Citizens Banking Corporation Announces Second Quarter Results.Business Editors 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.--(BUSINESS WIRE)--July 11, 2003 Citizens Banking Corporation (Nasdaq:CBCF CBCF Canadian Breast Cancer Foundation CBCF Congressional Black Caucus Foundation CBCF Community Based Corrections Facilities CBCF Commander, Base Communications Facility ) announced net income of $13,214,000 or $0.30 per 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. share for the three months ended June June: see month. 30, 2003, compared to net income of $25,339,000 or $0.56 per diluted share in the same quarter of 2002 and net income of $15,058,000 or $0.34 per share in the first quarter of 2003. Returns on average assets and average equity during the second quarter were 0.68% and 8.29%, respectively, compared with 1.35% and 14.48% in the second quarter of 2002. For the six months ended June 30, 2003, net income was $28,272,000 or $0.65 per diluted share, compared to $49,442,000 or $1.09 per diluted share for the same period of 2002. "As a result of the continued economic slowness and the fraud related losses we experienced in the fourth and first quarters, we conducted a thorough review of our commercial loan portfolio which has included collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although field audits and an in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis risk rating review. As expected, commercial loan charge-offs for this quarter were lower than those of last quarter. We have taken provision expense in excess of the reduced charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. level as a result of this risk rating review and the continued application of our enhanced internal risk rating process. Based on this review, our new credit processes and credit administration procedures, we now expect charge-offs and loan loss provision in the third and fourth quarters to be less than $12 million per quarter," 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
Preliminary analysis of the collateral field audits which were initiated in late March have created numerous opportunities with our customers to clarify (company) Clarify - A software vendor, specialising in Customer Relationship Management software. Nortel Networks sold Clarify to Amdocs in 2002. http://amdocsclarify.com/. borrowing base requirements and to improve their internal reporting capabilities. Analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. results have not uncovered Uncovered may refer to:
The second quarter provision for loan losses of $25.7 million represented a 35.1% increase over the first quarter of 2003, and resulted from risk rating downgrades in the commercial portfolio which drove additional formula reserves. In addition to the collateral field audits, Citizens conducted a review of higher risk "pass" rated credits to confirm risk ratings of these loans. As a result of this review and our enhanced risk rating process, Citizens downgraded approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $348 million of commercial loans resulting in additional provision requirements of $18.5 million this quarter. "We believe these initiatives conservatively position us to deal with the protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. impact of the economy upon the financial performance of our commercial customers," Hartman commented. Key Actions in the Quarter: -- Citizens Bank Wealth Management, N.A. formed strategic alliances with SEI Investments and EnvestnetPMC, Inc. in May. These alliances will expand product offerings and provide upgraded systems and technology in the wealth management line of business. "The new alliances will expand our comprehensive wealth management capabilities and allow us to be the premier provider of investment products and services in our markets while improving the efficiency of our wealth management line of business," explained Hartman. -- Citizens' home equity line of credit campaign yielded favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results with over 3,500 new accounts being opened with balances in excess of $105 million. Overall home equity loans have increased 24% or approximately $120 million over the comparable quarter in 2002. -- Citizens issued approximately $25 million of floating rate, 30 year trust preferred securities, initially set at 4.16%. These trust preferred securities qualify as Tier 1 regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. capital and will improve Citizens' Tier 1, total capital and leverage capital ratios. -- Citizens' new checking campaign, "Perfect Fit", is yielding positive results with over 9,200 new accounts being opened representing nearly $54 million in deposit balances. Balance Sheet Citizens' total assets at June 30, 2003 were $7.786 billion, an increase of $21.0 million or 0.27% compared with March 31, 2003 and an increase of $264 million or 3.5% compared with December December: see month. 31, 2002. Although total assets at June 30, 2003 were virtually unchanged from March 31, 2003 levels, average assets for the second quarter increased $355 million from first quarter 2003 levels. Total average assets increased as Citizens expanded its investment securities portfolio beginning near the end of the first quarter to offset the effects of weak loan demand and the prospect of net interest margin pressure from continued low interest rates. Loans declined $16 million or 0.3% from March 31, 2003 and $146 million or 2.7% compared with December 31, 2002. The decline in loans from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2002 was caused by a decrease in commercial and mortgage loans, partially offset by an increase in consumer loans. Commercial loans decreased $179 million or 5.4% at June 30, 2003 compared with December 31, 2002 due to lower demand for commercial credit in the still sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. , increased activity in fixed-rate loan Fixed-rate loan A loan whose rate is fixed for the life of the loan. refinancing Refinancing An extension and/or increase in amount of existing debt. and paydowns and proactive identification and reduction of exposure on credits with the potential to deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. . The decline occurred primarily in Citizens' 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). and 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 markets, and to a lesser extent, the Iowa market. Mortgage loans declined $41 million or 6.6% at June 30, 2003 from year end 2002 due to the continued sale of most new mortgage loan production into the secondary market and record high refinancing activity causing prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of existing portfolio loans in the historically low interest rate environment. Consumer loans increased $74 million or 4.9% at June 30, 2003 compared to December 31, 2002 due to the success of the home equity campaign. Home equity loans increased 13.2% from year-end 2002 (a 26.5% 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. growth rate) and comprised $73 million of the $74 million increase in consumer loans. A $19 million increase in indirect consumer loans at June 30, 2003 compared with year end 2002 was largely offset by an $18 million decrease in other direct (non-home equity) loans. "Our recent home equity line of credit campaign has been very successful producing account originations at a rate more than two times normal for such loans. Additionally, we plan to conduct one or two more such campaigns over the balance of this year," commented Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. G. Schaeffer Schaeffer can refer to:
Total deposits decreased $277 million to $5.660 billion at June 30, 2003 compared with $5.937 billion at December 31, 2002. The decline in deposits occurred largely within time deposits, and to a lesser extent, 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. as clients sought higher yielding investment alternatives in the low interest rate environment. In the second quarter of 2003 Citizens began a marketing campaign promoting its "Perfect Fit" checking account products to increase growth in interest bearing and non-interest bearing checking accounts. Initial results have been very favorable with new account openings double the normal rate. Net Interest Margin and Net Interest Income Net interest margin declined to 4.17% in the second quarter of 2003 compared to 4.33% in the first quarter of 2003 and 4.45% in the second quarter of 2002. The decrease in net interest margin in the second quarter of 2003 compared to the first quarter is related to Citizens' asset-sensitive interest rate risk position and the continued low interest rate environment. The low level of interest rates is generating increased refinancing of fixed rate commercial loans and high mortgage loan and mortgage-related investment securities prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. . 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 of new home equity credits at lower ("teaser teaser an animal used to sexually tease but not to impregnate the members of the opposite sex. Usually males and they may be surgically prepared to ensure that they cannot mate or are not fertile. ") interest rates than existing loans in the consumer portfolio has contributed to the decline in net interest margin. The second quarter 2003 net interest margin was also affected by Citizens' strategy to expand the investment portfolio beginning late in the first quarter of 2003. Citizens purchased mortgage backed securities and collateralized mortgage obligations Collateralized mortgage obligation (CMO) A security backed by a pool of pass-through rates , structured so that there are several classes of bondholders with varying maturities, called tranches. with average lives of three to five years and an average duration of two to four years, resulting in interest spreads up to 250 basis points over funding sources. This increased net interest income yet reduced the net interest margin percentage in the second quarter. Net interest margin declined to 4.25% from 4.45% for the six months ended June 30, 2003 compared to the same period of the prior year. The decline in net interest margin for the six month period compared to the prior year was due to a four basis point decline in the net interest spread and a 16 basis point decline in the contribution of net noninterest bearing funding sources (noninterest bearing liabilities and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. less nonearning assets). Net noninterest bearing funding sources declined in the first half of 2003 compared to the same period of the prior year due to the investment in bank owned life insurance in the third quarter of 2002, a decline in shareholders' equity and the issuance of subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". in the first quarter of 2003. Net interest income increased $1.4 million to $72.9 million in the second quarter of 2003 compared to $71.5 million in the first quarter of 2003 due to an increase in 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 . Average earning assets increased in the second quarter due to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. expansion of the investment portfolio beginning at the end of the first quarter 2003. Compared to the second quarter of 2002, net interest income declined $2.5 million in the current quarter due to a decrease in the net interest margin partially offset by an increase in earning assets. For the first six months of 2003, net interest income declined $5.9 million due to a .20% decline in net interest margin partially offset by an increase in earning assets. With the recent decline in short term interest rates in response to the Federal Reserve's action to lower the Federal Funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. , as well as increased prepayments in the investment portfolio, Citizens expects some continued contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction of net interest margin in future quarters. Net interest income is anticipated to decline in future quarters along with the lower net interest margin. Noninterest Income Noninterest income for the second quarter of 2003 was $24.8 million, a decrease of $5.8 million or 18.8% from the second quarter of 2002. Noninterest income for the six months ended June 30, 2003 was $48.1 million compared to $55.3 million in the first six months of 2002, a decrease of $7.2 million or 13.0%. The decline in both the three and six month periods ended June 30, 2003 reflected lower bankcard bank·card n. A card issued by a bank authorizing the holder to receive bank services and often functioning as a debit card. fees, trust fees, and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and investment fees. Gains recorded in the second quarter of 2002 of $5.4 million from the sale of our merchant services Merchant services is the name given in the United States to a broad category of financial services intended for use by businesses. In its most specific use, it usually refers to the service that enables a business to accept a transaction payment by use of the customer's credit or business and $2.4 million from the sale of securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. mortgages also contributed to the decline. Higher deposit service charges and mortgage banking revenue partially offset the decline. Compared to the first quarter of 2003, noninterest income increased $1.6 million or 6.7% reflecting increases in all major categories including deposit service charges, trust fees, mortgage and other loan income, and brokerage and investment fees. Service charges on deposit accounts were up $1.0 million for both the three and six-month periods ended June 30, 2003 compared to the same periods in 2002. The increase reflected higher overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers fee revenue due to the implementation of additional fees, a new overdraft monitoring system and fewer waived fees. "Last year we began an extensive review of the consumer bank business line, assisted by banking industry consultants. The recommendations that have been implemented are resulting in significant increases in fee income from service charges on deposit accounts as well as a reduction in expense for staffing and other costs of operations," Schaeffer remarked. Bankcard fees declined $1.1 million or 57.8% for the quarter and $3.1 million or 67.0% for the first six months of 2003 compared to the same periods in 2002. The decline in both periods resulted from the sale of the merchant services business in the second quarter of 2002. Trust fees for the quarter, decreased $0.7 million, or 14.0% compared to the second quarter of 2002 and were down $1.3 million or 13.6% in the first six months of 2003 compared to the same periods in 2002. These fees are based primarily on the market value of assets under administration. Trust fees declined since the second quarter of 2002 principally as a result of the decline in the equity markets. Trust fee revenue, however, grew by $104,000 or 2.5% in the second quarter of 2003 over the first quarter of 2003 due primarily to the recent improvement in the equity markets. Total trust assets under administration were $2.62 billion at June 30, 2003, down $112 million from June 30, 2002, but up $142 million from March 31, 2003. Brokerage and investment fees declined $0.7 million or 27.3% for the quarter and $1.0 million or 21.4% for the six months ended June 30, 2003 compared to the same periods of 2002. The decline reflects slower retail sales of fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. products. Mortgage and other loan income increased $2.5 million or 88.3% in the second quarter of 2003 and $3.7 million or 53.2% in the first half of 2003 compared to the same period of 2002 due to higher mortgage banking revenue. The increase in mortgage banking revenue was primarily due to higher gains on the sale of mortgage loans and the related servicing rights. A strong mortgage origination market, spurred by low mortgage interest rates, helped push total mortgage originations to $490 million in the second quarter, compared with $350 million in the first quarter of 2003 and $228 million in the second quarter of 2002. The majority of all new mortgage loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. along with the related servicing was sold in the secondary market. Other noninterest income was up $1.0 million and $1.3 million for the three and six months periods ended June 30, 2003, respectively compared to the same periods of 2002, principally due to an increase in life insurance income and title insurance fees. Higher life insurance income reflects the purchase of $78 million of separate account bank owned life insurance in the third quarter of 2002. Title insurance fees increased due to higher mortgage origination volume. Citizens currently expects a decrease in noninterest income for 2003 as compared to 2002 due primarily to sale of the merchant services business in 2002. The gain of $5.4 million recorded in 2002 for this sale, as well as the loss of revenue from the business, is expected to decrease noninterest income by approximately $8.7 million in 2003. Based on the current economic and interest rate environment, the remaining components of noninterest income are anticipated to increase slightly on a collective basis in 2003 over full year 2002 levels. Noninterest Expense Noninterest expense for the second quarter was $56.4 million compared to $61.5 million for the second quarter of 2002 and $56.6 million for the first quarter of 2003, a decline of $5.1 million or 8.4% from the second quarter of 2002 and $0.2 million or 0.4% from first quarter 2003. For the six months ended June 30, 2003, total noninterest expense decreased $9.8 million or 8.0% to $112.9 million compared to the same period in 2002. The decline in both the three and six month periods reflected decreases in nearly all the major components of noninterest expense partially offset by an increase in professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Salaries and employee benefits decreased $0.4 million or 1.4% for the quarter and $2.5 million or 4.0% for the six months ended June 30, 2003 compared to the same periods of 2002. Salary and benefit costs were down due to the 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). initiatives announced during the third quarter of 2002, which included branch closures and reduced staff. Citizens had 2,376 full time equivalent employees at June 30, 2003, down from 2,695 at June 30, 2002. Equipment expenses decreased $1.1 million or 21.9% for the quarter, and $1.8 million or 18.1% for the six month period ended June 30, 2003, compared to the same periods of 2002, as a result of lower depreciation expense and improved pricing from new or renegotiated maintenance contracts. 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 decreased $1.2 million or 66.4% for the quarter from the second quarter of 2002 and $1.0 million or 27.5% for the six-month period ended June 30, 2003 compared to the same periods a year ago due to fewer media-intensive marketing campaigns in the second quarter of 2003. Bankcard expense declined $1.5 million or 94.2% for the quarter and $3.5 million or 95.0% for the six month period ended June 30, 2003 compared to the same periods of 2002 due to the sale of Citizens' merchant services business in the second quarter of 2002. Professional services increased $0.6 million or 18.0% for the quarter and $1.5 million or 23.9% for the six months ended June 30, 2003, compared to the same periods of 2002 as a result of higher legal costs related to loan collection efforts, recruiting fees, and costs associated with engagement of banking industry consultants assisting in the restructuring and line of business focus. Other noninterest expense decreased $1.0 million, or 11.8% for the quarter and $2.1 million or 13.0% for the six months ended June 30, 2003 compared to the same periods in 2002 due to declines in telephone, stationery The term for boilerplate in the Eudora mail client, starting with Version 3.0. Stationery files are stored on disk and brought into new messages or added to replies. See boilerplate. and supplies expense, and other losses primarily as a result of fewer branch locations and staff due to the restructuring and business line reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. . A payment of $0.5 million in the first quarter of 2002 for partial settlement of an early contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). fee associated with the sale of the merchant services business also contributed to the decline in 2003. During 2002, noninterest expense included special and other significant charges of $20.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc restructuring and other key actions previously reported, which are not expected to recur in 2003. Citizens expects the remaining components of noninterest expense on a collective basis to decrease in 2003 from 2002 levels due to anticipated cost savings from the restructuring announced in September September: see month. 2002 and other ongoing strategic initiatives. 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 $96.6 million or 1.24% of assets, at June 30, 2003, representing an increase of $3.3 million or 3.5% from first quarter 2003 levels. The allowance for loan losses increased to $126.0 million or 2.38% of loans, from $112.4 million or 2.12% of loans at March 31, 2003. Net loans charged off during the quarter totaled $12.0 million or 0.92% of average loans (annualized), compared with $16.1 million in the first quarter of 2003 and $9.4 million in the second quarter of 2002. Nonperforming assets are anticipated to decline slowly from June 30, 2003 levels. Other News Citizens announced on May 20,2003 agreements with SEI Investments and EnvestnetPMC, Inc., two nationally known providers of asset management and investment technology solutions, and Citizens Bank Wealth Management N.A., the trust bank subsidiary of Citizens Banking Corporation. EnvestnetPMC will provide the bank's wealth management clients with a broader range of mutual fund products. Using their state-of-the-art web-based platform, Citizens will be able to offer its wealth management clients more mutual funds family choices, advanced research capabilities and sophisticated portfolio modeling. Through SEI Investments the bank will offer additional individual securities to its personal, business and institutional wealth management clients. SEI will provide Citizens with advanced 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 software, state-of-the-art research and sophisticated client profiling tools. Additionally, Citizens will use SEI's automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. and centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. trust accounting services, which includes an advanced statement solution and other processing functions. On June 6, 2003, Citizens consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: six of its branch offices (five Michigan offices and one Wisconsin office) as part of its ongoing effort to improve the efficiency of the retail delivery network. During the second quarter of 2003, Citizens repurchased a total of 125,200 shares of its stock at an average price of $24.37. Since the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program was announced in October October: see month. 2001, Citizens has repurchased 2,503,200 shares at an average price of $28.19. As of June 30, 2003, 496,800 shares remain to be purchased under the current program. Conference Call Announcement 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. and John D. Schwab Schwab is a German name meaning "man from Swabia" and may refer to:
abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Monday Monday: see week. , July July: see month. 14, 2003. To participate in the conference call, please call the number below approximately 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: 1457415 Conference Name: "Citizens Banking Corporation 2nd Quarter Earnings" R.S.V.P. is not required. A playback Playback could mean:
The process by which the corporation communicates with its investors. section by clicking on Presentations or directly at http://www.snl.com/Interactive/IR/presentations.asp?IID IID Imperial Irrigation District (California) IID Interface Identifier (Component Object Model) IID Ignition Interlock Device (automotive security system) =100175. This release and other statistical information referenced on the call will be posted on the web site. The analyst conference call previously scheduled for Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , July 18, 2003, has been canceled as a result of the rescheduled July 14, 2003 call. 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 services to a broad client base. Citizens operates 182 branch, private banking, and financial center locations throughout Michigan, Wisconsin, Iowa, and in suburban Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , 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. .
CONTACT: Charles D. Christy
Chief Financial Officer
(810) 237-4200
Charlie.Christy@cbcf-net.com
CONTACT: Ryan P. Mathews
VP Investor Relations
(810) 257-2489
Ryan.Mathews@cbcf-net.com
TRADED NASDAQ
SYMBOL: CBCF
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 in the "Earnings Outlook" and statements that include terms such as "believe", "expect", and "anticipate") 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 the Company's actual future results could materially differ from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, adverse changes in the Company's loan and lease portfolios and the resulting credit risk-related losses and expenses, the Company's future lending and collections experience and the potential inadequacy of the Company's loan loss reserves, interest rate fluctuations and other adverse changes in economic or financial market conditions, 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: , adverse changes in competition and pricing environments, the Company's potential failure to maintain or improve loan quality levels and origination volume, the Company's potential inability to continue to attract core deposits, the potential lack of market acceptance of the Company's products and services, adverse changes in the Company's relationship with major customers, 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. , unanticipated environmental liabilities or costs, the Company's potential inability to integrate acquired operations or complete our restructuring, the effects of terrorist attacks and potential attacks, the Company's success in managing the risks involved in the foregoing, and other risks and uncertainties detailed from time to time in the company's filings with the Securities and Exchange Commission. Other factors not currently anticipated by management may also materially and adversely affect the Company's results of operations. The Company does not undertake, and expressly disclaims any obligation, to update or alter its forward-looking 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
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Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
June 30, December 31,
(in thousands) 2003 2002(1)
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Assets
Cash and due from banks $205,709 $171,864
Money market investments:
Federal funds sold 4,000 69,000
Interest-bearing deposits with banks 2,380 2,332
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Total money market investments 6,380 71,332
Securities available-for-sale:
Taxable 1,471,776 1,021,668
Tax-exempt 432,309 435,613
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Total securities 1,904,085 1,457,281
Mortgage loans held for sale 136,429 160,743
Loans 5,287,249 5,432,561
Less: Allowance for loan losses (125,992) (109,467)
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Net loans 5,161,257 5,323,094
Premises and equipment 113,545 117,704
Goodwill 54,785 54,785
Other intangible assets 18,413 19,862
Bank owned life insurance 79,462 78,434
Other assets 105,859 66,935
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Total assets $7,785,924 $7,522,034
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Liabilities
Noninterest-bearing deposits $904,447 $900,674
Interest-bearing deposits 4,755,312 5,036,239
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Total deposits 5,659,759 5,936,913
Federal funds purchased and securities sold
under agreements to repurchase 437,418 223,289
Other short-term borrowings 27,397 79,062
Other liabilities 74,525 32,988
Long-term debt 947,657 599,313
----------- -------------
Total liabilities 7,146,756 6,871,565
Shareholders' Equity
Preferred stock - no par value
Common stock - no par value 101,723 112,253
Retained earnings 499,044 495,570
Other accumulated comprehensive net income 38,401 42,646
----------- -------------
Total shareholders' equity 639,168 650,469
----------- -------------
Total liabilities and shareholders'
equity $7,785,924 $7,522,034
=========== =============
----------------------------------------------------------------------
(1) Certain amounts have been reclassified to conform with current
year presentation.
----------------------------------------------------------------------
Consolidated Statements of Income (Unaudited)
Citizens Banking Corporation and Subsidiaries
Three Months Ended Six Months Ended
(in thousands, except per June 30, June 30,
share amounts) 2003 2002(1) 2003 2002(1)
----------------------------------------------------------------------
Interest Income
Interest and fees on loans $82,519 $96,825 $167,023 $196,988
Interest and dividends on
investment securities:
Taxable 17,106 14,602 31,540 26,971
Tax-exempt 5,037 5,335 10,221 10,719
Money market investments 21 231 108 590
-------- ---------- --------- ---------
Total interest income 104,683 116,993 208,892 235,268
-------- ---------- --------- ---------
Interest Expense
Deposits 22,522 32,865 47,559 67,435
Short-term borrowings 1,414 904 2,034 1,869
Long-term debt 7,827 7,815 14,873 15,596
-------- ---------- --------- ---------
Total interest expense 31,763 41,584 64,466 84,900
-------- ---------- --------- ---------
Net Interest Income 72,920 75,409 144,426 150,368
Provision for loan losses 25,650 9,400 44,642 14,650
-------- ---------- --------- ---------
Net interest income after
provision for loan losses 47,270 66,009 99,784 135,718
-------- ---------- --------- ---------
Noninterest Income
Service charges on deposit
accounts 7,549 6,515 14,139 13,147
Trust fees 4,324 5,030 8,544 9,888
Mortgage and other loan income 5,409 2,872 10,563 6,897
Brokerage and investment fees 1,914 2,633 3,682 4,683
Bankcard fees 814 1,929 1,549 4,687
Investment securities gains
(losses) 11 (59) 59 (57)
Gain on sale of merchant
business --- 5,400 --- 5,400
Gain on securitized mortgages --- 2,436 --- 2,436
Other 4,826 3,859 9,598 8,260
-------- ---------- --------- ---------
Total noninterest income 24,847 30,615 48,134 55,341
-------- ---------- --------- ---------
Noninterest Expense
Salaries and employee
benefits 31,400 31,844 61,512 64,044
Equipment 3,869 4,956 8,038 9,814
Occupancy 4,314 4,584 9,009 9,199
Professional services 3,959 3,354 7,667 6,189
Data processing services 3,058 3,250 6,374 6,375
Postage and delivery 1,683 1,757 3,361 3,515
Advertising and public
relations 623 1,856 2,672 3,687
Bankcard expense 91 1,571 182 3,653
Other 7,364 8,349 14,127 16,236
-------- ---------- --------- ---------
Total noninterest expense 56,361 61,521 112,942 122,712
-------- ---------- --------- ---------
Income Before Income Taxes 15,756 35,103 34,976 68,347
Income tax provision 2,542 9,764 6,704 18,905
-------- ---------- --------- ---------
Net Income $13,214 $25,339 $28,272 $49,442
======== ========== ========= =========
Net Income Per Share:
Basic $0.30 $0.57 $0.65 $1.10
Diluted 0.30 0.56 0.65 1.09
Average Shares Outstanding:
Basic 43,248 44,789 43,376 44,925
Diluted 43,478 45,282 43,612 45,462
----------------------------------------------------------------------
(1) Certain amounts have been reclassified to conform with current
year presentation.
----------------------------------------------------------------------
Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2003 2003 2002 2002 2002
----------------------------------------------------------------------
Summary of Operations
(thousands)
Interest income (1) $104,683 $104,209 $112,558 $115,558 $116,993
Interest expense 31,763 32,703 36,326 40,376 41,584
Net interest income 72,920 71,506 76,232 75,182 75,409
Provision for loan
losses 25,650 18,992 16,300 89,250 9,400
Net interest income
(loss) after
provision for loan
losses 47,270 52,514 59,932 (14,068) 66,009
Noninterest
income (1) (2) 24,847 23,287 26,701 19,734 30,615
Noninterest
expense (1) 56,361 56,581 57,126 79,545 61,521
Income tax provision
(benefit) 2,542 4,162 7,982 (27,950) 9,764
Net income (loss) 13,214 15,058 21,525 (45,929) 25,339
----------------------------------------------------------------------
At Period End (millions)
Total assets $7,786 $7,765 $7,522 $7,614 $7,547
Total earning assets 7,334 7,285 7,122 7,149 7,160
Total loans 5,287 5,303 5,433 5,524 5,567
Total deposits 5,660 5,812 5,937 5,904 5,866
Total shareholders'
equity 639 640 650 668 715
----------------------------------------------------------------------
Average Balances (millions)
Total assets $7,809 $7,454 $7,564 $7,616 $7,533
Total earning assets 7,387 7,043 7,141 7,194 7,150
Total loans 5,253 5,343 5,470 5,577 5,536
Total deposits 5,723 5,853 5,922 5,951 5,900
Total shareholders'
equity 639 643 654 711 702
Shareholders' equity /
assets 8.18 % 8.63 % 8.65 % 9.34 % 9.32 %
----------------------------------------------------------------------
Credit Quality Statistics
(thousands)
Nonaccrual loans $87,928 $84,107 $86,717 $98,732 $77,624
Loans 90 or more
days past due and
still accruing 607 990 860 1,260 1,207
Restructured loans --- --- --- --- 336
--------- --------- --------- --------- ---------
Total nonperforming
loans 88,535 85,097 87,577 99,992 79,167
Other repossessed
assets acquired
(ORAA) 8,044 8,226 8,094 8,025 8,621
--------- --------- --------- --------- ---------
Total nonperforming
assets $96,579 $93,323 $95,671 $108,017 $87,788
========= ========= ========= ========= =========
Allowance for loan
losses $125,992 $112,385 $109,467 $104,158 $80,447
Allowance for loan
losses ratio 2.38 % 2.12 % 2.02 % 1.89 % 1.45 %
Allowance for loan
losses as a percent
of nonperforming
assets 130.45 120.43 114.42 96.43 91.64
Allowance for loan
losses as a percent
of nonperforming
loans 142.31 132.07 125.00 104.17 101.62
Nonperforming assets
as a percent of
loans plus ORAA 1.82 1.76 1.76 1.95 1.57
Nonperforming assets
as a percent of
total assets 1.24 1.20 1.27 1.42 1.16
Net loans charged
off as a percent of
average loans
(annualized) 0.92 1.20 0.80 4.70 0.68
Net loans charged
off (000) $12,043 $16,074 $10,991 $65,539 $9,378
----------------------------------------------------------------------
Per Common Share Data
Net Income (loss):
Basic $0.30 $0.35 $0.49 $(1.03) $0.57
Diluted 0.30 0.34 0.48 (1.03) 0.56
Dividends 0.285 0.285 0.285 0.285 0.285
Market Value:
High $28.17 $26.05 $26.46 $29.43 $33.88
Low 21.72 23.58 21.25 23.35 27.82
Close 27.01 23.62 24.78 24.17 28.98
Book value 14.77 14.79 14.88 14.97 16.02
Shares outstanding,
end of period (000) 43,260 43,299 43,702 44,631 44,624
----------------------------------------------------------------------
Performance Ratios
(annualized)
Net interest
margin (FTE) 4.17 % 4.33 % 4.49 % 4.40 % 4.45 %
Return on average
assets 0.68 0.82 1.13 (2.39) 1.35
Return on average
shareholders' equity 8.29 9.50 13.06 (25.63) 14.48
Efficiency ratio (3) 55.96 57.71 54.00 58.64 60.40
----------------------------------------------------------------------
(1) Third quarter amounts for 2002 include other charges of $701,000
in interest income, $1,587,000 in noninterest income, $7,068,000
in noninterest expense and a special charge of $13,807,000 in
noninterest expense.
(2) Second quarter 2002 includes net investment securities gains of
$2,377,000 and gain on sale of merchant business of $5,400,000 in
noninterest income.
(3) Excludes nonrecurring gains, special and other charges.
----------------------------------------------------------------------
Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
For the Six Months Ended
June 30,
2003 2002 % Change
----------------------------------------------------------------------
Summary of Operations (thousands)
Interest income $208,892 $235,268 (11.2)%
Interest expense 64,466 84,900 (24.1)
Net interest income 144,426 150,368 (4.0)
Provision for loan losses 44,642 14,650 204.7
Net interest income after provision for
loan losses 99,784 135,718 (26.5)
Noninterest income (1) 48,134 55,341 (13.0)
Noninterest expense 112,942 122,712 (8.0)
Income tax provision 6,704 18,905 (64.5)
Net income 28,272 49,442 (42.8)
----------------------------------------------------------------------
At Period End (millions)
Total assets $7,786 $7,547 3.2 %
Total earning assets 7,334 7,160 2.4
Total loans 5,287 5,567 (5.0)
Total deposits 5,660 5,866 (3.5)
Total shareholders' equity 639 715 (10.6)
----------------------------------------------------------------------
Average Balances (millions)
Total assets $7,633 $7,549 1.1 %
Total earning assets 7,216 7,154 0.9
Total loans 5,297 5,579 (5.1)
Total deposits 5,788 5,912 (2.1)
Total shareholders' equity 641 701 (8.6)
Shareholders' equity / assets 8.40 % 9.29 % (9.6)
----------------------------------------------------------------------
Per Common Share Data
Net Income:
Basic $0.65 $1.10 (40.9)%
Diluted 0.65 1.09 (40.4)
Dividends 0.570 0.560 1.8
Market Value:
High $28.17 $33.88 (16.9)
Low 21.72 27.82 (21.9)
Close 27.01 28.98 (6.8)
Book value 14.77 16.02 (7.8)
Tangible book value 13.08 14.24 (8.1)
Shares outstanding, end of period (000) 43,260 44,624 (3.1)
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest margin (FTE) (2) 4.25 % 4.45 % (4.5)%
Return on average assets 0.75 1.32 (43.2)
Return on average shareholders' equity 8.89 14.22 (37.5)
Net loans charged off as a percent of
average loans 1.06 0.52 103.8
----------------------------------------------------------------------
(1) Amounts for 2002 include net investment securities gains of
$2,379,000 and gain on sale of merchant business of $5,400,000 in
noninterest income.
(2) Net interest margin is presented on an annual basis and includes
taxable equivalent adjustments to interest income of $6,829,000
and $7,253,000 for the six months ended June 30, 2003 and 2002,
respectively, based on a tax rate of 35%.
----------------------------------------------------------------------
Noninterest Income and Noninterest Expense (Unaudited)
Citizens Banking Corporation and Subsidiaries
Quarter Ended
----------------------------------------------
June 30 Mar 31 Dec 31 Sept 30 Jun 30
(in thousands) 2003 2003 2002 2002 2002
----------------------------------------------------------------------
NONINTEREST INCOME:
Service charges on
deposit accounts $7,549 $6,590 $6,689 $6,620 $6,515
Trust fees 4,324 4,220 4,696 4,372 5,030
Mortgage and other loan
income 5,409 5,154 7,020 2,928 2,872
Brokerage and investment
fees 1,914 1,768 2,482 2,337 2,633
Bankcard fees 814 735 783 672 1,929
Other 4,826 4,772 5,019 4,347 3,859
-------- -------- -------- -------- --------
Total fees and other
income 24,836 23,239 26,689 21,276 22,838
Investment securities
gains (losses) 11 48 12 45 (59)
-------- -------- -------- -------- --------
Total before
significant gains and
charges 24,847 23,287 26,701 21,321 22,779
-------- -------- -------- -------- --------
Significant gains
(charges):
Sale of merchant
business --- --- --- --- 5,400
Gains on sale of
securitized mortgages --- --- --- --- 2,436
Writedown of equity
investment --- --- --- (662) ---
Cash surrender value
adjustment --- --- --- (650) ---
Other charges --- --- --- (275) ---
-------- -------- -------- -------- --------
Total significant
items --- --- --- (1,587) 7,836
-------- -------- -------- -------- --------
TOTAL NONINTEREST INCOME $24,847 $23,287 $26,701 $19,734 $30,615
======== ======== ======== ======== ========
NONINTEREST EXPENSE:
Salaries and employee
benefits $31,400 $30,112 $30,585 $32,218 $31,844
Equipment 3,869 4,169 4,888 4,761 4,956
Occupancy 4,314 4,695 4,349 4,307 4,584
Professional services 3,959 3,708 5,077 3,524 3,354
Data processing services 3,058 3,316 3,200 3,066 3,250
Postage and delivery 1,683 1,678 1,745 1,860 1,757
Advertising and public
relations 623 2,049 (423) 1,848 1,856
Bankcard expense 91 91 92 134 1,571
Other 7,585 6,863 8,018 6,883 8,349
-------- -------- -------- -------- --------
Total before
significant charges 56,582 56,681 57,531 58,601 61,521
-------- -------- -------- -------- --------
Significant charges:
Special charge (221) (100) (405) 13,807 ---
Prepayment penalty on
FHLB advances --- --- --- 3,300 ---
Contribution to
charitable trust --- --- --- 2,000 ---
O.R.E. valuation
adjustment --- --- --- 979 ---
Additional equipment
depreciation --- --- --- 406 ---
Other charges --- --- --- 452 ---
-------- -------- -------- -------- --------
Total significant
items (221) (100) (405) 20,944 ---
-------- -------- -------- -------- --------
TOTAL NONINTEREST
EXPENSE $56,361 $56,581 $57,126 $79,545 $61,521
======== ======== ======== ======== ========
----------------------------------------------------------------------
----------------------------------------------------------------------
Average Balances, Yields and Rates
Three Months Ended
-------------------------------------------------------
06/30/03 03/31/03 06/30/02
-------------------------------------------------------
Average Average Average Average Average Average
(in thousands) Balance Rate(1) Balance Rate(1) Balance Rate(1)
----------------------------------------------------------------------
Earning Assets
Money market
investments $7,715 0.61 % $31,069 1.13 % $54,620 1.69 %
Investment
securities(2):
Taxable 1,484,937 4.61 1,061,281 5.44 1,001,223 5.83
Tax-exempt 396,288 7.83 405,524 7.87 418,178 7.85
Mortgage loans
held for sale 183,545 5.70 138,275 5.85 99,097 7.52
Loans:
Commercial 3,169,230 5.74 3,256,707 5.84 3,348,395 6.39
Real estate 548,778 6.19 587,692 6.34 702,178 7.23
Direct
consumer 890,033 6.59 857,422 6.92 830,479 7.84
Indirect
consumer 644,677 7.49 640,807 7.80 654,580 8.24
----------- ---------- -----------
Total
earning
assets 7,325,203 5.91 6,978,777 6.23 7,108,750 6.80
Nonearning Assets
Cash and due
from banks 163,210 171,491 172,645
Investment
security fair
value
adjustment 62,182 64,090 41,128
Other
nonearning
assets 376,946 354,558 290,302
Allowance for
loan losses (118,463) (114,692) (80,246)
----------- ----------- -----------
Total
assets $7,809,078 $7,454,224 $7,532,579
=========== =========== ===========
Interest-Bearing
Liabilities
Deposits:
Interest-
bearing
demand $1,289,092 0.96 $1,314,615 1.14 $1,115,440 1.63
Savings
deposits 1,355,646 0.79 1,369,434 0.86 1,350,890 1.17
Time deposits 2,209,352 3.05 2,316,693 3.22 2,581,794 3.79
Short-term
borrowings 476,878 1.19 214,786 1.17 213,653 1.69
Long-term debt 877,184 3.58 690,122 4.13 629,671 4.98
----------- ----------- -----------
Total
interest-bearing
liabilities 6,208,152 2.05 5,905,650 2.24 5,891,448 2.83
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Noninterest-
bearing demand 869,347 851,929 851,867
Other
liabilities 92,470 53,284 87,341
Shareholders'
equity 639,109 643,361 701,923
----------- ----------- -----------
Total
liabilities
and
shareholders'
equity $7,809,078 $7,454,224 $7,532,579
=========== =========== ===========
Interest Spread 3.86 % 3.99 % 3.97 %
Contribution of
noninterest
bearing sources
of funds 0.31 0.34 0.48
======= ======= ======
Net Interest
Income as a
Percent of
Earning Assets 4.17 % 4.33 % 4.45 %
----------------------------------------------------------------------
Six Months Ended
----------------------------------------
06/30/03 06/30/02
---------------------------------------
Average Average Average Average
(in thousands) Balance Rate (1) Balance Rate (1)
---------------------------------------------------------------------
Earning Assets
Money market investments $19,327 1.02 % $70,263 1.68 %
Investment securities(2):
Taxable 1,274,279 4.95 922,378 5.85
Tax-exempt 400,880 7.85 418,899 7.87
Mortgage loans held for sale 161,035 5.76 123,007 7.44
Loans:
Commercial 3,212,727 5.79 3,344,717 6.47
Real estate 568,128 6.27 754,483 7.15
Direct consumer 873,819 6.75 823,849 7.99
Indirect consumer 642,753 7.64 655,852 8.29
----------- -----------
Total earning assets 7,152,948 6.07 7,113,448 6.86
Nonearning Assets
Cash and due from banks 167,327 179,963
Investment security fair
value adjustment 63,131 40,072
Other nonearning assets 365,813 295,659
Allowance for loan losses (116,588) (80,588)
----------- -----------
Total assets $7,632,631 $7,548,554
=========== ===========
Interest-Bearing Liabilities
Deposits:
Interest-bearing demand $1,301,783 1.05 $1,092,268 1.60
Savings deposits 1,362,502 0.82 1,359,772 1.18
Time deposits 2,262,726 3.14 2,606,745 3.93
Short-term borrowings 346,556 1.18 222,798 1.69
Long-term debt 784,170 3.82 629,039 5.00
----------- -----------
Total interest-bearing
liabilities 6,057,737 2.15 5,910,622 2.90
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Noninterest-bearing demand 860,686 852,980
Other liabilities 72,985 83,687
Shareholders' equity 641,223 701,265
----------- -----------
Total liabilities and
shareholders' equity $7,632,631 $7,548,554
=========== ===========
Interest Spread 3.92 % 3.96 %
Contribution of noninterest
bearing sources of funds 0.33 0.49
======== ========
Net Interest Income as a
Percent of Earning Assets 4.25 % 4.45 %
---------------------------------------------------------------------
(1) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income.
(2) 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.
----------------------------------------------------------------------
Nonperforming Assets
Citizens Banking Corporation and Subsidiaries
Quarter Ended
-------------------------------------------------
June 30 Mar 31 Dec 31 Sept 30 Jun 30
(in thousands) 2003 2003 2002 2002 2002
----------------------------------------------------------------------
Commercial(1)
Commercial $52,760 $49,275 50,231 48,374 34,541
Commercial real
estate 19,568 20,433 19,301 28,488 20,722
Small business 1,466 1,459 813 588 1,392
--------- --------- --------- --------- --------
Total commercial 73,794 71,167 70,345 77,450 56,655
Consumer:
Direct 3,208 3,416 3,704 3,512 3,726
Indirect 1,094 1,646 1,803 1,657 1,581
Mortgage 9,832 7,878 10,865 16,113 15,662
Loans 90 days or more
past due and still
accruing 607 990 860 1,260 1,207
Restructured loans --- --- --- --- 336
--------- --------- --------- --------- --------
Total Nonperforming
Loans 88,535 85,097 87,577 99,992 79,167
Other Repossessed
Assets Acquired 8,044 8,226 8,094 8,025 8,621
--------- --------- --------- --------- --------
Total Nonperforming
Assets $96,579 $93,323 $95,671 $108,017 $87,788
========= ========= ========= ========= ========
----------------------------------------------------------------------
(1) Changes in commercial nonperforming assets for the quarter
(in millions):
Inflows $36.3 $22.7 $27.6 $51.1 $20.3
Outflows (33.7) (21.9) (34.7) (30.3) (10.6)
--------- --------- --------- --------- --------
Net change $2.6 $0.8 $(7.1) $20.8 $9.7
========= ========= ========= ========= ========
----------------------------------------------------------------------
Summary of Loan Loss Experience
Citizens Banking Corporation and Subsidiaries
Quarter Ended
-------------------------------------------------
June 30 Mar 31 Dec 31 Sept 30 Jun 30
(in thousands) 2003 2003 2002 2002 2002
----------------------------------------------------------------------
Allowance for loan
losses - beginning of
period $112,385 $109,467 $104,158 $80,447 $80,425
Provision for loan
losses 25,650 18,992 16,300 89,250 9,400
Charge-offs:
Commercial 7,577 14,133 10,058 56,042 7,046
Commercial real
estate 4,321 955 159 5,452 ---
Small business 273 264 159 1,596 106
--------- --------- --------- --------- --------
Total commercial 12,171 15,352 10,376 63,090 7,152
Real estate mortgage 76 625 1,745 229 ---
Consumer - Direct 1,790 1,748 1,474 2,478 1,911
Consumer - Indirect 2,152 2,511 2,582 2,035 1,900
--------- --------- --------- --------- --------
Total charge-offs 16,189 20,236 16,177 67,832 10,963
--------- --------- --------- --------- --------
Recoveries:
Commercial 2,115 2,032 3,862 1,004 390
Commercial real
estate 623 465 45 11 ---
Small business 93 362 86 50 14
--------- --------- --------- --------- --------
Total commercial 2,831 2,859 3,993 1,065 404
Real estate mortgage 8 1 --- 11 ---
Consumer - Direct 479 439 400 463 434
Consumer - Indirect 828 863 793 754 747
--------- --------- --------- --------- --------
Total recoveries 4,146 4,162 5,186 2,293 1,585
--------- --------- --------- --------- --------
Net charge-offs 12,043 16,074 10,991 65,539 9,378
--------- --------- --------- --------- --------
Allowance for loan
losses - end of
period $125,992 $112,385 $109,467 $104,158 $80,447
========= ========= ========= ========= ========
----------------------------------------------------------------------
----------------------------------------------------
For the Quarter Ended 06/30/03
----------------------------------------------------
Consumer - Consumer -
Commercial Real estate Direct Indirect Total
----------------------------------------------------
Charge-offs:
Michigan $6,671 $11 $1,160 $2,152 $9,994
Wisconsin 4,875 65 527 --- 5,467
Iowa 229 --- 89 --- 318
Illinois 396 --- 14 --- 410
--------- ----------- ---------- --------- --------
Total charge-offs 12,171 76 1,790 2,152 16,189
--------- ----------- ---------- --------- --------
Recoveries:
Michigan 1,910 --- 321 821 3,052
Wisconsin 813 --- 107 --- 920
Iowa 40 8 33 --- 81
Illinois 68 --- 18 7 93
--------- ----------- ---------- --------- --------
Total recoveries 2,831 8 479 828 4,146
--------- ----------- ---------- --------- --------
Net charge-offs $9,340 $68 $1,311 $1,324 $12,043
========= =========== ========== ========= ========
---------- ----------- ---------- --------- --------
For the Six Months Ended 06/30/03
----------------------------------------------------
Consumer - Consumer -
Commercial Real estate Direct Indirect Total
---------- ----------- ---------- --------- --------
Charge-offs:
Michigan $20,142 $744 $2,275 $4,663 $27,824
Wisconsin 6,338 (129) 1,044 --- 7,253
Iowa 647 86 183 --- 916
Illinois 396 --- 36 --- 432
---------- ----------- ---------- --------- --------
Total charge-offs 27,523 701 3,538 4,663 36,425
---------- ----------- ---------- --------- --------
Recoveries:
Michigan 3,410 --- 646 1,680 5,736
Wisconsin 2,021 1 206 --- 2,228
Iowa 51 8 40 --- 99
Illinois 208 --- 26 11 245
---------- ----------- ---------- --------- --------
Total recoveries 5,690 9 918 1,691 8,308
---------- ----------- ---------- --------- --------
Net charge-offs $21,833 $692 $2,620 $2,972 $28,117
========== =========== ========== ========= ========
----------------------------------------------------------------------
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