Citizens First Corporation Announces Second Quarter 2011 Results

BOWLING GREEN, Ky., July 21, 2011 /PRNewswire/ -- Citizens First Corporation (Nasdaq: CZFC) today reported results for the second quarter ending June 30, 2011, which include the following:

• Continued profitability - Net income was $728,000, or $0.25 per diluted common share, for the second quarter ended June 30, 2011. Compared to the quarter ended June 30 a year ago, net income increased $111,000 or $.07 per share, an increase of 18.0%. For the six months ended June 30, 2011, net income grew to $1.4 million, or $.46 per diluted common share.  This represents an increase of $296,000, or $0.14 per share, from the net income of $1.1 million in the previous year.
• Branch acquisition - As previously announced on June 2, 2011, the Company has entered into a definitive agreement to purchase a banking center located in Bowling Green, Kentucky from Republic Bank & Trust Company (Republic), a subsidiary of Republic Bancorp, Inc. (NASDAQ: RBCAA). The agreement provides that Citizens will purchase certain fixed assets and outstanding loans and assume all deposits of the banking center. The transaction includes approximately $35 million in deposits and approximately $14.5 million in loans. The transaction is subject to customary closing conditions, including regulatory approvals, and is anticipated to be completed during the third quarter of 2011.
• Nonperforming assets remain below peer levels - The Company's nonperforming assets were $4.1 million at June 30, 2011 compared to $2.6 million at December 31, 2010, which represents an increase of $1.5 million, or 54.7%.  Included in nonperforming assets is other real estate, which represents properties acquired through foreclosure, totaling $901,000, and nonperforming loans of $3.2 million at June 30, 2011. The Company's nonperforming assets remain at relatively low levels compared to the banking industry as a whole. However, the Company continues to monitor the loan portfolio for borrowers who might be at risk of suffering adverse financial conditions impacting their ability to perform on their loan.  Management believes that prolonged weak economic conditions could place additional pressure on credit quality.

Second Quarter 2011 Compared to First Quarter 2011

For the quarter ended June 30, 2011, the Company reported net income of $728,000, or $.25 per diluted common share, which represents an increase of $12,000, or $.04 per share, for the linked quarter ended March 31, 2011.  

Net interest income for the quarter ended June 30, 2011 increased $11,000, or 0.3%, compared to the previous quarter due to a decrease in interest expense on certificates of deposit.  The Company's net interest margin was 4.01% for the quarter ended June 30, 2011 compared to 4.11% for the quarter ended March 31, 2011, a decrease of 10 basis points.  The Company's net interest margin declined as loan and investment yields fell during the second quarter. The yield on average earning assets declined from the linked quarter, totaling 5.32% in the second quarter of 2011 compared to 5.47% in the first quarter of 2011.  The cost of average interest bearing liabilities also declined to 1.54% in the second quarter of 2011 compared to 1.59% for the first quarter of 2011.  

A $300,000 provision for loan losses was recorded for the second quarter of 2011, compared to a $225,000 provision in the previous quarter.  Net charge-offs were $89,000 for the second quarter of 2011 compared to $223,000 in the first quarter of 2011, a decrease of 60.0%.  Provision expense increased due to the increase in nonperforming assets during the second quarter of 2011.

Non-interest income for the three months ended June 30, 2011 increased $98,000, or 14.8%, compared to the previous quarter, primarily due to gains on the sale of investment securities of $61,000 and an increase in non-deposit brokerage fees of $32,000.

Non-interest expense for the three months ended June 30, 2011 increased $17,000, or 0.6%, compared to the previous quarter, primarily due to an increase in professional fees of $56,000.  

Second Quarter 2011 Compared to Second Quarter 2010

Net interest income for the quarter ended June 30, 2011 increased $102,000, or 3.3%, compared to the previous year.  The increase in net interest income was impacted by a reduction in interest expense of $239,000 partially offset by a decrease in interest income of $137,000. The Company's net interest margin was 4.01% for the quarter ended June 30, 2011 compared to 4.08% for the quarter ended June 30, 2010, a decrease of 7 basis points.

A $300,000 provision for loan losses was recorded for the second quarter of 2011, compared to a $450,000 provision in the second quarter of 2010, a decrease of $150,000 or 33.3%.  Net charge-offs were $89,000 for the second quarter of 2011 compared to $75,000 in the second quarter of 2010, an increase of 18.6%.

Non-interest income for the three months ended June 30, 2011 increased $16,000, or 2.1%, compared to the three months ended June 30, 2010, primarily due to an increase in gains from sale of investment securities of $61,000.  Rental income increased $39,000 from the prior year, while services charges on deposit accounts declined $105,000.

Non-interest expense for the three months ended June 30, 2011 increased $94,000, or 3.5%, compared to the three months ended June 30, 2010, primarily due to an increase in salaries and benefit expenses totaling $80,000.  Other real estate expenses increased $63,000 from the prior year.

Balance Sheet

Total assets at June 30, 2011 were $354.1 million, up $4.4 million, or 1.3%, from $349.7 million at December 31, 2010.  Loans increased $1.4 million, or 0.5%, from $268.3 million at December 31, 2010 to $269.7 million at June 30, 2011.  Total loans averaged $269.8 million for the second quarter of 2011, compared to $269.0 million for the first quarter of 2011, an increase of $0.8 million, or 0.3%.  Deposits at June 30, 2011 were $293.3 million, an increase of $4.6 million, or 1.6%, compared to $288.7 million at December 31, 2010.  Total deposits averaged $302.9 million for the second quarter of 2011, compared to $296.6 million for the first quarter of 2011, an increase of $6.3 million, or 2.1%.  Brokered deposits were reduced by $4.9 million during the second quarter to $8.2 million.

Non-performing assets totaled $4.1 million at June 30, 2011 compared to $2.6 million at December 31, 2010, an increase of $1.5 million.  Non-performing loans increased $2.0 million, primarily due to a $1.6 million relationship with an area small business which was placed on non-accrual during the second quarter of 2011.  Other real estate owned decreased $479,000 during the second quarter to $901,000.  Non-performing assets to total assets ratio was 1.15% and 0.75% at June 30, 2011 and December 31, 2010, respectively.  The allowance for loan losses at June 30, 2011 was $5.2 million, or 1.93% of total loans, compared to $5.0 million, or 1.86% of total loans as of December 31, 2010.

At June 30, 2011, total shareholders' equity was $37.9 million and total tangible shareholders' equity was $34.4 million.  In February, 2011 the Company repurchased 25% of the Series A preferred stock it issued under the U.S. Treasury's Capital Purchase Program, which reduced shareholder's equity by $2.2 million.  As a result, the Company's tangible equity ratio was 9.81% as of June 30, 2011 compared to 10.02% as of December 31, 2010.  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, retention of key personnel and the receipt of regulatory approval for the branch acquisition.  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.

SOURCE Citizens First Corporation