Citizens Banking Corporation Third 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)--Oct. 17, 2001 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 ) Highlights Include: -- Quarterly earnings of $28 million -- 11.1% increase in third quarter earnings per share -- Net interest margin increased to 4.44% -- 102.6% increase in mortgage income -- $11 million gain on sale of NYCE stock Citizens Banking Corporation (Nasdaq:CBCF) announced net income of $27,962,000 for the quarter ended September September: see month. 30, 2001, compared to $25,729,000 for 2000, an increase of 8.7%. 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 $0.60 up 11.1% from $0.54 for the same quarter of 2000. Returns on average assets and average equity for the quarter ended September 30, 2001 were 1.42% and 15.56%, respectively, compared with 1.25% and 15.58%, respectively, in 2000. For the nine months ended September 30, 2001, net income was $78,915,000, or $1.69 per share, compared to $70,305,000, or $1.47 per share, an increase of 15.0% on a per share basis. Return on average assets and average equity for the first nine months of the year were 1.32% and 15.05%, respectively, compared with 1.17% and 14.58%, respectively, in 2000. 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). Citizens' total assets at September 30, 2001 were $7.715 billion, a decrease of 2.6% from June June: see month. 30, 2001 and 6.8% from September 30, 2000. Assets declined due to Citizens' continued efforts to restructure the balance sheet to reduce interest rate risk and decrease reliance on borrowed funds. Citizens has reduced borrowed funds by selling the majority of new mortgage loan production into the secondary market and through the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. and subsequent sale of $247 million of mortgage loans in the first half of 2001. These actions have decreased average mortgage loan balances 24.4% in the current quarter from the same quarter of 2000, reduced reliance on borrowed funds and increased noninterest income and net interest margin. Citizens is continuing to transition and refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. its commercial loan portfolio at F&M to target markets consistent with its overall business strategy and at the same time implement Citizens' credit standards Credit Standards The guidelines a company follows to determine whether a credit applicant is creditworthy. and loan structuring criteria criteria (krītēr´ē  ),n. . As a result, commercial loans in the F&M markets have declined in the third quarter. The decline in the F&M markets along with generally slower growth in other markets due to the current economic conditions resulted in an overall decrease of 2.1% in average commercial loans in the third quarter compared with the second quarter. Average consumer loan balances in the third quarter were 1.2% lower than the previous quarter primarily due to the sale of $30 million of credit card loans in the 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). market at the end of the second quarter. Home equity loans continued to grow in the third quarter with 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. growth rate of 17.4% in the Michigan market and 8.1% overall. "Our sales program, that has proven so successful in the Michigan and 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. markets, is currently being implemented in the F&M markets. The training process is nearing completion and we hold high expectations for success in these markets," 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. Overall, average loans for the third quarter of 2001 were $6.025 billion compared to $6.169 billion for the second quarter, representing a 2.3% decrease. Average deposits decreased by 1.0% in the third quarter from the previous quarter levels. For the nine months ended September 30, 2001, total average loans increased .6% to $6.173 billion, while average deposits declined 1.1% to $6.034 billion compared to the same period in 2000. Noninterest Income Noninterest income rose to $34,707,000 during the third quarter, an increase of 49.5% compared to the same period in 2000. In August 2001, Citizens recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain from the sale of NYCE See New York Cotton Exchange. NYCE See New York Cotton Exchange (NYCE). stock of $11.0 million. NYCE Corporation, an ATM network provider in which Citizens held an equity interest, was acquired by First Data Corporation. Mortgage income continued to experience strong growth with an increase of 102.6% as a result of higher loan volume and a greater percentage of loans sold in the secondary market. Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and investment fees increased 15.9% resulting from deeper penetration The successful unauthorized breach of a security perimeter. See penetration test. in our F&M markets. Service charges on deposit accounts were up 2.0% in the third quarter over the same period a year ago. 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 were also up 2.0% from the comparable period due to higher merchant and debit card debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. volume despite the sale of the credit card portfolio in the second quarter of this year. Trust fees declined by 13.6% in the third quarter from the same quarter in 2000 due to the continued weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. in the equity
markets, lowering the value of managed assets upon which fees are based.For the nine months ended September 30, 2001, noninterest income increased 35.9%, over the same period last year. Excluding gains on the sale of NYCE stock and the credit card portfolio and investment securities gains, noninterest income increased 7.0% over the comparable period in 2000. This growth came primarily from mortgage and other loan income, bankcard fees, and deposit service charges. Net Interest Margin Net interest margin increased to 4.44% in the third quarter compared to 4.26% in the second quarter and 4.31% in the third quarter of 2000. "The continued decline in interest rates since January January: see month. 2001, has positively affected our net interest margin for the second consecutive quarter," remarked Mr. Vitito. Funding costs decreased 47 basis points in the third quarter 2001 compared to the second quarter while asset yields experienced a decrease of only 24 basis points. Net interest income increased $1.8 million from the previous quarter despite slightly lower earning asset Earning asset An asset that generates income, e.g., income from rental property. levels. Future decreases in short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. may affect Citizens' ability to continue the improvements in the net interest margin. Net interest margin for the first nine months of 2001 declined 13 basis points to 4.27% compared to 4.40% in 2000, while average earning asset levels were virtually unchanged from the same period of 2000. As a result, net interest income decreased 3.5% to $230.3 million for the nine months ended September 30, 2001, from the comparable period in 2000. 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 before the prior year special charge, increased 4.2%, from third quarter 2000 levels. Salaries and employee benefits increased 3.2% from the same period in 2000 due to normal merit increases and higher sales-based incentive compensation. Professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. increased $875,000 due to higher legal costs for loan and other collection activities, increased cost of technical support in the F&M banks and other corporate initiatives. For the nine months ended September 30, 2001, noninterest expenses before the special charge, increased by 3.2%, compared to the same period of the prior year. 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. decreased to $79.0 million, or 1.02% of total assets, at September 30, 2001, from $85.5 million, or 1.08% of total assets, at the end of second quarter. The allowance for loan losses increased to 1.36% of loans at September 30, 2001 from 1.33% at June 30, 2001. Net loans charged off during the third quarter were $8.5 million, or .56% on average loans (annualized), up from $5.5 million in the second quarter 2001 and $3.6 million in the third quarter 2000. The increase in net charge-offs occurred primarily within the commercial loan portfolio of the F&M banks. Net loans charged off for the first nine months of 2001 were $17.6 million or .38% of average loans (annualized) compared to $10.4 million, or .23%, for the same period in 2000. Net charge-offs are anticipated to decline in the fourth quarter. "We are encouraged to see the improvement in non-performing assets and are cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about overall net charge-offs," stated Mr. Vitito. "However, the economy remains soft and if this situation continues it may affect the credit quality of certain segments of our client base." Other News On July July: see month. 23, 2001, a definitive agreement was reached for the sale of F&M Bank - 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 to Frandsen Financial Corporation headquartered in Forrest For·rest , Nathan Bedford 1821-1877. American Confederate general who was active at the battles of Shiloh (1862) and Chickamauga (1863). He was a founder and the first leader (1866-1869) of the Ku Klux Klan. Lake, Minnesota. F&M Bank -Minnesota operates out of one location in Dundas, Minnesota Dundas is a city in Rice County, Minnesota, United States. The population was 547 at the 2000 census. The community was named for Dundas, Ontario, Canada. The town originally had a flour mill on the Cannon River, ruins of which can still be seen. and has total assets of $27 million. The sale of the bank received 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. approval in early October October: see month. and is expected to close sometime in November November: see month. . Citizens Banking Corporation ranked sixth among best performing Michigan-based companies in the July 30, 2001, issue of Crain's Detroit Detroit, city, United States Detroit (dĭtroit`), city (1990 pop. 1,027,974), seat of Wayne co., SE Mich., on the Detroit River and between lakes St. Clair and Erie; inc. as a city 1815. Business. Crain Crain may refer to:
Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants total return, revenue growth, net income growth and return on equity. On August 27, 2001, Citizens Bank Michigan was awarded Preferred Lenders Program status by the U.S. Small Business Administration. This status is granted after proven success in the certified See certification. lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. program, which Citizens earned in 1990. In addition to this recognition Citizens has greater lending opportunities and will have full authority to approve and service SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government loans in the state of Michigan. In September the Corporation announced that on behalf of Citizens Bank and F&M Bank, the company and the Citizens Banking Corporation Charitable Trust The arrangement by which real or Personal Property given by one person is held by another to be used for the benefit of a class of persons or the general public. would match up to $50,000 of staff member contributions (a total of company and staff funds up to $100,000). The donations will be given to the September 11th Fund The September 11th Fund was created by the New York Community Trust [1] and the United Way of New York City[2] in response to the destruction of the World Trade Center on 9/11/2001. , the American Red Cross American Red Cross: see Red Cross. Disaster Relief Fund and other funds that may be established to aid the victims and their families. During the third quarter of 2001 Citizens repurchased a total of 751,100 shares of its stock. Since the plan was announced in May 2000, Citizens has repurchased 2,408,200 shares at an average price of $25.28. Earnings Outlook Looking forward to the remainder of 2001, Citizens is anticipating full-year 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 $2.24 to $2.26 range. 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 203 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, 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. 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) Visit our Website at http://www.citizensonline.com
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Consolidated Balance Sheets (Unaudited)
Citizens Banking Corporation and Subsidiaries
September 30, December 31,
(in thousands) 2001 2000
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Assets
Cash and due from banks $ 212,210 $ 318,115
Money market investments:
Federal funds sold 4,306 24,986
Commercial paper 36,262 ---
Interest-bearing deposits with banks 2,502 2,547
----------- -----------
Total money market investments 43,070 27,533
Securities available-for-sale:
Taxable 830,507 965,590
Nontaxable 448,381 418,518
----------- -----------
Total securities 1,278,888 1,384,108
Loans 5,981,642 6,422,806
Less: Allowance for loan losses (81,355) (80,070)
----------- -----------
Net loans 5,900,287 6,342,736
Premises and equipment 130,551 137,094
Intangible assets 82,616 90,808
Other assets 67,019 104,697
----------- -----------
Total assets $ 7,714,641 $ 8,405,091
=========== ===========
Liabilities and Shareholders' Equity
Noninterest-bearing deposits $ 854,334 $ 973,938
Interest-bearing deposits 5,035,902 5,270,203
----------- -----------
Total deposits 5,890,236 6,244,141
Federal funds purchased and securities
sold under agreements to repurchase 155,213 394,466
Other short-term borrowings 201,969 538,784
Other liabilities 100,066 76,604
Long-term debt 645,967 471,117
----------- -----------
Total liabilities 6,993,451 7,725,112
Shareholders' Equity
Preferred stock - no par value:
Common stock - no par value: 175,288 201,549
Retained earnings 508,013 466,692
Other accumulated comprehensive net income 37,889 11,738
----------- -----------
Total shareholders' equity 721,190 679,979
----------- -----------
Total liabilities and
shareholders' equity $ 7,714,641 $ 8,405,091
=========== ===========
Consolidated Statements of Income (Unaudited)
Citizens Banking Corporation and Subsidiaries
Three Months Ended Nine Months Ended
(in thousands, except September 30, September 30,
per share amounts) 2001 2000 2001 2000
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Interest Income
Interest and fees on loans $ 121,137 $ 138,835 $ 381,614 $ 395,506
Interest and dividends on
investment securities:
Taxable 12,973 16,380 44,562 50,024
Nontaxable 5,499 5,094 16,238 15,210
Money market investments 797 38 1,810 99
--------- --------- --------- ---------
Total interest income 140,406 160,347 444,224 460,839
--------- --------- --------- ---------
Interest Expense
Deposits 48,653 59,676 164,314 166,284
Short-term borrowings 4,761 14,959 24,821 44,251
Long-term debt 8,732 6,087 24,784 11,690
--------- --------- --------- ---------
Total interest expense 62,146 80,722 213,919 222,225
--------- --------- --------- ---------
Net Interest Income 78,260 79,625 230,305 238,614
Provision for loan losses 8,500 4,642 18,911 15,088
--------- --------- --------- ---------
Net interest income after
provision for loan losses 69,760 74,983 211,394 223,526
--------- --------- --------- ---------
Noninterest Income
Service charges on
deposit accounts 6,960 6,825 20,844 19,553
Trust fees 5,096 5,901 15,860 18,312
Mortgage and other loan income 2,840 1,402 9,395 3,485
Bankcard fees 2,922 2,865 9,032 8,226
Brokerage and investment fees 2,030 1,752 5,933 5,770
Investment securities
gains (losses) 49 (5) 5,772 (6)
Gain on sale of NYCE stock 11,017 --- 11,017 ---
Gain on sale of
credit card assets --- --- 2,623 ---
Other 3,793 4,470 10,983 11,983
--------- --------- --------- ---------
Total noninterest income 34,707 23,210 91,459 67,323
--------- --------- --------- ---------
Noninterest Expense
Salaries and employee benefits 32,304 31,309 95,348 94,501
Equipment 4,655 4,824 14,686 14,222
Occupancy 4,174 4,009 13,554 12,660
Data processing fees 3,496 3,223 9,959 8,936
Professional services 3,646 2,771 9,058 7,779
Intangible asset amortization 2,704 2,615 8,163 7,858
Bankcard fees 2,334 2,202 7,178 6,713
Special charge --- (99) --- 7,189
Other 10,957 10,717 32,651 31,973
--------- --------- --------- ---------
Total noninterest expense 64,270 61,571 190,597 191,831
--------- --------- --------- ---------
Income Before Income Taxes 40,197 36,622 112,256 99,018
Income taxes 12,235 10,893 33,341 28,713
--------- --------- --------- ---------
Net Income $ 27,962 $ 25,729 $ 78,915 $ 70,305
========= ========= ========= =========
Net Income Per Share:
Basic $ 0.60 $ 0.54 $ 1.70 $ 1.48
Diluted 0.60 0.54 1.69 1.47
Diluted - operating income 0.60 0.54 1.69 1.57
Average Shares Outstanding:
Basic 46,102 47,235 46,321 47,495
Diluted 46,670 47,518 46,799 47,659
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Selected Quarterly Information
Citizens Banking Corporation and Subsidiaries
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
2001 2001 2001 2000 2000
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Summary of
Operations (thousands)
Interest income $140,406 $147,260 $156,558 $161,169 $160,347
Interest expense 62,146 70,835 80,938 84,909 80,722
Net interest income 78,260 76,425 75,620 76,260 79,625
Provision for loan losses 8,500 6,362 4,049 5,895 4,642
Net interest income
after provision for
loan losses 69,760 70,063 71,571 70,365 74,983
Noninterest income
before securities
gains (losses)(a) 34,658 28,587 22,442 23,015 23,215
Investment securities
gains (losses) 49 3,504 2,219 6 (5)
Noninterest expense before
special charge(a) 64,270 63,616 62,711 57,579 61,670
Special charge:
Before-tax --- --- --- 8,352 (99)
After-tax --- --- --- 5,101 (40)
Income taxes 12,235 11,390 9,716 7,100 10,893
Net income 27,962 27,148 23,805 20,355 25,729
Net operating income(b) 27,962 27,148 23,805 25,456 25,689
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At Period End (millions)
Total assets $7,715 $7,924 $8,199 $8,405 $8,276
Total earning assets 7,304 7,450 7,754 7,834 7,774
Total loans 5,982 6,110 6,183 6,423 6,406
Total deposits 5,890 5,922 6,118 6,244 6,154
Total shareholders' equity 721 707 702 680 665
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Average Balances (millions)
Total assets $7,809 $7,977 $8,264 $8,244 $8,164
Total earning assets 7,388 7,557 7,816 7,771 7,683
Total loans 6,025 6,169 6,329 6,393 6,311
Total deposits 5,944 6,007 6,155 6,180 6,159
Total shareholders' equity 713 700 688 668 657
Shareholders' equity/assets 9.13% 8.78% 8.33% 8.10% 8.05%
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Credit Quality
Statistics (thousands)
Nonaccrual loans $66,875 $75,067 $67,258 $59,415 $48,422
Loans 90 or more days past
due and still accruing 4,665 4,460 872 889 1,189
Restructured loans 171 625 954 1,068 1,295
------- ------- ------- ------- -------
Total nonperforming
loans 71,711 80,152 69,084 61,372 50,906
Other repossessed
assets acquired (ORAA) 7,325 5,315 4,440 4,917 3,178
------- ------- ------- ------- -------
Total nonperforming
assets $79,036 $85,467 $73,524 $66,289 $54,084
======= ======= ======= ======= =======
Allowance for loan
losses ratio 1.36% 1.33% 1.30% 1.25% 1.27%
Allowance for loan
losses as a percent
of nonperforming assets 102.93 95.18 109.45 120.79 149.90
Allowance for loan
losses as a percent
of nonperforming loans 113.45 101.50 116.48 130.47 159.26
Nonperforming assets as
a percent of total
loans plus ORAA 1.32 1.40 1.19 1.03 0.84
Nonperforming assets as
a percent of total assets 1.02 1.08 0.90 0.79 0.65
Net loans charged off as
a percent of average
loans (annualized) 0.56 0.36 0.23 0.43 0.23
Net loans charged
off (000) $8,496 $5,481 $3,649 $6,899 $3,615
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Per Common Share Data
Net Income (loss):
Basic $0.60 $0.59 $0.51 $0.44 $0.54
Diluted 0.60 0.58 0.51 0.44 0.54
Diluted - net operating
income(b) 0.60 0.58 0.51 0.54 0.54
Dividends 0.275 0.275 0.26 0.26 0.26
Market Value:
High $32.75 $30.55 $29.38 $29.81 $23.94
Low 27.30 24.51 23.69 21.19 16.00
Close 32.08 29.25 26.69 29.06 23.00
Book value 15.77 15.27 15.13 14.62 14.15
Shares outstanding,
end of period (000) 45,742 46,273 46,428 46,510 47,011
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Performance
Ratios (annualized)
Net interest margin (FTE) 4.44% 4.26% 4.10% 4.09% 4.31%
Return on average assets 1.42 1.37 1.17 0.98 1.25
Return on average assets
- net operating income(b) 1.42 1.37 1.17 1.23 1.25
Return on average
shareholders' equity 15.56 15.56 14.03 12.12 15.58
Return on average
shareholders' equity
- net operating income(b) 15.56 15.56 14.03 15.16 15.56
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(a) Certain amounts have been reclassified to conform with current
year presentation.
(b) Net operating income is based on net income that excludes special
charges incurred in connection with acquisitions and other
corporate initiatives.
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Financial Summary and Comparison
Citizens Banking Corporation and Subsidiaries
Nine Months Ended
September 30
2001 2000 % Change
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Summary of Operations (thousands)
Interest income $444,224 $460,839 (3.6) %
Interest expense 213,919 222,225 (3.7)
Net interest income 230,305 238,614 (3.5)
Provision for loan losses 18,911 15,088 25.3
Net interest income after
provision for loan losses 211,394 223,526 (5.4)
Noninterest income before
securities gains (losses) (1) 85,687 67,329 27.3
Investment securities gains (losses) 5,772 (6) ---
Noninterest expense before
special charge (1) 190,597 184,642 3.2
Special charge:
Before-tax --- 7,189 ---
After-tax --- 4,363 ---
Income taxes 33,341 28,713 16.1
Net income 78,915 70,305 12.2
Net operating income (2) 78,915 74,668 5.7
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At Period End (millions)
Total assets $7,715 $8,276 (6.8) %
Total earning assets 7,304 7,774 (6.0)
Total loans 5,982 6,406 (6.6)
Total deposits 5,890 6,154 (4.3)
Total shareholders' equity 721 665 8.4
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Average Balances (millions)
Total assets $8,015 $8,016 0.0 %
Total earning assets 7,585 7,523 0.8
Total loans 6,173 6,138 0.6
Total deposits 6,034 6,102 (1.1)
Total shareholders' equity 701 644 8.9
Shareholders' equity / assets 8.75 % 8.03 % 9.0
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Per Common Share Data
Net Income:
Basic $1.70 $1.48 14.9 %
Diluted 1.69 1.47 15.0
Diluted - net operating income (2) 1.69 1.57 7.6
Dividends 0.81 0.755 7.3
Market Value:
High $32.75 $23.94 36.8
Low 23.69 15.50 52.8
Close 32.08 23.00 39.5
Book value 15.77 14.15 11.4
Shares outstanding, end of period (000) 45,742 47,011 (2.7)
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Cash Earnings Summary (2) (3)
Cash operating income $83,078 $78,905 5.3 %
Diluted earnings per share 1.78 1.66 7.2
Tangible Book value per share 13.96 12.15 14.9
Return on average assets 1.39 % 1.31 % 6.1
Return on average equity 15.86 16.35 (3.0)
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Performance Ratios (annualized)
Net interest margin (FTE) (4) 4.27 % 4.40 % (3.0) %
Return on average assets 1.32 1.17 12.8
Return on average assets - net
operating income (2) 1.32 1.24 6.5
Return on average shareholders' equity 15.05 14.58 3.2
Return on average shareholders'
equity - net operating income (2) 15.05 15.49 (2.8)
Net loans charged off as a
percent of average loans 0.38 0.23 65.2
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(1) Certain amounts have been reclassified to conform with current
year presentation.
(2) Net operating income is based on net income that excludes special
charges incurred in connection with acquisitions and other corporate
initiatives.
(3) Cash earnings exclude the effect of goodwill amortization expense
arising from previous mergers accounted for as a purchase.
(4) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income of $11,132,000 and
$10,453,000 for the nine months ended September 30, 2001 and 2000,
respectively, based on a tax rate of 35%.
--------------------------------------------------------------------
Other Noninterest Income and Noninterest Expenses (Unaudited)
Citizens Banking Corporation and Subsidiaries
Quarter Ended
Sept 30 Jun 30 Mar 31 Dec 31 Sept 30
(in thousands) 2001 2001 2001 2000 2000
--------------------------------------------------------------------
OTHER NONINTEREST INCOME:
Service charges
on deposit
accounts $ 6,960 $ 7,181 $ 6,703 $ 6,707 $ 6,825
Trust fees 5,096 5,269 5,495 5,941 5,901
Bankcard fees 2,922 3,204 2,906 3,032 2,865
Mortgage and
other loan income 2,840 4,461 2,094 1,512 1,402
Brokerage and
investment fees 2,030 2,035 1,868 1,923 1,752
Other service
charges and fees 3,793 3,814 3,376 3,900 4,470
-------- -------- -------- -------- --------
Subtotal 23,641 25,964 22,442 23,015 23,215
Investment
securities
gains (losses) 49 3,504 2,219 6 (5)
Gain on sale
of NYCE stock 11,017 -- -- -- --
Gain on sale of
credit card assets -- 2,623 -- -- --
-------- -------- -------- -------- --------
TOTAL NONINTEREST
INCOME $ 34,707 $ 32,091 $ 24,661 $ 23,021 $ 23,210
======== ======== ======== ======== ========
OPERATING
EXPENSES:
Salaries and
employee
benefits $ 32,304 $ 31,526 $ 31,518 $ 28,076 $ 31,309
Equipment 4,655 5,077 4,954 5,042 4,824
Occupancy 4,174 4,453 4,927 4,110 4,009
Professional
services 3,646 3,030 2,382 2,309 2,771
Data processing
services 3,496 3,288 3,175 3,672 3,223
Intangible asset
amortization 2,704 2,770 2,689 2,875 2,615
Bankcard fees 2,334 2,556 2,288 2,246 2,202
Other 10,957 10,916 10,778 9,249 10,717
-------- -------- -------- -------- --------
Subtotal 64,270 63,616 62,711 57,579 61,670
Special charge -- -- -- 8,352 (99)
-------- -------- -------- -------- --------
TOTAL NONINTEREST
EXPENSES $ 64,270 $ 63,616 $ 62,711 $ 65,931 $ 61,571
======== ======== ======== ======== ========
----------------------------------------------------------------------
Average Balances, Yields and Rates
Three Months Ended
----------------------------------------------------
09/30/2001 06/30/2001 09/30/2000
----------------------------------------------------
Average Average Average Average Average Average
(in thousands) Balance Rate(a) Balance Rate(a) Balance Rate(a)
----------------------------------------------------------------------
Earning Assets
Money market
investments $ 88,729 3.54% $ 60,677 4.68% $ 3,081 4.94%
Investment
securities(b):
Taxable 801,660 6.47 882,520 6.56 991,962 6.60
Tax-exempt 429,847 7.87 414,254 8.03 394,115 7.95
Loans:
Commercial 3,418,443 7.78 3,491,726 8.13 3,311,636 8.99
Real estate 1,080,452 7.78 1,132,995 7.68 1,429,646 7.80
Consumer 1,525,911 8.79 1,543,803 9.06 1,569,271 9.36
---------- ---------- ----------
Total earning
assets 7,345,042 7.80 7,525,975 8.04 7,699,711 8.48
Nonearning Assets
Cash and due
from banks 205,544 191,927 223,415
Investment
security fair
value adjustment 43,086 30,615 (17,044)
Other nonearning
assets 297,228 309,193 338,996
Allowance for
loan losses (81,807) (81,070) (80,881)
---------- ---------- ----------
Total
assets $ 7,809,093 $ 7,976,640 $ 8,164,197
========== ========== ==========
Interest-Bearing
Liabilities
Deposits:
Demand
deposits $ 805,186 2.15 $ 668,939 1.98 $ 568,706 1.39
Savings
deposits 1,420,092 2.14 1,497,909 2.54 1,662,669 3.31
Time deposits 2,829,613 5.14 2,968,206 5.68 2,966,068 5.88
Short-term
borrowings 420,964 4.48 614,617 5.21 888,866 6.68
Long-term debt 638,912 5.42 566,075 5.70 379,073 6.39
---------- ---------- ----------
Total interest-
bearing
liabilities 6,114,767 4.03 6,315,746 4.50 6,465,382 4.96
Noninterest-
Bearing
Liabilities and
Shareholders'
Equity
Demand deposits 888,822 871,553 961,961
Other liabilities 92,450 89,463 79,759
Shareholders'
equity 713,054 699,878 657,095
---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $ 7,809,093 $ 7,976,640 $ 8,164,197
========== ========== ==========
Net Interest
Spread 3.77% 3.54% 3.52%
Net Interest
Income as a
Percent of
Earning Assets 4.44% 4.26% 4.31%
----------------------------------------------------------------------
Nine Months Ended
-----------------------------------------
09/30/2001 09/30/2000
-----------------------------------------
Average Average Average Average
(in thousands) Balance Rate(a) Balance Rate(a)
----------------------------------------------------------------------
Earning Assets
Money market investments $ 57,878 4.15% $ 2,552 5.16%
Investment securities(b):
Taxable 902,479 6.58 1,019,957 6.54
Tax-exempt 417,406 7.98 390,014 7.99
Loans:
Commercial 3,466,813 8.18 3,086,807 8.88
Real estate 1,162,876 7.68 1,532,014 7.65
Consumer 1,543,450 9.08 1,519,124 9.20
----------- -----------
Total earning assets 7,550,902 8.05 7,550,468 8.33
Nonearning Assets
Cash and due from banks 201,724 224,719
Investment security fair
value adjustment 34,572 (27,950)
Other nonearning assets 308,930 348,357
Allowance for loan losses (81,245) (80,090)
----------- -----------
Total assets $ 8,014,883 $ 8,015,504
=========== ===========
Interest-Bearing Liabilities
Deposits:
Demand deposits $ 682,672 1.94 $ 587,167 1.44
Savings deposits 1,501,233 2.63 1,726,156 3.18
Time deposits 2,967,714 5.63 2,835,445 5.60
Short-term borrowings 610,607 5.42 947,365 6.22
Long-term debt 581,552 5.70 246,212 6.34
----------- -----------
Total interest-bearing
liabilities 6,343,778 4.51 6,342,345 4.68
Noninterest-Bearing Liabilities
and Shareholders' Equity
Demand deposits 882,677 952,773
Other liabilities 87,894 75,944
Shareholders' equity 700,534 644,442
----------- -----------
Total liabilities and
shareholders' equity $ 8,014,883 $ 8,015,504
=========== ===========
Net Interest Spread 3.54% 3.65%
Net Interest Income as a
Percent of Earning Assets 4.27% 4.40%
----------------------------------------------------------------------
(a) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income.
(b) 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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