RALEIGH, N.C., Jan. 26, 2009 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (Nasdaq:FCNCA) reports earnings for the year ending December 31, 2008, of $91.1 million, compared to $108.6 million earned during 2007, according to Lewis R. Holding, chairman of the board.
Lower net income during 2008 resulted from higher provision for credit losses and noninterest expense. Net income benefited from improved net interest income and noninterest income.
Per share income for 2008 totaled $8.73, compared to $10.41 for 2007. First Citizens' return on average assets equaled 0.56 percent for 2008, compared to 0.68 percent for 2007. The return on average equity was 6.13 percent during 2008, compared to 7.92 percent for 2007.
Net interest income during 2008 increased $19.4 million, or 4.0 percent versus 2007. For 2008, the impact of a $618.6 million increase in average interest-earning assets more than offset the unfavorable impact of lower interest rates. The taxable-equivalent net yield on interest-earning assets equaled 3.40 percent during 2008 compared to 3.41 percent during 2007.
The provision for credit losses increased $32.2 million during 2008, the result of higher net charge-offs and deterioration in the residential construction loan portfolio. Net charge-offs for 2008 totaled $45.3 million, compared to $28.0 million recorded during 2007. The increased level of net charge-offs in 2008 resulted from higher losses among retail and residential construction loans. The ratio of net charge-offs to average loans and leases in 2008 equaled 0.40 percent, compared to 0.27 percent for the prior year. Nonperforming assets totaled $71.7 million or 0.61 percent of loans plus other real estate owned as of December 31, 2008, compared to $19.9 million and 0.18 percent as of December 31, 2007. The increase in nonperforming assets is primarily attributable to the residential construction loan portfolio.
Noninterest income increased $16.6 million or 5.6 percent during 2008. Service charges on deposit accounts increased $4.5 million or 5.8 percent in 2008 primarily due to higher commercial service charge income resulting from lower interest rates. Fees from processing services increased $3.1 million or 9.4 percent as a result of continued expansion in the customer base. Wealth management services income fell $1.1 million or 2.3 percent caused by a decline in the market values of assets under management. Securities gains totaled $8.1 million during 2008 due to gains recognized on the redemption of Visa stock, compared to $1.4 million during 2007.
Noninterest expense increased $31.8 million or 5.5 percent during 2008. Salaries and wages increased $15.4 million or 6.3 percent during 2008 as a result of additional costs from new branch locations and merit increases offset partially by reduced incentive-based compensation. Benefit costs were up $6.2 million or 11.7 percent for the year due to higher health and executive retirement costs. Occupancy costs grew $3.9 million or 6.9 percent due to new branches and expenses related to the new headquarters building.
Net income for the quarter ending December 31, 2008, equaled $12.9 million, compared to $26.2 million for the corresponding period of 2007. Results for the fourth quarter 2008 include a significant increase in the provision for credit losses and higher noninterest expense when compared to the same period of 2007. While net interest income improved during the fourth quarter of 2008, noninterest income declined.
Per share income for the fourth quarter 2008 totaled $1.24, compared to $2.51 for the same period a year ago. First Citizens' results generated an annualized return on average assets of 0.31 percent for the fourth quarter of 2008, compared to 0.64 percent for the fourth quarter of 2007. The annualized return on average equity was 3.43 percent during the current quarter, compared to 7.31 percent for the same period of 2007.
Net interest income increased $2.5 million or 2.1 percent during the fourth quarter of 2008 due to a $638.1 million or 4.4 percent increase in average interest-earning assets when compared to the same period of 2007. However, falling interest rates had a greater impact on asset yields than on liabilities, causing the taxable-equivalent net yield on interest-earning assets to drop 8 basis points to 3.27 percent.
The provision for credit losses increased $10.3 million during the fourth quarter of 2008, up 87.7 percent versus the same period of 2007, due primarily to deterioration in the residential construction loan portfolio. Net charge-offs equaled $18.0 million during the fourth quarter of 2008, compared to $8.4 million during the fourth quarter of 2007. Net charge-offs for 2008 increased due to higher losses among retail and residential construction loans. The annualized ratio of net charge-offs to average loans and leases equaled 0.61 percent during the fourth quarter of 2008, compared to 0.31 percent during the same period of 2007.
Noninterest income decreased $4.4 million or 5.7 percent during the fourth quarter of 2008. The decline resulted from general economic weakness causing reductions in wealth management services, cardholder and merchant services income and service charge income. Noninterest expense increased $9.5 million during the fourth quarter of 2008. This 6.5 percent increase resulted primarily from higher personnel, advertising and foreclosure-related expenses. Salary expense increased $3.4 million or 5.5 percent, due to merit increases, new branch offices and severance costs, partially offset by lower incentive-based compensation. Employee benefits expense increased $2.5 million due to higher employer health expense and current year costs related to an enhanced 401(k) plan.
As of December 31, 2008, First Citizens had total assets of $16.7 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 400 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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(thousands, except Three Months Ended Year Ended
share data; December 31 December 31
unaudited) 2008 2007 2008 2007
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Interest income $ 195,366 $ 230,826 $ 814,716 $ 904,056
Interest expense 71,211 109,197 314,945 423,714
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Net interest
income 124,155 121,629 499,771 480,342
Provision for
credit losses 22,142 11,795 65,805 33,594
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Net interest
income after
provision for
credit losses 102,013 109,834 433,966 446,748
Noninterest income 72,182 76,534 312,119 295,470
Noninterest
expense 155,800 146,285 606,481 574,664
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Income before
income taxes 18,395 40,083 139,604 167,554
Income taxes 5,502 13,920 48,546 58,937
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Net income $ 12,893 $ 26,163 $ 91,058 $ 108,617
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Taxable-equivalent
net interest
income $ 125,779 $ 123,666 $ 506,516 $ 488,019
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Net income per
share $ 1.24 $ 2.51 $ 8.73 $ 10.41
Cash dividends per
share 0.275 0.275 1.10 1.10
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Profitability
Information
(annualized)
Return on average
assets 0.31% 0.64% 0.56% 0.68%
Return on average
equity 3.43 7.31 6.13 7.92
Taxable-equivalent
net yield on
interest-earning
assets 3.27 3.35 3.40 3.41
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CONDENSED BALANCE SHEETS
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(thousands, except
share data; December 31 December 31
unaudited) 2008 2007 Change
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Cash and due from
banks $ 593,375 $ 793,788 -25.25%
Investment
securities 3,271,650 3,236,835 1.08%
Loans and leases 11,719,285 10,963,904 6.89%
Allowance for loan
and lease losses (157,569) (136,974) 15.04%
Other assets 1,318,921 1,354,554 -2.63%
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Total assets $16,745,662 $16,212,107 3.29%
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Deposits $13,713,763 $12,928,544 6.07%
Other liabilities 1,588,524 1,842,355 -13.78%
Shareholders'
equity 1,443,375 1,441,208 0.15%
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Total liabilities
and shareholders'
equity $16,745,662 $16,212,107 3.29%
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Book value per
share $ 138.33 $ 138.12 0.15%
Tangible book
value per share 128.13 127.72 0.32%
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SELECTED AVERAGE BALANCES
-------------------------
(thousands, except Three Months Ended Year Ended
shares outstand- December 31 December 31
ing; unaudited) 2008 2007 2008 2007
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Total assets $16,741,696 $16,276,649 $16,403,717 $15,919,222
Investment
securities 3,193,703 3,272,015 3,153,121 3,144,052
Loans and leases 11,665,522 10,831,571 11,306,900 10,513,599
Interest-earning
assets 15,293,442 14,655,309 14,910,905 14,292,322
Deposits 13,544,762 12,876,549 13,108,246 12,659,236
Interest-bearing
liabilities 12,471,757 12,216,067 12,312,499 11,883,421
Shareholders'
equity $ 1,497,619 $ 1,420,348 $ 1,484,605 $ 1,370,617
Shares outstanding 10,434,453 10,434,453 10,434,453 10,434,453
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ASSET QUALITY
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(dollars in
thousands; December 31 December 31
unaudited) 2008 2007 Change
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Nonaccrual loans
and leases $ 39,361 $ 13,021 202.29%
Other real estate 29,956 6,893 334.59%
Troubled debt
restructuring 2,349 -- --
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Total nonper-
forming assets $ 71,666 $ 19,914 259.88%
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Accruing loans and
leases 90 days or
more past due $ 22,459 $ 7,124 215.26%
Net charge-offs,
year to date 45,331 27,971 62.06%
Nonperforming
assets to gross
loans and leases
plus other real
estate 0.61% 0.18%
Allowance for
credit losses to
gross loans and
leases 1.41 1.32
Net charge-offs to
average loans and
leases 0.40 0.27
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CAPITAL INFORMATION
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(dollars in
thousands; December 31 December 31
unaudited) 2008 2007 Change
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Tier 1 capital $ 1,649,675 $ 1,557,190 5.94%
Total capital 1,935,993 1,836,763 5.40%
Risk-weighted
assets 12,499,545 11,961,124 4.50%
Tier 1 capital
ratio 13.20% 13.02%
Total capital
ratio 15.49 15.36
Leverage capital
ratio 9.88 9.63
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