First Citizens Reports Earnings for Third Quarter 2003 RALEIGH,
N.C., Oct. 27 /PRNewswire-FirstCall/ -- First Citizens BancShares
Inc. reports earnings for the quarter ending Sept. 30, 2003, of
$20.3 million compared to $23.8 million for the corresponding
period of 2002, a reduction of 14.7 percent, according to Lewis R.
Holding, chairman of the board. Per share income for the third
quarter 2003 totaled $1.94 compared to $2.27 for the same period a
year ago. First Citizens' results generated an annualized return on
average assets of 0.66 percent for the third quarter of 2003,
compared to 0.80 percent for the same period of 2002. The
annualized return on average equity was 8.03 percent during the
current quarter, compared to 10.09 percent for the same period of
2002. During the third quarter, a reduction in net interest income
and higher noninterest expenses more than offset the favorable
impact of improved noninterest income and lower income tax expense.
During the third quarter of 2003, net interest income decreased
$5.3 million or 5.5 percent from the same period of 2002. The
reduction in net interest income was due to the unfavorable impact
of lower interest rates on interest-earning assets. The
taxable-equivalent yield on interest-earning assets fell 104 basis
points to 4.51 percent during the third quarter of 2003 when
compared to the same period of 2002, while the rate on total
interest-bearing liabilities fell 76 basis points to 1.50 percent.
The taxable-equivalent net yield on interest-earning assets fell
from 3.60 percent for the third quarter of 2002 to 3.28 percent for
the third quarter of 2003. Average interest-earning assets
increased $401.9 million or 3.8 percent during the third quarter of
2003 when compared to the same period of 2002. Noninterest expense
increased $10.3 million or 9.5 percent during the third quarter of
2003. Salary expense increased $3.8 million or 7.9 percent during
2003 due to the continued expansion of Atlantic States Bank's
franchise and higher incentive-based compensation. Employee benefit
expense increased $1.3 million or 12.2 percent due to higher
pension expense and health insurance costs. Equipment expense
increased $2.0 million or 17.6 percent, the result of higher
depreciation and maintenance costs from continuing technology
investments. Noninterest income increased $7.6 million or 13.7
percent during the third quarter, the result of strong refinance
activity. Mortgage income increased $2.5 million or 88.7 percent
from the third quarter of 2002. Cardholder and merchant services
income increased $1.9 million or 14.5 percent due to favorable
volume growth. Income tax expense during the third quarter was $7.9
million for 2003 and $13.2 million for 2002. The $5.3 million or
39.9 percent reduction was primarily due to lower pre-tax income
and adjustments to valuation reserves for deferred taxes. The
provision for loan losses increased $761,000 or 13.6 percent from
the third quarter of 2002 to the same period of 2003 due to higher
loss estimates following recent loan growth. Net charge-offs were
$4.0 million during the third quarter of 2003, compared to $4.5
million during the same period of 2002, an 11.1 percent reduction.
For the nine-month period ending Sept. 30, 2003, net income was
$59.4 million, or $5.68 per share, compared to $73.4 million, or
$7.01 per share earned during the same period of 2002. Annualized
net income for 2003 represents 0.65 percent of average assets
compared to 0.83 percent for 2002. The annualized return on average
equity was 8.02 percent for the first nine months of 2003, compared
to 10.72 percent for the same period of 2002. Year-to-date net
interest income for 2003 decreased $20.5 million or 7.1 percent
from the same period of 2002. During 2003, the unfavorable impact
of lower interest rates more than offset the benefit of growth
among interest- earning assets. The taxable-equivalent net yield on
interest-earning assets fell from 3.70 percent to 3.32 percent
during 2003. Noninterest income increased $21.4 million or 12.9
percent during the first nine months of 2003, the result of
improved cardholder and merchant services income and mortgage
income. Noninterest income also included a $5.7 million
nonrecurring gain on the sale of branch offices. Noninterest
expense increased $24.9 million or 7.7 percent during the first
nine months of 2003, the result of higher personnel expenses as
well as higher equipment and occupancy costs. For the nine-month
period ending Sept. 30, the provision for loan losses was $19.1
million and $19.4 million for 2003 and 2002, respectively. The
reduction in the provision for loan losses resulted from lower
levels of net charge-offs. Net charge-offs were $13.9 million and
$14.9 million during the respective nine-month periods, a reduction
of $1.0 million or 6.8 percent during 2003. Year-to-date net
charge-offs represent 0.24 percent of average loans outstanding
during 2003, compared to 0.27 percent for the same period of 2002.
As of Sept. 30, 2003, First Citizens had total assets of $12.4
billion. First Citizens Bank has 348 branches in North Carolina,
Virginia and West Virginia. Atlantic States Bank and its western
division IronStone Bank have 46 branches in Georgia, Florida,
Texas, Arizona and California. For more information, visit the
First Citizens Web site at firstcitizens.com. This news release may
contain forward-looking statements. A discussion of factors that
could cause First Citizens' actual results to differ materially
from those expressed in such forward-looking statements is included
in First Citizens' filings with the SEC. CONDENSED STATEMENTS OF
INCOME Three Months Ended Nine Months Ended September 30 September
30 (thousands, except share data; unaudited) 2003 2002 2003 2002
Interest income $124,887 $147,742 $385,134 $455,661 Interest
expense 34,573 52,127 116,236 166,306 Net interest income 90,314
95,615 268,898 289,355 Provision for loan losses 6,353 5,592 19,108
19,394 Net interest income after provision for loan losses 83,961
90,023 249,790 269,961 Noninterest income 63,205 55,571 186,540
165,155 Noninterest expense 118,947 108,614 346,204 321,335 Income
before income taxes 28,219 36,980 90,126 113,781 Income taxes 7,922
13,190 30,763 40,366 Net income $20,297 $23,790 $59,363 $73,415
Taxable-equivalent net interest income $90,568 $95,932 $269,694
$290,388 Net income per share $1.94 $2.27 $5.68 $7.01 Cash
dividends per share 0.275 0.250 0.825 0.750 Profitability
Information (annualized) Return on average assets 0.66 % 0.80 %
0.65 % 0.83 % Return on average equity 8.03 10.09 8.02 10.72
Taxable-equivalent net yield on interest-earning assets 3.28 3.60
3.32 3.70 CONDENSED BALANCE SHEETS (thousands, except share data;
September 30 December 31 September 30 unaudited) 2003 2002 2002
Cash and due from banks $790,166 $811,657 $801,450 Investment
securities 2,646,829 2,539,236 2,502,026 Loans 8,026,502 7,620,263
7,521,834 Reserve for loan losses (117,747) (112,533) (111,577)
Other assets 1,041,531 1,373,267 1,373,419 Total assets $12,387,281
$12,231,890 $12,087,152 Deposits $10,563,135 $10,439,620
$10,286,825 Other liabilities 807,718 824,979 850,456 Shareholders'
equity 1,016,428 967,291 949,871 Total liabilities and
shareholders' equity $12,387,281 $12,231,890 $12,087,152 Book value
per share $97.39 $92.36 $90.67 Tangible book value per share 87.02
81.73 80.23 SELECTED AVERAGE BALANCES Three Months Ended Nine
Months Ended September 30 September 30 (thousands, except shares
outstanding; unaudited) 2003 2002 2003 2002 Total assets
$12,287,273 $11,871,334 $12,177,404 $11,764,711 Investment
securities 2,665,203 2,553,957 2,579,562 2,632,761 Loans 7,946,501
7,450,271 7,801,418 7,324,359 Interest-earning assets 10,994,308
10,592,386 10,876,224 10,480,111 Deposits 10,441,989 10,060,785
10,373,902 9,925,071 Interest-bearing liabilities 9,126,076
9,131,569 9,159,017 9,093,797 Shareholders' equity $1,002,712
$935,735 $989,121 $915,387 Shares outstanding 10,436,345 10,477,886
10,457,976 10,480,011 ASSET QUALITY September 30 December 31
September 30 (dollars in thousands; unaudited) 2003 2002 2002
Nonaccrual loans $13,494 $15,521 $14,944 Other real estate 6,827
7,330 12,092 Total nonperforming assets $20,321 $22,851 $27,036
Accruing loans 90 days or more past due $11,840 $9,566 $8,928 Net
charge-offs (year-to-date) $13,894 21,104 $14,904 Nonperforming
assets to gross loans plus other real estate 0.25 % 0.30 % 0.36%
Reserve for loan losses to gross loans 1.47 1.48 1.48 Net
charge-offs to average total loans (annualized, year-to-date) 0.24
0.29 0.27 CAPITAL INFORMATION (dollars in thousands; September 30
December 31 September 30 unaudited) 2003 2002 2002 Tier 1 capital
$1,147,124 $1,096,537 $1,084,714 Total capital 1,262,501 1,204,142
1,191,150 Risk-weighted assets 8,618,154 8,123,321 8,086,739 Tier 1
capital ratio 13.31 % 13.50 % 13.41 % Total capital ratio 14.65
14.82 14.73 Leverage capital ratio 9.42 9.17 9.22 2002 data has
been restated to reflect the adoption of Statement of Financial
Accounting Standards No. 147, which was adopted during the fourth
quarter of 2002 with a retroactive effective date of January 1,
2002. DATASOURCE: First Citizens BancShares, Inc. CONTACT: Barbara
Thompson of First Citizens Bank, +1-919-716-2716 Web site:
http://www.firstcitizens.com/
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