Exhibit 99
Citizens South Banking Corporation Announces Earnings for the Quarter Ended
September 30, 2004
GASTONIA, N.C., Oct. 18 /PRNewswire-FirstCall/ -- Citizens South Banking
Corporation (Nasdaq: CSBC), the holding company for Citizens South Bank,
announced earnings for the quarter ended September 30, 2004, of $770,000, or
$0.11 per diluted share, compared to $94,000, or $0.01 per diluted share, for
the quarter ended September 30, 2003.
The Company's net interest income increased by $255,000, or 8.5%, from the
third quarter 2003 to the third quarter 2004. As a result, the net interest
margin increased to 2.58% for the third quarter 2004 from 2.43% for the same
period a year ago, and from 2.47% in the second quarter 2004. This margin
expansion was due in part to the three recent 0.25% increases in the prime
lending rate. Also, during the third quarter, total loans increased by
$11.2 million, or 14.8% annualized. Nonperforming assets increased from 0.26%
of total assets at September 30, 2003, to 0.35% of total assets at
September 30, 2004, and continues to compare favorably with industry peers.
Deposits increased by $32.0 million, or 9.4%, from $339.6 million on
September 30, 2003, to $371.6 million on September 30, 2004. The strongest
area of growth came from core (non-time) deposit accounts, which increased by
$21.4 million, or 17.0%, year-over-year.
For the third quarter, noninterest expense decreased 21.3% from
$4.1 million in 2003 to $3.3 million in 2004. This decrease was largely the
result of a $1.3 million prepayment penalty on Federal Home Loan Bank advances
that was paid during the third quarter 2003. Absent the expense associated
with the prepayment penalty, noninterest expense increased by $404,000, or
14.2%, from the third quarter 2003 to the corresponding period 2004. This
increase is the result of branch expansion, new and enhanced technological
investments, and costs associated with the development of the Company's loan
production office in Cornelius, North Carolina, and the development of the
Company's Hispanic banking initiative. Noninterest income during the
comparable quarters decreased 7.2% from $1.2 million to $1.1 million,
primarily as a result of a $101,000 decrease in revenues from mortgage banking
activities and a $95,000 reduction in the gain on sale of assets during the
quarter. These decreases were partially offset by a $30,000 increase in fee
income on deposits.
Kim S. Price, President and CEO, commented, "We are quite pleased with the
continued positive developments in our core franchise as demonstrated by
renewed loan and deposit growth. We believe that the recent increase in the
prime lending rate will continue to provide some benefit to our net interest
margin and that our recently announced expansion in Cornelius, NC, will assist
us in leveraging our strong capital base. We are also optimistic about the
revenue possibilities from our Hispanic initiative announced earlier today."
Citizens South Bank, headquartered in Gastonia, North Carolina, was
founded in 1904 and is celebrating its 100th anniversary. The Bank had
approximately $507 million in assets at September 30, 2004, and operates ten
full-service offices located in three North Carolina counties -- Gaston,
Rowan, and Iredell.
This news release contains certain forward-looking statements, which are
subject to risks and uncertainties. A number of factors could cause actual
conditions, events or results to differ significantly from those described in
the forward-looking statements. 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, 2003, describe some of these factors.
Forward-looking statements speak only as of the date they are made and the
Company does not undertake to update 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.
Citizens South Banking Corporation
Selected Financial Information
(dollars in thousands, except per share data)
Quarter ended Quarter ended
September 30, September 30, Year ended Year ended
2004 2003 December 31, December 31,
2003 2002
Income Statement Data:
Interest income $5,318 $5,206 $21,969 $24,716
Interest expense 2,058 2,202 8,732 10,195
Net interest income 3,260 3,004 13,237 14,521
Provision for
loan losses 60 15 60 225
Net int. income after
provision for
loan losses 3,200 2,989 13,177 14,296
Noninterest income 1,076 1,159 5,561 4,121
Noninterest expense 3,264 4,148 13,891 11,381
Income before
income taxes 1,012 0 4,847 7,036
Income tax expense 242 (94) 1,456 2,528
Net income $770 $94 $3,391 $4,508
Per Share Data:
Basic net income $0.11 $0.01 $0.39 $0.51
Diluted net income 0.11 0.01 0.39 0.51
Cash dividends declared 0.065 0.06 0.24 0.16
Period-end book value 9.75 10.42 10.11 10.64
Financial Ratios:
Return on average
stockholders' equity 4.29% 0.40% 3.61% 7.61%
Return on average
assets 0.61 0.08 0.68 0.98
Efficiency ratio 74.99 100.29 78.16 61.11
Net interest margin 2.58 2.43 2.67 3.17
Average equity to
average assets 14.20 19.11 18.96 12.93
Asset Quality Data:
Allowance for loan
losses $2,916 $3,007 $2,969 $2,995
Nonperforming loans 1,569 1,102 529 516
Nonperforming assets 1,796 1,270 674 1,823
Allowance for loan
losses to total loans 0.94% 1.01% 0.97% 0.97%
Nonperforming loans
to total loans 0.50 0.38 0.18 0.17
Nonperforming assets
to total assets 0.35 0.26 0.14 0.37
Average Balances:
Total assets $505,665 $493,732 $495,198 $458,316
Loans receivable,
net of unearned
income 300,163 294,980 297,517 320,505
Interest-earning
assets 452,820 448,698 450,826 416,748
Deposits 374,464 337,595 328,722 337,422
Interest-bearing
liabilities 409,363 377,824 379,960 381,664
Stockholders' equity 71,798 94,408 93,873 59,243
Common shares
outstanding, basic 7,213,577 8,596,575 8,623,838 8,767,982
Common shares
outstanding,
diluted 7,323,021 8,752,979 8,762,545 8,870,054
At Period End:
Total assets $506,786 $498,341 $495,751 $492,873
Loans receivable,
net unearned income 311,380 288,699 297,995 302,900
Interest-earning
assets 452,905 441,996 448,401 456,611
Deposits 371,604 339,619 342,446 340,862
Interest-bearing
liabilities 408,630 379,967 388,434 377,234
Stockholders' equity 72,670 91,667 87,669 96,383
Other Data:
Amortization of
intangible assets $104 $91 $404 $963
Net gain / (loss)
on sale of assets (10) 23 1,022 105
Vesting expense for
recognition and
retention plan 0 0 975 0
Prepayment penalty
on FHLB advances 0 1,289 1,289 65
Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(dollars in thousands)
September 30, December 31,
2004 2003
(unaudited)
ASSETS
Cash and due from banks $6,097 $5,374
Interest-earning bank balances 850 2,840
Cash and cash equivalents 6,947 8,214
Investment securities available-for-sale,
at fair value 55,983 56,233
Mortgage-backed securities available-for-sale,
at fair value 86,485 89,168
Loans receivable, net unearned income 311,380 297,995
Allowance for loan losses (2,916) (2,969)
Real estate acquired through foreclosure, net 227 145
Accrued interest receivable 1,614 1,943
Premises and equipment, net 17,689 14,939
Federal Home Loan Bank stock, at cost 2,900 2,915
Bank owned life insurance 12,779 12,317
Intangible assets 7,659 7,985
Other assets 6,039 6,866
Total assets $506,786 $495,751
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Demand deposit accounts $50,491 $43,686
Money market deposit accounts 67,410 48,189
Savings accounts 29,618 36,754
Time deposits 224,085 213,817
Total deposits 371,604 342,446
Borrowed money 55,819 58,981
Deferred compensation 5,751 6,165
Other liabilities 942 490
Total liabilities 434,116 408,082
Stockholders' Equity:
Common stock issued and outstanding,
$0.01 par value, 20,000,000 shares
authorized, 9,062,727 issued and
outstanding in 2004 and 2003 91 91
Additional paid-in-capital 68,280 68,280
Unallocated common stock held by
Employee Stock Ownership Plan (1,842) (1,979)
Unearned compensation related to
Recognition and Retention Plan (1,712) (1,979)
Retained earnings, substantially restricted 29,968 28,824
Accumulated unrealized gain on securities
available-for-sale, net of tax (439) (40)
Treasury stock of 1,610.683 shares at
September 30, 2004, and 392,414 shares
at December 31, 2003 (21,676) (5,528)
Total stockholders' equity 72,670 87,669
Total liabilities and stockholders' equity $506,786 $495,751
Citizens South Banking Corporation
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
2004 2003 2004 2003
Interest income
Loans $4,044 $4,077 $11,752 $ 12,910
Investment securities 490 311 1,447 1,000
Interest-bearing deposits 47 57 113 219
Mortgage-backed and
related securities 737 761 2,156 2,625
Total interest income 5,318 5,206 15,468 16,754
Interest Expense
Deposits 1,591 1,603 4,478 5,037
Borrowed funds 467 599 1,362 1,779
Total interest expense 2,058 2,202 5,840 6,816
Net interest income 3,260 3,004 9,628 9,938
Provision for
loan losses 60 15 120 45
Net interest income
after provision for
loan losses 3,200 2,989 9,508 9,893
Noninterest Income
Fee income on
deposit accounts 644 614 1,801 1,791
Fee income on mortgage
banking and lending
activities 140 241 427 754
Dividends on FHLB stock 24 21 69 79
Gain on sale of assets 13 108 483 168
Fair value adjustment on
deferred compensation
assets 46 (8) 80 178
Other noninterest income 209 183 707 631
Total noninterest
income 1,076 1,159 3,567 3,601
Noninterest Expense
Compensation and
benefits 1,504 1,511 4,507 4,498
Vesting expense for
Recognition and
Retention Plan 0 0 355 0
Fair value adjustment
on deferred compensation
obligation 46 (8) 80 179
Occupancy and equipment
expense 510 349 1,286 993
Professional services 136 113 392 444
Amortization of
intangible assets 104 91 320 323
Prepayment penalty on
FHLB advances 0 1,289 0 1,289
Loss on sale of assets 23 85 23 99
Other noninterest
expenses 941 718 2,361 2,217
Total noninterest
expense 3,264 4,148 9,324 10,042
Income before income
taxes 1,012 0 3,751 3,452
Provision for income
taxes 242 (94) 1,072 1,028
Net income $770 $94 $2,679 $2,424
Basic earnings
per share $0.11 $0.01 $0.35 $0.28
Diluted earnings
per share $0.11 $0.01 $0.34 $0.28
Basic average common
shares outstanding 7,213,577 8,596,575 7,755,483 8,670,591
Diluted average
common shares
outstanding 7,323,021 8,752,979 7,854,010 8,810,380
SOURCE Citizens South Banking Corporation
-0- 10/18/2004
/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)
CO: Citizens South Banking Corporation
ST: North Carolina
IN: FIN
SU: ERN