Citizens sees quarterly net income rise, but decrease over nine-month period

PHILADELPHIA — Citizens Holding Company has released the results of operations for the three and nine months ended Sept. 30, 2013.

Net income for the three months was $2.009 million, or $0.41 per share-basic and diluted, up from $1.629 million, or $0.34 per share-basic and $0.33 per share-diluted for the same quarter in 2012. Net interest income for the third quarter of 2013, after the provision for loan losses for the quarter, was $6.173 million, approximately 3.8 percent lower than the same period in 2012, due to an increase in the provision for loan losses. The provision for loan losses was $1.080 million compared to $462,000 for the same period in 2012. The increase in the provision reflects management’s estimate of inherent losses in the loan portfolio including the impact of current local and national economic conditions. The net interest margin decreased to 3.72% in the third quarter of 2013 from 3.74 percent in the same period in 2012 primarily because of the decrease in yields on earning assets was greater than the decline in rates paid on interest bearing deposits.

Non-interest income increased in the third quarter of 2013 by $343,000, or 18.6 percent, while non-interest expenses decreased $423,000, or 6.7 percent, compared to the same period in 2012. The increase in non-interest income was due primarily to an increase in service charges on deposit accounts, other income and other service charges and fees. Non-interest expenses decreased due to a $285,000 decrease in other operating expense and a $134,000 decrease in salaries and benefits and a $4,000 decrease in occupancy expense. The decrease in other operating expense was due mainly as a result of lower regulatory and related costs.

Net income for the nine months decreased 0.3 percent to $5.028 million, or $1.03 per share-basic and diluted, from $5.044 million, or $1.04 per share-basic and diluted, for the nine months ended Sept. 30, 2012. Net interest income for the nine months ended September 30, 2013, after the provision for loan losses, decreased 7.3 percent to $18.985 million from $20.485 million for the same period in 2012. Net interest margin for the nine months decreased to 3.57 percent in 2013 from 4.00 percent in the same period in 2012. The provision for loan losses for the nine months was $1.829 million compared to the provision of $1.328 million in 2012. The increase in the provision reflects management’s assessment of inherent losses in the loan portfolio including the impact caused by current local and national economic conditions.

Non-interest income increased by $706,000, or 13.9 percent, and non-interest expense decreased by $803,000, or 4.1 percent, for the nine months when compared to the same period in 2012. The increase in non-interest income was primarily due to an increase in service charges from deposit accounts and other service charges and fees. Non-interest expense decreased primarily due a decrease in other operating expenses of $368,000 and in salaries and benefits in the amount of $526,000 partially offset by an increase in occupancy expenses in the amount of $91,000. The decrease in other operating expense was due mainly as a result of lower regulatory and related costs.

Total assets as of Sept. 30 decreased to $871.588 million, down $9.252 million, or 1.1 percent, when compared to Dec. 31, 2012. Deposits increased by $6.142 million, or 1.0 percent, and loans, net of unearned income increased by $8.265 million, or 2.3 percent, when compared to Dec. 31, 2012. The increase in loans, net of unearned, was due to improving loan demand in excess of repayments of existing loans. Non-performing assets decreased by $1.238 million to $18.164 million at Sept. 30 as compared to Dec. 31, 2012, because of decreases in non-accrual loans, other real estate owned and loans 90 days or more past due and still accruing interest.

During the first three quarters of 2013, the company paid dividends totaling $0.66 per share.

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