Citizens Banking Corporation Reports Fourth Quarter and Full Year 1999 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)--Jan. 20, 2000 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 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter ending December December: see month. 31, 1999, of $25,931,000 compared with $23,859,000 for the same period in 1998, an increase of 8.7%. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before per share were $0.54, an increase of 10.2% over fourth quarter 1998 of $0.49 per share. Net operating income for the year was $97,154,000, a 7.6% increase over 1998, which was $90,282,000. Operating earnings per share for the full year were $2.00 compared with $1.84 for 1998, an 8.7% increase. Net operating income for the quarter resulted in an 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. return on average equity of 15.66% and return on average assets of 1.33%. These compare with a return on average equity of 14.02% and return on average assets of 1.38% for fourth quarter of 1998. Net operating earnings exclude fourth quarter 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). and merger-related charges of $35.2 million (after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) for the acquisition of F& Bancorporation and 17 former Bank One offices, the reconfiguration of our branch network, and other non-recurring items. The pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges consist of $36.3 million in merger and integration charges, $3.9 million in branch reconfiguration and other non-recurring items, a $3.6 million loss on repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. the securities portfolio of the combined entities and a merger-related provision for loan losses of $6.8 million. Including these items, Citizens reported a net loss of $9,229,000 for the fourth quarter of 1999 and net income for the year of $61,994,000. Noninterest income (excluding investment securities gains and losses) increased $13,403,000 to $84,196,000 during the twelve months ending December 31, 1999, an improvement of 18.9% over 1998. This significant increase is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased sales efforts, particularly in wealth management services, and certain non-recurring items. In the wealth management area, brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. fees increased an impressive 61.6% to $4,325,000 from $2,677,000 while trust fees increased 10.6% to $21,701,000. Fees on deposit accounts also grew 13.7% to $21,378,000 compared with $18,803,000 for 1998. Nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items included a premium on the sale of branch deposits in the first quarter and a gain from the sale of Magic Line, Inc. stock in the second quarter. Citizens' total assets as of December 31, 1999, were $7.9 billion, an increase of 14% from December 31, 1998. Total 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 increased $884 million to $7.4 billion or 13.6% and total loans increased 12.4% to $5.9 billion from year end 1998. Enhanced sales efforts increased commercial loans by $430 million or 18.3% and direct consumer loans by $90 million or 15.3% over 1998 year end levels. Citizens acquired seventeen Seventeen novel of young love. [Am. Lit.: Booth Tarkington Seventeen in Magill I, 882] See : Adolescence offices of Bank One Corporation located in northern lower Michigan Lower Michigan See Lower Peninsula. on October October: see month. 8, 1999 and completed the systems conversion of these locations on October 11th. On November November: see month. 1, 1999, Citizens completed its acquisition of the $2.7 billion F& Bancorporation. The transaction was accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. , and as such, financial data were restated to include the historical results of operations of both entities. F&'s 22 banks have been 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: into three bank charters effective January January: see month. 3, 2000: F& 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 with 72 offices, F& Iowa with 14 offices and F& Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces with one banking location. The process to convert F&'s operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. to Citizens' systems has already begun and will be completed throughout the next three quarters. We expect to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional merger and integration costs of $12 - $15 million in 2000 as the F& Banks are converted to Citizens' operating systems. Citizens expects that the F& acquisition will have a positive effect on its future operating performance. &uot;This acquisition broadens our client and shareholder base and provides us with many opportunities for future growth,&uot; commented Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Vitito, Chairman, President and Chief Executive Officer. &uot;It also allows us to further enhance revenue by implementing our sales culture and offering expanded product lines in new markets,&uot; Vitito continued. 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 229 branch, private banking, and financial center locations throughout 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). , Wisconsin, Iowa, Minnesota 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. . Discussions in this release that are not statements of historical fact (including statements in the future tense future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future of those which include terms such as &uot;believe&uot;, &uot;expect&uot;, and &uot;anticipate&uot;) 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 Corporation'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, the Corporation's future lending and collections experience, the inability to complete announced acquisition transactions, the effects of acquisitions and the ability to integrate acquired operations, market acceptance of the Corporation's products and services, competition from other institutions, changes in the banking industry and its regulation, needs for technological change, and other factors, including those which are discussed in the Corporation's filings with the Securities and Exchange Commission. (Financial highlights follow)
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Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
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4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
1999 1999 1999 1999 1998
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Summary of Operations (thousands)
Interest income $144,531 $138,354 $130,687 $128,835 $129,509
Interest expense 63,391 59,773 54,402 54,351 55,310
Net interest income 81,140 78,581 76,285 74,484 74,199
Provision for loan losses 11,422 4,370 4,812 4,071 4,185
Net interest income after
provision for loan losses 69,718 74,211 71,473 70,413 70,014
Investment securities
gains (losses) (3,584) 39 301 192 227
Noninterest income 19,390 19,351 25,180 20,275 18,162
Noninterest expense,
excluding charge 59,105 59,551 61,416 56,706 54,293
Special charge 40,198 --- --- --- ---
(4,550) 10,625 11,183 10,731 10,251
Net income (9,229) 23,425 24,355 23,443 23,859
Net operating income 25,931(1) 23,425 24,355 23,443 23,859
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At Period End (millions)
Total assets $7,899 $7,530 $7,351 $7,046 $6,931
Total earning assets 7,381 7,004 6,874 6,604 6,497
Total loans 5,918 5,649 5,517 5,334 5,265
Total deposits 6,129 5,787 5,782 5,817 5,773
Total shareholders' equity 634 638 648 671 681
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Average Balances (millions)
Total assets $7,759 $7,448 $7,103 $6,942 $6,849
Total earning assets 7,259 7,004 6,663 6,512 6,417
Total loans 5,803 5,575 5,415 5,256 5,214
Total deposits 6,144 5,817 5,811 5,770 5,643
Total shareholders' equity 657 664 679 673 675
Shareholders' equity/assets 8.47% 8.92% 9.56% 9.69% 9.86%
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Credit Quality Statistics
(thousands)
Nonaccrual loans $28,482 $31,147 $32,644 $31,923 $35,142
Loans 90 or more days past
due and still accruing 2,773 2,318 3,318 3,254 2,474
Restructured loans 9 114 114 114 114
------- -------- -------- -------- --------
Total nonperforming
loans 31,264 33,579 36,076 35,291 37,730
Other repossessed assets
acquired (ORAA) 4,039 5,497 4,432 5,365 4,790
------- -------- -------- -------- --------
Total nonperforming
assets $35,303 $39,076 $40,508 $40,656 $42,520
------- -------- -------- -------- --------
------- -------- -------- -------- --------
Allowance for loan losses
ratio 1.29% 1.26% 1.29% 1.31% 1.32%
Allowance for loan losses
as a percent of
nonperforming assets 216.40 182.70 175.44 171.59 164.02
Allowance for loan losses
as a percent of
nonperforming loans 244.36 212.61 197.00 197.68 184.84
Nonperforming assets as a
percent of total loans
plus ORAA 0.60 0.69 0.73 0.76 0.81
Nonperforming assets as a
percent of total assets 0.45 0.52 0.55 0.58 0.61
Net loans charged off as a
percent of average loans
(annualized) 0.53 0.29 0.26 0.39 0.36
Net loans charged off
(000) $7,714 $4,048 $3,505 $5,150 $4,701
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Per Common Share Data
Net Income (loss):
Basic ($0.19) $0.49 $0.50 $0.48 $0.49
Fully diluted ($0.19) $0.49 $0.50 $0.47 $0.49
Fully diluted -
net operating income 0.54(1) 0.49 0.50 0.47 0.49
Dividends 0.235 0.235 0.235 0.21 0.21
Market Value:
High $29.94 $31.25 $42.25 $36.06 $35.38
Low 21.25 25.19 28.63 31.00 26.75
Close 22.38 26.13 30.06 36.00 33.75
Book value 13.32 13.36 13.51 13.83 14.07
Shares outstanding, end of
period (000) 47,568 47,738 47,963 48,506 48,373
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Performance Ratios
(annualized)
Net interest margin (FTE) 4.63% 4.64% 4.77% 4.76% 4.76%
Return on average assets 1.33(1) 1.25 1.39 1.37 1.38
Return on average
shareholders' equity 15.66(1) 14.06 14.39 14.13 14.02
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(1) Operating income before special charge associated with F&
Bancorporation merger, acquisition of 17 offices of Bank One
Corporation, branch reconfiguration and other non-recurring
items. Also excludes merger related securities losses of
$3.6 million and additional loan loss provision of $6.8 million.
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Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
December 31
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1999 1998 % Change
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Summary of Operations (thousands)
Interest income $ 542,407 $ 522,317 3.8 %
Interest expense 231,917 229,273 1.2
Net interest income 310,490 293,044 6.0
Provision for loan losses 24,675 16,528 49.3
Net interest income
after provision for
loan losses 285,815 276,516 3.4
Investment securities
gains (losses) (3,052) 475 --(4)
Noninterest income 84,196 70,793 18.9
Noninterest expense 236,778 218,219 8.5
Special charge 40,198 -- --(4)
Income taxes 27,989 39,283 (28.8)
Net income 61,994 90,282 (31.3)
Net operating income 97,154(1) 90,282 7.6
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At Period End (millions)
Total assets $ 7,899 $ 6,931 14.0 %
Total earning assets 7,381 6,497 13.6
Total loans 5,917 5,265 12.4
Total deposits 6,129 5,773 6.2
Total shareholders' equity 634 681 (6.9)
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Average Balances (millions)
Total assets $ 7,342 $ 6,837 7.4 %
Total earning assets 6,876 6,398 7.5
Total loans 5,529 5,186 6.6
Total deposits 5,907 5,647 4.6
Total shareholders' equity 672 663 1.4
Shareholders' equity / assets 9.16 % 9.70 % (5.6)
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Per Common Share Data
Net Income:
Basic $ 1.29 $ 1.86 (30.6)%
Fully diluted $ 1.28 $ 1.84 (30.4)
Fully diluted - net
operating income 2.00(1) 1.84 8.7
Dividends 0.915 0.82 11.6
Market Value:
High $ 42.25 $ 37.13 13.8
Low 21.25 26.75 (20.6)
Close 22.38 33.75 (33.7)
Book value 13.32 14.07 (5.3)
Shares outstanding,
end of period (000) 47,568 48,373 (1.7)
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Cash Earnings Summary(2)
Net Income $ 102,771(1)$ 95,403 7.7 %
Diluted earnings per share 2.11 1.94 8.8
Tangible book value per share 11.35 12.71 (10.7)
Return on average assets 1.41 % 1.41 % 0.0
Return on average equity 17.09 16.05 6.5
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Performance Ratios (annualized)
Net interest margin (FTE)(3) 4.69 % 4.77 % (1.7)%
Return on average assets 1.32 1.32 0.2
Return on average
shareholders' equity 14.45 13.62 6.1
Net loans charged off
as a percent of
average loans 0.37 0.30 23.3
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(1) Operating income before special charge associated with F&
Bancorporation merger, acquisition of 17 offices of Bank One
Corporation, branch reconfiguration and other non-recurring
items. Also excludes merger related securities losses of
$3.6 million and additional loan loss provision of $6.8 million.
(2) Cash earnings exclude the effect of intangible asset amortization
expense arising from previous mergers accounted for as a
purchase.
(3) Average rates are presented on an annual basis and include
taxable equivalent adjustments to interest income of $12,204,000
and $11,520,000 for the years ended December 31, 1999 and 1998,
respectively, based on a tax rate of 35%.
(4) Not meaningful
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Consolidated Statements of Income
Citizens Banking Corporation and Subsidiaries
Three Months Ended Twelve Months Ended
(in thousands, except December 31, December 31,
per share amounts) 1999 1998 1999 1998
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Interest Income
Interest and
fees on loans $ 122,522 $ 111,602 $ 463,071 $ 450,178
Interest and
dividends on
investment securities:
Taxable 16,820 12,092 58,991 49,358
Nontaxable 4,605 4,068 17,151 16,944
Money market investments 584 1,747 3,194 5,837
--------- --------- --------- ---------
Total interest
income 144,531 129,509 542,407 522,317
--------- --------- --------- ---------
Interest Expense
Deposits 51,568 49,850 196,871 206,608
Short-term borrowings 7,369 2,267 20,749 9,806
Long-term debt 4,454 3,193 14,297 12,859
--------- --------- --------- ---------
Total interest
expense 63,391 55,310 231,917 229,273
--------- --------- --------- ---------
Net Interest Income 81,140 74,199 310,490 293,044
Provision for
loan losses 11,422 4,185 24,675 16,528
--------- --------- --------- ---------
Net interest
income after
provision for
loan losses 69,718 70,014 285,815 276,516
--------- --------- --------- ---------
Noninterest Income
Trust fees 5,423 5,067 21,701 19,627
Service charges on
deposit accounts 5,876 4,620 21,378 18,803
Bankcard fees 2,434 2,157 9,163 7,899
Mortgage and other
loan income 788 1,836 5,230 7,298
Brokerage and
investment fees 1,020 617 4,325 2,677
Cash management services 698 720 2,556 2,405
Investment securities
gains (losses) (3,584) 227 (3,052) 475
Other 3,151 3,145 19,843 12,084
--------- --------- --------- ---------
Total noninterest
income 15,806 18,389 81,144 71,268
--------- --------- --------- ---------
Noninterest Expense
Salaries and
employee benefits 31,315 28,343 122,572 115,088
Equipment 4,366 4,572 16,645 17,088
Occupancy 3,850 3,551 15,414 15,074
Intangible asset
amortization 2,463 1,682 7,510 6,712
Bankcard fees 2,099 1,521 7,477 5,894
Stationery and
supplies 1,522 1,462 5,674 5,609
Postage and
delivery 1,281 1,439 5,985 5,925
Advertising and
public relations 923 622 5,223 5,842
Data processing fees 2,685 2,316 9,924 7,943
Special charge 40,198 -- 40,198 --
Other 8,601 8,785 40,354 33,044
--------- --------- --------- ---------
Total noninterest
expense 99,303 54,293 276,976 218,219
--------- --------- --------- ---------
Income Before
Income Taxes (13,779) 34,110 89,983 129,565
Income taxes (4,550) 10,251 27,989 39,283
--------- --------- --------- ---------
Net Income $ (9,229) $ 23,859 $ 61,994 $ 90,282
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Income Per Share:
Basic $ (0.19) $ 0.49 $ 1.29 $ 1.86
Diluted (0.19) 0.49 1.28 1.84
Diluted - operating
income 0.54 0.49 2.00 1.84
Average Shares Outstanding:
Basic 47,599 48,369 48,169 48,427
Diluted 47,599 48,986 48,617 49,085
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Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
December 31,
(in thousands) 1999 1998
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Assets
Cash and due from banks $ 250,745 $ 221,880
Money market investments:
Federal funds sold 63,048 86,048
Other money market investments 1,857 17,935
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Total money market investments 64,905 103,983
Trading account securities 2,444 --
Securities available-for-sale:
Taxable 1,039,859 816,214
Nontaxable 356,386 311,883
----------- -----------
Total investment securities 1,398,689 1,128,097
Loans 5,917,483 5,264,706
Less: Allowance for loan losses (76,397) (69,740)
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Net loans 5,841,086 5,194,966
Premises and equipment 141,460 127,980
Intangible assets 93,697 65,846
Other assets 108,775 87,781
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Total assets $ 7,899,357 $ 6,930,533
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 965,849 $ 913,846
Interest-bearing deposits 5,163,149 4,858,946
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Total deposits 6,128,998 5,772,792
Federal funds purchased
and securities sold
under agreements to repurchase 251,805 172,183
Other short-term borrowings 454,600 12,971
Other liabilities 72,307 65,915
Long-term debt 357,978 226,171
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Total liabilities 7,265,688 6,250,032
Shareholders' Equity
Preferred stock - no par value:
Common stock - no par value: 226,972 276,439
Retained earnings 424,140 396,516
Other accumulated
comprehensive net income (17,443) 7,546
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Total shareholders' equity 633,669 680,501
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Total liabilities and
shareholders' equity $ 7,899,357 $ 6,930,533
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