2014

Citizens First Corporation Announces Third Quarter 2013 Results

BOWLING GREEN, Ky., Oct. 31, 2013 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the third quarter ending September 30, 2013, which include the following:

  • For the quarter ended September 30, 2013, the Company reported net income of $233,000, or $0.02 per diluted common share.  This represents a decrease of $555,000, or $0.28 per diluted common share, from the linked quarter ended June 30, 2013.  Compared to the quarter ended September 30 a year ago, net income decreased $708,000 or $0.33 per diluted common share.  
  • For the nine months ended September 30, 2013, net income totaled $1.1 million, or $0.27 per diluted common share.  This represents a decrease of $1.4 million or $0.61 per diluted common share, from the net income of $2.5 million in the first nine months of the previous year.
  • The Company's net interest margin was 3.88% for the quarter ended September 30, 2013 compared to 3.77% for the quarter ended June 30, 2013 and 4.31% for the quarter ended September 30, 2012, an increase of 11 basis points for the linked quarter and a decrease of 43 basis points from the prior year.  The Company's net interest margin increased from the prior quarter primarily due to an increase in average loan balances and a decline in non-accrual loans. 
  • Provision for loan losses was $900,000 for the third quarter of 2013 compared to $50,000 for the linked quarter ended June 30, 2013 and $300,000 for the quarter ended September 30, 2012.  Provision expense for 2013 totaled $2.2 million compared to $1.1 million in 2012.  Net charge-offs for 2013 total $3.1 million compared to $1.0 million in 2012.  Todd Kanipe, President & CEO of Citizens First commented, "We improved our level of non-performing assets during the third quarter as we moved through the liquidation of collateral on several credits.  We continue to work aggressively to reduce non-performing assets and the related increased collection costs. Our provision expense is higher in 2013 due to the increased level of charged-off loans. Our allowance remains strong and as a percentage of loans is currently 1.60%, which is in line with our peer group."
  • During the third quarter of 2013, the real estate securing our largest non-performing asset, a $3.8 million commercial real estate loan, was sold at auction to a third party for $2.5 million less selling costs.  The deficiency resulted in a charge-off of $1.6 million in the third quarter of 2013. The remaining principal balance of $2.2 million was collected on October 15, 2013, which will further reduce non-performing assets.

Third Quarter 2013 Compared to Second Quarter 2013

Net interest income for the quarter ended September 30, 2013 improved $79,000 from the previous quarter due to an increase in loan income as the level of non-accrual loans declined.

Non-interest income for the three months ended September 30, 2013 increased $1,000, or 0.13%, compared to the previous quarter, primarily due to an improvement in service charges on deposit accounts of $20,000.  Non-interest expense for the three months ended September 30, 2013 increased $100,000, or 3.1%, compared to the previous quarter. Accruals for FDIC insurance premiums increased $124,000 from the previous quarter. 

A $900,000 provision for loan losses was recorded for the third quarter of 2013, compared to a $50,000 provision in the previous quarter.  The provision expense was higher in the third quarter of 2013 as a result of an increase in historical charge-offs, particularly the charge-offs that occurred in the third quarter of 2013.  Net charge-offs were $2.1 million for the third quarter of 2013 compared to $636,000 in the second quarter of 2013.  The substantial majority of the charge-offs in the third quarter of 2013 had specific allocations in the allowance for loan losses that had been established prior to the current quarter.

Third Quarter 2013 Compared to Third Quarter 2012

Net interest income for the quarter ended September 30, 2013 decreased $221,000, or 5.7%, compared to the previous year.  The decrease in net interest income was impacted by a reduction in interest expense of $79,000 combined with a decrease in interest income of $300,000.  The decrease in interest income was created by a decline in the yield on loans from 5.86% in the third quarter of 2012 to 5.26% in the third quarter of 2013.  Loan yields have declined as maturing loans were repriced at a lower rate.

Non-interest income for the three months ended September 30, 2013 increased $51,000, or 6.8%, compared to the three months ended September 30, 2012, primarily due to an improvement in non-deposit brokerage fees of $37,000 from the prior year.

Non-interest expense for the three months ended September 30, 2013 increased $286,000, or 9.6%, compared to the three months ended September 30 2012, due to an increase in other operating expenses which were primarily collection expenses related to non-performing loans.

A $900,000 provision for loan losses was recorded for the third quarter of 2013, an increase of $600,000, from $300,000 in the third quarter of 2012.  Net charge-offs were $2.1 million for the third quarter of 2013 compared to net charge-offs of $231,000 in the third quarter of 2012.

Balance Sheet

Total assets at September 30, 2013 were $410.8 million, an increase of $4.2 million from $406.6 million at December 31, 2012.  Average assets during the third quarter were $413.3 million, an increase of 3.9%, or $15.6 million, from $397.7 million the third quarter of 2012.  Average interest earning assets increased 4.5%, or $16.5 million, from $363.7 million in the third quarter of 2012 to $380.2 million in the third quarter of 2013.

Loans increased $2.6 million, or 0.9%, from $298.8 million at December 31, 2012 to $301.4 million at September 30, 2013.  Total loans averaged $307.6 million the third quarter of 2013, compared to $297.9 million the third quarter of 2012, an increase of $9.7 million, or 3.3%.  Deposits at September 30, 2013 were $337.6 million, an increase of $5.9 million, or 1.8%, compared to $331.7 million at December 31, 2012.  Total deposits averaged $340.1 million the third quarter of 2013, an increase of $18.3 million, or 5.7%, compared to $321.8 million during the third quarter of 2012.  Average deposits increased during the year, but the cost of funds declined as higher cost deposits matured and were renewed at lower rates.  

Non-performing assets totaled $6.4 million at September 30, 2013 compared to $6.3 million at December 31, 2012, an increase of $58,000. Compared to the prior quarter at June 30, 2013, non-performing assets decreased $3.6 million.  During the third quarter of 2013, $2.1 million in non-performing assets were collected, $2.2 million of non-performing assets were charged-off, and $646,000 of loans became non-performing during the quarter.

The allowance for loan losses at September 30, 2013 was $4.8 million, or 1.60% of total loans, compared to $5.7 million, or 1.91% of total loans as of December 31, 2012.  The allowance decreased as a result of charging off specific allocations of the allowance that had been established in previous quarters. 

A summary of nonperforming assets is presented below:

(In thousands)

September 30,

 2013

June 30,

 2013

March 31,

 2013

December 31,

 2012

September 30,

 2012

Nonaccrual loans

$3,784

$6,141

$7,097

$5,384

$5,911

Loans 90+ days past due/accruing

19

-

23

-

60

Restructured loans

2,041

3,340

3,528

758

1,388

Total non-performing loans

5,844

9,481

10,648

6,142

7,359







Other real estate owned

547

517

232

191

258

Total non-performing assets

$6,391

$9,998

$10,880

$6,333

$7,617







Non-performing assets to total assets

1.56%

2.43%

2.58%

1.56%

1.93%

A summary of the allowance for loan losses is presented below:

(In thousands)

September 30,

 2013

June 30,

 2013

March 31,

 2013

December  31,

 2012

September 30,

 2012

Balance at beginning of period

$6,064

$6,650

$5,721

$5,968

$5,899

Provision for loan losses

900

50

1,250

580

300

Charged-off loans

2,198

678

358

838

243

Recoveries of previously charged-off loans

54

42

37

11

12

Balance at end of period

$4,820

$6,064

$6,650

$5,721

$5,968













Allowance for loan losses to total loans

1.60%

1.98%

2.21%

1.91%

1.95%

At September 30, 2013, total shareholders' equity was $38.1 million compared to $41.6 million at December 31, 2012, a decrease of $3.5 million.  During the first quarter of 2013, the Company paid $3.3 million to repurchase 94 of the 250 shares of the Series A preferred stock that the Company had issued to the Treasury on December 19, 2008 under the TARP Capital Purchase Program.  At September 30, 2013, the Company has 93 shares of the Series A preferred stock outstanding with a balance of approximately $3.3 million.

The Company's tangible equity ratio was 8.19% as of September 30, 2013 compared to 9.08% at December 31, 2012.  The tangible book value per common share improved slightly from $11.32 at December 31, 2012, to $11.34 at September 30, 2013.  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.

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


September 30

June 30

March 31

December 31

September 30


2013

2013

2013

2012

2012

Interest income          

$4,381

$4,325

$4,428

$4,664

$4,681

Interest expense

747

770

762

809

826

Net interest income

3,634

3,555

3,666

3,855

3,855







Provision for loan losses

900

50

1,250

580

300







Non-interest income:






   Service charges on deposits

341

321

291

351

355

   Other service charges and fees

156

158

138

129

138

   Gain on sale of mortgage loans

81

78

82

82

64

   Non-deposit brokerage fees

91

78

65

61

54

   Lease income

74

75

74

76

68

   BOLI income

53

56

61

65

66

   Securities gains

-

29

8

-

-

      Total

796

795

719

764

745







Non-interest expenses:






   Personnel expense

1,382

1,417

1,441

1,489

1,406

   Net occupancy expense

499

465

461

491

489

   Advertising and public relations

70

110

78

91

92

   Professional fees

201

174

164

176

158

   Data processing services

280

272

265

241

225

   Franchise shares and deposit tax

146

141

141

141

141

   FDIC insurance

150

26

85

87

83

   Core deposit intangible amortization

84

85

84

84

88

   Postage and office supplies

35

35

43

40

40

   Other real estate owned expenses

7

20

11

15

5

   Other

425

434

309

236

266

      Total

3,279

3,179

3,082

3,091

2,993







Income before income taxes

251

1,121

53

948

1,307

Provision for income taxes

18

333

(62)

251

366

Net income

233

788

115

697

941







Preferred dividends and discount accretion

178

176

217

225

225

Net income available for common shareholders

$55

$612

$(102)

$472

$716

Basic earnings per common share

$0.03

$0.31

$(0.05)

$0.24

$0.36

Diluted earnings per common share

$0.02

$0.30

$(0.05)

$0.23

$0.35

 


Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Key Operating Statistics:




Three Months Ended






September 30

June 30

March 31

December 31

September 30


2013

2013

2013

2012

2012







Average assets

$413,293

$419,240

$417,804

$403,975

$397,657

Average loans

307,618

305,532

303,942

304,249

297,863

Average deposits

340,067

345,738

342,475

325,644

321,828

Average equity

37,937

38,353

40,164

41,629

40,776

Average common equity

27,023

27,445

27,695

27,458

26,618







Return on average assets

0.22%

0.75%

0.11%

0.69%

0.94%

Return on average equity

2.44%

8.24%

1.16%

6.66%

9.18%







Efficiency ratio

72.66%

72.17%

68.96%

65.70%

63.88%

Non-interest income to average assets

0.77%

0.76%

0.70%

0.75%

0.75%

Non-interest expenses to average assets

3.15%

3.04%

2.99%

3.04%

2.99%

Yield on average earning assets (tax equivalent)

4.66%

4.56%

4.76%

5.11%

5.21%

Cost of average interest bearing liabilities

0.89%

0.92%

0.93%

1.01%

1.04%

Net interest margin (tax equivalent)

3.88%

3.77%

3.96%

4.24%

4.31%

Number of FTE employees

100

98

99

102

103







Asset Quality Ratios:






Non-performing loans to total loans

1.94%

3.09%

3.54%

2.06%

2.41%

Non-performing assets to total assets

1.56%

2.43%

2.58%

1.56%

1.93%

Allowance for loan losses to total loans

1.60%

1.98%

2.21%

1.91%

1.95%

YTD net charge-offs to average loans, annualized

1.36%

0.63%

0.43%

0.60%

0.45%








 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Nine Months Ended





September 30

September 30


2013

2012

Interest income          

$13,134

$13,864

Interest expense

2,279

2,641

Net interest income

10,855

11,223




Provision for loan losses

2,200

1,120




Non-interest income:



   Service charges on deposits

953

1,014

   Other service charges and fees

452

400

   Gain on sale of mortgage loans

241

219

   Non-deposit brokerage fees

234

145

   Lease income

223

203

   BOLI income

170

198

   Securities gains

37

55

      Total

2,310

2,234




Non-interest expenses:



   Personnel expense

4,240

4,229

   Net occupancy expense

1,425

1,427

   Advertising and public relations

258

260

   Professional fees

539

451

   Data processing services

817

675

   Franchise shares and deposit tax

428

407

   FDIC insurance

261

228

   Core deposit intangible amortization

253

265

   Postage and office supplies

113

149

   Other real estate owned expenses

38

156

   Other

1,168

717

      Total

9,540

8,964




Income before income taxes

1,425

3,373

Provision for income taxes

289

897

Net income

1,136

2,476




Preferred dividends and discount accretion

571

672

Net income available for common shareholders

$565

$1,804

Basic earnings per common share

$0.29

$0.92

Diluted earnings per common share

$0.27

$0.88




 


Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios



Key Operating Statistics:



Nine Months Ended





September 30

September 30


2013

2012




Average assets

$416,763

$402,617

Average loans

305,710

300,300

Average deposits

342,751

328,325

Average equity

38,810

40,059

Average common equity

27,385

25,912




Return on average assets

0.36%

0.82%

Return on average equity

3.91%

8.26%




Efficiency ratio

71.30%

65.67%

Non-interest income to average assets

0.74%

0.74%

Non-interest expenses to average assets

3.06%

2.97%

Yield on average earning assets (tax equivalent)

4.66%

5.14%

Cost of average interest bearing liabilities

0.91%

1.10%

Net interest margin (tax equivalent)

3.87%

4.18%

 


Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios





Consolidated Statement of Condition:

As of

As of

As of


September 30,

December 31,

December 31,

2013

2012

2011

Cash and cash equivalents

$32,527

$34,799

$30,549

Available for sale securities

50,441

46,639

50,718

Loans held for sale

115

61

180

Loans

301,376

298,754

294,352

Allowance for loan losses

(4,820)

(5,721)

(5,865)

Premises and equipment, net

11,172

11,568

11,849

Bank owned life insurance (BOLI)

7,756

7,587

7,324

Federal Home Loan Bank Stock, at cost

2,025

2,025

2,025

Accrued interest receivable

1,648

1,660

1,858

Deferred income taxes

2,728

2,180

2,973

Intangible assets

4,841

5,094

5,443

Other real estate owned

547

191

637

Other assets

403

1,719

1,751

  Total Assets

$410,759

$406,556

$403,794





Deposits:




    Noninterest bearing

$ 40,082

$ 41,724

$ 38,352

    Savings, NOW and money market

121,129

111,195

116,968

    Time

176,422

178,814

177,411

      Total deposits

$337,633

$331,733

$332,731

FHLB advances and other borrowings

28,000

26,000

25,000

Subordinated debentures

5,000

5,000

5,000

Other liabilities

2,032

2,257

2,191

Total Liabilities

372,665

364,990

364,922

6.5% Cumulative preferred stock

7,659

7,659

7,659

Series A preferred stock

3,259

6,519

6,471

Common stock

27,072

27,072

27,072

Retained earnings (deficit)

134

(430)

(2,706)

Accumulated other comprehensive income (loss)

(30)

746

376

Total Stockholders' Equity

38,094

41,566

38,872

Total Liabilities and Stockholders' Equity

$410,759

$406,556

$403,794

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios








September 30,
2013

December 31,
2012

December 31,
2011

Capital Ratios:





Tier 1 leverage


9.35%

10.20%

9.46%

Tier 1 risk-based capital


12.32%

13.16%

11.94%

Total risk based capital


13.57%

14.41%

13.19%

Tangible equity ratio (1)


8.19%

9.08%

8.39%

Tangible common equity ratio (1)


5.50%

5.55%

4.84%

Book value per common share


$13.80

$13.91

$12.57

Tangible book value per common share (1)

$11.34

$11.32

$9.80

Shares outstanding (in thousands)

1,969

1,969

1,969

_____________





(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:

September 30,
2013

December 31,
2012

December 31,
2011






Total shareholders' equity (a)


$38,094

$41,566

$38,872

Less:





   Preferred stock


(10,918)

(14,178)

(14,130)

Common equity (b)


27,176

27,388

24,742

   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(744)

(997)

(1,346)

Tangible common equity (c)


22,335

22,294

19,299

Add:





   Preferred stock


10,918

14,178

14,130

Tangible equity (d)


$33,253

$36,472

$33,429






Total assets (e)


$410,759

$406,556

$403,794

Less:





   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(744)

(997)

(1,346)

Tangible assets (f)


$405,918

$401,462

$398,351

Shares outstanding (in thousands) (g)

1,969

1,969

1,969






Book value per common share (b/g)

$13.80

$13.91

$12.57

Tangible book value per common share (c/g)

$11.34

$11.32

$9.80






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

9.27%

10.22%

9.63%

Tangible equity ratio (d/f)

8.19%

9.08%

8.39%

Tangible common equity ratio (c/f)

5.50%

5.55%

4.84%

 

SOURCE Citizens First Corporation



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