UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 2012
Citizens South Banking Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 0-23971 | 54-2069979 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 519 South New Hope Road, Gastonia, North Carolina | 28054-4040 | |||
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 704-868-5200
________________________________________________________________________________
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
On July 23, 2012, Citizens South Banking Corporation issued a press release to announce its results of operations for the three-month periods ended June 30, 2012 and 2011. The text of the press release and related financial supplements are included as Exhibit 99.1 to this report. The information included in the text and financial supplements of the press releases is considered to be "furnished" under the Securities Exchange Act of 1934. The Company will include final financial statements and additional analyses for the three-month periods ended June 30, 2012 and 2011, as part of its Form 10-Q covering that period.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Earnings Press Release of Citizens South Banking Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Citizens South Banking Corporation (Registrant) |
||
| July 23, 2012 (Date) |
By: | /s/ KIM S. PRICE Kim S. Price President and Chief Executive Officer |
By: |
/s/ GARY F. HOSKINS Gary F. Hoskins Chief Financial Officer |
EXHIBIT INDEX
99.1 Earnings Press Release of Citizens South Banking Corporation
EXHIBIT 99.1
GASTONIA, N.C., July 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 June 30, 2012. The Company reported a net loss allocable to common shareholders totaling $716,000, or $0.06 per diluted share, for the quarter ended June 30, 2012, compared to net income available to common shareholders of $2.0 million, or $0.18 per diluted share, for the quarter ended June 30, 2011. The net income for the quarter ended June 30, 2011 was due to the $4.4 million pre-tax gain from acquisition relating to the April 2011 acquisition of New Horizons Bank.
Other highlights during the quarter included:
President Kim S. Price stated, "We are pleased that our credit quality metrics continue showing signs of improvement. Our operating results and credit trends are very much in line with the projections utilized in our merger analysis with Park Sterling Bank and we remain excited about the earnings capacity and balance sheet strength created by combining the two companies."
Second Quarter Financial Results:
Asset Quality
During the second quarter of 2012 the Company recognized net loan charge-offs of $1.9 million compared to net loan charge-offs of $6.4 million during the first quarter of 2012. 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 decrease in net charge-offs is largely the result of an internal loan review which was completed in the first quarter of 2012 and had resulted in a higher than normal level of charge-offs during the first quarter of 2012. The Company had an overall decrease in nonperforming non-covered assets from $34.0 million, or 3.17% of total assets at March 31, 2012, to $32.2 million, or 3.06% of total assets at June 30, 2012. This $1.8 million decrease was due to a $483,000 decrease in other real estate owned and a $1.4 million decrease in nonaccrual loans. Also, the Company's classified assets, which totaled $44.1 million at March 31, 2012, decreased by $2.5 million, or 5.6%, to $41.6 million at June 30, 2012.
Loans and Core Deposits
The Company experienced positive trends in local economic conditions and loan demand continues to improve gradually in its markets. Total non-covered loans increased by $7.8 million on a linked quarter basis, or 5.4% annualized. The Company originated $49.0 million in loans during the second quarter of 2012 compared to loan originations totaling $40.2 million during the first quarter of 2012. Management continues to focus on increasing business loans to the professional market, owner-occupied commercial real estate loans, and residential and personal loans. The Company's realigned lending team has been more effective in developing quality business relationships and the Company is on target with its Small Business Lending Fund initiative which has reduced the preferred stock dividend rate from 5.0% to 1.0%.
The Company continues to experience steady non-time core deposit growth. During the first half of 2012, non-time core deposits increased by $9.9 million, or 4.3% annualized.
Capital Position
The Company's capital position continues to be a source of strength. At June 30, 2012, the Bank's total risk-based, Tier 1 risk-based, and Tier 1 leverage capital ratios were 15.6%, 14.3%, and 9.6%, respectively, compared to 17.3%, 16.0%, and 9.4% respectively, at June 30, 2011. The Bank exceeded the regulatory minimum capital ratios to be considered well-capitalized by 156%, 238%, and 192% for total risk-based capital, Tier 1 risk-based capital, and Tier 1 leverage capital, respectively, at June 30, 2012.
Net Interest Income and Net Interest Margin
The Company's net interest income for the second quarter of 2012 decreased by $430,000, or 5.0%, as compared to the second quarter of 2011. The reason for this decline was a $46.1 million decrease in average interest-earning assets associated, in part, with the expected reduction of covered assets acquired in FDIC assisted transactions. The Company's net interest margin remained flat at 3.78% for the respective quarters. On a linked quarter basis, the Company's net interest margin decreased by ten basis points. This decrease was largely driven by the Company's higher than normal level of liquidity partly associated with our anticipated merger. 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
Excluding the effects of the gain/loss from acquisition, which amounted to a loss of $175,000 for the second quarter of 2012 and a gain of $4.4 million for the second quarter of 2011, noninterest income increased by $1.4 million, or 48.9%, for the second quarter of 2012 compared to the second quarter of 2011.
Excluding valuation adjustments and other expenses on other real estate owned ($2.2 million for the second quarter of 2012 and $2.1 million for the second quarter of 2011) and acquisition and integration expenses ($566,000 for the second quarter of 2011), noninterest operating expense increased by $728,000, or 11.0%, during the respective second quarter periods. This increase was partly due to operating costs related to the Bank's acquisition of New Horizons Bank in April 2011 resulting in increased personnel and operating expenses. On a linked-quarter basis noninterest operating expense increased by $145,000, or 2.0%.
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 June 30, 2012, the Company had $1.0 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.
Important Tables Follow
| Quarterly Financial Highlights (unaudited) | At and For the Quarters Ended | |||||||||
| 2012 | 2011 | |||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
| (Dollars in thousands, except share and per share data) | ||||||||||
| Summary of Operations: | ||||||||||
| Interest income - taxable equivalent | $ 10,098 | $ 10,528 | $ 11,089 | $ 11,308 | $ 11,488 | |||||
| Interest expense | 1,888 | 2,016 | 2,304 | 2,554 | 2,826 | |||||
| Net interest income - taxable equivalent | 8,210 | 8,512 | 8,785 | 8,754 | 8,662 | |||||
| Less: Taxable-equivalent adjustment | 47 | 59 | 65 | 62 | 69 | |||||
| Net interest income | 8,163 | 8,453 | 8,720 | 8,692 | 8,593 | |||||
| Provision for loan losses | 2,555 | 6,300 | 4,635 | 1,350 | 1,700 | |||||
| Net interest income after loan loss provision | 5,608 | 2,153 | 4,085 | 7,342 | 6,893 | |||||
| Noninterest income | 2,700 | 2,719 | 1,985 | 1,990 | 5,886 | |||||
| Noninterest expense | 9,532 | 8,684 | 8,779 | 8,931 | 9,270 | |||||
| Net income (loss) before income taxes | (1,224) | (3,812) | (2,709) | 401 | 3,509 | |||||
| Income tax expense (benefit) | (576) | (1,672) | (1,172) | 28 | 1,213 | |||||
| Net income (loss) | (648) | (2,140) | (1,537) | 373 | 2,296 | |||||
| Dividends and accretion of discount on preferred stock | 68 | 122 | 767 | 247 | 256 | |||||
| Net income (loss) available to common shareholders | $ (716) | $ (2,262) | $ (2,304) | $ 126 | $ 2,040 | |||||
| Per Common Share Data: | ||||||||||
| Net income (loss): | ||||||||||
| Basic | $ (0.06) | $ (0.20) | $ (0.20) | $ 0.01 | $ 0.18 | |||||
| Diluted | (0.06) | (0.20) | (0.20) | 0.01 | 0.18 | |||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 11,444,873 | 11,469,525 | 11,470,599 | 11,462,107 | 11,455,642 | |||||
| Diluted | 11,444,873 | 11,469,525 | 11,470,599 | 11,462,107 | 11,455,642 | |||||
| End of period shares outstanding | 11,506,324 | 11,506,324 | 11,506,324 | 11,506,324 | 11,506,324 | |||||
| Cash dividends declared | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
| Book value | 5.99 | 6.04 | 6.27 | 6.44 | 6.44 | |||||
| Tangible book value | 5.90 | 5.93 | 6.15 | 6.31 | 6.29 | |||||
| Selected Financial Performance Ratios (annualized): | ||||||||||
| Return on average assets | (0.27)% | (0.85)% | (0.85)% | 0.05% | 0.73% | |||||
| Return on average common equity | (4.17)% | (12.86)% | (12.45)% | 0.68% | 11.00% | |||||
| Noninterest income to average total assets | 1.03% | 1.02% | 0.73% | 0.72% | 2.12% | |||||
| Noninterest expense to average total assets | 3.62% | 3.25% | 3.24% | 3.23% | 3.34% | |||||
| Efficiency ratio | 87.75% | 77.73% | 82.01% | 83.61% | 64.02% | |||||
| Operating Earnings (Non-GAAP): | ||||||||||
| Net income (loss) available to common shareholders | $ (716) | $ (2,262) | $ (2,304) | $ 126 | $ 2,040 | |||||
| (Gain) loss on acquisition, net of tax | 106 | -- | (15) | 29 | (2,695) | |||||
| Gain 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 | |||||
| Net operating income (loss) | $ (610) | $ (2,667) | $ (1,713) | $ 174 | $ (310) | |||||
| Operating net income (loss) per common share: | ||||||||||
| Basic | $ (0.05) | $ (0.23) | $ (0.15) | $ 0.02 | $ (0.03) | |||||
| Diluted | (0.05) | (0.23) | (0.15) | 0.02 | (0.03) | |||||
| Pre-tax, pre-credit earnings (1) | $ 3,612 | $ 3,543 | $ 3,545 | $ 3,545 | $ 3,902 | |||||
| Operating return on average assets | (0.23)% | (1.00)% | (0.63)% | 0.06% | (0.11)% | |||||
| Operating return on average equity | (3.55)% | (11.72)% | (7.29)% | 0.73% | (1.30)% | |||||
| Operating efficiency ratio (2) | 66.68% | 68.13% | 69.52% | 67.52% | 65.92% | |||||
| (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 | ||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |
| (Dollars in thousands, except per share data) | |||||
| Credit Quality Information and Ratios: | |||||
| Allowance for loan losses - beginning of period | $ 11,583 | $ 11,713 | $ 12,956 | $ 12,742 | $ 12,006 |
| Add: Provision for loan losses | 2,050 | 6,300 | 4,635 | 1,350 | 1,700 |
| Less: Net charge-offs | 1,898 | 6,430 | 5,878 | 1,136 | 964 |
| Allowance for loan losses - end of period | $ 11,735 | $ 11,583 | $ 11,713 | $ 12,956 | $ 12,742 |
| Assets not covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing | $ 1,812 | $ 5,362 | $ 4,933 | $ 4,479 | $ 5,687 |
| Past due loans (30-89 days) to total non-covered loans | 0.31% | 0.92% | 0.86% | 0.77% | 0.99% |
| Nonperforming non-covered loans: | |||||
| One-to-four family residential | $ 4,230 | $ 2,698 | $ 2,407 | $ 1,556 | $ 1,406 |
| Construction | -- | -- | -- | -- | -- |
| Commercial land | 3,169 | 3,852 | 2,631 | 3,176 | 3,167 |
| Residential development | 3,000 | 3,742 | 6,474 | 6,459 | 5,155 |
| Other commercial real estate | 8,489 | 8,924 | 4,173 | 6,602 | 10,306 |
| Commercial business | 945 | 1,086 | 168 | 306 | 201 |
| Consumer | 976 | 1,750 | 2,958 | 2,426 | 2,440 |
| Total nonperforming non-covered loans | 20,809 | 22,052 | 18,811 | 20,525 | 22,675 |
| Other nonperforming non-covered assets | 11,504 | 11,987 | 8,936 | 8,208 | 10,723 |
| Total nonperforming non-covered assets | $ 32,313 | $ 34,039 | $ 27,747 | $ 28,733 | $ 33,398 |
| Allowance for loan losses to total non-covered loans | 2.00% | 2.00% | 2.04% | 2.23% | 2.22% |
| Net charge-offs to average non-covered loans (annualized) | 1.30% | 4.44% | 4.07% | 0.79% | 0.66% |
| Nonperforming non-covered loans to non-covered loans | 3.54% | 3.80% | 3.28% | 3.53% | 3.95% |
| Nonperforming non-covered assets to total assets | 3.08% | 3.17% | 2.57% | 2.61% | 2.99% |
| Nonperforming non-covered assets to total non-covered loans and other real estate owned | 5.39% | 5.75% | 4.76% | 4.87% | 5.72% |
| Assets covered by FDIC loss-share agreements: | |||||
| Past due loans (30-89 days) accruing (3) | $ 1,495 | $ 2,726 | $ 5,372 | $ 6,430 | $ 12,987 |
| Past due loans (30-89 days) to total covered loans | 1.16% | 1.83% | 3.36% | 3.81% | 7.34% |
| Total covered nonperforming loans (4) | $ 36,460 | $ 40,582 | $ 44,056 | $ 37,074 | $ 35,830 |
| Other covered nonperforming assets | 9,900 | 9,447 | 8,746 | 12,765 | 14,127 |
| Total covered nonperforming assets | $ 46,360 | $ 50,029 | $ 52,802 | $ 49,839 | $ 49,957 |
| Classified Assets (5) | |||||
| Non-covered classified loans | $ 30,142 | $ 32,146 | $ 28,727 | $ 35,357 | $ 41,515 |
| OREO and other nonperforming assets | 11,504 | 11,987 | 8,936 | 8,208 | 10,723 |
| Total classified assets | $ 41,646 | $ 44,133 | $ 37,663 | $ 43,565 | $ 52,238 |
| Tier 1 capital | $ 100,586 | $ 100,774 | $ 102,539 | $ 104,487 | $ 105,088 |
| Total classified assets to Tier 1 capital | 41.40% | 43.79% | 36.73% | 41.69% | 49.71% |
| (3) The contractual balance of past due loans covered by FDIC loss-share agreements totaled $13.7 million, $8.2 million, $7.0 million, $3.5 million and $1.9 million at June 30, 2011, September 30, 2011, December 31, 2011, March 31, 2012, and June 30, 2012, respectively. | |||||
| (4) The contractual balance of nonperforming loans covered by FDIC loss-share agreements totaled $39.3 million $48.8 million, $55.4 million, $46.2 million and $41.4 million at June 30, 2011, September 30, 2011, December 31, 2011, March 31, 2012, and June 30, 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 | ||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |
| (Dollars in thousands, except per share data) | |||||
| Net Interest Margin (annualized): | |||||
| Yield on earning assets | 4.63% | 4.75% | 4.81% | 4.84% | 4.95% |
| Cost of funds | 0.88% | 0.92% | 1.01% | 1.11% | 1.23% |
| Net interest rate spread | 3.75% | 3.83% | 3.80% | 3.73% | 3.72% |
| Net interest margin (taxable equivalent) | 3.78% | 3.88% | 3.84% | 3.76% | 3.78% |
| Selected End of Period Balances: | |||||
| Loans covered by FDIC loss-share agreements | $ 128,874 | $ 148,833 | $ 159,688 | $ 168,940 | $ 177,047 |
| Loans not covered by FDIC loss-share agreements | 587,498 | 579,692 | 574,100 | 582,065 | 573,603 |
| Total loans, net | 716,372 | 728,525 | 733,788 | 751,005 | 750,650 |
| Investment securities | 100,635 | 121,411 | 147,899 | 132,443 | 156,328 |
| Total interest-earning assets | 872,256 | 890,456 | 895,003 | 913,910 | 927,463 |
| Total assets | 1,049,177 | 1,073,815 | 1,080,460 | 1,098,974 | 1,117,993 |
| Noninterest-bearing deposits | 95,512 | 97,437 | 88,077 | 87,413 | 82,305 |
| Interest-bearing deposits | 757,252 | 775,209 | 787,979 | 801,167 | 822,273 |
| Total deposits | 852,764 | 872,646 | 876,056 | 888,580 | 904,578 |
| Total borrowings and other debt | 99,724 | 104,080 | 103,939 | 105,778 | 108,011 |
| Shareholders' equity | 89,473 | 90,010 | 92,659 | 94,782 | 94,771 |
| Selected Quarterly Average Balances: | |||||
| Loans covered by FDIC loss-share agreements | $ 136,530 | $ 154,344 | $ 164,314 | $ 173,755 | $ 170,580 |
| Loans not covered by FDIC loss-share agreements | 582,263 | 579,224 | 578,083 | 576,846 | 583,294 |
| Average loans, net | 718,793 | 733,568 | 742,397 | 750,601 | 753,874 |
| Investment securities | 109,559 | 128,086 | 140,846 | 146,017 | 157,513 |
| Average interest-earning assets | 872,028 | 880,073 | 906,064 | 920,932 | 918,118 |
| Average total assets | 1,053,263 | 1,069,651 | 1,084,313 | 1,107,687 | 1,110,740 |
| Noninterest-bearing deposits | 93,126 | 90,024 | 87,770 | 84,001 | 81,617 |
| Interest-bearing deposits | 763,442 | 777,621 | 789,233 | 810,469 | 814,736 |
| Average total deposits | 856,568 | 867,645 | 877,003 | 894,470 | 896,353 |
| Average borrowings and other debt | 102,179 | 103,181 | 105,872 | 106,696 | 107,872 |
| Shareholders' equity | 89,472 | 91,057 | 94,028 | 94,711 | 95,116 |
| Capital Ratios: | |||||
| Total equity to total assets | 8.53% | 8.38% | 8.58% | 8.62% | 8.48% |
| Tangible common equity to tangible assets | 6.47% | 6.36% | 6.56% | 6.61% | 6.49% |
| Total Risk-Based Capital (Bank only) | 15.59% | 15.50% | 15.60% | 17.32% | 17.29% |
| Tier 1 Risk-Based Capital (Bank only) | 14.33% | 14.25% | 14.35% | 16.06% | 16.03% |
| Tier 1 Leverage Capital (Bank only) | 9.62% | 9.42% | 9.44% | 9.53% | 9.42% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) | ||||
|
June 30, 2012 |
December 31, 2011 |
Amount Change |
Percent Change |
|
| (Dollars in thousands) | ||||
| ASSETS | ||||
| Cash and cash equivalents: | 128,824 | 88,344 | 40,480 | 45.82% |
| Investment securities available for sale, at fair value | 18,359 | 52,136 | (33,777) | -64.79% |
| Investment securities held to maturity, at amortized cost | 82,276 | 95,763 | (13,487) | -14.08% |
| Federal Home Loan Bank stock, at cost | 4,443 | 5,067 | (624) | -12.31% |
| Presold loans in process of settlement | 2,146 | 2,146 | -- | 0.00% |
| Loans: | ||||
| Covered by FDIC loss-share agreements | 128,874 | 159,688 | (30,814) | -19.30% |
| Not covered by FDIC loss-share agreements | 587,498 | 574,100 | 13,398 | 2.33% |
| Loans, net of deferred fees and costs | 716,372 | 733,788 | (17,416) | -2.37% |
| Allowance for loan losses | (11,735) | (11,713) | (22) | 0.19% |
| Loans, net | 704,637 | 722,075 | (17,438) | -2.41% |
| Other real estate owned | 21,405 | 17,571 | 3,834 | 21.82% |
| Premises and equipment, net | 25,396 | 25,888 | (492) | -1.90% |
| FDIC loss share receivable | 28,863 | 38,931 | (10,068) | -25.86% |
| Accrued interest receivable | 1,840 | 2,773 | (933) | -33.65% |
| Bank-owned life insurance | 18,723 | 18,978 | (255) | -1.34% |
| Intangible assets | 1,141 | 1,373 | (232) | -16.90% |
| Other assets | 11,124 | 9,415 | 1,709 | 18.15% |
| Total assets | $ 1,049,177 | $ 1,080,460 | $ (31,283) | -2.90% |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Deposits: | ||||
| Noninterest-bearing demand deposits | $ 95,512 | $ 88,077 | $ 7,435 | 8.44% |
| Interest-bearing demand and savings | 377,587 | 375,160 | 2,427 | 0.65% |
| Time deposits | 379,665 | 412,819 | (33,154) | -8.03% |
| Total deposits | 852,764 | 876,056 | (23,292) | -2.66% |
| Securities sold under repurchase agreements | 7,554 | 9,787 | (2,233) | -22.82% |
| Borrowed money | 76,706 | 78,688 | (1,982) | -2.52% |
| Subordinated debt | 15,464 | 15,464 | -- | 0.00% |
| Other liabilities | 7,216 | 7,806 | (590) | -7.56% |
| Total liabilities | 959,704 | 987,801 | (28,097) | -2.84% |
| Shareholders' Equity | ||||
| Preferred stock | 20,500 | 20,500 | -- | 0.00% |
| Common stock | 124 | 124 | -- | 0.00% |
| Additional paid-in-capital | 64,209 | 63,888 | 321 | 0.50% |
| Retained earnings, substantially restricted | 4,647 | 7,854 | (3,207) | -40.83% |
| Accumulated other comprehensive income (loss) | (7) | 293 | (300) | -102.39% |
| Total shareholders' equity | 89,473 | 92,659 | (3,186) | -3.44% |
| Total liabilities and shareholders' equity | $ 1,049,177 | $ 1,080,460 | $ (31,283) | -2.90% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
|
Three Months Ended June 30 |
Amount |
Percent |
||
| 2012 | 2011 | Change | Change | |
| (Dollars in thousands, except per share data) | ||||
| Interest Income: | ||||
| Interest and fees on loans | $ 9,355 | $ 10,329 | $ (974) | -9.43% |
| Investment securities: | ||||
| Taxable interest income | 606 | 983 | (377) | -38.35% |
| Tax-exempt interest income | 25 | 69 | (44) | -63.77% |
| Other interest income | 65 | 38 | 27 | 71.05% |
| Total interest income | 10,051 | 11,419 | (1,368) | -11.98% |
| Interest Expense: | ||||
| Deposits | 1,121 | 1,981 | (860) | -43.41% |
| Repurchase agreements | 7 | 19 | (12) | -63.16% |
| Borrowed money | 680 | 753 | (73) | -9.69% |
| Subordinated debt | 80 | 73 | 7 | 9.59% |
| Total interest expense | 1,888 | 2,826 | (938) | -33.19% |
| Net interest income | 8,163 | 8,593 | (430) | -5.00% |
| Provision for loan losses | 2,555 | 1,700 | 855 | 50.29% |
| Net interest income after provision for loan losses | 5,608 | 6,893 | (1,285) | -18.64% |
| Noninterest Income: | ||||
| Service charges on deposit accounts | 1,092 | 1,046 | 46 | 4.40% |
| Mortgage banking income | 393 | 254 | 139 | 54.72% |
| Commissions on sales of financial products | 67 | 69 | (2) | -2.90% |
| Income from bank-owned life insurance | 169 | 214 | (45) | -21.03% |
| Gain (loss) from acquisition | (175) | 4,418 | (4,593) | -103.96% |
| Gain on sale of investments, available for sale | -- | 1 | (1) | NA |
| Gain (loss) on sale of other assets | 85 | (338) | 423 | -125.15% |
| Other | 1,069 | 222 | 847 | 381.53% |
| Total noninterest income | 2,700 | 5,886 | (3,186) | -54.13% |
| Noninterest Expense: | ||||
| Compensation and benefits | 3,902 | 3,806 | 96 | 2.52% |
| Occupancy and equipment | 898 | 873 | 25 | 2.86% |
| Data processing and other technology | 235 | 296 | (61) | -20.61% |
| Professional services | 308 | 249 | 59 | 23.69% |
| Advertising and business development | 74 | 71 | 3 | 4.23% |
| Loan collection and other expenses | 864 | 204 | 660 | 323.53% |
| Deposit insurance | (49) | 361 | (410) | -113.57% |
| Amortization of intangible assets | 109 | 136 | (27) | -19.85% |
| Office supplies | 53 | 62 | (9) | -14.52% |
| Telephone and communications | 107 | 111 | (4) | -3.60% |
| Other real estate owned valuation adjustments | 1,784 | 1,476 | 308 | 20.87% |
| Other real estate owned expenses | 388 | 596 | (208) | -34.90% |
| Acquisition and integration expenses | -- | 566 | (566) | -100.00% |
| Other | 859 | 463 | 396 | 85.53% |
| Total noninterest expense | 9,532 | 9,270 | 432 | 4.66% |
| Income (loss) before income tax expense (benefit) | (1,224) | 3,509 | (4,733) | -134.88% |
| Income tax expense (benefit) | (576) | 1,213 | (1,789) | -147.49% |
| Net income (loss) | (648) | 2,296 | (2,944) | -128.22% |
| Dividends on preferred stock | 68 | 256 | (188) | -73.44% |
| Net income (loss) allocable to common shareholders | $ (716) | $ 2,040 | $ (2,756) | -135.10% |
| Earnings (Loss) per common share - basic | $ (0.06) | $ 0.18 | $ (0.24) | -135.13% |
| Earnings (Loss) per common share - diluted | (0.06) | 0.18 | (0.24) | -135.13% |
| CITIZENS SOUTH BANKING CORPORATION | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||
|
Six Months Ended June 30 |
Amount |
Percent |
||
| 2012 | 2011 | Change | Change | |
| (Dollars in thousands, except per share data) | ||||
| Interest Income: | ||||
| Interest and fees on loans | $ 19,002 | $ 19,790 | $ (788) | -3.98% |
| Investment securities: | ||||
| Taxable interest income | 1,343 | 1,776 | (433) | -24.38% |
| Tax-exempt interest income | 62 | 137 | (75) | -54.74% |
| Other interest income | 114 | 103 | 11 | 10.68% |
| Total interest income | 20,521 | 21,806 | (1,285) | -5.89% |
| Interest Expense: | ||||
| Deposits | 2,357 | 3,982 | (1,625) | -40.81% |
| Repurchase agreements | 14 | 37 | (23) | -62.16% |
| Borrowed money | 1,371 | 1,516 | (145) | -9.56% |
| Subordinated debt | 163 | 145 | 18 | 12.41% |
| Total interest expense | 3,905 | 5,680 | (1,775) | -31.25% |
| Net interest income | 16,616 | 16,126 | 490 | 3.04% |
| Provision for loan losses | 8,855 | 4,700 | 4,155 | 88.40% |
| Net interest income after provision for loan losses | 7,761 | 11,426 | (3,665) | -32.08% |
| Noninterest Income: | ||||
| Service charges on deposit accounts | 2,147 | 2,004 | 143 | 7.14% |
| Mortgage banking income | 710 | 491 | 219 | 44.60% |
| Commissions on sales of financial products | 153 | 136 | 17 | 12.50% |
| Income from bank-owned life insurance | 338 | 397 | (59) | -14.86% |
| Gain (loss) from acquisition | (175) | 4,163 | (4,338) | -104.20% |
| Gain on sale of investments, available for sale | 664 | 1 | 663 | NA |
| Gain (loss) on sale of other assets | (53) | (326) | 273 | -83.74% |
| Other | 1,638 | 500 | 1,138 | 227.60% |
| Total noninterest income | 5,422 | 7,366 | (1,944) | -26.39% |
| Noninterest Expense: | ||||
| Compensation and benefits | 7,748 | 7,454 | 294 | 3.94% |
| Occupancy and equipment | 1,806 | 1,701 | 105 | 6.17% |
| Data processing and other technology | 491 | 530 | (39) | -7.36% |
| Professional services | 583 | 502 | 81 | 16.14% |
| Advertising and business development | 142 | 125 | 17 | 13.60% |
| Loan collection and other expenses | 1,116 | 494 | 622 | 125.91% |
| Deposit insurance | 369 | 695 | (326) | -46.91% |
| Amortization of intangible assets | 231 | 275 | (44) | -16.00% |
| Office supplies | 112 | 132 | (20) | -15.15% |
| Telephone and communications | 213 | 207 | 6 | 2.90% |
| Other real estate owned valuation adjustments | 2,784 | 1,984 | 800 | 40.32% |
| Other real estate owned expenses | 858 | 597 | 261 | 43.72% |
| Acquisition and integration expenses | -- | 611 | (611) | -100.00% |
| Other | 1,767 | 1,638 | 129 | 7.88% |
| Total noninterest expense | 18,220 | 16,945 | 1,757 | 10.37% |
| Income (loss) before income tax expense (benefit) | (5,037) | 1,847 | (6,884) | -372.71% |
| Income tax expense (benefit) | (2,249) | 442 | (2,691) | -608.82% |
| Net income (loss) | (2,788) | 1,405 | (4,193) | -298.43% |
| Dividends on preferred stock | 190 | 512 | (322) | -62.89% |
| Net income (loss) allocable to common shareholders | $ (2,978) | $ 893 | $ (3,871) | -433.48% |
| Earnings (Loss) per common share - basic | $ (0.26) | $ 0.08 | $ (0.34) | -433.78% |
| Earnings (Loss) per common share - diluted | (0.26) | 0.08 | (0.34) | -433.78% |
CONTACT: Gary F. Hoskins, CFO
(704) 884-2263
gary.hoskins@citizenssouth.com