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Citizens First Corporation Announces Second Quarter 2017 Results and Completion of Preferred Stock Redemption

BOWLING GREEN, Ky., July 20, 2017 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the second quarter ending June 30, 2017, which include the following:

For the quarter ended June 30, 2017, the Company reported net income of $1.11 million, or $0.43 per diluted common share.  This represents an increase of $34,000 from $1.07 million, or $0.42 per diluted common share, for the quarter ended June 30, 2016.  For the six months ended June 30, 2017, net income totaled $2.02 million, or $0.79 per diluted common share.  This represents an increase of $36,000, or $0.01 per diluted common share, from the net income of $1.98 million in the first six months of the previous year. 

As of June 30, 2017, the Company completed the redemption of the 6.5% Cumulative Preferred Stock, which provided an additional $7.1 million in common equity. Outstanding common shares of the Company increased 25% as a result of the preferred shareholders' option to convert preferred shares into common shares. The Company's tangible common equity ratio increased from 6.83% at December 31, 2016 to 8.75% at June 30, 2017.  "In addition to improving our tangible common equity, the conversion of the preferred shares will reduce annual preferred dividend expense by $476,000," said Todd Kanipe, President and CEO.

Income Statement Second Quarter 2017 Compared to Second Quarter 2016

Net interest income decreased $45,000, or 1.2%, as the yield on loans decreased and the cost of funds increased from the second quarter of the prior year.  The Company's net interest margin was 3.69% for the quarter ended June 30, 2017, compared to 3.92% for the quarter ended June 30, 2016, a decrease of 23 basis points.  The Company's net interest margin decreased primarily due to a decline in the yield on loans and an increase in the cost of interest-bearing liabilities.

There was no provision for loan losses in the second quarter of the current year compared to an ($85,000) (credit) provision for loan losses in the second quarter of the prior year.

Non-interest income increased $7,000, or 0.8%, from the prior year primarily due to an increase in lease income of $31,000 and other service charges and fees of $29,000, offset by a decrease in gains on sale of securities of $55,000.

Non-interest expense decreased $177,000, or 5.2%, from the prior year primarily due to a decrease in other expenses of $78,000, a reduction in occupancy expenses of $46,000, and a decrease in personnel expense of $21,000.

Income Statement Current Year Compared to Prior Year

Net interest income decreased $128,000, or 1.6%, as the yield on loans decreased and the cost of funds increased from the prior year.  The Company's net interest margin was 3.68% for the six months ended June 30, 2017, and 3.93% for the six months ended June 30, 2016, a decrease of 25 basis points.  The Company's net interest margin decreased due to a decrease in the yield on average earning assets coupled with an increase in the cost of average interest-bearing liabilities.

Non-interest income decreased $40,000, or 2.2%, primarily due to a reduction in gains on the sale of securities of $83,000 and a decrease in service charges on deposit accounts of $59,000, offset by an increase in other service charges and fees of $45,000 and lease income of $38,000.

Non-interest expense decreased $340,000, or 5.0%, primarily due to reductions in all categories of expenses, including $71,000 in personnel expenses and $68,000 in occupancy expenses.  "We have been successful in lowering operating expenses which has contributed to the improvement of the overall profitability of the Company," Kanipe added.

Credit Quality

Non-performing assets totaled $2.9 million, or 0.63% of total assets, at June 30, 2017 compared to $23,000, or 0.01% of total assets at December 31, 2016, an increase of $2.9 million.   Two agricultural-related credits were moved to non-accrual status during the first quarter of 2017.

The allowance for loan losses at June 30, 2017 was $4.9 million, or 1.36% of total loans, compared to $4.9 million, or 1.35% of total loans as of December 31, 2016.  We consider the size, volume and credit quality of the loan portfolio as well as recent economic and other external influences to record the allowance for loan losses and provision for loan losses that is directionally consistent with our loan portfolio.

Balance Sheet

Total assets at June 30, 2017 were $462.4 million compared to $455.4 million at December 31, 2016.  Total assets increased $6.9 million, or 1.5%, from December 31, 2016 to June 30, 2017 due to a growth in loans and interest-bearing deposits in other financial institutions, partially offset by a decline in available-for-sale securities.

Loans increased $1.1 million, or 0.3%, from December 31, 2016 to June 30, 2017.  "Higher than anticipated payoffs and softer loan demand resulted in flat average loan balances in the second quarter of 2017," Kanipe noted.  Deposits increased $426,000, or 0.1%, from December 31, 2016 to June 30, 2017.  Borrowings from the Federal Home Loan Bank increased $5.0 million, or 14.3%, from December 31, 2016 to June 30, 2017.

Stockholders' equity increased to $44.3 million at June 30, 2017 from $42.4 million at December 31, 2016.  The book value per common share and tangible book value per common share ratios were $17.55 and $15.87, respectively, at June 30, 2017 compared to $17.54 and $15.40, respectively, at December 31, 2016. 

Redemption and Conversion of Cumulative Preferred Stock

On May 15, 2017, the Board of Directors of the Company authorized the redemption of all 229 outstanding shares of the Company's Cumulative Convertible Preferred Stock ("Preferred Shares") as of June 30, 2017 (the "Redemption Date") at the redemption price of $31,992 per share (the Stated Value of the Preferred Shares), plus accrued and unpaid dividends.  The Preferred Shares were convertible at the option of the holder, until the day prior to the Redemption Date, into a number of shares of common stock determined by dividing the Stated Value of the Preferred Shares ($31,992) by $14.06, the conversion price.

From May 15, 2017 to the Redemption Date, the Company issued an aggregate of 507,325 shares of common stock upon conversion of 223 Preferred Shares.  Six preferred shares with an aggregate redemption price of  $191,952 were redeemed.  As a result of the conversion of Preferred Shares, the outstanding shares of the Company's common stock have increased from 2,019,052 to 2,526,377 as of June 30, 2017.  

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, and a loan production office in Williamson County, Tennessee.  Additional information concerning our products and services is available at www.citizensfirstbank.com.

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 current and future economic and business conditions; possible changes in trade, monetary, and fiscal policies, as well as legislative and regulatory changes; changes in the interest rate environment and our ability to effectively manage interest rate risk and other market risk, credit risk and operational risk; changes in the quality or composition of our loan or investment portfolios; increases in our nonperforming assets, or our inability to recover or absorb losses created by such nonperforming assets; 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)

Consolidated Statement of Condition














(In Thousands, Except Share Data and ratios)




June 30, 


December 31, 


December 31, 




2017


2016


2015


Assets











Cash and due from financial institutions


$

6,769


$

8,542


$

8,865


Federal funds sold







6,390


Interest-bearing deposits in other financial institutions



24,351



11,018



2,728


Available-for-sale securities



48,560



53,547



60,200


Loans held for sale





264




Loans



360,470



359,391



330,782


Allowance for loan losses



(4,898)



(4,854)



(4,916)


Premises and equipment, net



9,212



9,390



9,998


Bank owned life insurance (BOLI)



8,439



8,351



8,174


Federal Home Loan Bank (FHLB) stock, at cost



2,053



2,025



2,025


Accrued interest receivable



1,435



1,622



1,680


Deferred income taxes



1,210



1,464



1,328


Goodwill and other intangible assets



4,256



4,291



4,362


Other real estate owned







100


Other assets



499



371



465


Total Assets


$

462,356


$

455,422


$

432,181


Liabilities











Deposits











Noninterest bearing


$

50,404


$

52,322


$

48,522


Savings, NOW and money market



175,400



173,620



168,335


Time



145,061



144,497



153,531


Total deposits



370,865



370,439



370,388


FHLB advances and other borrowings



40,000



35,000



15,000


Subordinated debentures



5,000



5,000



5,000


Accrued interest payable



229



220



213


Other liabilities



1,923



2,399



2,056


Total Liabilities



418,017



413,058



392,657


Stockholders' Equity











6.5% Cumulative convertible preferred stock





7,261



7,659


Common stock



33,050



25,920



25,406


Retained earnings



11,321



9,706



6,304


Accumulated other comprehensive income (loss)



(32)



(523)



155


Total stockholders' equity



44,339



42,364



39,524


Total liabilities and stockholders' equity


$

462,356


$

455,422


$

432,181


 

 

Consolidated Financial Highlights (Unaudited)

Consolidated Statement of Income




















Three months ended




(In Thousands, Except Per Share Data and ratios)




June 30, 


March 31, 


December 31, 


September 30, 


June 30, 




2017


2017


2016


2016


2016


Interest and dividend income


$

4,593


$

4,457


$

4,572


$

4,557


$

4,536


Interest expense



726



677



652



639



624



Net interest income


3,867



3,780



3,920



3,918



3,912



















Provision (credit) for loan losses





30







(85)



















Non-interest income

















Service charges on deposit accounts



327



278



371



361



339


Other service charges and fees



301



264



245



262



272


Gain on sale of mortgage loans



88



68



97



110



91


Non-deposit brokerage fees



91



87



85



83



75


Lease income



80



52



52



61



49


BOLI income



45



43



44



45



44


Gain on sale of securities





23





20



55



Total non-interest income


932



815



894



942



925



















Non-interest expenses:

















Personnel expense



1,655



1,734



1,741



1,674



1,676


Net occupancy expense



446



461



471



481



492


Advertising and public relations



77



71



75



86



98


Professional fees



171



130



50



98



137


Data processing services



251



253



256



262



263


Franchise shares and deposit tax



132



132



132



132



132


FDIC insurance



49



49



47



58



59


Other real estate owned expenses







1



(8)



23


Other



432



461



457



452



510



Total non-interest expenses


3,213



3,291



3,230



3,235



3,390



















Income before income taxes



1,586



1,274



1,584



1,625



1,532


Income taxes



478



367



481



490



458



Net income


1,108



907



1,103



1,135



1,074


Dividends on preferred stock



119



119



124



124



123


Net income available for common stockholders


$

989


$

788


$

979


$

1,011


$

951



Basic earnings per common share

$

0.47


$

0.39


$

0.49


$

0.50


$

0.48



Diluted earnings per common share

$

0.43


$

0.36


$

0.43


$

0.45


$

0.42


 

 

Consolidated Financial Highlights (Unaudited)

Key Operating Statistics




















Three months ended




(In Thousands, Except Per Share Data and ratios)




June 30, 


March 31, 


December 31, 


September 30, 


June 30, 




2017


2017


2016


2016


2016


Average:

















Assets


$

454,524


$

452,265


$

444,168


$

442,042


$

439,081


Earning Assets



427,675



424,349



417,161



414,569



409,722


Loans



363,733



363,824



347,046



344,733



338,456


Interest-bearing deposits



319,883



314,939



310,336



304,473



311,084


Deposits



368,743



364,227



360,816



354,953



360,209


Borrowed funds



39,769



43,078



38,429



42,490



35,868


Equity



44,047



42,827



42,652



42,002



40,912


Common equity



38,240



35,718



35,391



34,741



33,651



















Return on average assets



0.98

%


0.81

%


0.99

%


1.02

%


0.98

%

Return on average equity



10.09

%


8.59

%


10.29

%


10.75

%


10.56

%


















Efficiency ratio



66.10

%


70.96

%


66.20

%


65.86

%


69.74

%

Non-interest income to average assets



0.82

%


0.73

%


0.80

%


0.85

%


0.85

%

Non-interest expenses to average assets



2.84

%


2.95

%


2.89

%


2.91

%


3.11

%

Net overhead to average assets



2.01

%


2.22

%


2.09

%


2.06

%


2.26

%

Yield on loans



4.69

%


4.60

%


4.86

%


4.86

%


4.95

%

Yield on investment securities (TE)



2.85

%


2.87

%


2.58

%


2.66

%


2.77

%

Yield on average earning assets (TE)



4.37

%


4.32

%


4.42

%


4.44

%


4.53

%

Cost of average interest bearing liabilities



0.81

%


0.77

%


0.74

%


0.73

%


0.72

%

Net interest margin (TE)



3.69

%


3.68

%


3.80

%


3.83

%


3.92

%

Number of FTE employees



95



94



95



94



96



















Asset Quality Indicators:

















Non-performing loans to total loans



0.80

%


0.83

%


0.01

%


0.05

%


0.06

%

Non-performing assets to total assets



0.63

%


0.65

%


0.01

%


0.04

%


0.06

%

Allowance for loan losses to total loans



1.36

%


1.34

%


1.35

%


1.45

%


1.43

%

YTD net charge-offs (recoveries) to average loans, annualized



(0.01)

%


(0.02)

%


(0.01)

%


(0.05)

%


(0.07)

%

YTD net charge-offs (recoveries)



(13)



(22)



(23)



(130)



(119)


 

 

Consolidated Financial Highlights (Unaudited)

Consolidated Statement of Income











Six Months Ended




June 30, 


June 30, 




2017


2016


Interest and dividend income


$

9,050


$

9,012


Interest expense



1,403



1,237



Net interest income


7,647



7,775










Provision (credit) for loan losses



30



(85)










Non-interest income








Service charges on deposit accounts



605



664


Other service charges and fees



565



520


Gain on sale of mortgage loans



156



168


Non-deposit brokerage fees



178



147


Lease income



132



94


BOLI income



88



88


Gain on sale of securities



23



106



Total non-interest income


1,747



1,787










Non-interest expenses:








Personnel expense



3,389



3,460


Net occupancy expense



907



975


Advertising and public relations



148



159


Professional fees



301



317


Data processing services



504



519


Franchise shares and deposit tax



264



264


FDIC insurance



98



118


Other real estate owned expenses





24


Other



893



1,008



Total non-interest expenses


6,504



6,844










Income before income taxes



2,860



2,803


Income taxes



845



824



Net income


2,015



1,979


Dividends on preferred stock



238



247


Net income available for common stockholders


$

1,777


$

1,732



Basic earnings per common share

$

0.86


$

0.87



Diluted earnings per common share

$

0.79


$

0.78


 

 

Consolidated Financial Highlights (Unaudited)

Key Operating Statistics











Six Months Ended




(In Thousands, Except Per




Share Data and ratios)




June 30, 


June 30, 




2017


2016


Average:








Assets


$

453,401


$

436,112


Earning Assets



426,021



406,181


Loans



363,778



335,728


Interest-bearing deposits



317,425



315,724


Deposits



366,498



363,803


Borrowed funds



41,415



29,631


Equity



43,441



40,534


Common equity



36,987



33,241










Return on average assets



0.90

%


0.91

%

Return on average equity



9.35

%


9.82

%









Efficiency ratio



68.47

%


70.63

%

Non-interest income to average assets



0.78

%


0.74

%

Non-interest expenses to average assets



2.89

%


3.07

%

Net overhead to average assets



2.12

%


2.33

%

Yield on loans



4.65

%


4.95

%

Yield on investment securities (TE)



2.86

%


2.77

%

Yield on average earning assets (TE)



4.34

%


4.54

%

Cost of average interest bearing liabilities



0.79

%


0.72

%

Net interest margin (TE)



3.68

%


3.93

%

Number of FTE employees



95



96


 

Consolidated Financial Highlights (Unaudited)














(In Thousands, Except Share Data and ratios)




June 30, 


December 31, 


December 31, 


Consolidated Capital Ratios


2017


2016


2015













Total shareholders' equity to total assets ratio



9.59

%


9.30

%


9.15

%

Tangible equity ratio (1)



8.75

%


8.44

%


8.22

%

Tangible common equity ratio (1)



8.75

%


6.83

%


6.43

%

Book value per common share


$

17.55


$

17.54


$

16.18


Tangible book value per common share (1)


$

15.87


$

15.40


$

13.97


End of period common share closing price


$

22.14


$

18.00


$

13.74









(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.

 














(In Thousands, Except Share Data and ratios)




June 30, 


December 31, 


December 31, 


Regulation G Non-GAAP Reconciliation:


2017


2016


2015













Total shareholders' equity (a)


$

44,339


$

42,364


$

39,524


Less:











Preferred stock





(7,261)



(7,659)


Common equity (b)



44,339



35,103



31,865


Goodwill



(4,097)



(4,097)



(4,097)


Intangible assets



(159)



(194)



(265)


Tangible common equity (c)



40,083



30,812



27,503


Add:











Preferred stock





7,261



7,659


Tangible equity (d)



40,083



38,073



35,162













Total assets (e)



462,356



455,422



432,181


Less:











Goodwill



(4,097)



(4,097)



(4,097)


Intangible assets



(159)



(194)



(265)


Tangible assets (f)


$

458,100


$

451,131


$

427,819


Shares outstanding (in thousands) (g)



2,526



2,001



1,969













Book value per common share (b/g)


$

17.55


$

17.54


$

16.18


Tangible book value per common share (c/g)


$

15.87


$

15.40


$

13.97


Equity to assets ratio (a/e)



9.59

%


9.30

%


9.15

%

Tangible equity ratio (d/f)



8.75

%


8.44

%


8.22

%

Common equity ratio (b/e)



9.59

%


7.71

%


7.37

%

Tangible common equity ratio (c/f)



8.75

%


6.83

%


6.43

%

 

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