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Citizens Bancorp Announces Third Quarter 2010 Operating Results

^{Published on 2010-10-27 09:51:02 - Market Wire}
 

NEVADA CITY, Calif.--([ BUSINESS WIRE ])--Today, Citizens Bancorp (the aCompanya) (OTCBB: CZNB), the holding company of Citizens Bank of Northern California (the aBanka), announced operating results for the third quarter of 2010. During the quarter, the Company maintained its strong net interest margin which improved to 4.34% for the three month period ended September 30, 2010, from 4.17% for the same period in 2009. The Company recorded net income available to common shareholders of $15 thousand for the three months ended September 30, 2010, compared to $363 thousand for the same period of 2009 and a net loss available to common shareholders for the nine months ended September 30, 2010 of $4.5 million, compared to $1.7 million for the same period in 2009. Net income per share was $0.01 and $0.19 for the three months ended September 30, 2010 and 2009, respectively. The loss per share was $1.95 and $0.89 for the nine months ended September 30, 2010 and 2009, respectively.

Net interest income was $3.4 million for the three month period ended September 30, 2010, a decrease of $257 thousand, or 7%, as compared to $3.7 million for the same period in 2009. Net interest income was $10.6 million for the nine months ended September 30, 2010, a decrease of $316 thousand, or 3%, as compared to $10.9 million for the same period of 2009. The Companya™s net interest margin increased from 4.17% and 4.35% in the three and nine months ended September 30, 2009, respectively, to 4.34% and 4.54% in the three and nine months ended September 30, 2010, respectively, primarily as a result of a lower cost of funds. The cost of funds decreased 37 basis points from 1.11% for the three month period ended September 30, 2009 to 0.74% for the same period in 2010 and decreased 54 basis points from 1.32% for the nine months ended September 30, 2009 to 0.78% for the same period in 2010. As of September 30, 2010, the Companya™s loan to deposit ratio was 99.4% compared with 94.9% at September 30, 2009. Forgone interest on non-accrual and restructured loans adversely impacted the net interest margin by 1.17% and 0.98% for the three and nine months ended September 30, 2010, respectively, compared to 0.35% and 0.72% for the three and nine months ended September 30, 2009.

The provision for credit losses for the nine months ended September 30, 2010 was $7.9 million, an increase of $4.0 million compared to the $3.9 million recorded during the same period in 2009, as a result of the continuing declines in underlying real estate collateral values over the last year. Costs and impairment charges associated with other real estate owned (aOREOa) were $1.2 million for the nine months ended September 30, 2010, compared to $2.2 million during the same period in 2009 and $745 thousand for the three months ended September 30, 2010, compared to $85 thousand for the same period in 2009. Operating results for the nine months ended September 30, 2010, were positively impacted by the reversal of liabilities totaling $1.3 million associated with the cancellation of certain deferred compensation agreements, compared to the reversal of $714 thousand in the same period of 2009.

Consistent with the Companya™s plan to reduce assets and improve its capital ratios, total assets decreased $29.8 million, or 8%, to $357.5 million as of September 30, 2010, from $387.3 million as of September 30, 2009. The Company continues to maintain strong liquidity with $42.9 million in cash and cash equivalents and $17.3 million in time deposits at other banks at September 30, 2010. Total loans for the Company as of September 30, 2010 were $281.4 million, a decrease of $21.2 million, or 7%, from $302.5 million as of September 30, 2009. Over the same period, deposits decreased $35.7 million, or 11%, to $283.0 million at September 30, 2010, compared to $318.7 million at September 30, 2009. The decrease in deposits primarily reflects brokered deposit maturities of $20.3 million.

Non-performing assets increased to $42.2 million at September 30, 2010, compared to $41.9 million at September 30, 2009. The allowance for credit losses equaled 5.15% of total loans at September 30, 2010, compared to 4.78% at September 30, 2009. The allowance for credit losses as a percent of non-accrual loans totaled 43.53% and 40.87% at September 30, 2010 and 2009, respectively.

Gary Gall, President and CEO said, aThe Citizens Bank team continues to do the hard work necessary to move our Company forward. While improvement in our asset quality is slow, and loan demand is weak, we continue to maintain a net interest margin that ranks in the top quartile of banks in the state and nationally. We are also beginning to see the positive effects of our cost reduction measures implemented earlier in the year. We expect to continue to see the accelerated benefits of these savings in future quarters.a

During the nine months ended September 30, 2010, the decrease in non-interest expense of $2.2 million over the same period in 2009 was primarily the result of lower expenses related to OREO and the reversal of liabilities totaling $1.3 million associated with certain deferred compensation agreements that were cancelled in June 2010. In the nine months ended September 30, 2010, the Bank recorded a loss on the sale or write-down of OREO of $1.2 million compared to $2.2 million for the same period of 2009.

Gall continued, aWe are committed to providing high quality service and a responsive and personalized approach to serving the needs of our customers. We take great pride in giving back to the community as evidenced by the commitment of our Board of Directors and valued employees who continue to make a real difference by volunteering in 81 local organizations, serving on 31 boards of directors and contributing to 66 organizations.a

The Banka™s Tier 1 leverage capital ratio was 5.7% at both September 30, 2010 and June 30, 2010. In order to strengthen the balance sheet of the Bank and attain a 9% Tier 1 leverage capital ratio level, preparations are underway for an initial public offering in which we seek to raise new capital beginning in the forth quarter of 2010. In order to preserve capital, in August 2009 the Company began deferring TARP dividend payments, and in July 2010 began deferring interest payments on trust preferred securities.

This release may contain certain forward-looking statements that are based on managementa™s current expectations regarding economic, legislative, and regulatory issues that may impact the Companya™s earnings in future periods.Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.They often include the words abelievea, aexpecta, aintenda, aestimatea or words of similar meaning, or future or conditional verbs such as awilla, awoulda, ashoulda, acoulda or amaya.Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting the Banka™s operations, pricing, products and services.These and other important factors are detailed in various Federal Deposit Insurance Corporation filings made periodically by the Bank, copies of which are available from the Bank without charge.The Company or the Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

Citizens Bank of Northern California (the aBanka) was founded in February 1995, and is headquartered in Nevada City, California.The Bank became a wholly owned subsidiary of the Company in 2003.The Bank has six branches serving communities throughout Nevada County, including locations in Nevada City, Grass Valley, Penn Valley, Lake of the Pines, and Truckee.In addition to its Nevada County branches, the Bank services the needs of its Placer County customers with a branch located in Auburn.The Bank offers consumer loans and other traditional banking products and services, designed to meet the needs of small and middle market businesses and individuals.