Citizens First Corporation

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Citizens First Corporation Announces Second Quarter 2013 Results

BOWLING GREEN, Ky., Aug. 1, 2013 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the second quarter ending June 30, 2013, which include the following:

  • For the quarter ended June 30, 2013, the Company reported net income of $788,000, or $0.30 per diluted common share.  This represents an increase of $673,000, or $0.35 per diluted common share, from the linked quarter ended March 31, 2013.  Compared to the quarter ended June 30 a year ago, net income increased $62,000 or $0.06 per diluted common share. 
  • For the six months ended June 30, 2013, net income totaled $903,000, or $0.25 per diluted common share.  This represents a decrease of $631,000, or $0.28 per diluted common share, from the net income of $1.5 million in the first six months of the previous year.
  • The Company's net interest margin was 3.77% for the quarter ended June 30, 2013 compared to 3.96% for the quarter ended March 31, 2013 and 4.06% for the quarter ended June 30, 2012, a decrease of 19 basis points for the linked quarter and a decrease of 29 basis points from the prior year.  The Company's net interest margin decreased from the prior quarter primarily due to a decrease in loan income for the quarter as the level of non-accrual loans remained high. 
  • Provision for loan losses was $50,000 for the second quarter of 2013 compared to $1.3 million for the linked quarter ended March 31, 2013 and $450,000 for the quarter ended June 30, 2012.  Todd Kanipe, President & CEO of Citizens First commented, "We made slight improvements in our level of non-performing assets during the second quarter as we moved through the liquidation of collateral on several credits.  The higher level of non-performing assets during 2013 has adversely impacted our margin and increased our collection expenses.  A majority of our charge-offs during the quarter had specific allocations in the allowance for loan losses that had been previously established. We continue to work aggressively to reduce non-performing assets."
  • On July 26, 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.  Our allowance for loan losses as of June 30, 2013 included a specific allocation for the deficiency. The deficiency will result in a charge-off of approximately $1.5 million in the third quarter of 2013.

Second Quarter 2013 Compared to First Quarter 2013

Net interest income for the quarter ended June 30, 2013 declined $111,000 from the previous quarter due to a reduction in loan income, which included the effect of existing loans repricing at lower rates and the impact of existing non-accrual loans.

Non-interest income for the three months ended June 30, 2013 increased $76,000, or 10.6%, compared to the previous quarter, primarily due to an improvement in service charges on deposit accounts of $30,000.  Non-interest expense for the three months ended June 30, 2013 increased $97,000, or 3.1%, compared to the previous quarter. Other operating expenses, primarily collection expenses related to non-performing loans, increased $126,000

A $50,000 provision for loan losses was recorded for the second quarter of 2013, compared to a $1.3 million provision in the previous quarter.  The provision expense was lower in the second quarter of 2013 as a result of an $882,000 reduction in nonperforming assets in the current quarter.  Net charge-offs were $635,000 for the second quarter of 2013 compared to $321,000 in the first quarter of 2013. The majority of the charge-offs in the second quarter of 2013 had specific allocations in the allowance for loan losses that had been established prior to the current quarter.

Second Quarter 2013 Compared to Second Quarter 2012

Net interest income for the quarter ended June 30, 2013 decreased $120,000, or 3.3%, compared to the previous year.  The decrease in net interest income was impacted by a reduction in interest expense of $121,000 combined with a decrease in interest income of $241,000. The decrease in interest income was created by a decline in the yields on loans and taxable securities.

Non-interest income for the three months ended June 30, 2013 increased $2,000, or 0.3%, compared to the three months ended June 30, 2012, primarily due to an improvement in non-deposit brokerage fees of $21,000 from the prior year offset by a decrease in securities gains of $26,000.

Non-interest expense for the three months ended June 30, 2013 increased $134,000, or 4.4%, compared to the three months ended June 30 2012, due to an increase in other operating expenses which were primarily collection expenses related to non-performing loans.

A $50,000 provision for loan losses was recorded for the second quarter of 2013, a decrease of $400,000, from $450,000 in the second quarter of 2012.  Net charge-offs were $636,000 for the second quarter of 2013 compared to net charge-offs of $479,000 in the second quarter of 2012.

Balance Sheet

Total assets at June 30, 2013 were $411.5 million, an increase of $4.9 million from $406.6 million at December 31, 2012.  Average assets during the second quarter were $419.2 million, an increase of 2.9%, or $11.9 million, from $407.3 million the second quarter of 2012.  Average interest earning assets increased 4.2%, or $15.7 million, from $372.0 million in the second quarter of 2012 to $387.7 million in the second quarter of 2013.

Loans increased $7.6 million, or 2.5%, from $298.8 million at December 31, 2012 to $306.4 million at June 30, 2013.  Total loans averaged $305.5 million the second quarter of 2013, compared to $304.0 million the second quarter of 2012, an increase of $1.5 million, or 0.5%.  Deposits at June 30, 2013 were $337.2 million, an increase of $5.5 million, or 1.7%, compared to $331.7 million at December 31, 2012.  Total deposits averaged $345.7 million the second quarter of 2013, an increase of $13.9 million, or 4.2%, compared to $331.8 million during the second 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 $10.0 million at June 30, 2013 compared to $6.3 million at December 31, 2012, an increase of $3.7 million.  The allowance for loan losses at June 30, 2013 was $6.1 million, or 1.98% of total loans, compared to $5.7 million, or 1.91% of total loans as of December 31, 2012.  The allowance increased due to the increase in nonperforming assets during the year, as specific allocations in the allowance were provided for these impaired loans.

A summary of nonperforming assets is presented below:

(In thousands)

June

30,

2013

March

31,

 2013

December

31,

 2012

September

30,

2012

June

30,

2012

Nonaccrual loans

$6,141

$7,097

$5,384

$5,911

$6,168

Loans 90+ days past due/accruing

-

23

-

60

-

Restructured loans

3,340

3,528

758

1,388

1,549

Total non-performing loans

9,481

10,648

6,142

7,359

7,717







Other real estate owned

517

232

191

258

214

Total non-performing assets

$9,998

$10,880

$6,333

$7,617

$7,931







Non-performing assets to total assets

2.43%

2.58%

1.56%

1.93%

2.00%

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

(In thousands)

June

30,

2013

March

31,

 2013

December

31,

 2012

September

30,

2012

June

30,

2012

Balance at beginning of period

$6,650

$5,721

$5,968

$5,899

$5,928

Provision for loan losses

50

1,250

580

300

450

Charged-off loans

678

358

838

243

495

Recoveries of previously charged-off loans

42

37

11

12

16

Balance at end of period

$6,064

$6,650

$5,721

$5,968

$5,899













Allowance for loan losses to total loans

1.98%

2.21%

1.91%

1.95%

1.97%

At June 30, 2013, total shareholders' equity was $37.8 million compared to $41.6 million at December 31, 2012, a decrease of $3.8 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 June 30, 2013, the Company has 93 shares of the Series A preferred stock outstanding with a balance of approximately $3.3 million.  In addition, accumulated other comprehensive income declined by $1.0 million as long-term interest rates increased, which impacted unrealized gains and losses in investment securities.

The Company's tangible equity ratio was 8.08% as of June 30, 2013 compared to 9.08% at December 31, 2012.  The tangible book value per common share declined slightly from $11.32 at December 31, 2012, to $11.14 at June 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




June 30

March 31

December 31

September 30

June 30


2013

2013

2012

2012

2012

Interest income          

$4,325

$4,428

$4,664

$4,681

$4,566

Interest expense

770

762

809

826

891

Net interest income

3,555

3,666

3,855

3,855

3,675







Provision for loan losses

50

1,250

580

300

450







Non-interest income:






   Service charges on deposits

321

291

351

355

340

   Other service charges and fees

158

138

129

138

143

   Gain on sale of mortgage loans

78

82

82

64

64

   Non-deposit brokerage fees

78

65

61

54

57

   Lease income

75

74

76

68

68

   BOLI income

56

61

65

66

66

   Securities gains

29

8

-

-

55

      Total

795

719

764

745

793







Non-interest expenses:






   Personnel expense

1,417

1,441

1,489

1,406

1,414

   Net occupancy expense

465

461

491

489

479

   Advertising and public relations

110

78

91

92

93

   Professional fees

174

164

176

158

149

   Data processing services

272

265

241

225

221

   Franchise shares and deposit tax

141

141

141

141

141

   FDIC insurance

26

85

87

83

73

   Core deposit intangible amortization

85

84

84

88

88

   Postage and office supplies

35

43

40

40

59

   Other real estate owned expenses

20

11

15

5

105

   Other

434

309

236

266

223

      Total

3,179

3,082

3,091

2,993

3,045







Income before income taxes

1,121

53

948

1,307

973

Provision for income taxes

333

(62)

251

366

247

Net income

788

115

697

941

726







Preferred dividends and discount accretion

176

217

225

225

223

Net income available for common shareholders

$612

$(102)

$472

$716

$503

Basic earnings per common share

$0.31

$(0.05)

$0.24

$0.36

$0.25

Diluted earnings per common share

$0.30

$(0.05)

$0.23

$0.35

$0.24

 

 


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


2013

2013

2012

2012

2012







Average assets

$419,240

$417,804

$403,975

$397,657

$407,298

Average loans

305,532

303,942

304,249

297,863

304,003

Average deposits

345,738

342,475

325,644

321,828

331,820

Average equity

38,353

40,164

41,629

40,776

39,962

Average common equity

27,445

27,695

27,458

26,618

25,816







Return on average assets

0.75%

0.11%

0.69%

0.94%

0.72%

Return on average equity

8.24%

1.16%

6.66%

9.18%

7.31%







Efficiency ratio

72.17%

68.96%

65.70%

63.88%

66.93%

Non-interest income to average assets

0.76%

0.70%

0.75%

0.75%

0.78%

Non-interest expenses to average assets

3.04%

2.99%

3.04%

2.99%

3.01%

Yield on average earning assets (tax equivalent)

4.56%

4.76%

5.11%

5.21%

5.03%

Cost of average interest bearing liabilities

0.92%

0.93%

1.01%

1.04%

1.10%

Net interest margin (tax equivalent)

3.77%

3.96%

4.24%

4.31%

4.06%

Number of FTE employees

98

99

102

103

100







Asset Quality Ratios:






Non-performing loans to total loans

3.09%

3.54%

2.06%

2.41%

2.57%

Non-performing assets to total assets

2.43%

2.58%

1.56%

1.93%

2.00%

Allowance for loan losses to total loans

1.98%

2.21%

1.91%

1.95%

1.97%

Net charge-offs to average loans, annualized

0.63%

0.43%

0.60%

0.45%

0.52%








 

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Six Months Ended





June 30

June 30


2013

2012

Interest income          

$8,753

$9,184

Interest expense

1,532

1,816

Net interest income

7,221

7,368




Provision for loan losses

1,300

820




Non-interest income:



   Service charges on deposits

612

659

   Other service charges and fees

296

262

   Gain on sale of mortgage loans

160

154

   Non-deposit brokerage fees

143

91

   Lease income

149

136

   BOLI income

117

132

   Securities gains

37

55

      Total

1,514

1,489




Non-interest expenses:



   Personnel expense

2,858

2,823

   Net occupancy expense

926

938

   Advertising and public relations

188

168

   Professional fees

338

292

   Data processing services

537

450

   Franchise shares and deposit tax

282

266

   FDIC insurance

111

145

   Core deposit intangible amortization

169

176

   Postage and office supplies

78

109

   Other real estate owned expenses

31

150

   Other

743

455

      Total

6,261

5,972




Income before income taxes

1,174

2,065

Provision for income taxes

271

531

Net income

903

1,534




Preferred dividends and discount accretion

393

447

Net income available for common shareholders

$510

$1,087

Basic earnings per common share

$0.26

$0.55

Diluted earnings per common share

$0.25

$0.53







 

 


Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios


Key Operating Statistics:




Six Months Ended





June

 30

June

 30


2013

2012




Average assets

$418,526

$405,124

Average loans

304,741

295,580

Average deposits

344,115

331,611

Average equity

39,254

39,696

Average common equity

27,570

25,556




Return on average assets

0.44%

0.76%

Return on average equity

4.64%

7.77%




Efficiency ratio

70.60%

66.60%

Non-interest income to average assets

0.73%

0.74%

Non-interest expenses to average assets

3.02%

2.97%

Yield on average earning assets (tax equivalent)

4.66%

5.11%

Cost of average interest bearing liabilities

0.92%

1.13%

Net interest margin (tax equivalent)

3.86%

4.12%

 

 


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,

2013

2012

2011

Cash and cash equivalents

$29,965

$34,799

$30,549

Available for sale securities

49,201

46,639

50,718

Loans held for sale

156

61

180

Loans

306,397

298,754

294,352

Allowance for loan losses

(6,064)

(5,721)

(5,865)

Premises and equipment, net

11,294

11,568

11,849

Bank owned life insurance (BOLI)

7,704

7,587

7,324

Federal Home Loan Bank Stock, at cost

2,025

2,025

2,025

Accrued interest receivable

1,666

1,660

1,858

Deferred income taxes

3,222

2,180

2,973

Intangible assets

4,925

5,094

5,443

Other real estate owned

517

191

637

Other assets

474

1,719

1,751

  Total Assets

$411,482

$406,556

$403,794





Deposits:




    Noninterest bearing

$ 42,007

$ 41,724

$ 38,352

    Savings, NOW and money market

110,494

111,195

116,968

    Time

184,725

178,814

177,411

      Total deposits

$337,226

$331,733

$332,731

FHLB advances and other borrowings

28,300

26,000

25,000

Subordinated debentures

5,000

5,000

5,000

Other liabilities

3,180

2,257

2,191

Total Liabilities

373,706

364,990

364,922

6.5% Cumulative preferred stock

7,659

7,659

7,659

Series A preferred stock

3,253

6,519

6,471

Common stock

27,072

27,072

27,072

Retained earnings (deficit)

79

(430)

(2,706)

Accumulated other comprehensive income (loss)

(287)

746

376

Total Stockholders' Equity

37,776

41,566

38,872

Total Liabilities and Stockholders' Equity

$411,482

$406,556

$403,794

 

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios



June 30,

2013

December 31,

2012

December 31,

2011

Capital Ratios:




Tier 1 leverage

9.82%

10.20%

9.46%

Tier 1 risk-based capital

12.87%

13.16%

11.94%

Total risk based capital

14.13%

14.41%

13.19%

Tangible equity ratio (1)

8.08%

9.08%

8.39%

Tangible common equity ratio (1)

5.40%

5.55%

4.84%

Book value per common share

$13.64

$13.91

$12.57

Tangible book value per common share (1)

$11.14

$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:

June 30, 2013

December 31, 2012

December 31, 2011





Total shareholders' equity (a)

$37,776

$41,566

$38,872

Less:




   Preferred stock

(10,912)

(14,178)

(14,130)

Common equity (b)

26,864

27,388

24,742

   Goodwill

(4,097)

(4,097)

(4,097)

   Intangible assets

(828)

(997)

(1,346)

Tangible common equity (c)

21,939

22,294

19,299

Add:




   Preferred stock

10,912

14,178

14,130

Tangible equity (d)

$32,851

$36,472

$33,429





Total assets (e)

$411,482

$406,556

$403,794

Less:




   Goodwill

(4,097)

(4,097)

(4,097)

   Intangible assets

(828)

(997)

(1,346)

Tangible assets (f)

$406,557

$401,462

$398,351

Shares outstanding (in thousands) (g)

1,969

1,969

1,969





Book value per common share (b/g)

$13.64

$13.91

$12.57

Tangible book value per common share (c/g)

$11.14

$11.32

$9.80





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

9.18%

10.22%

9.63%

Tangible equity ratio (d/f)

8.08%

9.08%

8.39%

Tangible common equity ratio (c/f)

5.40%

5.55%

4.84%

 

SOURCE Citizens First Corporation

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