Citizens Banking Corporation Announces Fourth Quarter 2004 Results.FLINT flint, mineral flint, variety of quartz that commonly occurs in rounded nodules and whose crystal structure is not visible to the naked eye. Flint is dark gray, smoky brown, or black in color; pale gray flint is called chert. , Mich. -- Citizens Banking Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CBCF CBCF Canadian Breast Cancer Foundation CBCF Congressional Black Caucus Foundation CBCF Community Based Corrections Facilities CBCF Commander, Base Communications Facility ) announced a net income increase of $2.2 million or 12.2% to $20,286,000 for the three months ended December December: see month. 31, 2004, compared with net income of $18,074,000 in the same quarter of 2003. This represents an increase of $0.6 million or 3.3% over the net income of $19,646,000 in the third quarter of 2004. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share was $0.46, compared to $0.41 per diluted share for the same quarter of last year and $0.45 per diluted share for the third quarter of 2004. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. returns on average assets and average equity during the fourth quarter were 1.05% and 12.43%, respectively, compared with 0.93% and 11.45% in the fourth quarter of 2003. Annualized returns on average assets and average equity for the fourth quarter of 2004 were an improvement over the third quarter of 2004 returns of 1.02% and 12.27%, respectively. For the year ended December 31, 2004, net income was $76,097,000 or $1.74 per diluted share compared with net income of $65,951,000 or $1.51 per diluted share for the same period of 2003, an increase of 15.4% in net income and 15.2% in diluted net income per share. "This quarter represents the third consecutive quarter of earnings per share increases and was highlighted by improved performances from many areas of our company," stated William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack R. Hartman Hartman may refer to: Surname
Key Highlights in the Quarter: --Nonperforming assets continued to decline to their lowest level in more than three years, decreasing $1.5 million or 2.9% to $50.8 million at December 31, 2004 compared with September September: see month. 30, 2004 and decreased $26.2 million or 34.0% compared with December 31, 2003. The allowance for loan losses as a percent of nonperforming loans is now 285% compared to 290% in the third quarter of 2004 and 179% in the fourth quarter of 2003. --The fourth quarter 2004 provision for loan losses of $4.6 million was $0.4 million less than the third quarter of 2004 and $3.4 million or 42.5% less than the fourth quarter of 2003. Net charge-offs declined to $4.6 million in the fourth quarter of 2004 compared with $5.0 million in the third quarter of 2004 and $7.7 million in the fourth quarter of 2003. --Total bank core deposit balances increased by $25.6 million in the fourth quarter compared to the third quarter of 2004, representing the fifth consecutive quarter of core deposit growth. The growth has been driven by increases in noninterest bearing deposits and a new market rate savings product introduced in the fourth quarter of 2003. --Our Oakland Oakland, city (1990 pop. 372,242), seat of Alameda co., W Calif., on the eastern side of San Francisco Bay; inc. 1852. Together with San Francisco and San Jose, the city comprises the fourth largest metropolitan area in the United States. County initiative generated an increase in total loans outstanding of $96.3 million and an increase of total core deposits within the market of $65.5 million during the fourth quarter of 2004 over the third quarter of 2004. --Citizens introduced another new suite of checking products during the fourth quarter of 2004, specifically targeted for the public funds See Fund, 3. See also: Public sector. Coupled with the business checking product suite introduced earlier this year, over 4,150 business and public fund accounts totaling over $27.8 million have been opened since April 2004. The success of these new products has significantly contributed to the $24.8 million increase in commercial checking balances since December 2003. Balance Sheet Citizens' total assets at December 31, 2004 were $7.7 billion, a decrease of $5.0 million or 0.1% compared with December 31, 2003 and an increase of $46.6 million or 0.6% from September 30, 2004. Material factors contributing to these changes included the sale of our Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Bank subsidiary in the third quarter of 2004 ($173.2 million in assets at the date of sale), declines in both the investment portfolio and mortgage loans held for sale, and growth in total portfolio loans. Portfolio loans increased $145.5 million or 2.8% compared with year end 2003 and $89.9 million or 1.7% compared with September 30, 2004 as both consumer and commercial loans increased. Consumer loans, excluding mortgage loans, increased $231.4 million or 13.1% at December 31, 2004 compared with December 31, 2003 due to a well executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. sales process A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation. and a number of successful sales campaigns Noun 1. sales campaign - an advertising campaign intended to promote sales ad blitz, ad campaign, advertising campaign - an organized program of advertisements sales campaign n → campaña de venta , slightly offset by the reduction of $23.2 million as a result of the Illinois Bank sale completed in the third quarter of 2004. Total consumer loans, excluding mortgage loans, increased $24.2 million or 1.2% since September 30, 2004. Since December 31, 2003, direct consumer loans increased $149.3 million or 14.6% due to the success of the home equity product while indirect loans increased $82.0 million or 11.0% due to growth in the recreational vehicle and marine segments from continued emphasis on service and maintaining strong relationships with existing dealers. Portfolio mortgage loans were $508.2 million at December 31, 2004, an increase of $11.5 million or 2.3% compared with December 31, 2003 and an increase of $5.5 million or 1.1% from September 30, 2004. The increase in the mortgage portfolio occurred due to slower refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. activity. Citizens continues to sell most new production into the secondary market. Closed mortgage loan volume declined to $132.9 million in the fourth quarter of 2004 compared with $154.7 million in the fourth quarter of 2003. Commercial loans increased by $60.3 million or 2.1% in the fourth quarter of 2004 from the third quarter of 2004 on a period end basis but, on an average basis, decreased $1.8 million or 0.1%. The increase on a period end basis was driven by strong growth in Michigan's Oakland County market. Overall, commercial loans at December 31, 2004 were lower than December 31, 2003, by $97.3 million or 3.3% due to lower demand for commercial credit in several of Citizens' mature markets, high repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan activity, the sale of the Illinois Bank (which equated to $52.9 million at the date of sale), and continued reduction of exposure on credits not meeting Citizens' risk parameters. Total deposits were $5.3 billion at December 31, 2004, a decrease of $142.5 million or 2.6% compared with December 31, 2003 and an increase of $32.4 million or 0.6% from September 30, 2004. The decline in deposits since year end 2003 occurred largely within time deposits, reflecting Citizens' less aggressive pricing posture posture /pos·ture/ (pos´choor) the attitude of the body.pos´tural pos·ture n. 1. A position of the body or of body parts. 2. during the low interest rate environment as well as the impact from the sale of the Illinois Bank (which equated to $155.3 million at the date of sale). Time deposits declined $347.6 million to $1.6 billion at December 31, 2004 compared with $2.0 billion at December 31, 2003. Core deposits, which exclude time deposits, totaled $3.7 billion at December 31, 2004, an increase of $205.1 million or 5.9% compared with December 31, 2003 and an increase of $25.6 million or 0.7% from September 30, 2004. The increase in core deposits is largely the result of the growth in a new market rate savings product, which has increased $606.5 million since December 31, 2003 and more than offsets the decline of $102.8 million as a result of the Illinois Bank sale. Additionally, noninterest bearing deposits have increased 1.9% since December 31, 2003 as a result of several deposit campaigns throughout the year. Partially offsetting these increases were declines in interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid checking and savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. . Credit Quality Nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. totaled $50.8 million at December 31, 2004, a decrease of $1.5 million or 2.9% compared with September 30, 2004 and a decrease of $26.2 million or 34.0% compared with December 31, 2003. Nonperforming assets at December 31, 2004 represent 0.94% of total loans plus other repossessed assets acquired compared with 0.99% at September 30, 2004 and 1.47% at December 31, 2003. Loans added to the commercial nonperforming loan category decreased to $18.4 million for the quarter compared with $22.3 million in the third quarter of 2004 while loans removed from that category totaled $18.9 million for the fourth quarter compared with $29.4 million in the third quarter of 2004. The allowance for loan losses totaled $122.2 million or 2.27% of portfolio loans at December 31, 2004, consistent with both the September 30, 2004 level of $122.2 million or 2.30% of portfolio loans and the December 31, 2003 level of $123.5 million or 2.35% of portfolio loans. Net charge-offs decreased to $4.6 million in the fourth quarter of 2004 compared with $5.0 million in the prior quarter and decreased from $7.7 million in the fourth quarter of 2003. The decrease in net charge-offs compared with the third quarter of 2004 was due to an increase in the level of loan recoveries partially offset by proactive risk mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy on a single, large, deteriorating de·te·ri·o·rate v. de·te·ri·o·rat·ed, de·te·ri·o·rat·ing, de·te·ri·o·rates v.tr. To diminish or impair in quality, character, or value: commercial loan. The 40.5% decrease in net charge-offs from the fourth quarter of the prior year was due to lower net charge-offs in the commercial loan portfolio. The provision for loan losses decreased to $4.6 million in the fourth quarter of 2004 compared with $5.0 million in the third quarter and $8.0 million in the fourth quarter of 2003. The reduction in the provision for loan losses reflects changes in specific reserves, the formula-based component of the reserve which is impacted by the level of net charge-offs, revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. in loan risk rating, and changes in the qualitative qualitative /qual·i·ta·tive/ (kwahl´i-ta?tiv) pertaining to quality. Cf. quantitative. qualitative pertaining to observations of a categorical nature, e.g. breed, sex. risk component of the allowance. Citizens anticipates both net charge-offs and provision expense in the first quarter of 2005 to be lower than the fourth quarter of 2004 based on current business trends. Net Interest Margin and Net Interest Income Net interest margin decreased to 3.97% in the fourth quarter of 2004 compared with 4.02% in the prior quarter and 4.07% in the fourth quarter of 2003. The decrease in net interest margin compared with the third quarter of 2004 was due to lower yields on investments and residential mortgage loans, and growth in higher yielding deposit products. The decrease in net interest margin compared with the fourth quarter of 2003 resulted from the liability yield increase outpacing the asset yield increase, which was slowed by real estate and consumer loan yield declines. For the full year 2004, net interest margin declined to 3.99% compared with 4.15% for the same period of 2003. Net interest income was $68.5 million in the fourth quarter of 2004 compared with $69.3 million in the prior quarter and $70.7 million in fourth quarter of 2003. The decrease compared with the prior quarter was driven by lower net interest margin as average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin remained relatively flat. The impact on fourth quarter 2004 earning assets as a result of the Illinois Bank sale in the third quarter of 2004 was largely offset by organic growth in the consumer loan portfolio. The decrease in net interest income compared with the fourth quarter of 2003 resulted from the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. decline in the net interest margin and from lower average earning assets resulting from the sale of the Illinois Bank. For the full year 2004, net interest income declined $10.9 million to $275.3 million compared with the full year 2003 due to the decline in net interest margin percentage. Average earning assets were nearly unchanged year over year with consumer loan growth offsetting the impact of the sale of the Illinois Bank. In the first quarter of 2005 Citizens anticipates net interest income will be lower than the fourth quarter of 2004 levels due to anticipated slight margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. and having two fewer days in the quarter. Noninterest Income Noninterest income for the fourth quarter of 2004 increased $2.0 million or 9.4% to $23.7 million compared with the fourth quarter of 2003. The increase resulted from higher trust fees, mortgage fees, and deposit service charges. Compared with the third quarter of 2004, noninterest income decreased $11.4 million or 32.6% as a result of the $11.7 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain from the sale of the Illinois Bank completed in the third quarter of 2004. Noninterest income increased $9.2 million or 9.7% to $104.1 million during the twelve month period ended December 31, 2004 compared with the same period of 2003. This increase was due to the aforementioned gain from the sale of the Illinois Bank and increased deposit service charge income, partially offset by lower mortgage income. Deposit service charges for the fourth quarter of 2004 increased $0.7 million or 9.2% compared with the fourth quarter of 2003. For the twelve months ended December 31, 2004 deposit service charges increased $5.2 million or 17.4% to $35.1 million compared with the twelve months ended December 31, 2003. The increase was the result of initiatives implemented over the last six quarters which improved fee waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. management and slight increases in certain fees. For the three month period ended December 31, 2004, deposit service charges decreased $.4 million or 4.2% to $8.8 million compared with the third quarter of 2004. This decrease was due to the rising rate environment, which resulted in higher credits against commercial deposit service charges based on commercial deposit balances. Trust fees increased $0.2 million or 3.9% to $4.8 million in the fourth quarter of 2004 compared with the fourth quarter of 2003. Trust fees increased $0.3 million or 1.9% to $17.9 million for the twelve months ended December 31, 2004 compared with the same period in 2003. The increases in trust fees were due to stronger financial markets and Citizens' sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a processes implemented during the first quarter of 2004. These new processes are focused on relationship management and new business development strategies. Total trust assets under administration decreased $184.4 million to $2.7 billion at December 31, 2004 compared to December 31, 2003. The decline in trust assets was due to the reduction of a large institutional relationship and a large custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. account. Mortgage and other loan income increased $0.5 million or 23.2% to $2.6 million in the fourth quarter of 2004 compared with the fourth quarter of 2003, reflecting an improvement in the execution of the secondary market sales process. For the twelve months ended December 31, 2004, mortgage and other loan income declined $8.4 million or 46.7% to $9.6 million compared with the same period in 2003. The decline in mortgage fees reflects the decrease in mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real volume as compared to 2003, due to the increased refinance activity that occurred during 2003. Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and investment fees were relatively unchanged at $1.7 million for the fourth quarter of 2004 compared to the fourth quarter of 2003. Brokerage and investment fees increased $0.2 million or 2.1% to $7.9 million for the twelve months of 2004 compared with the same period in 2003. The increase in brokerage and investment fees is due to three sales campaigns coordinated between the Consumer and Wealth Management lines of business. Other noninterest income increased $0.5 million or 9.5% to $4.8 million for the quarter and $1.5 million or 8.3% to $20.0 million for the twelve months ended December 31, 2004 compared with the same periods of the prior year. The increase was the result of the profit on the sale of closed bank premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person of $0.3 million and $1.6 million for the 2004 three and twelve month periods, respectively. Additionally, in the third quarter of 2004 Citizens received a distribution of $0.8 million related to venture capital investments made beginning in 1998, in a limited partnership pursuing early stage investment opportunities in technology driven businesses located in the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians region of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Net investment securities gains (losses) during 2004 were $1.6 million less than 2003 as a result of investment securities sold during the year. Citizens anticipates total noninterest income in the first quarter of 2005 to be lower than the fourth quarter of 2004 based on anticipated lower mortgage activity. Noninterest Expense Noninterest expense increased $0.7 million or 1.1% to $61.1 million in the fourth quarter of 2004 compared with $60.4 million in the fourth quarter of 2003 and decreased $17.9 million or 22.6% compared with $79.0 million in the third quarter of 2004. During the third quarter of 2004, the Bank incurred an $18.0 million prepayment penalty Prepayment penalty A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity. on high cost Federal Home Loan Bank ("FHLB FHLB Federal Home Loan Bank ") debt. For the year ended December 31, 2004, noninterest expense increased $29.8 million or 12.8% to $262.8 million compared with the same period in 2003 reflecting the impact of the prepayment penalty on the FHLB debt and higher costs as a result of the Oakland County initiative. Salaries and employee benefits increased $1.5 million or 5.2% and $6.8 million or 5.5% for the three and twelve month periods ended December 31, 2004, respectively, compared with the same periods of the prior year. Salaries related to the Oakland County initiative increased $0.3 million and $3.6 million for the three and twelve month periods, respectively. Employee benefits increased in both the three and twelve month periods due to higher pension and medical expenses. Normal salary merit increases were partially offset by a reduction in staffing levels. Citizens had 2,215 full time equivalent employees at December 31, 2004, down from 2,260 at September 30, 2004 and 2,345 at December 31, 2003. Occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal were relatively unchanged for the three month period ended December 31, 2004 and increased $1.8 million or 9.5% for the twelve months ended December 31, 2004 compared with the same periods of the prior year. The increase was largely due to $0.9 million in costs related to the opening of new branches and two regional hubs hubs - hub in Oakland County and, to a lesser extent, higher building repair and maintenance costs. Professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. expense decreased $1.3 million or 24.8% and $1.6 million or 8.8% for the three and twelve month periods ended December 31, 2004, respectively, compared with the same periods of the prior year. The decreases were the result of lower executive recruiting and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs and a decline in costs associated with banking industry consultants, partially offset by higher costs related to new internal control evaluation procedures to comply with Section 404 of the Sarbanes-Oxley Act See SOX. . Equipment related costs decreased $0.6 million or 15.3% and $2.1 million or 13.0% for the three and twelve month periods ended December 31, 2004, respectively, compared to the same periods in the prior year. These decreases were the result of the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of data transmission costs from equipment expense to telephone expense in connection with a new services contract. In addition, Citizens experienced lower depreciation and amortization expense on equipment and software. These decreases were partially offset by increases in noncapitalized equipment purchases as a result of changes in Citizens' capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. policy. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a services were relatively unchanged at $3.1 million for the three month period and increased $0.6 million or 4.8% for the twelve month period ended December 31, 2004 compared with the same periods of the prior year. The increase in the twelve month period is due to higher processing costs following the fourth quarter 2003 implementation of the new trust and investment accounting systems. These increases were partially offset by reduced processing costs on Citizens' core loan and deposit systems. Advertising and public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most expense increased $1.2 million or 69.1% and $3.4 million or 58.7% for the three and twelve month periods ended December 31, 2004, respectively, compared with the same periods of the prior year. These increases were the result of advertising to support Citizens' Oakland County initiative, deposit-focused promotions and the new brand introduction. Other loan fee expense decreased $0.4 million or 29.5% and $0.9 million or 17.7% for the three and twelve month periods ended December 31, 2004, respectively, compared with the same periods of the prior year. Loan fee expenses decreased due to lower mortgage loan expenses as a result of lower mortgage origination volume and process efficiencies resulting in lower title fee expense. Other noninterest expense increased $0.3 million or 6.1% and $2.7 million or 16.7% for the three and twelve month periods ended December 31, 2004, respectively, compared with the same periods of the prior year. Contributing to the increases for the three and twelve month periods ended December 31, 2004, were higher expenses for travel and training, certain tax related reconciliation items, and losses from litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements. Partially offsetting these increases were lower service fees in both the quarter and the twelve month period ended December 31, 2004 due to implementation costs associated with Wealth Management's strategic alliances with SEI Investments, EnvestnetPMC, Inc., and EPIC Advisors, Inc. initiated in the third and fourth quarters of 2003. Additionally, other real estate expenses decreased $1.3 million for the twelve month period ended December 31, 2004 due to reduced losses on property sales and lower carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. on properties under management. In the first quarter of 2005, Citizens anticipates that noninterest expenses will be lower than the fourth quarter of 2004 due to costs incurred in the fourth quarter that are not expected to be incurred during the first quarter. Oakland County Citizens continued to focus on the expansion initiative in Oakland County, Michigan Oakland County is a county in the U.S. state of Michigan. As of 2005, the population was estimated at 1,214,361.[2] The county seat is Pontiac6. Oakland County is part of the Detroit metropolitan area, though the actual city of Detroit is located in . Two regional hub locations and four branch facilities were opened during 2004 with plans for an additional three new branches in 2005. The Oakland County expansion initiative has shown great success since being launched in the fourth quarter of 2003, as evidenced by total loans increasing $203.7 million or 49.2% with total outstanding loans of $617.9 million as of December 31, 2004. Increases occurred in both the commercial and consumer banking lines of business with commercial loans increasing $185.6 million or 51.3% and consumer loans increasing $18.1 million or 34.9%. Core deposits increased $65.5 million or 43.9% to $214.7 million for the same period. Total full-time equivalent Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. ("FTE FTE Full-Time Equivalent FTE Full-Time Employee FTE Full-Time Equivalency FTE Full Time Employment FTE Foundation for Teaching Economics FTE Full Time Enrollment FTE For the Enterprise (SQL) FTE Fund for Theological Education ") personnel in Oakland County increased by 42 since the end of the fourth quarter of 2003 to 124 FTE's. From the third quarter of 2004, total loans increased $96.3 million and core deposits increased $22.6 million as of December 31, 2004. Other News Re-branding Update The new look of Citizens Banking Corporation - first introduced in November November: see month. 2003 at Citizens Bank branches in Oakland County, Michigan - was unveiled throughout the state of Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). during 2004. The redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re of the corporate image updates Citizens' traditional "weather ball" logo, giving it a more sophisticated, action-oriented look. The change distinguishes Citizens from competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. and provides a positive message that conveys the essence of the company. During 2004, new signage highlighting the updated logo replaced existing signs at the bank's 115 Michigan locations. The new logo also began appearing on Citizens Bank client account statements, new checks and check cards, brochures, advertising, and on the company's web site at www.citizensonline.com. Citizens is planning to re-brand the F&M Bank-Wisconsin locations as Citizens Bank in April 2005. Citizens previously announced its plan to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. F&M Bank-Wisconsin with Citizens Bank under one State of Michigan Federal Reserve member charter. The re-branding will include new Citizens Bank signage at all of the company's Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee locations and the replacement of the F&M Bank name and logo with the Citizens Bank name and logo on all materials and products. Citizens expects to re-brand its F&M Bank-Iowa branches in late 2005 or early 2006. During the fourth quarter of 2004, Citizens repurchased a total of 83,600 shares of its stock at an average price of $34.10. As of December 31, 2004, 2,850,200 shares remain to be purchased under the program approved by the company's Board of Directors on October October: see month. 16, 2003. Dividend Announcement The Board of Directors of Citizens Banking Corporation declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a cash dividend of $0.285 per share of common stock. The dividend is payable on February February: see month. 10, 2005, to shareholders of record on February 1, 2005. Investor Conference Call William R. Hartman, Chairman, President and CEO, Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by D. Christy chris·ty n. Variant of christie. , CFO See Chief Financial Officer. , John D. Schwab Schwab is a German name meaning "man from Swabia" and may refer to:
2. It is his duty to use ordinary diligence in the performance of his office, and to account with those whose money he has. will review the quarter's results in a conference call for investors and analysts beginning at 10:00am EST EST electroshock therapy. EST abbr. electroshock therapy on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , January January: see month. 21, 2005. A live audio web cast is available at http://viavid.net/dce.aspx?sid=00002160 To participate in the conference call, please call the number below approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 minutes prior to the scheduled conference time: US/Canada Dial-In Number: (800) 374-2419 International Dial-In Number: (706) 634-1073 Conference ID: 3188892 Conference Name: "Citizens Banking Corporation Fourth Quarter Earnings Call" R.S.V.P. is not required. A playback Playback could mean:
The process by which the corporation communicates with its investors. section at www.citizensonline.com Corporate Profile Citizens Banking Corporation is a diversified financial The diversified financial services segment includes a range of consumer and commercially-oriented companies offering a wide variety of products and services, including various lending products (such as home equity loans and credit cards), insurance, and securities and investment services company providing a full range of commercial, consumer, mortgage banking, trust and financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against services to a broad client base. Citizens operates 180 branch, private banking, and financial center locations throughout Michigan, Wisconsin, and Iowa. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Discussions in this release that are not statements of historical fact (including statements that include terms such as "will" "may," "should," "believe," "expect," "anticipate," "estimate," "intend," and "plan") are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, and Citizens' actual future results could materially differ from those discussed. Factors that could cause or contribute to such differences include, without limitation, adverse changes in Citizens' loan and lease portfolios and the resulting credit risk-related losses and expenses (including losses due to fraud and economic factors), Citizens' future lending and collections experience and the potential inadequacy of Citizens' loan loss reserves, interest rate fluctuations and the effects on net interest income of changes in Citizens' interest rate risk position, the potential inability to hedge certain risks economically ec·o·nom·i·cal adj. 1. Prudent and thrifty in management; not wasteful or extravagant. See Synonyms at sparing. 2. Intended to save money, as by efficient operation or elimination of unnecessary features; economic: , other adverse changes in economic or financial market conditions, the effects of terrorist attacks and potential attacks, Citizens' potential inability to continue to attract core deposits, Citizens' potential inability to continue to obtain third party financing on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms, adverse changes in competition and pricing environments, Citizens' potential failure to maintain or improve loan quality levels and origination volume, unanticipated expenses and payments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc litigation brought against Citizens from time to time, unanticipated technological changes that require major capital expenditures, adverse changes in applicable laws and regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. , the potential lack of market acceptance of Citizens' products and services, Citizens' potential inability to successfully expand its Oakland county operations, adverse changes in Citizens' relationship with major customers, changes in accounting rules that negatively impact results of operations or capital, the potential inadequacy of Citizens' business continuity plans, the potential failure of Citizens' external vendors to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. their contractual obligations to Citizens, Citizens' potential inability to integrate acquired operations or complete its restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , unanticipated environmental liabilities or costs, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of the ability of the banking subsidiaries to pay dividends to the holding company parent, Citizens' success in managing the risks involved in the foregoing, and other risks and uncertainties detailed from time to time in its filings with the Securities and Exchange Commission. Other factors not currently anticipated by management may also materially and adversely affect Citizens' results of operations. There can be no assurance that the future results will meet expectations. While Citizens believes that its forward-looking statements are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. Citizens does not undertake, and expressly disclaims any obligation, to update or alter its statements whether as a result of new information, future events or otherwise, except as required by applicable law.
(Financial highlights follow)
Visit our Web site at http://www.CitizensOnline.com
----------------------------------------------------------------------
Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
December September December
31, 30, 31,
(in thousands) 2004 2004 2003
----------------------------------------------------------------------
Assets
Cash and due from banks $153,474 $166,936 $182,545
Interest-bearing deposits with
banks 1,769 1,933 2,072
Investment Securities:
Available-for-sale:
U.S. Treasury and federal
agency securities 1,348,199 1,384,546 1,452,582
State and municipal
securities 395,878 407,226 437,003
Other securities 70,447 70,902 75,616
Held-to-maturity:
State and municipal
securities (fair value of
$54,749, $49,646,
and $19,913,
respectively) 54,035 48,878 19,857
----------- ----------- -----------
Total investment
securities 1,868,559 1,911,552 1,985,058
Mortgage loans held for sale 28,038 15,715 42,561
Loans:
Commercial 1,633,698 1,618,678 1,673,447
Commercial real estate 1,255,913 1,210,661 1,313,491
Residential mortgage loans 508,234 502,784 496,716
Direct consumer 1,169,618 1,133,644 1,020,269
Indirect consumer 825,902 837,664 743,895
----------- ----------- -----------
Total loans 5,393,365 5,303,431 5,247,818
Less: Allowance for loan
losses (122,184) (122,184) (123,545)
----------- ----------- -----------
Net loans 5,271,181 5,181,247 5,124,273
Premises and equipment 117,944 117,743 112,784
Goodwill 54,527 54,527 54,785
Other intangible assets 14,033 14,758 16,932
Bank owned life insurance 82,613 82,022 80,461
Other assets 113,895 113,017 109,599
----------- ----------- -----------
Total assets $7,706,033 $7,659,450 $7,711,070
=========== =========== ===========
Liabilities
Noninterest-bearing deposits $898,820 $933,864 $882,429
Interest-bearing demand deposits 1,150,332 1,206,540 1,360,756
Savings deposits 1,638,295 1,521,415 1,239,178
Time deposits 1,612,313 1,605,520 1,959,904
----------- ----------- -----------
Total deposits 5,299,760 5,267,339 5,442,267
Federal funds purchased and
securities sold under
agreements to repurchase 671,660 707,219 588,593
Other short-term borrowings 53,114 44,266 43,077
Other liabilities 77,276 64,588 65,112
Long-term debt 949,921 926,318 936,859
----------- ----------- -----------
Total liabilities 7,051,731 7,009,730 7,075,908
Shareholders' Equity
Preferred stock - no par value --- --- ---
Common stock - no par value 97,180 97,882 100,314
Retained earnings 539,128 530,896 512,045
Accumulated other comprehensive
income 17,994 20,942 22,803
----------- ----------- -----------
Total shareholders'
equity 654,302 649,720 635,162
----------- ----------- -----------
Total liabilities and
shareholders' equity $7,706,033 $7,659,450 $7,711,070
=========== =========== ===========
----------------------------------------------------------------------
Consolidated Statements of Income (Unaudited)
Citizens Banking Corporation and Subsidiaries
Three Months Twelve Months
Ended Ended
(in thousands, except per share December 31, December 31,
amounts) 2004 2003 2004 2003
----------------------------------------------------------------------
Interest Income
Interest and fees on loans $77,290 $76,345 $300,539 $323,739
Interest and dividends on
investment securities:
Taxable 14,726 15,836 61,501 61,631
Tax-exempt 5,150 5,214 20,916 20,502
Money market investments 4 3 12 105
-------- -------- --------- ---------
Total interest income 97,170 97,398 382,968 405,977
-------- -------- --------- ---------
Interest Expense
Deposits 16,462 17,039 64,439 83,449
Short-term borrowings 3,813 1,463 9,584 4,960
Long-term debt 8,415 8,218 33,618 31,310
-------- -------- --------- ---------
Total interest expense 28,690 26,720 107,641 119,719
-------- -------- --------- ---------
Net Interest Income 68,480 70,678 275,327 286,258
Provision for loan losses 4,609 8,020 21,094 62,962
-------- -------- --------- ---------
Net interest income after
provision for loan losses 63,871 62,658 254,233 223,296
-------- -------- --------- ---------
Noninterest Income
Service charges on deposit
accounts 8,814 8,074 35,121 29,916
Trust fees 4,794 4,615 17,854 17,527
Mortgage and other loan income 2,562 2,079 9,615 18,046
Brokerage and investment fees 1,733 1,705 7,885 7,720
Bankcard fees 897 732 3,444 3,042
Gain on sale of Illinois bank
subsidiary --- --- 11,650 ---
Other 4,844 4,424 19,991 18,465
-------- -------- --------- ---------
Total fees and other income 23,644 21,629 105,560 94,716
Investment securities gains
(losses) 10 2 (1,509) 103
-------- -------- --------- ---------
Total noninterest income 23,654 21,631 104,051 94,819
Noninterest Expense
Salaries and employee benefits 31,320 29,774 129,093 122,322
Occupancy 5,077 5,112 20,200 18,449
Professional services 3,911 5,202 16,251 17,815
Equipment 3,575 4,221 14,371 16,519
Data processing services 3,074 3,145 13,352 12,744
Advertising and public relations 2,907 1,719 9,180 5,786
Postage and delivery 1,600 1,796 6,534 6,896
Telephone 1,502 1,314 6,030 4,793
Other loan fees 840 1,192 3,984 4,840
Stationery and supplies 1,046 1,024 3,751 3,505
Intangible asset amortization 725 725 2,899 2,899
Prepayment penalty on FHLB
advances --- --- 17,959 ---
Other 5,540 5,222 19,163 16,420
-------- -------- --------- ---------
Total noninterest expense 61,117 60,446 262,767 232,988
-------- -------- --------- ---------
Income Before Income Taxes 26,408 23,843 95,517 85,127
Income tax provision 6,122 5,769 19,420 19,176
-------- -------- --------- ---------
Net Income $20,286 $18,074 $76,097 $65,951
======== ======== ========= =========
Net Income Per Share:
Basic $0.47 $0.42 $1.76 $1.52
Diluted 0.46 0.41 1.74 1.51
Cash Dividends Declared Per
Share 0.285 0.285 1.140 1.140
Average Shares Outstanding:
Basic 43,235 43,237 43,266 43,304
Diluted 43,798 43,714 43,767 43,609
----------------------------------------------------------------------
Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
2004 2004 2004 2004 2003
----------------------------------------------------------------------
Summary of Operations
(thousands)
Interest
income $97,170 $96,029 $95,375 $94,394 $97,398
Interest
expense 28,690 26,728 26,157 26,066 26,720
Net interest
income 68,480 69,301 69,218 68,328 70,678
Provision for loan
losses 4,609 4,985 4,500 7,000 8,020
Net interest income
after provision for
loan losses 63,871 64,316 64,718 61,328 62,658
Total fees and other
income 23,644 34,548 24,856 22,512 21,629
Investment
securities gains
(losses) 10 534 (2,053) --- 2
Noninterest
expense 61,117 78,973 62,143 60,534 60,446
Income tax
provision 6,122 779 6,656 5,863 5,769
Net income 20,286 19,646 18,722 17,443 18,074
----------------------------------------------------------------------
At Period End (millions)
Total assets $7,706 $7,659 $7,748 $7,692 $7,711
Total earning
assets 7,292 7,233 7,305 7,279 7,278
Total loans
including held for
sale 5,421 5,319 5,327 5,237 5,290
Total
deposits 5,300 5,267 5,361 5,461 5,442
Total shareholders'
equity 654 650 628 654 635
----------------------------------------------------------------------
Average Balances (millions)
Total assets $7,661 $7,669 $7,769 $7,640 $7,697
Total earning
assets 7,238 7,235 7,338 7,228 7,279
Total loans
including held for
sale 5,337 5,289 5,312 5,229 5,285
Total
deposits 5,258 5,336 5,435 5,474 5,481
Total shareholders'
equity 649 637 628 644 626
Shareholders' equity/
assets 8.48% 8.31% 8.08% 8.43% 8.13%
----------------------------------------------------------------------
Credit Quality Statistics
(thousands)
Nonaccrual
loans $42,819 $41,706 $48,191 $54,565 $68,744
Loans 90 or more days
past due and still
accruing 40 324 298 201 345
Restructured
loans 42 52 52 52 ---
--------- --------- --------- --------- ---------
Total
nonperforming
loans 42,901 42,082 48,541 54,818 69,089
Other repossessed
assets acquired
(ORAA) 7,946 10,303 9,673 7,592 7,943
--------- --------- --------- --------- ---------
Total
nonperforming
assets $50,847 $52,385 $58,214 $62,410 $77,032
========= ========= ========= ========= =========
Allowance for loan
losses $122,184 $122,184 $123,805 $123,703 $123,545
Allowance for loan
losses as a percent
of portfolio loans 2.27% 2.30% 2.34% 2.38% 2.35%
Allowance for loan
losses as a percent
of nonperforming
assets 240.30 233.24 212.67 198.21 160.38
Allowance for loan
losses as a percent
of nonperforming
loans 284.80 290.35 255.05 225.66 178.82
Nonperforming assets
as a percent of
portfolio loans plus
ORAA 0.94 0.99 1.10 1.20 1.47
Nonperforming assets
as a percent of total
assets 0.66 0.68 0.75 0.81 1.00
Net loans charged off
as a percent of
average portfolio
loans (annualized) 0.35 0.38 0.33 0.53 0.59
Net loans charged
off (000) $4,608 $4,985 $4,398 $6,842 $7,740
----------------------------------------------------------------------
Per Common Share Data
Net Income:
Basic $0.47 $0.46 $0.43 $0.40 $0.42
Diluted 0.46 0.45 0.43 0.40 0.41
Dividends 0.285 0.285 0.285 0.285 0.285
Market Value:
High $35.43 $33.36 $33.99 $34.00 $34.26
Low 32.01 29.42 28.31 31.55 26.41
Close 34.35 32.57 31.05 32.63 32.72
Book value 15.13 15.03 14.51 15.09 14.69
Shares outstanding,
end of period (000) 43,240 43,234 43,263 43,343 43,242
----------------------------------------------------------------------
Performance Ratios
(annualized)
Net interest margin
(FTE)(1) 3.97% 4.02% 3.98% 4.01% 4.07%
Return on average
assets 1.05 1.02 0.97 0.92 0.93
Return on average
shareholders'
equity 12.43 12.27 12.00 10.89 11.45
Efficiency
ratio(2)(3)(4) 64.21 63.86 63.78 64.26 63.16
----------------------------------------------------------------------
(1) Net interest margin is presented on an annual basis, includes
taxable equivalent adjustments to interest income and is based on
a tax rate of 35%.
(2) Efficiency Ratio = Noninterest expense/(Net interest income +
Total fees and other income). It measures how efficient a bank
spends its revenues. Third quarter 2004 excludes investment
securities gains of $534,000, gain on sale of Illinois bank
subsidiary of $11,650,000 and prepayment penalty on FHLB advances
of $17,959,000. The efficiency ratio would equal 73.30% if the
excluded items were included in the calculation.
(3) The efficiency ratio for second quarter 2004 would equal 65.16% if
investment securities losses of ($2,053,000) were included.
(4) The efficiency ratio for fourth quarter 2004 would equal 64.02% if
investment securities gains of $10,000 and a special charge
recovery of $167,000 were included.
----------------------------------------------------------------------
Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
For the twelve
months ended
December 31,
2004 2003 % Change
----------------------------------------------------------------------
Summary of Operations (thousands)
Interest income $382,968 $405,977 (5.7)%
Interest expense 107,641 119,719 (10.1)
Net interest income 275,327 286,258 (3.8)
Provision for loan losses 21,094 62,962 (66.5)
Net interest income after provision for
loan losses 254,233 223,296 13.9
Total fees and other income 105,560 94,716 11.4
Investment securities gains (losses) (1,509) 103 N/M
Noninterest expense 262,767 232,988 12.8
Income tax provision 19,420 19,176 1.3
Net income 76,097 65,951 15.4
----------------------------------------------------------------------
At Period End (millions)
Total assets $7,706 $7,711 (0.1)%
Total earning assets 7,292 7,278 0.2
Total loans including held for sale 5,421 5,290 2.5
Total deposits 5,300 5,442 (2.6)
Total shareholders' equity 654 635 3.0
----------------------------------------------------------------------
Average Balances (millions)
Total assets $7,685 $7,694 (0.1)%
Total earning assets 7,260 7,273 (0.2)
Total loans including held for sale 5,292 5,404 (2.1)
Total deposits 5,375 5,666 (5.1)
Total shareholders' equity 640 632 1.2
Shareholders' equity / assets 8.32% 8.21% 1.4
----------------------------------------------------------------------
Per Common Share Data
Net Income:
Basic $1.76 $1.52 15.8%
Diluted 1.74 1.51 15.2
Dividends 1.140 1.140 0.0
Market Value:
High $35.43 $34.26 3.4
Low 28.31 21.72 30.3
Close 34.35 32.72 5.0
Book value 15.13 14.69 3.0
Tangible book value 13.55 13.03 4.0
Shares outstanding, end of period (000) 43,240 43,242 (0.0)
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest margin (FTE)(1) 3.99% 4.15% (3.9)%
Return on average assets 0.99 0.86 15.1
Return on average shareholders' equity 11.90 10.44 14.0
Net loans charged off as a percent of
average portfolio loans 0.40 0.88 (54.5)
----------------------------------------------------------------------
(1) Net interest margin is presented on an annual basis and includes
taxable equivalent adjustments to interest income of $13,392,000
and $13,508,000 for the twelve months ended December 31, 2004 and
2003, respectively, based on a tax rate of 35%.
N/M - not meaningful
----------------------------------------------------------------------
Noninterest Income and Noninterest Expense (Unaudited)
Citizens Banking Corporation and Subsidiaries
Quarter Ended
---------------------------------------------
Dec 31 Sept 30 June 30 Mar 31 Dec 31
(in thousands) 2004 2004 2004 2004 2003
----------------------------------------------------------------------
NONINTEREST INCOME:
Service charges on
deposit accounts $8,814 $9,196 $9,069 $8,042 $8,074
Trust fees 4,794 4,222 4,528 4,310 4,615
Mortgage and other loan
income 2,562 1,750 3,047 2,256 2,079
Brokerage and investment
fees 1,733 1,719 2,651 1,782 1,705
Bankcard fees 897 853 911 783 732
Gain on sale of Illinois
bank subsidiary --- 11,650 --- --- ---
Other income 4,844 5,158 4,650 5,339 4,424
-------- -------- -------- -------- --------
Total fees and other
income 23,644 34,548 24,856 22,512 21,629
Investment securities
gains (losses) 10 534 (2,053) --- 2
-------- -------- -------- -------- --------
TOTAL NONINTEREST INCOME $23,654 $35,082 $22,803 $22,512 $21,631
======== ======== ======== ======== ========
NONINTEREST EXPENSE:
Salaries and employee
benefits $31,320 $32,649 $33,185 $31,939 $29,774
Occupancy 5,077 4,859 4,922 5,342 5,112
Professional services 3,911 4,131 4,281 3,928 5,202
Equipment 3,575 3,486 3,668 3,642 4,221
Data processing services 3,074 3,192 3,440 3,646 3,145
Advertising and public
relations 2,907 2,090 2,038 2,145 1,719
Postage and delivery 1,600 1,516 1,862 1,556 1,796
Telephone 1,502 1,543 1,451 1,534 1,314
Other loan fees 840 384 1,631 1,129 1,192
Stationery and supplies 1,046 947 916 842 1,024
Intangible asset
amortization 725 725 724 725 725
Prepayment penalty on
FHLB advances --- 17,959 --- --- ---
Other expense 5,540 5,492 4,025 4,106 5,222
-------- -------- -------- -------- --------
TOTAL NONINTEREST EXPENSE $61,117 $78,973 $62,143 $60,534 $60,446
======== ======== ======== ======== ========
----------------------------------------------------------------------
Average Balances, Yields and Rates
Three Months Ended
--------------------------------------------------------
December 31, 2004 September 30, 2004 December 31, 2003
--------------------------------------------------------
Average Average Average Average Average Average
(in thousands) Balance Rate Balance Rate Balance Rate
(1) (1) (2) (1)(2)
----------------------------------------------------------------------
Earning Assets
Money market
investments $1,904 0.85% $2,592 0.57% $2,539 0.51%
Investment
securities(3):
Taxable 1,446,836 4.07 1,491,700 4.11 1,542,774 4.11
Tax-exempt 421,523 7.52 426,893 7.56 418,438 7.67
Mortgage loans
held for sale 20,910 6.62 21,640 6.35 52,861 5.47
Loans(4):
Commercial 1,598,030 5.42 1,606,257 5.19 1,673,017 4.99
Commercial
real estate 1,229,568 5.96 1,223,116 5.90 1,309,832 6.07
Residential
mortgage
loans 503,139 5.55 489,608 5.73 506,077 5.56
Direct
consumer 1,151,932 5.68 1,124,343 5.57 996,486 5.96
Indirect
consumer 833,599 6.63 824,030 6.66 746,444 6.99
----------- ----------- ----------
Total
portfolio
loans 5,316,268 5.80 5,267,354 5.72 5,231,856 5.78
----------- ----------- ----------
Total
earning
assets 7,207,441 5.56 7,210,179 5.49 7,248,468 5.53
Nonearning Assets
Cash and due
from banks 162,170 170,013 165,477
Bank premises
and equipment 118,217 118,110 112,651
Investment
security fair
value
adjustment 30,414 24,664 30,907
Other
nonearning
assets 266,123 270,491 264,779
Allowance for
loan losses (122,934) (124,197) (125,420)
----------- ----------- -----------
Total
assets $7,661,431 $7,669,260 7,696,862
=========== =========== ===========
Interest-Bearing
Liabilities
Deposits:
Interest-
bearing
demand $1,183,322 0.77 $1,269,994 0.76 $1,340,511 0.73
Savings
deposits 1,534,662 1.03 1,493,434 0.84 1,262,141 0.47
Time deposits 1,608,388 2.52 1,634,243 2.44 1,976,707 2.63
Short-term
borrowings 729,610 2.08 694,850 1.55 576,496 1.01
Long-term debt 946,588 3.54 923,476 3.62 938,005 3.48
----------- ----------- -----------
Total
interest-
bearing
liabilities 6,002,570 1.90 6,015,997 1.77 6,093,860 1.74
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Noninterest-
bearing
demand 931,622 938,155 901,383
Other
liabilities 77,766 77,905 75,625
Shareholders'
equity 649,473 637,203 625,994
----------- ----------- -----------
Total
liabilities
and
shareholders'
equity $7,661,431 $7,669,260 $7,696,862
=========== =========== ===========
Interest
Spread 3.66% 3.72% 3.79%
Contribution of
noninterest bearing
sources of funds 0.31 0.30 0.28
====== ====== ======
Net Interest
Income as a
Percent of
Earning
Assets 3.97% 4.02% 4.07%
----------------------------------------------------------------------
(1) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income.
(2) Certain amounts have been reclassified to conform with current
year presentation.
(3) For presentation in this table, average balances and the
corresponding average rates for investment securities are based
upon historical cost, adjusted for amortization of premiums and
accretion of discounts.
(4) Nonaccrual loans are included in average balances.
----------------------------------------------------------------------
Average Balances, Yields and Rates
Twelve Months Ended December 31,
---------------------------------------
2004 2003
---------------------------------------
Average Average Average Average
(in thousands) Balance Rate Balance Rate
(1) (2) (1)(2)
----------------------------------------------------------------------
Earning Assets
Money market investments $2,095 0.57% $11,214 0.94%
Investment securities(3):
Taxable 1,511,515 4.07 1,405,549 4.38
Tax-exempt 424,280 7.58 405,412 7.78
Mortgage loans held for sale 29,559 6.09 125,206 5.54
Loans(4):
Commercial 1,613,919 5.18 1,763,466 5.18
Commercial real estate 1,255,490 5.88 1,348,845 6.28
Residential mortgage loans 493,037 5.69 557,766 6.09
Direct consumer 1,108,036 5.61 920,696 6.39
Indirect consumer 791,907 6.72 688,350 7.32
----------- -----------
Total portfolio loans 5,262,389 5.72 5,279,123 6.05
----------- -----------
Total earning assets 7,229,838 5.48 7,226,504 5.80
Nonearning Assets
Cash and due from banks 163,646 170,865
Bank premises and equipment 117,334 113,974
Investment security fair
value adjustment 29,822 46,383
Other nonearning assets 268,681 257,131
Allowance for loan losses (124,487) (120,926)
----------- -----------
Total assets $7,684,834 $7,693,931
=========== ===========
Interest-Bearing Liabilities
Deposits:
Interest-bearing demand $1,281,635 0.75 $1,319,858 0.89
Savings deposits 1,425,369 0.77 1,329,648 0.67
Time deposits 1,753,387 2.50 2,138,087 2.94
Short-term borrowings 655,472 1.46 458,673 1.08
Long-term debt 936,049 3.59 861,704 3.63
----------- -----------
Total interest-bearing
liabilities 6,051,912 1.78 6,107,970 1.96
Noninterest-Bearing Liabilities
and Shareholders' Equity
Noninterest-bearing demand 914,906 877,939
Other liabilities 78,385 75,962
Shareholders' equity 639,631 632,060
----------- -----------
Total liabilities
and shareholders'
equity $7,684,834 $7,693,931
=========== ===========
Interest Spread 3.70% 3.84%
Contribution of noninterest
bearing sources of funds 0.29 0.31
======= =======
Net Interest Income as a
Percent of Earning Assets 3.99% 4.15%
----------------------------------------------------------------------
(1) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income.
(2) Certain amounts have been reclassified to conform with current
year presentation.
(3) For presentation in this table, average balances and the
corresponding average rates for investment securities are based
upon historical cost, adjusted for amortization of premiums and
accretion of discounts.
(4) Nonaccrual loans are included in average balances.
----------------------------------------------------------------------
Nonperforming Assets
Citizens Banking Corporation and Subsidiaries
Quarter Ended
--------------------------------------------------
Dec 31 Sept 30 June Mar 31 Dec 31
(in thousands) 2004 2004 2004 2004 2003
----------------------------------------------------------------------
Commercial(1)
Commercial $10,876 $13,433 $18,066 $24,359 $37,171
Commercial real
estate 14,464 12,290 14,982 15,310 16,385
Small business 2,898 2,974 2,749 2,052 1,603
--------- --------- --------- --------- ---------
Total
commercial 28,238 28,697 35,797 41,721 55,159
Consumer:
Direct 3,518 3,682 4,042 3,471 3,177
Indirect 2,420 1,158 655 1,087 1,247
Mortgage 8,643 8,169 7,697 8,286 9,161
Loans 90 days or more
past due and still
accruing 40 324 298 201 345
Restructured loans 42 52 52 52 ---
--------- --------- --------- --------- ---------
Total
Nonperforming
Loans 42,901 42,082 48,541 54,818 69,089
Other Repossessed
Assets Acquired 7,946 10,303 9,673 7,592 7,943
--------- --------- --------- --------- ---------
Total
Nonperforming
Assets $50,847 $52,385 $58,214 $62,410 $77,032
========= ========= ========= ========= =========
----------------------------------------------------------------------
(1) Changes in commercial nonperforming loans for the quarter (in
millions):
Inflows $18.4 $22.3 $17.3 $11.7 $17.8
Outflows (18.9) (29.4) (23.2) (25.1) (32.8)
--------- --------- --------- --------- ---------
Net change $(0.5) $(7.1) $(5.9) $(13.4) $(15.0)
========= ========= ========= ========= =========
----------------------------------------------------------------------
Summary of Loan Loss Experience
Citizens Banking Corporation and Subsidiaries
Quarter Ended
--------------------------------------------------
Dec 31 Sept 30 June Mar 31 Dec 31
(in thousands) 2004 2004 2004 2004 2003
----------------------------------------------------------------------
Allowance for loan
losses - beginning
of period $122,184 $123,805 $123,703 $123,545 $123,265
Less: Allowance of
sold bank --- (1,621) --- --- ---
Provision for loan
losses 4,609 4,985 4,500 7,000 8,020
Charge-offs:
Commercial 952 2,698 2,982 5,703 7,323
Commercial real
estate 5,754 1,763 1,918 1,151 2,276
Small business 924 518 167 218 551
--------- --------- --------- --------- ---------
Total commercial 7,630 4,979 5,067 7,072 10,150
Real estate
mortgage 238 324 305 193 320
Consumer - Direct 1,600 1,471 1,220 1,629 1,388
Consumer -
Indirect 2,155 1,888 1,630 1,892 2,580
--------- --------- --------- --------- ---------
Total charge-offs 11,623 8,662 8,222 10,786 14,438
--------- --------- --------- --------- ---------
Recoveries:
Commercial 5,386 2,315 2,202 2,333 4,452
Commercial real
estate 609 339 225 432 927
Small business 74 29 107 17 165
--------- --------- --------- --------- ---------
Total commercial 6,069 2,683 2,534 2,782 5,544
Real estate
mortgage --- 34 23 13 ---
Consumer - Direct 364 342 560 437 461
Consumer -
Indirect 582 618 707 712 693
--------- --------- --------- --------- ---------
Total recoveries 7,015 3,677 3,824 3,944 6,698
--------- --------- --------- --------- ---------
Net charge-offs 4,608 4,985 4,398 6,842 7,740
--------- --------- --------- --------- ---------
Allowance for loan
losses - end of
period $122,184 $122,184 $123,805 $123,703 $123,545
========= ========= ========= ========= =========
Reserve for loan
commitments - end of
period $2,833 $2,630 $3,000 $2,757 $2,690
========= ========= ========= ========= =========
----------------------------------------------------------------------
For the Quarter Ended December 31, 2004
------------------------------------------------
Real Consumer- Consumer-
Commercial estate Direct Indirect Total
------------------------------------------------
Charge-offs:
Michigan $1,678 $52 $1,282 $2,155 $5,167
Wisconsin 5,930 154 282 --- 6,366
Iowa 22 32 36 --- 90
Illinois --- --- --- --- ---
------- ------ ------- ------- -------
Total charge-offs 7,630 238 1,600 2,155 11,623
------- ------ ------- ------- -------
Recoveries:
Michigan 3,734 --- 264 582 4,580
Wisconsin 2,280 --- 65 --- 2,345
Iowa 55 --- 35 --- 90
Illinois --- --- --- --- ---
------- ------ ------- ------- -------
Total recoveries 6,069 --- 364 582 7,015
------- ------ ------- ------- -------
Net charge-offs $1,561 $238 $1,236 $1,573 $4,608
======= ====== ======= ======= =======
For the Twelve Months Ended December 31, 2004
------------------------------------------------
Real Consumer- Consumer-
Commercial estate Direct Indirect Total
------------------------------------------------
Charge-offs:
Michigan $8,184 $364 $4,482 $7,565 $20,595
Wisconsin 14,638 481 1,034 --- 16,153
Iowa 1,309 215 348 --- 1,872
Illinois 617 --- 56 --- 673
-------- ------ ------- ------- --------
Total charge-offs 24,748 1,060 5,920 7,565 39,293
-------- ------ ------- ------- --------
Recoveries:
Michigan 7,759 9 1,198 2,597 11,563
Wisconsin 5,605 31 365 --- 6,001
Iowa 455 30 105 --- 590
Illinois 249 --- 35 22 306
-------- ------ ------- ------- --------
Total recoveries 14,068 70 1,703 2,619 18,460
-------- ------ ------- ------- --------
Net charge-offs $10,680 $990 $4,217 $4,946 $20,833
======== ====== ======= ======= ========
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