EXHIBIT 99.1
GASTONIA, N.C., July 25, 2011 (GLOBE NEWSWIRE) -- Citizens South Banking Corporation (Nasdaq:CSBC), the holding company for Citizens South Bank (the "Bank"), reported net income available to common shareholders of $2.0 million, or $0.18 per diluted share, for the quarter ended June 30, 2011, compared to net income available to common shareholders of $98,000, or $0.01 per diluted share, for the quarter ended June 30, 2010. The financial results for the quarter ended June 30, 2011, included a $4.4 million pre-tax gain related to the acquisition of New Horizons Bank and $566,000 in related acquisition and integration expenses.
President Kim S. Price stated, "We are encouraged by a number of indicators in this quarter's results, including healthy expansion of our net interest margin, continued growth in our core deposits, and a decrease in our level of nonperforming assets. We continue to focus on profitability, growing our franchise, and adding shareholder value as the community banking landscape evolves in this challenging economy."
Second Quarter 2011 Highlights:
FDIC-Assisted Acquisition – New Horizons Bank
On April 15, 2011, Citizens South Bank acquired certain assets and assumed certain liabilities of New Horizons Bank in East Ellijay, Georgia, in an FDIC-assisted transaction. The acquisition was made pursuant to the terms of a purchase and assumption agreement entered into by the Bank and the FDIC. Under the terms of this agreement, the Bank acquired certain assets of New Horizons Bank with a fair value of approximately $105.4 million, which includes $11.0 million in cash paid by the FDIC in order to consummate the transaction. The fair value of the acquired assets included $49.3 million of loans, $9.7 million of investment securities, $7.9 million of cash and cash equivalents, $6.4 million of other real estate owned ("OREO"), $19.9 million related to the FDIC's indemnification of the Bank against certain losses described below, and $970,000 of other assets. Liabilities with a fair value of approximately $102.5 million were also assumed, including $96.7 million of deposits, $4.2 million of borrowed money, and $1.6 million of other liabilities. Also, as a part of the acquisition, the Bank recorded a $221,000 core deposit intangible asset and realized a pre-tax gain on acquisition of $4.4 million, or $2.9 million after-tax.
In connection with the acquisition, the Bank entered into loss-sharing agreements with the FDIC that covered approximately $69.3 million of the $71.2 million of loans that were acquired from the FDIC (the "covered loans") and all of the $11.6 million of OREO that was acquired from the FDIC (collectively referred to as "covered assets"). Pursuant to the terms of the loss-sharing agreements, the FDIC is obligated to reimburse the Bank for 80% of all eligible losses and certain collection and disposition expenses with respect to covered assets. The Bank has a corresponding obligation to reimburse the FDIC for 80% of eligible recoveries with respect to covered assets.
Asset Quality
The linked-quarter trend of the Company's credit quality metrics was positive. For the second quarter of 2011 the Company continued to build reserves even though it reported lower net charge-offs, a stable level of past due loans, and a declining level of nonperforming non-covered assets (assets not covered under FDIC loss-sharing agreements). Net charge-offs declined from $2.9 million, or 1.99% of average non-covered loans, for the first quarter of 2011 to $1.0 million, or 0.66% of average non-covered loans for the second quarter of 2011. This quarterly decrease was largely due to the stable level of past due loans and the declining level of nonperforming non-covered loans during the second quarter. Non-covered past due loans, which includes non-covered loans that are 30 to 89 days delinquent and still accruing interest, remained flat at $5.7 million, or 0.99% of total non-covered loans, for the second quarter. Also during the second quarter, nonperforming non-covered assets declined from $32.8 million, or 3.15% of total assets at March 31, 2011, to $30.6 million, or 2.74% of total assets at June 30, 2011. This represents a decrease of $2.2 million, or 6.7%, in nonperforming non-covered assets for the second quarter. Due in part to the decline in net charge-offs and nonperforming non-covered assets during the quarter, the Company reduced its loan loss provision from $3.0 million during the first quarter of 2011 to $1.7 million during the second quarter of 2011. However, despite this decrease in the loan loss provision, the Company's allowance for loan losses to total non-covered loans increased from 2.05% at March 31, 2011, to 2.22% at June 30, 2011.
As nonperforming loans move through the disposition process and become OREO, the Company's expenses and valuation adjustments related to OREO also increases. During the second quarter of 2011 these expenses totaled $2.0 million, compared to $509,000 for the first quarter of 2011.
President Price commented, "While the general economy and real estate markets continue to be choppy in most of our markets, we are encouraged with the positive trend of our credit quality this quarter and we are cautiously optimistic that these improving trends will continue, although not necessarily in a purely linear fashion."
Loans and Deposits
Despite some improving trends in local economic conditions, loan demand continues to be soft. Total non-covered loans decreased by $29.1 million, or 4.8%, from June 30, 2010 to June 30, 2011. On a linked-quarter basis, non-covered loans decreased by $13.3 million. This decrease was largely due to a $6.1 million reduction in the Company's commercial land and residential acquisition and development loan portfolios. Management is continuing to focus on increasing business loans to the professional market, owner-occupied commercial real estate loans, and residential and personal loans to qualified consumers through competitive pricing and an active marketing campaign.
The Company continues to experience strong core deposit growth. From June 30, 2010, to June 30, 2011, non-time core deposits increased by $62.3 million, or 16.0%, to $451.0 million. On a linked-quarter basis, non-core time deposits increased by $43.4 million. A portion of this growth was due to the $21.9 million in non-time core deposits that were assumed in the New Horizons Bank acquisition. However, the remaining growth in core deposits was attributable to a continued focus on deposit gathering and increased market share due to local branch closures, mergers, and a general "flight to quality" among community bank depositors.
Capital Position
At June 30, 2011, the Bank's total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 17.3%, 16.0%, and 9.4%, respectively, compared to 16.8%, 15.5%, and 9.7% respectively, at June 30, 2010. The Bank exceeded the regulatory minimum capital ratios to be considered well-capitalized by 172.9%, 267.1%, and 188.5% for total risk-based capital, Tier 1 risk-based capital, and Tier 1 leverage capital, respectively, at June 30, 2011. The Company's capital position continues to be a source of strength and provides a competitive advantage during these uncertain economic times. The Company's tangible common equity ratio remains strong at 6.5% at June 30, 2011. Also, the Company's tangible book value per share increased on a linked-quarter basis from $6.09 at March 31, 2011, to $6.29 at June 30, 2011.
Net Interest Income and Margin
The Company's net interest income for the second quarter of 2010 increased by $482,000, or 5.94%, as compared to the second quarter of 2010. Contributing to this increase was a 48 basis point increase in the Company's net interest margin from 3.24% at June 30, 2010, to 3.72% at June 30, 2011. On a linked-quarter basis, the Company's net interest margin improved by 36 basis points. The improvement on a linked-quarter basis was due to a 33 basis point increase in the Company's yield on assets coupled with a nine basis point decrease in the Company's cost of funds. The increase in the yield on assets was largely due to the New Horizons Bank acquisition which added $71.2 million of loans, which were adjusted to a fair value of $49.2 million. The accretion of the discount on these loans during the second quarter was $200,000. Also, given the Company's high level of liquidity, coupled with strong core deposit growth, the Company has been able to repay maturing time deposits or reprice these time deposits at lower market rates at maturity. This time deposit repricing has contributed to the decline in the cost of funds.
Noninterest Income and Expense
Noninterest income increased by $3.4 million to $5.9 million for the quarter ended June 30, 2011, as compared to $2.4 million of the quarter ended June 30, 2010. This increase was due to a $3.8 million increase in gain on acquisition and a $75,000 increase in service charges on deposit accounts. These increases were partly offset by decreases in the gain on sale of other assets, mortgage banking income, and commissions on the sale of non-deposit financial products.
Noninterest expense increased by $2.0 million, or 27.3%, during the second quarter of 2011 compared to the second quarter of 2010. This increase was primarily related to the $472,000 increase in acquisition and integration expenses and a $1.3 million increase in valuation adjustments on other real estate owned. These increases were partly offset by decreases in office occupancy expense, amortization of intangible assets and other noninterest expenses.
About Citizens South Banking Corporation and Citizens South Bank
Citizens South Bank was founded in 1904 and is headquartered in Gastonia, North Carolina. Deposits are FDIC insured up to applicable regulatory limits. At June 30, 2011, the Company had $1.1 billion in assets with 21 full-service offices in the Charlotte and North Georgia regions, including Gaston, Iredell, Rowan, Mecklenburg, and Union counties in North Carolina, York County in South Carolina, and Towns, Union, Fannin, and Gilmer counties in Georgia. Citizens South Bank is an Equal Housing Lender and Member, FDIC. The Bank is a wholly-owned subsidiary of Citizens South Banking Corporation, and shares of the common stock of the Company trade on the NASDAQ Global Market under the ticker symbol "CSBC." The Company maintains a website at www.citizenssouth.com that includes information on the Company, along with a list of products and services, branch locations, current financial information, and links to the Company's filings with the SEC.
The Citizens South Banking Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7099
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under accounting principles generally accepted in the United States ("GAAP"), and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation, or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
Cautionary Statement Regarding Forward-looking Statements
This news release contains certain forward-looking statements which include, but are not limited to, statements of our earnings expectations, statements regarding our operating strategy, and estimates of our future costs and benefits. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Forward-looking statements speak only as of the date they are made and the Company is under no duty to update these forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements or to reflect the occurrence of unanticipated events. A number of factors could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, changes in general economic conditions – either locally or nationally, competition among depository and financial institutions, the continuation of current revenue and expense trends, significant changes in interest rates, unforeseen changes in the Company's markets, and legal, regulatory, or accounting changes. The Company's reports filed from time to time with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2010, describe some of these factors.
Important Tables Follow
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | ||||
| 2011 | 2010 | ||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |
| (Dollars in thousands, except per share data) | |||||
| Summary of Operations: | |||||
| Interest income - taxable equivalent | $ 11,488 | $ 10,457 | $ 11,055 | $ 11,675 | $ 12,308 |
| Interest expense | 2,826 | 2,855 | 3,411 | 3,790 | 4,083 |
| Net interest income - taxable equivalent | 8,662 | 7,602 | 7,644 | 7,885 | 8,225 |
| Less: Taxable-equivalent adjustment | 69 | 70 | 70 | 79 | 114 |
| Net interest income | 8,593 | 7,532 | 7,574 | 7,806 | 8,111 |
| Provision for loan losses | 1,700 | 3,000 | 5,000 | 3,000 | 3,000 |
| Net interest income after loan loss provision | 6,893 | 4,532 | 2,574 | 4,806 | 5,111 |
| Noninterest income | 5,886 | 1,478 | 2,274 | 2,290 | 2,415 |
| Noninterest expense | 9,270 | 7,672 | 7,918 | 7,781 | 7,279 |
| Net income (loss) before income taxes | 3,509 | (1,662) | (3,070) | (685) | 247 |
| Income tax expense (benefit) | 1,213 | (771) | (1,331) | (413) | (108) |
| Net income (loss) | 2,296 | (891) | (1,739) | (272) | 355 |
| Dividends on preferred stock | 256 | 256 | 256 | 256 | 257 |
| Net income (loss) available to common shareholders | $ 2,040 | $ (1,147) | $ (1,995) | $ (528) | $ 98 |
| Per Common Share Data: | |||||
| Net income (loss): | |||||
| Basic | $ 0.18 | $ (0.10) | $ (0.18) | $ (0.05) | $ 0.01 |
| Diluted | 0.18 | (0.10) | (0.18) | (0.05) | 0.01 |
| Weighted average shares outstanding: | |||||
| Basic | 11,455,642 | 11,491,734 | 11,173,174 | 10,844,386 | 9,077,042 |
| Diluted | 11,455,642 | 11,491,734 | 11,173,174 | 10,844,386 | 9,077,042 |
| End of period shares outstanding | 11,506,324 | 11,508,750 | 11,508,750 | 10,964,146 | 10,965,941 |
| Cash dividends declared | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.04 | $ 0.04 |
| Book value | 6.44 | 6.22 | 6.32 | 6.86 | 6.91 |
| Tangible book value | 6.29 | 6.09 | 6.17 | 6.70 | 6.73 |
| Selected Financial Performance Ratios (annualized): | |||||
| Return on average assets | 0.73% | -0.44% | -0.74% | -0.20% | 0.04% |
| Return on average common equity | 11.00% | -6.39% | -10.68% | -2.77% | 0.56% |
| Noninterest income to average total assets | 2.12% | 0.56% | 0.85% | 0.85% | 0.87% |
| Noninterest expense to average total assets | 3.34% | 2.91% | 2.95% | 2.88% | 2.63% |
| Operating Earnings (Non-GAAP): | |||||
| Net income (loss) available to common shareholders | $ 2,040 | $ (1,147) | $ (1,995) | $ (528) | $ 98 |
| (Gain) loss on acquisition, net of tax | (2,695) | 155 | (90) | (118) | (368) |
| (Gain) loss on sale of investments, net of tax | -- | -- | -- | (186) | (6) |
| Other-than-temporary impairment on securities, net of tax | -- | -- | 365 | -- | -- |
| Acquisition and integration expenses, net of tax | 345 | 27 | 26 | 86 | 57 |
| Net operating loss | $ (310) | $ (965) | $ (1,694) | $ (746) | $ (219) |
| Operating net loss per common share: | |||||
| Basic | $ (0.03) | $ (0.08) | $ (0.15) | $ (0.07) | $ (0.02) |
| Diluted | (0.03) | (0.08) | (0.15) | (0.07) | (0.02) |
| Net Interest Margin (annualized): | |||||
| Yield on earning assets | 4.95% | 4.62% | 4.68% | 4.91% | 4.96% |
| Cost of funds | 1.23% | 1.32% | 1.51% | 1.66% | 1.72% |
| Net interest rate spread | 3.72% | 3.30% | 3.17% | 3.25% | 3.24% |
| Net interest margin (taxable equivalent) | 3.78% | 3.42% | 3.25% | 3.42% | 3.48% |
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | ||||
| 2011 | 2010 | ||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |
| (Dollars in thousands, except per share data) | |||||
| Selected End of Period Balances: | |||||
| Loans, net | $ 750,650 | $ 724,655 | $ 736,510 | $ 754,740 | $ 776,234 |
| Investment securities | 156,328 | 154,006 | 111,586 | 87,255 | 97,678 |
| Total interest-earning assets | 931,156 | 886,872 | 914,456 | 937,278 | 927,757 |
| Total assets | 1,117,993 | 1,041,444 | 1,064,487 | 1,087,558 | 1,077,431 |
| Deposits | 904,578 | 832,803 | 850,456 | 865,786 | 853,526 |
| Shareholders' equity | 94,771 | 92,276 | 93,443 | 95,682 | 96,410 |
| Selected Quarterly Average Balances: | |||||
| Loans, net | $ 753,874 | $ 726,346 | $ 747,054 | $ 767,381 | $ 780,209 |
| Investment securities | 157,513 | 135,645 | 100,691 | 91,361 | 100,501 |
| Total interest-earning assets | 918,118 | 902,141 | 928,756 | 915,882 | 949,130 |
| Total assets | 1,110,740 | 1,053,747 | 1,075,338 | 1,080,680 | 1,105,788 |
| Deposits | 896,353 | 841,387 | 853,185 | 853,902 | 859,408 |
| Shareholders' equity | 95,116 | 93,533 | 94,761 | 96,258 | 96,282 |
| Credit Quality Information and Ratios: | |||||
| Allowance for loan losses - beginning of period | $ 12,006 | $ 11,924 | $ 10,752 | $ 9,796 | $ 9,230 |
| Add: Provision for loan losses | 1,700 | 3,000 | 5,000 | 3,000 | 3,000 |
| Less: Net charge-offs | 964 | 2,918 | 3,828 | 2,044 | 2,433 |
| Allowance for loan losses - end of period | 12,742 | 12,006 | 11,924 | 10,752 | 9,797 |
| Assets not covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing | 5,687 | 5,692 | 13,787 | 6,602 | 10,145 |
| Past due loans to total non-covered loans | 0.99% | 0.97% | 2.34% | 1.11% | 1.68% |
| Nonperforming non-covered loans: | |||||
| One-to-four family residential | 1,406 | 2,373 | 1,864 | 2,068 | 1,646 |
| Construction | -- | 72 | 14 | 163 | 896 |
| Acquisition and development | 4,244 | 4,675 | 2,560 | 340 | 691 |
| Commercial land | 3,071 | 4,653 | 4,360 | 5,034 | 3,252 |
| Other commercial real estate | 8,473 | 9,636 | 4,800 | 9,566 | 4,127 |
| Commercial business | 228 | 309 | 287 | 720 | 742 |
| Consumer | 2,483 | 2,639 | 2,529 | 1,930 | 1,652 |
| Total nonperforming non-covered loans | 19,905 | 24,357 | 16,414 | 19,821 | 13,006 |
| Other nonperforming non-covered assets | 10,723 | 8,463 | 7,650 | 8,557 | 8,239 |
| Total nonperforming non-covered assets | 30,628 | 32,820 | 24,064 | 28,378 | 21,245 |
| Allowance for loan losses to total non-covered loans | 2.22% | 2.05% | 2.02% | 1.81% | 1.62% |
| Net charge-offs to average non-covered loans (annualized) | 0.66% | 1.99% | 2.59% | 1.36% | 3.22% |
| Nonperforming non-covered loans to non-covered loans | 3.47% | 4.15% | 2.79% | 3.33% | 2.15% |
| Nonperforming non-covered assets to total assets | 2.74% | 3.15% | 2.26% | 2.61% | 1.97% |
| Nonperforming non-covered assets to total non-covered loans and other real estate owned | 5.24% | 5.51% | 4.03% | 4.71% | 3.46% |
| Assets covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing | 12,987 | 7,006 | 5,767 | 8,701 | 5,257 |
| Past due loans to total covered loans | 7.34% | 5.09% | 3.91% | 5.43% | 3.07% |
| Total covered nonperforming loans | 34,623 | 24,791 | 25,541 | 22,416 | 24,924 |
| Other covered nonperforming assets | 14,120 | 8,225 | 7,108 | 3,183 | 2,343 |
| Total covered nonperforming assets | 48,743 | 33,016 | 32,649 | 25,599 | 27,267 |
| Capital Ratios: | |||||
| Tangible common equity | 6.49% | 6.73% | 6.69% | 6.74% | 6.86% |
| Total Risk-Based Capital (Bank only) | 17.29% | 16.70% | 16.80% | 16.83% | 16.78% |
| Tier 1 Risk-Based Capital (Bank only) | 16.03% | 15.44% | 15.54% | 15.58% | 15.52% |
| Tier 1 Leverage Capital (Bank only) | 9.42% | 9.89% | 9.74% | 9.58% | 9.74% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) | ||||
| June 30, | Amount | Percent | ||
| 2011 | 2010 | Change | Change | |
| (Dollars in thousands) | ||||
| ASSETS | ||||
| Cash and cash equivalents | 89,337 | 109,946 | (20,609) | -18.74% |
| Investment securities available for sale, at fair value | 76,930 | 71,802 | 5,128 | 7.14% |
| Investment securities held to maturity, at amortized cost | 79,398 | 25,876 | 53,522 | 206.84% |
| Federal Home Loan Bank stock, at cost | 5,635 | 6,397 | (762) | -11.91% |
| Presold loans in process of settlement | 2,109 | 2,529 | (420) | -16.61% |
| Loans: | ||||
| Covered by FDIC loss-share agreements | 177,047 | 171,002 | 6,045 | 3.54% |
| Not covered by FDIC loss-share agreements | 573,603 | 602,703 | (29,100) | -4.83% |
| Allowance for loan losses | (12,742) | (9,796) | (2,946) | 30.07% |
| Net loans | 737,908 | 763,909 | (26,001) | -3.40% |
| Other real estate owned | 24,803 | 10,582 | 14,221 | 134.39% |
| Premises and equipment, net | 25,233 | 15,458 | 9,775 | 63.24% |
| FDIC loss share receivable | 43,424 | 36,470 | 6,954 | 19.07% |
| Accrued interest receivable | 3,076 | 3,405 | (329) | -9.66% |
| Bank-owned life insurance | 18,654 | 17,930 | 724 | 4.04% |
| Intangible assets | 1,636 | 1,988 | (352) | -17.71% |
| Other assets | 9,850 | 11,139 | (1,289) | -11.57% |
| Total assets | $ 1,117,993 | $ 1,077,431 | $ 40,562 | 3.76% |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Deposits: | ||||
| Noninterest-bearing demand deposits | $ 82,304 | $ 69,272 | $ 13,032 | 18.81% |
| Interest-bearing demand and savings | 368,766 | 319,472 | 49,294 | 15.43% |
| Time deposits | 453,508 | 464,782 | (11,274) | -2.43% |
| Total deposits | 904,578 | 853,526 | 51,052 | 5.98% |
| Securities sold under repurchase agreements | 11,890 | 9,432 | 2,458 | 26.06% |
| Borrowed money | 96,121 | 105,183 | (9,062) | -8.62% |
| Other liabilities | 10,633 | 12,879 | (2,246) | -17.44% |
| Total liabilities | 1,023,222 | 981,020 | 42,202 | 4.30% |
| Shareholders' Equity | ||||
| Preferred stock | 20,713 | 20,630 | 83 | 0.40% |
| Common stock | 124 | 124 | -- | 0.00% |
| Additional paid-in-capital | 63,125 | 62,857 | 268 | 0.43% |
| Retained earnings, substantially restricted | 10,287 | 12,774 | (2,487) | -19.47% |
| Accumulated other comprehensive income | 522 | 26 | 496 | 1907.69% |
| Total shareholders' equity | 94,771 | 96,411 | (1,640) | -1.70% |
| Total liabilities and shareholders' equity | $ 1,117,993 | $ 1,077,431 | $ 40,562 | 3.76% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
| Three Months Ended | Amount | Percent | ||
| June 30, 2011 | June 30, 2010 | Change | Change | |
| (Dollars in thousands) | ||||
| Interest Income: | ||||
| Interest and fees on loans | $ 10,329 | $ 11,231 | $ (902) | -8.03% |
| Investment securities: | ||||
| Taxable interest income | 983 | 676 | 307 | 45.41% |
| Tax-exempt interest income | 69 | 188 | (119) | -63.30% |
| Other interest income | 38 | 99 | (61) | -61.62% |
| Total interest income | 11,419 | 12,194 | (775) | -6.36% |
| Interest Expense: | ||||
| Deposits | 1,981 | 2,904 | (923) | -31.78% |
| Borrowed money | 1,652 | 2,300 | (648) | -28.17% |
| Total interest expense | 2,826 | 4,083 | (1,257) | -30.79% |
| Net interest income | 8,593 | 8,111 | 482 | 5.94% |
| Provision for loan losses | 1,700 | 3,000 | (1,300) | -43.33% |
| Net interest income after provision for loan losses | 6,893 | 5,111 | 1,782 | 34.87% |
| Noninterest Income: | ||||
| Service charges on deposit accounts | 1,046 | 971 | 75 | 7.72% |
| Mortgage banking income | 254 | 357 | (103) | -28.85% |
| Commissions on sales of financial products | 69 | 188 | (119) | -63.30% |
| Income from bank-owned life insurance | 214 | 243 | (29) | -11.93% |
| Gain (loss) from acquisition | 4,418 | 605 | 3,813 | 630.25% |
| Gain on sale of investments, available for sale | 1 | 10 | (9) | -90.00% |
| Gain (loss) on sale of other assets | (338) | (203) | (135) | 66.50% |
| Other income | 222 | 244 | (22) | -9.02% |
| Total noninterest income | 5,886 | 2,415 | 3,471 | 143.73% |
| Noninterest Expense: | ||||
| Compensation and benefits | 3,806 | 3,652 | 154 | 4.22% |
| Occupancy and equipment | 873 | 1,039 | (166) | -15.98% |
| Loan collection and other expenses | 204 | 165 | 39 | 23.64% |
| Professional services | 249 | 233 | 16 | 6.87% |
| Data processing | 282 | 190 | 92 | 48.42% |
| Deposit insurance | 361 | 354 | 7 | 1.98% |
| Amortization of intangible assets | 136 | 154 | (18) | -11.69% |
| Valuation adjustment on OREO | 1,476 | 210 | 1,266 | 602.86% |
| OREO expense | 596 | 202 | 394 | 195.05% |
| Acquisition and integration expenses | 566 | 94 | 472 | 502.13% |
| Other expenses | 721 | 986 | (265) | -26.88% |
| Total noninterest expense | 9,270 | 7,279 | 1,991 | 27.35% |
| Income before income tax expense (benefit) | 3,509 | 247 | 3,262 | 1320.65% |
| Income tax expense (benefit) | 1,213 | (108) | 1,321 | -1223.15% |
| Net income | 2,296 | 355 | 1,941 | 546.76% |
| Dividends on preferred stock | 256 | 257 | (1) | -0.39% |
| Net income available to common shareholders | $ 2,040 | $ 98 | $ 1,942 | 1981.63% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
| Six Months Ended | Amount | Percent | ||
| June 30, 2011 | June 30, 2010 | Change | Change | |
| (Dollars in thousands) | ||||
| Interest Income: | ||||
| Interest and fees on loans | $ 19,790 | $ 19,485 | $ 305 | 1.57% |
| Investment securities: | ||||
| Taxable interest income | 1,776 | 1,294 | 482 | 37.25% |
| Tax-exempt interest income | 137 | 378 | (241) | -63.76% |
| Other interest income | 103 | 149 | (46) | -30.87% |
| Total interest income | 21,806 | 21,306 | 500 | 2.35% |
| Interest Expense: | ||||
| Deposits | 3,982 | 5,169 | (1,187) | -22.96% |
| Borrowed money | 1,698 | 2,308 | (610) | -26.43% |
| Total interest expense | 5,680 | 7,477 | (1,797) | -24.03% |
| Net interest income | 16,126 | 13,829 | 2,297 | 16.61% |
| Provision for loan losses | 4,700 | 6,050 | (1,350) | -22.31% |
| Net interest income after provision for loan losses | 11,426 | 7,779 | 3,647 | 46.88% |
| Noninterest Income: | ||||
| Service charges on deposit accounts | 2,004 | 1,761 | 243 | 13.80% |
| Mortgage banking income | 491 | 567 | (76) | -13.40% |
| Commissions on sales of financial products | 136 | 306 | (170) | -55.56% |
| Income from bank-owned life insurance | 397 | 432 | (35) | -8.10% |
| Gain (loss) from acquisition | 4,163 | 19,338 | (15,175) | -78.47% |
| Gain on sale of investments, available for sale | 1 | 44 | (43) | -97.73% |
| Gain (loss) on sale of other assets | (326) | (266) | (60) | 22.56% |
| Other income | 500 | 418 | 82 | 19.62% |
| Total noninterest income | 7,366 | 22,600 | (15,234) | -67.41% |
| Noninterest Expense: | ||||
| Compensation and benefits | 7,454 | 6,295 | 1,159 | 18.41% |
| Occupancy and equipment | 1,701 | 1,722 | (21) | -1.22% |
| Loan collection and other expenses | 494 | 291 | 203 | 69.76% |
| Professional services | 502 | 467 | 35 | 7.49% |
| Data processing | 522 | 331 | 191 | 57.70% |
| Deposit insurance | 695 | 614 | 81 | 13.19% |
| Amortization of intangible assets | 275 | 218 | 57 | 26.15% |
| Valuation adjustment on OREO | 1,984 | 694 | 1,290 | 185.88% |
| OREO expenses | 597 | 352 | 245 | 69.60% |
| Acquisition and integration expenses | 611 | 882 | (271) | -30.73% |
| Other expenses | 2,110 | 1,769 | 341 | 19.28% |
| Total noninterest expense | 16,945 | 13,635 | 3,310 | 24.28% |
| Income before income tax expense | 1,847 | 16,744 | (14,897) | -88.97% |
| Income tax expense | 442 | 6,093 | (5,651) | -92.75% |
| Net income | 1,405 | 10,651 | (9,246) | -86.81% |
| Dividends on preferred stock | 512 | 513 | (1) | -0.19% |
| Net income available to common shareholders | $ 893 | $ 10,138 | $ (9,245) | -91.19% |
CONTACT: Gary F. Hoskins, CFO
(704) 884-2263
gary.hoskins@citizenssouth.com