SOURCE: Centrue Financial Corporation

Centrue Financial Corporation

October 01, 2015 16:15 ET

Centrue Financial Corporation Announces 2015 Second Quarter Results

OTTAWA, IL--(Marketwired - Oct 1, 2015) - Centrue Financial Corporation (OTCQB: CFCB) (OTC PINK: CFCB)

Highlights

  • Net income for second quarter 2015 totaled $1.1 million or $0.16 per common diluted share.
  • Total loans for the quarter increased by $17.3 million, or 3.0%, from the first quarter of 2015 and $33.4 million, or 6.0%, from year-end 2014.
  • Second quarter 2015 net interest margin was 3.48%, representing an increase of 4 basis points from 3.44% reported in the first quarter of 2015 and a 19 basis point increase from the 3.29% reported in the second quarter of 2014.
  • Gross recoveries for the quarter totaled $1.7 million.
  • Share data has been restated for prior periods to adjust for the 1-for-30 reverse stock split that was effective May 29, 2015.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: CFCB) (OTC PINK: CFCB), parent company of Centrue Bank (the "Bank"), reported second quarter net income of $1.1 million, or $0.16 per common diluted share, compared to net income of $1.9 million, or $65.60 per common diluted share, for the first quarter 2015 and net income of $0.4 million or ($3.06) per common diluted share for the second quarter of 2014. For the first six months of 2015, the Company reported net income of $2.9 million, or $4.62 per common diluted share, as compared to net income of $0.9 million, or ($4.18) per common diluted share, for the same period in 2014. 

A recapitalization occurred during the first quarter of 2015, having a significant impact on earnings and earnings per share including a $1.8 million gain on debt extinguishment that resulted from the Company settling its senior and subordinated debt. The Company also redeemed its Series C preferred stock at a 58.2% discount. This one-time transaction was added to net income available to common stockholders and drove up the earnings per share for that quarter and the year-to-date period.

Centrue also announced that it has filed a Registration Statement on Form S-1 for the registration of 4,833,209 of the common shares issued as part of the recapitalization. All of the shares registered under this registration statement will be offered by selling stockholders. Centrue will not receive any proceeds from this offering. The registration statement has not yet become effective, and the shares being registered may not be sold under the registration statement prior to the time the registration statement becomes effective. Centrue anticipates the registration statement will become effective and that Centrue's shares will begin trading on NASDAQ under the symbol CFCB prior to November 1, 2015. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities subject to the registration statement. 

Commenting on the second quarter, the Company's President & CEO, Kurt R. Stevenson, stated, "We made notable progress in several key areas as loan balances increased at a 12% annualized rate, the net interest margin remained stable while our earning asset base expanded, and asset quality continued to improve. The completion of the capital raise has given us a renewed drive and focus, as we work to grow top-line revenue while identifying strategies to operate more efficiently."

Securities

Total securities equaled $198.5 million at June 30, 2015, representing an increase of $32.2 million, or 19.4%, from March 31, 2015 and an increase of $49.6 million, or 33.3%, from the same quarter in 2014. The net increase from second quarter 2014 was related to allocating the recapitalization proceeds in excess of normal amortization of the portfolio for the period.

Loans

Total loans, including loans held for sale, equaled $587.0 million, representing an increase of $17.3 million, or 3.0%, from March 31, 2015 and an increase of $7.4 million, or 1.3%, from the same period-end in 2014. The net increase from first quarter 2015 was related to new organic loan growth. Second quarter of 2014 was prior to the Company's bulk asset sale in the fourth quarter of 2014 which resulted in the sale of $27.5 million in troubled loans. Competition for new commercial loan opportunities and loan renewals continues to be strong and pressures loan yields.

Funding and Liquidity

Total deposits equaled $700.1 million, a decrease of $12.6 million, or 1.8%, from March 31, 2015 and a decrease of $42.6 million, or 5.7%, from second quarter 2014. Core deposits decreased $8.4 million, or 1.6% from March 31, 2015 and increased $4.8 million, or 1.0% from June 30, 2014. Fluctuations in core deposit levels are in line with the normal business cycle cash use of our customer base.

Credit Quality

The key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 1.47% at June 30, 2015, compared to 1.40% at March 31, 2015 and 2.15% at June 30, 2014. The coverage ratio (allowance for loan losses to nonperforming loans) was 139.01% at June 30, 2015, compared to 108.85% at March 31, 2015 and 43.24% at June 30, 2014.
  • Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $6.2 million at June 30, 2015, from $7.3 million at March 31, 2015 and $28.8 million at June 30, 2014. The level of nonperforming loans to end of period loans was 1.06% at June 30, 2015, compared to 1.29% at March 31, 2015 and 4.97% at June 30, 2014.
  • Other real estate owned decreased to $9.8 million at June 30, 2015, from $10.0 million at March 31, 2015 and $21.3 million at June 30, 2014. Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $16.0 million at June 30, 2015, from $17.3 million at March 31, 2015 and decreased $34.1 million from the $50.1 million held at June 30, 2014. The ratio of nonperforming assets to total assets was 1.80% at June 30, 2015, 1.99% at March 31, 2015 and 5.76% at June 30, 2014.
  • The past due ratio was 1.24% at June 30, 2015 compared to 1.66% at March 31, 2015 and 3.61% at June 30, 2014. 

Net Interest Margin

The Company's net interest margin was 3.48% for the second quarter of 2015, representing an increase of 4 basis points from 3.44% recorded in the first quarter of 2015 and an increase of 19 basis points from 3.29% reported in the second quarter of 2014. The Bank's net interest margin was 3.56% for the second quarter of 2015, representing a decrease of 2 basis points from 3.58% recorded for the first quarter 2015 and a 14 basis point increase to the second quarter 2014 net interest margin. The improvement in the net interest margin for the Company comes from lowered cost of funds from borrowings and interest bearing deposits.

Noninterest Income and Expense

Noninterest income totaled $2.6 million for the second quarter June 30, 2015, compared to $3.1 million for the same period in 2014. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.2 million or 7.4%. This $0.2 million decrease was primarily due to decreases in service charge income, overdraft fees, and mortgage banking income.

Noninterest expense for the second quarter of 2015 was $8.0 million, compared to $8.1 million for the same period in 2014. 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 largely in the salary and benefits category.

Capital Management

Starting in 2015, the new Basel III capital rules are in effect. Along with these new capital rules came a new capital ratio called the common equity tier I capital ratio. The following table has the regulatory capital ratios as of June 30, 2015 and December 31, 2014.

                       
  Centrue Financial     Centrue Bank  
  Jun 30, 2015     Dec 31, 2014     Jun 30, 2015     Dec 31, 2014  
Capital ratios:                      
  Total risk-based capital 16.41 %   9.64 %   16.11 %   11.84 %
  Common equity tier 1 capital 11.88 %   NM     14.86 %   NM  
  Tier 1 risk-based capital 15.16 %   6.85 %   14.86 %   10.59 %
  Tier 1 leverage ratio 12.14 %   4.93 %   11.88 %   7.61 %
                       

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.

Forward Looking Statements

This release contains certain "forward-looking statements." 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, Adjusted for One for Thirty Reverse Stock Split)  
                               
    Quarters Ended  
    6/30/15     3/31/15     12/31/14     9/30/14     6/30/14  
Balance Sheet                                        
  Assets                                        
    Cash and cash equivalents   $ 35,732     $ 66,639     $ 49,167     $ 58,128     $ 62,054  
    Securities     198,463       166,340       141,473       141,538       148,891  
    Loans held for sale     169       321       364       300       689  
    Loans     586,809       569,427       553,200       575,560       578,923  
    Allowance for loan losses     (8,645 )     (7,995 )     (7,981 )     (12,863 )     (12,461 )
    Loans, net of allowance     578,164       561,432       545,219       562,697       566,462  
    Other real estate owned     9,777       9,996       10,256       20,220       21,285  
    Other assets     68,710       68,840       70,610       71,207       69,970  
      Total assets     891,015       873,568       817,089       854,090       869,350  
Liabilities and stockholders' equity                                        
  Deposits     700,118       712,673       698,824       728,940       742,677  
  Non-deposit funding     103,454       72,851       77,829       79,162       81,085  
  Other liabilities     4,615       5,094       10,108       9,423       9,221  
      Total liabilities     808,187       790,618       786,761       817,525       832,983  
  Stockholders' equity     82,828       82,950       30,328       36,565       36,367  
      Total liabilities and stockholders' equity   $ 891,015     $ 873,568     $ 817,089     $ 854,090     $ 869,350  
Statement of Income                                        
    Interest income   $ 7,007     $ 6,734     $ 6,747     $ 6,947     $ 6,928  
    Interest expense     561       694       771       871       911  
    Net interest income     6,446       6,040       5,976       6,076       6,017  
    Provision for loan losses     -       -       4,927       675       700  
    Net interest income (loss) after provision for loan losses     6,446       6,040       1,049       5,401       5,317  
    Noninterest income     2,576       4,027       2,990       3,204       3,144  
    Noninterest expense     7,953       8,183       10,055       8,032       8,087  
    Income (loss) before income taxes     1,069       1,884       (6,016 )     573       374  
    Income tax expense (benefit)     16       17       -       -       -  
    Net income (loss)   $ 1,053     $ 1,867     $ (6,016 )   $ 573     $ 374  
    Net income (loss) for common stockholders (1)   $ 1,053     $ 14,529     $ (7,000 )   $ (235 )   $ (619 )
Per Share                                        
    Diluted earnings (loss) per common share (1)     0.16       65.60       (46.32 )     (1.41 )     (3.06 )
    Book value per common share   $ 12.37     $ 12.39     $ (32.93 )   $ 8.34     $ 15.83  
    Weighted average common shares outstanding     6,484,457       221,492       151,122       166,641       202,115  
    Common shares outstanding     6,485,218       6,484,455       151,122       151,122       202,115  
Earnings Performance                                        
    Return on average total assets     0.49 %     0.91 %     (2.85 )%     0.26 %     0.17 %
    Return on average stockholders' equity     5.08       24.16       (65.13 )     6.24       4.15  
    Net interest margin     3.48       3.44       3.37       3.33       3.29  
    Efficiency ratio (2)     83.83       92.20       93.00       82.31       84.51  
    Bank net interest margin     3.56       3.58       3.51       3.46       3.42  
Asset Quality                                        
    Nonperforming assets to total end of period assets     1.80 %     1.99 %     2.20 %     5.14 %     5.76 %
    Nonperforming loans to total end of period loans     1.06       1.29       1.40       4.11       4.97  
    Net loan charge-offs to total average loans     (0.11 )     -       1.22       0.05       0.11  
    Allowance for loan losses to total end of period loans     1.47       1.40       1.44       2.23       2.15  
    Allowance for loan losses to nonperforming loans     139.01       108.85       102.99       54.32       43.24  
    Nonperforming loans   $ 6,219     $ 7,345     $ 7,749     $ 23,678     $ 28,820  
    Nonperforming assets     15,996       17,341       18,005       43,898       50,105  
    Net loan charge-offs     (650 )     (14 )     9,809       273       628  
Capital                                        
    Total risk-based capital ratio     16.41 %     16.84 %     9.64 %     10.18 %     10.01 %
    Common equity tier 1 risk-based capital ratio     11.88       12.22       NM       NM       NM  
    Tier 1 leverage ratio     12.14       12.45       4.93       5.52       5.48  
   
(1) Net income for common stockholders was significantly impacted by a GAAP requirement that any discount received on preferred stock redemption be attributed back to common stockholders. This non-recurring item reflects the retirement of the Series C Preferred Stock for $19 million which had outstanding par value of $32.7 million and $12.0 million of unpaid dividends, resulting in the $25.7 million addition to net income for common stockholders. This impacts the earnings per share but does not impact the income statement, book value or any of the earnings performance ratios.
   
(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