Centrue Financial Corporation Announces 2011 First Quarter ResultsST. LOUIS, MO -- (Marketwire - May 13, 2011) - Centrue Financial Corporation (NASDAQ: TRUE)
First Quarter 2011 Highlights
-- First quarter of 2011 net loss was $3.5 million, compared to a $39.2
million net loss for the fourth quarter of 2010 (which included a $15.9
million goodwill impairment charge and $13.5 million deferred tax asset
valuation adjustment) and a $6.3 million net loss in the first quarter
of 2010.
-- The first quarter 2011 net interest margin equaled 3.09%, representing
increases of 2 basis points from 3.07% recorded in the fourth quarter
of 2010 and 21 basis points from 2.88% reported in the first quarter of
2010.
-- Nonperforming loans declined $6.3 million, or 9.0%, from December 31,
2010 and $26.5 million, or 29.4%, from March 31, 2010.
-- The coverage ratio (allowance for loan losses to nonperforming loans)
was 45.64%, increasing slightly from December 31, 2010 levels.
Centrue Financial Corporation (the "Company" or "Centrue") (NASDAQ: TRUE), parent company of Centrue Bank, reported a first quarter net loss of $3.5 million, or $0.65 per common diluted share, compared to a net loss of $6.3 million or $1.11 per common diluted share for the same period in 2010. The first quarter 2011 results were adversely impacted by a $4.3 million charge to the provision for loan losses, a $0.2 million non-cash valuation adjustment on OREO properties and a $0.4 million non-cash credit impairment charge on pooled trust preferred collateralized debt obligations ("CDOs").
"Despite reporting a loss for the quarter, we are encouraged by some of the positive trends experienced in recent months," remarked President & CEO Thomas A. Daiber. "We have made no secret of the fact that asset quality challenges have placed a significant strain on our earnings stream. However, decreases in nonperforming loans, nonperforming assets, action list loans and loan charge-offs in the first quarter are all positive indicators that the action plans we have in place are yielding results. These improvements, coupled with an increase in the margin and continued expense discipline, contributed to a smaller quarterly loss. Going forward, we will continue our aggressive efforts to address credit quality issues, the single biggest contributor to our losses, as we work toward returning to profitability as quickly as possible."
Securities
Total securities equaled $244.9 million at March 31, 2011, representing an increase of $15.0 million, or 6.5%, from December 31, 2010 and a decrease of $40.5 million, or 14.2%, from March 31, 2010. The net increase from year-end 2010 was largely related to enhancing the Company's liquidity position through reinvesting dollars from the loan portfolio into security instruments with shorter durations. During the first quarter of 2011, the Company evaluated its security portfolio and recorded a $0.4 million non-cash other-than-temporary impairment charge related to three CDOs.
Loans
Total loans equaled $710.5 million, representing decreases of $11.4 million, or 1.6%, from December 31, 2010 and $128.2 million, or 15.3%, from March 31, 2010. The net decrease from year-end 2010 was related to a combination of normal attrition, pay-downs, loan charge-offs, transfers to OREO and strategic initiatives to reduce balance sheet risk. Due to economic conditions, we have also experienced a decrease in loan demand as many borrowers continue to reduce their debt.
Funding and Liquidity
Total deposits equaled $922.5 million, representing decreases of $8.6 million, or 0.9%, from December 31, 2010 and $123.7 million, or 11.8%, from March 31, 2010. The net decrease from year-end 2010 was largely related to strategic initiatives to reduce higher costing time deposits and collateralized local public agency deposits.
Due to continued uncertainty in the financial markets, liquidity strategies are conservatively postured in an effort to mitigate adverse pressure on liquidity levels. The Bank's overall liquidity position remained relatively unchanged during the first quarter of 2011 largely due to a reduction in the loan portfolio, net of gross charge-offs and transfers to OREO.
Credit Quality
The key credit quality metrics are as follows:
-- The allowance for loan losses to total loans was 4.09% at March 31,
2011, compared to 4.37% at December 31, 2010 and 4.99% at March 31,
2010. Management evaluates the sufficiency of the allowance for loan
losses based on the combined total of specific allocations, historical
loss and qualitative components and believes that the allowance for
loan losses represented probable incurred credit losses inherent in the
loan portfolio at March 31, 2011.
-- The provision for loan losses for the first quarter of 2011 was $4.3
million, a decrease from $10.5 million recorded in the fourth quarter
of 2010 and $9.4 million recorded in the first quarter of 2010. The
first quarter of 2011 provision level was driven by:
-- sustained level of nonperforming loans and new credits that
migrated to nonperforming status that have required current
specific allocation estimates;
-- elevated charge-offs of previously accrued specific allocations
that impact historical loss levels;
-- elevated past due loans;
-- weakening guarantor positions due to adverse economic conditions;
-- continued deteriorating collateral values, reflecting the impact
of the adverse economic climate on the Company's borrowers.
-- Net loan charge-offs for the first quarter of 2011 were $6.7 million,
or 0.91% of average loans, compared with $22.3 million, or 2.98% of
average loans, for the fourth quarter of 2010 and $8.4 million, or
0.97% of average loans, for the first quarter of 2010. Loan
charge-offs during the first quarter of 2011 were largely influenced by
the credit performance of the Company's land development, construction
and commercial real estate portfolio. These charge-offs reflect
management's continuing efforts to align the carrying value of these
assets with the value of underlying collateral based upon more
aggressive disposition strategies and recognizing falling property
values. Because these loans are collateralized by real estate, losses
occur more frequently when property values are declining and borrowers
are losing equity in the underlying collateral. Management believes we
are recognizing losses in our portfolio through provisions and
charge-offs as credit developments warrant.
-- Nonperforming loans (nonaccrual, 90 days past due and troubled debt
restructures) decreased to $63.7 million at March 31, 2011, from $70.0
million at December 31, 2010 and $90.2 million at March 31, 2010. The
$6.3 million decrease from the fourth quarter of 2010 to the first
quarter of 2011, was mainly due to the charge-off of nonaccrual loans
and the transfer of the property securing the credits into OREO. The
$63.7 million recorded at March 31, 2011 included $58.6 million in
nonaccrual loans and $5.1 million in troubled debt restructures. The
level of nonperforming loans to end of period loans was 8.97% at March
31, 2011, compared to 9.70% at December 31, 2010 and 10.75% at March
31, 2010.
-- The coverage ratio (allowance for loan losses to nonperforming loans)
was 45.64% at March 31, 2011, compared to 45.02% at December 31, 2010
and 46.40% at March 31, 2010.
-- Other real estate owned ("OREO") increased to $28.6 million at March
31, 2011, from $25.6 million at December 31, 2010 and $15.2 million at
March 31, 2010. In the first quarter of 2011, management converted
collateral securing problem loans to properties ready for disposition
in the net amount of $4.5 million. First quarter additions were offset
by $1.3 million in dispositions and $0.2 million in additional
valuation adjustments, reflective of existing market conditions and
more aggressive disposition strategies.
-- Nonperforming assets (nonaccrual, 90 days past due, troubled debt
restructures and OREO) decreased to $92.3 million at March 31, 2011,
from $95.6 million at December 31, 2010 and $105.4 million at March 31,
2010. The $3.3 million decrease from the fourth quarter of 2010 to the
first quarter of 2011, was due to $6.7 million in charge-offs, net of
recoveries. The ratio of nonperforming assets to total assets was 8.60%
at March 31, 2011, 8.65% at December 31, 2010 and 8.19% at March 31,
2010.
Net Interest Margin
The net interest margin was 3.09% for the first quarter of 2011, representing increases of 2 basis points from 3.07% recorded in the fourth quarter of 2010 and 21 basis points from 2.88% reported in the first quarter of 2010. The increase in the first quarter 2011 net interest margin, as compared to the same period in 2010, was primarily due to increased utilization of interest rate floors on a majority of variable rate loans and a reduction in the Company's cost of interest-bearing liabilities due to maturity of higher rate time deposits and the decline in market interest rates. Adversely impacting the margin was the cost of retaining surplus liquidity, lower average volume of higher-yielding loans, increased premium amortization due to higher prepayments and lower coupon income with adjustable resets in the securities portfolio and the impact of nonaccrual loan interest reversals. Due largely to the protracted economic downturn, the carrying cost of nonaccrual loans and the Company's interest rate sensitivity, the margin will likely remain under pressure throughout 2011.
Noninterest Income and Expense
Noninterest income totaled $2.1 million for the three months ended March 31, 2011, compared to $1.3 million for the same period in 2010. Excluding credit impairment charges on CDO securities and gains related to the sale of OREO and other assets from both periods, noninterest income decreased $0.3 million or 11.1%. This $0.3 million decrease was primarily concentrated in service charges due to reduced consumer spending and its impact on overdraft and NSF fees.
Total noninterest expense for the first quarter of 2011 was $8.8 million, a decrease of $1.7 million, compared to $10.5 million recorded during the same period in 2010. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.2 million, or 2.3%. This $0.2 million decline in expenses was spread over various categories, including salaries and employee benefits, net occupancy costs, furniture and equipment, marketing and amortization expense. Adversely impacting expense levels were increases in loan remediation costs, including collection expenses on nonperforming loans and expenses associated with maintaining foreclosed real estate.
Capital Management
As reflected in the following table, both the Company and unit Centrue Bank were considered "adequately-capitalized" under regulatory defined capital ratios as of March 31, 2011 and December 31, 2010:
Centrue Financial Centrue Bank
---------------- ---------------- Adequately-
Mar 31, Dec 31, Mar 31, Dec 31, Capitalized
2011 2010 2011 2010 Thresholds
------- ------- ------- ------- -----------
Carrying amounts
($millions):
Total risk-based capital $ 72.7 $ 76.5 $ 75.3 $ 78.2
Tier 1 risk-based capital $ 47.9 $ 58.0 $ 65.1 $ 67.8
Capital ratios:
Total risk-based capital 9.0% 9.4% 9.4% 9.7% 8.0%
Tier 1 risk-based capital 5.9% 7.1% 8.2% 8.4% 4.0%
Tier 1 leverage ratio 4.2% 5.1% 6.0% 6.0% 4.0%
Total regulatory capital ratios decreased since year-end 2010 as a result of net operating losses for the first quarter of 2011.
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 Per Share Data)
Three Months Ended
March 31,
---------------------
2011 2010
--------- ---------
Operating Highlights
Net income (loss) $ (3,458) $ (6,260)
Return on average total assets (1.28)% (1.95)%
Return on average stockholders' equity (33.49) (22.92)
Net interest margin 3.09 2.88
Efficiency ratio 83.02 81.27
Per Share Data
Diluted earnings (loss) per common share $ (0.65) $ (1.11)
Book value per common share $ 1.09 $ 12.46
Tangible book value per common share $ 0.10 $ 8.64
Diluted weighted average common
shares outstanding 6,048,405 6,043,176
Period end common shares outstanding 6,048,405 6,043,176
Stock Performance Data
Market price:
Quarter-end $ 0.50 $ 3.45
High $ 1.18 $ 4.18
Low $ 0.42 $ 2.50
Period end price to book value 45.87% 27.69%
Period end price to tangible book value 500.00% 39.93%
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
2011 2010
----------- -----------
ASSETS
Cash and cash equivalents $ 44,445 $ 82,945
Securities available-for-sale 234,775 219,475
Restricted securities 10,148 10,470
Loans 710,529 721,871
Allowance for loan losses (29,089) (31,511)
----------- -----------
Net loans 681,440 690,360
Bank-owned life insurance 30,652 30,403
Mortgage servicing rights 2,383 2,425
Premises and equipment, net 25,267 25,687
Other intangible assets, net 6,017 6,293
Other real estate owned 28,581 25,564
Other assets 10,128 11,540
----------- -----------
Total assets $ 1,073,836 $ 1,105,162
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 119,779 $ 118,667
Interest-bearing 802,704 812,438
----------- -----------
Total deposits 922,483 931,105
Federal funds purchased and securities sold
under agreements to repurchase 15,931 16,188
Federal Home Loan Bank advances 51,059 71,059
Notes payable 10,623 10,623
Series B mandatory redeemable preferred
stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 13,086 12,378
----------- -----------
Total liabilities 1,034,070 1,062,241
Stockholders' equity
Series A convertible preferred stock 500 500
Series C cumulative perpetual preferred
stock 30,965 30,810
Common stock 7,454 7,454
Surplus 74,751 74,721
Retained earnings (accumulated deficit) (50,969) (46,861)
Accumulated other comprehensive income
(loss) (821) (1,589)
----------- -----------
61,880 65,035
Treasury stock, at cost (22,114) (22,114)
----------- -----------
Total stockholders' equity 39,766 42,921
Total liabilities and stockholders'
equity $ 1,073,836 $ 1,105,162
=========== ===========
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
------------------
2011 2010
-------- --------
Interest income
Loans $ 9,281 $ 11,248
Securities
Taxable 997 1,733
Exempt from federal income taxes 215 278
Federal funds sold and other 31 27
-------- --------
Total interest income 10,524 13,286
Interest expense
Deposits 2,487 4,371
Federal funds purchased and securities sold under
agreements to repurchase 11 18
Federal Home Loan Bank advances 412 581
Series B mandatory redeemable preferred stock 4 4
Subordinated debentures 270 254
Notes payable 90 88
-------- --------
Total interest expense 3,274 5,316
Net interest income 7,250 7,970
Provision for loan losses 4,250 9,350
-------- --------
Net interest income (loss) after provision for
loan losses 3,000 (1,380)
Noninterest income
Service charges 1,062 1,420
Mortgage banking income 407 319
Electronic banking services 527 484
Bank-owned life insurance 249 255
Securities gains, net - 2
Total other-than-temporary impairment losses (393) (4,516)
Portion of loss recognized in other comprehensive
income (before taxes) 1 2,909
-------- --------
Net impairment on securities (392) (1,607)
Gain on sale of OREO 44 9
Gain on sale of other assets 63 202
Other income 164 238
-------- --------
2,124 1,322
Noninterest expenses
Salaries and employee benefits 3,633 3,771
Occupancy, net 720 788
Furniture and equipment 439 524
Marketing 60 107
Supplies and printing 64 98
Telephone 204 179
Data processing 364 382
FDIC insurance 850 854
Loan processing and collection costs 591 512
OREO valuation adjustment 200 1,657
Amortization of intangible assets 276 339
Other expenses 1,399 1,275
-------- --------
8,800 10,486
Income (loss) before income taxes (3,676) (10,544)
Income tax expense (benefit) (218) (4,284)
-------- --------
Net income (loss) $ (3,458) $ (6,260)
Preferred stock dividends 494 473
-------- --------
Net income (loss) for common stockholders $ (3,952) $ (6,733)
======== ========
Basic earnings (loss) per common share $ (0.65) $ (1.11)
======== ========
Diluted earnings (loss) per common share $ (0.65) $ (1.11)
======== ========
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Per Share Data)
Quarters Ended
---------------------------------------------------------
3/31/11 12/31/10 09/30/10 06/30/10 03/31/10
--------- --------- --------- --------- ---------
Statement of
Income
Interest
income $ 10,524 $ 11,368 $ 11,508 $ 12,682 $ 13,286
Interest
expense (3,274) (3,636) (4,369) (4,995) (5,316)
--------- --------- --------- --------- ---------
Net interest
income 7,250 7,732 7,139 7,687 7,970
Provision for
loan losses 4,250 10,450 7,250 7,550 9,350
--------- --------- --------- --------- ---------
Net interest
income (loss)
after
provision for
loan losses 3,000 (2,718) (111) 137 (1,380)
Noninterest
income 2,124 3,263 3,427 2,806 1,322
Noninterest
expense 8,800 26,514 9,279 9,610 10,486
--------- --------- --------- --------- ---------
Income (loss)
before income
taxes (3,676) (25,969) (5,963) (6,667) (10,544)
Income tax
expense
(benefit) (218) 13,246 10,440 (2,742) (4,284)
--------- --------- --------- --------- ---------
Net income
(loss) $ (3,458) $ (39,215) $ (16,403) $ (3,925) $ (6,260)
========= ========= ========= ========= =========
Net income
(loss) for
common
stockholders $ (3,952) $ (39,704) $ (16,887) $ (4,403) $ (6,733)
========= ========= ========= ========= =========
Per Share
Basic earnings
(loss) per
common share $ (0.65) $ (6.56) $ (2.79) $ (0.73) $ (1.11)
Diluted
earnings
(loss) per
common share (0.65) (6.56) (2.79) (0.73) (1.11)
Cash dividends
on common
stock NM NM NM NM NM
Dividend
payout ratio
for common
stock NM NM NM NM NM
Book value per
common share $ 1.09 $ 1.61 $ 8.97 $ 11.77 $ 12.46
Tangible book
value per
common share 0.10 0.57 5.26 $ 8.01 $ 8.64
Basic weighted
average
common shares
outstanding 6,048,405 6,048,405 6,046,075 6,043,176 6,043,176
Diluted
weighted
average
common shares
outstanding 6,048,405 6,048,405 6,046,075 6,043,176 6,043,176
Period-end
common shares
outstanding 6,048,405 6,048,405 6,048,405 6,043,176 6,043,176
Balance Sheet
Securities $ 244,923 $ 229,945 $ 282,226 $ 307,846 $ 285,382
Loans 710,529 721,871 764,585 792,289 838,700
Allowance for
loan losses 29,089 31,511 43,390 42,378 41,845
Assets 1,073,836 1,105,162 1,179,684 1,226,769 1,286,532
Deposits 922,483 931,105 958,032 993,270 1,046,233
Stockholders'
equity 39,766 42,921 85,048 101,947 106,087
Earnings
Performance
Return on
average total
assets (1.28)% (13.54)% (5.36)% (1.23)% (1.95)%
Return on
average
stockholders'
equity (33.49) (188.05) (64.59) (15.10) (22.92)
Net interest
margin 3.09 3.07 2.69 2.79 2.88
Efficiency
ratio (1) 83.02 75.83 82.62 84.81 81.27
Asset Quality
Nonperforming
assets to
total end of
period assets 8.60% 8.65% 10.15% 8.91% 8.19%
Nonperforming
loans to
total end of
period loans 8.97 9.70 12.44 11.76 10.75
Net loan
charge-offs
to total
average loans 0.91 2.98 0.80 0.86 0.97
Allowance for
loan losses to
total end of
period loans 4.09 4.37 5.67 5.35 4.99
Allowance for
loan losses to
nonperforming
loans 45.64 45.02 45.63 45.49 46.40
Nonperforming
loans $ 63,731 $ 69,990 $ 95,096 $ 93,158 $ 90,184
Nonperforming
assets 92,312 95,554 119,791 109,340 105,414
Net loan
charge-offs 6,672 22,329 6,238 7,016 8,414
Capital
Total risk-based
capital ratio 8.99% 9.35% 10.20% 10.72% 11.01%
Tier 1 risk-based
capital ratio 5.92 7.09 7.96 8.51 8.65
Tier 1 leverage
ratio 4.17 5.08 5.75 6.01 6.44
(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.
NM Not meaningful.
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
