Centrue Financial Corporation Announces First Quarter EarningsST. LOUIS, MO -- 04/28/2008 -- Centrue Financial Corporation (NASDAQ: TRUE) reported net income for the first quarter 2008 of $2,445,000 or $0.39 per diluted share as compared to $1,899,000 or $0.28 per diluted share in the first quarter 2007. This represents increases of 28.8% in net income and 39.3% in diluted earnings per share.
"We were pleased with our improved financial performance during the quarter, particularly during such challenging economic times," remarked Thomas A. Daiber, President and Chief Executive Officer of Centrue Financial Corporation, on the announcement. "While we expect to see continued pressure on our net interest margin, we believe we are taking prudent steps to improve our core earnings, maintain strong asset quality, and meet the demands of the present financial climate. During the quarter, we also took several strategic steps to better position our organization for future growth, including relocating our corporate headquarters to St. Louis, Missouri and progressing on our small branch divestitures. These actions are consistent with our objective to improve shareholder returns and to allocate resources to the markets within our footprint with the highest potential for growth. By the end of the second quarter, through 8 sales and closings, our footprint will be reduced to a total of 28 branch locations."
First Quarter Highlights:
-- Nonrecurring activity for the quarter accounted for approximately
$349,000 in net income after taxes or $0.06 per diluted share.
Excluding nonrecurring activity, net income increased 10.4%, while
diluted earnings per share rose 17.9%, in comparison to first
quarter 2007 results.
-- First quarter 2008 results included the following nonrecurring
activity:
-- Approximately $83 million in discounted agency securities were
called resulting in a net gain on sale of $848,000. Cash
received from the called securities was used to fund loans and
reinvest in adjustable rate or "hybrid" securities.
-- Net gain on sale of branches of $482,000.
-- Write-down of $397,000 in goodwill related to the anticipated
sale of a Wealth Management business line.
-- Approximately $362,000 in costs associated with branch
sales/closings, employee separation costs and other
miscellaneous costs.
-- The loan portfolio increased $58.8 million or 6.1% from year-end
2007 and $147.6 million or 17.0% from first quarter 2007.
-- The level of nonperforming assets decreased $1.8 million or 25.7%
to $5.2 million versus the $7.0 million that existed as of
December 31, 2007.
-- The net interest margin decreased 10 basis points to 3.25% as
compared to 3.35% recorded in the first and fourth quarters 2007.
-- As part of an ongoing effort by the Company to redeploy capital to
higher growth markets, the Company completed the sale of its Hanover
and Elizabeth branches. The transaction resulted in selling $12.7
million in loans and $25.3 million in deposits and generated a net
gain on sale of $482,000. Upcoming branch transactions include the
previously announced sale of the Manlius and Tampico branches and
closing of the Ashkum branch, both scheduled to be completed in the
second quarter.
-- Entered into a $10.0 million subordinated debt agreement with
LaSalle Bank N.A. The subordinated debt credit facility is unsecured
and is intended to qualify as tier II capital for regulatory
purposes.
-- In an effort to provide greater visibility and recognition within
the investment community, the Company relocated our corporate
headquarters to St. Louis, Missouri.
Loan and Funding
Outstanding loans totaled $1.016 billion as compared to $957.3 million recorded at December 31, 2007. This represents an increase of $58.8 million or 6.1%. The loan growth was largely generated in the St. Louis and Streator markets and was concentrated in commercial real estate and commercial and industrial lending activities. The Company has no direct exposure to subprime mortgages.
Deposits totaled $1.049 billion as compared to $1.033 billion recorded at December 31, 2007. This represents an increase of $16.0 million or 1.6%. The majority of the increase was concentrated in lower costing non-maturing deposits, representing a shift from higher costing time deposits.
Asset Quality and Allowance for Loan Loss
Due to strong long growth experienced during the quarter, the Company recorded a $766,000 provision for loan losses versus no provision recorded in the first quarter 2007 and $449,000 recorded in the fourth quarter 2007. The allowance was 1.10% of total loans outstanding at March 31, 2008, compared to 1.12% reported at year-end 2007. Net charge-offs were $300,000 or 0.03% of average loans compared to $228,000 or 0.03% in the first quarter 2007 and $546,000 or 0.06% recorded in fourth quarter 2007. The first quarter 2008 reserve coverage ratio (allowance to nonperforming loans) was reported at 276.52% as compared to 262.96% reported at year-end 2007.
Nonperforming loans remained unchanged at $4.1 million as compared to year-end 2007 and decreased $5.3 million or 56.4% from the $9.4 million recorded in the first quarter 2007. The level of nonperforming loans to end of period loans totaled 0.40% as of March 31, 2008 compared to 0.43% as of December 31, 2007. In light of current market conditions, a review of our commercial real estate portfolio is ongoing. This continuing review has resulted in two large relationships aggregating $28 million being placed onto our internal watch list over the past thirty days. We are proactively working with the affected borrowers in order to strengthen or liquidate the loans.
Net Interest Margin
The net interest margin for the first quarter of 2008 decreased 10 basis points to 3.25% as compared to 3.35% reported in the first quarter 2007 and fourth quarter 2007. The decrease in the net interest margin was primarily a result of the aggressive reduction in short-term interest rates by the FOMC in the first quarter. 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 to $10.0 million for the first quarter 2008 as compared to $9.6 million earned in the same period of 2007. The improvement in net interest income was largely related to growth in the loan portfolio and a decrease in rates paid on funding costs. These improvements were partially offset by reductions in the rates earned and volume of the securities portfolio and a decrease in rates earned on loans. It is likely that the margin will remain under pressure throughout 2008 due to expected future FOMC short-term interest rate reductions and competitive pressures in loans and deposits.
Noninterest Income and Expense
Total noninterest income for the first quarter 2008 was $4.9 million as compared to $3.3 million reported in the same period in 2007. Excluding $848,000 in security gains and $482,000 in net gain on sale of other assets, noninterest income increased $354,000 or 10.9%. The remaining change was primarily the result of improvements in service charges and NSF fees on deposit accounts, volume related improvement from the mortgage banking division and revenue generated from electronic banking products.
Total noninterest expense for the first quarter 2008 was $10.3 million as compared to $9.9 million reported in the same period in 2007. Excluding $759,000 of previously mentioned nonrecurring items, noninterest expense declined $391,000 or 3.9 % during the first quarter of 2008 as compared to the same period in 2007. The remaining change was primarily the result of reductions in salaries and employee benefits due to a decrease in full time equivalent employees, data processing costs and supplies expenses.
Capital Management
At March 31, 2008, the Company's total risk-based capital ratio and leverage ratio were 10.79% and 7.65%, respectively. The Company'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 91st consecutive quarter of dividends paid to
stockholders.
- -- The Company repurchased 58,500 shares of common stock at a weighted
average cost of $20.08 per share. As of March 31, 2008, approximately
395,078 shares are authorized to be repurchased under the existing plan.
About the Company
Centrue Financial Corporation is a regional financial services company headquartered in St. Louis, Missouri 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 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
March 31,
--------------------
2008 2007
--------- ---------
Operating Highlights
Net income $ 2,445 $ 1,899
Return on average total assets 0.71% 0.60%
Return on average stockholders equity 8.24 6.50
Net interest margin 3.25 3.35
Efficiency ratio 73.06 75.13
Per Share Data
Diluted earnings per common share $ 0.39 $ 0.28
Book value per common share $ 19.48 $ 18.42
Diluted weighted average common
shares outstanding 6,088,608 6,497,614
Period end common shares outstanding 6,026,146 6,470,840
Stock Performance Data
Market price:
Quarter end $ 19.74 $ 19.37
High $ 22.94 $ 19.93
Low $ 17.26 $ 18.99
Period end price to book value 1.01 1.05
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
March 31, December 31,
2008 2007
----------- -----------
ASSETS
Cash and cash equivalents $ 50,606 $ 51,628
Securities available-for-sale 207,267 238,661
Restricted securities 10,670 10,670
Loans 1,016,097 957,285
Allowance for loan losses (11,221) (10,755)
----------- -----------
Net loans 1,004,876 946,530
Cash surrender value of life insurance 27,147 26,895
Mortgage servicing rights 3,090 3,161
Premises and equipment, net 34,649 35,615
Goodwill 25,101 25,498
Intangible assets, net 10,495 11,007
Other real estate 1,153 2,937
Other assets 12,798 12,397
----------- -----------
Total assets $ 1,387,852 $ 1,364,999
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 118,368 $ 114,360
Interest-bearing 930,681 918,662
----------- -----------
Total deposits 1,049,049 1,033,022
Federal funds purchased and securities sold
under agreements to repurchase 49,166 44,937
Federal Home Loan Bank advances 115,408 121,615
Notes payable 24,031 13,802
Series B mandatory redeemable preferred stock 831 831
Subordinated debentures 20,620 20,620
Other liabilities 10,877 11,296
----------- -----------
Total liabilities 1,269,982 1,246,123
Stockholders' equity
Series A convertible preferred stock 500 500
Common stock 7,451 7,438
Surplus 71,131 70,901
Retained earnings 61,219 60,344
Accumulated other comprehensive income (loss) (11) 939
----------- -----------
140,290 140,122
Treasury stock, at cost (22,420) (21,246)
----------- -----------
Total stockholders' equity 117,870 118,876
Total liabilities and stockholders’
equity $ 1,387,852 $ 1,364,999
=========== ===========
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended
March 31,
---------------------
2008 2007
---------- ----------
Interest income
Loans $ 17,295 $ 16,046
Securities
Taxable 2,474 3,277
Exempt from federal income taxes 358 382
Federal funds sold and other 55 108
---------- ----------
Total interest income 20,182 19,813
Interest expense
Deposits 8,340 8,817
Federal funds purchased and securities
sold under agreements to repurchase 333 410
Federal Home Loan Bank advances 1,172 645
Series B mandatory redeemable preferred 12 12
Subordinated debentures 384 448
Notes payable 238 158
---------- ----------
Total interest expense 10,479 10,490
Net interest income 9,703 9,323
Provision for loan losses 766 -
---------- ----------
Net interest income after
provision for loan losses 8,937 9,323
Noninterest income
Service charges 1,636 1,583
Trust income 253 229
Mortgage banking income 446 434
Brokerage commissions and fees 102 126
Bank owned life insurance 252 241
Securities gains 848 -
Gain on sale of OREO 96 82
Gain on sale of other assets 482 -
Other income 823 559
---------- ----------
4,938 3,254
Noninterest expenses
Salaries and employee benefits 4,829 5,148
Occupancy 1,210 941
Furniture and equipment 611 695
Marketing 223 192
Supplies and printing 131 181
Telephone 241 178
Data processing 303 583
Amortization of intangible assets 909 621
Other expenses 1,859 1,409
---------- ----------
10,316 9,948
Income before income taxes 3,559 2,629
Income taxes 1,114 730
---------- ----------
Net income $ 2,445 $ 1,899
========== ==========
Preferred stock dividends 52 52
---------- ----------
Net income for common stockholders $ 2,393 $ 1,847
========== ==========
Basic earnings per common share $ 0.40 $ 0.29
========== ==========
Diluted earnings per common share $ 0.39 $ 0.28
========== ==========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
-----------------------------------------------------
03/31/08 12/31/07 09/30/07 06/30/07 03/31/07
--------- --------- --------- --------- ---------
Statement of Income
Data
Interest income $ 20,182 $ 21,549 $ 21,561 $ 20,653 $ 19,813
Interest expense (10,479) (11,606) (11,477) (11,162) (10,490)
--------- --------- --------- --------- ---------
Net interest income 9,703 9,943 10,084 9,491 9,323
Provision for loan
losses 766 449 - 226 -
--------- --------- --------- --------- ---------
Net interest income
after provision
for loan losses 8,937 9,494 10,084 9,265 9,323
Noninterest income 4,938 3,850 4,367 4,194 3,254
Noninterest expense 10,316 8,908 8,631 9,846 9,948
--------- --------- --------- --------- ---------
Income before
income taxes 3,559 4,436 5,820 3,613 2,629
Provision (benefit)
for income taxes 1,114 1,356 1,982 1,107 730
--------- --------- --------- --------- ---------
Net income $ 2,445 $ 3,080 $ 3,838 $ 2,506 $ 1,899
========= ========= ========= ========= =========
Net income on
common stock $ 2,393 $ 3,029 $ 3,786 $ 2,454 $ 1,847
========= ========= ========= ========= =========
Per Share Data
Basic earnings per
common share $ 0.40 $ 0.49 $ 0.60 $ 0.38 $ 0.29
Diluted earnings
per common share 0.39 0.49 0.60 0.38 0.28
Cash dividends on
common stock 0.13 0.13 0.13 0.13 0.12
Dividend payout ratio
for common stock 32.97% 26.74% 21.71% 34.03% 41.89%
Book value per
common share $ 19.48 $ 19.50 $ 19.12 $ 18.48 $ 18.42
Basic weighted
average common
shares outstanding 6,051,554 6,174,732 6,321,760 6,414,390 6,461,791
Diluted weighted
average common
shares outstanding 6,088,608 6,227,046 6,357,605 6,449,777 6,497,614
Period-end common
shares outstanding 6,026,146 6,071,546 6,261,128 6,363,922 6,470,840
Balance Sheet Data
Securities $ 217,937 $ 249,331 $ 265,873 $ 276,710 $ 289,288
Loans 1,016,097 957,285 933,903 912,168 868,529
Allowance for loan
losses 11,221 10,755 10,852 10,828 10,607
Assets 1,387,852 1,364,999 1,363,246 1,353,386 1,318,821
Deposits 1,049,049 1,033,022 1,063,805 1,088,122 1,057,297
Stockholders'
equity 117,870 118,876 120,234 118,067 119,667
Earnings Performance Data
Return on average
total assets 0.71% 0.90% 1.13% 0.76% 0.60%
Return on average
stockholders' equity 8.24 10.22 12.78 8.51 6.50
Net interest margin
ratio 3.25 3.35 3.40 3.30 3.35
Efficiency ratio(1) 73.06 61.72 59.42 70.80 75.13
Asset Quality Ratios
Nonperforming assets
to total end of
period assets 0.38% 0.51% 0.75% 0.81% 1.04%
Nonperforming loans
to total end of
period loans 0.40 0.43 0.60 0.49 1.08
Net loan charge-offs
to total average
loans 0.03 0.06 - 0.09 0.03
Allowance for loan
losses to total
end of period
loans 1.10 1.12 1.16 1.19 1.22
Allowance for loan
losses to
nonperforming loans 276.52 262.96 194.72 241.05 112.65
Capital Ratios
Average equity to
average assets 8.68% 8.75% 8.83% 8.88% 9.15%
Total capital to
risk adjusted
assets 10.79 10.23 11.06 11.09 11.66
Tier 1 leverage
ratio 7.65 7.69 7.80 7.60 7.99
(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.
Contacts:
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
