SOURCE: Centrue Financial Corporation

Centrue Financial Corporation

October 29, 2015 12:00 ET

Centrue Financial Corporation Announces 2015 Third Quarter Results

OTTAWA, IL--(Marketwired - Oct 29, 2015) - Centrue Financial Corporation (NASDAQ: CFCB)

Highlights

  • Net income for third quarter 2015 of $1.1 million.
  • Total loans increased by $25.1 million or 4.28% from the second quarter of 2015 and $58.5 million or 10.57% from year-end 2014.
  • Total securities increased $16.2 million or 8.16% from the second quarter 2015 and $73.2 million or 51.73% from the fourth quarter 2014.
  • The Company registered with the SEC and its common stock trades on NASDAQ with the ticker symbol of CFCB.
  • Share data has been restated for prior periods to account for a 1:30 reverse stock split that was effective May 28, 2015.

Centrue Financial Corporation (the "Company" or "Centrue") (NASDAQ: CFCB), parent company of Centrue Bank, reported third quarter net income of $1.1 million, or $0.11 per common diluted share, compared to net income of $0.6 million or ($1.41) per common diluted share for the third quarter of 2014. For the first nine months of 2015, the Company reported net income of $4.0 million, or $3.68 per common diluted share, as compared to net income of $1.5 million, or ($5.68) per common diluted share, for the same period in 2014. Impacting net income and earnings per share for the first nine months of 2015 was a $1.8 million gain on debt extinguishment recorded in the first quarter that resulted from the Company settling its senior and subordinated debt as part of its recapitalization.

Commenting on the third quarter, the Company's President & CEO, Kurt R. Stevenson, stated, "We continued to experience positive momentum in several key areas including growth in quality loans and core deposits and improved asset quality metrics. As a result of these strong core fundamentals, we again saw an increase in earnings per share. This, coupled with our recent NASDAQ listing, is consistent with our objective of enhanced shareholder value."

Securities
Total securities equaled $214.7 million at September 30, 2015, representing an increase of $73.2 million, or 51.73%, from December 31, 2014 and from the same quarter in 2014. The net increase from third quarter 2014 was related to putting proceeds from the fourth quarter 2014 bulk asset sale and first quarter recapitalization to work above the amount of normal amortization of the portfolio during the period.

Loans
Total loans equaled $612.1 million, representing an increase of $58.5 million, or 10.57%, from December 31, 2014 and an increase of $36.3 million, or 6.31%, from the same period-end in 2014. The net increase from fourth quarter 2014 was related to a combination of new organic loan growth and normal seasonal line draws. Third quarter of 2014 was prior to the Company's bulk asset sale in the fourth quarter of 2014 which resulted in the sale of $35.2 million in troubled assets. Competition for new commercial loan opportunities and loan renewals continues to be strong and pressures loan yields.

Funding and Liquidity
Total deposits equaled $709.5 million, representing an increase of $10.7 million, or 1.53%, from December 31, 2014 and a decrease of $19.4 million, or 2.66%, from third quarter 2014. Core deposits increased $20.9 million, or 4.25%, and $19.5 million, or 3.95% from December 31, 2014 and September 30, 2014, respectively. Core deposits total $513.0 million or 72.3% of deposits. The net increase from fourth quarter 2014 was largely related to initiatives aimed at deepening deposit relationships with loan customers and a general increase in deposits from existing account holders as noncore and brokered time deposits matured and were not replaced.

Credit Quality
The key credit quality metrics are as follows:

  • The allowance for loan losses to total loans was 1.37% at September 30, 2015, compared to 1.44% at December 31, 2014 and 2.23% at September 30, 2014. 
  • The coverage ratio (allowance for loan losses to nonperforming loans) was 139.24% at September 30, 2015, compared to 102.99% at December 31, 2014 and 54.32% at September 30, 2014.
  • There was no provision for loan losses taken for the third quarter of 2015 compared to $4.9 million in the fourth quarter 2014 and $0.7 million recorded in the third quarter of 2014. The third quarter of 2015 provision level decrease was driven by decreased levels of nonperforming loans and stabilizing collateral values on troubled loans.
  • Net loan charge-offs for the third quarter of 2015 were $0.2 million, or 0.04% of average loans, compared with $9.8 million, or 1.22% of average loans, for the fourth quarter of 2014 and $0.3 million, or 0.05% of average loans, for the third quarter of 2014. 
  • Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $6.0 million at September 30, 2015, from $7.7 million at December 31, 2014 and $23.7 million at September 30, 2014. The level of nonperforming loans to end of period loans was 0.99% at September 30, 2015, compared to 1.40% at December 31, 2014 and 4.11% at September 30, 2014.
  • Other real estate owned decreased to $9.8 million for September 30, 2015 from $10.3 million at December 31, 2014 and $20.2 million at September 30, 2014.
  • Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $15.8 million at September 30, 2015, from $18.0 million at December 31, 2014 and $43.9 million held at September 30, 2014. The ratio of nonperforming assets to total assets was 1.67% at September 30, 2015, 2.20% at December 31, 2014 and 5.14% at September 30, 2014.
  • Classified loans (loans designated as Substandard or Doubtful) equaled $10.4 million at September 30, 2015, compared to $13.8 million at December 31, 2014 and $30.6 million at September 30, 2014.
  • The past due ratio was 1.47% at September 30, 2015 compared to 0.94% at December 31, 2014 and 2.55% at September 30, 2014.

Net Interest Margin
The Company's net interest margin was 3.34% for the third quarter of 2015, representing an increase of one basis point from 3.33% reported in the third quarter of 2014. The improvement in the net interest margin is being driven by the addition of new earning assets, decreasing cost of funds, and the reduction nonperforming loans.

Noninterest Income and Expense
Noninterest income totaled $3.2 million for both the third quarter September 30, 2015 and 2014. Excluding gains related to the sale of OREO, securities and other nonrecurring income, noninterest income decreased $0.1 million or 3.85%. This $0.1 million decrease was mainly due to a decrease in service charge income and mortgage banking income. For the nine months ended September 30, 2015, noninterest income was flat at $9.8 million when compared to the same time period in 2014. When excluding the same items as above, year-to-date noninterest income decreased $0.5 million in comparison to the same period in 2014. This $0.5 million decrease in noninterest income is for the same reasons as stated above.

Noninterest expense for the third quarter of 2015 was $8.8 million, compared to $8.0 million for the same period in 2014. Excluding OREO valuation adjustments taken in both periods and other nonrecurring expenses, noninterest expense levels increased by $0.2 million, or 2.63%. This $0.2 million increase in expense was largely in the salary and benefits category. For the nine months ended September 30, 2015, noninterest expense was $25.0 million compared to $24.2 million for the nine months ended September 30, 2014. When excluding OREO valuation adjustments and other nonrecurring expenses taken in both periods, noninterest expense increased $0.5 million mainly for the same reason as stated for the quarter.

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 presents the regulatory capital ratios as of September 30, 2015 and December 31, 2014.

                 
    Centrue Financial   Centrue Bank
    Sep 30, 2015   Dec 31, 2014   Sep 30, 2015   Dec 31, 2014
Capital ratios:                
Total risk-based capital   15.71%   9.64%   15.50%   11.84%
Common equity tier 1 capital   11.43%   NA   14.34%   NA
Tier 1 risk-based capital   14.55%   6.85%   14.34%   10.59%
Tier 1 leverage ratio   11.49%   4.93%   11.31%   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)
 
    Quarters Ended  
      9/30/15     6/30/15     3/31/15     12/31/14     9/30/14  
Balance Sheet                                
  Assets                                
    Cash and cash equivalents   $ 45,686   $ 35,732   $ 66,639   $ 49,167   $ 58,128  
    Securities     214,701     198,463     166,340     141,473     141,538  
    Loans held for sale     214     169     321     364     300  
    Loans     611,918     586,809     569,427     553,200     575,560  
    Allowance for loan losses     (8,403 )   (8,645 )   (7,995 )   (7,981 )   (12,863 )
    Loans, net of allowance     603,515     578,164     561,432     545,219     562,697  
    Other real estate owned     9,755     9,777     9,996     10,256     20,220  
    Other assets     69,805     68,710     68,840     70,610     71,207  
      Total assets     943,676     891,015     873,568     817,089     854,090  
  Liabilities and stockholders' equity                                
    Deposits     709,535     700,118     712,673     698,824     728,940  
    Non-deposit funding     144,757     103,454     72,851     77,829     79,162  
    Other liabilities     5,636     4,615     5,094     10,108     9,423  
      Total liabilities     859,928     808,187     790,618     786,761     817,525  
    Stockholders' equity     83,748     82,828     82,950     30,328     36,565  
      Total liabilities and stockholders' equity   $ 943,676   $ 891,015   $ 873,568   $ 817,089   $ 854,090  
Statement of Income                                
    Interest income   $ 7,336   $ 7,007   $ 6,734   $ 6,747   $ 6,947  
    Interest expense     599     561     694     771     871  
    Net interest income     6,737     6,446     6,040     5,976     6,076  
    Provision for loan losses     -     -     -     4,927     675  
    Net interest income after provision for loan losses     6,737     6,446     6,040     1,049     5,401  
    Noninterest income     3,238     2,576     4,027     2,990     3,204  
    Noninterest expense     8,842     7,953     8,183     10,055     8,032  
    Income (loss) before income taxes     1,133     1,069     1,884     (6,016 )   573  
    Income tax expense     45     16     17     -     -  
    Net income (loss)   $ 1,088   $ 1,053   $ 1,867   $ (6,016 ) $ 573  
    Net income (loss) for common stockholders (1)   $ 693   $ 1,053   $ 14,529   $ (7,000 ) $ (235 )
Per Share                                
    Diluted earnings (loss) per common share (1)     0.11     0.16     65.60     (46.32 )   (1.41 )
    Book value per common share   $ 12.51   $ 12.37   $ 12.39   $ (32.93 ) $ 8.34  
    Weighted average common shares outstanding     6,485,218     6,484,457     221,492     151,122     166,641  
    Common shares outstanding     6,485,218     6,485,218     6,484,455     151,122     151,122  
  Earnings Performance                                
    Return on average total assets     0.47 %   0.49 %   0.91 %   (2.85 )%   0.26 %
    Return on average stockholders' equity     5.17     5.08     24.16     (65.13 )   6.24  
    Net interest margin     3.34     3.48     3.44     3.37     3.33  
    Efficiency ratio (2)     80.16     83.83     92.20     93.00     82.31  
    Bank net interest margin     3.40     3.56     3.58     3.51     3.46  
  Asset Quality                                
    Nonperforming assets to total end of period assets     1.67 %   1.80 %   1.99 %   2.20 %   5.14 %
    Nonperforming loans to total end of period loans     0.99     1.06     1.29     1.40     4.11  
    Net loan charge-offs (recoveries) to total average loans     0.04     (0.11 )   -     1.22     0.05  
    Allowance for loan losses to total end of period loans     1.37     1.47     1.40     1.44     2.23  
    Allowance for loan losses to nonperforming loans     139.24     139.01     108.85     102.99     54.32  
    Nonperforming loans   $ 6,035   $ 6,219   $ 7,345   $ 7,749   $ 23,678  
    Nonperforming assets     15,790     15,996     17,341     18,005     43,898  
    Net loan charge-offs (recoveries)     242     (650 )   (14 )   9,809     273  
  Capital                                
    Total risk-based capital ratio     15.71 %   16.41 %   16.84 %   9.64 %   10.18 %
    Common equity tier 1 risk-based capital ratio     11.43     11.88     12.22     NM     NM  
    Tier 1 leverage ratio     11.49     12.14     12.45     4.93     5.52  
                                 
(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