RALEIGH, N.C., Jan. 28, 2008 (PRIME NEWSWIRE) -- First Citizens BancShares Inc. (Nasdaq:FCNCA) reports earnings for the quarter ending December 31, 2007, of $26.2 million, compared to $33.2 million for the corresponding period of 2006, a decrease of 21.2 percent, according to Lewis R. Holding, chairman of the board.
Results for the fourth quarter 2007 include a significant increase in the provision for credit losses and higher noninterest expense when compared to the same period of 2006. While noninterest income improved during the fourth quarter of 2007, continuing market-driven interest rate pressure caused net interest income to increase only marginally.
Per share income for the fourth quarter 2007 totaled $2.51, compared to $3.18 for the same period a year ago. First Citizens' results generated an annualized return on average assets of 0.64 percent for the fourth quarter of 2007, compared to 0.84 percent for the fourth quarter of 2006. The annualized return on average equity was 7.31 percent during the current quarter, compared to 10.19 percent for the same period of 2006.
Net interest income increased $3.4 million or 2.8 percent during the fourth quarter of 2007. The taxable-equivalent net yield on interest-earning assets declined 6 basis points to 3.35 percent. Average loans and leases exhibited healthy growth during the fourth quarter of 2007 when compared to the same period in 2006, up $664.4 million or 6.5 percent. Average interest-bearing liabilities increased $614.3 million or 5.3 percent over 2006.
The provision for credit losses increased significantly during the fourth quarter of 2007, up $4.3 million or 58.1 percent versus the same period of 2006. Net charge-offs equaled $8.4 million during the fourth quarter of 2007, compared to $7.0 million during the fourth quarter of 2006. The annualized ratio of net charge-offs to average loans and leases equaled 0.31 percent during the fourth quarter of 2007, compared to 0.27 percent during the same period of 2006.
Noninterest income increased $7.3 million or 10.5 percent during the fourth quarter of 2007. The improvement resulted from growth in wealth advisory services, cardholder and merchant services income and service charge income. Noninterest expense increased $14.9 million during the fourth quarter of 2007. This 11.3 percent increase resulted primarily from higher salary expense, $3.3 million for litigation matters resulting from Visa International member bank status and cardholder and merchant processing costs. Salary expense increased $5.3 million or 9.2 percent, primarily due to new branch offices and the impact of merit increases. Cardholder and merchant processing costs increased $1.6 million or 13.4 percent during the fourth quarter of 2007, as a result of higher levels of transaction volume and new cardholder reward programs.
For the year ending December 31, 2007, net income amounted to $108.6 million or $10.41 per share, compared to $126.5 million or $12.12 per share earned during 2006. Net income as a percentage of average assets equaled 0.68 percent during 2007, compared to 0.83 percent during 2006. The return on average equity was 7.92 percent for 2007, compared to 10.19 percent for 2006. Lower net income during 2007 resulted from much higher provision for credit losses and noninterest expense offset partially by improved noninterest income.
Net interest income during 2007 increased only $3.8 million, or 0.8 percent versus 2006. Although average interest-earning assets grew $654.9 million or 4.8 percent during 2007, the combined impact of a flat yield curve and highly competitive loan and deposit pricing caused the taxable-equivalent net yield on interest-earning assets to decline 13 basis points to 3.41 percent during 2007, when compared to 2006.
The provision for credit losses increased $12.7 million or 60.6 percent during 2007. Net charge-offs for 2007 totaled $28.0 million, compared to $18.0 million recorded during the same period of 2006. Higher 2007 net charge-offs were primarily due to an $8.6 million increase in losses on working capital finance loans. The ratio of net charge-offs to average loans and leases in 2007 equaled 0.27 percent compared to 0.18 percent for the prior year.
Noninterest income increased $24.1 million or 8.9 percent during 2007. Cardholder and merchant services income increased $11.0 million or 12.7 percent from 2006 to 2007 due to transaction volume growth. Income from wealth advisory services continued to display very favorable growth trends, up $7.1 million or 16.8 percent during 2007. Service charges on deposit accounts increased $5.3 million or 7.3 percent during 2007.
Noninterest expense increased $43.6 million or 8.2 percent during 2007. Salaries and wages increased $15.4 million or 6.7 percent during 2007 as a result of new branch locations and merit increases. Costs related to cardholder and merchant activities, including processing and cardholder reward costs, increased $7.9 million or 17.0 percent over the same period of 2006, due to higher transaction volume and enhanced programs. Occupancy costs grew $4.8 million or 9.1 percent, due to new branches and expenses related to the new headquarters building. Equipment costs increased $3.9 million or 7.5 percent during 2007. Other expense included $3.3 million related to BancShares' estimated portion of the pending litigation resulting from Visa International membership.
As of December 31, 2007, First Citizens had total assets of $16.2 billion. BancShares' banking subsidiaries, First Citizens Bank and IronStone Bank, provide a broad range of financial services to individuals, businesses, professionals and the medical community through a network of 395 branch offices, telephone banking, online banking and ATMs. For more information, visit First Citizens' Web site at firstcitizens.com.
This news release may contain forward-looking statements. A discussion of factors that could cause First Citizens' actual results to differ materially from those expressed in such forward-looking statements is included in First Citizens' filings with the SEC.
CONDENSED STATEMENTS OF INCOME
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Three Months Ended Year Ended
(thousands, except share December 31 December 31
data; unaudited) 2007 2006 2007 2006
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Interest income $ 230,827 $ 219,493 $ 904,056 $ 830,315
Interest expense 109,197 101,215 423,714 353,737
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Net interest income 121,630 118,278 480,342 476,578
Provision for credit losses 11,795 7,462 33,594 20,922
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Net interest income after
provision for credit
losses 109,835 110,816 446,748 455,656
Noninterest income 76,534 69,246 295,470 271,367
Noninterest expense 146,286 131,400 574,664 531,077
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Income before income taxes 40,083 48,662 167,554 195,946
Income taxes 13,920 15,467 58,937 69,455
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Net income $ 26,163 $ 33,195 $ 108,617 $ 126,491
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Taxable-equivalent net
interest income $ 123,666 $ 120,110 $ 488,019 $ 482,927
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Net income per share $ 2.51 $ 3.18 $ 10.41 $ 12.12
Cash dividends per share 0.275 0.275 1.10 1.10
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Profitability Information
(annualized)
Return on average assets 0.64% 0.84% 0.68% 0.83%
Return on average equity 7.31 10.19 7.92 10.19
Taxable-equivalent net
yield on interest-
earning assets 3.35 3.41 3.41 3.54
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CONDENSED BALANCE SHEETS
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(thousands, except share December 31 December 31
data; unaudited) 2007 2006 Change
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Cash and due from banks $ 793,788 $ 1,010,984 -21.48%
Investment securities 3,236,835 3,221,048 0.49%
Loans and leases 10,963,904 10,273,043 6.72%
Allowance for loan and
lease losses (136,974) (132,004) 3.77%
Other assets 1,354,554 1,356,626 -0.15%
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Total assets $ 16,212,107 $ 15,729,697 3.07%
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Deposits $ 12,928,544 $ 12,743,324 1.45%
Other liabilities 1,842,355 1,675,554 9.95%
Shareholders' equity 1,441,208 1,310,819 9.95%
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Total liabilities and
shareholders' equity $ 16,212,107 $ 15,729,697 3.07%
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Book value per share $ 138.12 $ 125.62 9.95%
Tangible book value per share 127.72 115.02 11.04%
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SELECTED AVERAGE BALANCES
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(thousands, except Three Months Ended Year Ended
shares outstanding; December 31 December 31
unaudited) 2007 2006 2007 2006
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Total assets $16,276,649 $15,628,835 $15,919,222 $15,240,327
Investment
securities 3,272,015 3,176,845 3,144,052 3,028,384
Loans and leases 10,831,571 10,167,157 10,513,599 9,989,757
Interest-earning
assets 14,655,309 13,984,789 14,292,322 13,637,388
Deposits 12,876,549 12,601,708 12,659,236 12,452,955
Interest-bearing
liabilities 12,216,067 11,601,752 11,883,421 11,262,423
Shareholders'
equity $ 1,420,348 $ 1,292,771 $ 1,370,617 $ 1,241,254
Shares
outstanding 10,434,453 10,434,453 10,434,453 10,434,453
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ASSET QUALITY
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December 31 December 31
(dollars in thousands; unaudited) 2007 2006 Change
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Nonaccrual loans and leases $ 13,021 $ 14,882 -12.51%
Other real estate 6,893 6,028 14.35%
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Total nonperforming assets $ 19,914 $ 20,910 -4.76%
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Accruing loans and leases 90 days
or more past due $ 6,941 $ 5,185 33.87%
Nonperforming assets to gross
loans and leases plus other
real estate 0.18% 0.20%
Allowance for credit losses to
gross loans and leases 1.32 1.35
Net charge-offs to average loans
and leases 0.27 0.18
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CAPITAL INFORMATION
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(dollars in thousands; December 31 December 31
unaudited) 2007 2006 Change
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Tier 1 capital $ 1,557,190 $ 1,456,947 6.88%
Total capital 1,836,763 1,732,026 6.05%
Risk-weighted assets 11,961,124 11,266,342 6.17%
Tier 1 capital ratio 13.02% 12.93%
Total capital ratio 15.36 15.37
Leverage capital ratio 9.63 9.39
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