Citizens First Corporation Announces Second Quarter 2014 Results

BOWLING GREEN, Ky., July 21, 2014 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the quarter ending June 30, 2014, which include the following:

  • For the quarter ended June 30, 2014, the Company reported net income of $733,000, which represents an increase of $42,000 from the linked quarter ended March 31, 2014 and a decrease of $55,000 from the quarter ended June 30, 2013. Earnings per diluted common share for the current quarter were $0.29, an increase of $0.02 from the linked quarter ended March 31, 2014 and a decrease of $0.01 for the quarter ended June 30, 2013.
  • For the six months ended June 30, 2014, net income totaled $1.42 million, or $0.56 per diluted common share.  This represents an increase of $521,000, or $0.31 per diluted common share, from the net income of $903,000 in the first six months of the previous year.
  • The Company's net interest margin was 3.74% for the quarter ended June 30, 2014 compared to 3.81% for the linked quarter ended March 31, 2014 and 3.77% for the quarter ended June 30, 2013, a decrease of 7 basis points for the linked quarter and a decrease of 3 basis points from the prior year.  The Company's net interest margin decreased from prior periods due to a decline in the yield on loans.
  • Total loans increased $16.4 million, or 5.6%, to $311.5 million at June 30, 2014 compared to $295.1 million at December 31, 2013. Total deposits increased $2.8 million, or 0.8%, to $345.8 million at June 30, 2014 compared to $343.0 million at December 31, 2013.  Todd Kanipe, President & CEO of Citizens First, commented, "commercial loan growth during the first half of the year along with a much lower provision for loan losses and improved asset quality were significant contributors to improved profitability.  We remain encouraged by overall loan demand in our markets."

Second Quarter 2014 Compared to First Quarter 2014

Net interest income for the quarter ended June 30, 2014 improved $31,000 from the previous quarter, or 0.9%, as the volume of average earning assets increased $6.0 million for the second quarter of 2014.

Non-interest income for the three months ended June 30, 2014 increased $129,000, or 20.5%, compared to the previous quarter, primarily due to an increase in service charges on deposits of $35,000 and an increase in security gains of $74,000.  Non-interest expense for the three months ended June 30, 2014 increased $71,000, or 2.3%, compared to the previous quarter, primarily due to an increase in other real estate expense.

A $150,000 provision for loan losses was recorded for the second quarter of 2014, compared to a $125,000 provision in the previous quarter, an increase of $25,000.  The allowance for loan losses to total loans remained relatively constant at 1.59% compared to 1.60% in the first quarter.  Net charge-offs (recoveries) were $24,000 for the second quarter of 2014 compared to $(49,000) in the first quarter of 2014.  

Second Quarter 2014 Compared to Second Quarter 2013

Net interest income for the quarter ended June 30, 2014 decreased $26,000, or 0.7%, compared to the previous year.  The decrease in net interest income was impacted by a reduction in interest expense of $69,000 combined with a decrease in interest income of $95,000.  The decrease in interest income was created by a decline in the yield on loans from 5.28% in the second quarter of 2013 to 5.13% in the second quarter of 2014.  Loan yields have declined as maturing loans were repriced at a lower rate.

Non-interest income for the three months ended June 30, 2014 decreased $37,000, or 4.7%, compared to the three months ended June 30, 2013, primarily due to a decline in gains on sale of mortgage loans.

Non-interest expense for the three months ended June 30, 2014 decreased $46,000, or 1.4%, compared to the three months ended June 30 2013, due to a decrease in legal and collection expenses.

A $150,000 provision for loan losses was recorded for the second quarter of 2014, an increase of $100,000, from $50,000 in the second quarter of 2013.  The allowance for loan losses to total loans decreased from 1.98% of total loans at June 30, 2013 to 1.59% at June 30, 2014, primarily due to charge-offs of specific allocations which were included in the allowance at June 30, 2013.  Net charge-offs were $24,000 for the second quarter of 2014 compared to net charge-offs of $635,000 in the second quarter of 2013.

Balance Sheet
Total assets at June 30, 2014 were $414.8 million, an increase of $4.6 million from $410.2 million at December 31, 2013.  Average assets year-to-date were $416.9 million, a decrease of 0.4%, or $1.6 million, from $418.5 million in 2013.  Average interest earning assets decreased 0.4%, or $1.6 million, from $386.1 million year-to-date 2013 to $384.5 million year-to-date 2014.

Loans increased $16.4 million, or 5.6%, from $295.1 million at December 31, 2013 to $311.5 million at June 30, 2014.  Total loans averaged $303.5 million for the six months ended June 30, 2014, compared to $304.7 million for the six months ended June 30, 2013, a decrease of $1.2 million, or 0.4%.

Non-performing assets totaled $2.5 million at June 30, 2014 compared to $2.0 million at December 31, 2013, an increase of $468,000. A summary of nonperforming assets is presented below:

(In thousands)


June

30,

 2014

March

31,

 2014

December

31,

 2013

September

30,

 2013

June

30,

 2013

Nonaccrual loans


$1,035

$1,104

$1,026

$3,784

$6,141

Loans 90+ days past due/accruing


42

56

-

19

-

Restructured loans


806

815

154

2,041

3,340

Total non-performing loans


1,883

1,975

1,180

5,844

9,481








Other real estate owned


598

631

833

547

517

Total non-performing assets


$2,481

$2,606

$2,013

$6,391

$9,998








Non-performing assets to total assets


0.60%

0.62%

0.49%

1.56%

2.43%

The allowance for loan losses at June 30, 2014 was $5.0 million, or 1.59% of total loans, compared to $4.7 million, or 1.58% of total loans as of December 31, 2013.  The allowance increased due to an increase in outstanding loans for the year.  A summary of the allowance for loan losses is presented below:

(In thousands)


June

30,

 2014

March

31,

 2014

December

31,

 2013

September

30,

 2013

June

30,

 2013

Balance at beginning of period


$4,827

$4,653

$4,820

$6,064

$6,650

Provision for loan losses


150

125

450

900

50

Charged-off loans


81

22

788

2,198

678

Recoveries of previously charged-off loans


57

71

171

54

42

Balance at end of period


$4,953

$4,827

$4,653

$4,820

$6,064








Allowance for loan losses to total loans


1.59%

1.60%

1.58%

1.60%

1.98%

Deposits at June 30, 2014 were $345.8 million, an increase of $2.8 million, or 0.8%, compared to $343.0 million at December 31, 2013.  Total deposits averaged $348.5 million for the six months ended June 30, 2014, an increase of $4.4 million, or 1.3%, compared to $344.1 million during the six months ended June 30, 2013.  Average deposits increased during the year, but the cost of funds declined as higher cost deposits matured and were renewed at lower rates. 

At June 30, 2014, total shareholders' equity was $36.8 million compared to $38.3 million at December 31, 2013, a decrease of $1.5 million.  During the first quarter of 2014, the Company paid $3.3 million to repurchase the remaining 93 shares of the Series A preferred stock that the Company had issued to the Treasury in 2008 under the TARP Capital Purchase Program.  

The Company's tangible equity ratio declined to 7.85% as of June 30, 2014 compared to 8.28% at December 31, 2013 due to the repurchase of the Company's Series A preferred stock noted above.  The tangible book value per common share improved from $11.51 at December 31, 2013, to $12.47 at June 30, 2014.  The Company and Citizens First Bank are categorized as "well capitalized" under regulatory guidelines.

About Citizens First Corporation

Citizens First Corporation is a bank holding company headquartered in Bowling Green, Kentucky and established in 1999.  The Company has branch offices located in Barren, Hart, Simpson and Warren Counties in Kentucky, and a loan production office in Williamson County, Tennessee.

Forward-Looking Statements

Statements in this press release relating to Citizens First Corporation's plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon the Company's current expectations, but are subject to certain risks and uncertainties that may cause actual results to differ materially.  Among the risks and uncertainties that could cause actual results to differ materially are economic conditions generally and in the market areas of the Company, a continuation or worsening of the current disruption in credit and other markets, goodwill impairment, overall loan demand, increased competition in the financial services industry which could negatively impact the Company's ability to increase total earning assets, and the retention of key personnel.  Actions by the Department of the Treasury and federal and state bank regulators in response to changing economic conditions, changes in interest rates, loan prepayments by and the financial health of the Company's borrowers, and other factors described in the reports filed by the Company with the Securities and Exchange Commission could also impact current expectations.    

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios

Consolidated Statement of Income:


Three Months Ended




June 30

March 31

Dec 31

Sept 30

June 30


2014

2014

2013

2013

2013

Interest income          

$4,230

$4,181

$4,411

$4,381

$4,325

Interest expense

701

683

682

747

770

Net interest income

3,529

3,498

3,729

3,634

3,555







Provision for loan losses

150

125

450

900

50







Non-interest income:






   Service charges on deposits

296

261

319

341

321

   Other service charges and fees

141

153

133

156

158

   Gain on sale of mortgage loans

51

24

36

81

78

   Non-deposit brokerage fees

75

69

72

91

78

   Lease income

74

75

75

74

75

   BOLI income

47

47

49

53

56

   Securities gains

74

-

27

-

29

      Total

758

629

711

796

795







Non-interest expenses:






   Personnel expense

1,486

1,527

1,419

1,382

1,417

   Net occupancy expense

479

482

485

499

465

   Advertising and public relations

93

83

65

70

110

   Professional fees

149

153

141

201

174

   Data processing services

248

233

266

280

272

   Franchise shares and deposit tax

145

146

145

146

141

   FDIC insurance

74

77

119

150

26

   Core deposit intangible amortization

82

84

79

84

85

   Postage and office supplies

59

51

38

35

35

   Other real estate owned expenses

47

10

46

7

20

   Other

271

216

258

425

434

      Total

3,133

3,062

3,061

3,279

3,179







Income before income taxes

1,004

940

929

251

1,121

Provision for income taxes

271

249

227

18

333

Net income

733

691

702

233

788







Preferred dividends and discount accretion

127

132

184

178

176

Net income available for common shareholders

$606

$559

$518

$55

$612

Basic earnings per common share

$0.31

$0.28

$0.26

$0.03

$0.31

Diluted earnings per common share

$0.29

$0.27

$0.25

$0.02

$0.30


Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios

 

Key Operating Statistics:


Three Months Ended





June  

 30  

March  

 31  

December  

 31   

September   

 30   

June   

 30   


2014

2014

2013

2013

2013







Average assets

$419,630

$414,089

$408,792

$413,293

$419,240

Average earning assets

387,457

381,485

375,658

380,154

387,663

Average loans

303,489

303,438

298,833

307,618

305,532

Average deposits

350,943

346,089

340,938

340,067

345,738

Average equity

36,501

36,213

38,469

37,937

38,353

Average common equity

28,842

28,046

27,548

27,023

27,445







Return on average assets

0.70%

0.68%

0.68%

0.22%

0.75%

Return on average equity

8.05%

7.74%

7.24%

2.44%

8.24%







Efficiency ratio

72.88%

72.73%

68.07%

72.66%

72.17%

Non-interest income to average assets

0.72%

0.62%

0.69%

0.77%

0.76%

Non-interest expenses to average assets

2.99%

3.00%

2.97%

3.15%

3.04%

Net overhead to average assets

2.27%

2.38%

2.28%

2.38%

2.28%

Yield on loans

5.13%

5.14%

5.42%

5.26%

5.28%

Yield on investment securities (TE)

2.94%

3.02%

2.97%

2.87%

2.78%

Yield on average earning assets (TE)

4.47%

4.53%

4.75%

4.66%

4.56%

Cost of average interest bearing liabilities

0.83%

0.83%

0.83%

0.89%

0.92%

Net interest margin (TE)

3.74%

3.81%

4.03%

3.88%

3.77%

Number of FTE employees

99

98

100

100

98







Asset Quality Ratios:






Non-performing loans to total loans

0.60%

0.65%

0.40%

1.94%

3.09%

Non-performing assets to total assets

0.60%

0.62%

0.49%

1.56%

2.43%

Allowance for loan losses to total loans

1.59%

1.60%

1.58%

1.60%

1.98%

YTD net charge-offs (recoveries) to average loans, annualized

(0.03)%

(0.06)%

1.22%

1.36%

0.63%








Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Six Months Ended





June 30

June 30


2014

2013

Interest income          

$8,411

$8,753

Interest expense

1,384

1,532

Net interest income

7,027

7,221




Provision for loan losses

275

1,300




Non-interest income:



   Service charges on deposits

557

612

   Other service charges and fees

294

296

   Gain on sale of mortgage loans

75

160

   Non-deposit brokerage fees

144

143

   Lease income

149

149

   BOLI income

94

117

   Securities gains

74

37

      Total

1,387

1,514




Non-interest expenses:



   Personnel expense

3,013

2,858

   Occupancy expense

961

926

   Advertising and public relations

176

188

   Professional fees

302

338

   Data processing services

481

537

   Franchise shares and deposit tax

291

282

   FDIC insurance

151

111

   Core deposit intangible amortization

166

169

   Postage and office supplies

110

78

   Other real estate owned expenses

57

31

   Other

487

743

      Total

6,195

6,261




Income before income taxes

1,944

1,174

Provision for income taxes

520

271

Net income

1,424

903




Preferred dividends and discount accretion

259

393

Net income available for common shareholders

$1,165

$510

Basic earnings per common share

$0.59

$0.26

Diluted earnings per common share

$0.56

$0.25







 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Key Operating Statistics:




Six Months Ended





June  

 30  

June   

 30   


2014

2013




Average assets

$416,873

$418,526

Average earning assets

384,487

386,147

Average loans

303,464

304,741

Average deposits

348,529

344,115

Average equity

36,358

39,254

Average common equity

28,446

27,570




Return on average assets

0.69%

0.44%

Return on average equity

7.90%

4.64%




Efficiency ratio

72.81%

70.60%

Non-interest income to average assets

0.67%

0.73%

Non-interest expenses to average assets

3.00%

3.02%

Net overhead to average assets

2.33%

2.29%

Yield on loans

5.13%

5.39%

Yield on investment securities (TE)

2.97%

2.87%

Yield on average earning assets (TE)

4.50%

4.66%

Cost of average interest bearing liabilities

0.83%

0.92%

Net interest margin (TE)

3.77%

3.86%

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios





Consolidated Statement of Condition:

As of

As of

As of


June 30,

December 31,

December 31,

2014

2013

2012

Cash and due from financial institutions

$ 11,055

$ 8,572

$9,549

Federal funds sold

11,775

28,490

25,250

Available for sale securities

55,405

51,633

46,639

Loans held for sale

286

-

61

Loans

311,455

295,068

298,754

Allowance for loan losses

(4,953)

(4,653)

(5,721)

Premises and equipment, net

10,880

11,054

11,568

Bank owned life insurance (BOLI)

7,900

7,806

7,587

Federal Home Loan Bank Stock, at cost

2,025

2,025

2,025

Accrued interest receivable

1,536

1,554

1,660

Deferred income taxes

1,614

2,279

2,180

Intangible assets

4,596

4,762

5,094

Other real estate owned

598

833

191

Other assets

639

752

1,719

  Total Assets

$414,811

$410,175

$406,556





Deposits:




    Noninterest bearing

$ 44,972

$ 39,967

$ 41,725

    Savings, NOW and money market

139,293

143,602

111,194

    Time

161,545

159,382

178,814

      Total deposits

$345,810

$342,951

$331,733

FHLB advances and other borrowings

25,300

22,000

26,000

Subordinated debentures

5,000

5,000

5,000

Accrued interest payable

239

243

238

Other liabilities

1,661

1,634

2,019

Total Liabilities

378,010

371,828

364,990

6.5% Cumulative preferred stock

7,659

7,659

7,659

Series A preferred stock

-

3,266

6,519

Common stock

27,072

27,072

27,072

Retained earnings (deficit)

1,818

653

(430)

Accumulated other comprehensive income (loss)

252

(303)

746

Total Stockholders' Equity

36,801

38,347

41,566

Total Liabilities and Stockholders' Equity

$414,811

$410,175

$406,556

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios








June 30
2014

December 31,
2013

December 31,
2012

Capital Ratios:





Tier 1 leverage


8.90%

9.57%

10.20%

Tier 1 risk-based capital


11.44%

12.56%

13.16%

Total risk based capital


12.69%

13.81%

14.41%

Tangible equity ratio (1)


7.85%

8.28%

9.08%

Tangible common equity ratio (1)


5.98%

5.59%

5.55%

Book value per common share


$14.80

$13.93

$13.91

Tangible book value per common share (1)


$12.47

$11.51

$11.32

End of period common share closing price


$11.00

$9.86

$8.78

_____________





(1)   The tangible equity ratio, tangible common equity ratio and tangible book value per common share, while not required by accounting principles generally accepted in the United States of America (GAAP), are considered critical metrics with which to analyze banks.  The ratio and per share amount have been included to facilitate a greater understanding of the Company's capital structure and financial condition.  See the Regulation G Non-GAAP Reconciliation table for reconciliation of this ratio and per share amount to GAAP.

Regulation G Non-GAAP Reconciliation:


June 30,
2014

December 31,
2013

December 31,
2012






Total shareholders' equity (a)


$36,801

$38,348

$41,566

Less:





   Preferred stock


(7,659)

(10,925)

(14,178)

Common equity (b)


29,142

27,423

27,388

   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(499)

(665)

(997)

Tangible common equity (c)


24,546

22,661

22,294

Add:





   Preferred stock


7,659

10,925

14,178

Tangible equity (d)


$32,205

$33,586

$36,472






Total assets (e)


$414,811

$410,175

$406,556

Less:





   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(499)

(665)

(997)

Tangible assets (f)


$410,215

$405,413

$401,462

Shares outstanding (in thousands) (g)


1,969

1,969

1,969






Book value per common share (b/g)


$14.80

$13.93

$13.91

Tangible book value per common share (c/g)


$12.47

$11.51

$11.32






Total shareholders' equity to total assets ratio (a/e)


8.87%

9.35%

10.22%

Tangible equity ratio (d/f)


7.85%

8.28%

9.08%

Tangible common equity ratio (c/f)


5.98%

5.59%

5.55%

SOURCE Citizens First Corporation



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