Centrue Financial Corporation Announces 2013 First Quarter

ST. LOUIS, MO--(Marketwired - May 6, 2013) -  Centrue Financial Corporation ( OTCQB : TRUE ) ( PINKSHEETS : TRUE )

Highlights

• First quarter of 2013 net income was $61,000, compared to a loss of $152,000 for the fourth quarter of 2012 and a loss of $500,000 in the first quarter of 2012.
• The Company's principal subsidiary, Centrue Bank (the "Bank"), posted net income of $359,000 for the first quarter of 2013 compared to net income of $49,000 for the fourth quarter of 2012 and net income of $28,000 for the first quarter of 2012.
• First quarter 2013 net interest margin was 3.21%, representing a decrease of 4 basis points from 3.25% reported in the fourth quarter of 2012 and a 19 basis point increase from the 3.02% reported in the first quarter of 2012.
• Centrue Bank remains "well capitalized" at the end of the first quarter of 2013.

Centrue Financial Corporation (the "Company" or "Centrue") ( OTCQB : TRUE ) ( PINKSHEETS : TRUE ), parent company of Centrue Bank, reported first quarter net income of $61,000 compared to a net loss of $152,000 for the fourth quarter of 2012.

"Posting earnings at both the Bank and Consolidated level reinforces that the steps we are taking to improve our performance are the right ones," remarked President & CEO Kurt R. Stevenson. "Our trends continue in the right direction with positive decreases in nonperforming assets, action list loans, past dues, and charge-offs. While we continue to prudently manage expenses and strategically lower our cost of funds, we recognize that our revenue generating efforts are the key driver of sustained profitability. We will continue to focus on growing our core business by focusing on the basics of community banking -- making quality loans and servicing our depositors."

Loans

Total loans equaled $551.5 million, representing a decrease of $7.5 million, or 1.3%, from December 31, 2012 and a decrease of $12.2 million, or 2.2%, from the same period-end in 2012. The net decrease from year-end 2012 was related to a combination of normal attrition, pay-downs, loan charge-offs, transfers to other real estate owned ("OREO") and strategic initiatives to reduce balance sheet risk. Due to economic conditions, we continue to experience a decrease in loan demand. Competition for new commercial loans remains strong.

Funding and Liquidity

Total deposits equaled $805.3 million, representing an increase of $20.0 million, or 2.5%, from December 31, 2012 and a decrease of $38.1 million, or 4.5%, from March 31, 2012. The net increase from year-end 2012 was largely related to initiatives aimed at deepening deposit relationships with loan customers and a general increase in deposits from existing account holders.

The Bank's overall liquidity position remained strong with available capacity for new loan opportunities.

Credit Quality The key credit quality metrics are as follows:

• Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased $5.8 million to $61.5 million at March 31, 2013, from $66.9 million at December 31, 2012 and $15.9 million decrease from the $77.4 million held at March 31, 2012. The ratio of nonperforming assets to total assets was 6.72% at March 31, 2013, 7.40% at December 31, 2012 and 8.05% at March 31, 2012.
• Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased $1.5 million to $36.1 million at March 31, 2013, from $37.6 million at December 31, 2012 and $7.8 million to $43.9 million at March 31, 2012. The $7.8 million decrease from the first quarter of 2012 to the first quarter of 2013 was due to a combination of successful loan workout strategies, charge-offs and transfers to OREO. The $36.1 million recorded at March 31, 2013 included $27.1 million in nonaccrual loans and $9.0 million in troubled debt restructures. The level of nonperforming loans to end of period loans was 6.54% at March 31, 2013, compared to 6.72% at December 31, 2012 and 7.79% at March 31, 2012.
• Other real estate owned decreased $3.9 million to $25.4 million at March 31, 2013, from $29.3 million at December 31, 2012 and $8.1 million from $33.5 million at March 31, 2012. In the first quarter of 2013, management converted collateral securing problem loans to properties ready for disposition in the net amount of $0.2 million. First quarter additions were more than offset by $4.0 million in dispositions and $0.3 million in additional valuation adjustments, reflective of existing market conditions and more aggressive disposition strategies.
• The allowance for loan losses to total loans was 2.99% at March 31, 2013, compared to 3.39% at December 31, 2012 and 3.61% at March 31, 2012. Management evaluates the sufficiency of the allowance for loan losses based on the combined total of specific allocations, historical loss and qualitative components and believes that the allowance for loan losses represented probable incurred credit losses inherent in the loan portfolio at March 31, 2013.
• Net loan charge-offs for the first quarter of 2013 were $3.1 million, or 0.55% of average loans, compared with $3.4 million, or 0.60% of average loans, for the fourth quarter of 2012 and $2.2 million, or 0.39% of average loans, for the first quarter of 2012. Loan charge-offs during the first quarter of 2013 were largely influenced by the credit performance of the Company's land development, construction and commercial real estate portfolio. These charge-offs reflect management's continuing efforts to align the carrying value of these impaired assets with the value of underlying collateral based upon more aggressive disposition strategies. Management believes we are recognizing losses in our portfolio through provisions and charge-offs as credit developments warrant.
• The provision for loan losses for the first quarter of 2013 was $0.6 million, a decrease from the $1.3 million recorded in the fourth quarter of 2012 and $1.4 million recorded in the first quarter of 2012. The first quarter of 2013 provision level decrease was driven by decreasing levels of nonperforming loans, stabilizing collateral values on troubled loans and light new loan demand.
• The past due ratio was 7.79% at March 31, 2013 compared to 7.36% at December 31, 2012 and 8.21% at March 31, 2012. Action Listed Loans (classified and criticized loans) declined to $78.6 million at March 31, 2013 from $80.8 million at December 31, 2012 and $117.6 million at March 31, 2012.
• The coverage ratio (allowance for loan losses to nonperforming loans) was 45.73% at March 31, 2013, compared to 50.40% at December 31, 2012 and 46.32% at March 31, 2012.

Net Interest Margin

The net interest margin was 3.21% for the first quarter of 2013, representing a decrease of 4 basis points from 3.25% recorded in the fourth quarter of 2012 and an increase of 19 basis points from 3.02% reported in the first quarter of 2012. The Bank's net interest margin was 3.34% for the first quarter of 2013, representing a decrease of 5 basis points from 3.39% recorded for the fourth quarter 2012 and a 13 basis point increase to the first quarter 2012 net interest margin. The volatility of the net interest margin is being affected by several factors including: falling yields in both the securities and loan portfolios, decreased loan volumes, decreasing cost of funds and the removal of nonperforming loans from the earning assets bucket.

Noninterest Income and Expense

Noninterest income totaled $2.9 million for the first quarter 2013, compared to $3.1 million for the same period in 2012. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.2 million or 7.1%. This $0.2 million decrease was mainly due to decreases in service charges and income from OREO properties.

Total noninterest expense for the first quarter of 2013 was $8.2 million, which was flat compared to the same period in 2012. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels decreased by $0.2 million, or 2.5%. This $0.2 million decline in expenses was spread over various categories including furniture and equipment, loan processing, and collection costs. Adversely impacting expense levels were increases in telephone, data processing, and salary and employee benefits.

Capital Management

As reflected in the following table, unit Centrue Bank was considered "well-capitalized" and the Company was considered "adequately-capitalized" under regulatory defined capital ratios as of March 31, 2013 except for the Company's Tier 1 leverage ratio which was 3.33%.

			Centrue Financial						Centrue Bank
			Mar 31, 2013			Dec 31, 2012			Mar 31, 2013			Dec 31, 2012
Capital ratios:
	Total risk-based capital		8.27	%		8.25	%		10.65	%		10.41	%
	Tier 1 risk-based capital		4.67	%		4.65	%		9.38	%		9.14	%
	Tier 1 leverage ratio		3.33	%		3.39	%		6.61	%		6.58	%

Other Items

The Company plans to relocate its headquarters from St. Louis, Missouri to Ottawa, Illinois effective May 15, 2013.

About the Company

Centrue Financial Corporation is a regional financial services company headquartered in St. Louis, Missouri and devotes special attention to personal service. The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central Illinois down to the metropolitan St. Louis area. 

Further information about the Company is available at its website at http://www.centrue.com .

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Accompanying Financial Statements and Tables

• Unaudited Selected Quarterly Consolidated Financial Data

Centrue Financial Corporation
Unaudited Selected Quarterly Consolidated Financial Data
(In Thousands, Except Per Share Data)
				Quarters Ended
				3/31/13				12/31/12				9/30/12				6/30/12				3/31/12
Balance Sheet
	Assets
	Cash and cash equivalents			$	80,420			$	63,271			$	79,423			$	48,253			$	62,544
	Securities				204,077				201,369				188,524				232,695				253,828
	Loans				551,519				559,014				561,476				567,908				563,732
	Allowance for loan losses				(16,488)				(18,948)				(21,070)				(18,234)				(20,338)
	Other real estate owned				25,426				29,305				28,601				27,890				33,501
	Other assets				70,044				69,763				67,871				68,062				68,536
		Total assets			914,998				903,774				904,825				926,574				961,803
Liabilities and stockholders' equity
	Deposits				805,279				785,337				782,597				782,264				843,405
	Non-deposit funding				64,892				74,309				77,959				97,056				70,611
	Other liabilities				16,749				16,212				15,562				14,853				15,029
		Total liabilities			886,920				875,858				876,118				894,173				929,045
	Stockholders' equity				28,078				27,916				28,707				32,401				32,758
		Total liabilities and stockholders' equity		$	914,998			$	903,774			$	904,825			$	926,574			$	961,803
Statement of Income
	Interest income			$	7,141			$	7,361			$	7,726			$	7,956			$	8,032
	Interest expense				(1,155)				(1,270)				(1,428)				(1,734)				(1,989)
	Net interest income				5,986				6,091				6,298				6,222				6,043
	Provision for loan losses				600				1,250				5,750				1,375				1,350
	Net interest income (loss) after provision for loan losses				5,386				4,841				548				4,847				4,693
	Noninterest income				2,878				3,250				3,829				3,812				3,052
	Noninterest expense				8,203				8,289				8,484				8,576				8,245
	Income (loss) before income taxes				61				(198)				(4,107)				83				(500)
	Income tax expense (benefit)				-				(46)				(788)				-				-
	Net income (loss)			$	61			$	(152)			$	(3,319)			$	83			$	(500)
	Net income (loss) for common stockholders			$	(480)			$	(686)			$	(3,848)			$	(440)			$	(1,017)
Per Share
	Basic earnings (loss) per common share			$	(0.08)			$	(0.11)			$	(0.63)			$	(0.07)			$	(0.17)
	Diluted earnings (loss) per common share				(0.08)				(0.11)				(0.63)				(0.07)				(0.17)
	Book value per common share			$	(0.84)			$	(0.87)			$	(0.74)			$	(0.13)			$	(0.07)
	Tangible book value per common share				(1.51)				(1.58)				(1.49)				(0.92)				(0.90)
	Basic weighted average common shares outstanding				6,063,441				6,063,441				6,063,441				6,063,441				6,063,441
	Diluted weighted average common shares outstanding				6,063,441				6,063,441				6,063,441				6,063,441				6,063,441
	Period-end common shares outstanding				6,063,441				6,063,441				6,063,441				6,063,441				6,063,441
Earnings Performance
	Return on average total assets				0.03	%			(0.07)	%			(1.44)	%			0.04	%			(0.21)	%
	Return on average stockholders' equity				0.90				(2.14)				(40.93)				1.01				(6.26)
	Net interest margin				3.21				3.25				3.20				3.11				3.02
	Efficiency ratio (1)				88.55				73.98				79.13				83.72				89.39
	Bank net interest margin				3.34				3.39				3.33				3.31				3.21
Asset Quality
	Nonperforming assets to total end of period assets				6.72	%			7.40	%			8.33	%			7.31	%			8.05	%
	Nonperforming loans to total end of period loans				6.54				6.72				8.32				7.01				7.79
	Net loan charge-offs to total average loans				0.55				0.60				0.52				0.62				0.39
	Allowance for loan losses to total end of period loans				2.99				3.39				3.75				3.21				3.61
	Allowance for loan losses to nonperforming loans				45.73				50.40				45.08				45.79				46.32
	Nonperforming loans			$	36,055			$	37,592			$	46,739			$	39,823			$	43,904
	Nonperforming assets				61,481				66,897				75,340				67,713				77,405
	Net loan charge-offs				3,062				3,372				2,914				3,479				2,244
Capital
	Total risk-based capital ratio				8.27	%			8.25	%			8.38	%			8.76	%			9.04	%
	Tier 1 risk-based capital ratio				4.67				4.65				4.78				5.40				5.42
	Tier 1 leverage ratio				3.33				3.39				3.38				3.82				3.78

⁽¹⁾ Calculated as noninterest expense less amortization of intangibles and expenses related to other real estate owned divided by the sum of net interest income before provisions for loan losses and total noninterest income excluding securities gains and losses and gains on sale of assets.