CITIZENS FIRST CORP - FORM 8-K - EX-99.1

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8-K - 8-K - CITIZENS FIRST CORP	f8-k.htm

Exhibit 99.1

Citizens First Corporation Announces Third Quarter 2017 Results, Increase in Common Dividend and Election of Two Corporate Directors

mailto:tkanipe@citizensfirstbank.com

mailto:smarcum@citizensfirstbank.com

NEWS

For Immediate Release

Contact:

Todd Kanipe, CEO

tkanipe@citizensfirstbank.com

Steve Marcum, CFO

smarcum@citizensfirstbank.com

Citizens First Corporation

1065 Ashley Street, Suite 150

Bowling Green, KY 42103

270.393.0700

BOWLING GREEN, KY, October 19, 2017 – Citizens First Corporation (NASDAQ: CZFC) today reported results for the nine months ended September 30, 2017 which include the following:

For the quarter ended September 30, 2017 the Company reported net income of $1.12 million, or $0.44 per diluted common share. This represents a decrease of $13,000 from $1.14 million, or $0.45 per diluted common share, for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, net income totaled $3.14 million, or $1.23 per diluted common share. This represents an increase of $23,000 from the net income of $3.11 million in the first nine months of the previous year. “While profitability improved over the previous year, it was due primarily to lower operating expenses and credit costs,” said Todd Kanipe, President and CEO.

Income Statement Third Quarter 2017 Compared to Third Quarter 2016

Net interest income decreased $55,000, or 1.4%, as the yield on loans decreased and the cost of funds increased from the third quarter of the prior year. The Company’s net interest margin was 3.68% for the quarter ended September 30, 2017, compared to 3.83% for the quarter ended September 30, 2016, a decrease of 15 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 a ($30,000) (credit) provision for loan losses in the third quarter of the current year compared to no provision in the third quarter of the prior year.

Non-interest income decreased $17,000, or 1.8%, from the prior year primarily due to a decrease in service charges on deposit accounts of $44,000 and gain on sale of mortgage loans of $31,000, partially offset by an increase in other service charges and fees of $55,000.

Non-interest expense decreased $29,000, or 0.9%, from the prior year primarily due to a decrease in data processing services of $48,000 and other expenses of $37,000, partially offset by an increase in professional fees of $62,000.

Income Statement Current Year Compared to Prior Year

Net interest income decreased $183,000, 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 nine months ended September 30, 2017, and 3.89% for the nine months ended September 30, 2016, a decrease of 21 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 $57,000, or 2.1%, primarily due to a reduction in gains on the sale of securities of $78,000 and a decrease in service charges on deposit accounts of $103,000, offset by an increase in other service charges and fees of $100,000 and non-deposit brokerage fees of $38,000.

Non-interest expense decreased $369,000, or 3.7%, primarily due to reductions in most categories of expenses, including $152,000 in other expenses, $72,000 in personnel expenses and $100,000 in occupancy expenses.

Credit Quality

Non-performing assets totaled $2.6 million, or 0.58% of total assets, at September 30, 2017 compared to $23,000, or 0.01% of total assets at December 31, 2016, an increase of $2.6 million. Two agricultural-related credits were moved to non-accrual status during the first quarter of 2017. Collateral underlying one agricultural credit was sold at auction during the third quarter, and full payment of the loan principal in the amount of $1.2 million is anticipated to be received during the fourth quarter.

The allowance for loan losses at September 30, 2017 was $4.9 million, or 1.34% 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 September 30, 2017 were $455.4 million, the same level as December 31, 2016. Loans increased $2.8 million, or 0.8%, from December 31, 2016 to September 30, 2017. “Loan growth in the third quarter was lower than anticipated; however, we remain encouraged by our pipeline for the remainder of the year and improving loan demand in our markets,” Kanipe noted. Deposits, primarily time deposits, decreased $7.8 million, or 2.1%, from December 31, 2016 to September 30, 2017. Borrowings from the Federal Home Loan Bank increased $5.0 million, or 14.3%, from December 31, 2016 to September 30, 2017.

Stockholders’ equity increased to $45.4 million at September 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 $17.99 and $16.31, respectively, at September 30, 2017 compared to $17.54 and $15.40, respectively, at December 31, 2016.

Increase in Common Dividend

On October 19, 2017, the Board of Directors declared a cash dividend of $0.10 per common share payable November 16, 2017 to shareholders of record as of October 27, 2017, which represents a 25% increase in the semiannual dividend. Dividends were most recently paid in May, 2017 at $0.08 per common share. “Completing the conversion of preferred shares and eliminating the related costs in the second quarter of this year now gives us the ability to return more capital to our common shareholders. We believe this increased common dividend is consistent with our goal of maximizing total shareholder return,” Kanipe added.

Appointment of Corporate Directors

On October 19, 2017, the Board of Directors appointed Mark Iverson as a Class II director of the Company and of the Bank, effective immediately, and Jeff Perkins as a Class II director of the Company and of the Bank, effective immediately. “These gentlemen bring significant executive and financial experience to our board room as well as an understanding of the needs of consumer and business customers in our core markets,” Kanipe commented.

Mark Iverson, age 55, is a Certified Public Accountant, and the General Manager of Bowling Green Municipal Utilities in Bowling Green, Kentucky. Mr. Iverson graduated from Western Kentucky University and currently resides in Bowling Green, Kentucky. He serves on the Board of Directors of the Tennessee Valley Public Power Association and previously served as Chairman of the Board of the Bowling Green Area Chamber of Commerce. It is expected that Mr. Iverson will serve on the Audit and Governance Committees of the Board.

Jeff Perkins, age 55, is a Certified Public Accountant and the President of Mid-South Lumber and Supply Company in Bowling Green, Kentucky. Mr. Perkins graduated from Western Kentucky University and currently resides in Franklin, Kentucky. He has served as President of the Kentucky Building Material Association and served on the board and finance committees of the Independent Builders Supply Association. It is expected that Mr. Perkins will serve on the Audit and Compensation Committees of the Board.

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,
	2017		2016		2015
Assets
Cash and due from financial institutions	$	7,452	$	8,542	$	8,865
Federal funds sold		—		—		6,390
Interest-bearing deposits in other financial institutions		18,086		11,018		2,728
Available-for-sale securities		45,044		53,547		60,200
Loans held for sale		341		264		—
Loans		362,208		359,391		330,782
Allowance for loan losses		(4,852)		(4,854)		(4,916)
Premises and equipment, net		9,115		9,390		9,998
Bank owned life insurance (BOLI)		8,483		8,351		8,174
Federal Home Loan Bank (FHLB) stock, at cost		2,053		2,025		2,025
Accrued interest receivable		1,505		1,622		1,680
Deferred income taxes		1,105		1,464		1,328
Goodwill and other intangible assets		4,238		4,291		4,362
Other real estate owned		—		—		100
Other assets		597		371		465
Total Assets	$	455,375	$	455,422	$	432,181
Liabilities
Deposits
Noninterest bearing	$	51,306	$	52,322	$	48,522
Savings, NOW and money market		172,178		173,620		168,335
Time		139,113		144,497		153,531
Total deposits		362,597		370,439		370,388
FHLB advances and other borrowings		40,000		35,000		15,000
Subordinated debentures		5,000		5,000		5,000
Accrued interest payable		254		220		213
Other liabilities		2,083		2,399		2,056
Total Liabilities		409,934		413,058		392,657
Stockholders’ Equity
6.5% Cumulative convertible preferred stock		—		7,261		7,659
Common stock		33,081		25,920		25,406
Retained earnings		12,443		9,706		6,304
Accumulated other comprehensive income (loss)		(83)		(523)		155
Total stockholders’ equity		45,441		42,364		39,524
Total liabilities and stockholders’ equity	$	455,375	$	455,422	$	432,181

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,
	2017		2017		2017		2016		2016
Interest and dividend income	$	4,640	$	4,593	$	4,457	$	4,572	$	4,557
Interest expense		777		726		677		652		639
Net interest income		3,863		3,867		3,780		3,920		3,918

Provision (credit) for loan losses		(30)		—		30		—		—

Non-interest income
Service charges on deposit accounts		317		327		278		371		361
Other service charges and fees		317		301		264		245		262
Gain on sale of mortgage loans		79		88		68		97		110
Non-deposit brokerage fees		90		91		87		85		83
Lease income		53		80		52		52		61
BOLI income		44		45		43		44		45
Gain on sale of securities		25		—		23		—		20
Total non-interest income		925		932		815		894		942

Non-interest expenses:
Personnel expense		1,673		1,655		1,734		1,741		1,674
Net occupancy expense		449		446		461		471		481
Advertising and public relations		111		77		71		75		86
Professional fees		160		171		130		50		98
Data processing services		214		251		253		256		262
Franchise shares and deposit tax		132		132		132		132		132
FDIC insurance		52		49		49		47		58
Other real estate owned expenses		—		—		—		1		(8)
Other		415		432		461		457		452
Total non-interest expenses		3,206		3,213		3,291		3,230		3,235

Income before income taxes		1,612		1,586		1,274		1,584		1,625
Income taxes		490		478		367		481		490
Net income		1,122		1,108		907		1,103		1,135
Dividends on preferred stock		—		119		119		124		124
Net income available for common stockholders	$	1,122	$	989	$	788	$	979	$	1,011
Basic earnings per common share	$	0.44	$	0.47	$	0.39	$	0.49	$	0.50
Diluted earnings per common share	$	0.44	$	0.43	$	0.36	$	0.43	$	0.45

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,
	2017			2017			2017			2016			2016
Average:
Assets	$	449,770		$	454,524		$	452,265		$	444,168		$	442,042
Earning Assets		422,258			427,674			424,349			417,161			414,569
Loans		362,343			363,733			363,824			347,046			344,733
Interest-bearing deposits		312,668			319,883			314,939			310,336			304,473
Deposits		364,798			368,743			364,227			360,816			354,953
Borrowed funds		37,696			39,769			43,078			38,429			42,490
Equity		44,916			44,047			42,827			42,652			42,002
Common equity		44,916			38,240			35,718			35,391			34,741

Return on average assets		0.99	%		0.98	%		0.81	%		0.99	%		1.02	%
Return on average equity		9.91	%		10.09	%		8.59	%		10.29	%		10.75	%

Efficiency ratio		66.51	%		66.10	%		70.96	%		66.20	%		65.86	%
Non-interest income to average assets		0.82	%		0.82	%		0.73	%		0.80	%		0.85	%
Non-interest expenses to average assets		2.83	%		2.84	%		2.95	%		2.89	%		2.91	%
Net overhead to average assets		2.01	%		2.01	%		2.22	%		2.09	%		2.06	%
Yield on loans		4.73	%		4.69	%		4.60	%		4.86	%		4.86	%
Yield on investment securities (TE)		2.68	%		2.85	%		2.87	%		2.58	%		2.66	%
Yield on average earning assets (TE)		4.41	%		4.37	%		4.32	%		4.42	%		4.44	%
Cost of average interest bearing liabilities		0.88	%		0.81	%		0.77	%		0.74	%		0.73	%
Net interest margin (TE)		3.68	%		3.69	%		3.68	%		3.80	%		3.83	%
Number of FTE employees		97			95			94			95			94

Asset Quality Indicators:
Non-performing loans to total loans		0.73	%		0.80	%		0.83	%		0.01	%		0.05	%
Non-performing assets to total assets		0.58	%		0.63	%		0.65	%		0.01	%		0.04	%
Allowance for loan losses to total loans		1.34	%		1.36	%		1.34	%		1.35	%		1.45	%
YTD net charge-offs (recoveries) to average loans, annualized		—	%		(0.01)	%		(0.02)	%		(0.01)	%		(0.05)	%
YTD net charge-offs (recoveries)		2			(13)			(22)			(23)			(130)

Consolidated Financial Highlights (Unaudited)

Consolidated Statement of Income


	Nine Months Ended
	September 30,		September 30,
	2017		2016
Interest and dividend income	$	13,690	$	13,569
Interest expense		2,180		1,876
Net interest income		11,510		11,693

Provision (credit) for loan losses		—		(85)

Non-interest income
Service charges on deposit accounts		922		1,025
Other service charges and fees		882		782
Gain on sale of mortgage loans		235		278
Non-deposit brokerage fees		268		230
Lease income		185		155
BOLI income		132		133
Gain on sale of securities		48		126
Total non-interest income		2,672		2,729

Non-interest expenses:
Personnel expense		5,062		5,134
Net occupancy expense		1,356		1,456
Advertising and public relations		259		245
Professional fees		461		415
Data processing services		718		781
Franchise shares and deposit tax		396		396
FDIC insurance		150		176
Other real estate owned expenses		—		16
Other		1,308		1,460
Total non-interest expenses		9,710		10,079

Income before income taxes		4,472		4,428
Income taxes		1,335		1,314
Net income		3,137		3,114
Dividends on preferred stock		238		371
Net income available for common stockholders	$	2,899	$	2,743
Basic earnings per common share	$	1.30	$	1.37
Diluted earnings per common share	$	1.23	$	1.23

Consolidated Financial Highlights (Unaudited)

Key Operating Statistics


	Nine Months Ended
	(In Thousands, Except Per
	Share Data and ratios)
	September 30,			September 30,
	2017			2016
Average:
Assets	$	452,177		$	438,103
Earning Assets		424,753			408,997
Loans		363,294			338,751
Interest-bearing deposits		315,822			311,945
Deposits		365,925			360,831
Borrowed funds		40,161			33,949
Equity		43,938			41,027
Common equity		39,659			33,745

Return on average assets		0.93	%		0.95	%
Return on average equity		9.55	%		10.14	%

Efficiency ratio		67.81	%		68.79	%
Non-interest income to average assets		0.79	%		0.83	%
Non-interest expenses to average assets		2.87	%		3.07	%
Net overhead to average assets		2.08	%		2.24	%
Yield on loans		4.67	%		4.92	%
Yield on investment securities (TE)		2.80	%		2.73	%
Yield on average earning assets (TE)		4.37	%		4.51	%
Cost of average interest bearing liabilities		0.82	%		0.72	%
Net interest margin (TE)		3.68	%		3.89	%
Number of FTE employees		97			96

Consolidated Financial Highlights (Unaudited)


	(In Thousands, Except Share Data and ratios)
	September 30,			December 31,			December 31,
Consolidated Capital Ratios	2017			2016			2015

Total shareholders’ equity to total assets ratio		9.98	%		9.30	%		9.15	%
Tangible equity ratio (1)		9.13	%		8.44	%		8.22	%
Tangible common equity ratio (1)		9.13	%		6.83	%		6.43	%
Book value per common share	$	17.99		$	17.54		$	16.18
Tangible book value per common share (1)	$	16.31		$	15.40		$	13.97
End of period common share closing price	$	23.84		$	18.00		$	13.74

(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:	2017			2016			2015

Total shareholders’ equity (a)	$	45,441		$	42,364		$	39,524
Less:
Preferred stock		—			(7,261)			(7,659)
Common equity (b)		45,441			35,103			31,865
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(141)			(194)			(265)
Tangible common equity (c)		41,203			30,812			27,503
Add:
Preferred stock		—			7,261			7,659
Tangible equity (d)		41,203			38,073			35,162

Total assets (e)		455,375			455,422			432,181
Less:
Goodwill		(4,097)			(4,097)			(4,097)
Intangible assets		(141)			(194)			(265)
Tangible assets (f)	$	451,137		$	451,131		$	427,819
Shares outstanding (in thousands) (g)		2,526			2,001			1,969

Book value per common share (b/g)	$	17.99		$	17.54		$	16.18
Tangible book value per common share (c/g)	$	16.31		$	15.40		$	13.97
Equity to assets ratio (a/e)		9.98	%		9.30	%		9.15	%
Tangible equity ratio (d/f)		9.13	%		8.44	%		8.22	%
Common equity ratio (b/e)		9.98	%		7.71	%		7.37	%
Tangible common equity ratio (c/f)		9.13	%		6.83	%		6.43	%

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