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| 8-K - FORM 8-K FILING DOCUMENT - CITIZENS SOUTH BANKING CORP | document.htm |
EXHIBIT 99.1
Citizens South Banking Corporation Announces First Quarter 2012 Financial Results
GASTONIA, N.C., April 23, 2012 (GLOBE NEWSWIRE) -- Citizens South Banking Corporation (Nasdaq:CSBC), the holding company for Citizens South Bank (the "Bank"), released its unaudited results of operations and other financial information for the three-month period ended March 31, 2012. The Company reported a net loss allocable to common shareholders totaling $2.3 million, or $0.20 per diluted share, for the quarter ended March 31, 2012, compared to a net loss allocable to common shareholders of $1.1 million, or $0.10 per diluted share, for the quarter ended March 31, 2011. The loss was attributable to $6.4 million in loan charge offs resulting primarily from the completion of our internal loan review initiated in the fourth quarter of 2011. Our internal loan review is now complete. The Company's pre-tax, pre-credit earnings of $3.5 million for the first quarter of 2012 were $905,000 higher than the Company's pre-tax, pre-credit earnings in the first quarter of 2011.
Other highlights during the quarter included:
- The successful completion of the Bank's first examination by the Office of the Comptroller of the Currency ("OCC").
- Improvement of the Company's net interest margin to 3.88% for the first quarter of 2012, an increase of four basis points on a linked quarter basis, and an increase of 46 basis points compared to the first quarter of 2011. This represents the second consecutive quarter of margin expansion for the Company.
- Non-covered past due loans 30 to 89 days delinquent and still accruing interest totaled $5.4 million, or 0.92% of total non-covered loans, at March 31, 2012. This represents the fifth consecutive quarter that past due non-covered accruing loans have been less than 1.0% of total non-covered loans.
- The Bank's non-covered classified loans increased by $3.4 million during the first quarter 2012 to $32.1 million. Non-covered classified loans had decreased by $6.6 million during the fourth quarter 2011. Non-covered classified assets, which includes both classified loans and other real estate owned, increased by $6.5 million to $44.1 million.
- On a linked quarter basis, nonperforming non-covered assets increased by $6.3 million to $34.0 million, or 3.18% of total assets at March 31, 2012, compared to 2.57% of total assets at December 31, 2011.
- The Company's non-time core deposits grew by $12.6 million, or 10.9% annualized, during the first quarter of 2012 to $475.9 million at March 31, 2012.
President Kim S. Price stated, "While disappointed with the loss in the first quarter, we are pleased to have completed our internal loan review and to have completed our first exam by the OCC. Both had an impact on our first quarter results but both reassure us that our balance sheet is strong and that our management has in place the processes to manage assets effectively even in challenging economic conditions. The completion of these two initiatives sets the stage for improved financial metrics and long-term profitability."
First Quarter Financial Results:
Asset Quality
During the first quarter of 2012 the Company recognized net loan charge-offs of $6.4 million. These charge-offs resulted from re-valuations on some collateral properties and also from resolutions of problem assets where a portion of the loan was charged-off. The elevated level of net charge-offs recognized over the past two quarters is largely the result of an internal loan review which is now complete. Despite the elevated level of loan charge-offs during the first quarter 2012, the Company had an overall increase in nonperforming non-covered assets from $27.7 million, or 2.57% of total assets at December 31, 2011, to $34.0 million, or 3.18% of total assets at March 31, 2012. This increase was largely due to a $3.1 million increase in other real estate owned and a $3.2 million increase in nonaccrual loans. The increase in nonaccrual loans was due to the addition of several real estate loans that have a current payment status, but were placed on nonaccrual status for non-payment related reasons. Also as a result of the items described above, our classified assets, which totaled $37.7 million at December 31, 2011, increased to $44.1 million at March 31, 2012.
Loans and Core Deposits
We are experiencing positive trends in local economic conditions and loan demand continues to improve gradually in our markets. Total non-covered loans increased by $5.7 million on a linked quarter basis, or 4.0% annualized. The Company originated $40.2 million in loans during the first quarter of 2012 and the Company's loan pipeline remains strong. Management continues to focus on increasing business loans to the professional market, owner-occupied commercial real estate loans, and residential and personal loans. Our realigned lending team continues to be more effective in developing quality business relationships and we are on target with our Small Business Lending Fund initiative which has reduced our preferred stock dividend rate from 5.0% to 1.3%. We expect to continue to expand our small business lending in 2012, which should ultimately reduce our dividend rate to the 1.0% minimum rate.
The Company continues to experience strong non-time core deposit growth. On a linked-quarter basis, non-time core deposits increased by $12.6 million, or 10.9% annualized.
Capital Position
The Company's capital position continues to be a source of strength. At March 31, 2012, the Bank's total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 15.5%, 14.2%, and 9.4%, respectively, compared to 16.7%, 15.4%, and 9.9% respectively, at March 31, 2011. The Bank exceeded the regulatory minimum capital ratios to be considered well-capitalized by 155%, 237%, and 188% for total risk-based capital, Tier 1 risk-based capital, and Tier 1 leverage capital, respectively, at March 31, 2012.
Increasing Net Interest Income and Net Interest Margin
The Company's net interest income for the first quarter of 2012 increased by $921,000, or 12.2%, as compared to the first quarter of 2011. The primary reason for this growth was a 46 basis point increase in the Company's net interest margin from 3.42% for the three months ended March 31, 2011, to 3.88% for the three months ended March 31, 2012. The improvement in the net interest margin was due to a 40 basis point decrease in the Company's cost of funds and a 13 basis point increase in the Company's yield on assets. On a linked quarter basis, the Company's net interest margin increased by four basis points. Given the Company's high level of liquidity, coupled with strong core deposit growth, we have been able to repay maturing time deposits or reprice these time deposits at lower market rates at maturity.
Noninterest Income and Expense
Noninterest income increased by $1.5 million to $2.9 million for the quarter ended March 31, 2012, as compared to the quarter ended March 31, 2011. Excluding the effects of the loss from acquisition ($255,000 for first quarter 2011) and the gain on sale of investments and other assets ($664,000 for first quarter 2012 and $12,000 for first quarter 2011), noninterest income increased by $561,000, or 32.6%, for the first quarter of 2012 compared to the first quarter of 2011. We continue to improve our deposit account revenue and our mortgage banking revenue.
Excluding valuation adjustments and other expenses on other real estate owned ($1,597 for first quarter 2012 and $873,000 for first quarter 2011) and acquisition and integration expenses ($45,000 for first quarter 2011), noninterest expense increased by $560,000, or 8.3%, during the respective first quarter periods. This increase was primarily due to costs related to the Bank's acquisition of New Horizons Bank in April 2011.
About Citizens South Banking Corporation and Citizens South Bank
Citizens South Bank was founded in 1904 and is headquartered in Gastonia, North Carolina. Deposits are FDIC insured up to applicable regulatory limits. At March 31, 2012, the Company had $1.1 billion in assets with 21 full-service offices in the Charlotte and North Georgia regions, including Gaston, Iredell, Rowan, Mecklenburg, and Union counties in North Carolina, York County in South Carolina, and Towns, Union, Fannin, and Gilmer counties in Georgia. Citizens South Bank is an Equal Housing Lender and Member, FDIC. The Bank is a wholly-owned subsidiary of Citizens South Banking Corporation, and shares of the common stock of the Company trade on the NASDAQ Global Market under the ticker symbol "CSBC." The Company maintains a website at www.citizenssouth.com that includes information on the Company, along with a list of products and services, branch locations, current financial information, and links to the Company's filings with the SEC.
The Citizens South Banking Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7099
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under accounting principles generally accepted in the United States ("GAAP"), and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation, or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
Cautionary Statement Regarding Forward-looking Statements
This news release contains certain forward-looking statements which include, but are not limited to, statements of our earnings expectations, statements regarding our operating strategy, and estimates of our future costs and benefits. These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Forward-looking statements speak only as of the date they are made and the Company is under no duty to update these forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements or to reflect the occurrence of unanticipated events. A number of factors could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, changes in general economic conditions – either locally or nationally, competition among depository and financial institutions, our ability to continue to expand our small business lending and thereby reduce the dividend rate on our SBLF preferred stock, the continuation of current revenue and expense trends, significant changes in interest rates, unforeseen changes in the Company's markets, and legal, regulatory, or accounting changes. The Company's reports filed from time to time with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2011, describe some of these factors.
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | ||||
| 2012 | 2011 | ||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| (Dollars in thousands, except share and per share data) | |||||
| Summary of Operations: | |||||
| Interest income - taxable equivalent | $ 10,528 | $ 11,089 | $ 11,308 | $ 11,488 | $ 10,457 |
| Interest expense | 2,016 | 2,304 | 2,554 | 2,826 | 2,855 |
| Net interest income - taxable equivalent | 8,512 | 8,785 | 8,754 | 8,662 | 7,602 |
| Less: Taxable-equivalent adjustment | 59 | 65 | 62 | 69 | 70 |
| Net interest income | 8,453 | 8,720 | 8,692 | 8,593 | 7,532 |
| Provision for loan losses | 6,300 | 4,635 | 1,350 | 1,700 | 3,000 |
| Net interest income after loan loss provision | 2,153 | 4,085 | 7,342 | 6,893 | 4,532 |
| Noninterest income | 2,946 | 1,985 | 1,990 | 5,886 | 1,478 |
| Noninterest expense | 8,911 | 8,779 | 8,931 | 9,270 | 7,672 |
| Net income (loss) before income taxes | (3,812) | (2,709) | 401 | 3,509 | (1,662) |
| Income tax expense (benefit) | (1,672) | (1,172) | 28 | 1,213 | (771) |
| Net income (loss) | (2,140) | (1,537) | 373 | 2,296 | (891) |
| Dividends and accretion of discount on preferred stock | 122 | 767 | 247 | 256 | 256 |
| Net income (loss) available to common shareholders | $ (2,262) | $ (2,304) | $ 126 | $ 2,040 | $ (1,147) |
| Per Common Share Data: | |||||
| Net income (loss): | |||||
| Basic | $ (0.20) | $ (0.20) | $ 0.01 | $ 0.18 | $ (0.10) |
| Diluted | (0.20) | (0.20) | 0.01 | 0.18 | (0.10) |
| Weighted average shares outstanding: | |||||
| Basic | 11,469,525 | 11,470,599 | 11,462,107 | 11,455,642 | 11,491,734 |
| Diluted | 11,469,525 | 11,470,599 | 11,462,107 | 11,455,642 | 11,491,734 |
| End of period shares outstanding | 11,506,324 | 11,506,324 | 11,506,324 | 11,506,324 | 11,508,750 |
| Cash dividends declared | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
| Book value | 6.04 | 6.27 | 6.44 | 6.44 | 6.22 |
| Tangible book value | 5.93 | 6.15 | 6.31 | 6.29 | 6.09 |
| Selected Financial Performance Ratios (annualized): | |||||
| Return on average assets | (0.85)% | (0.85)% | 0.05% | 0.73% | (0.44)% |
| Return on average common equity | (12.86)% | (12.45)% | 0.68% | 11.00% | (6.39)% |
| Noninterest income to average total assets | 1.10% | 0.73% | 0.72% | 2.12% | 0.56% |
| Noninterest expense to average total assets | 3.34% | 3.24% | 3.23% | 3.34% | 2.91% |
| Efficiency ratio | 78.17% | 82.01% | 83.61% | 64.02% | 85.15% |
| Operating Earnings (Non-GAAP): | |||||
| Net income (loss) available to common shareholders | $ (2,262) | $ (2,304) | $ 126 | $ 2,040 | $ (1,147) |
| (Gain) loss on acquisition, net of tax | -- | (15) | 29 | (2,695) | 155 |
| (Gain) loss on sale of investments, net of tax | (405) | -- | (67) | -- | -- |
| Other-than-temporary impairment on securities, net of tax | -- | 22 | -- | -- | -- |
| Acquisition and integration expenses, net of tax | -- | 584 | 86 | 345 | 27 |
| Net operating income (loss) | $ (2,667) | $ (1,713) | $ 174 | $ (310) | $ (965) |
| Operating net income (loss) per common share: | |||||
| Basic | $ (0.23) | $ (0.15) | $ 0.02 | $ (0.03) | $ (0.08) |
| Diluted | (0.23) | (0.15) | 0.02 | (0.03) | (0.08) |
| Pre-tax, pre-credit earnings (1) | $ 3,543 | $ 3,545 | $ 3,545 | $ 3,902 | $ 2,638 |
| Operating return on average assets | (1.00)% | (0.63)% | 0.06% | (0.11)% | (0.37)% |
| Operating return on average equity | (11.72)% | (7.29)% | 0.73% | (1.30)% | (4.13)% |
| Operating efficiency ratio (2) | 68.13% | 69.52% | 67.52% | 65.92% | 72.99% |
| (1) Calculated using net interest income plus noninterest income less noninterest expense adjusted for the following items: 1) gains or losses from acquisition or sale of investments or sale of other assets; 2) other-than-temporary impairment on securities; 3) amortization of intangible assets; 4) other real estate owned valuation adjustments and expenses; and 5) acquisition and integration expenses. | |||||
| (2) Calculated by dividing noninterest expense by net interest income plus noninterest income excluding the following items: 1) gains or losses from acquisition or sale of investments; 2) other-than-temporary impairment on securities; 3) other real estate owned valuation adjustments and expenses; and 4) acquisition and integration expenses. | |||||
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | ||||
| 2012 | 2011 | ||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| (Dollars in thousands, except per share data) | |||||
| Credit Quality Information and Ratios: | |||||
| Allowance for loan losses - beginning of period | $ 11,713 | $ 12,956 | $ 12,742 | $ 12,006 | $ 11,924 |
| Add: Provision for loan losses | 6,300 | 4,635 | 1,350 | 1,700 | 3,000 |
| Less: Net charge-offs | 6,430 | 5,878 | 1,136 | 964 | 2,918 |
| Allowance for loan losses - end of period | $ 11,583 | $ 11,713 | $ 12,956 | $ 12,742 | $ 12,006 |
| Assets not covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing | $ 5,362 | $ 4,933 | $ 4,479 | $ 5,687 | $ 5,692 |
| Past due loans (30-89 days) to total non-covered loans | 0.92% | 0.86% | 0.77% | 0.99% | 0.97% |
| Nonperforming non-covered loans: | |||||
| One-to-four family residential | $ 2,698 | $ 2,407 | $ 1,556 | $ 1,406 | $ 2,373 |
| Construction | -- | -- | -- | -- | 72 |
| Commercial land | 3,852 | 2,631 | 3,176 | 3,167 | 4,653 |
| Residential development | 3,742 | 6,474 | 6,459 | 5,155 | 4,675 |
| Other commercial real estate | 8,924 | 4,173 | 6,602 | 10,306 | 9,636 |
| Commercial business | 1,086 | 168 | 306 | 201 | 309 |
| Consumer | 1,750 | 2,958 | 2,426 | 2,440 | 2,639 |
| Total nonperforming non-covered loans | 22,052 | 18,811 | 20,525 | 22,675 | 24,357 |
| Other nonperforming non-covered assets | 11,987 | 8,936 | 8,208 | 10,723 | 8,463 |
| Total nonperforming non-covered assets | $ 34,039 | $ 27,747 | $ 28,733 | $ 33,398 | $ 32,820 |
| Allowance for loan losses to total non-covered loans | 2.00% | 2.04% | 2.23% | 2.22% | 2.05% |
| Net charge-offs to average non-covered loans (annualized) | 4.44% | 4.07% | 0.79% | 0.66% | 2.00% |
| Nonperforming non-covered loans to non-covered loans | 3.80% | 3.28% | 3.53% | 3.95% | 4.15% |
| Nonperforming non-covered assets to total assets | 3.18% | 2.57% | 2.61% | 2.99% | 3.15% |
| Nonperforming non-covered assets to total non-covered loans and other real estate owned | 5.75% | 4.76% | 4.87% | 5.72% | 5.51% |
| Assets covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing (3) | $ 2,726 | $ 5,372 | $ 6,430 | $ 12,987 | $ 7,006 |
| Past due loans (30-89 days) to total covered loans | 1.83% | 3.36% | 3.81% | 7.34% | 5.09% |
| Total covered nonperforming loans (4) | $ 40,582 | $ 44,056 | $ 37,074 | $ 35,830 | $ 24,791 |
| Other covered nonperforming assets | 9,447 | 8,746 | 12,765 | 14,127 | 8,225 |
| Total covered nonperforming assets | $ 50,029 | $ 52,802 | $ 49,839 | $ 49,957 | $ 33,016 |
| Classified Assets (5) | |||||
| Non-covered classified loans | $ 32,147 | $ 28,727 | $ 35,357 | $ 41,515 | $ 42,915 |
| OREO and other nonperforming assets | 11,987 | 8,936 | 8,208 | 10,723 | 8,463 |
| Total classified assets | $ 44,134 | $ 37,663 | $ 43,565 | $ 52,238 | $ 51,378 |
| Tier 1 capital | $ 100,757 | $ 102,539 | $ 104,487 | $ 105,088 | $ 102,628 |
| Total classified assets to Tier 1 capital | 43.80% | 36.73% | 41.69% | 49.71% | 50.06% |
| (3) The contractual balance of past due loans covered by FDIC loss-share agreements totaled $7.7 million $13.7 million, $8.2 million, $7.0 million and $3.5 million at December 31, 2010, March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2012 respectively. | |||||
| (4) The contractual balance of nonperforming loans covered by FDIC loss-share agreements totaled $31.2 million, $28.7 million $39.3 million $48.8 million, $55.4 million and $46.2 million at December 31, 2010, March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2012 respectively. | |||||
| (5) Excludes loans and OREO covered by FDIC loss-share agreements. | |||||
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | ||||
| 2012 | 2011 | ||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |
| (Dollars in thousands, except per share data) | |||||
| Net Interest Margin (annualized): | |||||
| Yield on earning assets | 4.75% | 4.81% | 4.84% | 4.95% | 4.62% |
| Cost of funds | 0.92% | 1.01% | 1.11% | 1.23% | 1.32% |
| Net interest rate spread | 3.83% | 3.80% | 3.73% | 3.72% | 3.30% |
| Net interest margin (taxable equivalent) | 3.88% | 3.84% | 3.76% | 3.78% | 3.42% |
| Selected End of Period Balances: | |||||
| Loans covered by FDIC loss-share agreements | $ 148,713 | $ 159,688 | $ 168,940 | $ 177,047 | $ 137,758 |
| Loans not covered by FDIC loss-share agreements | 579,812 | 574,100 | 582,065 | 573,603 | 586,897 |
| Total loans, net | 728,525 | 733,788 | 751,005 | 750,650 | 724,655 |
| Investment securities | 121,411 | 147,899 | 132,443 | 156,328 | 154,006 |
| Total interest-earning assets | 890,456 | 895,003 | 913,910 | 927,463 | 887,706 |
| Total assets | 1,070,992 | 1,080,460 | 1,098,974 | 1,117,993 | 1,041,444 |
| Noninterest-bearing deposits | 97,437 | 88,077 | 87,413 | 82,305 | 78,342 |
| Interest-bearing deposits | 775,209 | 787,979 | 801,167 | 822,273 | 754,461 |
| Total deposits | 872,646 | 876,056 | 888,580 | 904,578 | 832,803 |
| Total borrowings and other debt | 104,080 | 103,939 | 105,778 | 108,011 | 107,646 |
| Shareholders' equity | 90,010 | 92,659 | 94,782 | 94,771 | 92,276 |
| Selected Quarterly Average Balances: | |||||
| Loans covered by FDIC loss-share agreements | $ 154,344 | $ 164,314 | $ 173,755 | $ 170,580 | $ 142,353 |
| Loans not covered by FDIC loss-share agreements | 579,224 | 578,083 | 576,846 | 583,294 | 583,993 |
| Average loans, net | 733,568 | 742,397 | 750,601 | 753,874 | 726,346 |
| Investment securities | 128,086 | 140,846 | 146,017 | 157,513 | 135,645 |
| Average interest-earning assets | 880,073 | 906,064 | 920,932 | 918,118 | 902,141 |
| Average total assets | 1,068,689 | 1,084,313 | 1,107,687 | 1,110,740 | 1,053,747 |
| Noninterest-bearing deposits | 90,024 | 87,770 | 84,001 | 81,617 | 72,235 |
| Interest-bearing deposits | 777,621 | 789,233 | 810,469 | 814,736 | 769,152 |
| Average total deposits | 867,645 | 877,003 | 894,470 | 896,353 | 841,387 |
| Average borrowings and other debt | 103,181 | 105,872 | 106,696 | 107,872 | 109,385 |
| Shareholders' equity | 91,057 | 94,028 | 94,711 | 95,116 | 93,533 |
| Capital Ratios: | |||||
| Total equity to total assets | 8.40% | 8.58% | 8.62% | 8.48% | 8.86% |
| Tangible common equity to tangible assets | 6.38% | 6.56% | 6.61% | 6.49% | 6.73% |
| Total Risk-Based Capital (Bank only) | 15.50% | 15.60% | 17.32% | 17.29% | 16.70% |
| Tier 1 Risk-Based Capital (Bank only) | 14.24% | 14.35% | 16.06% | 16.03% | 15.44% |
| Tier 1 Leverage Capital (Bank only) | 9.41% | 9.44% | 9.53% | 9.42% | 9.89% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) | ||||
| Amount | Percent | |||
| March 31, 2012 | December 31, 2011 | Change | Change | |
| (Dollars in thousands) | ||||
| ASSETS | ||||
| Cash and cash equivalents: | 115,422 | 88,344 | 27,078 | 30.65% |
| Investment securities available for sale, at fair value | 20,947 | 52,136 | (31,189) | -59.82% |
| Investment securities held to maturity, at amortized cost | 100,464 | 95,763 | 4,701 | 4.91% |
| Federal Home Loan Bank stock, at cost | 5,067 | 5,067 | -- | 0.00% |
| Presold loans in process of settlement | 4,666 | 2,146 | 2,520 | 117.43% |
| Loans: | ||||
| Covered by FDIC loss-share agreements | 148,713 | 159,688 | (10,975) | -6.87% |
| Not covered by FDIC loss-share agreements | 579,812 | 574,100 | 5,712 | 0.99% |
| Loans, net of deferred fees and costs | 728,525 | 733,788 | (5,263) | -0.72% |
| Allowance for loan losses | (11,583) | (11,713) | 130 | -1.11% |
| Loans, net | 716,942 | 722,075 | (5,133) | -0.71% |
| Other real estate owned | 21,433 | 17,571 | 3,862 | 21.98% |
| Premises and equipment, net | 25,671 | 25,888 | (217) | -0.84% |
| FDIC loss share receivable | 30,704 | 38,931 | (8,227) | -21.13% |
| Accrued interest receivable | 2,577 | 2,773 | (196) | -7.07% |
| Bank-owned life insurance | 18,554 | 18,978 | (424) | -2.23% |
| Intangible assets | 1,251 | 1,373 | (122) | -8.89% |
| Other assets | 7,294 | 9,415 | (2,121) | -22.53% |
| Total assets | $ 1,070,992 | $ 1,080,460 | $ (9,468) | -0.88% |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Deposits: | ||||
| Noninterest-bearing demand deposits | $ 97,437 | $ 88,077 | $ 9,360 | 10.63% |
| Interest-bearing demand and savings | 378,421 | 375,160 | 3,261 | 0.87% |
| Time deposits | 396,788 | 412,819 | (16,031) | -3.88% |
| Total deposits | 872,646 | 876,056 | (3,410) | -0.39% |
| Securities sold under repurchase agreements | 9,919 | 9,787 | 132 | 1.35% |
| Borrowed money | 78,697 | 78,688 | 9 | 0.01% |
| Subordinated debt | 15,464 | 15,464 | -- | 0.00% |
| Other liabilities | 4,256 | 7,806 | (3,550) | -45.48% |
| Total liabilities | 980,982 | 987,801 | (6,819) | -0.69% |
| Shareholders' Equity | ||||
| Preferred stock | 20,500 | 20,500 | -- | 0.00% |
| Common stock | 124 | 124 | -- | 0.00% |
| Additional paid-in-capital | 63,941 | 63,888 | 53 | 0.08% |
| Retained earnings, substantially restricted | 5,477 | 7,854 | (2,377) | -30.26% |
| Accumulated other comprehensive income | (32) | 293 | (325) | -110.92% |
| Total shareholders' equity | 90,010 | 92,659 | (2,649) | -2.86% |
| Total liabilities and shareholders' equity | $ 1,070,992 | $ 1,080,460 | $ (9,468) | -0.88% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
| Three Months Ended | ||||
| March 31, | Amount | Percent | ||
| 2012 | 2011 | Change | Change | |
| (Dollars in thousands) | ||||
| Interest Income: | ||||
| Interest and fees on loans | $ 9,646 | $ 9,461 | $ 185 | 1.96% |
| Investment securities: | ||||
| Taxable interest income | 736 | 790 | (54) | -6.84% |
| Tax-exempt interest income | 38 | 69 | (31) | -44.93% |
| Other interest income | 49 | 67 | (18) | -26.87% |
| Total interest income | 10,469 | 10,387 | 82 | 0.79% |
| Interest Expense: | ||||
| Deposits | 1,236 | 2,002 | (766) | -38.26% |
| Repurchase agreements | 8 | 18 | (10) | -55.56% |
| Borrowed money | 669 | 763 | (94) | -12.32% |
| Subordinated debt | 103 | 72 | 31 | 43.06% |
| Total interest expense | 2,016 | 2,855 | (839) | -29.39% |
| Net interest income | 8,453 | 7,532 | 921 | 12.23% |
| Provision for loan losses | 6,300 | 3,000 | 3,300 | 110.00% |
| Net interest income after provision for loan losses | 2,153 | 4,532 | (2,379) | -52.49% |
| Noninterest Income: | ||||
| Service charges on deposit accounts | 1,055 | 957 | 98 | 10.24% |
| Mortgage banking income | 317 | 237 | 80 | 33.76% |
| Commissions on sales of financial products | 86 | 67 | 19 | 28.36% |
| Income from bank-owned life insurance | 184 | 182 | 2 | 1.10% |
| Gain (loss) from acquisition | -- | (255) | 255 | -100.00% |
| Gain on sale of investments, available for sale | 664 | -- | 664 | n/a |
| Gain (loss) on sale of other assets | -- | 12 | (12) | -100.00% |
| Other | 640 | 278 | 362 | 130.22% |
| Total noninterest income | 2,946 | 1,478 | 1,468 | 99.32% |
| Noninterest Expense: | ||||
| Compensation and benefits | 3,846 | 3,648 | 198 | 5.43% |
| Occupancy and equipment | 908 | 828 | 80 | 9.66% |
| Data processing and other technology | 255 | 183 | 72 | 39.34% |
| Professional services | 275 | 253 | 22 | 8.70% |
| Advertising and business development | 68 | 54 | 14 | 25.93% |
| Loan collection and other expenses | 251 | 290 | (39) | -13.45% |
| Deposit insurance | 418 | 334 | 84 | 25.15% |
| Amortization of intangible assets | 122 | 139 | (17) | -12.23% |
| Office supplies | 60 | 70 | (10) | -14.29% |
| Telephone and communications | 106 | 97 | 9 | 9.28% |
| Other real estate owned valuation adjustments | 1,000 | 509 | 491 | 96.46% |
| Other real estate owned expenses | 597 | 364 | 233 | 64.01% |
| Acquisition and integration expenses | -- | 45 | (45) | -100.00% |
| Other | 1,005 | 858 | 147 | 17.13% |
| Total noninterest expense | 8,911 | 7,672 | 1,137 | 14.82% |
| Loss before income tax benefit | (3,812) | (1,662) | (2,150) | 129.36% |
| Income tax benefit | (1,672) | (771) | (901) | 116.86% |
| Net loss | (2,140) | (891) | (1,249) | 140.18% |
| Dividends on preferred stock | 122 | 256 | (134) | -52.34% |
| Net loss allocable to common shareholders | $ (2,262) | $ (1,147) | $ (1,115) | 97.21% |
CONTACT: For More Information:
Gary F. Hoskins, CFO
(704) 884-2263
gary.hoskins@citizenssouth.com