Citizens First Corporation Announces Third Quarter 2013 Results

       Citizens First Corporation Announces Third Quarter 2013 Results

PR Newswire

BOWLING GREEN, Ky., Oct. 31, 2013

BOWLING GREEN, Ky., Oct.31, 2013 /PRNewswire/ --Citizens First Corporation
(NASDAQ: CZFC) today reported results for the third quarter ending September
30, 2013, which include the following:

  oFor the quarter ended September 30, 2013, the Company reported net income
    of $233,000, or $0.02 per diluted common share. This represents a
    decrease of $555,000, or $0.28 per diluted common share, from the linked
    quarter ended June 30, 2013. Compared to the quarter ended September 30 a
    year ago, net income decreased $708,000 or $0.33 per diluted common share.
    
  oFor the nine months ended September 30, 2013, net income totaled $1.1
    million, or $0.27 per diluted common share. This represents a decrease of
    $1.4 million or $0.61 per diluted common share, from the net income of
    $2.5 million in the first nine months of the previous year.
  oThe Company's net interest margin was 3.88% for the quarter ended
    September 30, 2013 compared to 3.77% for the quarter ended June 30, 2013
    and 4.31% for the quarter ended September 30, 2012, an increase of 11
    basis points for the linked quarter and a decrease of 43 basis points from
    the prior year. The Company's net interest margin increased from the
    prior quarter primarily due to an increase in average loan balances and a
    decline in non-accrual loans.
  oProvision for loan losses was $900,000 for the third quarter of 2013
    compared to $50,000 for the linked quarter ended June 30, 2013 and
    $300,000 for the quarter ended September 30, 2012. Provision expense for
    2013 totaled $2.2 million compared to $1.1 million in 2012. Net
    charge-offs for 2013 total $3.1 million compared to $1.0 million in 2012.
    Todd Kanipe, President & CEO of Citizens First commented, "We improved our
    level of non-performing assets during the third quarter as we moved
    through the liquidation of collateral on several credits. We continue to
    work aggressively to reduce non-performing assets and the related
    increased collection costs. Our provision expense is higher in 2013 due to
    the increased level of charged-off loans. Our allowance remains strong and
    as a percentage of loans is currently 1.60%, which is in line with our
    peer group."
  oDuring the third quarter of 2013, the real estate securing our largest
    non-performing asset, a $3.8 million commercial real estate loan, was sold
    at auction to a third party for $2.5 million less selling costs. The
    deficiency resulted in a charge-off of $1.6 million in the third quarter
    of 2013. The remaining principal balance of $2.2 million was collected on
    October 15, 2013, which will further reduce non-performing assets.

Third Quarter 2013 Compared to Second Quarter 2013

Net interest income for the quarter ended September 30, 2013 improved $79,000
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 September 30, 2013 increased
$1,000, or 0.13%, compared to the previous quarter, primarily due to an
improvement in service charges on deposit accounts of $20,000. Non-interest
expense for the three months ended September 30, 2013 increased $100,000, or
3.1%, compared to the previous quarter. Accruals for FDIC insurance premiums
increased $124,000 from the previous quarter.

A $900,000 provision for loan losses was recorded for the third quarter of
2013, compared to a $50,000 provision in the previous quarter. The provision
expense was higher in the third quarter of 2013 as a result of an increase in
historical charge-offs, particularly the charge-offs that occurred in the
third quarter of 2013. Net charge-offs were $2.1 million for the third
quarter of 2013 compared to $636,000 in the second quarter of 2013. The
substantial majority of the charge-offs in the third quarter of 2013 had
specific allocations in the allowance for loan losses that had been
established prior to the current quarter.

Third Quarter 2013 Compared to Third Quarter 2012

Net interest income for the quarter ended September 30, 2013 decreased
$221,000, or 5.7%, compared to the previous year. The decrease in net
interest income was impacted by a reduction in interest expense of $79,000
combined with a decrease in interest income of $300,000. The decrease in
interest income was created by a decline in the yield on loans from 5.86% in
the third quarter of 2012 to 5.26% in the third quarter of 2013. Loan yields
have declined as maturing loans were repriced at a lower rate.

Non-interest income for the three months ended September 30, 2013 increased
$51,000, or 6.8%, compared to the three months ended September 30, 2012,
primarily due to an improvement in non-deposit brokerage fees of $37,000 from
the prior year.

Non-interest expense for the three months ended September 30, 2013 increased
$286,000, or 9.6%, compared to the three months ended September 30 2012, due
to an increase in other operating expenses which were primarily collection
expenses related to non-performing loans.

A $900,000 provision for loan losses was recorded for the third quarter of
2013, an increase of $600,000, from $300,000 in the third quarter of 2012.
Net charge-offs were $2.1 million for the third quarter of 2013 compared to
net charge-offs of $231,000 in the third quarter of 2012.

Balance Sheet

Total assets at September 30, 2013 were $410.8 million, an increase of $4.2
million from $406.6 million at December 31, 2012. Average assets during the
third quarter were $413.3 million, an increase of 3.9%, or $15.6 million, from
$397.7 million the third quarter of 2012. Average interest earning assets
increased 4.5%, or $16.5 million, from $363.7 million in the third quarter of
2012 to $380.2 million in the third quarter of 2013.

Loans increased $2.6 million, or 0.9%, from $298.8 million at December 31,
2012 to $301.4 million at September 30, 2013. Total loans averaged $307.6
million the third quarter of 2013, compared to $297.9 million the third
quarter of 2012, an increase of $9.7 million, or 3.3%. Deposits at September
30, 2013 were $337.6 million, an increase of $5.9 million, or 1.8%, compared
to $331.7 million at December 31, 2012. Total deposits averaged $340.1
million the third quarter of 2013, an increase of $18.3 million, or 5.7%,
compared to $321.8 million during the third 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 $6.4 million at September 30, 2013 compared to
$6.3 million at December 31, 2012, an increase of $58,000. Compared to the
prior quarter at June 30, 2013, non-performing assets decreased $3.6 million.
During the third quarter of 2013, $2.1 million in non-performing assets were
collected, $2.2 million of non-performing assets were charged-off, and
$646,000 of loans became non-performing during the quarter.

The allowance for loan losses at September 30, 2013 was $4.8 million, or 1.60%
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:

                       September    June 30, March 31, December    September
(In thousands)         30,                             31,         30,
                                    2013    2013
                       2013                           2012       2012
Nonaccrual loans       $3,784       $6,141   $7,097    $5,384      $5,911
Loans 90+ days past    19           -        23        -           60
due/accruing
Restructured loans     2,041        3,340    3,528     758         1,388
Total non-performing   5,844        9,481    10,648    6,142       7,359
loans
Other real estate      547          517      232       191         258
owned
Total non-performing   $6,391       $9,998   $10,880   $6,333      $7,617
assets
Non-performing assets  1.56%        2.43%    2.58%     1.56%       1.93%
to total assets

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

                      September    June 30, March    December    September
(In thousands)        30,                   31,      31,          30,
                                   2013
                      2013                 2013    2012        2012
Balance at beginning  $6,064       $6,650   $5,721   $5,968       $5,899
of period
Provision for loan    900          50       1,250    580          300
losses
Charged-off loans     2,198        678      358      838          243
Recoveries of
previously            54           42       37       11           12
charged-off loans
Balance at end of     $4,820       $6,064   $6,650   $5,721       $5,968
period
Allowance for loan    1.60%        1.98%    2.21%    1.91%        1.95%
losses to total loans

At September 30, 2013, total shareholders' equity was $38.1 million compared
to $41.6 million at December 31, 2012, a decrease of $3.5 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
September 30, 2013, the Company has 93 shares of the Series A preferred stock
outstanding with a balance of approximately $3.3 million.

The Company's tangible equity ratio was 8.19% as of September 30, 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 $11.34 at
September 30, 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
                        September 30 June 30 March 31 December 31 September 30
                        2013         2013    2013     2012        2012
Interest                $4,381       $4,325  $4,428   $4,664      $4,681
income
Interest expense        747          770     762      809         826
Net interest income     3,634        3,555   3,666    3,855       3,855
Provision for loan      900          50      1,250    580         300
losses
Non-interest income:
 Service charges on   341          321     291      351         355
deposits
 Other service        156          158     138      129         138
charges and fees
 Gain on sale of      81           78      82       82          64
mortgage loans
 Non-deposit          91           78      65       61          54
brokerage fees
 Lease income         74           75      74       76          68
 BOLI income          53           56      61       65          66
 Securities gains     -            29      8        -           -
 Total             796          795     719      764         745
Non-interest expenses:
 Personnel expense    1,382        1,417   1,441    1,489       1,406
 Net occupancy        499          465     461      491         489
expense
 Advertising and      70           110     78       91          92
public relations
 Professional fees    201          174     164      176         158
 Data processing      280          272     265      241         225
services
 Franchise shares and 146          141     141      141         141
deposit tax
 FDIC insurance       150          26      85       87          83
 Core deposit         84           85      84       84          88
intangible amortization
 Postage and office   35           35      43       40          40
supplies
 Other real estate    7            20      11       15          5
owned expenses
 Other                425          434     309      236         266
 Total             3,279        3,179   3,082    3,091       2,993
Income before income    251          1,121   53       948         1,307
taxes
Provision for income    18           333     (62)     251         366
taxes
Net income              233          788     115      697         941
Preferred dividends and 178          176     217      225         225
discount accretion
Net income available    $55          $612    $(102)   $472        $716
for common shareholders
Basic earnings per      $0.03        $0.31   $(0.05)  $0.24       $0.36
common share
Diluted earnings per    $0.02        $0.30   $(0.05)  $0.23       $0.35
common share



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios
Key Operating Statistics:
                          Three Months Ended
                          September30 June30  March31 December 31 September
                                                                     30
                          2013         2013     2013     2012        2012
Average assets            $413,293     $419,240 $417,804 $403,975    $397,657
Average loans             307,618      305,532  303,942  304,249     297,863
Average deposits          340,067      345,738  342,475  325,644     321,828
Average equity            37,937       38,353   40,164   41,629      40,776
Average common equity     27,023       27,445   27,695   27,458      26,618
Return on average assets  0.22%        0.75%    0.11%    0.69%       0.94%
Return on average equity  2.44%        8.24%    1.16%    6.66%       9.18%
Efficiency ratio          72.66%       72.17%   68.96%   65.70%      63.88%
Non-interest income to    0.77%        0.76%    0.70%    0.75%       0.75%
average assets
Non-interest expenses to  3.15%        3.04%    2.99%    3.04%       2.99%
average assets
Yield on average earning  4.66%        4.56%    4.76%    5.11%       5.21%
assets (tax equivalent)
Cost of average interest  0.89%        0.92%    0.93%    1.01%       1.04%
bearing liabilities
Net interest margin (tax  3.88%        3.77%    3.96%    4.24%       4.31%
equivalent)
Number of FTE employees   100          98       99       102         103
Asset Quality Ratios:
Non-performing loans to   1.94%        3.09%    3.54%    2.06%       2.41%
total loans
Non-performing assets to  1.56%        2.43%    2.58%    1.56%       1.93%
total assets
Allowance for loan losses 1.60%        1.98%    2.21%    1.91%       1.95%
to total loans
YTD net charge-offs to    1.36%        0.63%    0.43%    0.60%       0.45%
average loans, annualized



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios
                                             Nine Months Ended
                                             September 30 September 30
                                             2013         2012
Interest income                    $13,134      $13,864
Interest expense                             2,279        2,641
Net interest income                          10,855       11,223
Provision for loan losses                    2,200        1,120
Non-interest income:
 Service charges on deposits               953          1,014
 Other service charges and fees            452          400
 Gain on sale of mortgage loans            241          219
 Non-deposit brokerage fees                234          145
 Lease income                              223          203
 BOLI income                               170          198
 Securities gains                          37           55
 Total                                  2,310        2,234
Non-interest expenses:
 Personnel expense                         4,240        4,229
 Net occupancy expense                     1,425        1,427
 Advertising and public relations          258          260
 Professional fees                         539          451
 Data processing services                  817          675
 Franchise shares and deposit tax          428          407
 FDIC insurance                            261          228
 Core deposit intangible amortization      253          265
 Postage and office supplies               113          149
 Other real estate owned expenses          38           156
 Other                                     1,168        717
 Total                                  9,540        8,964
Income before income taxes                   1,425        3,373
Provision for income taxes                   289          897
Net income                                   1,136        2,476
Preferred dividends and discount accretion   571          672
Net income available for common shareholders $565         $1,804
Basic earnings per common share              $0.29        $0.92
Diluted earnings per common share            $0.27        $0.88



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios
Key Operating Statistics:
                                                 Nine Months Ended
                                                 September30 September30
                                                 2013         2012
Average assets                                   $416,763     $402,617
Average loans                                    305,710      300,300
Average deposits                                 342,751      328,325
Average equity                                   38,810       40,059
Average common equity                            27,385       25,912
Return on average assets                         0.36%        0.82%
Return on average equity                         3.91%        8.26%
Efficiency ratio                                 71.30%       65.67%
Non-interest income to average assets            0.74%        0.74%
Non-interest expenses to average assets          3.06%        2.97%
Yield on average earning assets (tax equivalent) 4.66%        5.14%
Cost of average interest bearing liabilities     0.91%        1.10%
Net interest margin (tax equivalent)             3.87%        4.18%



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios
Consolidated Statement of Condition:   As of         As of        As of
                                       September 30, December 31, December 31,
                                       2013          2012         2011
Cash and cash equivalents              $32,527       $34,799      $30,549
Available for sale securities          50,441        46,639       50,718
Loans held for sale                    115           61           180
Loans                                  301,376       298,754      294,352
Allowance for loan losses              (4,820)       (5,721)      (5,865)
Premises and equipment, net            11,172        11,568       11,849
Bank owned life insurance (BOLI)       7,756         7,587        7,324
Federal Home Loan Bank Stock, at cost  2,025         2,025        2,025
Accrued interest receivable            1,648         1,660        1,858
Deferred income taxes                  2,728         2,180        2,973
Intangible assets                      4,841         5,094        5,443
Other real estate owned                547           191          637
Other assets                           403           1,719        1,751
 Total Assets                         $410,759      $406,556     $403,794
Deposits:
 Noninterest bearing                $ 40,082      $ 41,724     $ 38,352
 Savings, NOW and money market      121,129       111,195      116,968
 Time                               176,422       178,814      177,411
 Total deposits                   $337,633      $331,733     $332,731
FHLB advances and other borrowings     28,000        26,000       25,000
Subordinated debentures                5,000         5,000        5,000
Other liabilities                      2,032         2,257        2,191
Total Liabilities                      372,665       364,990      364,922
6.5% Cumulative preferred stock        7,659         7,659        7,659
Series A preferred stock               3,259         6,519        6,471
Common stock                           27,072        27,072       27,072
Retained earnings (deficit)            134           (430)        (2,706)
Accumulated other comprehensive income (30)          746          376
(loss)
Total Stockholders' Equity             38,094        41,566       38,872
Total Liabilities and Stockholders'    $410,759      $406,556     $403,794
Equity



Consolidated Financial Highlights (Unaudited)

In thousands, except per share data and ratios
                                       September 30, December 31, December 31,
                                       2013          2012         2011
Capital Ratios:
Tier 1 leverage                        9.35%         10.20%       9.46%
Tier 1 risk-based capital              12.32%        13.16%       11.94%
Total risk based capital               13.57%        14.41%       13.19%
Tangible equity ratio (1)              8.19%         9.08%        8.39%
Tangible common equity ratio (1)       5.50%         5.55%        4.84%
Book value per common share            $13.80        $13.91       $12.57
Tangible book value per common share   $11.34        $11.32       $9.80
(1)
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:  September 30, December 31, December 31,
                                       2013          2012         2011
Total shareholders' equity (a)         $38,094       $41,566      $38,872
Less:
 Preferred stock                     (10,918)      (14,178)     (14,130)
Common equity (b)                      27,176        27,388       24,742
 Goodwill                            (4,097)       (4,097)      (4,097)
 Intangible assets                   (744)         (997)        (1,346)
Tangible common equity (c)             22,335        22,294       19,299
Add:
 Preferred stock                     10,918        14,178       14,130
Tangible equity (d)                    $33,253       $36,472      $33,429
Total assets (e)                       $410,759      $406,556     $403,794
Less:
 Goodwill                            (4,097)       (4,097)      (4,097)
 Intangible assets                   (744)         (997)        (1,346)
Tangible assets (f)                    $405,918      $401,462     $398,351
Shares outstanding (in thousands) (g)  1,969         1,969        1,969
Book value per common share (b/g)      $13.80        $13.91       $12.57
Tangible book value per common share   $11.34        $11.32       $9.80
(c/g)
Total shareholders' equity to total    9.27%         10.22%       9.63%
assets ratio (a/e)
Tangible equity ratio (d/f)            8.19%         9.08%        8.39%
Tangible common equity ratio (c/f)     5.50%         5.55%        4.84%



SOURCE Citizens First Corporation

Contact: Todd Kanipe, CEO, tkanipe@citizensfirstbank.com, or Steve Marcum,
CFO, smarcum@citizensfirstbank.com, 270.393.0700
 
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