Exhibit 99.1
Citizens South Banking Corporation Announces Record Quarterly Earnings Per Share
GASTONIA, N.C., Oct. 16 /PRNewswire-FirstCall/ -- Citizens South Banking Corporation (Nasdaq: CSBC), the holding company for Citizens South Bank, announced net income for the quarter ended September 30, 2006, of $1.4 million, or $0.18 per diluted share, compared to $964,000, or $0.14 per diluted share, for the quarter ended September 30, 2005. This represents a $474,000, or 49.1%, increase in net income for the third quarter of 2006 when compared to the third quarter of 2005.
“It is gratifying to see our team’s efforts result in record earnings per share for the Company,” Kim S. Price, President and CEO, stated in making the announcement. “We have executed a number of initiatives that are enhancing our Company’s ability to deliver improved customer service, quality balance sheet growth, and operating efficiencies. These results are particularly notable considering the difficult yield curve and the increasingly competitive environment in which we operate.”
Diluted earnings per share increased by $0.04, or 28.6%, for the same periods. Net operating income, which excludes net gains on sales of assets, amounted to $1.4 million, or $0.18 per diluted share, for the quarter ended September 30, 2006, compared to $953,000, or $0.14 per diluted share, for the quarter ended September 30, 2005.
Net interest income increased by $1.5 million, or 40.3%, during the third quarter of 2006, compared to the third quarter of 2005. This increase was primarily the result of the acquisition of Trinity Bank, continued loan growth, and a change in the asset mix. Total loans increased by $44.9 million, or 12.6% annualized, to $518.2 million during the nine months ended September 30, 2006. This increase in loans was primarily funded by growth in deposits and maturing investment securities.
Credit quality compares favorably with industry peers. Nonperforming assets totaled $2.1 million, or 0.29% of total assets, at September 30, 2006, compared to $2.2 million, or 0.42% of total assets, at the end of the third quarter of 2005.
During the first three quarters of 2006, the Company’s total deposits increased by $31.5 million, or 8.1% annualized, to $549.0 million as of September 30, 2006. Deposit gathering continues to be a major focus for the Company.
Noninterest income increased by $548,000, or 50.0%, to $1.6 million for the quarter ended September 30, 2006, compared to $1.1 million for the quarter ended September 30, 2005. This increase was partially attributable to the expanded customer base developed and acquired through the Trinity Bank acquisition, which resulted in higher fee income from loan and deposit products. A restructuring of our mortgage banking and financial services divisions also contributed to growing fee revenue.
Noninterest expense increased by $1.1 million, or 33.7%, to $4.4 million for the third quarter of 2006. These increased expenses are largely associated with the staffing and operations of three additional full-service offices resulting from the acquisition of Trinity Bank, the opening of a new full-service office in Belmont, North Carolina, and the opening of a new loan production office in Rock Hill, South Carolina.
Headquartered in Gastonia, North Carolina, Citizens South Bank was founded in 1904. Deposits are FDIC insured. At September 30, 2006, the Bank had approximately $726 million in assets with 14 full-service offices in the Charlotte Region, including Gaston, Iredell, Rowan, and Union counties in North Carolina; and two loan production offices in Mecklenburg County, North Carolina and York County, South Carolina. 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 National 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 1934 Securities Exchange Act filings with the SEC.
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, our ability to successfully integrate Trinity Bank, the continuation of current revenue and expense trends, 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, 2005, describe some of these factors.
Citizens South Banking Corporation
Selected Financial Information
(dollars in thousands, except per share data)
| | Quarter ended September 30, 2006 | | Quarter ended September 30, 2005 | | Nine Months ended September 30, 2006 | | Nine Months ended September 30, 2005 | |
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Reconciliation of GAAP to non-GAAP Measures: | | | | | | | | | | | | | |
Net income, as reported (GAAP) | | $ | 1,438 | | $ | 964 | | $ | 3,972 | | $ | 2,767 | |
Non-operating items: | | | | | | | | | | | | | |
(Gain)/ loss on sale of assets, net | | | (8 | ) | | (19 | ) | | 40 | | | (82 | ) |
Merger and integration related expense | | | 0 | | | 0 | | | 57 | | | 0 | |
Related income taxes (39%) | | | 3 | | | 8 | | | (38 | ) | | 32 | |
Net Operating Income | | $ | 1,433 | | $ | 953 | | $ | 4,031 | | $ | 2,717 | |
Per Share Data: | | | | | | | | | | | | | |
Average common shares outstanding, basic | | | 8,019,286 | | | 6,968,691 | | | 8,042,271 | | | 7,007,014 | |
Basic net income - GAAP | | $ | 0.18 | | $ | 0.14 | | $ | 0.49 | | $ | 0.40 | |
Basic net income - Operating | | | 0.18 | | | 0.14 | | | 0.50 | | | 0.39 | |
Average common shares outstanding, diluted | | | 8,095,750 | | | 7,061,656 | | | 8,119,781 | | | 7,097,439 | |
Diluted net income - GAAP | | $ | 0.18 | | $ | 0.14 | | $ | 0.49 | | $ | 0.39 | |
Diluted net income - Operating | | | 0.18 | | | 0.14 | | | 0.50 | | | 0.38 | |
Cash dividends declared | | $ | 0.075 | | $ | 0.07 | | $ | 0.225 | | $ | 0.21 | |
Period-end book value | | | 10.46 | | | 9.77 | | | 10.46 | | | 9.77 | |
Financial Ratios (annualized): | | | | | | | | | | | | | |
Return on average stockholders’ equity - GAAP | | | 6.70 | % | | 5.40 | % | | 6.26 | % | | 5.22 | % |
Return on avg. stockholders’ equity - Operating | | | 6.67 | | | 5.33 | | | 6.35 | | | 5.12 | |
Return on average assets - GAAP | | | 0.79 | % | | 0.75 | % | | 0.75 | % | | 0.72 | % |
Return on average assets - Operating | | | 0.79 | | | 0.74 | | | 0.76 | | | 0.71 | |
Efficiency ratio - GAAP | | | 64.10 | % | | 68.30 | % | | 66.27 | % | | 69.28 | % |
Net interest margin | | | 3.27 | % | | 3.26 | % | | 3.36 | % | | 3.26 | % |
Average equity to average assets | | | 11.81 | | | 13.81 | | | 11.92 | | | 13.89 | |
Asset Quality Data: | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 5,560 | | $ | 3,369 | | $ | 5,560 | | $ | 3,369 | |
Nonperforming loans | | | 1,925 | | | 1,503 | | | 1,925 | | | 1,503 | |
Nonperforming assets | | | 2,070 | | | 2,158 | | | 2,070 | | | 2,158 | |
Net charge-offs | | | 154 | | | 42 | | | 409 | | | 70 | |
Allowance for loan losses to total loans | | | 1.07 | % | | 0.98 | % | | 1.07 | % | | 0.98 | % |
Nonperforming loans to total loans | | | 0.37 | | | 0.44 | | | 0.37 | | | 0.44 | |
Nonperforming assets to total assets | | | 0.29 | | | 0.42 | | | 0.29 | | | 0.42 | |
Average Balances: | | | | | | | | | | | | | |
Total assets | | $ | 721,204 | | $ | 513,347 | | $ | 711,344 | | $ | 510,733 | |
Loans receivable, net of unearned income | | | 503,491 | | | 330,718 | | | 487,860 | | | 324,471 | |
Interest-earning assets | | | 628,548 | | | 450,923 | | | 616,516 | | | 450,847 | |
Deposits | | | 540,201 | | | 371,448 | | | 528,988 | | | 371,053 | |
Interest-bearing liabilities | | | 588,402 | | | 410,882 | | | 582,538 | | | 410,339 | |
Stockholders’ equity | | | 85,178 | | | 70,880 | | | 84,813 | | | 70,940 | |
At Period End: | | | | | | | | | | | | | |
Total assets | | $ | 725,908 | | $ | 518,942 | | $ | 725,908 | | $ | 518,942 | |
Loans receivable, net | | | 512,652 | | | 341,406 | | | 512,652 | | | 341,406 | |
Interest-earning assets | | | 639,054 | | | 463,304 | | | 639,054 | | | 463,304 | |
Intangible assets | | | 31,842 | | | 7,310 | | | 31,842 | | | 7,310 | |
Deposits | | | 548,999 | | | 373,230 | | | 548,999 | | | 373,230 | |
Interest-bearing liabilities | | | 593,183 | | | 419,555 | | | 593,183 | | | 419,555 | |
Stockholders’ equity | | | 85,776 | | | 70,527 | | | 85,776 | | | 70,527 | |
Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(dollars in thousands)
| | September 30, 2006 | | December 31, 2005 | |
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ASSETS | | | | | | | |
Cash and due from banks | | $ | 10,227 | | $ | 8,863 | |
Interest-earning bank balances | | | 16,135 | | | 17,790 | |
Cash and cash equivalents | | | 26,362 | | | 26,653 | |
Investment securities available-for-sale, at fair value | | | 47,858 | | | 53,429 | |
Mortgage-backed securities available-for-sale, at fair value | | | 58,774 | | | 70,236 | |
Loans receivable, net unearned income | | | 518,212 | | | 473,336 | |
Allowance for loan losses | | | (5,560 | ) | | (5,104 | ) |
Loans receivable, net | | | 512,652 | | | 468,232 | |
Real estate acquired through foreclosure, net | | | 145 | | | 1,157 | |
Premises and equipment, net | | | 18,977 | | | 19,819 | |
Accrued interest receivable | | | 3,154 | | | 2,539 | |
Federal Home Loan Bank stock, at cost | | | 3,649 | | | 4,084 | |
Intangible assets | | | 31,842 | | | 32,424 | |
Bank owned life insurance | | | 15,365 | | | 14,828 | |
Other assets | | | 7,130 | | | 7,693 | |
Total assets | | $ | 725,908 | | $ | 701,094 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Liabilities: | | | | | | | |
Demand deposit accounts | | $ | 89,015 | | $ | 85,489 | |
Money market deposit accounts | | | 110,111 | | | 104,421 | |
Savings accounts | | | 17,591 | | | 23,654 | |
Time deposits | | | 332,282 | | | 303,980 | |
Total deposits | | | 548,999 | | | 517,544 | |
Borrowed money | | | 82,346 | | | 91,342 | |
Deferred compensation | | | 5,589 | | | 5,849 | |
Other liabilities | | | 3,198 | | | 2,101 | |
Total liabilities | | | 640,132 | | | 616,836 | |
Stockholders’ Equity: | | | | | | | |
Common stock issued and outstanding, $0.01 par value, 20,000,000 shares authorized, 9,062,727 issued at September 30, 2006, and December 31, 2005, and 8,199,683 shares outstanding at September 30, 2006, and 8,291,544 shares outstanding at December 31, 2005 | | | 91 | | | 91 | |
Additional paid-in-capital | | | 68,486 | | | 68,468 | |
Unallocated common stock held by Employee Stock Ownership Plan | | | (1,476 | ) | | (1,613 | ) |
Unearned compensation related to Recognition and Retention Plan | | | (1,209 | ) | | (1,419 | ) |
Retained earnings, substantially restricted | | | 32,156 | | | 30,311 | |
Accumulated unrealized loss on securities available-for-sale, net of tax | | | (1,333 | ) | | (1,567 | ) |
Treasury stock of 863,044 shares at September 30, 2006, and 771,183 shares at December 31, 2005 | | | (10,939 | ) | | (10,013 | ) |
Total stockholders’ equity | | | 85,776 | | | 84,258 | |
Total liabilities and stockholders’ equity | | $ | 725,908 | | $ | 701,094 | |
Citizens South Banking Corporation
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
| | Three Months Ended September 30, | | Nine Months Ended September 30, | |
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| | 2006 | | 2005 | | 2006 | | 2005 | |
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Interest income | | | | | | | | | | | | | |
Loans | | $ | 9,804 | | $ | 5,368 | | $ | 27,501 | | $ | 14,960 | |
Investment securities | | | 467 | | | 387 | | | 1,458 | | | 1,157 | |
Interest-bearing deposits | | | 210 | | | 107 | | | 487 | | | 261 | |
Mortgage-backed and related securities | | | 644 | | | 621 | | | 2,027 | | | 2,034 | |
Total interest income | | | 11,125 | | | 6,483 | | | 31,473 | | | 18,412 | |
Interest Expense | | | | | | | | | | | | | |
Deposits | | | 4,858 | | | 2,220 | | | 12,802 | | | 5,862 | |
Borrowed funds | | | 1,065 | | | 554 | | | 3,156 | | | 1,547 | |
Total interest expense | | | 5,923 | | | 2,774 | | | 15,958 | | | 7,409 | |
Net interest income | | | 5,202 | | | 3,709 | | | 15,515 | | | 11,003 | |
Provision for loan losses | | | 300 | | | 140 | | | 865 | | | 410 | |
Net interest income after provision for loan losses | | | 4,902 | | | 3,569 | | | 14,650 | | | 10,593 | |
Noninterest Income | | | | | | | | | | | | | |
Fee income on deposit accounts | | | 742 | | | 634 | | | 2,157 | | | 1,789 | |
Fee income on mortgage banking and lending activities | | | 359 | | | 159 | | | 864 | | | 400 | |
Dividends on FHLB stock | | | 58 | | | 30 | | | 169 | | | 109 | |
Increase in cash value of bank-owned life insurance | | | 166 | | | 150 | | | 580 | | | 458 | |
Fair value adjustment on deferred compensation assets | | | 101 | | | 26 | | | 143 | | | 57 | |
Net gain / (loss) on sale of assets | | | 8 | | | 19 | | | (40 | ) | | 82 | |
Other noninterest income | | | 209 | | | 77 | | | 553 | | | 299 | |
Total noninterest income | | | 1,643 | | | 1,095 | | | 4,426 | | | 3,194 | |
Noninterest Expense | | | | | | | | | | | | | |
Compensation and benefits | | | 2,281 | | | 1,705 | | | 6,861 | | | 5,111 | |
Fair value adjustment on deferred compensation obligation | | | 101 | | | 26 | | | 143 | | | 57 | |
Occupancy and equipment expense | | | 610 | | | 486 | | | 1,990 | | | 1,466 | |
Professional services | | | 116 | | | 132 | | | 420 | | | 443 | |
Amortization of intangible assets | | | 186 | | | 78 | | | 558 | | | 249 | |
Merger and integration related expenses | | | 0 | | | 0 | | | 57 | | | 0 | |
Other noninterest expenses | | | 1,094 | | | 855 | | | 3,186 | | | 2,510 | |
Total noninterest expense | | | 4,388 | | | 3,282 | | | 13,215 | | | 9,836 | |
Income before income taxes | | | 2,157 | | | 1,382 | | | 5,861 | | | 3,951 | |
Provision for income taxes | | | 719 | | | 418 | | | 1,889 | | | 1,184 | |
Net income | | $ | 1,438 | | $ | 964 | | $ | 3,972 | | $ | 2,767 | |
Basic earnings per share | | $ | 0.18 | | $ | 0.14 | | $ | 0.49 | | $ | 0.40 | |
Diluted earnings per share | | $ | 0.18 | | $ | 0.14 | | $ | 0.49 | | $ | 0.39 | |
Basic average common shares outstanding | | | 8,019,286 | | | 6,968,691 | | | 8,042,271 | | | 7,007,014 | |
Diluted average common shares outstanding | | | 8,095,750 | | | 7,061,656 | | | 8,119,781 | | | 7,097,439 | |
SOURCE
-0- 10/16/2006
/CONTACT: Gary F. Hoskins, CFO of Citizens South Banking Corporation, +1-704-884-2263, or gary.hoskins@citizenssouth.com/
/Web site: http://www.citizenssouth.com/
(CSBC)