Citizens Banking Corporation 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 19, 2002 (Nasdaq:CBCF CBCF Canadian Breast Cancer Foundation CBCF Congressional Black Caucus Foundation CBCF Community Based Corrections Facilities CBCF Commander, Base Communications Facility ) Highlights Include: -- Improved net interest margin -- Operating expenses decreased 3.3% -- $5.4 million gain on sale of merchant services business -- Revenue, expense and credit improvement initiatives underway Citizens Banking Corporation announced net income of $25,339,000 for the quarter ended June June: see month. 30, 2002, compared to $27,148,000 for 2001, a decrease of 6.7%. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share was $0.56 down 3.5% from $0.58 for the same quarter of 2001. Returns on average assets and average equity for the quarter ended June 30, 2002 were 1.35% and 14.48%, respectively, compared with 1.37% and 15.56%, respectively, in 2001. Citizens realized $7.8 million in non-recurring gains ($5.1 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. ) during the second quarter of 2002, compared with $5.9 million ($3.8 million after-tax) in 2001. For the six months ended June 30, 2002, net income was $49,442,000, or $1.09 per share, compared to $50,953,000 or $1.09 per share for the same period in 2001. Returns on average assets and average equity for the first six months of the year were 1.32% and 14.22%, respectively, compared with 1.27% and 14.81%, respectively, in 2001. For the six months ended June 30, 2002 Citizens experienced non-recurring gains of $7.8 million ($5.1 million after-tax) compared to $8.0 million ($5.2 million after-tax) in 2001. Balance Sheet Citizens' total assets as of June 30, 2002, were $7.547 billion, a decrease of 1.7% from December December: see month. 31, 2001. Total loans declined $205 million from year end 2001 as Citizens continued selling its current mortgage loan production into the secondary market during the low interest rate environment. During the second quarter, Citizens 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. $63.5 million in seasoned adjustable rate mortgage This article is about the US mortgage type. For an international perspective, see Variable rate mortgage. An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. (ARM) loans and subsequently sold these securities at a gain of $2.4 million. This ARM portfolio was experiencing rapid principal paydown Paydown A payment made towards an outstanding loan balance. Notes: Every time you make a mortgage payment you are "paying down" your loan. See also: Loan, Mortgage, Principal paydown In a corporate or U.S. as a result of the current interest rate environment. In addition, commercial loan balances have remained flat due to weaker demand caused by the 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. , particularly within the manufacturing sector in our markets. Total deposits declined 1.7% from December 31, 2001 to $5.866 billion at the end of the second quarter, in large part due to a decline in brokered deposits and large denomination Denomination The stated value found on financial instruments. Notes: This term applies to most financial instruments with monetary values. The denomination for bonds and securities would be face value or par value. time deposits as a part of Citizens' strategy to reduce higher cost funding. Citizens has no unconsolidated subsidiaries nor material derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. contracts, and continues to be 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. . Through its balance sheet 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 beginning in the first quarter of 2001, Citizens has also decreased reliance on borrowed funds, improved net interest margin and reduced interest rate risk. Net Interest Margin Net interest margin remained stable at 4.45% compared to the first quarter of 2002 and increased from 4.26% for the same quarter in 2001. The improvement in net interest margin over 2001 levels can be attributed to a lower cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . Funding costs decreased 167 basis points in the second quarter of 2002 compared to the same period of 2001 while asset yields declined only 124 basis points, resulting in the improvement in net interest margin. Net interest margin for the first six months of 2002 was 4.45% compared to 4.18% in 2001, an increase of 27 basis points. Despite the improvement in net interest margin, net interest income decreased 1.1% to $150,368,000 during the first half of 2002 from the same period in 2001 due to the lower level of 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 . Noninterest Income Noninterest income, including non-recurring gains, was $30.6 million during the second quarter representing a decrease of 4.6% compared to the same period in 2001. Noninterest income for the second quarter includes a $2.4 million gain on the sale of securitized mortgages and a $5.4 million gain on the sale of the 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 to NOVA Information Systems Nova Information Systems is a major US processor of credit card transactions and a subsidary of Us Bancorp. NOVA and its european division euroConex boast an expanding global reach that delivers merchant processing in more than 30 countries and supports the payment needs of more of Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. . 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:
n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. , quality service to our clients that will give us a competitive advantage in many of our markets." During the second quarter of 2001, Citizens realized a gain of $2.6 million from the sale of its 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). credit card portfolio and $3.3 million from the sale of securitized mortgages. Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and investment fees were $2.6 million during the second quarter of 2002, an increase of 29.4% over the same quarter in 2001. Service charges on deposit accounts were down 9.3% or $666,000 during the quarter due to a decline in 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 fees. Trust fees decreased 4.5% or $239,000 during the quarter due to a lower level of trust assets under administration resulting primarily from weak equity markets. 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 declined by 39.8% or $1,275,000 as a result of the sale of the credit card portfolio last year and the merchant services business in the second quarter of 2002. Mortgage and other loan income decreased by 35.6% or $1,589,000 compared to second quarter 2001 as a result of lower mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real volume and narrower gains on sold loans. For the six months ended June 30, 2002, noninterest income, including nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. gains, was $55.3 million, a decrease of 2.5% over the comparable period last year. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. For the quarter, operating expenses decreased 3.3%, or $2.1 million from second quarter 2001 levels. Intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization declined $1.8 million from the same quarter of 2001 due to the adoption of a new accounting standard that eliminates goodwill amortization. Bankcard expenses declined by $985,000 or 38.5%, related to the previously mentioned sale of the credit card portfolio during 2001 and the second quarter 2002 sale of the merchant services business. Salaries and employee benefits increased by only 1.0%, while professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. rose by 10.7% due to higher consulting fees. "We have engaged banking industry consultants to help us analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. our consumer, business banking and wealth management businesses," remarked 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
emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower intangible asset amortization of $3.6 million, due to adoption of the new accounting standard. Credit Quality Net loans charged off during the second quarter were $9.4 million or 68 basis points of average loans compared to $5.1 million or 37 basis points in the prior quarter. The allowance for loan losses increased to 1.45% of loans at June 30, 2002 from 1.43% at March 31, 2002. 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. increased to $87.8 million or 1.16% of total assets, at June 30, 2002, from $80.1 million or 1.07% of total assets, at the end of first quarter. The increase in nonperforming assets occurred within the commercial loan portfolio of the Michigan market, primarily as a result of overall weakness in the manufacturing sector. Non-performing assets have continued to rise due to the slow economy and net loan charge offs are expected to continue at higher than historical levels in the third quarter 2002. Net loans charged off for the first six months of 2002 were $14.5 million or 52 basis points of average loans compared to $9.1 million or 29 basis points for the same period in 2001. Earnings Outlook Looking forward to the remainder of 2002, Citizens is anticipating full year earnings per share to be below 2001 earnings per share of $2.25, as a result of higher loan charge offs and the lack of revenue growth, due in part to a stagnant stagnant /stag·nant/ (stag´nant) 1. motionless; not flowing or moving. 2. inactive; not developing or progressing. economy. "Despite the economic challenges, we are dissatisfied dis·sat·is·fied adj. Feeling or exhibiting a lack of contentment or satisfaction. dis·sat  is·fied with the current operating performance
of our company and are unwilling to wait for an economic turnaround TurnaroundA situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. to improve earnings. Consequently, we are conducting an aggressive and thorough review of the profitability and mix of our businesses, including customer service levels, expense structure and operating efficiency, revenue generation, credit quality and risk management techniques. We are totally committed to making the changes that, along with our balance sheet restructuring, will return Citizens to historical performance levels, restore earnings growth and build shareholder value," stated Mr. Hartman. Other News On June 24, 2002, John W. Ennest, vice chairman, chief financial officer and treasurer TREASURER. An officer entrusted with the treasures or money either of a private individual, a corporation, a company, or a state. 2. It is his duty to use ordinary diligence in the performance of his office, and to account with those whose money he has. of Citizens Banking Corporation announced that he plans to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. by the end of this year. Ennest has been with the organization for over 19 years, originally serving as Citizens Bank's CFO See Chief Financial Officer. . He was named president and CEO of the bank in 1987 and in 1991 became vice chairman of the board of directors of Citizens Banking Corporation and COO (Cell Of Origin) See mobile positioning. of the corporation. Ennest became CFO and treasurer of the corporation in 1994. A search has already begun to find Mr. Ennest's successor 1. SuccessoR - A language for distributed computing derived from SR. ["SuccessoR: Refinements to SR", R.A. Olsson et al, TR 84-3, U Arizona 1984]. 2. successor - daughter , which will provide adequate time for a smooth transition of responsibilities to occur. During the second quarter of 2002 Citizens repurchased a total of 584,600 shares of its stock through its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. Since the plan was announced in October October: see month. 2001, Citizens has repurchased 998,400 shares at an average price of $32.61. Corporate Profile Citizens Banking Corporation is a diversified financial The diversified financial services segment includes a range of consumer and commercially-oriented companies offering a wide variety of products and services, including various lending products (such as home equity loans and credit cards), insurance, and securities and investment services company providing a full range of commercial, consumer, mortgage banking, trust and financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against services to a broad client base. Citizens operates 197 branch, private banking, and financial center locations throughout Michigan, 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 , 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. . 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" or 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 statements which 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 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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Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
June 30, December 31,
(in thousands) 2002 2001(1)
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Assets
Cash and due from banks $ 180,139 $ 224,416
Money market investments:
Federal funds sold -- 891
Interest-bearing deposits with banks 3,952 3,455
Term federal funds sold 15,000 --
----------- -----------
Total money market investments 18,952 4,346
Securities available-for-sale:
Taxable 1,053,229 864,516
Nontaxable 441,276 433,180
----------- -----------
Total securities 1,494,505 1,297,696
Mortgage loans held for sale 79,662 150,443
Loans 5,566,903 5,771,963
Less: Allowance for loan losses (80,447) (80,299)
----------- -----------
Net loans 5,486,456 5,691,664
Premises and equipment 125,160 128,805
Goodwill 54,785 54,785
Other intangible assets 24,583 26,191
Other assets 82,786 100,529
----------- -----------
Total assets $ 7,547,028 $ 7,678,875
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 872,734 $ 903,900
Interest-bearing deposits 4,993,204 5,061,226
----------- -----------
Total deposits 5,865,938 5,965,126
Federal funds purchased and securities sold
under agreements to repurchase 176,705 233,077
Other short-term borrowings 81,538 81,353
Other liabilities 78,615 72,756
Long-term debt 629,548 629,099
----------- -----------
Total liabilities 6,832,344 6,981,411
Shareholders' Equity
Preferred stock - no par value:
Common stock - no par value: 135,729 155,720
Retained earnings 545,410 521,191
Other accumulated comprehensive net income 33,545 20,553
----------- -----------
Total shareholders' equity 714,684 697,464
----------- -----------
Total liabilities and
shareholders' equity $ 7,547,028 $ 7,678,875
----------- -----------
----------- -----------
(1) Certain amounts have been reclassified to conform with current
year presentation.
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Consolidated Statements of Income (Unaudited)
Citizens Banking Corporation and Subsidiaries
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except
per share amounts) 2002 2001(1) 2002 2001(1)
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Interest Income
Interest and
fees on loans $ 96,825 $ 126,657 $ 196,988 $ 260,477
Interest and
dividends
on investment
securities:
Taxable 14,602 14,482 26,971 31,589
Nontaxable 5,335 5,408 10,719 10,739
Money market
investments 231 713 590 1,013
--------- --------- --------- ---------
Total interest
income 116,993 147,260 235,268 303,818
--------- --------- --------- ---------
Interest Expense
Deposits 32,865 54,782 67,435 115,661
Short-term borrowings 904 8,014 1,869 20,060
Long-term debt 7,815 8,039 15,596 16,052
--------- --------- --------- ---------
Total interest
expense 41,584 70,835 84,900 151,773
--------- --------- --------- ---------
Net Interest Income 75,409 76,425 150,368 152,045
Provision for
loan losses 9,400 6,362 14,650 10,411
--------- --------- --------- ---------
Net interest income
after provision for
loan losses 66,009 70,063 135,718 141,634
--------- --------- --------- ---------
Noninterest Income
Service charges
on deposit accounts 6,515 7,181 13,147 13,884
Trust fees 5,030 5,269 9,888 10,764
Mortgage and other
loan income 2,872 4,461 6,897 6,555
Bankcard fees 1,929 3,204 4,687 6,110
Brokerage and
investment fees 2,633 2,035 4,683 3,903
Investment securities
gains (59) 245 (57) 351
Gain on sale of
merchant business 5,400 -- 5,400 --
Gain on securitized
mortgages 2,436 3,259 2,436 5,372
Gain on sale of
credit card assets -- 2,623 -- 2,623
Other 3,859 3,814 8,260 7,190
--------- --------- --------- ---------
Total noninterest
income 30,615 32,091 55,341 56,752
--------- --------- --------- ---------
Noninterest Expense
Salaries and
employee benefits 31,844 31,526 64,044 63,044
Equipment 4,956 5,077 9,814 10,031
Occupancy 4,584 4,453 9,199 9,380
Data processing
services 3,250 3,288 6,375 6,463
Professional services 3,354 3,030 6,189 5,412
Bankcard fees 1,571 2,556 3,653 4,844
Intangible asset
amortization 724 2,531 1,449 5,060
Other 11,238 11,155 21,989 22,093
--------- --------- --------- ---------
Total noninterest
expense 61,521 63,616 122,712 126,327
--------- --------- --------- ---------
Income Before
Income Taxes 35,103 38,538 68,347 72,059
Income taxes 9,764 11,390 18,905 21,106
--------- --------- --------- ---------
Net Income $ 25,339 $ 27,148 $ 49,442 $ 50,953
========= ========= ========= =========
Net Income Per Share:
Basic $ 0.57 $ 0.59 $ 1.10 $ 1.10
Diluted 0.56 0.58 1.09 1.09
Average Shares
Outstanding:
Basic 44,789 46,388 44,925 46,431
Diluted 45,282 46,789 45,462 46,866
(1) Certain amounts have been reclassified to conform with current
year presentation.
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Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2002 2002 2001 2001 2001
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Summary of Operations (thousands)
Interest income $116,993 $118,275 $129,335 $140,406 $147,260
Interest expense 41,584 43,316 51,659 62,146 70,835
Net interest income 75,409 74,959 77,676 78,260 76,425
Provision for
loan losses 9,400 5,250 7,496 8,500 6,362
Net interest income
after provision for
loan losses 66,009 69,709 70,180 69,760 70,063
Noninterest income
before securities
gains (losses) 28,238 24,724 25,599 34,658 28,587
Investment securities
gains (losses) 2,377 2 423 49 3,504
Noninterest expense 61,521 61,191 60,586 64,270 63,616
Income taxes 9,764 9,141 9,874 12,235 11,390
Net income 25,339 24,103 25,742 27,962 27,148
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At Period End (millions)
Total assets $ 7,547 $ 7,482 $ 7,679 $ 7,715 $ 7,924
Total earning assets 7,160 7,102 7,224 7,304 7,450
Total loans 5,567 5,613 5,772 5,866 6,008
Total deposits 5,866 5,861 5,965 5,890 5,922
Total shareholders'
equity 715 700 697 721 707
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Average Balances (millions)
Total assets $ 7,533 $ 7,565 $ 7,701 $ 7,809 $ 7,977
Total earning assets 7,150 7,157 7,287 7,388 7,557
Total loans 5,536 5,623 5,786 5,918 6,068
Total deposits 5,900 5,924 5,930 5,944 6,007
Total shareholders'
equity 702 701 708 713 700
Shareholders' equity/
assets 9.32% 9.27% 9.19% 9.13% 8.78%
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Credit Quality Statistics (thousands)
Nonaccrual loans $ 77,624 $ 67,998 $ 68,793 $ 66,875 $ 75,067
Loans 90 or more days
past due and
still accruing 1,207 3,176 4,168 4,665 4,460
Restructured loans 336 336 337 171 625
-------- -------- -------- -------- --------
Total nonperforming
loans 79,167 71,510 73,298 71,711 80,152
Other repossessed
assets acquired (ORAA) 8,621 8,600 5,947 7,325 5,315
-------- -------- -------- -------- --------
Total nonperforming
assets $ 87,788 $ 80,110 $ 79,245 $ 79,036 $ 85,467
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Allowance for
loan losses $ 80,447 $ 80,425 $ 80,299 $ 81,355 $ 81,351
Allowance for loan
losses ratio 1.45% 1.43% 1.39% 1.39% 1.35%
Allowance for loan
losses as a percent
of nonperforming
assets 91.64 100.39 101.33 102.93 95.18
Allowance for loan
losses as a percent
of nonperforming
loans 101.62 112.47 109.55 113.45 101.50
Nonperforming assets
as a percent of
loans plus ORAA 1.57 1.43 1.37 1.35 1.42
Nonperforming assets
as a percent of
total assets 1.16 1.07 1.03 1.02 1.08
Net loans charged off
as a percent of
average loans
(annualized) 0.68 0.37 0.57 0.57 0.36
Net loans charged
off (000) $ 9,378 $ 5,124 $ 8,312 $ 8,496 $ 5,481
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Per Common Share Data
Net Income (loss):
Basic $ 0.57 $ 0.53 $ 0.57 $ 0.60 $ 0.59
Diluted 0.56 0.53 0.56 0.60 0.58
Dividends 0.285 0.275 0.275 0.275 0.275
Market Value:
High $ 33.88 $ 33.20 $ 34.02 $ 32.75 $ 30.55
Low 27.82 30.67 27.70 27.30 24.51
Close 28.98 32.47 32.88 32.08 29.25
Book value 16.02 15.55 15.46 15.77 15.27
Shares outstanding,
end of period (000) 44,624 45,028 45,098 45,742 46,273
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Performance Ratios (annualized)
Net interest margin
(FTE) 4.45% 4.45% 4.48% 4.44% 4.26%
Return on average
assets 1.35 1.29 1.33 1.42 1.37
Return on average
shareholders' equity 14.48 13.94 14.42 15.56 15.56
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Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
June
2002 2001 % Change
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Summary of Operations (thousands)
Interest income $235,268 $303,818 (22.6)%
Interest expense 84,900 151,773 (44.1)
Net interest income 150,368 152,045 (1.1)
Provision for loan losses 14,650 10,411 40.7
Net interest income after
provision for loan losses 135,718 141,634 (4.2)
Noninterest income before securities
gains (losses) 52,962 51,029 3.8
Investment securities gains (losses) 2,379 5,723 --
Noninterest expense 122,712 126,327 (2.9)
Income taxes 18,905 21,106 (10.4)
Net income 49,442 50,953 (3.0)
----------------------------------------------------------------------
At Period End (millions)
Total assets $ 7,547 $ 7,924 (4.8)%
Total earning assets 7,160 7,450 (3.9)
Total loans 5,567 6,008 (7.3)
Total deposits 5,866 5,922 (0.9)
Total shareholders' equity 715 707 1.1
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Average Balances (millions)
Total assets $ 7,549 $ 8,119 (7.0)%
Total earning assets 7,154 7,605 (5.9)
Total loans 5,579 6,248 (10.7)
Total deposits 5,912 6,081 (2.8)
Total shareholders' equity 701 694 1.0
Shareholders' equity / assets 9.29% 8.55% 8.7
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Per Common Share Data
Net Income:
Basic $ 1.10 $ 1.10 0.0%
Diluted 1.09 1.09 0.0
Dividends 0.560 0.535 4.7
Market Value:
High $ 33.88 $ 30.55 10.9
Low 27.82 23.69 17.4
Close 28.98 29.25 (0.9)
Book value 16.02 15.27 4.9
Tangible book value per share 14.24 13.43 6.0
Shares outstanding, end of period (000) 44,624 46,273 (3.6)
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Performance Ratios (annualized)
Net interest margin (FTE)(1) 4.45% 4.18% 6.5%
Return on average assets 1.32 1.27 3.9
Return on average shareholders' equity 14.22 14.81 (4.0)
Net loans charged off as a percent
of average loans 0.52 0.29 79.3
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(1) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income of $7,253,000 and
$7,424,000 for the six months ended June 30, 2002 and 2001,
respectively, based on a tax rate of 35%.
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Noninterest Income and Noninterest Expenses (Unaudited)
Citizens Banking Corporation and Subsidiaries
Quarter Ended
--------------------------------------------
Jun 30 Mar 31 Dec 31 Sept 30 Jun 30
(in thousands) 2002 2002 2001 2001 2001
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NONINTEREST INCOME:
Service charges on
deposit accounts $ 6,515 $ 6,632 $ 6,929 $ 6,960 $ 7,181
Trust fees 5,030 4,858 5,168 5,096 5,269
Mortgage and other
loan income 2,872 4,025 3,764 2,840 4,461
Bankcard fees 1,929 2,758 2,767 2,922 3,204
Brokerage and
investment fees 2,633 2,050 2,224 2,030 2,035
Other 3,859 4,401 3,954 3,793 3,814
------- ------- ------- ------- -------
Total fees and
other income 22,838 24,724 24,806 23,641 25,964
Investment securities
gains (losses) (59) 2 423 49 245
------- ------- ------- ------- -------
Total before nonrecurring
items 22,779 24,726 25,229 23,690 26,209
Gain on sale of
merchant business 5,400 --- --- --- ---
Gain on sale of
NYCE stock --- --- --- 11,017 ---
Gain on securitized
mortgages 2,436 --- --- --- 3,259
Gain on sale of credit
card assets --- --- --- --- 2,623
Gain on sale of bank --- --- 793 --- ---
------- ------- ------- ------- -------
TOTAL NONINTEREST INCOME $30,615 $24,726 $26,022 $34,707 $32,091
------- ------- ------- ------- -------
------- ------- ------- ------- -------
OPERATING EXPENSES:
Salaries and employee
benefits $31,844 $32,200 $30,930 $32,304 $31,526
Equipment 4,956 4,858 4,631 4,655 5,077
Occupancy 4,584 4,615 4,159 4,174 4,453
Data processing services 3,250 3,125 3,142 3,496 3,288
Professional services 3,354 2,835 3,219 3,646 3,030
Bankcard fees 1,571 2,082 2,130 2,334 2,556
Intangible asset
amortization 724 725 2,525 2,530 2,531
Other 11,238 10,751 9,850 11,131 11,155
------- ------- ------- ------- -------
TOTAL NONINTEREST
EXPENSES $61,521 $61,191 $60,586 $64,270 $63,616
------- ------- ------- ------- -------
------- ------- ------- ------- -------
---------------------------------------------------------------------
Average Balances, Yields and Rates
Three Months Ended
-------------------------------------------
06/30/2002 03/31/2002
-------------------------------------------
Average Average Average Average
(in thousands) Balance Rate (1) Balance Rate (1)
---------------------------------------------------------------------
Earning Assets
Money market
investments $ 54,620 1.69 % $ 86,079 1.67 %
Investment
securities(2):
Taxable 1,001,223 5.83 842,657 5.87
Tax-exempt 418,178 7.85 419,629 7.89
Mortgage loans
held for sale 99,097 7.52 147,181 7.37
Loans:
Commercial 3,348,395 6.39 3,340,999 6.56
Real estate 702,178 7.23 807,369 7.07
Direct consumer 830,479 7.84 817,145 8.12
Indirect consumer 654,580 8.24 657,138 8.34
----------- -----------
Total earning
assets 7,108,750 6.80 7,118,197 6.92
Nonearning Assets
Cash and due from banks 172,645 187,363
Investment security
fair value adjustment 41,128 39,004
Other nonearning assets 290,302 301,076
Allowance for
loan losses (80,246) (80,933)
----------- -----------
Total assets $ 7,532,579 $ 7,564,707
=========== ===========
Interest-Bearing
Liabilities
Deposits:
Demand deposits $ 1,115,440 1.63 $ 1,068,838 1.57
Savings deposits 1,350,890 1.17 1,368,753 1.19
Time deposits 2,581,794 3.79 2,631,974 4.07
Short-term borrowings 213,653 1.69 232,045 1.69
Long-term debt 629,671 4.98 628,399 5.02
----------- -----------
Total interest-bearing
liabilities 5,891,448 2.83 5,930,009 2.96
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Demand deposits 851,867 854,106
Other liabilities 87,341 79,994
Shareholders' equity 701,923 700,598
----------- -----------
Total liabilities
and shareholders'
equity $ 7,532,579 $ 7,564,707
=========== ===========
Net Interest Spread 3.97 % 3.96 %
Net Interest Income
as a Percent of
Earning Assets 4.45 % 4.45 %
Three Months Ended
------------------
06/30/2001
------------------
Average Average
(in thousands) Balance Rate (1)
--------------------------------------------
Earning Assets
Money market
investments $ 59,083 4.46 %
Investment
securities(2):
Taxable 884,114 6.58
Tax-exempt 414,254 8.03
Mortgage loans
held for sale 101,237 8.81
Loans:
Commercial 3,491,726 8.13
Real estate 1,031,758 7.56
Direct consumer 851,823 9.34
Indirect consumer 691,980 8.73
-----------
Total earning
assets 7,525,975 8.04
Nonearning Assets
Cash and due from banks 191,927
Investment security
fair value adjustment 30,615
Other nonearning assets 309,193
Allowance for
loan losses (81,070)
-----------
Total assets $ 7,976,640
===========
Interest-Bearing
Liabilities
Deposits:
Demand deposits $ 668,939 1.98
Savings deposits 1,497,909 2.54
Time deposits 2,968,206 5.68
Short-term borrowings 614,617 5.21
Long-term debt 566,075 5.70
-----------
Total interest-bearing
liabilities 6,315,746 4.50
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Demand deposits 871,553
Other liabilities 89,463
Shareholders' equity 699,878
-----------
Total liabilities
and shareholders'
equity $ 7,976,640
===========
Net Interest Spread 3.54 %
Net Interest Income
as a Percent of
Earning Assets 4.26 %
Six Months Ended
-------------------------------------------
06/30/2002 06/30/2001
-------------------------------------------
Average Average Average Average
(in thousands) Balance Rate (1) Balance Rate (1)
---------------------------------------------------------------------
Earning Assets
Money market
investments $ 70,263 1.68% $ 41,395 4.82 %
Investment
securities(2):
Taxable 922,378 5.85 954,525 6.62
Tax-exempt 418,899 7.87 411,083 8.04
Mortgage loans
held for sale 123,007 7.44 80,060 8.21
Loans:
Commercial 3,344,717 6.47 3,491,399 8.39
Real estate 754,483 7.15 1,124,711 7.58
Direct consumer 823,849 7.99 853,292 9.57
Indirect consumer 655,852 8.29 699,073 8.78
----------- -----------
Total earning
assets 7,113,448 6.86 7,655,538 8.18
Nonearning Assets
Cash and due from banks 179,963 199,782
Investment security
fair value adjustment 40,072 30,245
Other nonearning assets 295,659 314,879
Allowance for
loan losses (80,588) (80,960)
----------- -----------
Total assets $ 7,548,554 $ 8,119,484
=========== ===========
Interest-Bearing
Liabilities
Deposits:
Demand deposits $ 1,092,268 1.60 $ 620,400 1.80
Savings deposits 1,359,772 1.18 1,542,476 2.86
Time deposits 2,606,745 3.93 3,037,908 5.86
Short-term borrowings 222,798 1.69 707,000 5.73
Long-term debt 629,039 5.00 552,397 5.86
----------- -----------
Total interest-bearing
liabilities 5,910,622 2.90 6,460,181 4.74
Noninterest-Bearing
Liabilities and
Shareholders' Equity
Demand deposits 852,980 879,553
Other liabilities 83,687 85,580
Shareholders' equity 701,265 694,170
----------- -----------
Total liabilities
and shareholders'
equity $ 7,548,554 $ 8,119,484
=========== ===========
Net Interest Spread 3.96 % 3.44 %
Net Interest Income
as a Percent of
Earning Assets 4.45 % 4.18 %
(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.
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