EX-99.1 2 cs3081ex991.txt Exhibit 99.1 CITIZENS SOUTH BANKING CORPORATION ANNOUNCES AN 18.2% INCREASE IN SECOND QUARTER NET OPERATING INCOME PER SHARE GASTONIA, N.C., July 18 /PRNewswire-FirstCall/ -- Citizens South Banking Corporation (Nasdaq: CSBC), the holding company for Citizens South Bank, announced earnings for the quarter ended June 30, 2005, of $901,000, or $0.13 per diluted share, compared to $948,000, or $0.12 per diluted share, for the quarter ended June 30, 2004. This represents an 8.3% increase in earnings per diluted share from the second quarter of 2004. Net operating income also amounted to $904,000, or $0.13 per diluted share, for the quarter ended June 30, 2005, compared to $838,000, or $0.11 per diluted share, for the quarter ended June 30, 2004, representing an 18.2% increase in operating income for the quarter. Net income for the six months ended June 30, 2005, was $1.8 million, or $0.25 per diluted share, compared to $1.9 million, or $0.24 per diluted share, for the six months ended June 30, 2004. Net operating income amounted to $1.8 million, or $0.25 per diluted share, for the period ended June 30, 2005, compared to $1.6 million, or $0.20 per diluted share, for the comparable period in 2004. This represents an increase of $0.05 per diluted share, or 25.0%, in net operating income from the first half of 2004 compared to the first half of 2005. Net interest income increased by $581,000, or 18.9%, during the second quarter of 2005 compared to the second quarter of 2004 as a result of margin expansion, loan growth, and a change in asset mix. Net interest margin increased from 2.78% during the second quarter of 2004, to 3.23% during the second quarter of 2005, an increase of 46 basis points. Also, outstanding loans increased from $300.2 million at June 30, 2004, to $327.9 million at June 30, 2005, an increase of $27.7 million, or 9.3%. The Company's credit quality continues to compare favorably with industry peers. Nonperforming assets totaled $1.7 million, or 0.34% of total assets, at June 30, 2005, compared to $1.0 million, or 0.20% of total assets, at June 30, 2004. Management remains focused on continuing a high level of loan quality while pursuing additional loan growth. Demand deposits increased by $2.2 million, or 8.4% annualized, to $54.9 million at June 30, 2005, from $52.7 million at December 31, 2004, as a result of a continued focus on growing our lower-cost deposit products. Total deposits decreased by $2.4 million, or 1.3% annualized, primarily due to aggressive time deposit pricing competition in the Company's local markets. Non-interest income decreased to $1.1 million for the quarter ended June 30, 2005, from $1.2 million for the quarter ended June 30, 2004. Excluding gains on sale of assets and fair value adjustments, noninterest income remained flat at $1.0 million. The Company experienced an increase in fees generated from deposits, dividends on FHLB stock, and commissions from the sale of financial products. However, these increases were offset by a reduction in fee income from mortgage banking and other sources of noninterest income. Non-interest expense increased to $3.4 million for the quarter ended June 30, 2005, from $2.9 million for the quarter ended June 30, 2004. Excluding losses on sale of assets and fair value adjustments, noninterest expense increased to $3.3 million for the second quarter of 2005. These increases were largely due to additional commercial loan staffing, including an additional loan production office, increased regulatory expenses, and upgraded technological and physical investments. Kim S. Price, President and CEO, commented, "Margin expansion, commercial loan growth and capital management are the primary drivers of our improved earnings. Our team continues to be effective in expanding our community banking franchise by delivering quality financial products and service throughout a broader geographic base. This, coupled with our changing balance sheet mix and reduced share count, are delivering earnings per share growth." Citizens South Bank, headquartered in Gastonia, North Carolina, was founded in 1904. The Bank had approximately $515 million in assets at June 30, 2005, and operates eleven full-service offices located in three North Carolina counties -- Gaston, Rowan, and Iredell -- and a loan production office in Mecklenburg County, North Carolina. Please see the tables that follow for a calculation of the Company's net operating income. This news release contains certain forward-looking statements, which are subject to risks and uncertainties. A number of factors could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. 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, 2004, describe some of these factors. Forward-looking statements speak only as of the date they are made and the Company does not undertake to update 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. Citizens South Banking Corporation Selected Financial Information (dollars in thousands, except per share data)
Quarter Quarter Six Months Six Months ended ended ended ended June 30, June 30, June 30, June 30, 2005 2004 2005 2004 ------------- ------------- ------------- ------------- Reconciliation of GAAP to non-GAAP Measures: Net income, as reported (GAAP) $ 901 $ 948 $ 1,803 $ 1,909 Non-operating items: Gain on sale of assets, net 5 (180) (63) (470) Loss on early extinguishment of debt 0 0 0 0 Related income taxes (39%) (2) 70 25 184 Net Operating Income $ 904 $ 838 $ 1,765 $ 1,623 Add: Amortization of intangible assets 84 107 171 221 Related income taxes (39%) (33) (42) (67) (86) Net Cash Operating Income $ 955 $ 904 $ 1,869 $ 1,758 Per Share Data: Average common shares outstanding, basic 6,969,151 7,780,751 7,026,493 8,024,668 Basic net income - GAAP $ 0.13 $ 0.12 $ 0.26 $ 0.24 Basic net income - Operating 0.13 0.11 0.25 0.20 Basic net income - Cash 0.14 0.12 0.27 0.22 Average common shares outstanding, diluted 7,029,230 7,891,635 7,115,649 8,117,736 Diluted net income - GAAP $ 0.13 $ 0.12 $ 0.25 $ 0.24 Diluted net income - Operating 0.13 0.11 0.25 0.20 Diluted net income - Cash 0.14 0.11 0.26 0.22 Cash dividends declared $ 0.07 $ 0.065 $ 0.14 $ 0.13 Period-end book value 9.76 9.54 9.76 9.54 Financial Ratios: Return on average stockholders' equity - GAAP 5.16% 4.73% 5.12% 4.62% Return on average stockholders' equity - Operating 5.18 4.18 5.01 3.93 Return on average stockholders' equity - Cash 5.47 4.50 5.31 4.25 Return on average assets - GAAP 0.71% 0.76% 0.71% 0.78% Return on average assets - Operating 0.71 0.67 0.70 0.66 Return on average assets - Cash 0.75 0.73 0.74 0.72 Efficiency ratio - GAAP 70.57% 67.36% 70.02% 68.52% Efficiency ratio - Operating 70.44 70.34 70.25 72.34 Efficiency ratio - Cash 68.68 67.78 68.42 69.71 Net interest margin 3.23% 2.78% 3.26% 2.91% Average equity to average assets 13.68 16.13 13.92 16.87 Asset Quality Data: Allowance for loan losses $ 3,271 $ 2,902 $ 3,271 $ 2,902 Nonperforming loans 1,413 928 1,413 928 Nonperforming assets 1,745 1,007 1,745 1,007 Net charge-offs (recoveries) 33 126 33 126 Allowance for loan losses to total loans 0.99% 0.97% 0.99% 0.97% Nonperforming loans to total loans 0.43 0.31 0.43 0.31 Nonperforming assets to total assets 0.34 0.20 0.34 0.20 Average Balances: Total assets $ 511,701 $ 498,562 $ 509,834 $ 494,018 Loans receivable, net of unearned income 329,259 293,802 326,033 297,139 Interest-earning assets 454,617 445,970 450,809 442,180 Deposits 372,947 362,858 372,020 351,886 Interest-bearing liabilities 412,648 395,593 410,067 389,278 Stockholders' equity 69,996 80,401 70,965 83,326 At Period End: Total assets $ 514,894 $ 500,586 $ 514,894 $ 500,586 Loans receivable, net 327,927 300,247 327,927 300,247 Interest-earning assets 455,644 447,457 455,644 447,457 Deposits 372,385 370,700 372,385 370,700 Interest-bearing liabilities 417,636 401,867 417,636 401,867 Stockholders' equity 70,877 71,727 70,877 71,727
Citizens South Banking Corporation Consolidated Statements of Financial Condition (dollars in thousands) June 30, December 31, 2005 2004 ------------ ------------ (unaudited) ASSETS Cash and due from banks $ 8,330 $ 5,800 Interest-earning bank balances 16,788 5,790 Cash and cash equivalents 25,118 11,590 Investment securities available-for-sale, at fair value 43,735 52,407 Mortgage-backed securities available-for-sale, at fair value 68,637 81,169 Loans receivable, net unearned income 331,198 317,156 Allowance for loan losses (3,271) (3,029) Loans receivable, net 327,927 314,127 Real estate acquired through foreclosure, net 332 806 Accrued interest receivable 1,678 1,662 Premises and equipment, net 16,927 17,363 Federal Home Loan Bank stock, at cost 3,917 3,461 Bank owned life insurance 13,182 12,885 Intangible assets 7,388 7,560 Other assets 6,053 5,931 Total assets $ 514,894 $ 508,961 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposit accounts $ 54,895 $ 52,684 Money market deposit accounts 72,474 77,924 Savings accounts 26,382 29,174 Time deposits 218,634 214,962 Total deposits 372,385 374,744 Borrowed money 65,616 55,772 Deferred compensation 3,581 5,850 Other liabilities 2,435 201 Total liabilities 444,017 436,567 Stockholders' Equity: Common stock issued and outstanding, $0.01 par value, 20,000,000 shares authorized, 9,062,727 issued and outstanding in 2005 and 2004 91 91 Additional paid-in-capital 68,381 68,381 Unallocated common stock held by Employee Stock Ownership Plan (1,704) (1,796) Unearned compensation related to Recognition and Retention Plan (1,559) (1,699) Retained earnings, substantially restricted 30,592 29,766 Accumulated unrealized gain on securities available-for-sale, net of tax (587) (419) Treasury stock of 1,798,212 shares at June 30, 2005, and 1,630,683 shares at December 31, 2004 (24,337) (21,930) Total stockholders' equity 70,877 72,394 Total liabilities and stockholders' equity $ 514,894 $ 508,961 Citizens South Banking Corporation Consolidated Statements of Operations (unaudited) (in thousands, except per share data)
Three Months Six Months Ended June 30, Ended June 30, ----------------------------- ----------------------------- 2005 2004 2005 2004 ------------- ------------- ------------- ------------- Interest income Loans $ 4,960 $ 3,836 $ 9,592 $ 7,722 Investment securities 373 472 770 957 Interest-bearing deposits 119 46 154 66 Mortgage-backed and related securities 676 641 1,413 1,419 Total interest income 6,128 4,995 11,929 10,164 Interest Expense Deposits 1,945 1,461 3,642 2,887 Borrowed funds 518 450 993 895 Total interest expense 2,463 1,911 4,635 3,782 Net interest income 3,665 3,084 7,294 6,382 Provision for loan losses 120 30 270 60 Net interest income after provision for loan losses 3,545 3,054 7,024 6,322 Noninterest Income Fee income on deposit accounts 611 553 1,155 1,183 Fee income on mortgage banking and lending activities 127 185 240 279 Dividends on FHLB stock 42 22 78 46 Gain on sale of assets 7 180 138 470 Fair value adjustment on deferred compensation assets 78 (37) 31 35 Other noninterest income 261 262 533 498 Total noninterest income 1,126 1,165 2,175 2,511 Noninterest Expense Compensation and benefits 1,670 1,539 3,266 3,096 Vesting expense for Recognition and Retention Plan 70 81 140 267 Fair value adjustment on deferred compensation assets 78 (37) 31 35 Occupancy and equipment expense 496 400 981 782 Professional services 160 125 310 236 Amortization of intangible assets 84 104 171 221 Loss on sale of assets 11 0 75 0 Other noninterest expenses 812 650 1,656 1,456 Total noninterest expense 3,381 2,862 6,630 6,093 Income before income taxes 1,290 1,357 2,569 2,740 Provision for income taxes 389 409 766 831 Net income $ 901 $ 948 $ 1,803 $ 1,909 Basic earnings per share $ 0.13 $ 0.12 $ 0.26 $ 0.24 Diluted earnings per share $ 0.13 $ 0.12 $ 0.25 $ 0.24 Basic average common shares outstanding 6,969,151 7,780,751 7,026,493 8,024,668 Diluted average common shares outstanding 7,029,230 7,891,635 7,115,649 8,117,736
SOURCE Citizens South Banking Corporation -0- 07/18/2005 /CONTACT: Gary F. Hoskins, CFO of Citizens South Banking Corporation, +1-704-884-2263, or gary.hoskins@citizenssouth.com/ /Web site: http://www.citizenssouth.com/