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Citizens First Corporation Announces Third Quarter 2018 Results

BOWLING GREEN, Ky. , Oct. 18, 2018 /PRNewswire/ -- Citizens First Corporation ( NASDAQ: CZFC ) today reported results for the third quarter ended September 30, 2018 which include the following:

For the quarter ended September 30, 2018 the Company reported net income of $1.20 million , or $0.47 per diluted common share (EPS).  This represents a 6.8% increase or $76,000 from the $1.12 million , or $0.44 per diluted common share, for the quarter ended September 30, 2017 .  For the nine months ended September 30, 2018 , net income totaled $3.66 million , or $1.44 per diluted common share.  This represents an increase of $519,000 , a 16.5% increase, or $0.21 per diluted common share, from the net income of $3.14 million in the first nine months of the previous year.  "While profitability improved over 2017, margin pressure and softening loan demand continue to present challenges for us," said Todd Kanipe , President and CEO.  "Market competition for deposits has intensified.  As a result, cost of funding has outpaced improvements in loan yields," Kanipe added.

Income Statement Third Quarter 2018 Compared to Third Quarter 2017

Net interest income increased $49,000 , or 1.3%, for the third quarter of the current year compared to the third quarter of the prior year.  The Company's net interest margin was 3.43% for the quarter ended September 30, 2018 , compared to 3.68% for the quarter ended September 30, 2017 , a decrease of 25 basis points.  The Company's net interest margin decreased primarily due to an increase in the cost of interest-bearing liabilities which exceeded the increase in the yield on earning assets.

There was a $30,000 provision for loan losses in the third quarter of the current year compared to a $30,000 credit for loan losses in the third quarter of the prior year.

Non-interest income decreased $13,000 , or 1.4%, from the prior year primarily due to a decrease in service charges on deposit accounts of $26,000 and a decrease in gains on sale of securities of $25,000 , offset by an increase in non-deposit brokerage fees of $20,000 and gain on sale of mortgage loans of $16,000 .

Non-interest expenses increased $79,000 , or 2.5%, from the prior year primarily due to an increase in personnel expense of $57,000 , and an increase in other expense of $55,000 .

Income tax expenses decreased $179,000 , or 36.5% due to a marginal rate of 21% in 2018 compared to a rate of 34% in 2017.

Income Statement Current Year Compared to Prior Year

Net interest income increased $400,000 , or 3.5%, from the prior year.  The Company's net interest margin was 3.55% for the nine months ended September 30, 2018 , and 3.68% for the nine months ended September 30, 2017 , a decrease of 13 basis points.  The Company's net interest margin decreased due to an increase in the cost of average interest-bearing liabilities.

There was a $90,000 provision for loan losses in the current year compared to no provision in the previous year.

Non-interest income decreased $16,000 , or 0.6%, primarily due to a decrease in service charges on deposit accounts of $24,000 , a reduction in gains on sale of mortgage loans of $21,000 and gains on the sale of securities of $48,000 , offset by an increase in other service charges and fees of $37,000 and non-deposit brokerage fees of $42,000 .

Non-interest expense increased $225,000 , or 2.3%, primarily due to an increase of $287,000 in personnel expenses and $82,000 increase in other expenses offset by a decrease of $111,000 in data processing services.

Income tax expenses decreased $450,000 , or 33.7% due to a marginal rate of 21% in 2018 compared to a rate of 34% in 2017.

Credit Quality

Non-performing assets totaled $2.0 million , or 0.43% of total assets, at September 30, 2018 compared to $1.3 million , or 0.29% of total assets at December 31, 2017 , an increase of approximately $670,000 .   The increase is primarily attributable to one credit secured by real estate which was moved to non-accrual status during the first quarter of 2018.

The allowance for loan losses at September 30, 2018 was $4.8 million , or 1.29% of total loans, compared to $4.7 million , or 1.26% of total loans as of December 31 , 2017.  The Company considers 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 the Company's loan portfolio.

Balance Sheet

Total assets at September 30, 2018 were $473.7 million , compared to $465.4 million at December 31, 2017 . Loans decreased $3.6 million , or 1%, from December 31, 2017 to September 30, 2018. Deposits increased $10.3 million , or 2.8%, from December 31, 2017 to September 30, 2018.  Borrowings from the Federal Home Loan Bank decreased $5.0 million , or 12.5%, from December 31, 2017 to September 30, 2018.

Stockholders' equity increased to $48.6 million at September 30, 2018 from $45.8 million at December 31 , 2017.  The book value per common share and tangible book value per common share ratios were $19.14 and $17.50 , respectively, at September 30, 2018 compared to $18.14 and $16.47 , respectively, at December 31 , 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)
Consolidated Statement of Condition














(In Thousands, Except
Per Share Data and ratios)




September 30, 


December 31, 


December 31, 




2018


2017


2016


Assets











Cash and due from financial institutions


$

7,523


$

6,444


$

8,542


Interest-bearing deposits in other financial institutions



28,113



13,532



11,018


Available-for-sale securities



45,450



48,616



53,547


Loans held for sale





427



264


Loans



370,689



374,239



359,391


Allowance for loan losses



(4,776)



(4,724)



(4,854)


Premises and equipment, net



8,930



9,140



9,390


Bank owned life insurance (BOLI)



8,660



8,528



8,351


Federal Home Loan Bank (FHLB) stock, at cost



2,065



2,053



2,025


Accrued interest receivable



1,596



1,681



1,622


Deferred income taxes



766



670



1,464


Goodwill and other intangible assets



4,168



4,221



4,291


Other assets



490



555



371


Total Assets


$

473,674


$

465,382


$

455,422


Liabilities











Deposits











Noninterest bearing


$

51,679


$

53,259


$

52,322


Savings, NOW and money market



188,200



175,087



173,620


Time



142,754



143,968



144,497


Total deposits



382,633



372,314



370,439


FHLB advances and other borrowings



35,000



40,000



35,000


Subordinated debentures



5,000



5,000



5,000


Accrued interest payable



360



285



220


Other liabilities



2,092



1,949



2,399


Total Liabilities



425,085



419,548



413,058


Stockholders' Equity











6.5% Cumulative convertible preferred stock







7,261


Common stock



33,232



33,138



25,920


Retained earnings



16,380



13,142



9,706


Accumulated other comprehensive (loss)



(1,023)



(446)



(523)


Total stockholders' equity



48,589



45,834



42,364


Total liabilities and stockholders' equity


$

473,674


$

465,382


$

455,422



Consolidated Financial Highlights (Unaudited)
Consolidated Statement of Income




















Three months ended




(In Thousands, Except Per Share Data and ratios)




September 30, 


June 30, 


March 31, 


December 31, 


September 30, 




2018


2018


2018


2017


2017


Interest and dividend income


$

5,094


$

5,162


$

4,860


$

4,905


$

4,640


Interest expense



1,182



1,064



960



858



777


   Net interest income



3,912



4,098



3,900



4,047



3,863



















Provision (credit) for loan losses



30



30



30



(150)



(30)



















Non-interest income

















Service charges on deposit accounts



291



309



298



315



317


Other service charges and fees



319



319



281



288



317


Gain on sale of mortgage loans



95



69



50



82



79


Non-deposit brokerage fees



110



101



99



97



90


Lease income



52



79



52



52



53


BOLI income



45



44



43



45



44


Gain on sale of securities











25


   Total non-interest income



912



921



823



879



925



















Non-interest expenses:

















Personnel expense



1,730



1,773



1,846



1,740



1,673


Net occupancy expense



457



432



453



448



449


Advertising and public relations



102



85



81



78



111


Professional fees



156



172



164



86



160


Data processing services



208



205



194



192



214


Franchise shares and deposit tax



120



120



120



88



132


FDIC insurance



42



43



42



47



52


Other



470



461



459



433



415


   Total non-interest expenses



3,285



3,291



3,359



3,112



3,206



















Income before income taxes



1,509



1,698



1,334



1,964



1,612


Income taxes



311



324



250



1,012



490


   Net income



1,198



1,374



1,084



952



1,122


Dividends on preferred stock












Net income available for common stockholders


$

1,198


$

1,374


$

1,084


$

952


$

1,122


   Basic earnings per common share


$

0.47


$

0.54


$

0.43


$

0.38


$

0.44


   Diluted earnings per common share


$

0.47


$

0.54


$

0.43


$

0.37


$

0.44



Consolidated Financial Highlights (Unaudited)
Key Operating Statistics




















Three months ended




(In Thousands, Except Per Share Data and ratios)




September 30, 


June 30, 


March 31, 


December 31, 


September 30, 




2018


2018


2018


2017


2017


Average:

















Assets


$

482,506


$

478,836


$

476,063


$

462,966


$

449,770


Earning Assets



454,914



451,315



448,853



435,458



422,258


Loans



377,140



389,614



384,184



370,173



362,343


Interest-bearing deposits



333,043



328,932



322,627



317,196



312,668


Deposits



388,124



383,144



375,617



369,643



364,798


Borrowed funds



43,685



46,758



52,167



45,000



37,696


Equity



48,242



47,006



46,023



45,907



44,916


Common equity



48,242



47,006



46,023



45,907



44,916



















Return on average assets



0.99

%


1.15

%


0.92

%


0.82

%


0.99

%

Return on average equity



9.85

%


11.97

%


9.55

%


8.23

%


9.91

%


















Efficiency ratio



67.74

%


65.23

%


70.72

%


62.46

%


66.51

%

Non-interest income to average assets



0.75

%


0.77

%


0.70

%


0.75

%


0.82

%

Non-interest expenses to average assets



2.70

%


2.76

%


2.86

%


2.67

%


2.83

%

Net overhead to average assets



1.95

%


1.99

%


2.16

%


1.91

%


2.01

%

Yield on loans



4.89

%


4.94

%


4.75

%


4.88

%


4.73

%

Yield on investment securities (TE)



2.51

%


2.61

%


2.56

%


2.77

%


2.68

%

Yield on average earning assets (TE)



4.46

%


4.61

%


4.42

%


4.52

%


4.41

%

Cost of average interest bearing liabilities



1.24

%


1.14

%


1.04

%


0.94

%


0.88

%

Net interest margin (TE)



3.43

%


3.67

%


3.55

%


3.74

%


3.68

%

Number of FTE employees



98



99



96



98



97



















Asset Quality Indicators:

















Non-performing loans to total loans



0.54

%


0.54

%


0.54

%


0.36

%


0.73

%

Non-performing assets to total assets



0.43

%


0.43

%


0.43

%


0.29

%


0.58

%

Allowance for loan losses to total loans



1.29

%


1.24

%


1.21

%


1.26

%


1.34

%

YTD net charge-offs (recoveries) to average loans, annualized



0.01

%


0.02

%


0.06

%


(0.01)

%


%

YTD net charge-offs (recoveries)



38



34



61



(20)



2


Consolidated Financial Highlights (Unaudited)
Consolidated Statement of Income











Nine Months Ended





(In Thousands, Except Per Share Data and ratios)




September 30, 


September 30, 




2018


2017


Interest and dividend income


$

15,116


$

13,690


Interest expense



3,206



2,180


   Net interest income



11,910



11,510










Provision  for loan losses



90












Non-interest income








Service charges on deposit accounts



898



922


Other service charges and fees



919



882


Gain on sale of mortgage loans



214



235


Non-deposit brokerage fees



310



268


Lease income



183



185


BOLI income



132



132


Gain on sale of securities





48


Total non-interest income



2,656



2,672










Non-interest expenses:








Personnel expense



5,349



5,062


Net occupancy expense



1,342



1,356


Advertising and public relations



268



259


Professional fees



492



461


Data processing services



607



718


Franchise shares and deposit tax



360



396


FDIC insurance



127



150


Other



1,390



1,308


Total non-interest expenses



9,935



9,710










Income before income taxes



4,541



4,472


Income taxes



885



1,335


Net income



3,656



3,137


Dividends on preferred stock





238


Net income available for common stockholders


$

3,656


$

2,899


Basic earnings per common share


$

1.44


$

1.30


Diluted earnings per common share


$

1.44


$

1.23


Consolidated Financial Highlights (Unaudited)
Key Operating Statistics











Nine Months Ended




(In Thousands, Except Per




Share Data and ratios)




September 30, 


September 30, 




2018


2017


Average:








Assets


$

479,158


$

452,177


Earning Assets



451,715



424,753


Loans



383,620



363,294


Interest-bearing deposits



328,239



315,821


Deposits



382,341



365,925


Borrowed funds



47,505



40,161


Equity



47,098



43,938


Common equity



47,098



39,659










Return on average assets



1.02

%


0.93

%

Return on average equity



10.38

%


9.55

%









Efficiency ratio



67.84

%


67.81

%

Non-interest income to average assets



0.74

%


0.79

%

Non-interest expenses to average assets



2.77

%


2.87

%

Net overhead to average assets



2.03

%


2.08

%

Yield on loans



4.86

%


4.67

%

Yield on investment securities (TE)



2.56

%


2.80

%

Yield on average earning assets (TE)



4.50

%


4.37

%

Cost of average interest bearing liabilities



1.14

%


0.82

%

Net interest margin (TE)



3.55

%


3.68

%

Number of FTE employees



98



97


Consolidated Financial Highlights (Unaudited)














(In Thousands, Except Per Share Data and ratios)




September 30, 


December 31, 


December 31, 


Consolidated Capital Ratios


2018


2017


2016













Total shareholders' equity to total assets ratio



10.26

%


9.85

%


9.30

%

Tangible equity ratio (1)



9.46

%


9.02

%


8.44

%

Tangible common equity ratio (1)



9.46

%


9.02

%


6.83

%

Book value per common share


$

19.14


$

18.14


$

17.54


Tangible book value per common share (1)


$

17.50


$

16.47


$

15.40


End of period common share closing price


$

26.25


$

24.00


$

18.00


(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 Per Share Data and ratios)




September 30, 


December 31, 


December 31, 


Regulation G Non-GAAP Reconciliation:


2018


2017


2016













Total shareholders' equity (a)


$

48,589


$

45,834


$

42,364


Less:











Preferred stock







(7,261)


Common equity (b)



48,589



45,834



35,103


Goodwill



(4,097)



(4,097)



(4,097)


Intangible assets



(71)



(124)



(194)


Tangible common equity (c)



44,421



41,613



30,812


Add:











Preferred stock







7,261


Tangible equity (d)



44,421



41,613



38,073













Total assets (e)



473,674



465,382



455,422


Less:











Goodwill



(4,097)



(4,097)



(4,097)


Intangible assets



(71)



(124)



(194)


Tangible assets (f)


$

469,506


$

461,161


$

451,131


Shares outstanding (in thousands) (g)



2,538



2,526



2,001













Book value per common share (b/g)


$

19.14


$

18.14


$

17.54


Tangible book value per common share (c/g)


$

17.50


$

16.47


$

15.40


Equity to assets ratio (a/e)



10.26

%


9.85

%


9.30

%

Tangible equity ratio (d/f)



9.46

%


9.02

%


8.44

%

Common equity ratio (b/e)



10.26

%


9.85

%


7.71

%

Tangible common equity ratio (c/f)



9.46

%


9.02

%


6.83

%

Cision

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