Centrue Financial Corporation Announces Fourth Quarter and Year-End EarningsOTTAWA, IL -- 02/11/2008 -- Centrue Financial Corporation (NASDAQ: TRUE) reported net income for the fourth quarter ended December 31, 2007 of $3,080,000 or $0.49 per diluted share as compared to net income of $1,011,000 or $0.18 per diluted share earned in the same period of 2006. Fourth quarter 2006 results included approximately $767,000 (or $470,000 after tax) in expenses related to the merger and integration between Centrue Financial Corporation and UnionBancorp, Inc. The impact to earnings, net of taxes, was approximately $0.11 per diluted share.
For the twelve months ended December 31, 2007, net income equaled $11,323,000 or $1.74 per diluted share as compared to net income of $5,187,000 or $1.20 per diluted share for the year ended December 31, 2006. Income from continuing operations for 2007 equaled $11,323,000 or $1.74 per diluted share as compared to net income of $5,602,000 or $1.30 per diluted share for 2006.
"Centrue made significant progress during 2007 in key financial metrics including our return on equity, net income and operating efficiency," remarked Thomas A. Daiber, President and Chief Executive Officer of Centrue Financial Corporation, on the announcement. "Our progress is especially noteworthy during a period when the financial services sector as a whole faced significant challenges. Our asset quality continued to improve as we experienced decreases in nonperforming and delinquent loans. Additionally during 2007, the Company realized more than its projected $4 million in cost savings related to the November 2006 merger. We are pleased with our 2007 performance, particularly in light of the slowed economy, and we will continue efforts to grow our assets and improve our operating results in 2008."
Fourth Quarter 2007 Highlights:
- -- In an effort to integrate operations and streamline our retail
distribution channel, the Company announced the sale of four Illinois
branch locations during the fourth quarter. The sale of the Hanover and
Elizabeth branches and Manlius and Tampico branches are anticipated to
close in the first and second quarter, respectively. This action, in
addition to the closing of three branches earlier in the year, will reduce
the branch distribution network to 29 locations.
- -- With a successful core systems conversion late in the second quarter,
the Company was able to realize a net reduction of over 125 full time
equivalent employees as of December 31, 2007 as compared to pro-forma
staffing levels at the beginning of 2006.
Loans and Funding
Outstanding loans totaled $957.3 million at December 31, 2007 compared to $836.9 million at December 31, 2006, representing an increase of $120.4 million or 14.4%. The loan growth was largely generated in the St. Louis market and was concentrated in commercial real estate lending activity. The Company has no direct exposure to sub prime mortgages.
Deposits totaled $1.033 billion at December 31, 2007 compared to $1.027 billion at December 31, 2006, representing an increase of $6.0 million or 0.6%. Although deposits remained relatively unchanged, the Company experienced a shift into higher costing time and wholesale deposits away from lower costing non-maturing deposits. The changes in deposit composition, combined with an increase in FHLB advances as well as a generally higher cost of funds during the year, put pressure on the margin.
Asset Quality and Allowance for Loan Loss
During the fourth quarter 2007, the Company recorded a provision for loan losses of $449,000 compared to $25,000 during the same period in 2006. The increase in the provision for the quarter was the result of identifying and addressing problem credits and deteriorating economic conditions in a timely fashion.
The allowance was 1.12% of total loans outstanding at December 31, 2007 as compared to 1.29% reported at year-end 2006. Net charge-offs were $546,000, or 0.06% of average loans compared to $61,000 or 0.01% in fourth quarter 2006. The 2007 reserve coverage ratio (allowance to nonperforming loans) was reported at 262.96% as compared to 92.14% reported at year-end 2006.
Nonperforming loans were $4.1 million, a decrease of $7.7 million or 65.3% reported at year-end 2006. The level of nonperforming loans to end of period loans totaled 0.43% as of December 31, 2007 compared to 1.40% as of December 31, 2006. The decrease in nonperforming loans was the result of aggressive action by the Company to work-out of troubled credits by either refinancing elsewhere or through liquidation.
Net Interest Margin
The net interest margin for fourth quarter 2007 was reported at 3.35%, compared with 3.32% for fourth quarter 2006 and 3.40% for third quarter 2007. The decline from the third quarter 2007 was due primarily to rate reductions by the Federal Reserve. Due to the Company's asset liability position, changes impact loan yields quicker than the Company's cost of funds.
Tax-equivalent net interest income increased $2.8 million to $10.3 million for the fourth quarter 2007 as compared to $7.5 million for the same period in 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 for a full quarter in 2007. 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. Due largely to continued competition in pricing loans and deposits, and the recent economic downturn, the margin will likely remain under pressure throughout 2008.
Noninterest Income and Expense
Noninterest income for the fourth quarter 2007 increased $1.5 million to $3.9 million as compared to $2.4 million reported in the same period in 2006. The growth was primarily the result of improvements in service charges and NSF fees on deposit accounts, electronic banking services (included in other income), and revenue generated from the mortgage banking division as a result of a full quarter's activity from the November 2006 merger. Also contributing to the increase was a gain on sale of other real estate and income earned on accrued interest related to a federal tax refund.
Noninterest expense for the fourth quarter 2007 increased $500,000 to $8.9 million as compared to $8.4 million reported in the same period in 2006. The increase was largely attributed to higher occupancy and equipment costs associated with operating 21 additional branches for a full quarter's activity from the November 2006 merger. Also contributing were increases in professional fees related to Sarbanes-Oxley compliance, core deposit amortization, and other real estate valuation adjustments on two properties taken in light of recent economic downturns. Offsetting these increases were reductions in payroll and benefit costs, marketing, and loan related expenses.
Capital Management
At December 31, 2007, the Company's total risk-based capital ratio and tier 1 leverage ratio were 10.23% and 7.69%, 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 90th consecutive quarter of dividends paid to
stockholders.
- -- The Company repurchased 196,582 shares of common stock at a weighted
average cost of $21.39 per share. As of December 31, 2007, approximately
454,000 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 Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Operating Highlights
Net income $ 3,080 $ 1,011 $ 11,323 $ 5,187
Income from continuing
operations $ 3,080 $ 1,099 $ 11,323 $ 5,602
Return on average total
assets 0.90% 0.40% 0.85% 0.69%
Return on average
Stockholders' equity 10.22 3.60 9.53 6.69
Net interest margin 3.35 3.32 3.35 3.41
Efficiency ratio 61.72 84.54 66.67 76.81
Per Share Data
Diluted earnings per common
share $ 0.49 $ 0.18 $ 1.74 $ 1.20
Diluted earnings per common
share From continuing
operations $ 0.49 $ 0.20 $ 1.74 $ 1.30
Diluted earnings per common
share From discontinued
operations $ - $ (0.02) $ - $ (0.10)
Book value per common share $ 19.50 $ 18.23 $ 19.50 $ 18.23
Diluted weighted average
common shares outstanding 6,227,046 5,233,655 6,380,646 4,163,836
Period end common shares
outstanding 6,071,546 6,455,068 6,071,546 6,455,068
Stock Performance Data
Market price:
Quarter end $ 22.50 $ 19.47 $ 22.50 $ 19.47
High $ 24.90 $ 20.00 $ 24.90 $ 21.48
Low $ 19.19 $ 18.30 $ 18.50 $ 17.44
Period end price to book value 1.15 1.06 1.15 1.06
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
December 31, December 31,
2007 2006
------------ ------------
ASSETS
Cash and cash equivalents $ 51,628 $ 40,195
Securities available-for-sale 238,661 290,224
Restricted securities 10,670 8,468
Loans 957,285 836,944
Allowance for loan losses (10,755) (10,835)
----------- -----------
Net loans 946,530 826,109
Cash value of life insurance 26,895 25,904
Mortgage servicing rights 3,161 3,510
Premises and equipment, net 35,615 35,403
Goodwill 25,498 25,396
Intangible assets, net 11,007 12,733
Other real estate 2,937 2,136
Other assets 12,397 12,947
----------- -----------
Total assets $ 1,364,999 $ 1,283,025
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 114,360 $ 125,585
Interest-bearing 918,662 901,025
----------- -----------
Total deposits 1,033,022 1,026,610
Federal funds purchased and securities sold
Under agreements to repurchase 44,937 36,319
Federal Home Loan Bank advances 121,615 63,147
Notes payable 13,802 9,015
Series B mandatory redeemable preferred stock 831 831
Subordinated debentures 20,620 20,620
Other liabilities 11,296 8,292
----------- -----------
Total liabilities 1,246,123 1,164,834
Stockholders' equity
Series A convertible preferred stock 500 500
Common stock 7,438 7,412
Surplus 70,901 70,460
Retained earnings 60,344 52,469
Accumulated other comprehensive income 939 235
----------- -----------
140,122 131,076
Treasury stock, at cost (21,246) (12,885)
----------- -----------
Total stockholders' equity 118,876 118,191
Total liabilities and stockholders’
equity $ 1,364,999 $ 1,283,025
=========== ===========
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- ------------------
2007 2006 2007 2006
--------- -------- -------- --------
Interest income
Loans $ 18,097 $ 11,924 $ 69,060 $ 33,717
Securities
Taxable 2,876 2,702 12,419 8,785
Exempt from federal income taxes 379 332 1,520 976
Federal funds sold and other 197 239 577 380
--------- -------- -------- --------
Total interest income 21,549 15,197 83,576 43,858
Interest expense
Deposits 9,566 6,752 37,560 18,204
Federal funds purchased and
securities sold under agreements
to repurchase 472 215 1,881 407
Federal Home Loan Bank advances 925 524 2,834 1,824
Series B mandatory redeemable
preferred 13 13 50 50
Subordinated debentures 395 242 1,688 242
Notes payable 235 156 722 624
--------- -------- -------- --------
Total interest expense 11,606 7,902 44,735 21,351
Net interest income 9,943 7,295 38,841 22,507
Provision for loan losses 449 25 675 (1,275)
--------- -------- -------- --------
Net interest income after provision
for loan losses 9,494 7,270 38,166 23,782
Noninterest income
Service charges 1,726 1,062 6,789 2,473
Trust income 238 238 942 858
Mortgage banking income 461 346 1,743 1,113
Brokerage commissions and fees 149 66 795 326
Bank owned life insurance (BOLI) 251 198 991 628
Securities gains (losses), net 4 (16) (29) (104)
Gain on sale of other real estate 60 - 1,107 -
Other income 961 469 3,327 1,394
--------- -------- -------- --------
3,850 2,363 15,665 6,688
Noninterest expenses
Salaries and employee benefits 3,452 4,146 17,635 12,181
Occupancy expense, net 1,055 604 4,043 1,714
Furniture and equipment 683 768 2,621 2,276
Marketing 297 403 1,035 697
Supplies and printing 179 191 653 421
Telephone 248 151 834 490
Amortization of intangible assets 534 345 2,308 416
Other expenses 2,460 1,764 8,204 4,528
--------- -------- -------- --------
8,908 8,372 37,333 22,723
Income from continuing operations
before income taxes 4,436 1,261 16,498 7,747
Income taxes 1,356 162 5,175 2,145
--------- -------- -------- --------
Income from continuing operations 3,080 1,099 11,323 5,602
Discontinued operations:
Loss from discontinued operations - (143) - (677)
Income tax benefit - (55) - (262)
--------- -------- -------- --------
Loss on discontinued operations - (88) - (415)
--------- -------- -------- --------
Net income $ 3,080 $ 1,011 $ 11,323 $ 5,187
========= ======== ======== ========
Preferred stock dividends 51 51 207 207
--------- -------- -------- --------
Net income for common stockholders $ 3,029 $ 960 $ 11,116 $ 4,980
========= ======== ======== ========
Basic earnings per share from
continuing operations $ 0.49 $ 0.20 $ 1.75 $ 1.31
========= ======== ======== ========
Diluted earnings per share from
continuing operations $ 0.49 $ 0.20 $ 1.74 $ 1.30
========= ======== ======== ========
Basic earnings per share from
discontinued operations $ - $ (0.02) $ - $ (0.10)
========= ======== ======== ========
Diluted earnings per share from
discontinued operations $ - $ (0.02) $ - $ (0.10)
========= ======== ======== ========
Basic earnings per common share $ 0.49 $ 0.18 $ 1.75 $ 1.21
========= ======== ======== ========
Diluted earnings per common share $ 0.49 $ 0.18 $ 1.74 $ 1.20
========= ======== ======== ========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
-------------------------------------------------
12/31/07 09/30/07 06/30/07 03/31/07 12/31/06
--------- --------- --------- --------- ---------
Statement of Income Data
Interest income $ 21,549 $ 21,561 $ 20,653 $ 19,813 $ 15,197
Interest expense (11,606) (11,477) (11,162) (10,490) (7,902)
--------- --------- --------- --------- ---------
Net interest income 9,943 10,084 9,491 9,323 7,295
Provision for loan
losses 449 - 226 - 25
--------- --------- --------- --------- ---------
Net interest income
after provision for
loan losses 9,494 10,084 9,265 9,323 7,270
Noninterest income 3,850 4,367 4,194 3,254 2,363
Noninterest expense 8,908 8,631 9,846 9,948 8,372
--------- --------- --------- --------- ---------
Income before income
taxes 4,436 5,820 3,613 2,629 1,261
Provision for income
taxes 1,356 1,982 1,107 730 162
--------- --------- --------- --------- ---------
Income from continuing
operations (after
related taxes) 3,080 3,838 2,506 1,899 1,099
Loss on discontinued
operations (tax
effected) - - - - (88)
--------- --------- --------- --------- ---------
Net income $ 3,080 $ 3,838 $ 2,506 $ 1,899 $ 1,011
========= ========= ========= ========= =========
Net income on common
stock $ 3,029 $ 3,786 $ 2,454 $ 1,847 $ 960
========= ========= ========= ========= =========
Per Share Data
Basic earnings per
common share $ 0.49 $ 0.60 $ 0.38 $ 0.29 $ 0.18
Basic earnings per
common share from
continuing operations 0.49 0.60 0.38 0.29 0.20
Diluted earnings per
common share 0.49 0.60 0.38 0.28 0.18
Diluted earnings per
common share from
continuing operations 0.49 0.60 0.38 0.28 0.20
Cash dividends on
common stock 0.13 0.13 0.13 0.12 -
Dividend payout ratio
for common stock 26.74% 21.71% 34.03% 41.89% -
Book value per common
share $ 19.50 $ 19.12 $ 18.48 $ 18.42 $ 18.23
Basic weighted average
common shares
outstanding 6,174,732 6,321,760 6,414,390 6,461,791 5,193,562
Diluted weighted
average common shares
outstanding 6,227,046 6,357,605 6,449,777 6,497,614 5,233,655
Period-end common
shares outstanding 6,071,546 6,261,128 6,363,922 6,470,840 6,455,068
Balance Sheet Data
Securities $ 249,331 $ 265,873 $ 276,710 $ 289,288 $ 298,692
Loans 957,285 933,903 912,168 868,529 836,944
Allowance for loan
losses 10,755 10,852 10,828 10,607 10,835
Assets 1,364,999 1,363,246 1,353,386 1,318,821 1,283,025
Deposits 1,033,022 1,063,805 1,088,122 1,057,297 1,026,610
Stockholders' equity 118,876 120,234 118,067 119,667 118,191
Earnings Performance Data
Return on average
total assets 0.90% 1.13% 0.76% 0.60% 0.40%
Return on average
stockholders' equity 10.22 12.78 8.51 6.50 3.60
Net interest margin
ratio 3.35 3.40 3.30 3.35 3.32
Efficiency ratio (1) 61.72 59.42 70.80 75.13 84.54
Asset Quality Ratios
Nonperforming assets
to total end of
period assets 0.51% 0.75% 0.81% 1.04% 1.08%
Nonperforming loans to
total end of period
loans 0.43 0.60 0.49 1.08 1.40
Net loan charge-offs
to total average
loans 0.06 - 0.09 0.03 0.01
Allowance for loan
losses to total end
of period loans 1.12 1.16 1.19 1.22 1.29
Allowance for loan
losses to
nonperforming loans 262.96 194.72 241.05 112.65 92.14
Capital Ratios
Average equity to
average assets 8.75% 8.83% 8.88% 9.15% 10.35%
Total risk-based
capital ratio 10.23 11.06 11.09 11.66 11.94
Tier 1 leverage ratio 7.69 7.80 7.60 7.99 7.90
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
