Centrue Financial Corporation Announces First Quarter EarningsST. LOUIS, MO -- (Marketwire - May 05, 2009) - Centrue Financial Corporation (NASDAQ: TRUE), parent company of Centrue Bank, reported first quarter 2009 net income of $1.1 million or $0.11 per share, compared to net income of $2.4 million or $0.39 per share earned in the first quarter 2008. The Company's first quarter performance reflects an increased provision for loan losses and a non-cash impairment charge related to a trust preferred security. These actions were largely reflective of continued deterioration of general economic conditions and extraordinary volatility in the securities markets.
In an effort to retain and build capital during this period of economic uncertainty, the Board of Directors approved a reduction in the Company's quarterly common stock dividend from $0.07 per share to $0.01 per share. This dividend action will enable the retention of approximately $1.4 million of additional capital annually. The dividend will be paid to stockholders of record on May 8, 2009 and will be payable on May 22, 2009.
"Although first quarter earnings fell short of expectations, our significant pre-provision earnings power and our capital levels which are above regulatory well capitalized guidelines are critical strengths as we navigate through the current economic challenges," stated Thomas A. Daiber, President and Chief Executive Officer. "Like many financial institutions, however, our results continue to be adversely impacted by larger loan loss provisions and non-cash impairment charges. Nonperforming loans did increase by $5.2 million from year-end to 1.57% of total loans while our allowance for loan losses is 1.62% of total loans and 103.47% of nonperforming loans. We remain focused on proactively identifying and addressing our problem credits and have increased staffing in our credit department in order to address the asset quality challenges that we will continue to face in this environment. We also made the difficult decision to reduce our common stock dividend for the first quarter. We believe this proactive step is prudent and will preserve our tangible capital position, improve our overall liquidity, and demonstrate our commitment to keeping our company and balance sheet healthy and strong."
First Quarter Highlights:
- -- Pre-tax earnings for the quarter, excluding provision for loan loss,
non-cash impairment charges on trust preferred securities, and gains on
sale of other assets, improved over first quarter 2008 due to stronger net
interest margin and lower operating expenses.
- -- First quarter 2009 results were adversely impacted by a $2.2 million
provision for loan loss and a $1.2 million non-cash impairment charge for a
trust preferred security.
- -- Excluding the $1.2 million impairment charge for trust preferred
securities, the Company would have recorded net income of $1.8 million or
$0.23 per share.
- -- The net interest margin was 3.42%, increasing 9 basis points from
3.33% recorded in the fourth quarter 2008 and 17 basis points from 3.25%
recorded in the first quarter 2008.
- -- Nonperforming loans increased to 1.57% of total loans as compared to
1.03% at December 31, 2008 and 0.40% at March 31, 2008.
- -- Allowance for loan loss increased to 1.62% of total loans as compared
to 1.50% at December 31, 2008 and 1.10% at March 31, 2008.
- -- Capital ratios remain strong. Tier 1 risk-based capital ratio was
11.88%; total risk-based capital ratio was 13.99%; and tangible common
equity to tangible assets was 6.45%.
- -- On January 9, 2009, the Company closed on the sale of $32.7 million of
preferred stock to the U.S. Department of the Treasury under the Capital
Purchase Program ("CPP"). During the first quarter, $363,000 of preferred
stock dividends were accrued in connection with the CPP, which reduced
earnings per share by $0.06.
Balance Sheet
Total securities at March 31, 2009 totaled $233.0 million as compared to $252.6 million recorded at December 31, 2008. This represents a decrease of $19.6 million or 7.8%. At quarter-end, the Company held nine pooled trust preferred securities with a total book value of $24.0 million. The investments in trust-preferred securities receive principal and interest payments from several pools of subordinated capital debentures.
Management elected early adoption of Financial Accounting Standards Board ("FASB") Staff Position ("FSP") FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. As a consequence, the Company recorded a $1.2 million pre-tax non-cash charge based upon management's determination that a trust preferred security with an aggregate cost before charge of $5.0 million was other than temporarily impaired. This charge is largely a result of deteriorating cash flows within one of these pools and illiquidity and credit concerns within the financial markets.
Management has determined that the remaining $20.2 million of trust-preferred securities is deemed to be only temporarily impaired at quarter-end. An unrealized loss of approximately $7.2 million associated with all trust preferred securities has been recorded, on an after-tax basis, through stockholders' equity as a component of other comprehensive income.
Should the economic climate deteriorate from current levels, the underlying credits may experience repayment difficulty, and the level of deferrals and defaults could increase requiring additional impairment charges on trust preferred securities in future quarters. The Company does not hold any securities containing sub-prime mortgages or any Fannie Mae or Freddie Mac equities.
Gross loans at March 31, 2009 totaled $985.5 million as compared to $1.004 billion recorded at December 31, 2008. This represents a decrease of $18.5 million or 1.8% as commercial lending requests slowed during the quarter. We continue to make new loans available in our communities as evidenced by our origination of over $46.0 million in residential mortgage loans in the quarter. The Company has no direct exposure to sub-prime mortgages.
The Company remains focused on growing deposits by leveraging opportunities to deepen existing customer relationships and develop new long-term relationships. Total deposits increased $19.0 million or 1.8% to $1.068 billion at March 31, 2009 as compared to $1.049 billion recorded at December 31, 2008. The improvement was generated primarily through in-market time deposits as brokered time deposits remained relatively unchanged from year-end 2008. Non-interest bearing deposits were 10.6% of total deposits at March 31, 2009 as compared to 11.3% recorded at December 31, 2008.
Credit Quality and Allowance for Loan Loss
Due largely to the deterioration of general economic conditions, the ongoing implementation of action plans on previously identified relationships and the identification of several additional deteriorating relationships, the Company's first quarter 2009 provision for loan losses was $2.2 million. The Company's allowance for losses grew to 1.62% of total loans, up 12 basis points from the fourth quarter 2008 and 52 basis points from first quarter 2008. Net charge-offs for the first quarter 2009 were $1.2 million or 0.12% of average loans as compared to $1.7 million or 0.17% reported in the fourth quarter 2008 and $300,000 or 0.03% reported in the first quarter 2008.
Total nonperforming assets were $28.2 million, or 2.06% of total assets, at March 31, 2009. This included $15.4 million of nonperforming loans and $12.8 million of foreclosed assets and repossessed real estate. Nonperforming loans increased $5.2 million or 49.5% from December 31, 2008 and $11.3 million or 275.6% from March 31, 2008. The increase in nonperforming loans was concentrated in our commercial real estate portfolio and with borrowers dependent on the housing industry. The level of nonperforming loans to end of period loans was 1.57% as of March 31, 2009 as compared to 1.03% as of December 31, 2008 and 0.40% as of March 31, 2008. As a result of the increase in nonperforming loans, the allowance to nonperforming loan coverage ratio decreased to 103.47% in the first quarter from 145.55% during the fourth quarter 2008 and 276.52% from the first quarter 2008.
Management continues to diligently monitor the loan portfolio, paying particular attention to borrowers with residential real estate exposure. While virtually all of these relationships are performing, the economic outlook for this industry will likely remain extremely challenging throughout 2009. Should the economic climate deteriorate from current levels, more borrowers may experience repayment difficulty, and the level of nonperforming loans, charge-offs and delinquencies will rise requiring further increases in the provision for loan losses.
Net Interest Margin
The net interest margin was 3.42% for the first quarter 2009, an increase of 9 basis points from 3.33% recorded in the fourth quarter 2008 and an increase of 17 basis points from 3.25% reported in the first quarter 2008. Over the past four quarters, the yield on average earning assets declined 110 basis points while the cost of funds declined 132 basis points. Due largely to continued competition in pricing loans and deposits, the protracted economic downturn, and the Company's interest rate sensitivity, the margin will likely remain under pressure throughout 2009.
Tax-equivalent net interest income for the first quarter of 2009 increased to $10.6 million as compared to $10.1 million earned in the fourth quarter of 2008 and $10.0 million for the same period in 2008. The increase in net interest income was largely due to an increase in average-earning assets and improvement in the net interest margin.
Noninterest Income and Expense
Total noninterest income for the first quarter of 2009 was $2.0 million as compared to $4.9 million reported in the same period in 2008. Excluding the $1.2 million impairment charge taken on a trust preferred security in the first quarter 2009 and $1.3 million on security gains and gains on sale of other assets in 2008, noninterest income decreased $375,000 or 10.7%. This decrease largely stems from reduced consumer spending and the impact on overdraft fees. Further, trust and brokerage fees declined resulting from the impact of selling the wealth management product lines in late 2008 and first quarter 2009. These decreases were partially offset by an increase in revenue from the mortgage banking business as refinancing activity increased due to the favorable interest rate environment.
Total noninterest expense for the first quarter 2009 was $8.9 million as compared to $10.3 million recorded during the same period in 2008. The decrease was reported across most categories and was largely due to the realization of cost saving initiatives and the impact of selling four branches in 2008. These strategic actions led to reductions in the number of full-time equivalent employees, occupancy, and telephone and data line expense levels. These reductions were partially offset by a $215,000 increase in FDIC insurance premiums.
Capital Management
Regulatory and tangible common equity ratios improved since year-end, largely driven by retention of earnings and a reduction in total assets. All regulatory mandated ratios for characterization as "well-capitalized" were significantly exceeded as of March 31, 2009.
- -- Tier 1 capital of $139.1 million, a ratio of 11.88%, up from 9.99% at
December 31, 2008.
- -- Tangible common equity of $86.3 million, a ratio of 6.45%, up from
6.24% at December 31, 2008.
- -- Total risk-based capital of $163.8 million, a ratio of 13.99%, up from
12.18% at December 31, 2008.
Other capital management activity included the following:
- -- The Company reduced its quarterly common stock dividend from $0.07 per
share to $0.01 per share effective with the May 2009 dividend. This
reduction equates to approximately $1.4 million in additional retained
capital per annum.
- -- On January 9, 2009, Centrue received $32.7 million through
participation in the U.S. Treasury's Capital Purchase Program. While the
Company has historically exceeded the industry's "well-capitalized"
standards, the Capital Purchase Program investment will even further
strengthen the balance sheet and capital position, improve the Company's
liquidity position and provide access to capital at more attractive rates
than what is available in the current market. Preferred dividends paid to
the U.S. Treasury will equate to approximately $1.6 million per annum.
About the Company
Centrue Financial Corporation is a regional financial services company headquartered in St. Louis, Missouri and devotes special attention to personal service. The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central 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
Three Months Ended
March 31,
--------------------
2009 2008
--------- ---------
Operating Highlights
Net income $ 1,065 $ 2,445
Return on average total assets 0.31% 0.71%
Return on average stockholders' equity 2.93 8.24
Net interest margin 3.42 3.25
Efficiency ratio 63.82 73.06
Per Share Data
Diluted earnings per common share $ 0.11 $ 0.39
Book value per common share $ 18.82 $ 19.48
Tangible book value per common share $ 13.35 $ 13.57
Diluted weighted average common
shares outstanding 6,028,491 6,088,608
Period end common shares outstanding 6,028,491 6,026,146
Stock Performance Data
Market price:
Quarter end $ 5.38 $ 19.74
High $ 6.95 $ 22.94
Low $ 2.76 $ 17.26
Period end price to book value 28.59% 101.33%
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
March 31, December 31,
2009 2008
------------ ------------
ASSETS
Cash and cash equivalents $ 43,081 $ 35,014
Securities available-for-sale 222,272 241,851
Restricted securities 10,711 10,711
Loans 985,464 1,004,390
Allowance for loan losses (16,010) (15,018)
------------ ------------
Net loans 969,454 989,372
Cash surrender value of life insurance 28,173 27,917
Mortgage servicing rights 2,902 2,890
Premises and equipment, net 31,615 32,376
Goodwill 24,331 24,494
Intangible assets, net 8,675 9,088
Other real estate 12,772 12,723
Other assets 16,377 15,445
------------ ------------
Total assets $ 1,370,363 $ 1,401,881
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 113,703 $ 118,745
Interest-bearing 954,750 930,475
------------ ------------
Total deposits 1,068,453 1,049,220
Federal funds purchased and securities sold
under agreements to repurchase 22,695 46,306
Federal Home Loan Bank advances 90,277 140,285
Notes payable 10,961 19,826
Series B mandatory redeemable preferred
stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 10,442 9,448
------------ ------------
Total liabilities 1,223,716 1,285,973
Stockholders' equity
Series A convertible preferred stock 500 500
Series C preferred stock 29,571 -
Common stock 7,454 7,454
Surplus 74,658 71,488
Retained earnings 62,704 62,476
Accumulated other comprehensive income
(loss) (5,820) (3,590)
------------ ------------
169,067 138,328
Treasury stock, at cost (22,420) (22,420)
------------ ------------
Total stockholders' equity 146,647 115,908
Total liabilities and stockholders'
equity $ 1,370,363 $ 1,401,881
============ ============
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended
March 31,
------------------
2009 2008
-------- ---------
Interest income
Loans $ 14,189 $ 17,295
Securities
Taxable 2,505 2,474
Exempt from federal income taxes 317 358
Federal funds sold and other 11 55
-------- ---------
Total interest income 17,022 20,182
Interest expense
Deposits 5,606 8,340
Federal funds purchased and securities sold under
agreements to repurchase 39 333
Federal Home Loan Bank advances 543 1,172
Series B mandatory redeemable preferred 4 12
Subordinated debentures 290 384
Notes payable 162 238
-------- ---------
Total interest expense 6,644 10,479
Net interest income 10,378 9,703
Provision for loan losses 2,235 766
-------- ---------
Net interest income after provision for loan losses 8,143 8,937
Noninterest income
Service charges 1,457 1,636
Mortgage banking income 698 446
Bank owned life insurance 256 252
Securities gains 14 848
Total other-than-temporary impairment losses (2,611) -
Portion recognized in other comprehensive income
(before taxes) 1,403 -
-------- ---------
Net OTTI impairment on securities (1,208) -
Gain on sale of OREO 7 96
Gain on sale of other assets 93 482
Other income 726 1,178
-------- ---------
2,043 4,938
Noninterest expenses
Salaries and employee benefits 4,126 4,829
Occupancy, net 865 1,038
Furniture and equipment 560 782
Marketing 183 236
Supplies and printing 119 131
Telephone 193 241
Data processing 370 303
Amortization of intangible assets 413 909
Other expenses 2,048 1,847
-------- ---------
8,877 10,316
Income before income taxes 1,309 3,559
Income taxes 244 1,114
-------- ---------
Net income $ 1,065 $ 2,445
======== =========
Preferred stock dividends 415 52
-------- ---------
Net income for common stockholders $ 650 $ 2,393
======== =========
Basic earnings per common share $ 0.11 $ 0.40
======== =========
Diluted earnings per common share $ 0.11 $ 0.39
======== =========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
---------------------------------------------------------
03/31/09 12/31/08 09/30/08 06/30/08 03/31/08
---------- --------- ---------- ---------- ----------
Statement of
Income
Interest
income $ 17,022 $ 17,045 $ 17,831 $ 18,460 $ 20,182
Interest
expense (6,644) (7,160) (7,849) (8,456) (10,479)
---------- --------- ---------- ---------- ----------
Net interest
income 10,378 9,885 9,982 10,004 9,703
Provision for
loan losses 2,235 5,225 1,225 866 766
---------- --------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 8,143 4,660 8,757 9,138 8,937
Noninterest
income 2,043 585 3,594 4,292 4,938
Noninterest
expense 8,877 8,086 8,122 9,221 10,316
---------- --------- ---------- ---------- ----------
Income (loss)
before income
taxes 1,309 (2,841) 4,229 4,209 3,559
Provision
(benefit) for
income taxes 244 (1,282) 1,430 1,504 1,114
---------- --------- ---------- ---------- ----------
Net income
(loss) $ 1,065 $ (1,559) $ 2,799 $ 2,705 $ 2,445
========== ========= ========== ========== ==========
Net income
(loss) on
common stock $ 650 $ (1,610) $ 2,747 $ 2,653 $ 2,393
========== ========= ========== ========== ==========
Per Share
Basic earnings
(loss) per
common share $ 0.11 $ (0.27) $ 0.46 $ 0.44 $ 0.40
Diluted
earnings
(loss) per
common share 0.11 (0.27) 0.46 0.44 0.39
Cash dividends
on common
stock 0.07 0.14 0.14 0.14 0.13
Dividend payout
ratio for
common stock 64.92% NM 30.72% 31.81% 32.97%
Book value per
common share $ 18.82 $ 19.14 $ 19.53 $ 19.26 $ 19.48
Tangible book
value per
common share $ 13.35 $ 13.57 $ 12.95 $ 13.48 $ 13.57
Basic weighted
average common
shares
outstanding 6,028,491 6,028,491 6,028,491 6,027,168 6,051,554
Diluted
weighted
average common
shares
outstanding 6,028,491 6,028,491 6,030,147 6,048,920 6,088,608
Period-end
common shares
outstanding 6,028,491 6,028,491 6,028,491 6,028,491 6,026,146
Balance Sheet
Securities $ 232,983 $ 252,562 $ 215,960 $ 214,534 $ 217,937
Loans 985,464 1,004,390 973,933 1,003,689 1,016,097
Allowance for
loan losses 16,010 15,018 11,461 11,542 11,221
Assets 1,370,363 1,401,881 1,342,182 1,373,548 1,387,852
Deposits 1,068,453 1,049,220 1,008,725 1,010,723 1,049,049
Stockholders'
equity 146,647 115,908 118,248 116,607 117,870
Earnings
Performance
Return on
average total
assets 0.31% (0.46)% 0.83% 0.80% 0.71%
Return on
average
stockholders'
equity 2.93 (5.26) 9.64 9.26 8.24
Net interest
margin ratio 3.42 3.33 3.37 3.34 3.25
Efficiency
ratio (1) 63.82 60.71 58.85 64.76 73.06
Asset Quality
Nonperforming
assets to
total end of
period assets 2.06% 1.64% 1.87% 1.76% 0.38%
Nonperforming
loans to total
end of period
loans 1.57 1.03 1.28 1.97 0.40
Net loan
charge-offs to
total average
loans 0.12 0.17 0.13 0.05 0.03
Allowance for
loan losses to
total end of
period loans 1.62 1.50 1.18 1.15 1.10
Allowance for
loan losses to
nonperforming
loans 103.47 145.55 91.78 58.27 276.52
Nonperforming
assets $ 28,245 $ 23,041 $ 24,932 $ 24,125 $ 5,210
Net
charge-offs 1,243 1,668 1,306 545 300
Capital
Total
risk-based
capital ratio 13.99% 12.18% 11.70% 11.17% 10.79%
Tier 1
risk-based
capital 11.88 9.99 9.70 9.42 8.94
Tier 1 leverage
ratio 10.26 8.10 8.30 7.93 7.65
Tangible common
equity to
tangible
assets 6.45 6.24 6.40 6.07 6.05
Average equity
to average
assets 10.60 8.82 8.63 8.61 8.68
(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
