Citizens First Corporation Announces Second Quarter 2018 Results

- Increase in net income of 24.0% compared to second quarter 2017

- Increase in assets of 5.0% compared to year end 2017

- Loan growth of 2.4% compared to year end 2017

- Deposit growth of 4.4% compared to year end 2017

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Jul 19, 2018, 12:24 ET

BOWLING GREEN, Ky., July 19, 2018 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the six months ended June 30, 2018 which include the following:

For the quarter ended June 30, 2018 the Company reported net income of $1,374,000, or $0.54 per diluted common share (EPS). This represents a 24.0% increase or $266,000 from the $1,108,000, or $0.43 per diluted common share, for the quarter ended June 30, 2017. For the six months ended June 30, 2018, net income totaled $2.46 million, or $0.97 per diluted common share. This represents an increase of $443,000, a 22.0% increase, or $0.18 per diluted common share, from the net income of $2.02 million in the first six months of the previous year. "Loan growth and lower income tax expense drove profitability for the first half of the year," said Todd Kanipe, President and CEO. "The challenge continues to be protecting our margin as interest rates increase in the economy. We've successfully grown our deposits this year, but increasing competition for deposits in our region continues to push up our cost of funds," Kanipe added.

Income Statement Second Quarter 2018 Compared to Second Quarter 2017

Net interest income increased $231,000, or 6.0%, for the second quarter of the current year compared to the second quarter of the prior year. During the second quarter of 2018, a loan of approximately $5.2 million was paid off prematurely which resulted in the collection of a prepayment penalty of approximately $105,000. The Company's net interest margin was 3.67% for the quarter ended June 30, 2018, compared to 3.69% for the quarter ended June 30, 2017, a decrease of 2 basis points. The Company's net interest margin decreased primarily due to an increase in the cost of interest-bearing liabilities which exceeded the increase in the yield on earning assets.

There was a $30,000 provision for loan losses in the second quarter of the current year compared to no provision for loan losses in the second quarter of the prior year.

Non-interest income decreased $11,000, or 1.2%, from the prior year primarily due to a decrease in service charges on deposit accounts of $18,000 and a decrease in gains on sale of mortgage loans of $19,000, offset by an increase in other service charges and fees of $18,000.

Non-interest expense increased $78,000, or 2.4%, from the prior year primarily due to an increase in personnel expense of $118,000, offset by a decrease in data processing services of $46,000.

Income tax expense decreased $154,000, or 32.2% due to a marginal rate of 21% in 2018 compared to a rate of 34% in 2017.

Income Statement Current Year Compared to Prior Year

Net interest income increased $351,000, or 4.6%, from the prior year. The Company's net interest margin was 3.61% for the six months ended June 30, 2018, and 3.68% for the six months ended June 30, 2017, a decrease of 7 basis points. The Company's net interest margin decreased due to an increase in the cost of average interest-bearing liabilities.

There was a $60,000 provision for loan losses in the current year compared to a $30,000 provision in the previous year.

Non-interest income decreased $3,000, or 0.2%, primarily due to a reduction in gains on sale of mortgage loans of $37,000 and gains on the sale of securities of $23,000, offset by an increase in other service charges and fees of $35,000 and non-deposit brokerage fees of $22,000.

Non-interest expense increased $146,000, or 2.2%, primarily due to an increase of $230,000 in personnel expenses offset by a decrease of $105,000 in data processing services. "We have added four full time equivalent employees over the past year as we strengthen the depth of our retail branching network," Kanipe added.

Income tax expense decreased $271,000, or 32.1% due to a marginal rate of 21% in 2018 compared to a rate of 34% in 2017.

Credit Quality

Non-performing assets totaled $2.1 million, or 0.43% of total assets, at June 30, 2018 compared to $1.3 million, or 0.29% of total assets at December 31, 2017, an increase of approximately $742,000. The increase is primarily attributable to one credit secured by real estate which was moved to non-accrual status during the first quarter of 2018.

The allowance for loan losses at June 30, 2018 was $4.8 million, or 1.24% of total loans, compared to $4.9 million, or 1.36% of total loans as of June 30, 2017. We consider the size, volume and credit quality of the loan portfolio as well as recent economic and other external influences to record the allowance for loan losses and provision for loan losses that is directionally consistent with our loan portfolio.

Balance Sheet

Total assets at June 30, 2018 were $488.6 million, compared to $465.4 million at December 31, 2017. Loans increased $9.1 million, or 2.4%, from December 31, 2017 to June 30, 2018. Loans declined $5.7 million during the second quarter of 2018, primarily due to the premature payoff of one credit relationship of approximately $5.2 million. Deposits increased $16.3 million, or 4.4%, from December 31, 2017 to June 30, 2018. Borrowings from the Federal Home Loan Bank increased $5.0 million, or 12.5%, from December 31, 2017 to June 30, 2018.

Stockholders' equity increased to $47.7 million at June 30, 2018 from $45.8 million at December 31, 2017. The book value per common share and tangible book value per common share ratios were $18.79 and $17.14, respectively, at June 30, 2018 compared to $18.14 and $16.47, respectively, at December 31, 2017.

Quarterly Common Dividend Payable August 16

On July 19, 2018, the Board of Directors declared a quarterly cash dividend of $0.07 per common share payable August 16, 2018 to shareholders of record on August 3, 2018.

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. Additional information concerning our products and services is available at www.citizensfirstbank.com.

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 current and future economic and business conditions; possible changes in trade, monetary, and fiscal policies, as well as legislative and regulatory changes; changes in the interest rate environment and our ability to effectively manage interest rate risk and other market risk, credit risk and operational risk; changes in the quality or composition of our loan or investment portfolios; increases in our nonperforming assets, or our inability to recover or absorb losses created by such nonperforming assets; 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) Consolidated Statement of Condition


	(In Thousands, Except Share Data and ratios)
	June 30,		December 31,		December 31,
	2018		2017		2016
Assets
Cash and due from financial institutions	$	6,546	$	6,444	$	8,542
Interest-bearing deposits in other financial institutions		30,166		13,532		11,018
Available-for-sale securities		46,432		48,616		53,547
Loans held for sale		147		427		264
Loans		383,289		374,239		359,391
Allowance for loan losses		(4,750)		(4,724)		(4,854)
Premises and equipment, net		8,988		9,140		9,390
Bank owned life insurance (BOLI)		8,615		8,528		8,351
Federal Home Loan Bank (FHLB) stock, at cost		2,065		2,053		2,025
Accrued interest receivable		1,549		1,681		1,622
Deferred income taxes		762		670		1,464
Goodwill and other intangible assets		4,185		4,221		4,291
Other assets		594		555		371
Total Assets	$	488,588	$	465,382	$	455,422
Liabilities
Deposits
Noninterest bearing	$	53,119	$	53,259	$	52,322
Savings, NOW and money market		188,213		175,087		173,620
Time		147,286		143,968		144,497
Total deposits		388,618		372,314		370,439
FHLB advances and other borrowings		45,000		40,000		35,000
Subordinated debentures		5,000		5,000		5,000
Accrued interest payable		347		285		220
Other liabilities		1,946		1,949		2,399
Total Liabilities		440,911		419,548		413,058
Stockholders' Equity
6.5% Cumulative convertible preferred stock		—		—		7,261
Common stock		33,201		33,138		25,920
Retained earnings		15,359		13,142		9,706
Accumulated other comprehensive (loss)		(883)		(446)		(523)
Total stockholders' equity		47,677		45,834		42,364
Total liabilities and stockholders' equity	$	488,588	$	465,382	$	455,422

Consolidated Financial Highlights (Unaudited) Consolidated Statement of Income


	Three months ended
	(In Thousands, Except Per Share Data and ratios)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2018		2018		2017		2017		2017
Interest and dividend income	$	5,162	$	4,860	$	4,905	$	4,640	$	4,593
Interest expense		1,064		960		858		777		726
Net interest income		4,098		3,900		4,047		3,863		3,867

Provision (credit) for loan losses		30		30		(150)		(30)		—

Non-interest income
Service charges on deposit accounts		309		298		315		317		327
Other service charges and fees		319		281		288		317		301
Gain on sale of mortgage loans		69		50		82		79		88
Non-deposit brokerage fees		101		99		97		90		91
Lease income		79		52		52		53		80
BOLI income		44		43		45		44		45
Gain on sale of securities		—		—		—		25		—
Total non-interest income		921		823		879		925		932

Non-interest expenses:
Personnel expense		1,773		1,846		1,740		1,673		1,655
Net occupancy expense		432		453		448		449		446
Advertising and public relations		85		81		78		111		77
Professional fees		172		164		86		160		171
Data processing services		205		194		192		214		251
Franchise shares and deposit tax		120		120		88		132		132
FDIC insurance		43		42		47		52		49
Other		461		459		433		415		432
Total non-interest expenses		3,291		3,359		3,112		3,206		3,213

Income before income taxes		1,698		1,334		1,964		1,612		1,586
Income taxes		324		250		1,012		490		478
Net income		1,374		1,084		952		1,122		1,108
Dividends on preferred stock		—		—		—		—		119
Net income available for common stockholders	$	1,374	$	1,084	$	952	$	1,122	$	989
Basic earnings per common share	$	0.54	$	0.43	$	0.38	$	0.44	$	0.47
Diluted earnings per common share	$	0.54	$	0.43	$	0.37	$	0.44	$	0.43

Consolidated Financial Highlights (Unaudited) Key Operating Statistics


	Three months ended
	(In Thousands, Except Per Share Data and ratios)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
Average:
Assets	$	478,836		$	476,063		$	462,966		$	449,770		$	454,524
Earning Assets		451,315			448,853			435,458			422,258			427,674
Loans		389,614			384,184			370,173			362,343			363,733
Interest-bearing deposits		328,932			322,627			317,196			312,668			319,883
Deposits		383,144			375,617			369,643			364,798			368,743
Borrowed funds		46,758			52,167			45,000			37,696			39,769
Equity		47,006			46,023			45,907			44,916			44,047
Common equity		47,006			46,023			45,907			44,916			38,240

Return on average assets		1.15	%		0.92	%		0.82	%		0.99	%		0.98	%
Return on average equity		11.97	%		9.55	%		8.23	%		9.91	%		10.09	%

Efficiency ratio		65.23	%		70.72	%		62.46	%		66.51	%		66.10	%
Non-interest income to average assets		0.77	%		0.70	%		0.75	%		0.82	%		0.82	%
Non-interest expenses to average assets		2.76	%		2.86	%		2.67	%		2.83	%		2.84	%
Net overhead to average assets		1.99	%		2.16	%		1.91	%		2.01	%		2.01	%
Yield on loans		4.94	%		4.75	%		4.88	%		4.73	%		4.69	%
Yield on investment securities (TE)		2.61	%		2.56	%		2.77	%		2.68	%		2.85	%
Yield on average earning assets (TE)		4.61	%		4.42	%		4.52	%		4.41	%		4.37	%
Cost of average interest bearing liabilities		1.14	%		1.04	%		0.94	%		0.88	%		0.81	%
Net interest margin (TE)		3.67	%		3.55	%		3.74	%		3.68	%		3.69	%
Number of FTE employees		99			96			98			97			95

Asset Quality Indicators:
Non-performing loans to total loans		0.54	%		0.54	%		0.36	%		0.73	%		0.80	%
Non-performing assets to total assets		0.43	%		0.43	%		0.29	%		0.58	%		0.63	%
Allowance for loan losses to total loans		1.24	%		1.21	%		1.26	%		1.34	%		1.36	%
YTD net charge-offs (recoveries) to average loans, annualized		0.02	%		0.06	%		(0.01)	%		—	%		(0.01)	%
YTD net charge-offs (recoveries)		34			61			(20)			2			(13)

Consolidated Financial Highlights (Unaudited) Consolidated Statement of Income


	Six Months Ended
	June 30,		June 30,
	2018		2017
Interest and dividend income	$	10,022	$	9,050
Interest expense		2,024		1,403
Net interest income		7,998		7,647

Provision for loan losses		60		30

Non-interest income
Service charges on deposit accounts		607		605
Other service charges and fees		600		565
Gain on sale of mortgage loans		119		156
Non-deposit brokerage fees		200		178
Lease income		131		132
BOLI income		87		88
Gain on sale of securities		—		23
Total non-interest income		1,744		1,747

Non-interest expenses:
Personnel expense		3,619		3,389
Net occupancy expense		885		907
Advertising and public relations		166		148
Professional fees		336		301
Data processing services		399		504
Franchise shares and deposit tax		240		264
FDIC insurance		85		98
Other		920		893
Total non-interest expenses		6,650		6,504

Income before income taxes		3,032		2,860
Income taxes		574		845
Net income		2,458		2,015
Dividends on preferred stock		—		238
Net income available for common stockholders	$	2,458	$	1,777
Basic earnings per common share	$	0.97	$	0.86
Diluted earnings per common share	$	0.97	$	0.79

Consolidated Financial Highlights (Unaudited) Key Operating Statistics


	Six Months Ended
	(In Thousands, Except Per
	Share Data and ratios)
	June 30,			June 30,
	2018			2017
Average:
Assets	$	477,457		$	453,401
Earning Assets		450,090			426,021
Loans		386,914			363,778
Interest-bearing deposits		325,797			317,425
Deposits		379,401			366,498
Borrowed funds		49,448			41,415
Equity		46,517			43,441
Common equity		46,517			36,987

Return on average assets		1.04	%		0.90	%
Return on average equity		10.66	%		9.35	%

Efficiency ratio		67.90	%		68.47	%
Non-interest income to average assets		0.74	%		0.78	%
Non-interest expenses to average assets		2.81	%		2.89	%
Net overhead to average assets		2.07	%		2.12	%
Yield on loans		4.84	%		4.65	%
Yield on investment securities (TE)		2.58	%		2.86	%
Yield on average earning assets (TE)		4.51	%		4.34	%
Cost of average interest bearing liabilities		1.09	%		0.79	%
Net interest margin (TE)		3.61	%		3.68	%
Number of FTE employees		99			95

Consolidated Financial Highlights (Unaudited)


	(In Thousands, Except Share Data and ratios)
	June 30,			December 31,			December 31,
Consolidated Capital Ratios	2018			2017			2016

Total shareholders' equity to total assets ratio		9.76	%		9.85	%		9.30	%
Tangible equity ratio (1)		8.98	%		9.02	%		8.44	%
Tangible common equity ratio (1)		8.98	%		9.02	%		6.83	%
Book value per common share	$	18.79		$	18.14		$	17.54
Tangible book value per common share (1)	$	17.14		$	16.47		$	15.40
End of period common share closing price	$	26.08		$	24.00		$	18.00

_____________________

(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.


	(In Thousands, Except Share Data and ratios)
	June 30,			December 31,			December 31,
Regulation G Non-GAAP Reconciliation:	2018			2017			2016

Total shareholders' equity (a)	$	47,677		$	45,834		$	42,364
Less:
Preferred stock		—			—			(7,261)
Common equity (b)		47,677			45,834			35,103
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(88)			(124)			(194)
Tangible common equity (c)		43,492			41,613			30,812
Add:
Preferred stock		—			—			7,261
Tangible equity (d)		43,492			41,613			38,073

Total assets (e)		488,588			465,382			455,422
Less:
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(88)			(124)			(194)
Tangible assets (f)	$	484,403		$	461,161		$	451,131
Shares outstanding (in thousands) (g)		2,538			2,526			2,001

Book value per common share (b/g)	$	18.79		$	18.14		$	17.54
Tangible book value per common share (c/g)	$	17.14		$	16.47		$	15.40
Equity to assets ratio (a/e)		9.76	%		9.85	%		9.30	%
Tangible equity ratio (d/f)		8.98	%		9.02	%		8.44	%
Common equity ratio (b/e)		9.76	%		9.85	%		7.71	%
Tangible common equity ratio (c/f)		8.98	%		9.02	%		6.83	%

SOURCE Citizens First Corporation

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