Citizens First Corporation Announces Fourth Quarter and Year End 2013 Results; Completes Final TARP Repayment

PR Newswire

BOWLING GREEN, Ky., Jan. 16, 2014 /PRNewswire/ -- Citizens First Corporation (CZFC) today reported results for the fourth quarter and year ending December 31, 2013, which include the following:

  • For the quarter ended December 31, 2013, the Company reported net income of $702,000, or $0.25 per diluted common share.  This represents an increase of $469,000, or $0.23 per diluted common share, from the linked quarter ended September 30, 2013.  Compared to the quarter ended December 31 a year ago, net income increased $5,000 or $0.02 per diluted common share.  
  • For the twelve months ended December 31, 2013, net income totaled $1.8 million, or $0.52 per diluted common share.  This represents a decrease of $1.4 million or $0.59 per diluted common share, from the net income of $3.2 million in the previous year.
  • The Company's net interest margin was 4.03% for the quarter ended December 31, 2013 compared to 3.88% for the quarter ended September 30, 2013 and 4.24% for the quarter ended December 31, 2012, an increase of 15 basis points for the linked quarter and a decrease of 21 basis points from the prior year.  The Company's net interest margin increased from the prior quarter primarily due to a decline in non-accrual loans and the collection of interest on loans which were previously in a non-accrual status. 
  • Nonperforming assets decreased to $2.0 million at December 31, 2013 compared to $6.3 million at December 31, 2012.  Nonperforming assets reached a high of $10.9 million at March 31, 2013.  President and CEO Todd Kanipe commented, "Reducing our nonperforming assets was a priority in 2013.  Our concentrated efforts to resolve these loans resulted in significantly improved levels of both restructured and non-performing loans at year end."
  • Provision for loan losses was $450,000 for the fourth quarter of 2013 compared to $900,000 for the linked quarter ended September 30, 2013 and $580,000 for the quarter ended December 31, 2012.  Provision expense for 2013 totaled $2.7 million compared to $1.7 million in 2012.  Net charge-offs for 2013 total $3.7 million compared to $1.8 million in 2012. 
  • On January 15, 2014, the Company repurchased the remaining 93 shares of the Series A Fixed Rate Cumulative Perpetual Preferred (CPP) Stock that the Company had issued to the Treasury on December 19, 2008 under the TARP Capital Purchase Program of the Emergency Economic Stabilization Act of 2008.  The Company had previously repurchased 157 shares of the original 250 shares issued.  The Company paid approximately $3.3 million, which was 100% of par value, to repurchase the preferred shares along with the accrued dividend for the shares repurchased.  The preferred dividend rate was scheduled to increase from 5% to 9% during 2014, which would have resulted in preferred dividends of $294,000 annually.  The warrants associated with the CPP investment remain outstanding at the present time.

Fourth Quarter 2013 Compared to Third Quarter 2013

Net interest income for the quarter ended December 31, 2013 improved $95,000 from the previous quarter due to an increase in loan income as the level of non-accrual loans declined.

Non-interest income for the three months ended December 31, 2013 decreased $85,000, or 10.7%, compared to the previous quarter, primarily due to a decrease in the gain on sale of mortgage loans of $45,000.  Non-interest expense for the three months ended December 31, 2013 decreased $218,000, or 6.6%, compared to the previous quarter due to a decrease in legal and collection expenses.

A $450,000 provision for loan losses was recorded for the fourth quarter of 2013, compared to a $900,000 provision in the previous quarter.  The provision expense was lower in the fourth quarter of 2013 as a result of a decrease in net charge-offs.  Net charge-offs were $617,000 for the fourth quarter of 2013 compared to $2.1 million in the third quarter of 2013.  

Fourth Quarter 2013 Compared to Fourth Quarter 2012

Net interest income for the quarter ended December 31, 2013 decreased $126,000, or 3.3%, compared to the previous year.  The decrease in net interest income was impacted by a reduction in interest expense of $127,000 combined with a decrease in interest income of $253,000.  The decrease in interest income was created by a decline in the yield on loans from 5.71% in the fourth quarter of 2012 to 5.42% in the fourth quarter of 2013.  Loan yields have declined as maturing loans were repriced at a lower rate.

Non-interest income for the three months ended December 31, 2013 decreased $53,000, or 6.9%, compared to the three months ended December 31, 2012, primarily due to a decline in gains on sale of mortgage loans of $46,000 from the prior year.

Non-interest expense for the three months ended December 31, 2013 decreased $30,000, or 0.1%, compared to the three months ended December 31 2012, due to a decrease in personnel expenses.

A $450,000 provision for loan losses was recorded for the fourth quarter of 2013, a decrease of $130,000, from $580,000 in the fourth quarter of 2012.  Net charge-offs were $617,000 for the fourth quarter of 2013 compared to net charge-offs of $827,000 in the fourth quarter of 2012.

Balance Sheet

Total assets at December 31, 2013 were $410.2 million, an increase of $3.6 million from $406.6 million at December 31, 2012.  Average assets during the fourth quarter were $408.8 million, an increase of 1.2%, or $4.8 million, from $404.0 million in the fourth quarter of 2012.  Average interest earning assets increased 1.5%, or $5.8 million, from $369.9 million in the fourth quarter of 2012 to $375.7 million in the fourth quarter of 2013.

Loans decreased $3.7 million, or 1.2%, from $298.8 million at December 31, 2012 to $295.1 million at December 31, 2013.  Total loans averaged $298.8 million the fourth quarter of 2013, compared to $304.2 million the fourth quarter of 2012, a decrease of $5.4 million, or 1.8%.  For the year of 2013, loans averaged $304.0 million, an increase of $2.7 million, or 0.9%, from $301.3 million in 2012.

Deposits at December 31, 2013 were $343.0 million, an increase of $11.3 million, or 3.4%, compared to $331.7 million at December 31, 2012.  Total deposits averaged $340.9 million the fourth quarter of 2013, an increase of $15.3 million, or 4.7%, compared to $325.6 million during the fourth quarter of 2012.  Average deposits increased during the year, but the cost of funds declined as higher cost deposits matured and were renewed at lower rates.  

Non-performing assets totaled $2.0 million at December 31, 2013 compared to $6.3 million at December 31, 2012, a decrease of $4.3 million. Compared to the prior quarter at September 30, 2013, non-performing assets decreased $4.4 million.  During the fourth quarter of 2013, $4.1 million in non-performing assets were collected or returned to accrual status, $609,000 of non-performing assets were charged-off, and $368,000 of loans became non-performing during the quarter.

The allowance for loan losses at December 31, 2013 was $4.7 million, or 1.58% of total loans, compared to $5.7 million, or 1.91% of total loans as of December 31, 2012.  The allowance decreased as a result of charging off specific allocations of the allowance that had been established in previous quarters. 

A summary of nonperforming assets is presented below:

(In thousands)

December

31,

 2013

September

30,

 2013

June

30,

 2013

March
31,

 2013

December
31,

 2012

Nonaccrual loans

$1,026

$3,784

$6,141

$7,097

$5,384

Loans 90+ days past due/accruing

-

19

-

23

-

Restructured loans

154

2,041

3,340

3,528

758

Total non-performing loans

1,180

5,844

9,481

10,648

6,142







Other real estate owned

833

547

517

232

191

Total non-performing assets

$2,013

$6,391

$9,998

$10,880

$6,333







Non-performing assets to total assets

0.49%

1.56%

2.43%

2.58%

1.56%

A summary of the allowance for loan losses is presented below:

(In thousands)

December

31,

 2013

September

30,

 2013

June

30,

 2013

March
31,

 2013

December
31,

 2012

Balance at beginning of period

$4,820

$6,064

$6,650

$5,721

$5,968

Provision for loan losses

450

900

50

1,250

580

Charged-off loans

788

2,198

678

358

838

Recoveries of previously charged-off loans

171

54

42

37

11

Balance at end of period

$4,653

$4,820

$6,064

$6,650

$5,721













Allowance for loan losses to total loans

1.58%

1.60%

1.98%

2.21%

1.91%

At December 31, 2013, total shareholders' equity was $38.3 million compared to $41.6 million at December 31, 2012, a decrease of $3.3 million.  During the first quarter of 2013, the Company paid $3.3 million to repurchase 94 of the 250 shares of the Series A preferred stock that the Company had issued to the Treasury on December 19, 2008 under the TARP Capital Purchase Program.  At December 31, 2013, the Company had 93 shares of the Series A preferred stock outstanding with a balance of approximately $3.3 million.

The Company's tangible equity ratio was 8.28% as of December 31, 2013 compared to 9.08% at December 31, 2012.  The tangible book value per common share improved slightly from $11.32 at December 31, 2012, to $11.51 at December 31, 2013.  The Company and Citizens First Bank are categorized as "well capitalized" under regulatory guidelines.

About Citizens First Corporation

Citizens First Corporation is a bank holding company headquartered in Bowling Green, Kentucky and established in 1999.  The Company has branch offices located in Barren, Hart, Simpson and Warren Counties in Kentucky.

Forward-Looking Statements

Statements in this press release relating to Citizens First Corporation's plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon the Company's current expectations, but are subject to certain risks and uncertainties that may cause actual results to differ materially.  Among the risks and uncertainties that could cause actual results to differ materially are economic conditions generally and in the market areas of the Company, a continuation or worsening of the current disruption in credit and other markets, goodwill impairment, overall loan demand, increased competition in the financial services industry which could negatively impact the Company's ability to increase total earning assets, and the retention of key personnel.  Actions by the Department of the Treasury and federal and state bank regulators in response to changing economic conditions, changes in interest rates, loan prepayments by and the financial health of the Company's borrowers, and other factors described in the reports filed by the Company with the Securities and Exchange Commission could also impact current expectations.     

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios

Consolidated Statement of Income:


Three Months Ended




Dec 31

Sept 30

June 30

March 31

Dec 31


2013

2013

2013

2013

2012

Interest income          

$4,411

$4,381

$4,325

$4,428

$4,664

Interest expense

682

747

770

762

809

Net interest income

3,729

3,634

3,555

3,666

3,855







Provision for loan losses

450

900

50

1,250

580







Non-interest income:






   Service charges on deposits

319

341

321

291

351

   Other service charges and fees

133

156

158

138

129

   Gain on sale of mortgage loans

36

81

78

82

82

   Non-deposit brokerage fees

72

91

78

65

61

   Lease income

75

74

75

74

76

   BOLI income

49

53

56

61

65

   Securities gains

27

-

29

8

-

      Total

711

796

795

719

764







Non-interest expenses:






   Personnel expense

1,419

1,382

1,417

1,441

1,489

   Net occupancy expense

485

499

465

461

491

   Advertising and public relations

65

70

110

78

91

   Professional fees

141

201

174

164

176

   Data processing services

266

280

272

265

241

   Franchise shares and deposit tax

145

146

141

141

141

   FDIC insurance

119

150

26

85

87

   Core deposit intangible amortization

79

84

85

84

84

   Postage and office supplies

38

35

35

43

40

   Other real estate owned expenses

46

7

20

11

15

   Other

258

425

434

309

236

      Total

3,061

3,279

3,179

3,082

3,091







Income before income taxes

929

251

1,121

53

948

Provision for income taxes

227

18

333

(62)

251

Net income

702

233

788

115

697







Preferred dividends and discount accretion

184

178

176

217

225

Net income available for common shareholders

$518

$55

$612

$(102)

$472

Basic earnings per common share

$0.26

$0.03

$0.31

$(0.05)

$0.24

Diluted earnings per common share

$0.25

$0.02

$0.30

$(0.05)

$0.23



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios





Key Operating Statistics:





Three Months Ended




December

 31

September

 30

June

 30

March

 31

December
31


2013

2013

2013

2013

2012







Average assets

$408,792

$413,293

$419,240

$417,804

$403,975

Average earning assets

375,658

380,154

387,663

384,614

369,927

Average loans

298,833

307,618

305,532

303,942

304,249

Average deposits

340,938

340,067

345,738

342,475

325,644

Average equity

38,469

37,937

38,353

40,164

41,629

Average common equity

27,548

27,023

27,445

27,695

27,458







Return on average assets

0.68%

0.22%

0.75%

0.11%

0.69%

Return on average equity

7.24%

2.44%

8.24%

1.16%

6.66%







Efficiency ratio

68.07%

72.66%

72.17%

68.96%

65.70%

Non-interest income to average assets

0.69%

0.77%

0.76%

0.70%

0.75%

Non-interest expenses to average assets

2.97%

3.15%

3.04%

2.99%

3.04%

Yield on loans

5.42%

5.26%

5.28%

5.50%

5.71%

Yield on investment securities (TE)

2.97%

2.87%

2.78%

2.97%

2.96%

Yield on average earning assets (TE)

4.75%

4.66%

4.56%

4.76%

5.11%

Cost of average interest bearing liabilities

0.83%

0.89%

0.92%

0.93%

1.01%

Net interest margin (tax equivalent)

4.03%

3.88%

3.77%

3.96%

4.24%

Number of FTE employees

100

100

98

99

102







Asset Quality Ratios:






Non-performing loans to total loans

0.40%

1.94%

3.09%

3.54%

2.06%

Non-performing assets to total assets

0.49%

1.56%

2.43%

2.58%

1.56%

Allowance for loan losses to total loans

1.58%

1.60%

1.98%

2.21%

1.91%

YTD net charge-offs to average loans, annualized

1.22%

1.36%

0.63%

0.43%

0.60%








 

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Twelve Months Ended





December
31

December
31


2013

2012

Interest income          

$17,545

$18,528

Interest expense

2,961

3,450

Net interest income

14,584

15,078




Provision for loan losses

2,650

1,700




Non-interest income:



   Service charges on deposits

1,272

1,365

   Other service charges and fees

585

529

   Gain on sale of mortgage loans

277

301

   Non-deposit brokerage fees

306

206

   Lease income

298

279

   BOLI income

219

263

   Securities gains

64

55

      Total

3,021

2,998




Non-interest expenses:



   Personnel expense

5,659

5,718

   Net occupancy expense

1,910

1,918

   Advertising and public relations

323

352

   Professional fees

680

627

   Data processing services

1,083

916

   Franchise shares and deposit tax

573

548

   FDIC insurance

380

314

   Core deposit intangible amortization

332

349

   Postage and office supplies

151

189

   Other real estate owned expenses

84

170

   Other

1,426

954

      Total

12,601

12,055




Income before income taxes

2,354

4,321

Provision for income taxes

516

1,148

Net income

1,838

3,173




Preferred dividends and discount accretion

755

896

Net income available for common shareholders

$1,083

$2,277

Basic earnings per common share

$0.55

$1.16

Diluted earnings per common share

$0.52

$1.11





Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios




Key Operating Statistics:




Twelve Months Ended





December

 31

December

 31


2013

2012




Average assets

$414,753

$402,958

Average earning assets

381,992

367,379

Average loans

303,977

301,292

Average deposits

342,294

327,651

Average equity

38,724

40,454

Average common equity

27,426

26,301




Return on average assets

0.44%

0.79%

Return on average equity

4.75%

7.84%




Efficiency ratio

70.48%

65.67%

Non-interest income to average assets

0.73%

0.74%

Non-interest expenses to average assets

3.04%

2.99%

Yield on average earning assets (tax equivalent)

4.68%

5.13%

Cost of average interest bearing liabilities

0.89%

1.08%

Net interest margin (tax equivalent)

3.91%

4.20%



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios





Consolidated Statement of Condition:

As of

As of

As of


December 31,

December 31,

December 31,

2013

2012

2011

Cash and cash equivalents

$37,062

$34,799

$30,549

Available for sale securities

51,633

46,639

50,718

Loans held for sale

-

61

180

Loans

295,068

298,754

294,352

Allowance for loan losses

(4,653)

(5,721)

(5,865)

Premises and equipment, net

11,054

11,568

11,849

Bank owned life insurance (BOLI)

7,806

7,587

7,324

Federal Home Loan Bank Stock, at cost

2,025

2,025

2,025

Accrued interest receivable

1,554

1,660

1,858

Deferred income taxes

2,279

2,180

2,973

Intangible assets

4,762

5,094

5,443

Other real estate owned

833

191

637

Other assets

752

1,719

1,751

  Total Assets

$410,175

$406,556

$403,794





Deposits:




    Noninterest bearing

$ 39,967

$ 41,725

$ 38,352

    Savings, NOW and money market

143,602

111,194

116,968

    Time

159,382

178,814

177,411

      Total deposits

$342,951

$331,733

$332,731

FHLB advances and other borrowings

22,000

26,000

25,000

Subordinated debentures

5,000

5,000

5,000

Other liabilities

1,877

2,257

2,191

Total Liabilities

371,828

364,990

364,922

6.5% Cumulative preferred stock

7,659

7,659

7,659

Series A preferred stock

3,266

6,519

6,471

Common stock

27,072

27,072

27,072

Retained earnings (deficit)

653

(430)

(2,706)

Accumulated other comprehensive income (loss)

(303)

746

376

Total Stockholders' Equity

38,347

41,566

38,872

Total Liabilities and Stockholders' Equity

$410,175

$406,556

$403,794

 

Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios






December
31, 2013

December
31, 2012

December
31, 2011

Capital Ratios:




Tier 1 leverage

9.57%

10.20%

9.46%

Tier 1 risk-based capital

12.56%

13.16%

11.94%

Total risk based capital

13.81%

14.41%

13.19%

Tangible equity ratio (1)

8.28%

9.08%

8.39%

Tangible common equity ratio (1)

5.59%

5.55%

4.84%

Book value per common share

$13.93

$13.91

$12.57

Tangible book value per common share (1)

$11.51

$11.32

$9.80

Shares outstanding (in thousands)

1,969

1,969

1,969

_____________




(1)   The tangible equity ratio, tangible common equity ratio and tangible book value per common share, while not required by accounting principles generally accepted in the United States of America (GAAP), are considered critical metrics with which to analyze banks.  The ratio and per share amount have been included to facilitate a greater understanding of the Company's capital structure and financial condition.  See the Regulation G Non-GAAP Reconciliation table for reconciliation of this ratio and per share amount to GAAP.

Regulation G Non-GAAP Reconciliation:


December
31, 2013

December
31, 2012

December
31, 2011






Total shareholders' equity (a)


$38,348

$41,566

$38,872

Less:





   Preferred stock


(10,925)

(14,178)

(14,130)

Common equity (b)


27,423

27,388

24,742

   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(665)

(997)

(1,346)

Tangible common equity (c)


22,661

22,294

19,299

Add:





   Preferred stock


10,925

14,178

14,130

Tangible equity (d)


$33,586

$36,472

$33,429






Total assets (e)


$410,175

$406,556

$403,794

Less:





   Goodwill


(4,097)

(4,097)

(4,097)

   Intangible assets


(665)

(997)

(1,346)

Tangible assets (f)


$405,413

$401,462

$398,351

Shares outstanding (in thousands) (g)


1,969

1,969

1,969






Book value per common share (b/g)


$13.93

$13.91

$12.57

Tangible book value per common share (c/g)

$11.51

$11.32

$9.80






Total shareholders' equity to total assets ratio (a/e)


9.35%

10.22%

9.63%

Tangible equity ratio (d/f)


8.28%

9.08%

8.39%

Tangible common equity ratio (c/f)


5.59%

5.55%

4.84%

 

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