EXHIBIT 99.1
EARNINGS PRESS RELEASE OF CITIZENS SOUTH BANKING CORPORATION
CITIZENS SOUTH BANKING CORPORATION ANNOUNCES RECORD
EARNINGS FOR THE QUARTER ENDED MARCH 31, 2003
GASTONIA, NC, April 21, 2003 --- Citizens South Banking Corporation
(Nasdaq: CSBC), the holding company for Citizens South Bank, announced record
earnings for the quarter ended March 31, 2003, of $1,207,000, or $0.14 per
share, compared to $992,000, or $0.11 per share, for the quarter ended March 31,
2002. This represents an increase of 21.7% in net income and a 27.3% increase in
earnings per share. The improvement in earnings was primarily attributable to
increased fee income coupled with a reduction in noninterest expense.
Unprecedented residential mortgage refinancing drove a $103,000
increase in loan fee income for the most recent quarter as compared to a year
ago. This, coupled with a $36,000 increase from fee generating transaction
accounts, created a net 5.5% increase in noninterest income as compared to the
first quarter a year ago. In addition, noninterest expense decreased by
$281,000, or 9.2%, from 2002 to 2003. This improvement was largely attributable
to a decrease in the amortization of the core deposit intangible and a reduction
in data processing expenses resulting from our computer conversion and
integration associated with the Innes Street Financial consolidation. These
operational advances resulted in an improved efficiency ratio of 59.3% during
the first quarter of 2003, as compared to 66.6% during the first quarter of
2002, and enabled the company to more than absorb a $49,000, or 1.3%, decrease
in net interest income as compared to a year ago.
Despite continued weakness in the U.S. and local economies, the
Company's credit quality remains strong. As of March 31, 2003, the ratio of
nonperforming loans to total loans was 0.19%, as compared to 0.44% as of March
31, 2002.
President and CEO Kim Price commented, "We are especially pleased with
our financial performance in light of the problems facing our economy and our
nation. Our challenge and focus for 2003 will be the successful deployment of
the additional capital raised during 2002, improving our net interest margin,
enhancing existing customer relationships and attracting new customers. We will
accomplish these goals with new or expanded products and services delivered in
existing and new market areas."
Citizens South Bank was founded in 1904 and has nine offices in three
counties - Gaston, Rowan, and Iredell, including seven cities - three in
Gastonia, one each in Dallas, Mount Holly, Stanley, Salisbury, Statesville, and
Rockwell. In addition, the Bank has begun construction of its tenth full-service
branch office in Mooresville, North Carolina. Construction of the new office
should be completed during the second quarter of 2003.
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, 2002, 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.
(Tables Follow)
# # #
Citizens South Banking Corporation
Selected Financial Information
(dollars in thousands, except per share data)
----------------- ---------------- ------------------ ------------------
Quarter ended Quarter ended Year ended Year ended
March 31, 2003 March 31, 2002 December 31, 2002 December 31, 2001
----------------- ---------------- ------------------ ------------------
(unaudited) (unaudited)
Income Statement Data:
Interest income ......................... $ 5,903 $ 6,299 $ 24,716 $ 16,383
Interest expense ........................ 2,328 2,676 10,195 9,771
Net interest income ..................... 3,575 3,623 14,521 6,612
Provision for loan losses ............... 15 65 225 120
Net int. income after provision for loan
losses ................................ 3,560 3,558 14,296 6,492
Noninterest income ...................... 1,084 1,028 4,121 3,006
Noninterest expense ..................... 2,763 3,044 11,381 7,092
Income before income taxes .............. 1,881 1,542 7,036 2,406
Income tax expense ...................... 674 550 2,528 702
Net income .............................. $ 1,207 $ 992 $ 4,508 $ 1,704
Per Share Data (1):
Basic net income ........................ $ 0.14 $ 0.11 $ 0.51 $ 0.20
Diluted net income ...................... 0.14 0.11 0.51 0.20
Cash dividends declared ................. 0.06 0.04 0.16 0.12
Period-end book value ................... 10.68 4.68 10.64 4.6
Financial Ratios:
Return on average stockholders' equity .. 5.00% 9.44% 7.61% 4.17%
Return on average assets ................ 0.97 0.89 0.98 0.65
Efficiency ratio ........................ 59.26 66.64 61.11 73.64
Net interest margin ..................... 2.88 3.25 3.17 2.52
Average equity to average assets ........ 19.41 9.42 12.93 15.55
Asset Quality Data:
Allowance for loan losses ............... $ 3,000 $ 3,022 $ 2,995 $ 3,136
Nonperforming loans ..................... 570 1,453 516 846
Nonperforming assets .................... 810 3,151 1,823 2,306
Allowance for loan losses to total loans 0.98% 0.91% 0.97% 0.91%
Nonperforming loans to total loans ...... 0.19 0.44 0.17 0.35
Nonperforming assets to total assets .... 0.16 0.71 0.37 0.59
Average Balances:
Total assets ........................... $ 496,746 $ 446,091 $ 458,316 $ 262,800
Loans receivable, gross ................ 299,144 334,564 320,505 166,574
Interest-earning assets ................ 453,110 406,777 416,748 245,652
Deposits ............................... 326,232 344,150 337,422 169,000
Interest-bearing liabilities ........... 374,869 385,757 381,664 211,620
Stockholders' equity ................... 96,648 42,022 59,243 40,876
Common shares outstanding, basic (1) .. 8,757,664 8,771,262 8,767,982 8,745,626
Common shares outstanding, diluted (1) 8,920,531 8,829,271 8,870,054 8,786,263
At Period End:
Total assets ........................... $ 501,216 $ 443,285 $ 492,567 $ 447,581
Loans receivable, gross ................ 306,340 331,311 308,408 342,841
Interest-earning assets ................ 457,433 401,139 456,611 408,475
Deposits ............................... 343,865 352,082 340,862 353,692
Interest-bearing liabilities ........... 383,287 382,461 377,234 387,796
Stockholders' equity ................... 96,795 42,237 96,383 41,630
Other Data:
Amortization of core deposit intangible . $ 126 $ 356 $ 963 $ 0
Net gain / (loss) on sale of assets ..... 4 87 105 (10)
- ---------------------------------------------- ---------------- ----------------- ------------------ ------------------
Footnotes:
(1) All share and per share data have been restated to reflect the 2.1408
conversion ratio of existing shares of common stock used in the second-step
stock offering that was completed on September 30, 2002. Common shares
outstanding exclude unallocated shares held by the ESOP.
Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(dollars in thousands)
March 31, December 31,
2003 2002
(unaudited)
ASSETS
Cash and due from banks...................................................... $ 9,218 $ 7,607
Interest-earning bank balances............................................... 19,628 39,392
---------- ----------
Cash and cash equivalents................................................. 28,846 46,999
Investment securities available-for-sale, at fair value...................... 39,062 39,594
Mortgage-backed securities available-for-sale, at fair value................. 93,618 70,409
Loans receivable, net unearned income........................................ 302,291 302,901
Allowance for loan losses.................................................... (3,000) (2,995)
Real estate acquired through foreclosure, net................................ 240 1,307
Accrued interest receivable.................................................. 2,107 1,913
Premises and equipment, net.................................................. 11,480 8,807
Federal Home Loan Bank stock, at cost........................................ 2,825 2,639
Cash value of life insurance policies........................................ 9,919 6,834
Core deposit intangible...................................................... 1,358 1,464
Goodwill .................................................................... 6,670 6,670
Other assets................................................................. 5,800 6,025
---------- ----------
Total assets.............................................................. $ 501,216 $ 492,567
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand accounts.......................................... $ 13,475 $ 11,203
Checking accounts............................................................ 28,613 25,773
Money market deposit accounts................................................ 41,970 35,811
Savings accounts............................................................. 41,605 43,670
Time deposits................................................................ 218,202 224,405
---------- ----------
Total deposits............................................................ 343,865 340,862
Borrowed money............................................................... 51,500 47,575
Advances from borrowers for property taxes and insurance..................... 1,397 440
Accrued interest payable..................................................... 329 382
Other liabilities............................................................ 7,330 6,926
---------- ----------
Total liabilities......................................................... 404,421 396,185
---------- ----------
Stockholders' Equity:
Common stock issued and outstanding, $0.01 par value, 20,000,000 shares
authorized, 9,062,727 issued and outstanding December 31, 2002,
9,076,552 issued and outstanding March 31, 2003........................... 91 91
Additional paid-in-capital................................................... 68,178 68,176
Unallocated common stock held by Employee Stock Ownership Plan............... (2,115) (2,162)
Retained earnings, substantially restricted.................................. 29,402 28,739
Accumulated unrealized gain on securities available-for-sale, net of tax..... 1,239 1,538
---------- ----------
Total stockholders' equity................................................ 96,795 96,382
---------- ----------
Total liabilities and stockholders' equity................................... $ 501,216 $ 492,567
========== ==========
Citizens South Banking Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months
Ended March 31,
2003 2002
(unaudited) (unaudited)
Interest Income
Loans receivable.................................................. $ 4,469 $ 5,588
Investment securities............................................. 418 321
Interest-bearing deposits......................................... 88 102
Mortgage-backed and related securities............................ 928 288
---------- ----------
Total interest income........................................... 5,903 6,299
Interest Expense
Deposits.......................................................... 1,741 2,125
Borrowed funds.................................................... 587 551
---------- ----------
Total interest expense............................................ 2,328 2,676
---------- ----------
Net interest income............................................... 3,575 3,623
Provision for loan losses......................................... 15 65
---------- ----------
Net interest income after provision for loan losses............. 3,560 3,558
Noninterest Income
Fee income on deposit accounts.................................... 557 522
Fee income on loan accounts....................................... 247 143
Dividends on Federal Home Loan Bank stock......................... 31 55
Commissions on sale of financial products......................... 30 47
Gain on sale of assets............................................ 14 98
Other noninterest income.......................................... 205 163
---------- ----------
Total noninterest income........................................ 1,084 1,028
Noninterest Expense
Compensation and benefits......................................... 1,519 1,406
Occupancy and equipment expense................................... 325 360
Federal deposit insurance premiums................................ 16 16
Professional services............................................. 121 79
Data processing expense........................................... 21 93
Advertising and promotions........................................ 72 64
Amortization of intangible assets................................. 126 356
Loss on sale of assets............................................ 10 10
Other noninterest expenses........................................ 553 660
---------- ----------
Total noninterest expense....................................... 2,763 3,044
Income before income taxes........................................ 1,881 1,542
Provision for income taxes........................................ 674 550
---------- ----------
Net income........................................................ $ 1,207 $ 992
========== ==========
Basic earnings per share.......................................... $ 0.14 $ 0.11
Diluted earnings per share........................................ $ 0.14 $ 0.11
Basic average common shares outstanding ...................... 8,757,664 8,740,311
Diluted average common shares outstanding......................... 8,920,531 8,740,311