FLINT, Mich., July 20 /PRNewswire-FirstCall/ -- Citizens Banking
Corporation (NASDAQ:CBCF) announced net income of $20.9 million for
the three months ended June 30, 2006. This represents an increase
of $0.1 million or 0.7% over the first quarter of 2006 net income
of $20.8 million and represents an increase of $0.3 million or 1.7%
over the second quarter of 2005 net income of $20.6 million.
Diluted net income per share was $0.49, an increase of 2.1%
compared with $0.48 for the first quarter of 2006, and an increase
of 4.3% over the $0.47 for the same quarter of last year.
Annualized returns on average assets and average equity during the
second quarter of 2006 were 1.09% and 12.96%, respectively,
compared with 1.10% and 12.86% for the first quarter of 2006 and
1.06% and 12.62% for the second quarter of 2005. Net income for the
first six months of 2006 totaled $41.7 million or $0.97 per diluted
share, which represents an increase in net income of $1.0 million
or 2.5% and $0.04 or 4.3% per diluted share over the same period of
2005. "Strong commercial loan growth while maintaining high credit
quality and prudent expense management enabled us to increase
earnings over the first quarter of this year and the second quarter
of 2005," stated William R. Hartman, chairman, president and CEO.
"We are confident that combining our strong execution capabilities
with the best practices of Republic Bancorp will enable us to build
long-term value for our shareholders," continued Hartman. Key
Highlights in the Quarter: - An executive committee for the merger
of Republic Bancorp has been formed and the planning process for
the integration is successfully underway. - Commercial and
commercial real estate loans increased $125.9 million or 4.1% over
March 31, 2006. This marks the seventh consecutive quarter of
growth, as origination in traditional Michigan and Wisconsin
markets, along with Southeast Michigan, continues to remain strong.
- Core deposits, which exclude time deposits, increased $68.0
million or 2.1% over March 31, 2006 due to initiatives focused on
generating deposits. Noninterest-bearing deposits improved by $55.0
million or 6.1% and savings deposits increased $84.5 million or
5.8% over March 31, 2006. - Nonperforming assets decreased $1.7
million or 4.7% from the first quarter of 2006 to $34.8 million at
June 30, 2006 and the nonperforming asset ratio improved to 0.61%,
its lowest level in four years, from 0.65% at March 31, 2006. The
decrease reflects reductions in nonperforming commercial, consumer
and restructured loans, which was partially offset by an increase
in residential mortgage loans and other repossessed assets
acquired. - Net charge-offs decreased to $2.0 million or 0.14% of
average loans from the first quarter of 2006 level of $4.0 million
or 0.29% of average loans. The decrease was the result of
significant reductions in direct and indirect consumer loan net
charge-offs. As a result of the historically low net charge-offs
and the overall risk profile of portfolio loans, the provision for
loan losses was $1.1 million for the second quarter of 2006. -
Expense management initiatives introduced in the fourth quarter of
2004 continue to offset increased expenses relating to growth
initiatives in Southeast Michigan and Wisconsin. Noninterest
expense totaled $60.1 million for the second quarter of 2006, a
decrease of $1.5 million or 2.5% from the first quarter of 2006 and
$0.9 million or 1.5% from the second quarter of 2005. Noninterest
expense in the first quarter of 2006 included a $1.5 million
contribution to Citizens' charitable foundation. Balance Sheet
Citizens' total assets at June 30, 2006 were $7.8 billion, an
increase of $150.9 million or 2.0% compared with March 31, 2006 and
essentially unchanged from June 30, 2005. Total portfolio loans
increased $136.0 million or 2.4% over March 31, 2006 and $204.8
million or 3.7% over June 30, 2005. When compared with both prior
periods, the increase in total portfolio loans was partially offset
by declines in the investment portfolio as a result of using
portfolio cash flow to reduce short-term borrowings and declines in
the direct consumer loan portfolio due to weak consumer demand in
most of Citizens' markets. Commercial and commercial real estate
loans at June 30, 2006 increased $125.9 million or 4.1% from March
31, 2006 to $3.2 billion and increased $264.3 million or 8.9%
compared with June 30, 2005. These improvements were a result of
new relationships in traditional Michigan and Wisconsin markets and
continued strong growth in the Southeast Michigan market.
Residential mortgage loans at June 30, 2006 were $551.0 million,
essentially unchanged from March 31, 2006 and an increase of $26.3
million or 5.0% over June 30, 2005. The increase was 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
June 30, 2006, an increase of $8.2 million or 0.4% from March 31,
2006 and a decrease of $85.8 million or 4.2% from June 30, 2005.
Direct consumer loans, which includes direct installment, home
equity, and other consumer loans, declined by $10.1 million or 0.9%
from March 31, 2006 and decreased $87.5 million or 7.4% from June
30, 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, which are primarily marine and
recreational vehicle loans, increased $18.4 million or 2.2% from
March 31, 2006 as a result of an increase in seasonal interest for
indirect products and were essentially unchanged from June 30,
2005. Total deposits at June 30, 2006 increased $160.6 million or
2.9% from March 31, 2006 to $5.7 billion and increased $483.8
million or 9.3% from June 30, 2005. Core deposits, which exclude
all time deposits, totaled $3.2 billion at June 30, 2006, an
increase of $68.0 million or 2.1% from March 31, 2006 and a
decrease of $174.3 million or 5.1% from June 30, 2005. The increase
in core deposits from March 31, 2006 was the result of initiatives
focused on generating deposits. The decrease in core deposits from
June 30, 2005 was largely the result of clients migrating from
lower cost savings and transaction accounts into time deposits with
higher yields. Time deposits totaled $2.4 billion at June 30, 2006,
an increase of $92.6 million or 3.9% compared with March 31, 2006
and an increase of $658.2 million or 36.8% from June 30, 2005. The
increases were largely the result of clients migrating their funds
from lower-cost deposits and some new client growth. The increase
from March 31, 2006 was partially offset by the effect of
municipalities maintaining lower balances due to the timing of tax
receipts. Additionally, the increase in time deposits from June 30,
2005 was partially due to an additional $148.8 million 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 June 30, 2006, essentially
unchanged from March 31, 2006 and a decrease of $484.1 million or
25.7% from June 30, 2005. The decrease was the result of Citizens'
response to the aforementioned loan and deposit changes as well as
the fourth quarter of 2005 pay down of $104.0 million on short-term
borrowings. Net Interest Margin and Net Interest Income Net
interest margin was 3.84% for the second quarter of 2006 compared
with 3.97% for the first quarter of 2006 and 3.92% for the second
quarter of 2005. The decreases from both prior periods were due to
funds migrating within the deposit portfolio from lower cost
savings and transaction accounts to higher cost savings and time
deposits, the repricing of $120.0 million of low-cost wholesale
funding in the second quarter of 2006, and continued pricing
pressure on loans. The decrease in net interest margin compared
with the first quarter of 2006 also includes a lower taxable
investment securities yield due to the receipt of a prepayment
penalty on a called investment security in the first quarter of
2006. The decrease in net interest margin compared with the second
quarter of 2005 was partially offset by the restructuring of the
investment portfolio and short-term borrowing pay down in the
fourth quarter of 2005 and a shift in asset mix from investment
securities to higher yielding commercial loans. For the six months
ended June 30, 2006, net interest margin declined to 3.90% compared
with 3.94% for the same period of 2005 as a result of the
aforementioned changes. Net interest income was $66.0 million in
the second quarter of 2006 compared with $67.5 million in the first
quarter of 2006 and $68.8 million in the second quarter of 2005.
The decrease in net interest income compared with the first quarter
of 2006 was driven by the decline in net interest margin, partially
offset by an increase in average earning assets of $31.9 million as
growth in the commercial and commercial real estate portfolios was
partially offset by a decline in the investment portfolio. The
decrease in net interest income compared with the second quarter of
2005 resulted from the decline in the net interest margin and lower
average earning assets of $131.6 million. The decline in average
earning assets resulted from a $251.1 million reduction in the
investment portfolio and a $49.6 million decrease in the mortgage
loans held for sale, consumer and residential mortgage loan
portfolios, partially offset by growth of $171.0 million in the
commercial and commercial real estate loan portfolios. The decrease
in the investment portfolio was the result of the fourth quarter of
2005 restructuring and maturing balances not being fully
reinvested. For the six months ended June 30, 2006, net interest
income totaled $133.5 million, a $3.5 million or 2.6% decrease from
the same period of 2005. The decrease was due to lower net interest
margin and a decrease in average earning assets of $103.6 million.
The decline in average earning assets resulted from a $239.9
million reduction in the investment portfolio and a $25.8 million
decrease in the mortgage loans held for sale, consumer, and
residential mortgage loan portfolios, partially offset by growth of
$163.1 million in the commercial and commercial real estate loan
portfolios. The decrease in the investment portfolio was the result
of the fourth quarter of 2005 restructuring and maturing balances
not being fully reinvested. For the third quarter of 2006, Citizens
anticipates net interest income will be consistent with or slightly
lower than the second quarter of 2006 due to continued margin
compression driven by customers migrating funds from lower yielding
deposit products into higher yielding deposit products. Credit
Quality Nonperforming assets totaled $34.8 million at June 30,
2006, a decrease of $1.7 million or 4.7% compared with March 31,
2006 and a decrease of $14.3 million or 29.1% compared with June
30, 2005. Nonperforming assets at June 30, 2006 represented 0.61%
of total loans plus other repossessed assets acquired compared with
0.65% at March 31, 2006 and 0.89% at June 30, 2005. Nonperforming
commercial loan inflows increased to $10.4 million in the second
quarter of 2006 compared with $9.8 million in the first quarter of
2006 and decreased from $21.1 million in the second quarter of 2005
while outflows increased to $13.9 million for the second quarter of
2006 compared with $9.1 million in the first quarter of 2006 and
$17.5 million in the second quarter of 2005. The decrease from the
first quarter of 2006 included the effects of a second quarter of
2006 nonperforming commercial loan sale with balances of $4.5
million. The decrease from the second quarter of 2005 also included
the effects of the third quarter 2005 sale of nonperforming
commercial loans with a balance of $6.7 million. Net charge-offs
decreased to $2.0 million or 0.14% of average portfolio loans in
the second quarter of 2006 compared with $4.0 million or 0.29% of
average portfolio loans in the first quarter of 2006 and $2.4
million or 0.17% of average portfolio loans in the second quarter
of 2005. The decrease from the first quarter of 2006 was primarily
due to a reduction in direct and indirect consumer loan net
charge-offs, partially offset by $0.2 million in net charge-offs
related to the sale of nonperforming commercial loans. The higher
direct and indirect consumer loan net charge-offs in the first
quarter of 2006 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 decrease from the second quarter of 2005 was due to lower
commercial loan net charge-offs. The provision for loan losses
decreased to $1.1 million in the second quarter of 2006 compared
with $3.0 million in the first quarter of 2006 and $1.4 million in
the second quarter of 2005. The decrease from the first quarter of
2006 reflected significantly lower net charge-offs in the second
quarter of 2006 and the overall risk profile of portfolio loans. As
a result of higher loan portfolio balances as well as changes in
net charge-offs and the provision for loan losses, the allowance
for loan losses totaled $114.6 million or 2.00% of portfolio loans
at June 30, 2006. The allowance for loan losses decreased by $0.9
million and $5.4 million from March 31, 2006 and June 30, 2005,
respectively. Based on seasonal business trends and the overall
risk in the loan portfolio, Citizens anticipates net charge-offs
for the third quarter of 2006 will be higher than the second
quarter of 2006. Citizens anticipates provision expense for the
third quarter of 2006 will be consistent with the second quarter of
2006. Noninterest Income Noninterest income for the second quarter
of 2006 was $23.7 million, a decrease of $1.8 million or 7.1% from
the first quarter of 2006 and an increase of $0.6 million or 2.6%
from the second quarter of 2005. The decrease from the first
quarter of 2006 was primarily the result of 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, partially offset by increases in service charges on deposit
accounts and brokerage and investment fees. The increase over the
second quarter of 2005 was primarily the result of increases in
service charges on deposits and trust fees, partially offset by
decreases in brokerage and investment fees as well as ATM network
user fees. For the first six months of 2006, noninterest income
totaled $49.3 million, an increase of $3.7 million or 8.1% over the
same period of 2005. The increase was primarily the result of the
aforementioned $2.9 million gain as well as higher service charges
on deposit accounts and trust fees, partially offset by decreases
in mortgage and other loan income as well as brokerage and
investment fees. Service charges on deposit accounts for the second
quarter of 2006 were $9.5 million, an increase of $0.6 million or
7.3% over the first quarter of 2006 and an increase of $0.7 million
or 7.9% from the second quarter of 2005. For the first six months
of 2006, service charges on deposit accounts totaled $18.4 million,
an increase of $1.3 million or 7.5% over the same period of 2005.
The increases were the result of revenue enhancement initiatives
implemented in the first quarter of 2006. Trust fees for the second
quarter of 2006 were $5.0 million, essentially unchanged from the
first quarter of 2006 and an increase of $0.5 million or 10.4% over
the second quarter of 2005. For the first six months of 2006, trust
fees totaled $10.0 million, an increase of $1.1 million or 12.3%
over the same period 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. Total trust assets under administration of
$2.6 billion at June 30, 2006 were essentially unchanged from March
31, 2006 and June 30, 2005. Mortgage and other loan income for the
second quarter of 2006 was $2.1 million, essentially unchanged from
the first quarter of 2006 and the second quarter of 2005. For the
first six months of 2006, mortgage and other loan income totaled
$4.1 million, a decrease of $0.3 million or 7.2% from the same
period of 2005. The decrease reflects the impact of an unfavorable
rate environment since the first quarter of 2005. Brokerage and
investment fees for the second quarter of 2006 were $1.7 million,
an increase of $0.2 million or 12.4% from the first quarter of 2006
and a decrease of $0.6 million or 25.4% from the second quarter of
2005. For the first six months of 2006, brokerage and investment
fees totaled $3.2 million, a decrease of $0.7 million or 17.1% from
the same period 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 six months of 2006 as the financial consultants adjusted
their sales process to create new opportunities. For the second
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), totaled $5.4 million, a decrease of $2.7 million or 33.1%
from the first quarter of 2006 and essentially unchanged from the
second quarter of 2005. The decrease from the first quarter of 2006
was primarily the result of the aforementioned $2.9 million gain on
the sale of the former downtown Royal Oak office. For the first six
months of 2006, all other noninterest income categories totaled
$13.6 million, an increase of $2.3 million or 20.4% over the same
period of 2005. The increase 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. Citizens anticipates total noninterest income for the
third quarter of 2006 will be consistent with or slightly higher
than the second quarter of 2006 due to anticipated increases in
deposit service charges and brokerage and investment fees.
Noninterest Expense Noninterest expense for the second quarter of
2006 was $60.1 million, a decrease of $1.5 million or 2.5% from the
first quarter of 2006 and a decrease of $0.9 million or 1.5% from
the second quarter of 2005. The decrease from the first quarter of
2006 was the result of Citizens contributing $1.5 million to its
charitable foundation during the first quarter of 2006 to sustain
future giving levels. Additionally, decreases in occupancy,
professional services, and advertising and public relations from
the first quarter of 2006 were partially offset by increases in
salaries and employee benefits, other loan expenses, and other
expenses. The decrease from the second quarter of 2005 resulted
from lower occupancy, equipment and advertising and public
relations, partially offset by increases in salaries and benefits,
other loan expenses, and other expenses. For the first six months
of 2006, noninterest expense totaled $121.6 million, essentially
unchanged from the same period of 2005 as increases in data
processing fees, other loan expenses, and other expenses were
substantially offset by reductions in salaries and employee
benefits, equipment, and advertising and public relations. Salaries
and employee benefits for the second quarter of 2006 increased $0.4
million or 1.4% over the first quarter of 2006 to $32.7 million and
increased $0.3 million or 1.1% over the second quarter of 2005.
When compared with the first quarter of 2006, increases in salaries
and incentive expense were largely offset by decreases in payroll
taxes and unemployment insurance. When compared with the second
quarter of 2005, higher salary expense due to merit increases
awarded in 2006 was largely offset by lower incentive,
hospitalization, and employee post-retirement benefit expenses.
Salary costs included $0.5 million in severance for the second
quarter of 2006, $0.7 million in the first quarter of 2006 and $0.4
million in the second quarter of 2005. Citizens had 2,107 full-time
equivalent employees at June 30, 2006, essentially unchanged from
March 31, 2006 and down from 2,150 at June 30, 2005. For the first
six months of 2006, salaries and employee benefits totaled $64.9
million, essentially unchanged from the same period in 2005.
Occupancy costs for the second quarter of 2006 decreased $0.7
million or 11.0% to $5.3 million compared with the first quarter of
2006 and decreased $0.4 million or 6.9% from the second quarter of
2005. The decrease from the first quarter of 2006 was primarily a
result of lower energy and utilities related expenses as well as
lower building maintenance expense. The decrease from the second
quarter of 2005 was largely the result of lower building rent
expense and lower depreciation. Citizens recorded additional
depreciation during the second quarter of 2005 as a result of
aligning the service life for these items with the current
capitalization policy. For the first six months of 2006, occupancy
costs totaled $11.2 million, essentially unchanged from the same
period of 2005. Equipment costs for the second quarter of 2006
increased $0.1 million or 4.2% to $3.3 million compared with the
first quarter of 2006 and decreased $1.6 million or 33.2% from the
second quarter of 2005. For the first six months of 2006, equipment
costs totaled $6.5 million, or a decrease of $1.8 million or 21.5%
from the same period of 2005. The decreases were due to $1.5
million in additional depreciation during the second quarter of
2005 as a result of aligning the service life for these items with
the current capitalization policy. Advertising and public relations
expense for the second quarter of 2006 decreased $1.1 million or
54.1% to $0.9 million compared with the first quarter of 2006 and
decreased $0.9 million or 48.7% from the second quarter of 2005.
For the first six months of 2006, advertising and public relations
expense totaled $3.0 million, a decrease of $0.6 million or 16.8%
from the same period of 2005. The decreases were due to higher
advertising related to direct mail campaigns and other media in the
first quarter of 2006 and advertising and marketing expenses
related to the rebranding of the Wisconsin franchise in the second
quarter of 2005. Other loan expenses for the second quarter of 2006
increased $0.8 million to $1.2 million compared with the first
quarter of 2006 and increased $0.3 million or 39.3% over the second
quarter of 2005. For the first six months of 2006, other loan
expenses totaled $1.6 million, an increase of $0.4 million or 30.8%
over the same period of 2005. The increase from the first quarter
of 2006 was the result of higher provisioning to fund the reserve
for unused loan commitments, which fluctuates with the amount of
unadvanced customer lines of credit. The increases from the second
quarter of 2005 and from the first six months of 2005 were due to
higher expenses related to processing commercial loans. For the
second quarter of 2006, all other noninterest expense categories,
which include professional services, data processing services,
postage and delivery, telephone, stationery and supplies,
intangible asset amortization, and other expenses, decreased $1.1
million or 6.3% from the first quarter of 2006 to $16.6 million and
increased $1.3 million or 8.5% from the second quarter of 2005. The
decrease from the first quarter of 2006 was due to the
aforementioned $1.5 million contribution to Citizens' charitable
foundation, partially offset by increases in non-credit losses from
a third-party vendor contract and write-downs of tax-credit related
investments in low-income housing and community development
projects. The increase from the second quarter of 2005 was
primarily a result of the aforementioned non-credit related loss
and write-downs, as well as higher training and travel expense. For
the first six months of 2006, all other noninterest expense
categories totaled $34.4 million, an increase of $2.8 million or
8.9% over the same period of 2005. The increase was the result of
the aforementioned contribution to the charitable foundation,
non-credit related loss, and write- downs, as well as higher data
processing fees. Citizens anticipates noninterest expenses for the
third quarter of 2006 will be consistent with or slightly higher
than the second quarter of 2006 due to increases in salaries and
employee benefits and advertising and public relations. Income Tax
Provision Income tax provision for the second quarter of 2006 was
$7.6 million, essentially unchanged from the first quarter of 2006
and a decrease of $1.4 million or 15.1% from the second quarter of
2005. For the first six months of 2006, income tax provision
totaled $15.3 million, a decrease of $0.6 million or 4.1% from the
same period of 2005. The decreases were the result of a $1.3
million ($0.8 million after-tax) reduction in the deferred
Wisconsin state income tax asset during the second quarter of 2005
as a result of the April 2005 merger of the Michigan and Wisconsin
bank charters. The effective tax rate was 26.72% for the second
quarter of 2006 compared with 27.10% for the first quarter of 2006
and 30.38% for the second quarter of 2005. The decrease from the
second quarter of 2005 was primarily due to the aforementioned
reduction in the Wisconsin state income tax asset. Citizens
anticipates the effective income tax rate for the third quarter of
2006 will be consistent with or slightly lower than the second
quarter of 2006. Citizens Republic Bancorp On June 27, 2006,
Citizens Banking Corporation and Republic Bancorp (NASDAQ symbol
RBNC) announced that they have agreed to merge Republic into
Citizens to create the new Citizens Republic Bancorp in a
transaction valued at approximately $1.048 billion in stock and
cash. The transaction is projected to close in the fourth quarter
of 2006, subject to regulatory and shareholder approvals. Based on
March 31, 2006 information, Citizens Republic Bancorp will have
$13.9 billion in assets, $8.6 billion in deposits, $2.6 billion in
trust assets under administration, and 275 branches and loan
production offices in five Midwest states. For more information
regarding the upcoming merger, see the June 27, 2006 press release
and investor presentation located on the Citizens website at
http://www.citizensonline.com/, under the Investor Relations
heading. Other News Citizens Opens New Branches Citizens opened two
new branch facilities during May 2006. The Jackson, Michigan
location was constructed with the new corporate design, which
includes a suspended glowing weatherball in the vestibule. The
Saginaw, Michigan office is part of a new multi-million dollar
medical complex. Both facilities are upgrades of previous
locations. Citizens Consolidates Loan Operations On June 12, 2006,
Citizens completed the consolidation announced in March 2006 of 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. Citizens
Equipment Leasing During June 2006, Citizens introduced an expanded
equipment leasing product suite, branded Citizens Equipment
Leasing. The new products, offered through Partners Equity Capital
Company (PECC), are intended to complement current commercial
financing alternatives as well as provide new opportunities for
deposit growth and fee income. Citizens Appoints Head of Consumer
Banking On June 26, 2006, the Board of Directors approved the
appointment of Cathleen Nash as executive vice president and head
of Consumer Banking. Ms. Nash joins Citizens from SunTrust
Corporation, where she served in a variety of positions for over 13
years, most recently as senior vice president and director of
branch banking overseeing the sales and operations strategy of
1,700 branch locations. Stock Repurchase Program During the second
quarter of 2006, Citizens repurchased a total of 80,000 shares of
its stock at an average price of $26.23. As of June 30, 2006 there
are 1,906,200 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. The dividend is payable on August 10, 2006, to shareholders
of record on August 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 10:00am EDT on Friday, July 21,
2006. A live audio Webcast is available at
http://www.vcall.com/IC/CEPage.asp?ID=106483. 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: 207186 Conference Name: "Citizens Banking
Corporation Second Quarter Earnings Conference Call" RSVP is not
required. A playback of the conference call will be available after
12:00pm EDT through August 7, 2006, by dialing US/Canada Dial-In
Number: (877) 660-6853 or International Dial-In Number: (201)
612-7415, Account Number: 286, Conference ID: 207186. Also, the
call can be accessed via Citizens' Web site, 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 182 branch, private banking, and
financial center locations and 193 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, including
those associated with the pending merger with Republic Bancorp;
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. Visit our website at
http://www.citizensonline.com/ Consolidated Balance Sheets
(Unaudited) Citizens Banking Corporation and Subsidiaries June 30,
March 31, June 30, (in thousands) 2006 2006 2005
--------------------------------------------------------------------------
Assets Cash and due from banks $205,117 $152,077 $163,461
Interest-bearing deposits with banks 1,478 1,503 1,128 Investment
Securities: Available-for-sale (amortized cost $1,434,595,
$1,479,416 and $1,703,232, respectively) U.S. Treasury and federal
agency securities 1,043,773 1,087,099 1,341,398 State and municipal
securities 363,095 378,454 379,625 Other securities 1,747 1,243 975
Held-to-maturity: State and municipal securities (fair value of
$94,559, $89,699 and $69,263, respectively) 96,789 90,346 67,813
FHLB and Federal Reserve stock 55,235 55,975 55,143 ----------
---------- ---------- Total investment securities 1,560,639
1,613,117 1,844,954 Mortgage loans held for sale 18,013 13,399
29,751 Portfolio loans: Commercial 1,789,583 1,688,970 1,634,924
Commercial real estate 1,443,851 1,418,596 1,334,169 Residential
mortgage loans 551,048 549,116 524,735 Direct consumer 1,099,146
1,109,249 1,186,659 Indirect consumer 844,411 826,060 842,741
---------- ---------- ---------- Total portfolio loans 5,728,039
5,591,991 5,523,228 Less: Allowance for loan losses (114,560)
(115,423) (119,967) ---------- ---------- ---------- Net portfolio
loans 5,613,479 5,476,568 5,403,261 Premises and equipment 120,154
120,719 120,353 Goodwill 54,527 54,527 54,527 Other intangible
assets 9,684 10,408 12,582 Bank owned life insurance 85,921 85,142
83,183 Other assets 145,158 135,857 112,737 ---------- ----------
---------- Total assets $7,814,170 $7,663,317 $7,825,937 ----------
---------- ---------- Liabilities Noninterest-bearing deposits
$954,907 $899,850 $927,270 Interest-bearing demand deposits 744,744
816,293 1,008,599 Savings deposits 1,537,098 1,452,638 1,475,220
Time deposits 2,447,820 2,355,206 1,789,649 ---------- ----------
---------- Total deposits 5,684,569 5,523,987 5,200,738 Federal
funds purchased and securities sold under agreements to repurchase
443,651 401,702 930,499 Other short-term borrowings 24,073 852
17,952 Other liabilities 78,881 82,203 78,072 Long-term debt
933,124 1,003,029 936,527 ---------- ---------- ---------- Total
liabilities 7,164,298 7,011,773 7,163,788 Shareholders' Equity
Preferred stock - no par value --- --- --- Common stock - no par
value 78,920 80,341 94,100 Retained earnings 587,494 578,980
555,017 Accumulated other comprehensive income (16,542) (7,777)
13,032 ---------- ---------- ---------- Total shareholders' equity
649,872 651,544 662,149 ---------- ---------- ---------- Total
liabilities and shareholders' equity $7,814,170 $7,663,317
$7,825,937 ========== ========== ========== Consolidated Statements
of Income (Unaudited) Citizens Banking Corporation and Subsidiaries
Three Months Ended Six Months Ended June 30, June 30, (in
thousands, except per share amounts) 2006 2005 2006 2005
--------------------------------------------------------------------------
Interest Income Interest and fees on loans $98,093 $83,475 $191,544
$162,747 Interest and dividends on investment securities: Taxable
13,063 14,979 26,674 29,667 Tax-exempt 5,259 5,147 10,576 10,344
Money market investments 1 18 13 27 -------- -------- --------
-------- Total interest income 116,416 103,619 228,807 202,785
-------- -------- -------- -------- Interest Expense Deposits
35,305 19,122 66,297 37,193 Short-term borrowings 5,395 6,700 9,131
11,141 Long-term debt 9,726 9,018 19,914 17,439 -------- --------
-------- -------- Total interest expense 50,426 34,840 95,342
65,773 -------- -------- -------- -------- Net Interest Income
65,990 68,779 133,465 137,012 Provision for loan losses 1,139 1,396
4,139 4,396 -------- -------- -------- -------- Net interest income
after provision for loan losses 64,851 67,383 129,326 132,616
-------- -------- -------- -------- Noninterest Income Service
charges on deposit accounts 9,521 8,822 18,396 17,109 Trust fees
4,972 4,503 10,014 8,915 Mortgage and other loan income 2,106 2,074
4,116 4,434 Brokerage and investment fees 1,703 2,284 3,218 3,883
ATM network user fees 1,018 1,223 2,005 2,096 Bankcard fees 1,129
961 2,186 1,801 Fair value change in CD swap derivatives --- ---
(207) --- Other 3,242 3,242 9,526 7,326 -------- -------- --------
-------- Total fees and other income 23,691 23,109 49,254 45,564
Investment securities gains 54 37 61 43 -------- -------- --------
-------- Total noninterest income 23,745 23,146 49,315 45,607
Noninterest Expense Salaries and employee benefits 32,690 32,351
64,946 65,702 Occupancy 5,291 5,685 11,233 11,245 Professional
services 3,703 3,726 7,781 7,925 Equipment 3,301 4,937 6,467 8,238
Data processing services 3,714 3,499 7,453 6,868 Advertising and
public relations 934 1,820 2,968 3,566 Postage and delivery 1,629
1,520 3,091 3,110 Telephone 1,392 1,465 2,856 2,906 Other loan
expenses 1,217 874 1,633 1,249 Stationery and supplies 631 602
1,358 1,521 Intangible asset amortization 724 724 1,449 1,449 Other
4,839 3,787 10,402 7,812 -------- -------- -------- -------- Total
noninterest expense 60,065 60,990 121,637 121,591 -------- --------
-------- -------- Income Before Income Taxes 28,531 29,539 57,004
56,632 Income tax provision 7,624 8,974 15,341 15,987 --------
-------- -------- -------- Net Income $20,907 $20,565 $41,663
$40,645 -------- -------- -------- -------- Net Income Per Common
Share: Basic $0.49 $0.48 $0.98 $0.94 Diluted 0.49 0.47 0.97 0.93
Cash Dividends Declared Per Common Share 0.290 0.285 0.575 0.570
Average Common Shares Outstanding: Basic 42,606 43,160 42,694
43,192 Diluted 42,738 43,424 42,839 43,534 Selected Quarterly
Information Citizens Banking Corporation and Subsidiaries 2nd Qtr
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 2006 2006 2005 2005 2005
--------------------------------------------------------------------------
Summary of Operations (thousands) Interest income $116,416 $112,391
$111,958 $108,506 $103,619 Interest expense 50,426 44,916 42,863
38,864 34,840 Net interest income 65,990 67,475 69,095 69,642
68,779 Provision for loan losses(1) 1,139 3,000 (7,287) 4,000 1,396
Net interest income after provision for loan losses 64,851 64,475
76,382 65,642 67,383 Total fees and other income(2) 23,691 25,563
19,930 23,941 23,109 Investment securities gains (losses)(3) 54 7
(8,970) --- 37 Noninterest expense 60,065 61,572 60,901 60,550
60,990 Income tax provision 7,624 7,717 7,553 8,041 8,974 Net
income 20,907 20,756 18,888 20,992 20,565 Taxable equivalent
adjustment 3,383 3,416 3,432 3,284 3,324
--------------------------------------------------------------------------
At Period End (millions) Assets $7,814 $7,663 $7,752 $7,851 $7,826
Portfolio loans 5,728 5,592 5,616 5,569 5,523 Deposits 5,685 5,524
5,474 5,226 5,201 Shareholders' equity 650 652 656 655 662
--------------------------------------------------------------------------
Average Balances (millions) Assets $7,671 $7,654 $7,754 $7,821
$7,807 Portfolio loans 5,610 5,561 5,575 5,531 5,472 Deposits 5,560
5,513 5,305 5,239 5,254 Shareholders' equity 647 655 654 655 654
Shareholders' equity/assets 8.44% 8.55% 8.43% 8.38% 8.37%
--------------------------------------------------------------------------
Credit Quality Statistics (thousands) Nonaccrual loans $26,001
$27,689 $32,140 $35,527 $42,191 Loans 90 or more days past due and
still accruing 887 547 238 92 2 Restructured loans 406 1,844 --- 13
32 ------ ----- ------ ----- ----- Total nonperforming loans 27,294
30,080 32,378 35,632 42,225 Other repossessed assets acquired
(ORAA) 7,472 6,397 7,351 6,984 6,817 ----- ----- ----- ----- -----
Total nonperforming assets $34,766 $36,477 $39,729 $42,616 $49,042
------- ------- ------- ------- ------- Allowance for loan losses
$114,560 $115,423 $116,400 $118,626 $119,967 Allowance for loan
losses as a percent of portfolio loans 2.00% 2.06% 2.07% 2.13%
2.17% Allowance for loan losses as a percent of nonperforming
assets 329.52 316.43 292.98 278.36 244.62 Allowance for loan losses
as a percent of nonperforming loans 419.73 383.72 359.50 332.92
284.11 Nonperforming assets as a percent of portfolio loans plus
ORAA 0.61 0.65 0.71 0.76 0.89 Nonperforming assets as a percent of
total assets 0.44 0.48 0.51 0.54 0.63 Net loans charged off as a
percent of average portfolio loans (annualized) 0.14 0.29 (0.36)
0.38 0.17 Net loans charged off (000) $2,002 $3,977 $(5,061) $5,341
$2,374
--------------------------------------------------------------------------
Per Common Share Data Net Income: Basic $0.49 $0.49 $0.44 $0.49
$0.48 Diluted 0.49 0.48 0.44 0.48 0.47 Dividends 0.290 0.285 0.285
0.285 0.285 Market Value: High $27.60 $28.66 $30.22 $32.15 $30.98
Low 23.71 25.62 26.67 28.20 26.35 Close 24.41 26.85 27.75 28.40
30.22 Book value 15.15 15.23 15.28 15.21 15.31 Shares outstanding,
end of period (000) 42,887 42,770 42,968 43,044 43,261
--------------------------------------------------------------------------
Performance Ratios (annualized) Net interest margin (FTE)(4) 3.84%
3.97% 3.95% 3.93% 3.92% Return on average assets 1.09 1.10 0.97
1.06 1.06 Return on average shareholders' equity 12.96 12.86 11.46
12.71 12.62 Efficiency ratio(5) 64.54 63.84 65.87 62.51 64.06
--------------------------------------------------------------------------
(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 Six months ended
Citizens Banking Corporation and Subsidiaries June 30, 2006 2005 %
Change
------------------------------------------------------------------------
Summary of Operations (thousands) Interest income $228,807 $202,785
12.8% Interest expense 95,342 65,773 45.0 Net interest income
133,465 137,012 (2.6) Provision for loan losses 4,139 4,396 (5.8)
Net interest income after provision for loan losses 129,326 132,616
(2.5) Total fees and other income 49,254 45,564 8.1 Investment
securities gains (losses) 61 43 43.0 Noninterest expense 121,637
121,591 0.0 Income tax provision 15,341 15,987 (4.0) Net income
41,663 40,645 2.5
------------------------------------------------------------------------
At Period End (millions) Assets $7,814 $7,826 (0.2)% Portfolio
loans 5,728 5,523 3.7 Deposits 5,685 5,201 9.3 Shareholders' equity
650 662 (1.9)
------------------------------------------------------------------------
Average Balances (millions) Assets $7,662 $7,768 (1.4)% Portfolio
loans 5,586 5,433 2.8 Deposits 5,537 5,301 4.4 Shareholders' equity
651 652 (0.1) Shareholders' equity / assets 8.49% 8.39% 1.2
------------------------------------------------------------------------
Per Common Share Data Net Income: Basic $0.98 $0.94 4.3% Diluted
0.97 0.93 4.3 Dividends 0.575 0.570 0.9 Market Value: High $28.66
$34.81 (17.7) Low 23.71 26.35 (10.0) Close 24.41 30.22 (19.2) Book
value 15.15 15.31 (1.0) Tangible book value 13.66 13.75 (0.7)
Shares outstanding, end of period (000) 42,887 43,261 (0.9)
------------------------------------------------------------------------
Performance Ratios (annualized) Net interest margin (FTE) (1) 3.90%
3.94% (1.0)% Return on average assets 1.10 1.06 3.8 Return on
average shareholders' equity 12.91 12.58 2.6 Net loans charged off
as a percent of average portfolio loans 0.22 0.25 (12.0)
------------------------------------------------------------------------
(1) Net interest margin is presented on an annual basis and
includes taxable equivalent adjustments to interest income of $6.8
million and $6.7 million for the six months ended June 30, 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
--------------------------------------- Jun 30 Mar 31 Dec 31 Sep 30
Jun 30 (in thousands) 2006 2006 2005 2005 2005
--------------------------------------------------------------------------
NONINTEREST INCOME: Service charges on deposit accounts $9,521
$8,875 $8,957 $9,343 $8,822 Trust fees 4,972 5,042 4,989 4,541
4,503 Mortgage and other loan income 2,106 2,010 2,099 2,450 2,074
Brokerage and investment fees 1,703 1,515 1,946 1,974 2,284 ATM
network user fees 1,018 987 1,065 1,194 1,223 Bankcard fees 1,129
1,057 1,027 976 961 Fair value change in CD swap derivatives ---
(207) (3,604) --- --- Other income 3,242 6,284 3,451 3,463 3,242
------ ------ ------ ------ ------ Total fees and other income
23,691 25,563 19,930 23,941 23,109 Investment securities gains
(losses) 54 7 (8,970) --- 37 ------ ------ ------ ------ ------
TOTAL NONINTEREST INCOME $23,745 $25,570 $10,960 $23,941 $23,146
====== ====== ====== ====== ====== NONINTEREST EXPENSE: Salaries
and employee benefits $32,690 $32,256 $32,391 $34,060 $32,351
Occupancy 5,291 5,942 5,631 5,255 5,685 Professional services 3,703
4,078 4,837 4,517 3,726 Equipment 3,301 3,166 3,263 3,133 4,937
Data processing services 3,714 3,739 3,744 3,188 3,499 Advertising
and public relations 934 2,034 2,570 1,717 1,820 Postage and
delivery 1,629 1,462 1,591 1,512 1,520 Telephone 1,392 1,464 1,333
1,242 1,465 Other loan expenses 1,217 416 686 720 874 Stationery
and supplies 631 727 844 726 602 Intangible asset amortization 724
725 725 725 724 Other expense (1) 4,839 5,563 3,286 3,755 3,787
------ ------ ------ ------ ------ TOTAL NONINTEREST EXPENSE
$60,065 $61,572 $60,901 $60,550 $60,990 ====== ====== ====== ======
====== (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
------------------------------------- June 30, 2006 March 31, 2006
------------------------------------- Average Average Average
Average (dollars in thousands) Balance Rate(1) Balance Rate(1)
--------------------------------------------------------------------------
Earning Assets Money market investments $1,373 0.45 1,684 2.82
Investment securities(3): Taxable 1,158,939 4.51 1,181,397 4.61
Tax-exempt 447,476 7.23 446,657 7.33 Mortgage loans held for sale
21,680 5.54 16,471 5.64 Portfolio loans(4): Commercial 1,704,447
7.26 1,646,899 7.02 Commercial real estate 1,426,911 7.13 1,415,201
6.88 Residential mortgage loans 544,526 5.76 541,390 5.66 Direct
consumer 1,103,024 7.49 1,124,379 7.22 Indirect consumer 831,012
6.61 833,436 6.61 --------- --------- Total portfolio loans
5,609,920 7.03 5,561,305 6.83 --------- --------- Total earning
assets 7,239,388 6.63 7,207,514 6.49 Nonearning Assets Cash and due
from banks 157,670 165,909 Bank premises and equipment 120,650
121,348 Investment security fair value adjustment (18,523) (3,305)
Other nonearning assets 287,048 278,550 Allowance for loan losses
(115,274) (116,151) --------- --------- Total assets $7,670,959
$7,653,865 ========= ========= Interest-Bearing Liabilities
Deposits: Interest-bearing demand $789,168 0.65 $857,273 0.64
Savings deposits 1,471,803 2.58 1,448,866 2.23 Time deposits
2,386,346 4.13 2,281,926 3.85 Short-term borrowings 487,549 4.44
390,307 3.88 Long-term debt 895,056 4.36 1,004,948 4.10 ---------
--------- Total interest-bearing liabilities 6,029,922 3.35
5,983,320 3.04 Noninterest-Bearing Liabilities and Shareholders'
Equity Noninterest-bearing demand 913,181 924,788 Other liabilities
80,727 91,150 Shareholders' equity 647,129 654,607 ---------
--------- Total liabilities and shareholders' equity $7,670,959
$7,653,865 ========= ========= Interest Spread 3.28% 3.45%
Contribution of noninterest bearing sources of funds 0.56 0.52 ----
---- Net Interest Income as a Percent of Earning Assets 3.84% 3.97%
Average Balances, Yields and Rates Three Months Ended
--------------------------------- June 30, 2005
--------------------------------- Average Average (dollars in
thousands) Balance(2) Rate(1)(2)
-------------------------------------------------------------------------
Earning Assets Money market investments 3,209 2.28 Investment
securities(3): Taxable 1,436,384 4.17 Tax-exempt 421,144 7.52
Mortgage loans held for sale 38,478 5.59 Portfolio loans(4):
Commercial 1,640,287 5.90 Commercial real estate 1,320,077 6.28
Residential mortgage loans 499,425 5.64 Direct consumer 1,181,656
6.15 Indirect consumer 830,330 6.53 --------- Total portfolio loans
5,471,775 6.12 --------- Total earning assets 7,370,990 5.81
Nonearning Assets Cash and due from banks 152,838 Bank premises and
equipment 121,863 Investment security fair value adjustment 15,326
Other nonearning assets 266,932 Allowance for loan losses (120,560)
--------- Total assets $7,807,389 ========= Interest-Bearing
Liabilities Deposits: Interest-bearing demand $1,071,211 0.67
Savings deposits 1,512,212 1.28 Time deposits 1,742,621 2.88
Short-term borrowings 890,444 3.02 Long-term debt 925,817 3.91
--------- Total interest-bearing liabilities 6,142,305 2.27
Noninterest-Bearing Liabilities and Shareholders' Equity
Noninterest-bearing demand 927,566 Other liabilities 83,828
Shareholders' equity 653,690 --------- Total liabilities and
shareholders' equity $7,807,389 ========= Interest Spread 3.54%
Contribution of noninterest bearing sources of funds 0.38 ---- Net
Interest Income as a Percent of Earning Assets 3.92%
-------------------------------------------------------------------------
(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. Average Balances, Yields and Rates Six Months
Ended June 30, ----------------------------------------- 2006 2005
----------------------------------------- Average Average Average
Average Balance Rate(1) Balance(2) Rate(1)(2) Earning Assets Money
market investments 1,528 1.75 2,508 2.18 Investment securities (3):
Taxable 1,170,105 4.56 1,436,036 4.13 Tax-exempt 447,069 7.28
421,038 7.56 Mortgage loans held for sale 19,090 5.58 34,929 5.54
Portfolio loans (4): Commercial 1,675,832 7.14 1,627,864 5.76
Commercial real estate 1,421,089 7.00 1,305,932 6.18 Residential
mortgage loans 542,966 5.71 498,679 5.55 Direct consumer 1,113,643
7.35 1,174,813 6.09 Indirect consumer 832,217 6.61 825,338 6.59
---------- ---------- Total portfolio loans 5,585,747 6.93
5,432,626 6.04 ---------- ---------- Total earning assets 7,223,539
6.56 7,327,137 5.75 Nonearning Assets Cash and due from banks
161,767 155,502 Bank premises and equipment 120,997 121,385
Investment security fair value adjustment (10,956) 17,140 Other
nonearning assets 282,822 267,891 Allowance for loan losses
(115,710) (120,912) ---------- ---------- Total assets $7,662,459
$7,768,143 ========== ========== Interest-Bearing Liabilities
Deposits: Interest-bearing demand $823,032 0.65 $1,111,998 0.69
Savings deposits 1,460,399 2.41 1,568,907 1.27 Time deposits
2,334,424 3.99 1,702,868 2.78 Short-term borrowings 439,197 4.19
804,684 2.79 Long-term debt 949,698 4.22 926,653 3.79 ----------
---------- Total interest-bearing liabilities 6,006,750 3.20
6,115,110 2.17 Noninterest-Bearing Liabilities and Shareholders'
Equity Noninterest-bearing demand 918,952 917,148 Other liabilities
85,909 84,294 Shareholders' equity 650,848 651,591 ----------
---------- Total liabilities and shareholders' equity $7,662,459
$7,768,143 ========== ========== Interest Spread 3.36% 3.58%
Contribution of noninterest bearing sources of funds 0.54 0.36 ----
---- Net Interest Income as a Percent of Earning Assets 3.90% 3.94%
(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
--------------------------------------------- Jun 30 Mar 31 Dec 31
Sep 30 Jun 30 (in thousands) 2006 2006 2005 2005 2005
----------------------------------------------------------------------
Commercial(1) Commercial $8,795 $10,594 $11,880 $14,457 $17,903
Commercial real estate 4,956 5,219 5,068 5,720 9,692 --------
-------- -------- -------- -------- Total commercial 13,751 15,813
16,948 20,177 27,595 Consumer: Direct 3,167 3,911 4,326 4,459 3,726
Indirect 904 569 2,454 962 1,042 Residential mortgage 8,179 7,396
8,412 9,929 9,828 Loans 90 days or more past due and still accruing
887 547 238 92 2 Restructured loans 406 1,844 --- 13 32 --------
-------- -------- -------- -------- Total Nonperforming Loans
27,294 30,080 32,378 35,632 42,225 Other Repossessed Assets
Acquired 7,472 6,397 7,351 6,984 6,817 -------- -------- --------
-------- -------- Total Nonperforming Assets $34,766 $36,477
$39,729 $42,616 $49,042 ======== ======== ======== ========
========
----------------------------------------------------------------------
(1)Changes in commercial nonperforming loans (including
restructured loans) for the quarter (in millions): Inflows $10.4
$9.8 $10.6 $9.9 $21.1 Outflows (13.9) (9.1) (13.8) (17.3) (17.5)
-------- -------- -------- -------- -------- Net change $(3.5) $0.7
$(3.2) $(7.4) $3.6 ======== ======== ======== ======== ========
Summary of Loan Loss Experience Citizens Banking Corporation and
Subsidiaries Three Months Ended
--------------------------------------------- Jun 30 Mar 31 Dec 31
Sep 30 Jun 30 (in thousands) 2006 2006 2005 2005 2005
----------------------------------------------------------------------
Allowance for loan losses - beginning of period $115,423 $116,400
$118,626 $119,967 $120,945 Provision for loan losses 1,139 3,000
(7,287) 4,000 1,396 Charge-offs: Commercial 854 921 2,068 1,912
2,722 Commercial real estate 606 616 912 1,965 200 ------- -------
------- ------- ------- Total commercial 1,460 1,537 2,980 3,877
2,922 Residential mortgage 305 198 519 182 127 Direct consumer
1,216 1,669 1,382 1,257 1,227 Indirect consumer 1,575 2,829 3,075
2,640 1,534 ------- ------- ------- ------- ------- Total
charge-offs 4,556 6,233 7,956 7,956 5,810 ------- ------- -------
------- ------- Recoveries: Commercial 1,001 1,175 11,914 1,334
2,117 Commercial real estate 485 79 28 232 227 ------- -------
------- ------- ------- Total commercial 1,486 1,254 11,942 1,566
2,344 Residential mortgage 48 55 37 32 --- Direct consumer 332 285
329 370 377 Indirect consumer 688 662 709 647 715 ------- -------
------- ------- ------- Total recoveries 2,554 2,256 13,017 2,615
3,436 ------- ------- ------- ------- ------- Net charge-offs 2,002
3,977 (5,061) 5,341 2,374 ------- ------- ------- ------- -------
Allowance for loan losses - end of period $114,560 $115,423
$116,400 $118,626 $119,967 ------- ------- ------- ------- -------
Reserve for loan commitments - end of period $2,937 $2,684 $3,023
$3,023 $2,868 ------- ------- ------- ------- ------- Three Months
Ended June 30, 2006 ------------------------------------------
Commercial Residential (in thousands) Commercial real estate
mortgage --------------- ------------ ------------- Charge-offs:
Michigan $645 $366 $246 Wisconsin 209 240 59 Iowa --- --- ---
------- ------- ------- Total charge-offs 854 606 305 -------
------- ------- Recoveries: Michigan 615 390 48 Wisconsin 383 86
--- Iowa 3 9 --- ------- ------- ------- Total recoveries 1,001 485
48 ======= ======= ======= Net charge-offs $(147) $121 $257 =======
======= ======= Three Months Ended June 30, 2006
------------------------------------------ Direct Indirect (in
thousands) consumer consumer Total ------------- -------------
-------------- Charge-offs: Michigan $954 $1,575 $3,786 Wisconsin
236 --- 744 Iowa 26 --- 26 ------- ------- ------- Total
charge-offs 1,216 1,575 4,556 ------- ------- ------- Recoveries:
Michigan 227 688 1,968 Wisconsin 93 --- 562 Iowa 12 --- 24 -------
------- ------- Total recoveries 332 688 2,554 ======= =======
======= Net charge-offs $884 $887 $2,002 ======= ======= =======
Six Months Ended June 30, 2006
------------------------------------------ Commercial Residential
(in thousands) Commercial real estate mortgage -------------
------------- -------------- Charge-offs: Michigan $1,265 $876 $404
Wisconsin 510 347 97 Iowa --- --- 1 ------- ------- ------- Total
charge-offs 1,775 1,223 502 ------- ------- ------- Recoveries:
Michigan 961 420 90 Wisconsin 1,208 135 8 Iowa 7 9 4 -------
------- ------- Total recoveries 2,176 564 102 ======= =======
======= Net charge-offs $(401) $659 $400 ======= ======= =======
Six Months Ended June 30, 2006
------------------------------------------ Direct Indirect (in
thousands) consumer consumer Total ------------- -------------
-------------- Charge-offs: Michigan $2,327 $4,404 $9,276 Wisconsin
496 --- 1,450 Iowa 62 --- 63 ------- ------- ------- Total
charge-offs 2,885 4,404 10,789 ------- ------- ------- Recoveries:
Michigan 468 1,350 3,289 Wisconsin 132 --- 1,483 Iowa 18 --- 38
------- ------- ------- Total recoveries 618 1,350 4,810 =======
======= ======= Net charge-offs $2,267 $3,054 $5,979 =======
======= ======= (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/
http://www.vcall.com/IC/CEPage.asp?ID=106483
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Citizens Banking (NASDAQ:CBCF)
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