Citizens First Corporation Announces First Quarter 2013 Results

BOWLING GREEN, Ky., April 22, 2013 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the first quarter ending March 31, 2013, which include the following:

• For the quarter ended March 31, 2013, the Company reported net income of $115,000, or a loss of $0.05 per diluted common share.  This represents a decrease of $582,000, or $0.28 per diluted common share, from the linked quarter ended December 31, 2012.  Compared to the quarter ended March 31 a year ago, net income decreased $693,000 or $0.34 per diluted common share.  
• Provision for loan losses was $1.3 million for the first quarter of 2013 compared to $580,000 for the linked quarter ended December 31, 2012 and $370,000 for the quarter ended March 31, 2012.  Todd Kanipe, President & CEO of Citizens First commented, "Our higher level of non-performing loans in the quarter increased provision expense, adversely impacted margin and increased collection expense.  We are working aggressively to reduce non-performing assets and expect resolution of a number of them in the second quarter."
• The Company's net interest margin was 3.96% for the quarter ended March 31, 2013 compared to 4.24% for the quarter ended December 31, 2012 and 4.17% for the quarter ended March 31, 2012, a decrease of 28 basis points for the linked quarter and a decrease of 21 basis points from the prior year.  The Company's net interest margin decreased from the prior quarter primarily due to a decrease in loan income for the quarter as the level of non-accrual loans increased. 

First Quarter 2013 Compared to Fourth Quarter 2012

Net interest income for the quarter ended March 31, 2013 declined $189,000 from the previous quarter due to a reduction in loan income, which included the effect of non-accrual loan interest reversed against income in the current quarter.

Non-interest income for the three months ended March 31, 2013 decreased $45,000, or 5.9%, compared to the previous quarter, primarily due to a reduction of service charges on deposit accounts of $60,000.  Non-interest expense for the three months ended March 31, 2013 decreased $9,000, or 0.3%, compared to the previous quarter. Other operating expenses, primarily collection expenses related to non-performing loans, increased $73,000 while personnel expenses decreased $48,000. 

A $1.3 million provision for loan losses was recorded for the first quarter of 2013, compared to a $580,000 provision in the previous quarter.  The provision expense was higher in the first quarter of 2013 primarily as a result of a $4.6 million increase in nonperforming assets in the current quarter.  Specific allocations in the allowance for loan losses increased as a result of the increased nonperforming assets.  Net charge-offs were $321,000 for the first quarter of 2013 compared to $827,000 in the fourth quarter of 2012.

First Quarter 2013 Compared to First Quarter 2012

Net interest income for the quarter ended March 31, 2013 decreased $26,000, or 0.7%, compared to the previous year.  The decrease in net interest income was impacted by a reduction in interest expense of $164,000 combined with a decrease in interest income of $190,000. The decrease in interest income was created by a decline in the yields on loans and taxable securities, along with the reversal of interest on non-accrual loans.

Non-interest income for the three months ended March 31, 2013 increased $23,000, or 3.3%, compared to the three months ended March 31, 2012, primarily due to an improvement in non-deposit brokerage fees of $31,000 from the prior year.

Non-interest expense for the three months ended March 31, 2013 increased $156,000, or 5.3%, compared to the three months ended March 31, 2012, due to an increase in other operating expenses which were primarily collection expenses related to non-performing loans. In addition, data processing expenses increased $36,000 and personnel expenses increased $32,000.

A $1.3 million provision for loan losses was recorded for the first quarter of 2013, an increase of $880,000, from $370,000 in the first quarter of 2012.  Net charge-offs were $321,000 for the first quarter of 2013 compared to net charge-offs of $307,000 in the first quarter of 2012.

Balance Sheet

Total assets at March 31, 2013 were $422.1 million, an increase of $15.5 million from $406.6 million at December 31, 2012.  Average assets during the first quarter were $417.8 million, an increase of 3.7% or $14.8 million from $403.0 million the first quarter of 2012.  Average interest earning assets increased 5.7% or $20.6 million, from $364.0 million in the first quarter of 2012 to $384.6 million in the first quarter of 2013.

Loans increased $2.3 million, or 0.8%, from $298.8 million at December 31, 2012 to $301.1 million at March 31, 2013.  Total loans averaged $303.9 million the first quarter of 2013, compared to $299.1 million the first quarter of 2012, an increase of $4.8 million.  Deposits at March 31, 2013 were $347.9 million, an increase of $16.2 million, or 4.9%, compared to $331.7 million at December 31, 2012.  Total deposits averaged $342.5 million the first quarter of 2013, an increase of $11.1 million, or 3.3%, compared to $331.4 million during the first 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 $10.9 million at March 31, 2013 compared to $6.3 million at December 31, 2012, an increase of $4.6 million.  Total nonperforming assets added during the quarter totaled $4.7 million, which consisted primarily of a commercial loan totaling $1.5 million and a commercial real estate loan totaling $1.8 million.

The allowance for loan losses at March 31, 2013 was $6.7 million, or 2.21% of total loans, compared to $5.7 million, or 1.91% of total loans as of December 31, 2012.  The allowance increased due to the increase in nonperforming assets, as specific allocations in the allowance were provided for these impaired loans.

A summary of nonperforming assets is presented below:

At March 31, 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 March 31, 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 7.93% as of March 31, 2013 compared to 9.08% at December 31, 2012.  The tangible book value per common share declined slightly from $11.32 at December 31, 2012, to $11.26 at March 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

(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.

SOURCE Citizens First Corporation

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