Citizens Banking Corporation Reports Higher Third Quarter 1998 Earnings.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)--Oct. 12, 1998--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 ) earned net income of $14,589,000 for the three months ended September September: see month. 30, 1998, an increase of 18.5% over third quarter 1997 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 . Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the third quarter were $0.50 in 1998, compared with operating earnings of $0.43 per share in 1997. Returns on average equity and average assets during the third quarter of 1998 improved to 13.46% and 1.30%, respectively, from 11.99% and 1.10%, respectively, in the third quarter of 1997. Noninterest income before investment securities gains, increased to $14,689,000 during the third quarter 1998, an improvement of 18.3% over the same period in 1997. Net interest income was $50,036,000 during the three months ended September 30, 1998, an increase of 2.6% over the corresponding quarter of 1997. Significant increases in noninterest income over the third quarter of 1997 were reported in trust fees (+20%), cash management services (+33%), brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and investment fees (+57%), and mortgage and other loan income (+194%). "We continue our strategic focus to provide high-quality, value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: financial services 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. to our clients," 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, President & Chief Executive Officer, "Our ability to effectively respond to the market demand for non-traditional bank products demonstrates the success of these strategic efforts." For the first nine months of 1998, net income was $41,794,000 or $1.45 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, compared with operating earnings of $34,516,000 or $1.22 per diluted share for the first nine months of 1997. Returns on average equity and average assets during the first nine months of 1998 were 13.26% and 1.26%, respectively, compared with 11.53% and 1.06%, respectively, in the same period of 1997. Average loans during the third quarter of 1998 increased to $3.504 billion, up 2.1% from the third quarter of 1997. Average assets increased slightly during the third quarter to $4.448 billion over the same period of 1997. Asset quality remains strong. 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. were $27,505,000 or 0.62% of total assets. Citizens is well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. . The ratio of 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. to total assets increased to 9.67% in the third quarter of 1998, from 9.21% a year ago. Average deposits of $3.682 billion were essentially unchanged from the third quarter of 1997. 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 125 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). 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. . (Financial Highlights Follow) -0-
Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
September 30, December 31,
(in thousands) 1998 1997
Assets
Cash and due from banks $166,854 $168,351
Money market investments:
Interest-bearing deposits with banks 64 246
Term federal funds and other 2,358 11,976
---------- ----------
Total money market investments 2,422 12,222
Securities available-for-sale:
U.S. Treasury and federal agency
securities 428,555 390,046
State and municipal securities 161,395 166,877
Other securities 26,202 18,459
---------- ----------
Total investment securities 616,152 575,382
Loans:
Commercial 1,484,301 1,317,213
Real estate construction 86,493 71,035
Real estate mortgage 762,583 779,567
Consumer 1,182,747 1,336,120
Lease financing 23,163 37,684
---------- ----------
Total loans 3,539,287 3,541,619
Less: Allowance for loan losses (47,136) (45,911)
---------- ----------
Net loans 3,492,151 3,495,708
Premises and equipment 74,440 69,415
Intangible assets 55,857 60,016
Other assets 54,667 58,177
---------- ----------
Total assets $4,462,543 $4,439,271
---------- ----------
---------- ----------
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $604,189 $600,498
Interest-bearing 3,043,567 3,093,848
---------- ----------
Total deposits 3,647,756 3,694,346
Federal funds purchased and securities
sold under agreements to repurchase 159,940 141,713
Other short-term borrowings 27,561 33,153
Other liabilities 51,320 52,052
Long-term debt 141,168 108,165
---------- ----------
Total liabilities 4,027,745 4,029,429
Shareholders' Equity
Preferred stock - No par value --- ---
Common stock - No par value 118,488 120,274
Retained earnings 310,353 285,706
Accumulated other comprehensive income 5,957 3,862
---------- ----------
Total shareholders' equity 434,798 409,842
---------- ----------
Total liabilities and
shareholders' equity $4,462,543 $4,439,271
---------- ----------
---------- ----------
----------------------------------------------------------------------
Consolidated Statements of Income (Unaudited)
Citizens Banking Corporation and Subsidiaries
Three Months Nine Months
Ended Ended
(in thousands, except September 30, September 30,
per share amounts) 1998 1997 1998 1997
---------------------------------------------------------------------
Interest Income
Interest and fees
on loans $ 75,848 $ 75,292 $ 226,988 $ 217,646
Interest and dividends
on investment
securities:
Taxable 7,179 8,035 21,481 25,033
Nontaxable 1,877 2,140 5,721 6,710
Money market
investments 551 181 1,942 482
--------- --------- --------- ---------
Total interest
income 85,455 85,648 256,132 249,871
--------- --------- --------- ---------
Interest Expense
Deposits 31,951 33,133 97,151 95,733
Short-term borrowings 1,512 2,297 4,569 7,025
Long-term debt 1,956 1,473 6,138 4,349
--------- --------- --------- ---------
Total interest
expense 35,419 36,903 107,858 107,107
--------- --------- --------- ---------
Net Interest Income 50,036 48,745 148,274 142,764
Provision for
loan losses 3,510 5,245 10,530 12,197
--------- --------- --------- ---------
Net interest income
after provision
for loan losses 46,526 43,500 137,744 130,567
--------- --------- --------- ---------
Noninterest Income
Trust fees 4,633 3,858 13,881 11,672
Service charges on
deposit accounts 3,258 3,129 9,513 9,163
Bankcard fees 2,083 1,917 5,653 5,271
Mortgage and other
loan income 1,534 521 2,869 1,152
Brokerage and
investment fees 663 422 1,860 1,261
Cash Management
Services 583 440 1,685 1,349
Investment securities
gains (losses) 49 (755) 103 (812)
Other 1,935 2,135 6,132 5,498
--------- --------- --------- ---------
Total noninterest
income 14,738 11,667 41,696 34,554
--------- --------- --------- ---------
Noninterest Expense
Salaries and employee
benefits 20,145 19,986 61,344 60,778
Equipment 2,921 3,069 9,079 9,428
Occupancy 2,845 2,820 8,516 8,700
Intangible asset
amortization 1,386 1,386 4,159 4,712
Bankcard fees 1,680 1,579 4,373 3,757
Stationery and
supplies 875 968 2,795 3,076
Postage and delivery 953 1,116 3,165 3,305
Advertising and
public relations 1,072 911 3,477 3,351
Special charge -- 23,734 -- 23,734
Other 8,392 5,771 22,252 18,845
--------- --------- --------- ---------
Total noninterest
expense 40,269 61,340 119,160 139,686
--------- --------- --------- ---------
Income before
income taxes 20,995 (6,173) 60,280 25,435
Income taxes 6,406 (1,222) 18,486 8,182
--------- --------- --------- ---------
Net Income (Loss) $ 14,589 $ (4,951) $ 41,794 $ 17,253
--------- --------- --------- ---------
--------- --------- --------- ---------
Net Income (Loss)
Per Share:
Basic $ 0.52 $ (0.18) $ 1.49 $ 0.62
Diluted 0.50 (0.18) 1.45 0.61
Average Shares
Outstanding:
Basic 28,164 27,896 28,138 27,834
Diluted 28,754 27,896 28,767 28,339
----------------------------------------------------------------------
Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
----------------------------------------------------------------------
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
1998 1998 1998 1997 1997
----------------------------------------------------------------------
Summary of Operations (thousands)
Interest income $ 85,455 $ 85,470 $ 85,207 $ 85,992 $ 85,648
Interest expense 35,419 36,008 36,431 36,908 36,903
Net interest income 50,036 49,462 48,776 49,084 48,745
Provision for
loan losses 3,510 3,510 3,510 3,135 5,245
Net interest income
after provision
for loan losses 46,526 45,952 45,266 45,949 43,500
Investment securities
gains (losses) 49 4 50 25 (755)
Noninterest income 14,689 13,963 12,941 12,115 12,422
Noninterest expense
before special charge 40,269 40,199 38,692 37,475 37,606
Special charge,
net of tax -- -- -- -- 17,263
Income taxes 6,406 6,037 6,043 6,359 5,249
Net income (loss) 14,589 13,683 13,522 14,255 (4,951)
Net income before
special charge 14,589 13,683 13,522 14,255 12,312/a
----------------------------------------------------------------------
At Period End (millions)
Total assets $4,463 $4,436 $4,497 $4,439 $4,413
Total earning assets 4,158 4,106 4,192 4,129 4,122
Total loans 3,539 3,497 3,486 3,542 3,497
Total deposits 3,648 3,653 3,720 3,694 3,695
Total shareholders'
equity 435 427 419 410 399
----------------------------------------------------------------------
Average Balances (millions)
Total assets $4,448 $4,465 $4,419 $4,401 $4,422
Total earning assets 4,138 4,171 4,137 4,117 4,124
Total loans 3,504 3,511 3,501 3,497 3,431
Total deposits 3,682 3,706 3,695 3,698 3,687
Total shareholders'
equity 430 421 413 402 407
Shareholders' equity /
assets 9.67 % 9.43 % 9.34 % 9.14 % 9.21 %
----------------------------------------------------------------------
Credit Quality Statistics (thousands)
Nonaccrual loans $24,340 $23,377 $22,896 $19,989 $20,251
Loans 90 or more
days past due
and still accruing 908 441 568 1,185 662
Restructured loans 134 231 305 446 487
------- ------- ------- ------- -------
Total nonperforming
loans 25,382 24,049 23,769 21,620 21,400
Other repossessed
assets acquired (ORAA) 2,123 2,548 3,866 3,348 3,766
------- ------- ------- ------- -------
Total nonperforming
assets $27,505 $26,597 $27,635 $24,968 $25,166
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Allowance for
loan losses ratio 1.33 % 1.34 % 1.33 % 1.30 % 1.32 %
Allowance for loan
losses as a
percent of
nonperforming assets 171.37 176.55 168.19 183.88 182.95
Allowance for loan
losses as a
percent of
nonperforming loans 185.70 195.26 195.55 212.35 215.14
Nonperforming assets
as a percent of
total loans plus
ORAA 0.78 0.76 0.79 0.70 0.72
Nonperforming assets
as a percent of
total assets 0.62 0.60 0.61 0.56 0.57
Net loans charged
off as a percent
of average loans
(annualized) 0.38 0.35 0.34 0.37 0.51
Net loans charged
off (000) $ 3,330 $ 3,034 $ 2,941 $ 3,265 $ 4,402
----------------------------------------------------------------------
Per Common Share Data/b
Net Income (loss):
Basic $ 0.52 $ 0.49 $ 0.48 $ 0.51 $ 0.44/a
Diluted before
special charge 0.50 0.48 0.47 0.50 0.43/a
Dividends 0.21 0.21 0.19 0.19 0.19
Market Value:
High $ 36.13 $ 37.00 $ 37.13 $ 34.75 $ 29.42
Low 28.00 32.88 27.50 27.17 22.33
Close 32.88 33.63 35.69 34.50 29.33
Book value 15.46 15.14 14.89 14.61 14.30
Shares outstanding,
end of period (000) 28,119 28,200 28,135 28,048 27,904
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest
margin (FTE) 4.98 % 4.89 % 4.89 % 4.90 % 4.86 %
Return on
average assets 1.30 1.23 1.24 1.29 1.10/a
Return on average
shareholders' equity 13.46 13.03 13.28 14.05 11.99/a
----------------------------------------------------------------------
/a Operating income before special charge associated with CB Financial
Corporation merger and information technology operations
reorganization.
/b Adjusted for a three-for-two stock split effected in the form of a
dividend paid to shareholders on November 18, 1997.
----------------------------------------------------------------------
Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
Nine Months Ended
September 30
-----------------------------------
1998 1997 % Change
----------------------------------------------------------------------
Summary of Operations (thousands)
Interest income $ 256,132 $ 249,871 2.5 %
Interest expense 107,858 107,107 0.7
Net interest income 148,274 142,764 3.9
Provision for loan
losses 10,530 12,197 (13.7)
Net interest income
after provision for
loan losses 137,744 130,567 5.5
Investment securities
gains (losses) 103 (812) (c)
Noninterest income 41,593 35,366 17.6
Noninterest expense
before special charge 119,160 115,952 2.8
Special charge,
net of tax -- 17,263 (c)
Income taxes 18,486 14,653 26.2
Net income 41,794 17,253 142.2
Net income before
special charge 41,794 34,516(e) 21.1
----------------------------------------------------------------------
At Period End (millions)
Total assets $ 4,463 $ 4,413 1.1 %
Total earning assets 4,158 4,122 0.9
Total loans 3,539 3,497 1.2
Total deposits 3,648 3,695 (1.3)
Total shareholders'
equity 435 399 8.9
----------------------------------------------------------------------
Average Balances (millions)
Total assets $ 4,444 $ 4,362 1.9 %
Total earning assets 4,149 4,062 2.1
Total loans 3,506 3,341 4.9
Total deposits 3,694 3,630 1.8
Total shareholders'
equity 421 400 5.3
Shareholders' equity /
assets 9.48 % 9.17 % 3.4
----------------------------------------------------------------------
Per Common Share Data(b)
Net Income:
Basic $ 1.49 $1.24(e) 20.2 %
Diluted 1.45 1.22(e) 18.9
Dividends 0.61 0.55 10.9
Market Value:
High $ 37.13 $ 29.42 26.2
Low 27.50 20.00 37.5
Close 32.88 29.33 12.1
Book value 15.46 14.30 8.1
Shares outstanding,
end of period (000) 28,119 27,904 0.8
----------------------------------------------------------------------
Cash Earnings Summary(a)
Net Income $ 44,869 $ 38,011(e) 18.0 %
Diluted earnings
per share 1.56 1.34 16.4
Tangible Book
value per share 13.48 12.10 11.4
Return on
average assets 1.37 % 1.18 % 16.1
Return on
average equity 16.51 15.43 7.0
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest margin
(FTE)(d) 4.92 % 4.84 % 1.7 %
Return on average
assets 1.26 1.06(e) 18.9
Return on average
shareholders' equity 13.26 11.53(e) 15.0
Net loans charged
off as a percent
of average loans 0.35 0.33 6.1
----------------------------------------------------------------------
(a) Cash earnings exclude the effect of intangible asset amortization
expense arising from previous mergers accounted for as a purchase.
(b) Adjusted for a three-for-two stock split effected in the form of a
dividend paid to shareholders on November 18, 1997.
(c) Not meaningful.
(d) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income of $4,406,000 and $4,662,000
for the nine months ended September 30, 1998 and 1997, respectively,
based on a tax rate of 35%.
(e) Operating income before special charge associated with CB
Financial Corporation merger and information technology operations
reorganization.
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