Centrue Financial Corporation Announces Third Quarter ResultsST. LOUIS, MO -- (Marketwire - November 09, 2009) - Centrue Financial Corporation (the "Company" or "Centrue") (NASDAQ: TRUE)
Highlights
- -- Earnings: Third quarter net loss of $8.4 million compared to $16.2
million net loss for second quarter 2009 and $2.8 million net income for
third quarter 2008. Results were adversely impacted by $14.5 million
provision for loan losses and $3.1 million impairment on collateralized
debt obligations ("CDO") securities.
- -- Risk-Based Capital Ratios: All regulatory capital ratios to be
considered "well-capitalized" were exceeded as of September 30, 2009. Total
risk-based capital ratio was 13.16% as compared to 12.18% at year-end 2008.
- -- Credit Quality: Increased the allowance for loan losses to 3.04% of
total loans; nonperforming assets increased $9.3 million from second
quarter 2009 to 6.8% of total assets; provision levels exceeded net charge-
offs by $1.1 million.
- -- Balance Sheet: Total loans decreased $83.1 million since year-end 2008
on strategic reduction initiatives to reduce balance sheet risks. Total
deposits increased $12.3 million since year-end 2008. In-market deposits
increased $47.1 million, FHLB advances decreased $64.0 million and brokered
deposits decreased $34.8 million during the same period.
- -- Net Interest Margin: Net interest margin compressed 6 basis points
from the prior quarter to 3.21% mainly due to increased levels of
nonaccrual loans and surplus liquidity initiatives.
- -- Liquidity: In-market deposits, cash and securities grew while
wholesale funding and loans decreased.
Centrue Financial Corporation (the "Company" or "Centrue") (NASDAQ: TRUE), parent company of Centrue Bank, reported a third quarter 2009 net loss of $8.4 million, or $(1.47) per common diluted share, compared to net income of $2.8 million, or $0.46 per common diluted share, for the same period in 2008. The results for the third quarter 2009 were adversely impacted by a $14.5 million provision for loan losses largely related to asset quality deterioration in the Company's land development, construction and commercial real estate portfolio. Also contributing to the loss was a $3.1 million non-cash impairment charge to CDO securities largely related to conditions impacting the banking sector leading to deterioration of capital, liquidity and asset quality.
For the first nine months of 2009, Centrue reported a net loss of $23.6 million, or $(4.13) per common diluted share, compared to net income of $7.9 million, or $1.29 per common diluted share, for the same period in 2008. Results for full year 2009 were adversely impacted by a $29.8 million provision for loans losses, a $8.5 million goodwill impairment charge taken in the second quarter 2009, and $9.1 million impairment on CDO securities.
"We experienced an increase in our nonperforming loans as several of our borrowers continued to struggle in this economic environment," remarked President & CEO Thomas A. Daiber. "The majority of our problem credits remain concentrated in land development, construction and commercial real estate portfolios, all areas stressed with persistent downward pressure on valuations. Our core earnings remain strong but have been negatively impacted as we increased our allowance for loan losses to 3.04% of total loans, reduced our balance sheet risk by shrinking our loan portfolio and reinvested these dollars in lower yielding investment securities, incurred impairments in our investment portfolio and absorbed higher FDIC premiums. Our capital levels remain above well capitalized and provide significant protection for us as we navigate through this volatile and challenging business cycle."
Securities
Investment securities at September 30, 2009 increased $20.5 million, or 8.1%, to $273.1 million largely due to surplus liquidity initiatives. The Company holds nine pooled trust preferred CDOs with a total book value of $16.5 million (after third quarter 2009 impairment). During third quarter 2009, the Company concluded that five CDOs were other than temporarily impaired, resulting in a $3.1 million before-tax reduction in earnings.
Loans
During the first nine months of 2009, gross loans decreased $83.1 million, or 8.3%, to $921.3 million through a combination of normal attrition, pay-downs, loan charge-offs and strategic initiatives to reduce lending exposure. Due to economic conditions, we have also experienced a decrease in the number of loan applications as many borrowers are trying to reduce their amount of debt.
As of September 30, 2009, the Company had 16.4% of its total loan portfolio invested in land development and construction loans and 48.3% invested in commercial real estate (excluding construction and development).
The Company does not have any material direct exposure to sub-prime loan products as it has focused its real estate lending activities on providing traditional loan products to relationship borrowers in locally known markets.
Funding and Liquidity
The Company remains focused on growing deposits by leveraging opportunities to deepen existing customer relationships and develop new long-term relationships. During the first nine months of 2009, total deposits increased $12.3 million, or 1.2%, to $1.062 billion. In-market deposits increased $47.1 million, or 5.0%, primarily as the result of an increase in certificates of deposit and savings accounts. Wholesale funding (brokered deposits and FHLB advances) decreased $98.8 million, or 38.9%, as maturing brokered certificates of deposit and FHLB advances were not replaced. Our liquidity increased as deposits, cash and investment securities grew while wholesale funding and loans decreased.
Credit Quality and Allowance for Loan Loss
The provision for loan losses for third quarter 2009 was $14.5 million, compared to $13.1 million and $1.2 million for second quarter 2009 and third quarter 2008, respectively. The third quarter 2009 provision for loan loss was driven by higher levels of nonperforming loans and related specific allocations due to declining real estate values on collateral for certain impaired credits.
Total nonperforming assets were $90.6 million, or 6.77% of total assets, at September 30, 2009. This included $0.6 million in troubled debt restructures, $14.0 million of foreclosed assets and repossessed real estate, and $76.0 million of nonaccrual loans. Approximately 67.1% of total nonaccrual loans at September 30, 2009 were concentrated in land development, construction and commercial real estate credits. Additionally, 80.5% of total nonaccrual loans represented loans to 15 borrowers.
As a result of the deterioration of general economic conditions, the ongoing implementation of action plans on previously identified relationships, and the identification of additional deteriorating relationships, nonperforming loans (nonaccrual, 90 days past due, and troubled debt restructures) increased $8.9 million from June 30, 2009 and $66.3 million from December 31, 2008. The level of nonperforming loans to end of period loans was 8.32% as of September 30, 2009 as compared to 7.10% as of June 30, 2009 and 1.03% as of December 31, 2008.
As of September 30, 2009, the Company increased its allowance for loan losses to $28.0 million, up $1.1 million from June 30, 2009 and $12.9 million from December 31, 2008. The allowance for loan losses represented 3.04% of total loans outstanding at September 30, 2009, compared to 2.82% at June 30, 2009 and 1.50% at December 31, 2008. Quarterly net charge offs totaled $13.4 million during third quarter 2009, compared to $2.2 million in second quarter 2009 and $1.7 million in fourth quarter 2008. As a result of the increase in nonperforming loans, the allowance to nonperforming loan coverage ratio decreased to 36.5% in the third quarter from 39.7% during the second quarter 2009 and 145.6% during the fourth quarter 2008.
Management continues to diligently monitor the loan portfolio, paying particular attention to borrowers with residential and commercial real estate exposure. The economic outlook for this industry will likely remain extremely challenging for the remainder of 2009 and into 2010. Should the economic climate continue to 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 3.21% for the third quarter 2009, representing decreases of 6 basis points from 3.27% recorded in the second quarter 2009 and 16 basis points from 3.37% reported in the third quarter 2008. Downward pressure placed on interest income due to higher nonaccrual loans and a decline in loan yields continued to outpace the decline in funding costs during the period, which led to a reduction in the net interest spread and margin compared with the third quarter 2008. Due largely to the protracted economic downturn, the increase of nonaccrual loans, and the Company's interest rate sensitivity and liquidity position, the margin will likely remain under pressure through the remainder of 2009 and into 2010.
Noninterest Income and Expense
Total noninterest income for the third quarter of 2009 was $0.1 million, a decline of $3.5 million, compared to $3.6 million reported in the same period in 2008. Excluding the $3.1 million impairment charge taken on securities, noninterest income decreased $0.4 million, or 11.1%. 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 second quarter 2009. The decrease in year to date income from 2008 reflects the gain realized on the sale of four branches in northwestern Illinois.
Total noninterest expense for the third quarter of 2009 was $9.0 million, an increase of $0.9 million, compared to $8.1 million recorded during the same period in 2008. The increase in expenses was primarily related to salaries and benefits, FDIC insurance premiums, and loan remediation costs, including collection expenses on nonperforming loans and expenses associated with maintaining foreclosed real estate.
Capital Management
As reflected in the following table, all regulatory ratios to be considered "well-capitalized" were exceeded as of September 30, 2009:
Well-
Dec 31, Sep 30, Capitalized
2008 2009 Thresholds
----------- ----------- -----------
Carrying costs ($millions):
Total risk-based capital $ 128.8 $ 139.1
Tier 1 risk-based capital $ 105.6 $ 115.7
Tangible common equity $ 81.8 $ 70.1
Capital ratios:
Total risk-based capital 12.18% 13.16% 10.0%
Tier 1 risk-based capital 9.99% 10.95% 5.0%
Leverage ratio 8.10% 8.87% 5.0%
Tangible common equity 5.99% 5.34% NA
Based upon a regulatory accounting calculation standard that is not directly applicable under generally accepted accounting principles, the preceding ratios include a reduction of 70 basis points in the total risk-based and tier 1 risk-based capital ratios and 56 basis points in the leverage ratio related to a disallowance of $7.3 million, or approximately 49.4% of the Company's deferred tax assets.
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 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,
---------------------- ----------------------
2009 2008 2009 2008
--------- ---------- --------- ----------
Operating Highlights
Net income $ (8,412) $ 2,799 $ (23,562) $ 7,949
Return on average total
assets (2.51)% 0.83% (2.32)% 0.78%
Return on average
stockholders' equity (25.47) 9.64 (22.38) 9.04
Net interest margin 3.21 3.37 3.30 3.32
Efficiency ratio 71.74 58.85 69.77 65.49
Per Share Data
Diluted earnings per
common share $ (1.47) $ 0.46 $ (4.13) $ 1.29
Book value per common
share $ 15.54 $ 19.53 $ 15.54 $ 19.53
Tangible book value per
common share $ 11.60 $ 12.95 $ 11.60 $ 12.95
Diluted weighted average
common shares
outstanding 6,043,176 6,030,147 6,033,045 6,051,418
Period end common shares
outstanding 6,043,176 6,028,491 6,043,176 6,028,491
Stock Performance Data
Market price:
Quarter end $ 3.79 $ 12.85 $ 3.79 $ 12.85
High $ 5.74 $ 16.00 $ 6.95 $ 22.94
Low $ 2.92 $ 9.12 $ 2.76 $ 9.12
Period end price to book
value 24.39% 65.80% 24.39% 65.80%
Period end price to
tangible book value 32.67% 99.23% 32.67% 99.23%
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands, Except Share Data)
September 30, December 31,
2009 2008
------------ ------------
ASSETS
Cash and cash equivalents $ 46,025 $ 35,014
Securities available-for-sale 262,374 241,851
Restricted securities 10,711 10,711
Loans 921,340 1,004,390
Allowance for loan losses (27,965) (15,018)
------------ ------------
Net loans 893,375 989,372
Cash value of life insurance 29,081 27,917
Mortgage servicing rights 2,909 2,890
Premises and equipment, net 30,766 32,376
Goodwill 15,880 24,494
Intangible assets, net 7,906 9,088
Other real estate 13,961 12,723
Other assets 25,486 15,445
------------ ------------
Total assets $ 1,338,474 $ 1,401,881
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 108,013 $ 118,745
Interest-bearing 953,530 930,475
------------ ------------
Total deposits 1,061,543 1,049,220
Federal funds purchased and securities
sold under agreements to repurchase 31,401 46,306
Federal Home Loan Bank advances 76,262 140,285
Notes payable 10,880 19,826
Series B mandatory redeemable preferred stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 10,434 9,448
------------ ------------
Total liabilities 1,211,408 1,285,973
Stockholders' equity
Series A convertible preferred stock 500 500
Series C preferred stock 30,036 -
Common stock 7,454 7,454
Surplus 74,709 71,488
Retained earnings 36,625 62,476
Accumulated other comprehensive income
(loss) (62) (3,590)
------------ ------------
149,262 138,328
Treasury stock, at cost (22,196) (22,420)
------------ ------------
Total stockholders' equity 127,066 115,908
Total liabilities and stockholders'
equity $ 1,338,474 $ 1,401,881
============ ============
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
2009 2008 2009 2008
--------- --------- --------- ----------
Interest income
Loans $ 12,958 $ 15,316 $ 40,720 $ 48,584
Securities
Taxable 2,041 2,150 6,697 6,731
Exempt from federal
income taxes 312 351 937 1,064
Federal funds sold and other 24 14 51 94
--------- --------- --------- ----------
Total interest income 15,335 17,831 48,405 56,473
Interest expense
Deposits 4,931 6,225 15,869 21,591
Federal funds purchased
and securities sold under
agreements to repurchase 39 189 111 675
Federal Home Loan Bank advances 595 838 1,708 2,786
Series B mandatory redeemable
preferred stock 4 12 12 37
Subordinated debentures 257 322 821 956
Notes payable 101 263 382 739
--------- --------- --------- ----------
Total interest expense 5,927 7,849 18,903 26,784
Net interest income 9,408 9,982 29,502 29,689
Provision for loan losses 14,500 1,225 29,799 2,857
--------- --------- --------- ----------
Net interest income (loss) after
provision for loan losses (5,092) 8,757 (297) 26,832
Noninterest income
Service charges 1,756 1,980 4,812 5,491
Mortgage banking income 351 349 1,860 1,184
Bank owned life insurance 248 260 763 767
Securities gains - - 246 848
Total other-than-temporary
impairment losses (4,822) - (11,193) -
Portion recognized in other
comprehensive income
(before taxes) 1,690 - 2,144 -
--------- --------- --------- ----------
Net impairment on securities (3,132) - (9,049) -
Gain on sale of OREO 130 122 166 360
Gain on sale of other assets 9 (33) 117 1,078
Other income 704 916 2,253 3,096
--------- --------- --------- ----------
66 3,594 1,168 12,824
Noninterest expenses
Salaries and employee benefits 3,931 3,554 12,379 12,876
Occupancy, net 777 761 2,547 2,718
Furniture and equipment 602 649 1,726 2,055
Marketing 191 355 579 906
Supplies and printing 108 101 344 331
Telephone 164 172 654 614
Data processing 374 378 1,136 912
FDIC insurance 538 63 1,877 138
Goodwill impairment - 30 8,451 724
Amortization of intangible
assets 375 458 1,182 1,448
Other expenses 1,931 1,601 5,258 4,937
--------- --------- --------- ----------
8,991 8,122 36,133 27,659
Income (loss) before income
taxes (14,017) 4,229 (35,262) 11,997
Income taxes (benefit) (5,605) 1,430 (11,700) 4,048
--------- --------- --------- ----------
Net income (loss) $ (8,412) $ 2,799 $ (23,562) $ 7,949
========= ========= ========= ==========
Preferred stock dividends 467 52 1,342 156
--------- --------- --------- ----------
Net income (loss) for
common stockholders $ (8,879) $ 2,747 $ (24,904) $ 7,793
========= ========= ========= ==========
Basic earnings (loss) per
common share $ (1.47) $ 0.46 $ (4.13) $ 1.29
========= ========= ========= ==========
Diluted earnings (loss) per
common share $ (1.47) $ 0.46 $ (4.13) $ 1.29
========= ========= ========= ==========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Share Data)
Quarters Ended
--------------------------------------------------------
09/30/09 06/30/09 03/31/09 12/31/08 09/30/08
--------- --------- --------- --------- ---------
Statement of Income
Interest income $ 15,335 $ 16,048 $ 17,022 $ 17,045 $ 17,831
Interest expense (5,927) (6,332) (6,644) (7,160) (7,849)
--------- --------- --------- --------- ---------
Net interest
income 9,408 9,716 10,378 9,885 9,982
Provision for
loan losses 14,500 13,064 2,235 5,225 1,225
--------- --------- --------- --------- ---------
Net interest
Income (loss)
after provision
for loan losses (5,092) (3,348) 8,143 4,660 8,757
Noninterest
income 66 (941) 2,043 585 3,594
Noninterest
expense 8,991 18,265 8,877 8,086 8,122
--------- --------- --------- --------- ---------
Income (loss)
before income
taxes (14,017) (22,554) 1,309 (2,841) 4,229
Provision
(benefit) for
income taxes (5,605) (6,339) 244 (1,282) 1,430
--------- --------- --------- --------- ---------
Net income
(loss) $ (8,412) $ (16,215) $ 1,065 $ (1,559) $ 2,799
========= ========= ========= ========= =========
Net income
(loss) on
common stock $ (8,879) $ (16,675) $ 650 $ (1,610) $ 2,747
========= ========= ========= ========= =========
Per Share
Basic earnings
(loss) per
common share $ (1.47) $ (2.77) $ 0.11 $ (0.27) $ 0.46
Diluted earnings
(loss) per
common share (1.47) (2.77) 0.11 (0.27) 0.46
Cash dividends
on common stock NM 0.01 0.07 0.14 0.14
Dividend payout
ratio for common
stock NM NM 64.92% NM 30.72%
Book value per
common share $ 15.54 $ 16.25 $ 18.82 $ 19.14 $ 19.53
Tangible book
value per
common share $ 11.60 $ 12.25 $ 13.35 $ 13.57 $ 12.95
Basic weighted
average common
shares
outstanding 6,043,176 6,027,306 6,028,491 6,028,491 6,028,491
Diluted weighted
average common
shares
outstanding 6,043,176 6,028,471 6,028,491 6,028,491 6,030,147
Period-end
common shares
outstanding 6,043,176 6,043,176 6,028,491 6,028,491 6,028,491
Balance Sheet
Securities $ 273,085 $ 225,805 $ 232,983 $ 252,562 $ 215,960
Loans 921,340 953,894 985,464 1,004,390 973,933
Allowance for
loan losses 27,965 26,894 16,010 15,018 11,461
Assets 1,338,474 1,313,529 1,370,363 1,401,881 1,342,182
Deposits 1,061,543 1,034,116 1,068,453 1,049,220 1,008,725
Stockholders'
equity 127,066 131,367 146,647 115,908 118,248
Earnings Performance
Return on average
total assets (2.51)% (4.82)% 0.31% (0.46)% 0.83%
Return on
average
stockholders'
equity (25.47) (45.09) 2.93 (5.26) 9.64
Net interest
margin ratio 3.21 3.27 3.42 3.33 3.37
Efficiency
ratio (1) 71.74 74.02 63.82 60.71 58.85
Asset Quality
Nonperforming
assets to total
end of period
assets 6.77% 6.19% 2.06% 1.64% 1.87%
Nonperforming
loans to total
end of period
loans 8.32 7.10 1.57 1.03 1.28
Net loan
charge-offs to
total average
loans 1.43 0.22 0.12 0.17 0.13
Allowance for
loan losses to
total end of
period loans 3.04 2.82 1.62 1.50 1.18
Allowance for
loan losses
to nonperforming
loans 36.48 39.70 103.47 145.55 91.78
Nonperforming
loans $ 76,657 $ 67,746 $ 15,473 $ 10,318 $ 12,487
Nonperforming
assets 90,618 81,328 28,245 23,041 24,932
Net charge-offs 13,429 2,180 1,243 1,668 1,306
Capital Total
risk-based
capital ratio 13.16% 14.29% 13.99% 12.18% 11.70%
Tier 1
risk-based
capital 10.95 12.11 11.88 9.99 9.70
Tier 1
leverage ratio 8.87 9.93 10.26 8.10 8.30
Tangible common
equity to
tangible assets 5.34 5.75 6.01 5.99 6.00
(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
