OTTAWA, IL — (Marketwired) — 07/30/13 — Centrue Financial Corporation (OTCQB: TRUE) (PINKSHEETS: TRUE)
Second quarter of 2013 net income was $4.0 million, compared to net income of $0.1 million in the second quarter of 2012.
The Company-s principal subsidiary, Centrue Bank (the “Bank”), posted net income of $5.5 million for the second quarter of 2013 compared to net income of $0.5 million for the second quarter of 2012.
The Company and Bank-s net income for the second quarter was attributed to the sale of pooled trust preferred securities which generated gains of $4.7 million and $5.7 million, respectively. Offsetting these nonrecurring revenue items were $0.7 million in nonrecurring expense related to foreclosure and other real estate owned (“OREO”) situations.
Substandard assets declined $10.4 million, or 11.9% from the first quarter of 2013 and $25.6 million, or 25.0% from June 30, 2012.
The net interest margin for the second quarter of 2013 remained unchanged from the second quarter of 2012 at 3.11%.
Loans increased $16.3 million during the second quarter compared to the first quarter 2013.
Centrue Bank remains “well-capitalized” at the end of the second quarter of 2013 with total risk-based capital of 11.63%.
Centrue Financial Corporation (the “Company” or “Centrue”) (OTCQB: TRUE) (PINKSHEETS: TRUE), parent company of Centrue Bank, reported second quarter net income of $4.0 million, or 0.57 per common diluted share, compared to net income of $0.1 million or ($0.07) per common diluted share for the second quarter 2012. For the first six months of 2013, the Company reported net income of $4.1 million, or $0.49 per common diluted share, as compared to a net loss of $0.4 million, or ($0.24) per common diluted share, for the same period in 2012.
“The Company-s improved quarterly earnings were a direct result of reducing balance sheet risk by selling pooled trust preferred securities for gains of $4.7 million. Our risk-based capital ratios have been enhanced, and our capacity for loan growth expanded, as a result of the booked gains. Asset quality trends, another key driver of earnings, continue to be favorable with positive decreases in nonperforming assets, action list loans, past dues and charge-offs,” remarked President & CEO Kurt R. Stevenson. “While we continue to prudently manage expenses and strategically lower our cost of funds, we recognize that our revenue generating efforts are critical to sustained profitability. Growing our core business organically by making quality loans and servicing our depositors, the hallmarks of community banking, remains our primary objective.”
Total securities equaled $186.7 million at June 30, 2013, representing a decrease of $14.6 million, or 7.3%, from December 31, 2012 and a decrease of $46.0 million, or 19.8%, from the same quarter in 2012. The net decrease from second quarter 2012 was related to several factors which included strategic enhancement to the Company-s liquidity position as public funds, brokered deposits and time deposits matured and were not replaced. Also during the period, a group of substandard securities with unrealized gains were sold and proceeds were used to fund loan growth during the quarter.
Total loans equaled $567.8 million, representing an increase of $8.8 million, or 1.6%, from December 31, 2012 and a decrease of less than $0.1 million from the second quarter 2012. The net increase from year-end 2012 was related to new loans being booked above the level of normal attrition, pay-downs, loan charge-offs and transfers to OREO. Economic conditions remain about the same as prior years, with decreased loan demand and very strong competition for new commercial loans.
Total deposits equaled $748.5 million, representing a decrease of $36.8 million, or 4.7%, from December 31, 2012 and a decrease of $33.8 million, or 4.3%, from June 30, 2012. The net decrease from year-end 2012 was largely related to maturing time deposits not being renewed and public funds being drawn down as municipalities spend down their fund balances before property tax revenue replenishes these balances. Core deposits were slightly improved over year-end 2012 and were $39.4 million above the same quarter in 2012.
The Bank-s overall liquidity position remains strong with funding available for new loan opportunities.
The key credit quality metrics are as follows:
The allowance for loan losses to total loans was 2.72% at June 30, 2013, compared to 3.21% at June 30, 2012. Management evaluates the sufficiency of the allowance for loan losses based on the combined total of specific allocations, historical loss and qualitative components and believes that the allowance for loan losses represented probable incurred credit losses inherent in the loan portfolio at June 30, 2013.
The provision for loan losses for the second quarter of 2013 was $0.9 million, a decrease from the $1.4 million recorded in the second quarter of 2012. The second quarter of 2013 provision level decrease was driven by decreasing levels of nonperforming loans and stabilizing collateral values on troubled loans.
Net loan charge-offs for the second quarter of 2013 were $1.9 million, or 0.34% of average loans, compared with $3.5 million, or 0.62% of average loans, for the second quarter of 2012. Loan charge-offs during the second quarter of 2013 were largely influenced by the credit performance of the Company-s land development, construction and commercial real estate portfolio. These charge-offs reflect management-s continuing efforts to align the carrying value of these impaired assets with the value of underlying collateral based upon more aggressive disposition strategies. Management believes we are recognizing losses in our portfolio through provisions and charge-offs as credit developments warrant.
Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $33.7 million at June 30, 2013, from $39.8 million at June 30, 2012. The $6.1 million decrease from the second quarter of 2012 to the second quarter of 2013 was due to a combination of successful loan workout strategies, charge-offs referenced above and transfers to OREO. The $33.7 million recorded at June 30, 2013 included $26.2 million in nonaccrual loans and $7.5 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 5.93% at June 30, 2013, compared to 6.72% at December 31, 2012 and 7.01% at June 30, 2012.
The coverage ratio (allowance for loan losses to nonperforming loans) was 45.92% at June 30, 2013, compared to 45.79% at June 30, 2012.
Other real estate owned decreased to $26.0 million at June 30, 2013, a decrease from $27.9 million at June 30, 2012. In the second quarter of 2013, management converted collateral securing problem loans to properties ready for disposition in the net amount of $2.3 million. Second quarter additions were more than offset by $1.3 million in dispositions and $0.4 million in additional valuation adjustments, reflective of existing market conditions and more aggressive disposition strategies.
Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $59.6 million at June 30, 2013, a decrease of $8.1 million from the $67.7 million held at June 30, 2012. The ratio of nonperforming assets to total assets was 6.72% at June 30, 2013, 7.40% at December 31, 2012 and 7.31% at June 30, 2012.
The past due ratio was 5.92% at June 30, 2013 compared to 7.23% at June 30, 2012. Action Listed Loans (classified and criticized loans) declined to $76.7 million at June 30, 2013 from $80.8 million at December 31, 2012 and $97.6 million at June 30, 2012.
The net interest margin for the second quarter of 2013 remained unchanged from the second quarter of 2012 at 3.11%. The Bank-s net interest margin was 3.24% for the second quarter of 2013, a 7 basis point decrease to the second quarter 2012 net interest margin. The volatility of the net interest margin is being affected by several factors including: falling yields in both the securities and loan portfolios, an increase in earning assets, decreasing cost of funds and the removal of nonperforming loans out of earning assets.
Noninterest income totaled $7.6 million for the second quarter June 30, 2013, compared to $3.8 million for the same period in 2012. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.2 million or 6.9%. This $0.2 million decrease was mainly due to decreases in Mortgage Banking Income and income from OREO properties. For the six months ended June 30, 2013, noninterest income was $10.5 million compared to $6.9 million for the same period in 2012. When excluding the same items from above, year-to-date noninterest income for 2013 was $0.5 million below the comparable amount for 2012. The main drivers of this decline have been in the Services Charges, income and gains from OREO and Bank-owned Life Insurance categories.
Total noninterest expense for the second quarter of 2013 was $8.6 million, which was flat compared to the same period in 2012. Excluding OREO Valuation Adjustments taken in both periods, noninterest expense levels increased by $0.3 million, or 3.8%. This $0.3 million increase in expenses was concentrated in Salary and Employee Benefits and Other Expenses. Positively impacting expense levels was a large decrease in Loan Processing and Collection Costs. For the six months ended June 30, 2013, noninterest expense was $16.8 million which was flat compared to the same period in 2012. When excluding the OREO Valuation Adjustments, year-to-date noninterest expense was $0.1 million above the comparable amount for 2012.
As reflected in the following table, unit Centrue Bank was considered “well-capitalized” and the Company was considered “adequately-capitalized” under regulatory defined capital ratios as of June 30, 2013 except for the Company-s Tier 1 leverage ratio which was 3.90%.
Centrue Financial Corporation is a regional financial services company headquartered in Ottawa, Illinois and devotes special attention to personal service. The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central Illinois down to the metropolitan St. Louis area.
Further information about the Company is available at its website at .
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. The Company-s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company-s market areas; the Company-s implementation of new technologies; the Company-s ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Unaudited Selected Quarterly Consolidated Financial Data
(1) Calculated as noninterest expense less amortization of intangibles and expenses related to other real estate owned divided by the sum of net interest income before provisions for loan losses and total noninterest income excluding securities gains and losses and gains on sale of assets.
Daniel R. Kadolph
Chief Financial Officer
Centrue Financial Corporation
(815) 431-2838