Citizens First Corporation Announces Third Quarter 2016 Results and Declares Common Dividend

Increase in earnings per share of 45% compared to third quarter 2015

Increase in net income of 46% compared to third quarter 2015

Net interest margin of 3.83%, compared to 3.84% in third quarter of 2015

Non-performing assets down 84% from the third quarter of 2015

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Oct 20, 2016, 03:19 ET

BOWLING GREEN, Ky., Oct. 20, 2016 /PRNewswire/ -- Citizens First Corporation (NASDAQ: CZFC) today reported results for the quarter and nine months ending September 30, 2016, which include the following:

For the quarter ended September 30, 2016, the Company reported net income of $1.14 million, or $0.45 per diluted common share. This represents an increase of $360,000, or $0.14 per diluted common share, from $775,000, or $0.31 per diluted common share, for the quarter ended September 30, 2015. "Continued loan growth, improved operating efficiency, and credit quality were the drivers of third quarter profitability," said Todd Kanipe, President & CEO of Citizens First. "General economic conditions in our markets remain favorable for loan growth. Continued pressure on the net interest margin remains our primary challenge as portfolio loans reprice."

For the nine months ended September 30, 2016, net income totaled $3.11 million, or $1.23 per diluted common share. This represents an increase of $658,000, or $0.28 per diluted common share, from the net income of $2.46 million in the first nine months of the previous year.

The Board of Directors declared a cash dividend of $0.08 per common share payable November 17, 2016 to shareholders of record as of October 31, 2016. Dividends were most recently paid in May, 2016 and November, 2015 of $0.08 per common share.

Income Statement Third Quarter 2016 Compared to Third Quarter 2015

Net interest income increased $165,000, or 4.4%, as the volume of earning assets increased from the prior year. The Company's net interest margin was 3.83% for the quarter ended September 30, 2016, and 3.84% for the quarter ended September 30, 2015, a decrease of 1 basis point. The Company's net interest margin decreased primarily due to a decline in the yield on loans.

There was no provision for loan losses in the third quarter of the current year and the third quarter in the prior year due to the continued reduction in non-performing assets.

Non-interest income increased $12,000, or 1.4%, primarily due to gains on the sale of mortgage loans.

Non-interest expense decreased $385,000, or 10.9%, primarily due to a branch disposal loss of $262,000 that occurred in 2015, and a reduction in professional fees of $85,000.

Income Statement Current Year Compared to Prior Year

Net interest income increased $487,000, or 4.3%, as the volume of earning assets increased from the prior year. The Company's net interest margin was 3.89% for the nine months ended September 30, 2016, and 3.84% for the nine months ended September 30, 2015, an increase of 5 basis points. The Company's net interest margin increased due to an increase in the yield on average earning assets coupled with a decline in the cost of average interest-bearing liabilities.

Non-interest income increased $103,000, or 4.4%, primarily due to gains on the sale of securities and gains on sale of mortgage loans, offset by a decline in lease income and non-deposit brokerage fees.

Non-interest expense decreased $167,000, or 1.7%, primarily due to a decrease in branch disposal losses of $235,000 and professional fees of $119,000, partially offset by an increase in personnel expenses, which were a result of normal salary adjustments.

Credit Quality

Non-performing assets totaled $156,000, or 0.04% of total assets, at September 30, 2016 compared to $1.0 million, or 0.24% of total assets at September 30, 2015, a decrease of $857,000.

The allowance for loan losses at September 30, 2016 was $5.0 million, or 1.45% of total loans, compared to $4.9 million, or 1.49% of total loans as of December 31, 2015. 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 September 30, 2016 were $441.7 million compared to $432.2 million at December 31, 2015. Total assets increased $9.5 million, or 2.2%, from December 31, 2015 to September 30, 2016 due to a growth in loans, partially offset by a decline in available-for-sale securities.

Loans increased $12.4 million, or 3.7%, from December 31, 2015 to September 30, 2016. Deposits decreased $16.6 million, or 4.5%, from December 31, 2015 to September 30, 2016. The decrease in deposits was offset by an increase in borrowings of $23 million.

Stockholders' equity increased to $42.4 million at September 30, 2016 from $39.5 million at December 31, 2015. The common equity and tangible common equity ratios were 7.95% and 7.05%, respectively, as of September 30, 2016 compared to 7.37% and 6.43%, respectively, at December 31, 2015. The book value and tangible book value per common share ratios were $17.56 and $15.40, respectively, at September 30, 2016 compared to $16.18 and $13.97, respectively, at December 31, 2015.

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)
	September 30,		December 31,		December 31,
	2016		2015		2014
Assets
Cash and due from financial institutions	$	5,353	$	8,865	$	7,962
Federal funds sold		—		6,390		3,360
Interest-bearing deposits in other financial institutions		15,611		2,728		—
Available-for-sale securities		55,424		60,200		58,986
Loans		343,176		330,782		318,477
Allowance for loan losses		(4,961)		(4,916)		(4,885)
Premises and equipment, net		9,461		9,998		10,758
Bank owned life insurance (BOLI)		8,307		8,174		7,993
Federal Home Loan Bank (FHLB) stock, at cost		2,025		2,025		2,025
Accrued interest receivable		1,547		1,680		1,527
Deferred income taxes		1,017		1,328		1,479
Goodwill and other intangible assets		4,309		4,362		4,433
Other real estate owned		—		100		198
Other assets		409		465		501
Total Assets	$	441,678	$	432,181	$	412,814
Liabilities
Deposits
Noninterest bearing	$	49,439	$	48,522	$	41,975
Savings, NOW and money market		155,912		168,335		148,935
Time		148,478		153,531		150,874
Total deposits		353,829		370,388		341,784
FHLB advances and other borrowings		38,000		15,000		25,500
Subordinated debentures		5,000		5,000		5,000
Accrued interest payable		219		213		231
Other liabilities		2,240		2,056		1,851
Total Liabilities		399,288		392,657		374,366
Stockholders' Equity
6.5% Cumulative convertible preferred stock		7,261		7,659		7,659
Common stock		25,899		25,406		27,072
Retained earnings		8,887		6,304		3,373
Accumulated other comprehensive income		343		155		344
Total stockholders' equity		42,390		39,524		38,448
Total liabilities and stockholders' equity	$	441,678	$	432,181	$	412,814

Consolidated Financial Highlights (Unaudited) Consolidated Statement of Income

	Three months ended
	(In Thousands, Except Per Share Data and ratios)
	Sept 30,		June 30,		March 31,		Dec 31,		Sept 30,
	2016		2016		2016		2015		2015
Interest and dividend income	$	4,557	$	4,536	$	4,476	$	4,494	$	4,415
Interest expense		639		624		613		623		662
Net interest income		3,918		3,912		3,863		3,871		3,753

Provision (credit) for loan losses		—		(85)		—		(65)		—

Non-interest income
Service charges on deposit accounts		361		339		325		360		386
Other service charges and fees		172		179		164		260		187
Gain on sale of mortgage loans		110		91		77		63		60
Non-deposit brokerage fees		83		75		72		82		103
Lease income		61		49		45		43		59
BOLI income		45		44		44		45		45
Gain on sale of securities		20		55		51		68		-
Total non-interest income		852		832		778		921		840

Non-interest expenses:
Personnel expense		1,674		1,676		1,784		1,648		1,650
Net occupancy expense		481		492		483		464		495
Advertising and public relations		86		98		61		80		75
Professional fees		98		137		180		176		183
Data processing services		262		263		256		262		262
Franchise shares and deposit tax		132		132		132		96		146
FDIC insurance		58		59		59		61		61
Other real estate owned expenses		(8)		23		1		52		6
Loss on branch disposal		—		27		—		-		262
Other		362		390		414		380		390
Total non-interest expenses		3,145		3,297		3,370		3,219		3,530

Income before income taxes		1,625		1,532		1,271		1,638		1,063
Income taxes		490		458		366		487		288
Net income		1,135		1,074		905		1,151		775
Dividends on preferred stock		124		123		124		131		131
Net income available for common stockholders	$	1,011	$	951	$	781	$	1,020	$	644
Basic earnings per common share	$	0.50	$	0.48	$	0.39	$	0.52	$	0.33
Diluted earnings per common share	$	0.45	$	0.42	$	0.36	$	0.45	$	0.31

Consolidated Financial Highlights (Unaudited) Key Operating Statistics

	Three months ended
	(In Thousands, Except Per Share Data and ratios)
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2016			2016			2016			2015			2015
Average:
Assets	$	442,042		$	439,081		$	433,143		$	430,174		$	428,331
Earning Assets		414,569			409,722			402,638			399,055			396,906
Loans		344,733			338,456			333,000			329,131			319,053
Interest-bearing deposits		304,473			311,084			320,363			316,979			321,643
Deposits		354,953			360,209			367,397			365,401			366,627
Borrowed funds		42,490			35,868			23,394			23,179			20,696
Equity		42,002			40,912			40,156			39,181			38,516
Common equity		34,741			33,651			32,831			31,522			30,857

Return on average assets		1.02	%		0.98	%		0.84	%		1.06	%		0.72	%
Return on average equity		10.75	%		10.56	%		9.06	%		11.66	%		7.97	%

Efficiency ratio		65.21	%		69.15	%		72.15	%		66.91	%		75.43	%
Non-interest income to average assets		0.77	%		0.76	%		0.72	%		0.85	%		0.78	%
Non-interest expenses to average assets		2.83	%		3.02	%		3.13	%		2.97	%		3.27	%
Net overhead to average assets		2.06	%		2.26	%		2.41	%		2.12	%		2.49	%
Yield on loans		4.86	%		4.95	%		4.96	%		4.97	%		5.04	%
Yield on investment securities (TE)		2.66	%		2.77	%		2.77	%		2.84	%		2.79	%
Yield on average earning assets (TE)		4.44	%		4.53	%		4.55	%		4.55	%		4.50	%
Cost of average interest bearing liabilities		0.73	%		0.72	%		0.72	%		0.73	%		0.77	%
Net interest margin (TE)		3.83	%		3.92	%		3.94	%		3.94	%		3.84	%
Number of FTE employees		94			96			98			98			98

Asset Quality Indicators:
Non-performing loans to total loans		0.05	%		0.06	%		0.18	%		0.16	%		0.25	%
Non-performing assets to total assets		0.04	%		0.06	%		0.16	%		0.15	%		0.24	%
Allowance for loan losses to total loans		1.45	%		1.43	%		1.53	%		1.49	%		1.53	%
YTD net charge-offs (recoveries) to average loans, annualized		(0.05)	%		(0.07)	%		(0.15)	%		0.03	%		0.03	%
YTD net charge-offs (recoveries)		(130)			(119)			(128)			104			64

Consolidated Financial Highlights (Unaudited) Consolidated Statement of Income

	Nine months ended
	(In Thousands, Except Per
	Share Data and ratios)
	September 30,		September 30,
	2016		2015
Interest and dividend income	$	13,569	$	13,190
Interest expense		1,876		1,984
Net interest income		11,693		11,206

Provision (credit) for loan losses		(85)		200

Non-interest income
Service charges on deposit accounts		1,025		1,061
Other service charges and fees		515		498
Gain on sale of mortgage loans		278		170
Non-deposit brokerage fees		230		282
Lease income		155		202
BOLI income		133		136
Gain on sale of securities		126		10
Total non-interest income		2,462		2,359

Non-interest expenses:
Personnel expense		5,134		4,887
Net occupancy expense		1,456		1,516
Advertising and public relations		245		250
Professional fees		415		534
Data processing services		781		739
Franchise shares and deposit tax		396		437
FDIC insurance		176		183
Other real estate owned expenses		16		42
Loss on branch disposal		27		262
Other		1,166		1,129
Total non-interest expenses		9,812		9,979

Income before income taxes		4,428		3,386
Income taxes		1,314		930
Net income		3,114		2,456
Dividends on preferred stock		371		389
Net income available for common stockholders	$	2,743	$	2,067
Basic earnings per common share	$	1.37	$	1.05
Diluted earnings per common share	$	1.23	$	0.95

Consolidated Financial Highlights (Unaudited) Key Operating Statistics

	Nine months ended
	(In Thousands, Except Per
	Share Data and ratios)
	September 30,			September 30,
	2016			2015
Average:
Assets	$	438,103		$	430,182
Earning Assets		408,998			399,544
Loans		338,752			319,940
Interest-bearing deposits		311,945			321,756
Deposits		360,831			365,919
Borrowed funds		33,948			23,538
Equity		41,027			38,573
Common equity		33,745			30,914

Return on average assets		0.95	%		0.76	%
Return on average equity		10.14	%		8.51	%

Efficiency ratio		68.79	%		72.20	%
Non-interest income to average assets		0.75	%		0.73	%
Non-interest expenses to average assets		2.99	%		3.10	%
Net overhead to average assets		2.24	%		2.37	%
Yield on loans		4.92	%		5.06	%
Yield on investment securities (TE)		2.73	%		2.85	%
Yield on average earning assets (TE)		4.51	%		4.50	%
Cost of average interest bearing liabilities		0.72	%		0.77	%
Net interest margin (TE)		3.89	%		3.84	%

Consolidated Financial Highlights (Unaudited)

	(In Thousands, Except Share Data and ratios)
	September 30,			December 31,			December 31,
Consolidated Capital Ratios	2016			2015			2014

Total shareholders' equity to total assets ratio		9.60	%		9.15	%		9.31	%
Tangible equity ratio (1)		8.71	%		8.22	%		8.33	%
Common equity ratio		7.95	%		7.37	%		7.46	%
Tangible common equity ratio (1)		7.05	%		6.43	%		6.45	%
Book value per common share	$	17.56		$	16.18		$	15.64
Tangible book value per common share (1)	$	15.40		$	13.97		$	13.39
End of period common share closing price	$	16.00		$	13.74		$	11.90

(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)
	September 30,			December 31,			December 31,
Regulation G Non-GAAP Reconciliation:	2016			2015			2014

Total shareholders' equity (a)	$	42,390		$	39,524		$	38,448
Less:
Preferred stock		(7,261)			(7,659)			(7,659)
Common equity (b)		35,129			31,865			30,789
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(212)			(265)			(336)
Tangible common equity (c)		30,820			27,503			26,356
Add:
Preferred stock		7,261			7,659			7,659
Tangible equity (d)		38,081			35,162			34,015

Total assets (e)		441,678			432,181			412,814
Less:
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(212)			(265)			(336)
Tangible assets (f)	$	437,369		$	427,819		$	408,381
Shares outstanding (in thousands) (g)		2,001			1,969			1,969

Book value per common share (b/g)	$	17.56		$	16.18		$	15.64
Tangible book value per common share (c/g)	$	15.40		$	13.97		$	13.39

Equity to assets ratio (a/e)		9.60	%		9.15	%		9.31	%
Tangible equity ratio (d/f)		8.71	%		8.22	%		8.33	%
Common equity ratio (b/e)		7.95	%		7.37	%		7.46	%
Tangible common equity ratio (c/f)		7.05	%		6.43	%		6.45	%

SOURCE Citizens First Corporation

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