter 2013.

"The year has gotten off to a good start as loans have grown during the quarter, net interest margin remains stable and asset quality metrics continue to improve. Adding to these positives is the fact that we continue to reduce operating expenses as asset quality expenses are diminished," remarked Kurt R. Stevenson, President & CEO.

Securities
Total securities equaled $157.0 million at March 31, 2014, representing a decrease of $6.9 million, or 4.2%, from December 31, 2013 and a decrease of $47.1 million, or 23.1%, from the same quarter in 2013. The net decrease from first quarter 2013 was related to normal amortization of the portfolio along with the sale of collateralized debt securities during the second quarter of 2013 with the proceeds being used to fund new loan growth.

Loans

Total loans equaled $576.1 million, representing an increase of $9.9 million, or 1.7%, from December 31, 2013 and an increase of $24.6 million, or 4.5%, from the same period-end in 2013. The net increase from year-end 2013 was related to a combination of normal seasonal line draws and new organic loan growth. The competitive landscape for new commercial loan opportunities and loan renewals continues to pressure loan yields.

Funding and Liquidity

Total deposits equaled $772.2 million, representing an increase of $17.9 million, or 2.4%, from December 31, 2013 and a decrease of $33.1 million, or 4.1%, from March 31, 2013. Core deposits increased $23.6 million, or 4.9%, and $8.8 million, or 1.8%, from December 31, 2013 and March 31, 2013, respectively. The net increase from year-end 2013 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 relatively unchanged during the first quarter of 2014 as funding remains available for any new loan opportunities.

Credit Quality

The key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 2.15% at March 31, 2014, compared to 2.06% at December 31, 2013 and 2.99% at March 31, 2013. 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, 2014.
  • The provision for loan losses for the first quarter of 2014 was $0.9 million, a decrease from the $1.1 million recorded in the fourth quarter of 2013 and an increase from the $0.6 million recorded in the first quarter of 2013. The first quarter of 2014 provision level decrease compared to fourth quarter of 2013 was driven by decreasing levels of nonperforming loans and stabilizing collateral values on troubled loans.
  • Net loan charge-offs for the first quarter of 2014 were $0.1 million, or 0.03% of average loans, compared with $1.0 million, or 0.17% of average loans, for the fourth quarter of 2013 and $3.1 million, or 0.55% of average loans, for the first quarter of 2013. 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 $28.3 million at March 31, 2014, from $29.1 million at December 31, 2013 and $36.1 million at March 31, 2013. The $7.8 million decrease from the first quarter of 2013 to the first quarter of 2014 was due to a combination of successful loan workout strategies, charge-offs and transfers to OREO. The $28.3 million recorded at March 31, 2014 included $10.6 million in nonaccrual loans and $17.7 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 4.91% at March 31, 2014, compared to 5.13% at December 31, 2013 and 6.54% at March 31, 2013.
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 43.81% at March 31, 2014, compared to 40.06% at December 31, 2013 and 45.73% at March 31, 2013.
  • Other real estate owned decreased to $22.4 million at March 31, 2014, from $23.3 million at December 31, 2013 and $25.4 million at March 31, 2013. In the first quarter of 2014, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.1 million. First quarter additions were more than offset by $0.9 million in dispositions and $0.1 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 $50.7 million at March 31, 2014, from $52.4 million at December 31, 2013 and decreased $10.8 million from the $61.5 million held at March 31, 2013. The ratio of nonperforming assets to total assets was 5.67% at March 31, 2014, 5.93% at December 31, 2013 and 6.72% at March 31, 2013. This improvement brought the Company to the lowest nonperforming ratio since first quarter 2009 and continues the trend of meaningful asset quality improvement. 
  • The past due ratio was 4.43% at March 31, 2014 compared to 4.38% at December 31, 2013 and 7.79% at March 31, 2013. Action Listed Loans (classified and criticized loans) declined to $64.6 million at March 31, 2014 from $71.5 million at December 31, 2013 and $78.6 million at March 31, 2013. The Company continues to work diligently on reducing and resolving troubled loan relationships.

Net Interest Margin

The net interest margin was 3.32% for the first quarter of 2014, representing a decrease of 2 basis points from 3.34% recorded in the fourth quarter of 2013 and an increase of 11 basis points from 3.21% reported in the first quarter of 2013. The Bank's net interest margin was 3.45% for the first quarter of 2014, representing a decrease of 2 basis points from 3.47% recorded for the fourth quarter 2013 and an 11 basis point increase from the first quarter 2013. The volatility of the net interest margin is being affected by several factors including: falling yields in the loan portfolio, decreasing cost of funds and the removal of nonperforming loans from the earning assets mix. The yield on the securities portfolio saw a meaningful improvement during the quarter as strategic modifications to the portfolio last year have contributed to lower premium amortization and higher yields.

Noninterest Income and Expense

Noninterest income totaled $3.5 million for the first quarter March 31, 2014, compared to $2.9 million for the same period in 2013. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.3 million or 11.5%. This $0.3 million decrease was mainly due to a decrease in Mortgage Banking income.

Total noninterest expense for the first quarter of 2014 was $8.0 million, compared to $8.2 million for the same period in 2013. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels increased by $0.1 million, or 1.3%. This $0.1 million increase in expense was spread over various categories including occupancy, furniture and equipment, marketing, telephone and data processing costs. Favorably impacting expense levels was a significant drop in loan processing and collection costs.

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 March 31, 2014.

                         
    Centrue Financial     Centrue Bank  
    Mar 31, 2014     Dec 31, 2013     Mar 31, 2014     Dec 31, 2013  
Capital ratios:                        
  Total risk-based capital   10.25 %   10.22 %   11.85 %   11.91 %
  Tier 1 risk-based capital   7.47 %   7.39 %   10.59 %   10.65 %
  Tier 1 leverage ratio   5.29 %   5.22 %   7.48 %   7.52 %
                           

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  
    3/31/14     12/31/13     9/30/13     6/30/13     3/31/13  
Balance Sheet                                        
  Assets                                        
    Cash and cash equivalents   $ 80,509     $ 70,748     $ 97,982     $ 51,393     $ 80,420  
    Securities     156,958       163,869       142,149       186,734       204,077  
    Loans     576,145       566,171       560,774       567,814       551,519  
    Allowance for loan losses     (12,389 )     (11,637 )     (11,540 )     (15,457 )     (16,488 )
    Other real estate owned     22,385       23,318       24,092       25,985       25,426  
    Other assets     70,136       70,409       70,175       70,492       70,044  
      Total assets     893,744       882,878       883,632       886,961       914,998  
  Liabilities and stockholders' equity                                        
    Deposits     772,195       754,345       754,583       748,507       805,279  
    Non-deposit funding     76,232       83,409       84,791       92,054       64,892  
    Other liabilities     9,424       9,253       17,872       17,499       16,749  
      Total liabilities     857,851       847,007       857,246       858,060       886,920  
    Stockholders' equity     35,893       35,871       26,386       28,901       28,078  
      Total liabilities and stockholders' equity   $ 893,744     $ 882,878     $ 883,632     $ 886,961     $ 914,998  
Statement of Income                                        
  Interest income   $ 6,973     $ 7,109     $ 7,040     $ 6,891     $ 7,141  
  Interest expense     947       1,002       1,030       1,072       1,155  
  Net interest income     6,026       6,107       6,010       5,819       5,986  
  Provision for loan losses     900       1,075       900       850       600  
  Net interest income (loss) after provision for loan losses     5,126       5,032       5,110       4,969       5,386  
  Noninterest income     3,472       3,105       3,067       7,649       2,878  
  Noninterest expense     8,040       8,446       8,257       8,610       8,203  
  Income (loss) before income taxes     558       (309 )     (80 )     4,008       61  
  Income tax expense (benefit)     -       -       -       -       -  
  Net income (loss)   $ 558     $ (309 )   $ (80 )   $ 4,008     $ 61  
  Net income (loss) for common stockholders   $ (226 )   $ (868 )   $ (633 )   $ 3,461     $ (480 )
Per Share                                        
  Book value per common share   $ 0.45     $ 0.45     $ (1.12 )   $ (0.70 )   $ (0.84 )
  Tangible book value per common share     (0.07 )     (0.11 )     (1.71 )     (1.34 )     (1.51 )
  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     0.26 %     (0.14) %     (0.04) %     1.80 %     0.03 %
  Return on average stockholders' equity     6.28       (4.60 )     (1.15 )     58.57       0.90  
  Net interest margin     3.32       3.34       3.21       3.11       3.21  
  Efficiency ratio (1)     90.38       85.01       84.41       90.05       88.55  
  Bank net interest margin     3.45       3.47       3.34       3.24       3.34  
Asset Quality                                        
  Nonperforming assets to total end of period assets     5.67 %     5.93 %     5.72 %     6.72 %     6.72 %
  Nonperforming loans to total end of period loans     4.91       5.13       4.72       5.93       6.54  
  Net loan charge-offs to total average loans     0.03       0.17       0.85       0.34       0.55  
  Allowance for loan losses to total end of period loans     2.15       2.06       2.06       2.72       2.99  
  Allowance for loan losses to nonperforming loans     43.81       40.06       43.63       45.92       45.73  
  Nonperforming loans   $ 28,276     $ 29,052     $ 26,452     $ 33,662     $ 36,055  
  Nonperforming assets     50,661       52,370       50,544       59,647       61,481  
  Net loan charge-offs     148       976       4,817       1,881       3,062  
Capital                                        
  Total risk-based capital ratio     10.25 %     10.22 %     8.78 %     8.76 %     8.27 %
  Tier 1 risk-based capital ratio     7.47       7.39       5.50       5.53       4.67  
  Tier 1 leverage ratio     5.29       5.22       3.86       3.90       3.33  
                                           
(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.

Contact Information

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