First Citizens BancShares (NASDAQ:FCNCA)
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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/