FRANKFORT, Ky., April 23, 2014 (GLOBE NEWSWIRE) -- Farmers Capital Bank Corporation (Nasdaq:FFKT) (the "Company") reported net income of $3.4 million for the quarter ended March 31, 2014, an increase of $298 thousand or 9.7% compared to the quarter ended December 31, 2013. On a per common share basis, net income was $.38 and $.35 for the current and linked quarters, respectively. Net income for the current quarter represents a decrease of $422 thousand or 11.1% compared to the first quarter of a year ago, which equates to a decline of $.06 on a per common share basis.
"We were pleased to have announced two significant events that occurred during the quarter," states Lloyd C. Hillard, Jr., President and Chief Executive Officer of the Company. "First, we received notice that our parent company is no longer subject to the regulatory agreement that had been in place since 2009," continues Mr. Hillard. "Second, we also announced that we are redeeming one-third of our outstanding preferred stock. Both of these positive events reflect the overall steady progress we've made over the last several years. But we have more challenges ahead, particularly the need to further reduce nonperforming assets and to increase outstanding loans without sacrificing credit quality."
A summary of nonperforming assets is as follows for the periods indicated.
|March 31,||December 31,||September 30,||June 30,||March 31,|
|Loans 90 days or more past due and still accruing||434||444||--||--||82|
|Total nonperforming loans||51,098||50,537||51,498||47,497||54,605|
|Other real estate owned||35,444||37,826||41,661||46,465||49,130|
|Total nonperforming assets||$86,542||$88,363||$93,159||$93,962||$103,735|
|Ratio of total nonperforming loans to total loans (net of unearned income)||5.2%||5.1%||5.1%||4.7%||5.4%|
|Ratio of total nonperforming assets to total assets||4.8||4.9||5.1||5.2||5.8|
Activity during the current quarter for nonaccrual loans, restructured loans, and other real estate owned is as follows:
|(In thousands)||Loans||Loans||Estate Owned|
|Balance at December 31, 2013||$23,838||$26,255||$37,826|
|Loans placed on nonaccrual status||2,749||--||--|
|Transfers to performing status||(165)||--||--|
|Transfers to other real estate owned||(335)||--||335|
|Proceeds from sales||--||--||(1,901)|
|Net gain on sales/other||--||--||90|
|Balance at March 31, 2014||$24,720||$25,944||$35,444|
Overall, nonaccrual loans increased $882 thousand or 3.7% during the quarter. Newly classified nonaccrual loans were $2.7 million, consisting primarily of three larger credits totaling $2.0 million in the aggregate secured by commercial real estate. The Company received principal paydowns on nonaccrual loans of $1.1 million; transfers to other real estate owned, representing repossession of loan collateral, totaled $335 thousand. Other real estate owned decreased $2.4 million or 6.3%, driven by sales and write-down activity. Property sales for the quarter include one larger-balance residential real estate development property sold at its carrying amount of $1.2 million. Write-downs during the quarter include impairment charges totaling $390 thousand related to one residential real estate development project resulting from an annual appraisal, which reduced its carrying value to $1.4 million.
The allowance for loan losses was $18.7 million or 1.90% of loans (net of unearned income) outstanding at March 31, 2014 compared to $20.6 million or 2.06% at year-end 2013. Net loan charge-offs were $2.0 million and $353 thousand for the current three months and linked quarter, respectively. Net charge-offs as a percentage of outstanding loans (net of unearned income) were 0.21% and 0.04% in the current and linked quarters, respectively. The increase in net charge-offs was driven primarily by two events: charge-offs totaling $1.0 million related to a group of fraudulent loans initiated by a former loan officer and a charge-off of $755 thousand related to one credit secured by commercial real estate. The Company has filed an insurance claim seeking possible recovery of approximately $750 thousand related to the fraudulent loans. The amount of recovery, if any, will be recognized when received.
Calculating net income per common share requires reducing the amount of net income available to common shareholders by the amount of dividends declared on preferred stock. In accordance with the terms of the Company's issuance of preferred stock, the rate of dividends payable increased to 9% from 5% on February 15, 2014. The Company will redeem 10,000, or one-third, of its outstanding preferred shares on May 15, 2014, which will mitigate the impact of the rate increase on earnings per common share. The amount of dividends payable for a full quarter without the redemption would have resulted in an increase of $300 thousand, equal to $.04 per common share per quarter. After the redemption, the increase in dividends for a full quarter will amount to only $75 thousand or $.01 per common share per quarter.
First Quarter 2014 Compared to Fourth Quarter 2013
First Quarter 2014 Compared to First Quarter 2013
The Memorandum of Understanding entered into during 2009 between the Company and its primary banking regulators was terminated in March, 2014 as a result of continued satisfactory compliance, most notably from the progress made in lowering nonperforming assets and increasing capital levels. Therefore, the Company is no longer required to receive permission from its banking regulators to make interest payments on its trust preferred securities or to pay dividends on its common and preferred stock. However, the Company has no intention of declaring or paying any dividend on its common stock prior to redeeming all of its outstanding preferred stock. The Company announced during the first quarter that it would redeem 10,000 shares, or one-third, of its outstanding preferred stock on May 15, 2014. Further redemptions, which require regulatory approval, will be based on satisfactory financial performance and take into consideration the Company's capital position, earnings, asset quality, and other factors. The timing and amount of any further redemption by the Company of its remaining outstanding preferred stock will be disclosed when it is assured.
Farmers Capital Bank Corporation is a bank holding company headquartered in Frankfort, Kentucky. The Company operates 36 banking locations in 23 communities throughout Central and Northern Kentucky, a data processing company, and an insurance company. Its stock is publicly traded on the NASDAQ Stock Market LLC exchange in the Global Select Market tier under the symbol: FFKT.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon current expectations, but are subject to certain risks and uncertainties that may cause actual results to differ materially. Among the risks and uncertainties that could cause actual results to differ materially are economic conditions generally and in the subject market areas, overall loan demand, increased competition in the financial services industry which could negatively impact the ability of the subject entities to increase total earning assets, and retention of key personnel. Actions by the Federal Reserve Board and changes in interest rates, loan prepayments by, and the financial health of, borrowers, and other factors described in the reports filed by the Company with the Securities and Exchange Commission ("SEC") could also impact current expectations. For more information about these factors please see the Company's Annual Report on Form 10-K on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
|Consolidated Financial Highlights-Unaudited|
|(In thousands except per share data)|
|Three Months Ended|
|March 31,||December 31,||March 31,|
|Interest income||$ 16,374||$ 16,797||$ 16,742|
|Net interest income||13,679||13,959||13,576|
|Provision for loan losses||132||(1,020)||(632)|
|Net interest income after provision for loan losses||13,547||14,979||14,208|
|Income before income tax expense||4,490||4,207||5,110|
|Income tax expense||1,120||1,135||1,318|
|Net income||$ 3,370||$ 3,072||$ 3,792|
|Net income||$ 3,370||$ 3,072||$ 3,792|
|Less preferred stock dividends and discount accretion||537||490||485|
|Net income available to common shareholders||$ 2,833||$ 2,582||$ 3,307|
|Basic and diluted net income per common share||$ .38||$ .35||$ .44|
|Loans, net of unearned interest||$994,050||$1,004,742||$1,005,775|
|Weighted average shares outstanding - basic and diluted||7,479||7,477||7,470|
|Return on average assets||.75%||.67%||.86%|
|Return on average equity||7.77%||7.16%||9.10%|
|March 31,||December 31,|
|Cash and cash equivalents||$ 94,963||$ 68,253|
|Loans, net of allowance of $18,690 and $20,577||965,229||979,306|
|Federal funds purchased and other short-term borrowings||27,393||29,123|
|Total liabilities and shareholders' equity||$1,814,279||$1,809,555|
|End of period tangible book value per common share1||$ 19.49||$ 18.61|
|End of period common share closing price||22.46||21.75|
|1Represents total common equity less intangible assets divided by the number of common shares outstanding at the end of the period.|
Farmers Capital Bank Corporation Doug Carpenter 502-227-1686
Farmers Capital Bank Corporation
Frankfort, Kentucky, UNITED STATES
Farmers Capital Bank Corporation Doug Carpenter 502-227-1686
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