Centrue Financial Corporation Announces Third Quarter EarningsOTTAWA, IL -- 10/22/2007 -- Centrue Financial Corporation (NASDAQ: TRUE) reported net income from continuing operations for the third quarter 2007 of $3.8 million or $0.60 per diluted share as compared to $1.5 million or $0.38 per diluted share in the third quarter 2006. For the nine months ended September 30, 2007, net income from continuing operations equaled $8.2 million or $1.26 per diluted share compared to $4.5 million or $1.14 per diluted share in the same period 2006. Results for the three and nine months ended September 30, 2007 included the impact from the merger of Centrue Financial Corporation and UnionBancorp, Inc. that occurred in November 2006.
"We are fast approaching the one-year anniversary of our merger and it is encouraging to see the strategic progress that has already been achieved," remarked Thomas A. Daiber, President and CEO. "We have significantly improved the return to our shareholders while realizing strong asset growth and improving our asset quality. Through the third quarter, we have already realized $3.3 million in actual 2007 cost savings and are confident that we will exceed the $4.0 million in annual cost savings that were not anticipated to be fully realized from the merger until 2008. The majority of our systems have been integrated and we have aligned our staffing levels with peer group. We have made progress on redefining our branch distribution network in order to better utilize capital and to leverage our core competencies. We continue to experience remarkable success in the St. Louis metropolitan market and expect to continue to grow primarily through the acquisition of new commercial banking relationships at our full service Clayton, Missouri branch. Since opening as a loan production office in September of 2006, the loan portfolio of the Clayton office has grown to $143.4 million and our pipeline remains strong."
Third Quarter Highlights:
- -- Third quarter results included the following nonrecurring items:
-- Net gain on sale of $459,000 realized from properties held in other
real estate.
-- Net fees of $132,000 generated from one U.S. Internal Revenue Code
Section 1031 exchange brokerage transaction.
-- The impact to earnings after taxes related to these items was
approximately $362,000 or $0.06 per diluted share.
- -- In order to integrate operations and streamline our retail distribution
channel, the Company closed its Urbana, Illinois location at the end of
August. This action, in addition to the closing of the Company's Dwight
In-Store and Coal City In-Store branches earlier in the year, will
reduce the branch distribution network from 36 to 33 locations.
- -- With a successful core systems conversion late in the second quarter,
the Company was able to realize a net reduction of over 100 full time
equivalent employees as of September 30, 2007 as compared to pro-forma
staffing levels at the beginning of 2006.
Loan and Funding
Outstanding loans totaled $933.9 million at September 30, 2007 compared to $836.9 million at December 31, 2006, representing an increase of $97.0 million or 11.6%. The loan growth was largely generated in the St. Louis market and concentrated in commercial real estate lending activity. The Company has no direct exposure to subprime mortgages.
Deposits totaled $1,063.8 million at September 30, 2007 compared to $1,026.6 million at December 31, 2006, representing an increase of $37.2 million or 3.6%. The majority of the increase was concentrated in higher costing time and wholesale deposits representing a shift from lower costing non-maturing deposits.
Asset Quality and Allowance for Loan Loss
During the third quarter 2007, the Company made no provision to the allowance for loan losses. No provision expense was necessary for the quarter as a result of improvements realized in nonperforming loans, the delinquency ratio and action list loans since year-end 2006.
The allowance was 1.16% of total loans outstanding at September 30, 2007, compared to 1.29% reported at year-end 2006. The third quarter 2007 reserve coverage ratio (allowance to nonperforming loans) was reported at 194.72% as compared to 92.14% reported at year-end 2006. The delinquency ratio was 1.32%, a decrease from 2.44% reported at year-end 2006.
Nonperforming loans were $5.6 million, a decrease of $6.2 million or 47.5% reported at year-end 2006. The level of nonperforming loans to end of period loans totaled 0.60% as of September 30, 2007 compared to 1.40% as of December 31, 2006.
Net Interest Margin
The net interest margin for the third quarter of 2007 was 3.40% as compared to 3.49% 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 loans and investments. Tax-equivalent net interest income increased to $10.3 million for the third quarter 2007 as compared to $5.2 million 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. It is likely that the margin will remain under pressure throughout 2007 due to expected competition in pricing loans and deposits.
Noninterest Income and Expense
Total noninterest income for the third quarter 2007 was $4.4 million as compared to $1.5 million reported in the same period in 2006. Excluding $459,000 in net gain on sale of OREO properties from the third quarter of 2007 and $132,000 in net fees generated from one U.S. Internal Revenue Code Section 1031 exchange brokerage transaction, noninterest income increased $2,295,000 or 155.0% during the third 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, NSF fees and revenue generated from the mortgage banking division as a result of the November 2006 merger. Total noninterest expense levels were $8.6 million, an increase of 87.0% from $4.6 million recorded during 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 and expenses related to organizational restructuring.
Capital Management
At September 30, 2007, the Company's total risk-based capital ratio and leverage ratio were 11.06% and 7.80%, respectively. Centrue's capital positions continue to exceed the minimum ratios of 10.0% and 5.0% required by the Federal Reserve for a bank holding company to be considered "well capitalized."
Other capital management activity for the quarter included the following:
- -- The Board of Directors approved the payment of a $0.13 common stock
dividend, marking the 89th consecutive quarter of dividends paid to
stockholders.
- -- The existing stock repurchase program was extended to allow for the
repurchase of an additional 500,000 shares, or approximately 8% of the
Company's currently issued and outstanding shares over an 18-month period.
This plan will commence immediately following the completion of the current
stock repurchase program which was announced in November of 2006.
- -- The Company repurchased 104,794 shares of common stock at a weighted
average cost of $19.84 per share. As of September 30, 2007, approximately
650,000 shares remain under Centrue's existing repurchase plan.
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 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 is 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 Nine Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Operating Highlights
Net income $ 3,838 $ 1,236 $ 8,243 $ 4,176
Income from continuing
operations $ 3,838 $ 1,506 $ 8,243 $ 4,503
Return on average total
assets 1.13% 0.76% 0.83% 0.85%
Return on average
stockholders equity 12.78 7.32 9.29 8.43
Net interest margin 3.40 3.49 3.35 3.46
Efficiency ratio 59.42 70.23 68.36 73.21
Per Share Data
Diluted earnings per common
share $ 0.60 $ 0.31 $ 1.26 $ 1.06
Diluted earnings per common
share from continuing
operations $ 0.60 $ 0.38 $ 1.26 $ 1.14
Diluted earnings per common
share from discontinued
operations $ - $ (0.07) $ - $ (0.08)
Book value per common share $ 19.12 $ 17.85 $ 19.12 $ 17.85
Diluted weighted average
common shares outstanding 6,357,605 3,783,075 6,433,243 3,800,869
Period end common shares
outstanding 6,261,128 3,742,851 6,261,128 3,742,851
Stock Performance Data
Market price:
Quarter end $ 20.00 $ 19.16 $ 20.00 $ 19.16
High $ 20.31 $ 20.17 $ 20.55 $ 21.48
Low $ 18.95 $ 17.44 $ 18.50 $ 17.44
Period end price to book
value 1.05 1.07 1.05 1.07
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
September 30, December 31,
2007 2006
----------- -----------
ASSETS
Cash and cash equivalents $ 55,008 $ 40,195
Securities available-for-sale 265,873 298,692
Loans 933,903 836,944
Allowance for loan losses (10,852) (10,835)
----------- -----------
Net loans 923,051 826,109
Cash surrender value of life insurance 26,644 25,904
Mortgage servicing rights 3,223 3,510
Premises and equipment, net 35,783 35,403
Goodwill 25,403 25,396
Intangible assets, net 11,541 12,733
Other real estate 4,620 2,136
Other assets 12,100 12,947
----------- -----------
Total assets $ 1,363,246 $ 1,283,025
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 109,189 $ 125,585
Interest-bearing 954,616 901,025
----------- -----------
Total deposits 1,063,805 1,026,610
Federal funds purchased and securities sold
under agreements to repurchase 52,295 36,319
Advances from the Federal Home Loan Bank 80,724 63,147
Notes payable 12,397 9,015
Series B mandatory redeemable preferred
stock 831 831
Subordinated debentures 20,620 20,620
Other liabilities 12,340 8,292
----------- -----------
Total liabilities 1,243,012 1,164,834
Stockholders' equity
Series A convertible preferred stock 500 500
Common stock 7,436 7,412
Surplus 70,867 70,460
Retained earnings 58,126 52,469
Accumulated other comprehensive income 437 235
----------- -----------
137,366 131,076
Treasury stock, at cost (17,132) (12,885)
----------- -----------
Total stockholders' equity 120,234 118,191
Total liabilities and stockholders’
equity $ 1,363,246 $ 1,283,025
=========== ===========
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2007 2006 2007 2006
--------- -------- -------- --------
Interest income
Loans $ 18,000 $ 7,444 $ 50,963 $ 21,793
Securities
Taxable 3,071 2,065 9,543 6,083
Exempt from federal income taxes 378 218 1,141 644
Federal funds sold and other 112 75 380 141
--------- -------- -------- --------
Total interest income 21,561 9,802 62,027 28,661
Interest expense
Deposits 9,734 4,128 27,994 11,452
Federal funds purchased and
securities sold under agreements
to repurchase 536 69 1,409 192
Advances from the Federal Home
Loan Bank 636 364 1,909 1,300
Series B Mandatory Redeemable 12 12 37 37
Subordinated debentures 395 - 1,293 -
Notes payable 164 155 487 468
--------- -------- -------- --------
Total interest expense 11,477 4,728 33,129 13,449
Net interest income 10,084 5,074 28,898 15,212
Provision for loan losses - (200) 226 (1,300)
--------- -------- -------- --------
Net interest income after
provision for loan losses 10,084 5,274 28,672 16,512
Noninterest income
Service charges 1,725 476 5,063 1,411
Trust income 243 202 704 620
Mortgage banking income 399 240 1,282 767
Brokerage commissions and fees 416 87 646 260
Bank owned life insurance (BOLI) 252 153 740 430
Securities gains (losses), net - - (33) (88)
Gain on sale of Oreo 459 - 1,047 -
Other income 873 323 2,366 925
--------- -------- -------- --------
4,367 1,481 11,815 4,325
Noninterest expenses
Salaries and employee benefits 3,891 2,630 14,183 8,035
Occupancy expense, net 1,028 356 2,988 1,110
Furniture and equipment expense 616 515 1,938 1,508
Marketing 325 88 738 294
Supplies and printing 137 71 474 230
Telephone 198 104 586 339
Amortization of intangible assets 562 11 1,774 71
Other expenses 1,874 816 5,744 2,764
--------- -------- -------- --------
8,631 4,591 28,425 14,351
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2007 2006 2007 2006
--------- -------- -------- --------
Income from continuing operations
before income taxes 5,820 2,164 12,062 6,486
Income taxes 1,982 658 3,819 1,983
--------- -------- -------- --------
Income from continuing operations 3,838 1,506 8,243 4,503
Discontinued operations:
Loss from discontinued operations - (440) - (534)
Income tax benefit - (170) - (207)
--------- -------- -------- --------
Gain (loss) on discontinued
operations - (270) - (327)
--------- -------- -------- --------
Net income $ 3,838 $ 1,236 $ 8,243 $ 4,176
========= ======== ======== ========
Preferred stock dividends 52 52 156 156
--------- -------- -------- --------
Net income for common stockholders $ 3,786 $ 1,184 $ 8,087 $ 4,020
========= ======== ======== ========
Basic earnings per share from
continuing operations $ 0.60 $ 0.39 $ 1.26 $ 1.16
========= ======== ======== ========
Diluted earnings per share from
continuing operations $ 0.60 $ 0.38 $ 1.26 $ 1.14
========= ======== ======== ========
Basic earnings per share from
discontinued operations $ - $ (0.07) $ - $ (0.09)
========= ======== ======== ========
Diluted earnings per share from
discontinued operations $ - $ (0.07) $ - $ (0.08)
========= ======== ======== ========
Basic earnings per common share $ 0.60 $ 0.32 $ 1.26 $ 1.07
========= ======== ======== ========
Diluted earnings per common share $ 0.60 $ 0.31 $ 1.26 $ 1.06
========= ======== ======== ========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
-----------------------------------------------------
09/30/07 06/30/07 03/31/07 12/31/06 09/30/06
--------- --------- --------- --------- ---------
Statement of Income
Data
Interest income $ 21,561 $ 20,653 $ 19,813 $ 15,197 $ 9,802
Interest expense (11,477) (11,162) (10,490) (7,902) (4,728)
--------- --------- --------- --------- ---------
Net interest income 10,084 9,491 9,323 7,295 5,074
Provision for loan
losses - 226 - 25 (200)
--------- --------- --------- --------- ---------
Net interest income
after provision
for loan losses 10,084 9,265 9,323 7,270 5,274
Noninterest income 4,367 4,194 3,254 2,363 1,481
Noninterest expense 8,631 9,846 9,948 8,372 4,591
--------- --------- --------- --------- ---------
Income before
income taxes 5,820 3,613 2,629 1,261 2,164
Provision for
income taxes 1,982 1,107 730 162 658
--------- --------- --------- --------- ---------
Income from
continuing
operations (after
related taxes) 3,838 2,506 1,899 1,099 1,506
Loss on
discontinued
operations (tax
effected) - - - (88) (270)
--------- --------- --------- --------- ---------
Net income $ 3,838 $ 2,506 $ 1,899 $ 1,011 $ 1,236
========= ========= ========= ========= =========
Net income on
common stock $ 3,786 $ 2,454 $ 1,847 $ 960 $ 1,184
========= ========= ========= ========= =========
Per Share Data
Basic earnings per
common share $ 0.60 $ 0.38 $ 0.29 $ 0.18 $ 0.32
Basic earnings per
common share from
continuing
operations 0.60 0.38 0.29 0.20 0.39
Diluted earnings
per common share 0.60 0.38 0.28 0.18 0.31
Diluted earnings
per common share
from continuing
operations 0.60 0.38 0.28 0.20 0.38
Cash dividends on
common stock 0.13 0.13 0.12 - 0.12
Dividend payout
ratio for common
stock 21.71% 34.03% 41.89% - 37.91%
Book value per
common share $ 19.12 $ 18.48 $ 18.42 $ 18.23 $ 17.85
Basic weighted
average common
shares outstanding 6,321,760 6,414,390 6,461,791 5,193,562 3,742,777
Diluted weighted
average common
shares outstanding 6,357,605 6,449,777 6,497,614 5,233,655 3,783,075
Period-end common
shares outstanding 6,261,128 6,363,922 6,470,840 6,455,068 3,742,851
Balance Sheet Data
Securities $ 265,873 $ 276,710 $ 289,288 $ 298,692 $ 182,171
Loans 933,903 912,168 868,529 836,944 407,015
Allowance for loan
losses 10,852 10,828 10,607 10,835 6,103
Assets 1,363,246 1,358,818 1,318,821 1,283,025 648,851
Deposits 1,063,805 1,088,122 1,057,297 1,026,610 526,918
Stockholders'
equity 120,234 118,084 119,667 118,191 67,313
Earnings Performance
Data
Return on average
total assets 1.13% 0.76% 0.60% 0.40% 0.76%
Return on average
stockholders'
equity 12.78 8.51 6.50 3.60 7.32
Net interest margin
ratio 3.40 3.30 3.35 3.32 3.49
Efficiency ratio (1) 59.42 70.80 75.13 84.54 70.23
Asset Quality Ratios
Nonperforming
assets to total
end of period
assets 0.75% 0.81% 1.04% 1.08% 0.63%
Nonperforming loans
to total end of
period loans 0.60 0.49 1.08 1.40 0.79
Net loan
charge-offs to
total average
loans - 0.09 0.03 0.01 0.14
Allowance for loan
losses to total
end of period
loans 1.16 1.19 1.22 1.29 1.50
Allowance for loan
losses to
nonperforming
loans 194.72 241.05 112.65 92.14 189.48
Capital Ratios
Average equity to
average assets 8.83% 8.88% 9.15% 10.35% 10.34%
Total capital to
risk adjusted
assets 11.06 11.09 11.66 11.94 13.60
Tier 1 leverage
ratio 7.80 7.60 7.99 7.90 9.49
(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
