EX-99.1 2 cs7494ex991.htm EXHIBIT 99.1

Exhibit 99.1

Citizens South Banking Corporation Announces Record Quarterly Earnings Per Share

          GASTONIA, N.C., Oct. 16 /PRNewswire-FirstCall/ -- Citizens South Banking Corporation (Nasdaq: CSBC), the holding company for Citizens South Bank, announced net income for the quarter ended September 30, 2006, of $1.4 million, or $0.18 per diluted share, compared to $964,000, or $0.14 per diluted share, for the quarter ended September 30, 2005.   This represents a $474,000, or 49.1%, increase in net income for the third quarter of 2006 when compared to the third quarter of 2005.

          “It is gratifying to see our team’s efforts result in record earnings per share for the Company,” Kim S. Price, President and CEO, stated in making the announcement.  “We have executed a number of initiatives that are enhancing our Company’s ability to deliver improved customer service, quality balance sheet growth, and operating efficiencies.  These results are particularly notable considering the difficult yield curve and the increasingly competitive environment in which we operate.”

          Diluted earnings per share increased by $0.04, or 28.6%, for the same periods.  Net operating income, which excludes net gains on sales of assets, amounted to $1.4 million, or $0.18 per diluted share, for the quarter ended September 30, 2006, compared to $953,000, or $0.14 per diluted share, for the quarter ended September 30, 2005.

          Net interest income increased by $1.5 million, or 40.3%, during the third quarter of 2006, compared to the third quarter of 2005. This increase was primarily the result of the acquisition of Trinity Bank, continued loan growth, and a change in the asset mix.  Total loans increased by $44.9 million, or 12.6% annualized, to $518.2 million during the nine months ended September 30, 2006.  This increase in loans was primarily funded by growth in deposits and maturing investment securities.

          Credit quality compares favorably with industry peers.  Nonperforming assets totaled $2.1 million, or 0.29% of total assets, at September 30, 2006, compared to $2.2 million, or 0.42% of total assets, at the end of the third quarter of 2005.

          During the first three quarters of 2006, the Company’s total deposits increased by $31.5 million, or 8.1% annualized, to $549.0 million as of September 30, 2006.   Deposit gathering continues to be a major focus for the Company.

          Noninterest income increased by $548,000, or 50.0%, to $1.6 million for the quarter ended September 30, 2006, compared to $1.1 million for the quarter ended September 30, 2005.  This increase was partially attributable to the expanded customer base developed and acquired through the Trinity Bank acquisition, which resulted in higher fee income from loan and deposit products.  A restructuring of our mortgage banking and financial services divisions also contributed to growing fee revenue.

          Noninterest expense increased by $1.1 million, or 33.7%, to $4.4 million for the third quarter of 2006.  These increased expenses are largely associated with the staffing and operations of three additional full-service offices resulting from the acquisition of Trinity Bank, the opening of a new full-service office in Belmont, North Carolina, and the opening of a new loan production office in Rock Hill, South Carolina. 

          Headquartered in Gastonia, North Carolina, Citizens South Bank was founded in 1904.  Deposits are FDIC insured.  At September 30, 2006, the Bank had approximately $726 million in assets with 14 full-service offices in the Charlotte Region, including Gaston, Iredell, Rowan, and Union counties in North Carolina; and two loan production offices in Mecklenburg County, North Carolina and York County, South Carolina.  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 National 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 1934 Securities Exchange Act filings with the SEC. 


          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 successfully integrate Trinity Bank, the continuation of current revenue and expense trends, 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, 2005, describe some of these factors. 


Citizens South Banking Corporation
Selected Financial Information
(dollars in thousands, except per share data)

 

 

Quarter ended
September 30, 2006

 

Quarter ended
September 30, 2005

 

Nine Months ended
September 30, 2006

 

Nine Months ended
September 30, 2005

 

 

 

 

 

 

 

Reconciliation of GAAP to non-GAAP Measures:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported (GAAP)

 

$

1,438

 

$

964

 

$

3,972

 

$

2,767

 

Non-operating items:

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain)/ loss on sale of assets, net

 

 

(8

)

 

(19

)

 

40

 

 

(82

)

Merger and integration related expense

 

 

0

 

 

0

 

 

57

 

 

0

 

Related income taxes (39%)

 

 

3

 

 

8

 

 

(38

)

 

32

 

Net Operating Income

 

$

1,433

 

$

953

 

$

4,031

 

$

2,717

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding, basic

 

 

8,019,286

 

 

6,968,691

 

 

8,042,271

 

 

7,007,014

 

Basic net income - GAAP

 

$

0.18

 

$

0.14

 

$

0.49

 

$

0.40

 

Basic net income - Operating

 

 

0.18

 

 

0.14

 

 

0.50

 

 

0.39

 

Average common shares outstanding, diluted

 

 

8,095,750

 

 

7,061,656

 

 

8,119,781

 

 

7,097,439

 

Diluted net income - GAAP

 

$

0.18

 

$

0.14

 

$

0.49

 

$

0.39

 

Diluted net income - Operating

 

 

0.18

 

 

0.14

 

 

0.50

 

 

0.38

 

Cash dividends declared

 

$

0.075

 

$

0.07

 

$

0.225

 

$

0.21

 

Period-end book value

 

 

10.46

 

 

9.77

 

 

10.46

 

 

9.77

 

Financial Ratios (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders’ equity - GAAP

 

 

6.70

%

 

5.40

%

 

6.26

%

 

5.22

%

Return on avg. stockholders’ equity - Operating

 

 

6.67

 

 

5.33

 

 

6.35

 

 

5.12

 

Return on average assets - GAAP

 

 

0.79

%

 

0.75

%

 

0.75

%

 

0.72

%

Return on average assets - Operating

 

 

0.79

 

 

0.74

 

 

0.76

 

 

0.71

 

Efficiency ratio - GAAP

 

 

64.10

%

 

68.30

%

 

66.27

%

 

69.28

%

Net interest margin

 

 

3.27

%

 

3.26

%

 

3.36

%

 

3.26

%

Average equity to average assets

 

 

11.81

 

 

13.81

 

 

11.92

 

 

13.89

 

Asset Quality Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

5,560

 

$

3,369

 

$

5,560

 

$

3,369

 

Nonperforming loans

 

 

1,925

 

 

1,503

 

 

1,925

 

 

1,503

 

Nonperforming assets

 

 

2,070

 

 

2,158

 

 

2,070

 

 

2,158

 

Net charge-offs

 

 

154

 

 

42

 

 

409

 

 

70

 

Allowance for loan losses to total loans

 

 

1.07

%

 

0.98

%

 

1.07

%

 

0.98

%

Nonperforming loans to total loans

 

 

0.37

 

 

0.44

 

 

0.37

 

 

0.44

 

Nonperforming assets to total assets

 

 

0.29

 

 

0.42

 

 

0.29

 

 

0.42

 

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

721,204

 

$

513,347

 

$

711,344

 

$

510,733

 

Loans receivable, net of unearned income

 

 

503,491

 

 

330,718

 

 

487,860

 

 

324,471

 

Interest-earning assets

 

 

628,548

 

 

450,923

 

 

616,516

 

 

450,847

 

Deposits

 

 

540,201

 

 

371,448

 

 

528,988

 

 

371,053

 

Interest-bearing liabilities

 

 

588,402

 

 

410,882

 

 

582,538

 

 

410,339

 

Stockholders’ equity

 

 

85,178

 

 

70,880

 

 

84,813

 

 

70,940

 

At Period End:

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

725,908

 

$

518,942

 

$

725,908

 

$

518,942

 

Loans receivable, net

 

 

512,652

 

 

341,406

 

 

512,652

 

 

341,406

 

Interest-earning assets

 

 

639,054

 

 

463,304

 

 

639,054

 

 

463,304

 

Intangible assets

 

 

31,842

 

 

7,310

 

 

31,842

 

 

7,310

 

Deposits

 

 

548,999

 

 

373,230

 

 

548,999

 

 

373,230

 

Interest-bearing liabilities

 

 

593,183

 

 

419,555

 

 

593,183

 

 

419,555

 

Stockholders’ equity

 

 

85,776

 

 

70,527

 

 

85,776

 

 

70,527

 


Citizens South Banking Corporation
Consolidated Statements of Financial Condition
(dollars in thousands)

 

 

September 30,
2006

 

December 31,
2005

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

 

$

10,227

 

$

8,863

 

Interest-earning bank balances

 

 

16,135

 

 

17,790

 

Cash and cash equivalents

 

 

26,362

 

 

26,653

 

Investment securities available-for-sale, at fair value

 

 

47,858

 

 

53,429

 

Mortgage-backed securities available-for-sale, at fair value

 

 

58,774

 

 

70,236

 

Loans receivable, net unearned income

 

 

518,212

 

 

473,336

 

Allowance for loan losses

 

 

(5,560

)

 

(5,104

)

Loans receivable, net

 

 

512,652

 

 

468,232

 

Real estate acquired through foreclosure, net

 

 

145

 

 

1,157

 

Premises and equipment, net

 

 

18,977

 

 

19,819

 

Accrued interest receivable

 

 

3,154

 

 

2,539

 

Federal Home Loan Bank stock, at cost

 

 

3,649

 

 

4,084

 

Intangible assets

 

 

31,842

 

 

32,424

 

Bank owned life insurance

 

 

15,365

 

 

14,828

 

Other assets

 

 

7,130

 

 

7,693

 

Total assets

 

$

725,908

 

$

701,094

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Demand deposit accounts

 

$

89,015

 

$

85,489

 

Money market deposit accounts

 

 

110,111

 

 

104,421

 

Savings accounts

 

 

17,591

 

 

23,654

 

Time deposits

 

 

332,282

 

 

303,980

 

Total deposits

 

 

548,999

 

 

517,544

 

Borrowed money

 

 

82,346

 

 

91,342

 

Deferred compensation

 

 

5,589

 

 

5,849

 

Other liabilities

 

 

3,198

 

 

2,101

 

Total liabilities

 

 

640,132

 

 

616,836

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common stock issued and outstanding, $0.01 par value, 20,000,000 shares authorized, 9,062,727 issued at September 30, 2006, and December 31, 2005, and 8,199,683 shares outstanding at September 30, 2006, and 8,291,544 shares outstanding at December 31, 2005

 

 

91

 

 

91

 

Additional paid-in-capital

 

 

68,486

 

 

68,468

 

Unallocated common stock held by Employee Stock Ownership Plan

 

 

(1,476

)

 

(1,613

)

Unearned compensation related to Recognition and Retention Plan

 

 

(1,209

)

 

(1,419

)

Retained earnings, substantially restricted

 

 

32,156

 

 

30,311

 

Accumulated unrealized loss on securities available-for-sale, net of tax

 

 

(1,333

)

 

(1,567

)

Treasury stock of 863,044 shares at September 30, 2006, and 771,183 shares at December 31, 2005

 

 

(10,939

)

 

(10,013

)

Total stockholders’ equity

 

 

85,776

 

 

84,258

 

Total liabilities and stockholders’ equity

 

$

725,908

 

$

701,094

 


Citizens South Banking Corporation
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)

 

 

Three Months
Ended September 30,

 

Nine Months
Ended September 30,

 

 

 

 

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

9,804

 

$

5,368

 

$

27,501

 

$

14,960

 

Investment securities

 

 

467

 

 

387

 

 

1,458

 

 

1,157

 

Interest-bearing deposits

 

 

210

 

 

107

 

 

487

 

 

261

 

Mortgage-backed and related securities

 

 

644

 

 

621

 

 

2,027

 

 

2,034

 

Total interest income

 

 

11,125

 

 

6,483

 

 

31,473

 

 

18,412

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

4,858

 

 

2,220

 

 

12,802

 

 

5,862

 

Borrowed funds

 

 

1,065

 

 

554

 

 

3,156

 

 

1,547

 

Total interest expense

 

 

5,923

 

 

2,774

 

 

15,958

 

 

7,409

 

Net interest income

 

 

5,202

 

 

3,709

 

 

15,515

 

 

11,003

 

Provision for loan losses

 

 

300

 

 

140

 

 

865

 

 

410

 

Net interest income after provision for loan losses

 

 

4,902

 

 

3,569

 

 

14,650

 

 

10,593

 

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income on deposit accounts

 

 

742

 

 

634

 

 

2,157

 

 

1,789

 

Fee income on mortgage banking and lending activities

 

 

359

 

 

159

 

 

864

 

 

400

 

Dividends on FHLB stock

 

 

58

 

 

30

 

 

169

 

 

109

 

Increase in cash value of bank-owned life insurance

 

 

166

 

 

150

 

 

580

 

 

458

 

Fair value adjustment on deferred compensation assets

 

 

101

 

 

26

 

 

143

 

 

57

 

Net gain / (loss) on sale of assets

 

 

8

 

 

19

 

 

(40

)

 

82

 

Other noninterest income

 

 

209

 

 

77

 

 

553

 

 

299

 

Total noninterest income

 

 

1,643

 

 

1,095

 

 

4,426

 

 

3,194

 

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

2,281

 

 

1,705

 

 

6,861

 

 

5,111

 

Fair value adjustment on deferred compensation obligation

 

 

101

 

 

26

 

 

143

 

 

57

 

Occupancy and equipment expense

 

 

610

 

 

486

 

 

1,990

 

 

1,466

 

Professional services

 

 

116

 

 

132

 

 

420

 

 

443

 

Amortization of intangible assets

 

 

186

 

 

78

 

 

558

 

 

249

 

Merger and integration related expenses

 

 

0

 

 

0

 

 

57

 

 

0

 

Other noninterest expenses

 

 

1,094

 

 

855

 

 

3,186

 

 

2,510

 

Total noninterest expense

 

 

4,388

 

 

3,282

 

 

13,215

 

 

9,836

 

Income before income taxes

 

 

2,157

 

 

1,382

 

 

5,861

 

 

3,951

 

Provision for income taxes

 

 

719

 

 

418

 

 

1,889

 

 

1,184

 

Net income

 

$

1,438

 

$

964

 

$

3,972

 

$

2,767

 

Basic earnings per share

 

$

0.18

 

$

0.14

 

$

0.49

 

$

0.40

 

Diluted earnings per share

 

$

0.18

 

$

0.14

 

$

0.49

 

$

0.39

 

Basic average common shares outstanding

 

 

8,019,286

 

 

6,968,691

 

 

8,042,271

 

 

7,007,014

 

Diluted average common shares outstanding

 

 

8,095,750

 

 

7,061,656

 

 

8,119,781

 

 

7,097,439

 

SOURCE
          -0-                                                            10/16/2006
          /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/
          (CSBC)