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)

SOURCE Citizens First Corporation

Related Links

http://www.citizensfirstbank.com