FLINT, Mich., April 20 /PRNewswire-FirstCall/ -- Citizens Banking
Corporation (NASDAQ:CBCF) announced net income of $20.8 million for
the three months ended March 31, 2006. This represents an increase
of $1.9 million or 9.9% over the fourth quarter of 2005 net income
of $18.9 million and an increase of $0.7 million or 3.4% over the
first quarter of 2005 net income of $20.1 million. Diluted net
income per share was $0.48, compared with $0.44 for the fourth
quarter of 2005 and $0.46 for the same quarter of last year.
Annualized returns on average assets and average equity during the
first quarter of 2006 were 1.10% and 12.86%, respectively, compared
with 0.97% and 11.46% for the fourth quarter of 2005 and 1.05% and
12.54% for the first quarter of 2005. "During the first quarter, we
were able to continue our commercial loan growth while emphasizing
credit quality despite a highly competitive environment. We
recently announced our strategic objectives for 2006. These include
generating low-cost deposits; providing extraordinary client
service; improving the effectiveness of the operating model in our
community markets; and continuing to grow loans, deposits, and
fee-based services, while maintaining a strong risk management
focus," stated William R. Hartman, chairman, president and CEO.
"Given the challenges of the current rate and economic
environments, we believe that this strategy will enable us to
maintain a strong balance sheet while generating increased
earnings," continued Hartman. Key Highlights in the Quarter: * Net
interest margin increased two basis points to 3.97% compared with
the fourth quarter of 2005 and increased one basis point compared
with the first quarter of 2005, reflecting disciplined product
pricing and effective balance sheet and risk management practices.
* Nonperforming assets decreased $3.4 million or 8.5% from the
fourth quarter of 2005 to $36.5 million at March 31, 2006 and the
nonperforming asset ratio improved to 0.65%, its lowest level in
four years, from 0.71% at December 31, 2005. The decrease reflects
reductions in nonperforming commercial, consumer and mortgage loans
and other repossessed assets acquired, which was partially offset
by an increase in restructured loans. * Commercial loan growth in
several traditional Michigan and Wisconsin markets, along with
Southeast Michigan, more than offset declines in other markets. In
total, average commercial loans increased $36.3 million or 1.2%
over the fourth quarter of 2005 and increased by $155.2 million or
4.0% over the first quarter of 2005. * During late March 2006,
Citizens created the Citizens Bank Business Finance lending
division as part of its strategy to expand the commercial loan
portfolio, augment its commercial lending product set, and enhance
its credit management capabilities. The Citizens Bank Business
Finance team is managed and staffed by well-seasoned and
highly-experienced asset-based lending professionals located in
Southeast Michigan. * Trust fees for the first quarter of 2006 were
$5.0 million, an increase of 1.1% over the fourth quarter of 2005
and an increase of $0.6 million or 14.3% over the first quarter of
2005. The increases were attributable to stronger financial
markets, continued execution of the sales management process and
improved pricing discipline, partially offset by attrition. This
marks the fourth consecutive quarterly increase in trust fees. * On
March 13, 2006, Citizens announced a strategic alliance with PHH
Mortgage, a leading provider of private label mortgage services.
PHH Mortgage will provide mortgage loan processing, servicing,
secondary marketing functions, and other mortgage-related loan
services. Once fully implemented, Citizens expects the PHH alliance
will improve cost-effectiveness, expand product capability and
enhance sales execution by increasing opportunities for origination
through multiple channels. The alliance is expected to be fully
implemented by the end of June 2006. * Citizens expanded its
footprint in Southeast Michigan with the opening of new branch
facilities in Novi, Michigan and Royal Oak, Michigan. Both offices
are staffed with commercial, consumer, and mortgage personnel. *
Citizens fully recognized a deferred gain of $2.9 million on the
2004 sale of its former downtown Royal Oak office, which was
deferred due to leaseback restrictions. The gain was offset by a
$1.5 million contribution to Citizens' charitable foundation;
severance related to the PHH alliance and loan operations
consolidation; additional advertising and consulting; and
corporate-wide conferences and communications related to Citizens'
new strategic objectives. Balance Sheet Citizens' total assets at
March 31, 2006 were $7.7 billion, a decrease of $88.6 million or
1.1% compared with December 31, 2005 and a decrease of $113.4
million or 1.5% from March 31, 2005. Commercial loan growth in
several traditional Michigan and Wisconsin markets, along with
Southeast Michigan, was partially offset by declines in other
markets, resulting in total growth in average commercial loans of
$36.3 million or 1.2% over the fourth quarter of 2005 and growth of
$155.2 million or 4.0% over the first quarter of 2005. The decrease
from December 31, 2005 was due to a decline in the investment
portfolio as a result of using portfolio cash flow to reduce
short-term borrowings and a decline in the consumer loan portfolio
due to weak consumer demand in most of Citizens' markets. The
decrease from March 31, 2005 was due to a decline in the investment
portfolio, partially offset by growth in the commercial loan
portfolio. Commercial and commercial real estate loans at March 31,
2006 increased $17.4 million or 0.6% from December 31, 2005 to $3.1
billion and increased $167.2 million or 5.7% compared with March
31, 2005. These improvements were a result of the sales management
process, new relationships in traditional Michigan and Wisconsin
markets, and continued strong growth in the Southeast Michigan
market. Residential mortgage loans at March 31, 2006 increased $9.3
million or 1.7% from December 31, 2005 to $549.1 million and
increased $53.2 million or 10.7% compared with March 31, 2005. The
increases in the mortgage portfolio were primarily the result of
retaining most new adjustable-rate mortgage (ARM) production.
Citizens continues to sell most new fixed rate production into the
secondary market. Total consumer loans, which are comprised of
direct and indirect loans, were $1.9 billion at March 31, 2006, a
decrease of $50.8 million or 2.6% from December 31, 2005 and a
decrease of $58.2 million or 2.9% from March 31, 2005. Direct
consumer loans declined by $32.8 million or 2.9% from December 31,
2005 and decreased $64.0 million or 5.5% from March 31, 2005. The
declines were due to a decrease in historically strong activity
where consumers repay their installment loans using home equity
loans and weaker consumer demand in Citizens' markets. Indirect
consumer loans declined $18.0 million or 2.1% from December 31,
2005 as a result of a decrease in seasonal interest in indirect
products and increased $5.8 million or 0.7% from March 31, 2005 as
a result of Citizens' emphasis on strong relationships with the
dealer network. Total deposits at March 31, 2006 increased $50.1
million or 0.9% from December 31, 2005 to $5.5 billion and
increased $234.5 million or 4.4% from March 31, 2005. Core
deposits, which exclude all time deposits, totaled $3.2 billion at
March 31, 2006, a decrease of $128.6 million or 3.9% from December
31, 2005 and a decrease of $407.9 million or 11.4% from March 31,
2005. The decreases in core deposits were largely the result of
clients migrating their funds into time deposits with higher
yields. Time deposits totaled $2.4 billion at March 31, 2006, an
increase of $178.8 million or 8.2% compared with December 31, 2005
and an increase of $642.3 million or 37.5% from March 31, 2005. The
increases were largely the result of clients migrating their funds
from lower-cost deposits and some new client growth. The increase
from the fourth quarter of 2005 also included the effect of
municipalities maintaining higher balances due to the timing of tax
receipts. Additionally, the increase in time deposits from March
31, 2005 was partially due to an increase in brokered certificates
of deposit, which is one of many wholesale funding alternatives
used by Citizens. Other interest-bearing liabilities, which include
federal funds purchased and securities sold under agreements to
repurchase, other short-term borrowings, and long-term debt, were
$1.4 billion at March 31, 2006, a decrease of $129.6 million or
8.4% from December 31, 2005 and a decrease of $356.4 million or
20.2% from March 31, 2005. The decreases were the result of
Citizens' response to the aforementioned loan and deposit changes.
Additionally, the decrease from March 31, 2005 was partially due to
the fourth quarter of 2005 pay down of $104.0 million on short-term
borrowings. Credit Quality Nonperforming assets totaled $36.5
million at March 31, 2006, a decrease of $3.4 million or 8.5%
compared with December 31, 2005 and a decrease of $7.3 million or
16.7% compared with March 31, 2005. The decrease from the first
quarter of 2005 is primarily the result of the third quarter 2005
sale of nonperforming commercial loans with a balance of $6.7
million. Nonperforming assets at March 31, 2006 represented 0.65%
of total loans plus other repossessed assets acquired compared with
0.71% at December 31, 2005 and 0.80% at March 31, 2005.
Nonperforming commercial loan inflows decreased to $9.8 million in
the first quarter of 2006 compared with $10.6 million in the fourth
quarter of 2005 and $11.2 million in the first quarter of 2005
while outflows decreased to $9.1 million for the first quarter of
2006 compared with $13.8 million in the fourth quarter of 2005 and
$15.4 million in the first quarter of 2005. Nonperforming loans at
March 31, 2006 include $1.8 million in restructured commercial
loans, which have been reclassified from the commercial subtotal as
a result of revising the terms of the notes in an effort to improve
collectibility in future periods. Net charge-offs increased to $4.0
million or 0.29% of average portfolio loans in the first quarter of
2006 compared with a net recovery of $5.1 million or (0.36)% of
average portfolio loans in the fourth quarter of 2005 and $4.2
million or 0.32% of average portfolio loans in the first quarter of
2005. The increase over the fourth quarter of 2005 was primarily
due to a $9.1 million insurance settlement received in that
quarter, which was accounted for as a loan loss recovery on
previous losses that were charged to the allowance for loan losses.
Excluding the insurance settlement, which reduced net charge-offs
as a percent of average portfolio loans by 0.65%, the fourth
quarter of 2005 net charge-offs as a percent of average portfolio
loans would have been 0.29%. The decrease from the first quarter of
2005 was due to lower commercial net charge-offs, partially offset
by higher direct and indirect consumer net charge-offs. The higher
direct and indirect consumer net charge-offs were caused by the
unusually high level of bankruptcy filings in October 2005 prior to
the October 17, 2005 effective date of the recent revisions to the
federal bankruptcy code. The provision for loan losses increased to
$3.0 million in the first quarter of 2006 compared with $(7.3)
million in the fourth quarter of 2005 and was the same as the first
quarter of 2005. The increase was due to the receipt of the $9.1
million insurance settlement described above and a fourth quarter
2005 reduction in the reserve of $1.5 million related to a previous
mortgage recourse transaction. As a result of the changes in net
charge-offs and provision for loan losses, the allowance for loan
losses totaled $115.4 million or 2.06% of portfolio loans at March
31, 2006. The allowance for loan losses decreased by $1.0 million
and $5.5 million from December 31, 2005 and March 31, 2005,
respectively. Based on seasonal business trends and the overall
risk in the loan portfolio as well as expected improvements in
consumer loan net charge-offs resulting from fewer bankruptcies,
Citizens anticipates net charge-offs and the provision expense for
the second quarter of 2006 will be lower than the first quarter of
2006. Net Interest Margin and Net Interest Income Net interest
margin was 3.97% for the first quarter of 2006 compared with 3.95%
for the fourth quarter of 2005 and 3.96% for the first quarter of
2005. The increase in net interest margin compared with the fourth
and first quarters of 2005 resulted from the restructuring of the
investment portfolio in the fourth quarter of 2005, largely offset
by shifts within the deposit portfolio from lower cost savings and
transaction products to higher cost savings products and time
deposits as well as continued pricing pressure on all loans. Net
interest income was $67.5 million in the first quarter of 2006
compared with $69.1 million in the fourth quarter of 2005 and $68.2
million in the first quarter of 2005. The decreases in net interest
income compared with the fourth and first quarters of 2005 were
driven by declines in average earning assets of $106.8 million and
$75.3 million, respectively, partially offset by a higher net
interest margin. The decline from the fourth quarter 2005 average
earning assets resulted primarily from an $80.1 million reduction
in the investment portfolio and a $56.4 million reduction in the
consumer loan portfolio, partially offset by growth of $36.3
million in the commercial and commercial real estate portfolios.
The decreases in investment portfolio balances were the result of
restructuring the investment portfolio in the fourth quarter of
2005 and maturing balances not being fully reinvested.
Additionally, the decrease from the fourth quarter of 2005 included
the effect of two fewer calendar days in the first quarter of 2006.
For the second quarter of 2006, Citizens anticipates net interest
income will be slightly lower than the first quarter of 2006
because of anticipated margin compression driven by the
continuation of customers migrating funds from lower yielding
deposit products into higher yielding deposit products. Noninterest
Income Noninterest income for the first quarter of 2006 was $25.6
million, an increase of $14.6 million from the fourth quarter of
2005 and an increase of $3.1 million or 13.8% from the first
quarter of 2005. The increase over the fourth quarter of 2005 was
primarily the result of higher trust fees as well as fully
recognizing a deferred gain of $2.9 million on the 2004 sale of the
former downtown Royal Oak, Michigan office during the first quarter
of 2006; and the $3.6 million charge associated with the accounting
treatment for swaps hedging brokered certificates of deposit and a
net loss on the sales of securities of $9.0 million in the fourth
quarter of 2005. All swaps hedging brokered certificates of deposit
qualified for hedge accounting treatment as of the end of January
2006, eliminating the need for a mark-to-market charge during the
remainder of the quarter similar to the charge taken during the
fourth quarter of 2005. The increase over the first quarter of 2005
was primarily the result of the aforementioned $2.9 million gain as
well as increases in service charges on deposits and trust fees,
partially offset by a decrease in mortgage and other loan income.
Service charges on deposit accounts for the first quarter of 2006
were essentially unchanged from the fourth quarter of 2005 at $8.9
million and increased $0.6 million or 7.1% from the first quarter
of 2005. The increase from the first quarter of 2005 was largely
due to higher overdraft fee income related to revenue enhancement
initiatives that were implemented in the first quarter of 2006.
Trust fees for the first quarter of 2006 were $5.0 million, an
increase of 1.1% over the fourth quarter of 2005 and increased $0.6
million or 14.3% from the first quarter of 2005. This marks the
fourth consecutive quarterly increase in trust fees. The increase
was attributable to stronger financial markets, continued execution
of the sales management process and improved pricing discipline,
partially offset by attrition. Total trust assets under
administration of $2.6 billion at March 31, 2006 increased $81.7
million over December 31, 2005 and were essentially unchanged from
March 31, 2005. The increase in trust assets from December 31, 2005
was due to stronger financial markets at March 31, 2006 and
continued growth in personal investment management assets. Mortgage
and other loan income for the first quarter of 2006 decreased $0.1
million or 4.3% to $2.0 million compared with the fourth quarter of
2005 and decreased $0.4 million or 14.8% from the first quarter of
2005. The decreases reflect lower seasonal mortgage origination
volume in the first quarter of 2006 from the fourth quarter of
2005, and the impact of an unfavorable rate environment since the
first quarter of 2005. Brokerage and investment fees for the first
quarter of 2006 were $2.0 million, a decrease of $0.4 million or
22.2% from the fourth quarter of 2005 and decreased $0.1 million or
5.2% from the first quarter of 2005. The decreases were the result
of Citizens shifting a large portion of its brokerage fee
production from reliance on referrals from the branch network to
its Investment Center financial consultants. This change supports
Citizens' strategy of growing low-cost deposits, as the financial
consultants increase their focus on attracting funds from new
sources outside of Citizens and the branch network continues to
improve on providing an enhanced client experience. While the
long-term impact is expected to be positive, these changes reduced
revenue in the first quarter of 2006 as the financial consultants
adjusted their sales process to create new opportunities. For the
first quarter of 2006, all other noninterest income categories,
which include ATM network user fees, bankcard fees, fair value
change in CD swap derivatives, other income, and investment
securities gains (losses), increased $15.2 million over the fourth
quarter of 2005 to $8.1 million and increased $2.3 million or 40.1%
over the first quarter of 2005. The increase over the fourth
quarter of 2005 was primarily the result of the aforementioned $3.6
million charge on the fair value change in CD swap derivatives and
the $9.0 million net loss on the sales of securities during the
fourth quarter of 2005 as well as the aforementioned $2.9 million
gain on the sale of the former downtown Royal Oak office. The
increase over the first quarter of 2005 was primarily the result of
the aforementioned $2.9 million gain, partially offset by the
effects of two items received in the first quarter of 2005,
specifically, a performance-related penalty received from a third
party vendor and a preference payment on Citizens' membership
interest in the PULSE ATM network. Excluding the effect of the $2.9
million gain, Citizens anticipates total noninterest income for the
second quarter of 2006 will be consistent with or slightly higher
than the first quarter of 2006 due to anticipated increases in
deposit service charges and brokerage fees. Noninterest Expense
Noninterest expense for the first quarter of 2006 was $61.6
million, essentially unchanged from the fourth and first quarters
of 2005, even though Citizens contributed $1.5 million to its
charitable foundation to sustain future giving levels. Increases in
occupancy and other expenses over the fourth quarter of 2005 were
offset by decreases in professional services, advertising and
public relations expenses, and other loan expenses. Increases in
occupancy, data processing fees, advertising and public relations
expenses, and other expenses over the first quarter of 2005 were
offset by decreases in salaries and benefits. Salaries and employee
benefits for the first quarter of 2006 were essentially unchanged
from the fourth quarter of 2005 at $32.3 million and decreased $1.1
million or 3.3% from the first quarter of 2005. The decrease was
the result of lower incentive expense and postretirement benefits,
partially offset by higher salaries due to merit increases awarded
in 2005 and higher self-funded hospitalization expenses. Salary
costs included $0.7 million in severance for the first quarter of
2006 as well as the fourth quarter of 2005 and $0.9 million for the
first quarter of 2005. Citizens adopted Statements of Financial
Accounting Standards (SFAS) No. 123R, "Share- Based Payment
(Revised 2004)," on January 1, 2006, which resulted in an expense
of $0.3 million for the quarter. Citizens had 2,119 full-time
equivalent employees at March 31, 2006, essentially unchanged from
December 31, 2005 and down from 2,175 at March 31, 2005. Occupancy
costs for the first quarter of 2006 increased $0.3 million or 5.5%
to $5.9 million compared with the fourth quarter of 2005 and
increased $0.4 million or 6.9% over the first quarter of 2005. The
increase over the fourth quarter of 2005 was primarily a result of
higher energy and utilities related expenses. The increase over the
first quarter of 2005 was largely the result of higher energy and
building depreciation expense related to the new branches opened in
Southeast Michigan during 2005, and higher depreciation as a result
of the Michigan and Wisconsin re-branding projects which were
completed in the first and second quarters of 2005. Professional
services for the first quarter of 2006 decreased $0.8 million or
15.7% to $4.1 million compared with the fourth quarter of 2005 and
decreased $0.1 million or 2.9% compared with the first quarter of
2005. The decrease from the fourth quarter was primarily the result
of higher consulting fees incurred during the fourth quarter of
2005 associated with several initiatives targeted at developing
corporate strategies to produce enhanced profitability and revenue
momentum and enhancing information technology practices.
Advertising and public relations expense for the first quarter of
2006 decreased $0.5 million or 20.9% to $2.0 million compared with
the fourth quarter of 2005 and increased $0.3 million or 16.5% over
the first quarter of 2005. The decrease from the fourth quarter of
2005 was largely due to lower promotional expenses in 2006 and
several product focused campaigns that occurred in the fourth
quarter of 2005. The increase over the first quarter of 2005 was
primarily related to targeted direct mailing campaigns conducted
during the first quarter of 2006. Other loan expenses for the first
quarter of 2006 decreased $0.3 million or 39.3% to $0.4 million
compared with the fourth quarter of 2005 and were essentially
unchanged from the first quarter of 2005. The decrease was the
result of lower provisioning to fund the reserve for unused loan
commitments, which fluctuates with the amount of unadvanced
customer lines of credit. For the first quarter of 2006, all other
noninterest expense categories, which include equipment, data
processing services, postage and delivery, telephone, stationery
and supplies, intangible asset amortization, and other expenses,
increased $2.1 million or 13.9% to $16.8 million from the fourth
quarter of 2005 and increased $1.5 million or 9.6% from the first
quarter of 2005. Other noninterest expense for the first quarter of
2006 includes the aforementioned $1.5 million contribution to
Citizens' charitable foundation. Additionally, the increase from
the fourth quarter of 2005 was the result of higher expenses
related to other real estate owned and a partial reversal in the
fourth quarter of 2005 of certain tax related reconciliation items
incurred during 2004, partially offset by lower postage, delivery,
stationery and supplies expenses. The increase from the first
quarter of 2005 was primarily a result of the aforementioned
charitable contribution and higher data processing services, travel
and training expenses, partially offset by lower supplies and
stationery expenses and non-credit related losses. Excluding the
contribution to the charitable foundation, Citizens anticipates
noninterest expenses for the second quarter of 2006 will be
consistent with the first quarter of 2006. Income Tax Provision
Income tax provision for the first quarter of 2006 was $7.7
million, essentially unchanged from the fourth quarter of 2005 and
an increase of $0.7 million or 10.0% over the first quarter of
2005. The increase over the first quarter of 2005 was due to higher
pre-tax income and higher ongoing state taxes as a result of the
April 2005 merger of the Michigan and Wisconsin bank charters. The
effective tax rate was 27.10% for the first quarter of 2006
compared with 28.56% for the fourth quarter of 2005 and 25.89% for
the first quarter of 2005. The decrease from the fourth quarter of
2005 was a result of an adjustment in the reserve for taxes payable
during the fourth quarter of 2005. The increase from the first
quarter of 2005 was due to higher ongoing state taxes as a result
of the April 2005 merger of the Michigan and Wisconsin bank
charters. Citizens anticipates that the effective income tax rate
for the second quarter of 2006 will be consistent with the first
quarter of 2006. Other News Citizens Plans to Consolidate Loan
Operations On March 13, 2006, Citizens finalized and announced a
plan to consolidate the consumer and commercial loan operations
groups into a functional, centrally located operation. Best
practice deployment will lead to an enhanced client experience by
improving workflow, efficiency and productivity through
standardization and specialization. Full implementation is expected
by the end of June 2006. Citizens Creates an Asset-Based Lending
Group During late March 2006, Citizens created the Citizens Bank
Business Finance lending unit as part of its strategy to expand the
commercial loan portfolio, augment its commercial lending product
set, and enhance its credit management capabilities. The Citizens
Bank Business Finance team is managed and staffed by well-seasoned
and highly experienced asset-based lending professionals located in
Southeast Michigan. The team will employ strict asset-based
underwriting standards to originate and monitor working capital and
term financings for middle-market companies located in the Midwest
that are experiencing a transition event and will also participate
in asset-based agent transactions. Citizens expects the initial
team to be in place and begin originating new business
relationships during the second quarter of 2006 and may hire
additional members as volumes build. Stock Repurchase Program
During the first quarter of 2006, Citizens repurchased a total of
255,000 shares of its stock at an average price of $26.86. As of
March 31, 2006 there are 1,986,200 shares remaining to be purchased
under the program approved by the company's Board of Directors on
October 16, 2003. Dividend Announcement The Board of Directors of
Citizens Banking Corporation declared a cash dividend of $0.29 per
share of common stock. This is an increase of $0.005 or 1.8% from
the previous quarterly dividend of $0.285. The dividend is payable
on May 11, 2006, to shareholders of record on May 1, 2006. Investor
Conference Call William R. Hartman, chairman, president and CEO,
Charles D. Christy, CFO, John D. Schwab, chief credit officer, and
Martin E. Grunst, treasurer, will review the quarter's results in a
conference call for investors and analysts beginning at 10:00 a.m.
EDT on Friday, April 21, 2006. A live audio webcast is available at
http://www.vcall.com/IC/CEPage.asp?ID=103323 . To participate in
the conference call, please call the number below approximately 10
minutes prior to the scheduled conference time. US/Canada Dial-In
Number: (877) 407-8031 International Dial-In Number: (201) 689-8031
Conference ID: 198846 Conference Name: "Citizens Banking
Corporation First Quarter Earnings Conference Call." RSVP is not
required. A playback of the conference call will be available after
12:00 p.m. EDT through May 5, 2006, by dialing US/Canada Dial-In
Number: (877) 660-6853 or International Dial-In Number: (201)
612-7415, Account Number: 286, Conference ID: 198846. Also, the
call can be accessed via Citizens' website, through the Investor
Relations section at http://www.citizensonline.com/ . Corporate
Profile Citizens Banking Corporation is a diversified financial
services company providing a full range of commercial, consumer,
mortgage banking, trust and financial planning services to a broad
client base. Citizens operates 183 branch, private banking, and
financial center locations and 188 ATMs throughout Michigan,
Wisconsin, and Iowa. Safe Harbor Statement Discussions in this
release that are not statements of historical fact (including
statements that include terms such as "will," "may," "should,"
"believe," "expect," "anticipate," "estimate," "intend," and
"plan") are forward-looking statements that involve risks and
uncertainties, and Citizens' actual future results could materially
differ from those discussed. Factors that could cause or contribute
to such differences include, without limitation, adverse changes in
Citizens' loan and lease portfolios resulting in credit
risk-related losses and expenses (including losses due to fraud,
Michigan automobile-related industry changes and shortfalls, and
other economic factors) as well as additional increases in the
allowance for loan losses; fluctuations in market interest rates,
the effects on net interest income of changes in Citizens' interest
rate risk position and the potential inability to hedge interest
rate risks economically; adverse changes in economic or financial
market conditions and the economic effects of terrorist attacks and
potential attacks; Citizens' potential inability to continue to
attract core deposits; Citizens' potential inability to continue to
obtain third party financing on favorable terms; adverse changes in
competition, pricing environments or relationships with major
customers; unanticipated expenses and payments relating to
litigation brought against Citizens from time to time; Citizens'
potential inability to adequately invest in and implement products
and services in response to technological changes; adverse changes
in applicable laws and regulatory requirements; the potential lack
of market acceptance of Citizens' products and services; changes in
accounting and tax rules and interpretations that negatively impact
results of operations or financial position; the potential
inadequacy of Citizens' business continuity plans or data security
systems; the potential failure of Citizens' external vendors to
fulfill their contractual obligations to Citizens; Citizens'
potential inability to integrate acquired operations; unanticipated
environmental liabilities or costs; impairment of the ability of
the banking subsidiaries to pay dividends to the holding company
parent; the potential circumvention of Citizens' controls and
procedures; Citizens' success in managing the risks involved in the
foregoing; and other risks and uncertainties detailed from time to
time in its filings with the Securities and Exchange Commission.
Other factors not currently anticipated may also materially and
adversely affect Citizens' results of operations. There can be no
assurance that future results will meet expectations. While
Citizens believes that the forward-looking statements in this
release are reasonable, you should not place undue reliance on any
forward-looking statement. In addition, these statements speak only
as of the date made. Citizens does not undertake, and expressly
disclaims any obligation to update or alter any statements, whether
as a result of new information, future events or otherwise, except
as required by applicable law. (Financial highlights follow) Visit
our website at http://www.citizensonline.com/
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Consolidated Balance Sheets (Unaudited) Citizens Banking
Corporation and Subsidiaries March 31, December 31, March 31, (in
thousands) 2006 2005 2005
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Assets Cash and due from banks $152,077 $194,748 $145,707
Interest-bearing deposits with banks 1,503 380 1,596 Investment
Securities: Available-for-sale (amortized cost $1,479,416,
$1,501,819 and $1,761,586, respectively) U.S. Treasury and federal
agency securities 1,087,099 1,122,306 1,377,766 State and municipal
securities 378,454 378,235 386,515 Other securities 1,243 1,456 963
Held-to-maturity: State and municipal securities (fair value of
$89,699, $82,364 and $58,622, respectively) 90,346 82,431 58,942
FHLB and Federal Reserve stock 55,975 55,911 68,020 ----------
---------- ---------- Total investment securities 1,613,117
1,640,339 1,892,206 Mortgage loans held for sale 13,399 16,252
34,627 Portfolio loans: Commercial 1,688,970 1,688,079 1,626,541
Commercial real estate 1,418,596 1,402,128 1,313,825 Residential
mortgage loans 549,116 539,824 495,953 Direct consumer 1,109,249
1,142,002 1,173,234 Indirect consumer 826,060 844,086 820,289
---------- ---------- ---------- Total portfolio loans 5,591,991
5,616,119 5,429,842 Less: Allowance for loan losses (115,423)
(116,400) (120,945) ---------- ---------- ---------- Net portfolio
loans 5,476,568 5,499,719 5,308,897 Premises and equipment 120,719
121,730 121,107 Goodwill 54,527 54,527 54,527 Other intangible
assets 10,408 11,133 13,307 Bank owned life insurance 85,142 84,435
83,072 Other assets 135,857 128,620 121,690 ---------- ----------
---------- Total assets $7,663,317 $7,751,883 $7,776,736 ==========
========== ========== Liabilities Noninterest-bearing deposits
$899,850 $969,074 $891,849 Interest-bearing demand deposits 816,293
891,313 1,106,744 Savings deposits 1,452,638 1,437,024 1,578,058
Time deposits 2,355,206 2,176,428 1,712,883 ---------- ----------
---------- Total deposits 5,523,987 5,473,839 5,289,534 Federal
funds purchased and securities sold under agreements to repurchase
401,702 505,879 853,926 Other short-term borrowings 852 23,242
6,157 Other liabilities 82,203 86,351 79,656 Long-term debt
1,003,029 1,006,109 901,875 ---------- ---------- ---------- Total
liabilities 7,011,773 7,095,420 7,131,148 Shareholders' Equity
Preferred stock - no par value --- --- --- Common stock - no par
value 80,341 85,526 94,966 Retained earnings 578,980 570,483
546,882 Accumulated other comprehensive income (7,777) 454 3,740
---------- ---------- ---------- Total shareholders' equity 651,544
656,463 645,588 ---------- ---------- ---------- Total liabilities
and shareholders' equity $7,663,317 $7,751,883 $7,776,736
========== ========== ==========
--------------------------------------------------------------------------
Consolidated Statements of Income (Unaudited) Citizens Banking
Corporation and Subsidiaries Three Months Ended March 31, (in
thousands, except per share amounts) 2006 2005
--------------------------------------------------------------------------
Interest Income Interest and fees on loans $93,451 $79,272 Interest
and dividends on investment securities: Taxable 13,611 14,688
Tax-exempt 5,317 5,197 Money market investments 12 9 ----------
---------- Total interest income 112,391 99,166 ----------
---------- Interest Expense Deposits 30,992 18,071 Short-term
borrowings 3,736 4,441 Long-term debt 10,188 8,421 ----------
---------- Total interest expense 44,916 30,933 ----------
---------- Net Interest Income 67,475 68,233 Provision for loan
losses 3,000 3,000 ---------- ---------- Net interest income after
provision for loan losses 64,475 65,233 ---------- ----------
Noninterest Income Service charges on deposit accounts 8,875 8,287
Trust fees 5,042 4,412 Mortgage and other loan income 2,010 2,360
Brokerage and investment fees 1,515 1,599 ATM network user fees 987
873 Bankcard fees 1,057 840 Fair value change in CD swap
derivatives (207) --- Other 6,284 4,084 ---------- ---------- Total
fees and other income 25,563 22,455 Investment securities gains
(losses) 7 6 ---------- ---------- Total noninterest income 25,570
22,461 Noninterest Expense Salaries and employee benefits 32,256
33,351 Occupancy 5,942 5,560 Professional services 4,078 4,199
Equipment 3,166 3,301 Data processing services 3,739 3,369
Advertising and public relations 2,034 1,746 Postage and delivery
1,462 1,590 Telephone 1,464 1,441 Other loan expenses 416 375
Stationery and supplies 727 919 Intangible asset amortization 725
725 Other 5,563 4,025 ---------- ---------- Total noninterest
expense 61,572 60,601 ---------- ---------- Income Before Income
Taxes 28,473 27,093 Income tax provision 7,717 7,013 ----------
---------- Net Income $20,756 $20,080 ---------- ---------- Net
Income Per Common Share: Basic $0.49 $0.46 Diluted 0.48 0.46 Cash
Dividends Declared Per Common Share 0.285 0.285 Average Common
Shares Outstanding: Basic 42,784 43,224 Diluted 42,941 43,646
--------------------------------------------------------------------------
Selected Quarterly Information Citizens Banking Corporation and
Subsidiaries 1st Qtr 2006 4th Qtr 2005 3rd Qtr 2005
--------------------------------------------------------------------------
Summary of Operations (thousands) Interest income $112,391 $111,958
$108,506 Interest expense 44,916 42,863 38,864 Net interest income
67,475 69,095 69,642 Provision for loan losses (1) 3,000 (7,287)
4,000 Net interest income after provision for loan losses 64,475
76,382 65,642 Total fees and other income (2) 25,563 19,930 23,941
Investment securities gains (losses) (3) 7 (8,970) --- Noninterest
expense 61,572 60,901 60,550 Income tax provision 7,717 7,553 8,041
Net income 20,756 18,888 20,992 Taxable equivalent adjustment 3,416
3,432 3,284
--------------------------------------------------------------------------
At Period End (millions) Assets $7,663 $7,752 $7,851 Earning assets
7,220 7,274 7,397 Portfolio loans 5,592 5,616 5,569 Deposits 5,524
5,474 5,226 Shareholders' equity 652 656 655
--------------------------------------------------------------------------
Average Balances (millions) Assets $7,654 $7,754 $7,821 Earning
assets 7,204 7,311 7,393 Portfolio loans 5,561 5,575 5,531 Deposits
5,513 5,305 5,239 Shareholders' equity 655 654 655 Shareholders'
equity / assets 8.55% 8.43% 8.38%
--------------------------------------------------------------------------
Credit Quality Statistics (thousands) Nonaccrual loans $27,689
$32,140 $35,527 Loans 90 or more days past due and still accruing
547 385 92 Restructured loans 1,844 --- 13 ---------- ----------
---------- Total nonperforming loans 30,080 32,525 35,632 Other
repossessed assets acquired (ORAA) 6,397 7,351 6,984 ----------
---------- ---------- Total nonperforming assets $36,477 $39,876
$42,616 ---------- ---------- ---------- Allowance for loan losses
$115,423 $116,400 $118,626 Allowance for loan losses as a percent
of portfolio loans 2.06% 2.07% 2.13% Allowance for loan losses as a
percent of nonperforming assets 316.43 291.90 278.36 Allowance for
loan losses as a percent of nonperforming loans 383.72 357.88
332.92 Nonperforming assets as a percent of portfolio loans plus
ORAA 0.65 0.71 0.76 Nonperforming assets as a percent of total
assets 0.48 0.51 0.54 Net loans charged off as a percent of average
portfolio loans (annualized) 0.29 (0.36) 0.38 Net loans charged off
(000) $3,977 $(5,061) $5,341
--------------------------------------------------------------------------
Per Common Share Data Net Income: Basic $0.49 $0.44 $0.49 Diluted
0.48 0.44 0.48 Dividends 0.285 0.285 0.285 Market Value: High
$28.66 $30.22 $32.15 Low 25.62 26.67 28.20 Close 26.85 27.75 28.40
Book value 15.23 15.28 15.21 Shares outstanding, end of period
(000) 42,770 42,968 43,044
--------------------------------------------------------------------------
Performance Ratios (annualized) Net interest margin (FTE) (4) 3.97%
3.95% 3.93% Return on average assets 1.10 0.97 1.06 Return on
average shareholders' equity 12.86 11.46 12.71 Efficiency ratio (5)
63.84 65.87 62.51
--------------------------------------------------------------------------
2nd Qtr 2005 1st Qtr 2005
--------------------------------------------------------------------------
Summary of Operations (thousands) Interest income $103,619 $99,166
Interest expense 34,840 30,933 Net interest income 68,779 68,233
Provision for loan losses (1) 1,396 3,000 Net interest income after
provision for loan losses 67,383 65,233 Total fees and other income
(2) 23,109 22,455 Investment securities gains (losses) (3) 37 6
Noninterest expense 60,990 60,601 Income tax provision 8,974 7,013
Net income 20,565 20,080 Taxable equivalent adjustment 3,324 3,353
--------------------------------------------------------------------------
At Period End (millions) Assets $7,826 $7,777 Earning assets 7,399
7,358 Portfolio loans 5,523 5,430 Deposits 5,201 5,290
Shareholders' equity 662 646
--------------------------------------------------------------------------
Average Balances (millions) Assets $7,807 $7,728 Earning assets
7,386 7,302 Portfolio loans 5,472 5,393 Deposits 5,254 5,349
Shareholders' equity 654 649 Shareholders' equity / assets 8.37%
8.40%
--------------------------------------------------------------------------
Credit Quality Statistics (thousands) Nonaccrual loans $42,191
$36,593 Loans 90 or more days past due and still accruing 2 11
Restructured loans 32 42 ---------- ---------- Total nonperforming
loans 42,225 36,646 Other repossessed assets acquired (ORAA) 6,817
7,118 ---------- ---------- Total nonperforming assets $49,042
$43,764 ---------- ---------- Allowance for loan losses $119,967
$120,945 Allowance for loan losses as a percent of portfolio loans
2.17% 2.23% Allowance for loan losses as a percent of nonperforming
assets 244.62 276.36 Allowance for loan losses as a percent of
nonperforming loans 284.11 330.04 Nonperforming assets as a percent
of portfolio loans plus ORAA 0.89 0.80 Nonperforming assets as a
percent of total assets 0.63 0.56 Net loans charged off as a
percent of average portfolio loans (annualized) 0.17 0.32 Net loans
charged off (000) $2,374 $4,239
--------------------------------------------------------------------------
Per Common Share Data Net Income: Basic $0.48 $0.46 Diluted 0.47
0.46 Dividends 0.285 0.285 Market Value: High $30.98 $34.81 Low
26.35 29.02 Close 30.22 29.36 Book value 15.31 14.95 Shares
outstanding, end of period (000) 43,261 43,173
--------------------------------------------------------------------------
Performance Ratios (annualized) Net interest margin (FTE) (4) 3.92%
3.96% Return on average assets 1.06 1.05 Return on average
shareholders' equity 12.62 12.54 Efficiency ratio (5) 64.06 64.44
--------------------------------------------------------------------------
(1) The provision for loan losses and note loans charged off during
the fourth quarter of 2005 reflect an insurance settlement of $9.1
million accounted for as a loan loss recovery. (2) Total fees and
other income includes a cumulative charge of $3.6 million on swaps
related to brokered certificates during the fourth quarter of 2005.
(3) Investment securities gains (losses) includes a net loss of
$9.0 million on the sale of securities as a result of restructuring
the investment portfolio during the fourth quarter of 2005. (4) Net
interest margin is presented on an annual basis, includes taxable
equivalent adjustments to interest income and is based on a tax
rate of 35%. (5) The Efficiency Ratio measures how efficiently a
bank spends its revenues. The formula is: Noninterest expense/(Net
interest income + Taxable equivalent adjustment + Total fees and
other income).
--------------------------------------------------------------------------
Financial Summary and Comparison Three months ended Citizens
Banking Corporation and Subsidiaries March 31, 2006 2005 % Change
--------------------------------------------------------------------------
Summary of Operations (thousands) Interest income $112,391 $99,166
13.3% Interest expense 44,916 30,933 45.2 Net interest income
67,475 68,233 (1.1) Provision for loan losses 3,000 3,000 0.0 Net
interest income after provision for loan losses 64,475 65,233 (1.2)
Total fees and other income 25,563 22,455 13.8 Investment
securities gains (losses) 7 6 15.0 Noninterest expense 61,572
60,601 1.6 Income tax provision 7,717 7,013 10.0 Net income 20,756
20,080 3.4
--------------------------------------------------------------------------
At Period End (millions) Assets $7,663 $7,777 (1.5)% Earning assets
7,220 7,358 (1.9) Portfolio loans 5,592 5,430 3.0 Deposits 5,524
5,290 4.4 Shareholders' equity 652 646 0.9
--------------------------------------------------------------------------
Average Balances (millions) Assets $7,654 $7,728 (1.0)% Earning
assets 7,204 7,302 (1.3) Portfolio loans 5,561 5,393 3.1 Deposits
5,513 5,349 3.1 Shareholders' equity 655 649 0.8 Shareholders'
equity / assets 8.55% 8.40% 1.8
--------------------------------------------------------------------------
Per Common Share Data Net Income: Basic $0.49 $0.46 6.5% Diluted
0.48 0.46 4.3 Dividends 0.285 0.285 0.0 Market Value: High $28.66
$34.81 (17.7) Low 25.62 29.02 (11.7) Close 26.85 29.36 (8.5) Book
value 15.23 14.95 1.9 Tangible book value 13.72 13.38 2.5 Shares
outstanding, end of period (000) 42,770 43,173 (0.9)
--------------------------------------------------------------------------
Performance Ratios (annualized) Net interest margin (FTE) (1) 3.97%
3.96% 0.3% Return on average assets 1.10 1.05 4.8 Return on average
shareholders' equity 12.86 12.54 2.6 Net loans charged off as a
percent of average portfolio loans 0.29 0.32 (9.4)
--------------------------------------------------------------------------
(1) Net interest margin is presented on an annual basis and
includes taxable equivalent adjustments to interest income of $3.4
million and $3.4 million for the three months ended March 31, 2006
and 2005, respectively, based on a tax rate of 35%.
--------------------------------------------------------------------------
Noninterest Income and Noninterest Expense (Unaudited) Citizens
Banking Corporation and Subsidiaries Three Months Ended
-------------------------------------------- Mar 31 Dec 31 Sep 30
Jun 30 Mar 31 (in thousands) 2006 2005 2005 2005 2005
--------------------------------------------------------------------------
NONINTEREST INCOME: Service charges on deposit accounts $8,875
$8,957 $9,343 $8,822 $8,287 Trust fees 5,042 4,989 4,541 4,503
4,412 Mortgage and other loan income 2,010 2,099 2,450 2,074 2,360
Brokerage and investment fees 1,515 1,946 1,974 2,284 1,599 ATM
network user fees 987 1,065 1,194 1,223 873 Bankcard fees 1,057
1,027 976 961 840 Fair value change in CD swap derivatives (207)
(3,604) --- --- --- Other income 6,284 3,451 3,463 3,242 4,084
-------- -------- -------- -------- -------- Total fees and other
income 25,563 19,930 23,941 23,109 22,455 Investment securities
gains (losses) 7 (8,970) --- 37 6 -------- -------- --------
-------- -------- TOTAL NONINTEREST INCOME $25,570 $10,960 $23,941
$23,146 $22,461 ======== ======== ======== ======== ========
NONINTEREST EXPENSE: Salaries and employee benefits $32,256 $32,391
$34,060 $32,351 $33,351 Occupancy 5,942 5,631 5,255 5,685 5,560
Professional services 4,078 4,837 4,517 3,726 4,199 Equipment 3,166
3,263 3,133 4,937 3,301 Data processing services 3,739 3,744 3,188
3,499 3,369 Advertising and public relations 2,034 2,570 1,717
1,820 1,746 Postage and delivery 1,462 1,591 1,512 1,520 1,590
Telephone 1,464 1,333 1,242 1,465 1,441 Other loan expenses 416 686
720 874 375 Stationery and supplies 727 844 726 602 919 Intangible
asset amortization 725 725 725 724 725 Other expense (1) 5,563
3,286 3,755 3,787 4,025 -------- -------- -------- --------
-------- TOTAL NONINTEREST EXPENSE $61,572 $60,901 $60,550 $60,990
$60,601 ======== ======== ======== ======== ========
--------------------------------------------------------------------------
(1) The quarter ended March 31, 2006 includes the $1.5 million
contribution to Citizens charitable foundation.
--------------------------------------------------------------------------
Average Balances, Yields and Rates Three Months Ended
----------------------------------------------- March 31, 2006
December 31, 2005 -----------------------------------------------
Average Average Average Average (dollars in thousands) Balance Rate
(1) Balance Rate (1)
-------------------------------------------------------------------------
Earning Assets Money market investments $1,684 2.82 1,688 3.09
Investment securities (3): Taxable 1,181,397 4.61 1,271,730 4.40
Tax-exempt 446,657 7.33 436,445 7.52 Mortgage loans held for sale
16,471 5.64 29,545 5.48 Portfolio loans (4): Commercial 1,646,899
7.02 1,636,024 6.70 Commercial real estate 1,415,201 6.88 1,389,810
6.62 Residential mortgage loans 541,390 5.66 534,840 5.64 Direct
consumer 1,124,379 7.22 1,158,271 6.89 Indirect consumer 833,436
6.61 855,945 6.62 ---------- ---------- Total portfolio loans
5,561,305 6.83 5,574,890 6.61 ---------- ---------- Total earning
assets 7,207,514 6.49 7,314,298 6.27 Nonearning Assets Cash and due
from banks 165,909 165,562 Bank premises and equipment 121,348
121,197 Investment security fair value adjustment (3,305) (3,159)
Other nonearning assets 278,550 274,197 Allowance for loan losses
(116,151) (118,215) ---------- ----------- Total assets $7,653,865
$7,753,880 ---------- ----------- Interest-Bearing Liabilities
Deposits: Interest-bearing demand $857,273 0.64 $904,447 0.64
Savings deposits 1,448,866 2.23 1,414,788 1.84 Time deposits
2,281,926 3.85 2,036,321 3.52 Short-term borrowings 390,307 3.88
740,423 3.79 Long-term debt 1,004,948 4.10 957,596 4.02 ----------
---------- Total interest-bearing liabilities 5,983,320 3.04
6,053,575 2.81 Noninterest-Bearing Liabilities and Shareholders'
Equity Noninterest-bearing demand 924,788 949,795 Other liabilities
91,150 96,857 Shareholders' equity 654,607 653,653 ----------
---------- Total liabilities and shareholders' equity $7,653,865
$7,753,880 ---------- ---------- Interest Spread 3.45% 3.46%
Contribution of noninterest bearing sources of funds 0.52 0.49 Net
Interest Income as a Percent of Earning Assets 3.97% 3.95%
--------------------------------------------------------------------------
Three Months Ended --------------------------- March 31, 2005
--------------------------- Average Average (dollars in thousands)
Balance (2) Rate (1)(2)
--------------------------------------------------------------------------
Earning Assets Money market investments 1,799 2.01 Investment
securities (3): Taxable 1,435,683 4.09 Tax-exempt 420,931 7.60
Mortgage loans held for sale 31,341 5.49 Portfolio loans (4):
Commercial 1,615,304 5.62 Commercial real estate 1,291,629 6.08
Residential mortgage loans 497,925 5.47 Direct consumer 1,167,894
6.03 Indirect consumer 820,291 6.66 ---------- Total portfolio
loans 5,393,043 5.96 ---------- Total earning assets 7,282,797 5.68
Nonearning Assets Cash and due from banks 158,195 Bank premises and
equipment 120,902 Investment security fair value adjustment 18,974
Other nonearning assets 268,861 Allowance for loan losses (121,267)
---------- Total assets $7,728,462 ---------- Interest-Bearing
Liabilities Deposits: Interest-bearing demand $1,153,239 0.70
Savings deposits 1,626,232 1.27 Time deposits 1,662,673 2.68
Short-term borrowings 717,971 2.51 Long-term debt 927,497 3.67
---------- Total interest-bearing liabilities 6,087,612 2.06
Noninterest-Bearing Liabilities and Shareholders' Equity
Noninterest-bearing demand 906,615 Other liabilities 84,766
Shareholders' equity 649,469 ---------- Total liabilities and
shareholders' equity $7,728,462 ---------- Interest Spread 3.62%
Contribution of noninterest bearing sources of funds 0.34 ----- Net
Interest Income as a Percent of Earning Assets 3.96%
--------------------------------------------------------------------------
(1) Average rates are presented on an annual basis and include
taxable equivalent adjustments to interest income. (2) Certain
amounts have been reclassified to conform with current year
presentation. (3) 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. (4) Nonaccrual loans are included in
average balances.
--------------------------------------------------------------------------
Nonperforming Assets Citizens Banking Corporation and Subsidiaries
Three Months Ended ------------------------------------------------
Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 (in thousands) 2006 2005 2005
2005 2005
--------------------------------------------------------------------------
Commercial(1) Commercial $10,594 $11,880 $14,457 $17,903 $12,991
Commercial real estate 5,219 5,068 5,720 9,692 11,004 -------
------- ------- ------- ------- Total commercial 15,813 16,948
20,177 27,595 23,995 Consumer: Direct 3,911 4,326 4,459 3,726 3,474
Indirect 569 2,454 962 1,042 1,025 Residential mortgage 7,396 8,412
9,929 9,828 8,099 Loans 90 days or more past due and still accruing
547 385 92 2 11 Restructured loans 1,844 --- 13 32 42 -------
------- ------- ------- ------- Total Nonperforming Loans 30,080
32,525 35,632 42,225 36,646 Other Repossessed Assets Acquired 6,397
7,351 6,984 6,817 7,118 ------- ------- ------- ------- -------
Total Nonperforming Assets $36,477 $39,876 $42,616 $49,042 $43,764
------- ------- ------- ------- -------
--------------------------------------------------------------------------
(1) Changes in commercial nonperforming loans (including
restructured loans) for the quarter (in millions): Inflows $9.8
$10.6 $9.9 $21.1 $11.2 Outflows (9.1) (13.8) (17.3) (17.5) (15.4)
------- ------- ------- ------- ------- Net change $0.7 $(3.2)
$(7.4) $3.6 $(4.2) ------- ------- ------- ------- -------
--------------------------------------------------------------------------
Summary of Loan Loss Experience Citizens Banking Corporation and
Subsidiaries Three Months Ended
------------------------------------------------ Mar 31 Dec 31 Sep
30 Jun 30 Mar 31 (in thousands) 2006 2005 2005 2005 2005
--------------------------------------------------------------------------
Allowance for loan losses - beginning of period $116,400 $118,626
$119,967 $120,945 $122,184 Provision for loan losses 3,000 (7,287)
4,000 1,396 3,000 Charge-offs: Commercial 921 2,068 1,912 2,722
2,463 Commercial real estate 616 912 1,965 200 678 ------- -------
------- ------- ------- Total commercial 1,537 2,980 3,877 2,922
3,141 Residential mortgage 198 519 182 127 324 Direct consumer
1,669 1,382 1,257 1,227 1,424 Indirect consumer 2,829 3,075 2,640
1,534 2,236 ------- ------- ------- ------- ------- Total
charge-offs 6,233 7,956 7,956 5,810 7,125 ------- ------- -------
------- ------- Recoveries: Commercial 1,175 11,914 1,334 2,117
1,162 Commercial real estate 79 28 232 227 707 ------- -------
------- ------- ------- Total commercial 1,254 11,942 1,566 2,344
1,869 Residential mortgage 55 37 32 --- --- Direct consumer 285 329
370 377 343 Indirect consumer 662 709 647 715 674 ------- -------
------- ------- ------- Total recoveries 2,256 13,017 2,615 3,436
2,886 ------- ------- ------- ------- ------- Net charge-offs 3,977
(5,061) 5,341 2,374 4,239 ------- ------- ------- ------- -------
Allowance for loan losses - end of period $115,423 $116,400
$118,626 $119,967 $120,945 ------- ------- ------- ------- -------
Reserve for loan commitments - end of period $2,684 $3,023 $3,023
$2,868 $2,596 ------- ------- ------- ------- -------
--------------------------------------------------------------------------
---------------------------------------------------------- Three
Months Ended March 31, 2006
----------------------------------------------------------
Commercial Residential Direct Indirect (in thousands) Commercial
real mortgage consumer consumer Total estate
----------------------------------------------------------
Charge-offs: Michigan $620 $509 $158 $1,374 $2,829 $5,490 Wisconsin
301 107 39 259 --- 706 Iowa --- --- 1 36 --- 37 ----- ----- -----
----- ----- ----- Total charge-offs 921 616 198 1,669 2,829 6,233
----- ----- ----- ----- ----- ----- Recoveries: Michigan 346 30 43
239 662 1,320 Wisconsin 825 49 8 40 --- 922 Iowa 4 --- 4 6 --- 14
----- ----- ----- ----- ----- ----- Total recoveries 1,175 79 55
285 662 2,256 ----- ----- ----- ----- ----- ----- Net charge-offs
$(254) $537 $143 $1,384 $2,167 $3,977 ----- ----- ----- ----- -----
-----
--------------------------------------------------------------------------
(Logo: http://www.newscom.com/cgi-bin/prnh/20050421/DETH014LOGO )
http://www.newscom.com/cgi-bin/prnh/20050421/DETH014LOGO
http://photoarchive.ap.org/ DATASOURCE: Citizens Banking
Corporation CONTACT: Charles D. Christy, Chief Financial Officer ,
+1-810-237-4200, , or Kathleen Miller, Investor Relations,
+1-810-257-2506, , both of Citizens Banking Corporation Web site:
http://www.citizensonline.com/
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