Centrue Financial Corporation Announces 2015 Second Quarter Results

OTTAWA, IL -- (Marketwired) -- 10/01/15 -- Centrue Financial Corporation (OTCQB: CFCB) (OTC PINK: CFCB)

Highlights

• Net income for second quarter 2015 totaled $1.1 million or $0.16 per common diluted share.
• Total loans for the quarter increased by $17.3 million, or 3.0%, from the first quarter of 2015 and $33.4 million, or 6.0%, from year-end 2014.
• Second quarter 2015 net interest margin was 3.48%, representing an increase of 4 basis points from 3.44% reported in the first quarter of 2015 and a 19 basis point increase from the 3.29% reported in the second quarter of 2014.
• Gross recoveries for the quarter totaled $1.7 million.
• Share data has been restated for prior periods to adjust for the 1-for-30 reverse stock split that was effective May 29, 2015.

Centrue Financial Corporation (the "Company" or "Centrue") (OTCQB: CFCB) (OTC PINK: CFCB), parent company of Centrue Bank (the "Bank"), reported second quarter net income of $1.1 million, or $0.16 per common diluted share, compared to net income of $1.9 million, or $65.60 per common diluted share, for the first quarter 2015 and net income of $0.4 million or ($3.06) per common diluted share for the second quarter of 2014. For the first six months of 2015, the Company reported net income of $2.9 million, or $4.62 per common diluted share, as compared to net income of $0.9 million, or ($4.18) per common diluted share, for the same period in 2014.

A recapitalization occurred during the first quarter of 2015, having a significant impact on earnings and earnings per share including a $1.8 million gain on debt extinguishment that resulted from the Company settling its senior and subordinated debt. The Company also redeemed its Series C preferred stock at a 58.2% discount. This one-time transaction was added to net income available to common stockholders and drove up the earnings per share for that quarter and the year-to-date period.

Centrue also announced that it has filed a Registration Statement on Form S-1 for the registration of 4,833,209 of the common shares issued as part of the recapitalization. All of the shares registered under this registration statement will be offered by selling stockholders. Centrue will not receive any proceeds from this offering. The registration statement has not yet become effective, and the shares being registered may not be sold under the registration statement prior to the time the registration statement becomes effective. Centrue anticipates the registration statement will become effective and that Centrue's shares will begin trading on NASDAQ under the symbol CFCB prior to November 1, 2015. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities subject to the registration statement.

Commenting on the second quarter, the Company's President & CEO, Kurt R. Stevenson, stated, "We made notable progress in several key areas as loan balances increased at a 12% annualized rate, the net interest margin remained stable while our earning asset base expanded, and asset quality continued to improve. The completion of the capital raise has given us a renewed drive and focus, as we work to grow top-line revenue while identifying strategies to operate more efficiently."

Securities

Total securities equaled $198.5 million at June 30, 2015, representing an increase of $32.2 million, or 19.4%, from March 31, 2015 and an increase of $49.6 million, or 33.3%, from the same quarter in 2014. The net increase from second quarter 2014 was related to allocating the recapitalization proceeds in excess of normal amortization of the portfolio for the period.

Loans

Total loans, including loans held for sale, equaled $587.0 million, representing an increase of $17.3 million, or 3.0%, from March 31, 2015 and an increase of $7.4 million, or 1.3%, from the same period-end in 2014. The net increase from first quarter 2015 was related to new organic loan growth. Second quarter of 2014 was prior to the Company's bulk asset sale in the fourth quarter of 2014 which resulted in the sale of $27.5 million in troubled loans. Competition for new commercial loan opportunities and loan renewals continues to be strong and pressures loan yields.

Funding and Liquidity

Total deposits equaled $700.1 million, a decrease of $12.6 million, or 1.8%, from March 31, 2015 and a decrease of $42.6 million, or 5.7%, from second quarter 2014. Core deposits decreased $8.4 million, or 1.6% from March 31, 2015 and increased $4.8 million, or 1.0% from June 30, 2014. Fluctuations in core deposit levels are in line with the normal business cycle cash use of our customer base.

Credit Quality

The key credit quality metrics are as follows:

• The allowance for loan losses to total loans was 1.47% at June 30, 2015, compared to 1.40% at March 31, 2015 and 2.15% at June 30, 2014. The coverage ratio (allowance for loan losses to nonperforming loans) was 139.01% at June 30, 2015, compared to 108.85% at March 31, 2015 and 43.24% at June 30, 2014.
• Nonperforming loans (nonaccrual, 90 days past due and troubled debt restructures) decreased to $6.2 million at June 30, 2015, from $7.3 million at March 31, 2015 and $28.8 million at June 30, 2014. The level of nonperforming loans to end of period loans was 1.06% at June 30, 2015, compared to 1.29% at March 31, 2015 and 4.97% at June 30, 2014.
• Other real estate owned decreased to $9.8 million at June 30, 2015, from $10.0 million at March 31, 2015 and $21.3 million at June 30, 2014. Nonperforming assets (nonaccrual, 90 days past due, troubled debt restructures and OREO) decreased to $16.0 million at June 30, 2015, from $17.3 million at March 31, 2015 and decreased $34.1 million from the $50.1 million held at June 30, 2014. The ratio of nonperforming assets to total assets was 1.80% at June 30, 2015, 1.99% at March 31, 2015 and 5.76% at June 30, 2014.
• The past due ratio was 1.24% at June 30, 2015 compared to 1.66% at March 31, 2015 and 3.61% at June 30, 2014.

Net Interest Margin

The Company's net interest margin was 3.48% for the second quarter of 2015, representing an increase of 4 basis points from 3.44% recorded in the first quarter of 2015 and an increase of 19 basis points from 3.29% reported in the second quarter of 2014. The Bank's net interest margin was 3.56% for the second quarter of 2015, representing a decrease of 2 basis points from 3.58% recorded for the first quarter 2015 and a 14 basis point increase to the second quarter 2014 net interest margin. The improvement in the net interest margin for the Company comes from lowered cost of funds from borrowings and interest bearing deposits.

Noninterest Income and Expense

Noninterest income totaled $2.6 million for the second quarter June 30, 2015, compared to $3.1 million for the same period in 2014. Excluding gains related to the sale of OREO, securities and other assets, noninterest income decreased $0.2 million or 7.4%. This $0.2 million decrease was primarily due to decreases in service charge income, overdraft fees, and mortgage banking income.

Noninterest expense for the second quarter of 2015 was $8.0 million, compared to $8.1 million for the same period in 2014. Excluding OREO valuation adjustments taken in both periods, noninterest expense levels increased by $0.1 million, or 1.3%. This $0.1 million increase in expense was largely in the salary and benefits category.

Capital Management

Starting in 2015, the new Basel III capital rules are in effect. Along with these new capital rules came a new capital ratio called the common equity tier I capital ratio. The following table has the regulatory capital ratios as of June 30, 2015 and December 31, 2014.

                         Centrue Financial              Centrue Bank
                    --------------------------   --------------------------
                    Jun 30, 2015  Dec 31, 2014   Jun 30, 2015  Dec 31, 2014
                    ------------  ------------   ------------  ------------
Capital ratios:
  Total risk-based
   capital                 16.41%         9.64%         16.11%        11.84%
  Common equity tier
   1 capital               11.88%           NM          14.86%           NM
  Tier 1 risk-based
   capital                 15.16%         6.85%         14.86%        10.59%
  Tier 1 leverage
   ratio                   12.14%         4.93%         11.88%         7.61%

About the Company

Centrue Financial Corporation is a regional financial services company headquartered in Ottawa, Illinois and devotes special attention to personal service. The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central Illinois down to the metropolitan St. Louis area.

Further information about the Company is available at its website at http://www.centrue.com.

Forward Looking Statements

This release contains certain "forward-looking statements." Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. The Company's ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and the subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan or securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market areas; the Company's implementation of new technologies; the Company's ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Accompanying Financial Statements and Tables

• Unaudited Selected Quarterly Consolidated Financial Data

                       Centrue Financial Corporation
          Unaudited Selected Quarterly Consolidated Financial Data
 (In Thousands, Except Per Share Data, Adjusted for One for Thirty Reverse
                                Stock Split)

                                        Quarters Ended
                   --------------------------------------------------------
                     6/30/15     3/31/15    12/31/14    9/30/14    6/30/14
                   ----------  ----------  ---------   ---------  ---------
Balance Sheet
 Assets
  Cash and cash
   equivalents     $   35,732  $   66,639  $  49,167   $  58,128  $  62,054
  Securities          198,463     166,340    141,473     141,538    148,891
  Loans held for
   sale                   169         321        364         300        689
  Loans               586,809     569,427    553,200     575,560    578,923
  Allowance for
   loan losses         (8,645)     (7,995)    (7,981)    (12,863)   (12,461)
                   ----------  ----------  ---------   ---------  ---------
  Loans, net of
   allowance          578,164     561,432    545,219     562,697    566,462
  Other real
   estate owned         9,777       9,996     10,256      20,220     21,285
  Other assets         68,710      68,840     70,610      71,207     69,970
                   ----------  ----------  ---------   ---------  ---------
   Total assets       891,015     873,568    817,089     854,090    869,350
Liabilities and
 stockholders'
 equity
 Deposits             700,118     712,673    698,824     728,940    742,677
 Non-deposit
  funding             103,454      72,851     77,829      79,162     81,085
 Other liabilities      4,615       5,094     10,108       9,423      9,221
                   ----------  ----------  ---------   ---------  ---------
   Total
    liabilities       808,187     790,618    786,761     817,525    832,983
 Stockholders'
  equity               82,828      82,950     30,328      36,565     36,367
                   ----------  ----------  ---------   ---------  ---------
   Total
    liabilities
    and
    stockholders'
    equity         $  891,015  $  873,568  $ 817,089   $ 854,090  $ 869,350
                   ==========  ==========  =========   =========  =========
Statement of
 Income
  Interest income  $    7,007  $    6,734  $   6,747   $   6,947  $   6,928
  Interest expense        561         694        771         871        911
                   ----------  ----------  ---------   ---------  ---------
  Net interest
   income               6,446       6,040      5,976       6,076      6,017
  Provision for
   loan losses              -           -      4,927         675        700
                   ----------  ----------  ---------   ---------  ---------
  Net interest
   income (loss)
   after provision
   for loan losses      6,446       6,040      1,049       5,401      5,317
  Noninterest
   income               2,576       4,027      2,990       3,204      3,144
  Noninterest
   expense              7,953       8,183     10,055       8,032      8,087
                   ----------  ----------  ---------   ---------  ---------
  Income (loss)
   before income
   taxes                1,069       1,884     (6,016)        573        374
  Income tax
   expense
   (benefit)               16          17          -           -          -
                   ----------  ----------  ---------   ---------  ---------
  Net income
   (loss)          $    1,053  $    1,867  $  (6,016)  $     573  $     374
                   ==========  ==========  =========   =========  =========
  Net income
   (loss) for
   common
   stockholders
   (1)             $    1,053  $   14,529  $  (7,000)  $    (235) $    (619)
                   ==========  ==========  =========   =========  =========
Per Share
  Diluted earnings
   (loss) per
   common share
   (1)                   0.16       65.60     (46.32)      (1.41)     (3.06)
  Book value per
   common share    $    12.37  $    12.39  $  (32.93)  $    8.34  $   15.83
  Weighted average
   common shares
   outstanding      6,484,457     221,492    151,122     166,641    202,115
  Common shares
   outstanding      6,485,218   6,484,455    151,122     151,122    202,115
Earnings
 Performance
  Return on
   average total
   assets                0.49%       0.91%     (2.85)%      0.26%      0.17%
  Return on
   average
   stockholders'
   equity                5.08       24.16     (65.13)       6.24       4.15
  Net interest
   margin                3.48        3.44       3.37        3.33       3.29
  Efficiency ratio
   (2)                  83.83       92.20      93.00       82.31      84.51
  Bank net
   interest margin       3.56        3.58       3.51        3.46       3.42
Asset Quality
  Nonperforming
   assets to total
   end of period
   assets                1.80%       1.99%      2.20%       5.14%      5.76%
  Nonperforming
   loans to total
   end of period
   loans                 1.06        1.29       1.40        4.11       4.97
  Net loan charge-
   offs to total
   average loans        (0.11)          -       1.22        0.05       0.11
  Allowance for
   loan losses to
   total end of
   period loans          1.47        1.40       1.44        2.23       2.15
  Allowance for
   loan losses to
   nonperforming
   loans               139.01      108.85     102.99       54.32      43.24
  Nonperforming
   loans           $    6,219  $    7,345  $   7,749   $  23,678  $  28,820
  Nonperforming
   assets              15,996      17,341     18,005      43,898     50,105
  Net loan charge-
   offs                  (650)        (14)     9,809         273        628
Capital
  Total risk-based
   capital ratio        16.41%      16.84%      9.64%      10.18%     10.01%
  Common equity
   tier 1 risk-
   based capital
   ratio                11.88       12.22         NM          NM         NM
  Tier 1 leverage
   ratio                12.14       12.45       4.93        5.52       5.48

(1)  Net income for common stockholders was significantly impacted by a GAAP
     requirement that any discount received on preferred stock redemption be
     attributed back to common stockholders. This non-recurring item
     reflects the retirement of the Series C Preferred Stock for $19 million
     which had outstanding par value of $32.7 million and $12.0 million of
     unpaid dividends, resulting in the $25.7 million addition to net income
     for common stockholders. This impacts the earnings per share but does
     not impact the income statement, book value or any of the earnings
     performance ratios.

(2)  Calculated as noninterest expense less amortization of intangibles and
     expenses related to other real estate owned divided by the sum of net
     interest income before provisions for loan losses and total noninterest
     income excluding securities gains and losses and gains on sale of
     assets.

Contact:
Daniel R. Kadolph
Chief Financial Officer
Centrue Financial Corporation
Email Contact
(815) 431-2838

Source: Centrue Financial Corporation

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