Centrue Financial Corporation Announces Second Quarter EarningsOTTAWA, IL -- 07/20/2007 -- Centrue Financial Corporation (NASDAQ: TRUE) today reported net income from continuing operations for the second quarter ended June 30, 2007 of $2,506,000 or $0.38 per diluted share as compared to $1,252,000 or $0.32 per diluted share in the same period of 2006. For the six months ended June 30, 2007, net income from continuing operations equaled $4,405,000 or $0.66 per diluted share compared to $2,926,000 or $0.74 per diluted share in the same period during 2006. Results for the three months and six months ended June 30, 2007 include the impact from the merger of Centrue Financial Corporation and UnionBancorp, Inc. that occurred in November 2006.
"During the second quarter, we completed several important initiatives that we believe will improve our future financial performance. While some of these steps added to current period expenses, going forward, we expect that they will provide direct bottom-line returns," remarked Thomas A. Daiber, President and CEO. "We have accomplished the majority of our merger integration as evidenced by the completion of our core system conversion and realization of our targeted annualized level of merger related cost savings. While reducing pro-forma expenses, we continue to experience strong growth with an annualized 11% increase in total assets during the first half of 2007. Loan growth also continues as reflected by an annualized 20% increase based on second quarter results. Most of our growth has been in the St. Louis market where we have opened our newest full service branch. Our asset quality also improved as reflected by a significant decrease in both nonaccrual and watch list loans. The improvement in our earnings performance is more evident when adjusting for the $1.1 million loan loss reversal recorded in first six months of 2006." Daiber also commented on the news that the Company was recently added to the Russell Microcap® Index and noted that it reflects the Company's "continued positive momentum." He went on to say that, "Russell is an industry leader for stock indexes, and we expect that our inclusion will generate greater interest in Centrue stock at an institutional level."
Second Quarter 2007 Highlights:
- -- Second quarter 2007 results included the following nonrecurring items:
-- $576,000 in employment related expenses, including separation
costs and a previously announced executive officer contract
payment;
-- $140,000 in costs associated with accelerated depreciation related
to two branch closings and the core processing computer
conversion;
-- $491,000 realized from the gain on sale of property held in other
real estate;
-- The net impact to earnings after taxes, was approximately $146,000
of additional expense or $0.02 per diluted share.
- -- The loan portfolio increased $43,639,000 or 5.0% during the second
quarter largely due to growth experienced in the St. Louis market.
- -- Several positive asset quality trends were experienced:
-- Action list loans decreased by 31.7% from $37,600,000 reported on
December 31, 2006 to $25,700,000 on June 30, 2007. The change from
the first quarter was a decrease by 20.5% or down from $32,327,000.
-- Non-accrual loans decreased by 61.8% from $11,759,000 reported on
December 31, 2006 to $4,492,000 on June 30, 2007. Non-accrual loans
declined 52.3% from $9,416,000 since March 31, 2007.
-- The delinquency ratio decreased from 2.44% at 2006 year-end to
1.18% recorded at June 30, 2007. This ratio was 2.03% at
March 31, 2007.
- -- The net interest margin decreased 7 basis points to 3.30% as compared
to the same period in 2006 and 5 basis points from the first quarter of
2007, largely due to the inverted yield curve and competitive pressures
in pricing loans and deposits.
- -- Excluding the $716,000 of charges related to restructuring,
noninterest expense levels for the second quarter 2007 reflect a
$1,307,000 or 12.5% decrease compared to the same period 2006 pro forma
combined companies. The former UnionBancorp reported $5,129,000
(adjusted for discontinued operations), while the former Centrue
reported $5,308,000 for a combined total of $10,437,000. Excluding the
charges related to restructuring, year-to-date noninterest expense
levels have decreased $2,053,000 or 9.7% as compared to a pro forma
combined level of $21,131,000 for the same period in 2006.
- -- On June 22, 2007, Centrue Financial Corporation was added to the
Russell Microcap® Index after the Russell Investment Group
reconstituted its comprehensive set of U.S. and global equity indexes.
The Company will hold its membership until Russell reconstitutes its
indexes in June of 2008. The Russell indexes capture the 4,000 largest
U.S. stocks, as ranked by total market capitalization. The Russell
Microcap is comprised of organizations falling in the lower half of
those 4,000 stocks.
- -- The Company obtained a Missouri bank charter in June and converted its
Clayton, Missouri loan production office into a full-service branch.
Since beginning operations as a loan production office in September
2006, the Clayton branch has originated loans in excess of $100
million.
- -- In order to integrate operations and streamline its retail
distribution channel, the Company consolidated two in-store bank
branches into nearby main bank locations and is scheduled to close a
third branch at the end of August. These actions will result in 33
total remaining branches.
- -- The Company successfully completed its core systems conversion and, by
the end of the third quarter, will have realized a net reduction of
over 100 full time equivalent employees as compared to pro-forma
staffing levels at the beginning of 2006.
- -- The Company's Board of Directors, in a continuing effort to enhance
stockholder value, approved the payment of an 8.0% increase in the
quarterly cash dividend to $0.13 from $0.12 on the Company's common
stock during the first quarter, marking the 88th consecutive quarter
of dividends paid to stockholders.
- -- The Company repurchased 110,918 shares at a weighted average cost of
$19.17 of its common stock under the Company's stock repurchase plan.
Net Interest Margin
The net interest margin for the second quarter of 2007 was 3.30% as compared to 3.37% for the same period in 2006. The decrease in the net interest margin was primarily a result of deposit and borrowing rates increasing more rapidly than yields earned on loan and investments. Tax-equivalent net interest income increased to $9,740,000 for the second quarter 2007 as compared to $5,078,000 earned in the same period of 2006. The improvement in net interest income was largely related to an increase in earning assets due to the addition of the former Centrue's loan and investment portfolios. This was offset by increases in deposit balances and a shift in the mix of funding liabilities from lower costing non-interest bearing deposits to higher costing time deposits. The competitive pressures in pricing loans and deposits is likely to maintain pressure on the margin throughout 2007.
Noninterest Income and Expense
Total noninterest income for the second quarter 2007 was $4,194,000 as compared to $1,363,000 reported in the same period in 2006. Excluding $491,000 in gain on sale of OREO property from the second quarter of 2007, noninterest income increased $2,340,000 or 171.7% during the second quarter of 2007 as compared to the same period in 2006. The growth experienced was primarily the result of improvements in service charges on deposit accounts, fees received on items drawn on customer accounts with insufficient funds and revenue generated from the mortgage banking division. The majority of the increase was related to revenue that was associated with the November 2006 merger.
Total noninterest expense levels were $9,846,000, up from $4,802,000 recorded during the same period in 2006. Excluding the restructuring charges of $716,000, noninterest expense levels increased $4,328,000 or 90.1% as compared to the same period in 2006. The increase was reported across all categories and predominantly due to higher costs associated with operating 21 additional branches resulting from the November 2006 merger. Also adversely impacting expense levels were core deposit amortization, accelerated depreciation expense for assets being phased out and restructuring related expenses.
Asset Quality
Centrue's nonperforming loans at June 30, 2007 totaled $4,492,000, a decrease of 61.8% as compared to $11,759,000 reported at December 31, 2006 and down 52.3% as compared to $9,416,000 reported as of March 31, 2007. The level of nonperforming loans to end of period loans totaled 0.49% as of June 30, 2007 compared to 1.08% as of March 31, 2007 and 1.40% as of December 31, 2006. The reserve coverage ratio (allowance to nonperforming loans) was reported at 241.05% as of June 30, 2007 as compared to 112.65% as of March 31, 2007 and to 92.14% as of December 31, 2006.
About the Company
Centrue Financial Corporation is a regional financial services company headquartered in Ottawa, Illinois and devotes special attention to personal service and offers bank, trust and investment services. The combined company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central and Northern Illinois down to the metropolitan St. Louis area.
Further information about the company will be available at its website at http://www.centrue.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Accompanying Financial Statements and Tables
Accompanying this press release is the following unaudited financial information:
- -- Unaudited Quarterly Highlights
- -- Unaudited Consolidated Balance Sheets
- -- Unaudited Consolidated Statements of Income
- -- Unaudited Selected Quarterly Consolidated Financial Data
Centrue Financial Corporation
Unaudited Highlights
(In Thousands, Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Operating Highlights
Net income $ 2,506 $ 1,294 $ 4,405 $ 2,940
Return on average total
assets 0.76% 0.79% 0.68% 0.89%
Return on average
stockholders equity 8.51 7.93 7.51 9.03
Net interest margin 3.30 3.37 3.32 3.44
Efficiency ratio 70.80 74.80 73.15 74.70
Per Share Data
Diluted earnings per common
share $ 0.38 $ 0.31 $ 0.66 $ 0.74
Book value per common share $ 18.48 $ 17.31 $ 18.48 $ 17.31
Diluted weighted average
common shares outstanding 6,449,777 3,837,231 6,472,272 3,809,813
Period end common shares
outstanding 6,363,922 3,742,751 6,363,922 3,742,751
Stock Performance Data
Market Price:
Quarter End $ 20.05 $ 20.10 $ 20.05 $ 20.10
High $ 20.55 $ 21.12 $ 20.55 $ 21.48
Low $ 18.50 $ 19.44 $ 18.50 $ 19.44
Period end price to
book value 1.08 1.16 1.08 1.16
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
June 30, December 31,
2007 2006
----------- -----------
ASSETS
Cash and cash equivalents $ 50,387 $ 40,195
Securities available-for-sale 276,710 298,692
Loans 912,168 836,944
Allowance for loan losses (10,828) (10,835)
----------- -----------
Net loans 901,340 826,109
Cash surrender value of life insurance 26,393 25,904
Mortgage servicing rights 3,309 3,510
Premises and equipment, net 35,950 35,403
Goodwill 25,439 25,396
Intangible assets, net 12,154 12,733
Other real estate 6,568 2,136
Other assets 15,136 12,947
----------- -----------
Total assets $ 1,353,386 $ 1,283,025
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 130,701 $ 125,585
Interest-bearing 957,421 901,025
----------- -----------
Total deposits 1,088,122 1,026,610
Federal funds purchased and securities
sold under agreements to repurchase 45,370 36,319
Advances from the Federal Home Loan Bank 57,731 63,147
Notes payable 10,917 9,015
Series B mandatory redeemable preferred
stock 831 831
Subordinated debentures 20,620 20,620
Other liabilities 11,728 8,292
----------- -----------
Total liabilities 1,235,319 1,164,834
----------- -----------
Stockholders' equity
Series A convertible preferred stock 500 500
Common stock 7,434 7,412
Surplus 70,817 70,460
Retained earnings 55,162 52,469
Accumulated other comprehensive income (793) 235
----------- -----------
133,120 131,076
Treasury stock, at cost (15,053) (12,885)
----------- -----------
Total stockholders' equity 118,067 118,191
----------- -----------
Total liabilities and
stockholders' equity $ 1,353,386 $ 1,283,025
=========== ===========
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Interest income
Loans $ 16,917 $ 7,194 $ 32,963 $ 14,349
Securities
Taxable 3,182 2,027 6,472 4,025
Exempt from federal income taxes 381 210 763 426
Federal funds sold and other 173 45 268 59
-------- -------- -------- --------
Total interest income 20,653 9,476 40,466 18,859
Interest expense
Deposits 9,443 3,845 18,260 7,324
Federal funds purchased and
securities sold under agreements
to repurchase 463 51 873 123
Advances from the Federal Home
Loan Bank 628 455 1,273 936
Series B Mandatory Redeemable (61) 13 25 25
Subordinated debentures 524 - 898 -
Notes payable 165 160 323 314
-------- -------- -------- --------
Total interest expense 11,162 4,524 21,652 8,722
-------- -------- -------- --------
Net interest income 9,491 4,952 18,814 10,137
Provision for loan losses 226 (300) 226 (1,100)
-------- -------- -------- --------
Net interest income after
Provision for loan losses 9,265 5,252 18,588 11,237
Noninterest income
Service charges 1,969 495 3,552 935
Trust income 232 199 461 418
Mortgage banking income 449 281 883 527
Brokerage commissions and fees 104 88 230 172
Bank owned life insurance (BOLI) 247 137 488 277
Securities gains (losses), net (33) (89) (33) (88)
Gain (loss) on sale of Oreo 491 - 588 -
Other income 735 252 1,279 587
-------- -------- -------- --------
4,194 1,363 7,448 2,828
Noninterest expenses
Salaries and employee benefits 5,144 2,359 10,292 5,405
Occupancy expense, net 1,019 215 1,960 754
Furniture and equipment expense 627 616 1,322 995
Marketing 221 96 413 206
Supplies and printing 156 65 337 160
Telephone 210 118 388 235
Other real estate owned expense 38 2 41 8
Amortization of intangible assets 591 31 1,212 60
Other expenses 1,840 1,300 3,829 1,973
-------- -------- -------- --------
9,846 4,802 19,794 9,796
-------- -------- -------- --------
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Income from continuing operations
before income taxes 3,613 1,813 6,242 4,269
Income taxes 1,107 561 1,837 1,343
-------- -------- -------- --------
Income from continuing operations 2,506 1,252 4,405 2,926
Discontinued operations:
Loss from discontinued operations - 5 - (43)
Income tax benefit - (37) - (57)
-------- -------- -------- --------
Gain (loss) on discontinued
operations - 42 - 14
-------- -------- -------- --------
Net income 2,506 1,294 4,405 2,940
======== ======== ======== ========
Preferred stock dividends 52 52 104 104
-------- -------- -------- --------
Net income for common
stockholders $ 2,454 $ 1,242 $ 4,301 $ 2,836
======== ======== ======== ========
Basic earnings per share from
continuing operations $ 0.38 $ 0.32 $ 0.67 $ 0.75
======== ======== ======== ========
Diluted earnings per share from
continuing operations $ 0.38 $ 0.32 $ 0.66 $ 0.74
======== ======== ======== ========
Basic earnings per share from
discontinued operations $ - $ 0.01 $ - $ -
======== ======== ======== ========
Diluted earnings per share from
discontinued operations $ - $ 0.01 $ - $ -
======== ======== ======== ========
Basic earnings per common share $ 0.38 $ 0.33 $ 0.67 $ 0.75
======== ======== ======== ========
Diluted earnings per common share $ 0.38 $ 0.33 $ 0.66 $ 0.74
======== ======== ======== ========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
------------------------------------------------------
06/30/07 03/31/07 12/31/06 09/30/06 6/30/06
---------- ---------- ---------- ---------- ----------
(Dollars in Thousands, Except Per Share Data)
Statement of Income
Data
Interest income $ 20,653 $ 19,813 $ 15,197 $ 9,802 $ 9,476
Interest expense (11,162) (10,490) (7,902) (4,728) (4,524)
---------- ---------- ---------- ---------- ----------
Net interest
income 9,491 9,323 7,295 5,074 4,952
Provision for
loan losses 226 - 25 (200) (300)
---------- ---------- ---------- ---------- ----------
Net interest income
after provision
for loan losses 9,265 9,323 7,270 5,274 5,252
Noninterest income 4,194 3,254 2,363 1,481 1,363
Noninterest expense 9,846 9,948 8,372 4,591 4,802
---------- ---------- ---------- ---------- ----------
Income before
income taxes 3,613 2,629 1,261 2,164 1,813
Provision (benefit)
for income taxes 1,107 730 162 658 561
---------- ---------- ---------- ---------- ----------
Income from
continuing
operations
(after related
taxes) 2,506 1,899 1,099 1,506 1,252
Loss on discontinued
operations (tax
effected) - - (88) (270) (42)
---------- ---------- ---------- ---------- ----------
Net income $ 2,506 $ 1,899 $ 1,011 $ 1,236 $ 1,294
========== ========== ========== ========== ==========
Net income on
common stock $ 2,454 $ 1,847 $ 960 $ 1,184 $ 1,242
========== ========== ========== ========== ==========
Per Share Data
Basic earnings per
common share $ 0.38 $ 0.29 $ 0.18 $ 0.32 $ 0.33
Basic earnings per
common share from
continuing
operations 0.38 0.29 0.20 0.39 0.32
Diluted earnings
per common share 0.38 0.28 0.18 0.31 0.33
Diluted earnings per
common share from
continuing
operations 0.38 0.28 0.20 0.38 0.32
Cash dividends on
common stock 0.13 0.12 0.00 0.12 0.12
Dividend payout
ratio for common
stock 34.03% 41.89% 0.00% 37.91% 36.15%
Book value per
common share $ 18.47 $ 18.42 $ 18.23 $ 17.85 $ 17.31
Basic weighted
average common
shares
outstanding 6,414,390 6,461,791 5,193,562 3,742,777 3,742,716
Diluted weighted
average common
shares
outstanding 6,449,777 6,497,614 5,233,655 3,783,075 3,837,231
Period-end common
shares
outstanding 6,363,922 6,470,840 6,455,068 3,742,851 3,742,751
Balance Sheet Data
Securities $ 276,710 $ 289,288 $ 298,692 $ 182,171 $ 182,914
Loans 912,168 868,529 836,944 407,015 403,455
Allowance for
loan losses 10,828 10,607 10,835 6,103 6,848
Assets 1,353,386 1,318,821 1,283,025 648,851 656,831
Deposits 1,088,122 1,057,297 1,026,610 526,918 522,695
Stockholders'
equity 118,067 119,667 118,191 67,313 65,304
Earnings Performance Data
Return on average
total assets 0.76% 0.60% 0.40% 0.76% 0.79%
Return on average
stockholders'
equity 8.51 6.50 3.60 7.32 7.93
Net interest
margin ratio 3.30 3.35 3.32 3.49 3.37
Efficiency ratio (1) 70.80 75.13 84.54 70.23 74.80
Asset Quality Ratios
Nonperforming assets
to total end of
period assets 0.81% 1.04% 1.08% 0.63% 0.64%
Nonperforming loans
to total end of
period loans 0.49 1.08 1.40 0.79 0.70
Net loan charge-offs
to total average
loans 0.09 0.03 0.01 0.14 0.09
Allowance for loan
losses to total end
of period loans 1.19 1.22 1.29 1.50 1.70
Allowance for loan
losses to
nonperforming loans 241.05 112.65 92.14 189.48 244.05
Capital Ratios
Average equity to
average assets 8.88% 9.15% 10.35% 10.34% 9.94%
Total capital to
risk adjusted
assets 11.09 11.66 11.94 13.60 13.69
Tier 1 leverage
ratio 7.60 7.99 7.90 9.49 9.38
(1) Calculated as noninterest expense less amortization of intangibles and
expenses related to other real estate owned divided by the sum of net
interest income before provisions for loan losses and total
noninterest income excluding securities gains and losses and gains on
sale of assets.
Contact:
Thomas A. Daiber
President and
Chief Executive Officer
Centrue Financial Corporation
tom.daiber@centrue.com
Kurt R. Stevenson
Senior Executive Vice President
and Chief Financial Officer
Centrue Financial Corporation
kurt.stevenson@centrue.com
