EXHIBIT 99 (a)
EARNINGS PRESS RELEASE OF CITIZENS SOUTH BANKING CORPORATION
CITIZENS SOUTH BANKING CORPORATION ANNOUNCES
EARNINGS FOR THE QUARTER ENDED MARCH 31, 2004
GASTONIA, NC, April 19, 2004 --- Citizens South Banking Corporation
(Nasdaq: CSBC), the holding company for Citizens South Bank, announced earnings
for the quarter ended March 31, 2004, of $971,000, or $0.12 per diluted share,
compared to $1,207,000, or $0.14 per diluted share, for the quarter ended March
31, 2003.
The reduction in earnings from our record first quarter earnings of 2003
was primarily the result of a lower level of net interest income resulting, in
part, from a decrease in the prime interest rate and from a lower level of
outstanding residential mortgage loans. The Company experienced positive growth
in its other loan portfolios. Commercial mortgage, business, and consumer loans
increased by $14.2 million, or 18.4%, from March 31, 2003, to March 31, 2004. In
addition, nonperforming assets improved from 0.16% of total assets as of March
31, 2003, to 0.10% of total assets as of March 31, 2004, and nonperforming loans
remain well below industry peers at 0.17% of total loans at the end of the first
quarter of 2004.
Deposits also continued to grow from the previous year with the strongest
growth coming in core (non-time) deposit accounts which increased by $8.7
million, or 6.9%, year over year. Total deposits increased by $6.7 million, or
1.9%, from March 31, 2003, to March 31, 2004.
Noninterest income during the comparable quarters increased 19.3% from
$1.1 million to $1.3 million, and noninterest expense increased 14.5% from $2.8
million to $3.2 million. These increases were largely the result of expenses
associated with implementing a recognition and retention plan and a
corresponding gain on the sale of investments utilized as funding for this plan.
Kim S. Price, President and CEO, commented, "We are delighted to be able
to continue to report very positive commercial loan, deposit, and asset quality
trends. The recent positive economic news, we believe, will provide additional
stimulus to increase outstanding commercial and consumer loans and curb
residential mortgage prepayments, both of which are positive developments for
our Company."
Citizens South Bank was founded in Gastonia, North Carolina, in 1904 and
is celebrating its 100th anniversary. The Bank has almost $500 million in assets
and 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.
(Tables Follow)
# # #
Citizens South Banking Corporation
Selected Financial Information
(dollars in thousands, except per share data)
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Quarter ended Quarter ended Year ended Year ended
March 31, 2004 March 31, 2003 December 31, 2003 December 31, 2002
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Income Statement Data:
Interest income ..................................... $ 5,155 $ 5,903 $ 21,969 $ 24,716
Interest expense .................................... 1,871 2,328 8,732 10,195
---------- ---------- ---------- ----------
Net interest income ................................. 3,284 3,575 13,237 14,521
Provision for loan losses ........................... 30 15 60 225
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Net int. income after provision for loan losses ..... 3,254 3,560 13,177 14,296
Noninterest income .................................. 1,293 1,084 5,561 4,121
Noninterest expense ................................. 3,164 2,763 13,891 11,381
---------- ---------- ---------- ----------
Income before income taxes .......................... 1,383 1,881 4,847 7,036
Income tax expense .................................. 412 674 1,456 2,528
---------- ---------- ---------- ----------
Net income .......................................... $ 971 $ 1,207 $ 3,391 $ 4,508
Per Share Data:
Basic net income .................................... $ 0.12 $ 0.14 $ 0.39 $ 0.51
Diluted net income .................................. 0.12 0.14 0.39 0.51
Cash dividends declared ............................. 0.065 0.06 0.24 0.16
Period-end book value ............................... 10.13 10.68 10.11 10.64
Financial Ratios:
Return on average stockholders' equity .............. 4.48% 5.00% 3.61% 7.61%
Return on average assets ............................ 0.79 0.97 0.68 0.98
Efficiency ratio .................................... 73.82 59.26 78.16 61.11
Net interest margin ................................. 2.68 2.88 2.67 3.17
Average equity to average assets .................... 17.72 19.41 18.96 12.93
Asset Quality Data:
Allowance for loan losses ........................... $ 2,998 $ 3,000 $ 2,969 $ 2,995
Nonperforming loans ................................. 513 570 529 516
Nonperforming assets ................................ 537 810 674 1,823
Allowance for loan losses to total loans ............ 0.99% 0.98% 0.97% 0.97%
Nonperforming loans to total loans .................. 0.17 0.19 0.18 0.17
Nonperforming assets to total assets ................ 0.10 0.16 0.14 0.37
Average Balances:
Total assets ....................................... $ 489,638 $ 496,746 $ 495,198 $ 458,316
Loans receivable, gross ............................ 296,075 299,144 297,517 320,505
Interest-earning assets ............................ 439,679 453,110 450,826 416,748
Deposits ........................................... 342,912 337,799 328,722 337,422
Interest-bearing liabilities ....................... 382,963 374,869 379,960 381,664
Stockholders' equity ............................... 86,777 96,648 93,873 59,243
Common shares outstanding, basic ................... 8,268,233 8,757,664 8,623,838 8,767,982
Common shares outstanding, diluted ................. 8,314,285 8,920,531 8,762,545 8,870,054
At Period End:
Total assets ....................................... $ 494,680 $ 501,216 $ 495,751 $ 492,873
Loans receivable, gross ............................ 301,898 306,340 304,615 308,408
Interest-earning assets ............................ 438,513 457,433 448,401 456,611
Deposits ........................................... 350,520 343,865 342,446 340,862
Interest-bearing liabilities ....................... 389,616 383,287 388,434 377,234
Stockholders' equity ............................... 85,434 96,795 87,669 96,383
Other Data:
Amortization of core deposit intangible ............. $ 78 $ 126 $ 404 $ 963
Net gain / (loss) on sale of assets ................. 290 4 1,022 105
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Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(dollars in thousands)
March 31, December 31,
2004 2003
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(unaudited)
ASSETS
Cash and due from banks ..................................................... $ 6,273 $ 5,374
Interest-earning bank balances .............................................. 20,499 2,840
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Cash and cash equivalents ................................................ 26,772 8,214
Investment securities available-for-sale, at fair value ..................... 49,248 56,233
Mortgage-backed securities available-for-sale, at fair value ................ 78,998 89,168
Loans receivable, net unearned income ....................................... 296,238 297,995
Allowance for loan losses ................................................... (2,998) (2,969)
Real estate acquired through foreclosure, net ............................... 24 145
Accrued interest receivable ................................................. 1,742 1,943
Premises and equipment, net ................................................. 16,019 14,939
Federal Home Loan Bank stock, at cost ....................................... 2,550 2,915
Bank owned life insurance ................................................... 12,452 12,317
Intangible assets ........................................................... 7,874 7,985
Other assets ................................................................ 5,761 6,866
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Total assets ............................................................. $ 494,680 $ 495,751
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand accounts ......................................... $ 12,062 $ 12,906
Checking accounts ........................................................... 35,369 30,780
Money market deposit accounts ............................................... 51,725 48,189
Savings accounts ............................................................ 35,182 36,754
Time deposits ............................................................... 216,182 213,817
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Total deposits ........................................................... 350,520 342,446
Borrowed money .............................................................. 52,119 58,981
Deferred compensation ....................................................... 5,629 6,165
Other liabilities ........................................................... 978 490
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Total liabilities ........................................................ 409,246 408,082
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 .............. (1,933) (1,979)
Unearned compensation related to Recognition and Retention Plan ............. (1,793) (1,979)
Retained earnings, substantially restricted ................................. 29,280 28,824
Accumulated unrealized gain on securities available-for-sale, net of tax .... 337 (40)
Treasury stock of 631,343 shares at March 31, 2004, and 392,414
shares at December 31, 2003 .............................................. (8,828) (5,528)
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Total stockholders' equity .................................................. 85,434 87,669
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Total liabilities and stockholders' equity .................................. $ 494,680 $ 495,751
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Citizens South Banking Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months
Ended March 31,
---------------------------
2004 2003
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(unaudited) (unaudited)
Interest Income
Loans receivable ........................................ $ 3,872 $ 4,469
Investment securities ................................... 485 418
Interest-bearing deposits ............................... 20 88
Mortgage-backed and related securities .................. 778 928
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Total interest income ................................. 5,155 5,903
Interest Expense
Deposits ................................................ 1,426 1,741
Borrowed funds .......................................... 445 587
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Total interest expense .................................. 1,871 2,328
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Net interest income ..................................... 3,284 3,575
Provision for loan losses ............................... 30 15
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Net interest income after provision for loan losses ... 3,254 3,560
Noninterest Income
Fee income on deposit accounts .......................... 603 557
Fee income on mortgage banking activities ............... 69 247
Dividends on Federal Home Loan Bank stock ............... 23 31
Commissions on sale of financial products ............... 27 31
Gain on sale of assets .................................. 290 14
Other noninterest income ................................ 281 204
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Total noninterest income .............................. 1,293 1,084
Noninterest Expense
Compensation and benefits ............................... 1,810 1,519
Occupancy and equipment expense ......................... 376 325
Federal deposit insurance premiums ...................... 14 16
Professional services ................................... 131 121
Data processing expense ................................. 20 21
Advertising and promotions .............................. 130 72
Amortization of core deposit intangible ................. 78 126
Loss on sale of assets .................................. 0 10
Other noninterest expenses .............................. 605 553
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Total noninterest expense ............................. 3,164 2,763
Income before income taxes .............................. 1,383 1,881
Provision for income taxes .............................. 412 674
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Net income .............................................. $ 971 $ 1,207
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Basic earnings per share ................................ $ 0.12 $ 0.14
Diluted earnings per share .............................. $ 0.12 $ 0.14
Basic average common shares outstanding ................. 8,268,233 8,757,664
Diluted average common shares outstanding ............... 8,314,285 8,920,531