Centrue Financial Corporation Announces 2012 Third Quarter ResultsST. LOUIS, MO -- (Marketwire - November 13, 2012) - Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE) (PINKSHEETS: TRUE)
Highlights
- Third quarter of 2012 net loss was $3.3 million, compared to $0.1 million net income for the second quarter of 2012 and a $4.7 million net loss in the third quarter of 2011.
- The Company's principal subsidiary, Centrue Bank (the "Bank"), posted a net loss of $3.2 million for the third quarter of 2012 compared to net income of $0.5 million for the second quarter of 2012 and a net loss of $4.3 million for the third quarter of 2011.
- Centrue Bank's third quarter 2012 net interest margin was 3.33%, representing an increase of 2 basis points from 3.31% reported in the second quarter of 2012 and the third quarter of 2011.
- Centrue Bank remains "well-capitalized" at the end of the third quarter of 2012.
- On November 13, the Company filed a Form 15 with the Securities and Exchange Commission Office to voluntarily deregister its shares of common stock under the Securities Exchange Act of 1934, as amended. Upon such filing, the Company's obligation to file certain reports with the SEC, including annual, quarterly and current reports on Form 10-K, Form 10-Q and Form 8-K will cease within 90 days. Shares of the Company's common stock trading under the symbol TRUE.PK will continue to trade on the Over-The-Counter Bulletin Board without interruption.
Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: TRUE), parent company of Centrue Bank, reported a third quarter net loss of $3.3 million, or ($0.63) per common diluted share, compared to a net loss of $4.7 million or ($0.87) per common diluted share for the third quarter 2011. For the first nine months of 2012, the Company reported a net loss of $3.7 million, or ($0.87) per common diluted share, as compared to a net loss of $10.6 million, or ($2.01) per common diluted share, for the same period in 2011.
"The losses posted in the third quarter were largely a result of the further deterioration of three credits previously on the watch list which were downgraded to a nonperforming status and are indicative of the ongoing volatility in the overall banking environment," remarked President & CEO Kurt R. Stevenson. "While expense management and managing our cost of funds remain critical, our top priority continues to be improved revenue generation through the acquisition of new relationships and, perhaps even more importantly, the expansion and strengthening of existing ones. Overall, we feel positive about our core trends and continue to proactively and swiftly address asset quality issues."
Securities
Total securities equaled $188.5 million at September 30, 2012, representing a decrease of $44.2 million, or 19.0%, from June 30, 2012 and a decrease of $49.5 million, or 20.8%, from year-end 2011. The net decrease from year-end 2011 was largely related to a strategy to enhance the Company's capitalization ratios by realizing gains in the investment portfolio, thereby augmenting capital while also reducing the risk-weighted assets requiring capital backing. This also served to maintain the liquidity position as maturing public funds and brokered deposits were not replaced.
Loans
Total loans equaled $561.5 million, representing a decrease of $6.4 million, or 1.1%, from June 30, 2012 and a decrease of $20.9 million, or 3.6%, from year-end 2011. The net decrease from year-end 2011 was related to a combination of normal attrition, pay-downs, loan charge-offs, transfers to other real estate owned ("OREO") and strategic initiatives to reduce balance sheet risk. Due to economic conditions, we continue to experience a decrease in loan demand as many borrowers continue to reduce their debt and competition for new commercial loans is strong.
Funding and Liquidity
Total deposits equaled $782.6 million, representing an increase of $0.3 million, or 0.04%, from June 30, 2012 and a decrease of $66.0 million, or 7.8%, from year-end 2011. The net decrease from year-end 2011 was largely related to strategic initiatives to reduce higher costing time deposits and collateralized local public agency deposits. Since year-end, $34.0 million of brokered deposits with an average cost of funds of 2.6% have matured.
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 third quarter of 2012.
Credit Quality
The key credit quality metrics are as follows:
- The allowance for loan losses to total loans was 3.75% at September 30, 2012, compared to 3.65% at December 31, 2011 and 3.76% at September 30, 2011. Management evaluates the adequacy 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 September 30, 2012.
- The provision for loan losses for the third quarter of 2012 was $5.8 million, an increase from the $1.4 million recorded in the second quarter of 2012 and $2.4 million recorded in the third quarter of 2011. The third quarter of 2012 provision level increase was driven by increasing levels of nonperforming loans due to credits that migrated to nonperforming status.
- Net loan charge-offs for the third quarter of 2012 were $2.9 million, or 0.52% of average loans, compared with $3.5 million, or 0.62% of average loans, for the second quarter of 2012 and $3.4 million, or 0.54% of average loans, for the third quarter of 2011. Loan charge-offs during the third quarter of 2012 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 impaired 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) increased to $46.7 million at September 30, 2012, from $39.8 million at June 30, 2012 and $45.8 million at December 31, 2011. The $6.9 million increase from the second quarter of 2012 to the third quarter of 2012 was mainly due to continued deterioration in previously identified three problem loans. The $46.7 million recorded at September 30, 2012 included $42.8 million in nonaccrual loans and $3.9 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 8.32% at September 30, 2012, compared to 7.01% at June 30, 2012 and 7.87% at December 31, 2011.
- The coverage ratio (allowance for loan losses to nonperforming loans) was 45.08% at September 30, 2012, compared to 45.79% at June 30, 2012 and 46.32% at December 31, 2011.
- Other real estate owned increased to $28.6 million at September 30, 2012, from $27.9 million at June 30, 2012 and decreased from $29.7 million at December 31, 2011. In the third quarter of 2012, management converted collateral securing problem loans to properties ready for disposition in the net amount of $1.8 million. Third quarter additions were offset by $0.5 million in dispositions and $0.6 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) increased to $75.3 million at September 30, 2012, from $67.7 million at June 30, 2012 and decreased from $75.5 million at December 31, 2011. The ratio of nonperforming assets to total assets was 8.33% at September 30, 2012, 7.31% at June 30, 2012 and 7.80% at December 31, 2011.
- The past due ratio was 7.40% at September 30, 2012 compared to 7.23% at June 30, 2012 and 10.11% at December 31, 2011. Action Listed Loans (classified and criticized loans) declined to $94.0 million at September 30, 2012 from $97.6 million at June 30, 2012 and $126.6 million at December 31, 2011.
Net Interest Margin
The Company's net interest margin was 3.20% for the third quarter of 2012, representing an increase of 9 basis points from 3.11% recorded in the second quarter of 2012 and an increase of 6 basis points from 3.14% reported in the third quarter of 2011. The Bank's net interest margin was 3.33% for the third quarter of 2012, representing increases of 2 basis points from 3.31% recorded in both the second quarter 2012 and the third quarter of 2011. The increase in the net interest margin compared to second quarter 2012 was primarily due to a decrease in funding costs.
Noninterest Income and Expense
Noninterest income totaled $3.8 million for the three months ended September 30, 2012, compared to $2.6 million for the same period in 2011. Excluding gains related to the sale of OREO, securities and other assets, noninterest income increased $0.5 million or 19.2%. This $0.5 million increase was mainly due to a $0.4 million or 127.9% increase from Mortgage Banking.
Total noninterest expense for the third quarter of 2012 was $8.5 million, a decrease of $3.9 million, compared to $12.4 million recorded during the same period in 2011. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.1 million, or 1.3%. This $0.1 million decline in expenses was spread over various categories including net occupancy costs, furniture and equipment, telephone, loan processing and collection costs, and amortization expense. Adversely impacting expense levels were increases in marketing, data processing, FDIC insurance, and salary and employee benefits.
Capital Management
As reflected in the following table, unit Centrue Bank was considered "well-capitalized" and the Company was considered "adequately-capitalized" under regulatory defined capital ratios as of September 30, 2012 except for the Company's Tier 1 leverage ratio which was 3.38%.
Centrue Financial Centrue Bank
-------------------- --------------------
Sep 30, Dec 31, Sep 30, Dec 31,
2012 2011 2012 2011
--------- --------- --------- ---------
Carrying amounts ($millions):
Total risk-based capital $ 54.2 $ 61.2 $ 66.4 $ 68.6
Tier 1 risk-based capital $ 30.9 $ 37.2 $ 58.3 $ 60.1
Capital ratios:
Total risk-based capital 8.38% 9.03% 10.46% 10.28%
Tier 1 risk-based capital 4.78% 5.49% 9.18% 9.01%
Tier 1 leverage ratio 3.38% 3.74% 6.40% 6.06%
Participation in the Treasury Capital Purchase Program
On January 9, 2009, as part of the Troubled Asset Relief Program ("TARP") Capital Purchase Program, the Company entered into a Letter Agreement and Securities Purchase Agreement (collectively, the "Purchase Agreement") with the United States Department of the Treasury ("U.S. Treasury"), pursuant to which the Company sold 32,668 shares of newly authorized Fixed Rate Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share and liquidation value $1,000 per share (the "Series C Preferred Stock") and also issued warrants (the "Warrants") to the U.S. Treasury to acquire an additional 508,320 shares of the Company's common stock at an exercise price of $9.64 per share. The U.S. Treasury has notified the Company that the preferred securities and the warrant may be placed into pooled "Dutch Auctions" after October 9, 2012.
Other Matters
Under the recently passed Jumpstart Our Business Startups (JOBS) Act, banks and bank holding companies may now go private and deregister their shares from the Securities and Exchange Commission (SEC) if they have less than 1,200 shareholders. This is done by filing Form 15 with the SEC, which becomes effective ninety days after the filing date. The Company filed Form 15 in order to reduce the costs of remaining an SEC registrant. It should be noted that the Company's stock will still be traded on the OTCQB Marketplace under the symbol "TRUE.PK" following the deregistration.
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 Nine Months Ended
September 30, 2012 September 30, 2012
----------------------- -----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Operating Highlights
Net income (loss) $ (3,319) $ (4,748) $ (3,736) $ (10,630)
Return on average total
assets (1.44)% (1.85)% (0.53)% (1.34)
Return on average
stockholders' equity (40.93) (50.99) (15.40) (36.33)
Net interest margin 3.20 3.14 3.11 3.12
Efficiency ratio 79.13 78.00 83.96 80.98
Bank net interest margin 3.33 3.31 3.29 3.22
Per Share Data
Diluted earnings (loss)
per common share $ (0.63) $ (0.87) $ (0.87) $ (2.01)
Book value per common
share $ (0.74) $ (0.03) $ (0.74) $ (0.03)
Tangible book value per
common share $ (1.49) $ (0.94) $ (1.49) $ (0.94)
Diluted weighted average
common shares
outstanding 6,063,441 6,048,405 6,063,441 6,048,405
Period end common shares
outstanding 6,063,441 6,048,405 6,063,441 6,048,405
Stock Performance Data
Market price:
Quarter-end $ 0.39 $ 0.35 $ 0.39 $ 0.35
High $ 0.73 $ 0.60 $ 0.88 $ 1.18
Low $ 0.25 $ 0.22 $ 0.15 $ 0.22
Centrue Financial Corporation
Unaudited Consolidated Balance Sheets
(In Thousands)
September 30, December 31,
2012 2011
------------- -------------
ASSETS
Cash and cash equivalents $ 79,423 $ 69,735
Securities available-for-sale 181,497 228,836
Restricted securities 7,028 9,150
Loans 561,477 582,395
Allowance for loan losses (21,070) (21,232)
------------- -------------
Net loans 540,407 561,163
Bank-owned life insurance 32,146 31,412
Mortgage servicing rights 1,997 2,089
Premises and equipment, net 23,098 23,754
Other intangible assets, net 4,551 5,264
Other real estate owned 28,601 29,667
Other assets 6,077 6,914
------------- -------------
Total assets $ 904,825 $ 967,984
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing $ 118,733 $ 134,137
Interest-bearing 663,864 714,501
------------- -------------
Total deposits 782,597 848,638
Federal funds purchased and securities sold
under agreements to repurchase 16,669 18,036
Federal Home Loan Bank advances 30,057 23,058
Notes payable 10,345 10,440
Series B mandatory redeemable preferred
stock 268 268
Subordinated debentures 20,620 20,620
Other liabilities 15,562 14,355
------------- -------------
Total liabilities 876,118 935,415
Stockholders' equity
Series A convertible preferred stock 500 500
Series C cumulative perpetual preferred
stock 31,894 31,429
Common stock 7,454 7,454
Surplus 74,581 74,558
Retained earnings (accumulated deficit) (65,834) (60,064)
Accumulated other comprehensive income
(loss) 1,989 569
------------- -------------
50,584 54,446
Treasury stock, at cost (21,877) (21,877)
------------- -------------
Total stockholders' equity 28,707 32,569
Total liabilities and stockholders'
equity $ 904,825 $ 967,984
============= =============
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Interest income
Loans $ 6,850 $ 8,297 $ 20,839 $ 26,414
Securities
Taxable 748 1,047 2,432 3,132
Exempt from federal income
taxes 105 158 344 550
Federal funds sold and other 23 40 99 108
--------- --------- --------- ---------
Total interest income 7,726 9,542 23,714 30,204
Interest expense
Deposits 973 1,937 3,515 6,637
Federal funds purchased and
securities sold under
agreements to repurchase 10 11 31 32
Federal Home Loan Bank advances 192 347 568 1,114
Series B mandatory redeemable
preferred stock 4 4 12 12
Subordinated debentures 157 277 745 821
Notes payable 92 89 280 270
--------- --------- --------- ---------
Total interest expense 1,428 2,665 5,151 8,886
Net interest income 6,298 6,877 18,563 21,318
Provision for loan losses 5,750 2,400 8,475 9,900
--------- --------- --------- ---------
Net interest income (loss) after
provision for loan losses 548 4,477 10,088 11,418
Noninterest income
Service charges 1,128 1,232 3,217 3,483
Mortgage banking income 777 341 1,719 1,050
Electronic banking services 550 552 1,640 1,644
Bank-owned life insurance 246 256 734 755
Securities gains, net 684 - 1,398 379
Total other-than-temporary
impairment losses - - - (499)
Portion of loss recognized in
other comprehensive income
(before taxes) - - - -
--------- --------- --------- ---------
Net impairment on securities - - - (499)
Gain (loss) on sale of OREO 40 (12) 465 (60)
Gain (loss) on sale of other
assets - (16) - 47
Other income 404 213 1,520 575
--------- --------- --------- ---------
3,829 2,566 10,693 7,374
Centrue Financial Corporation
Unaudited Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Noninterest expenses
Salaries and employee benefits 3,697 3,505 10,981 10,598
Occupancy, net 681 712 1,965 2,136
Furniture and equipment 235 407 902 1,267
Marketing 115 56 284 183
Supplies and printing 67 67 200 208
Telephone 180 229 534 637
Data processing 396 381 1,063 1,120
FDIC insurance 515 323 1,544 1,997
Loan processing and collection
costs 337 495 1,427 1,597
OREO valuation adjustment 640 4,473 1,435 5,770
Amortization of intangible assets 238 250 713 789
Other expenses 1,383 1,499 4,257 4,472
-------- -------- -------- --------
8,484 12,397 25,305 30,774
Income (loss) before income taxes (4,107) (5,354) (4,524) (11,982)
Income tax expense (benefit) (788) (606) (788) (1,352)
-------- -------- -------- --------
Net income (loss) (3,319) (4,748) (3,736) (10,630)
Preferred stock dividends 529 505 1,569 1,500
Net income (loss) for common
stockholders (3,848) (5,253) (5,305) (12,130)
Basic earnings (loss) per common
share (0.63) (0.87) (0.87) (2.01)
Diluted earnings (loss) per common
share (0.63) (0.87) (0.87) (2.01)
Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Per Share Data)
Quarters Ended
----------------------------------------------------------
9/30/12 6/30/12 3/31/12 12/31/11 9/30/11
---------- ---------- ---------- ---------- ----------
Statement of
Income
Interest
income $ 7,726 $ 7,956 $ 8,032 $ 8,957 $ 9,542
Interest
expense (1,428) (1,734) (1,989) (2,339) (2,665)
---------- ---------- ---------- ---------- ----------
Net interest
income 6,298 6,222 6,043 6,618 6,877
Provision for
loan losses 5,750 1,375 1,350 1,475 2,400
---------- ---------- ---------- ---------- ----------
Net interest
income (loss)
after
provision for
loan losses 548 4,847 4,693 5,143 4,477
Noninterest
income 3,829 3,812 3,052 4,561 2,566
Noninterest
expense 8,484 8,576 8,245 9,660 12,397
---------- ---------- ---------- ---------- ----------
Income (loss)
before income
taxes (4,107) 83 (500) 44 (5,354)
Income tax
expense
(benefit) (788) - - (14) (606)
---------- ---------- ---------- ---------- ----------
Net income
(loss) $ (3,319) $ 83 $ (500) $ 58 $ (4,748)
========== ========== ========== ========== ==========
Net income
(loss) for
common
stockholders $ (3,848) $ (440) $ (1,017) $ (453) $ (5,253)
========== ========== ========== ========== ==========
Per Share
Basic earnings
(loss) per
common share $ (0.63) $ (0.07) $ (0.17) $ (0.07) $ (0.87)
Diluted
earnings
(loss) per
common share (0.63) (0.07) (0.17) (0.07) (0.87)
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 $ (0.74) $ (0.13) $ (0.07) $ (0.10) $ (0.03)
Tangible book
value per
common share (1.49) (0.92) (0.90) (0.97) (0.94)
Basic weighted
average
common shares
outstanding 6,063,441 6,063,441 6,063,441 6,059,028 6,048,405
Diluted
weighted
average
common shares
outstanding 6,063,441 6,063,441 6,063,441 6,059,028 6,048,405
Period-end
common shares
outstanding 6,063,441 6,063,441 6,063,441 6,063,441 6,048,405
Balance Sheet
Securities $ 188,525 $ 232,695 $ 253,828 $ 237,986 $ 245,236
Loans 561,477 567,908 563,732 582,395 620,450
Allowance for
loan losses 21,070 18,234 20,338 21,232 23,314
Assets 904,825 926,574 961,803 967,984 1,008,953
Deposits 782,597 782,264 843,405 848,638 862,117
Stockholders'
equity 28,707 32,401 32,758 32,569 32,961
Earnings
Performance
Return on
average total
assets (1.44)% 0.04% (0.21)% 0.02% (1.85)%
Return on
average
stockholders'
equity (40.93) 1.01 (6.26) 0.71 (50.99)
Net interest
margin 3.20 3.11 3.02 3.09 3.14
Efficiency
ratio (1) 79.13 83.72 89.39 89.03 78.00
Bank net
interest
margin 3.33 3.31 3.21 3.27 3.31
Asset Quality
Nonperforming
assets to
total end of
period assets 8.33% 7.31% 8.05% 7.80% 8.02%
Nonperforming
loans to
total end of
period loans 8.32 7.01 7.79 7.87 7.73
Net loan
charge-offs
to total
average loans 0.52 0.62 0.39 0.59 0.54
Allowance for
loan losses
to total end
of period
loans 3.75 3.21 3.61 3.65 3.76
Allowance for
loan losses
to
nonperforming
loans 45.08 45.79 46.32 46.32 48.59
Nonperforming
loans $ 46,739 $ 39,823 $ 43,904 $ 45,835 $ 47,982
Nonperforming
assets 75,340 67,713 77,405 75,502 80,894
Net loan
charge-offs 2,914 3,479 2,244 3,557 3,445
Capital
Total risk-
based capital
ratio 8.38% 8.76% 9.04% 9.03% 8.51%
Tier 1 risk-
based capital
ratio 4.78 5.40 5.42 5.49 5.15
Tier 1
leverage
ratio 3.38 3.82 3.78 3.74 3.70
(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:
Kurt R. Stevenson
President and
Chief Executive Officer
Centrue Financial Corporation
kurt.stevenson@centrue.com
Daniel R. Kadolph
Chief Financial Officer
Centrue Financial Corporation
daniel.kadolph@centrue.com
