EX-99 2 v055327_ex99-1.htm Unassociated Document
Exhibit 99


For Immediate Release
Contact:   
Barbara Thompson
Oct. 23, 2006
  
First Citizens Bank
   
(919) 716-2716

FIRST CITIZENS REPORTS EARNINGS FOR THIRD QUARTER 2006

RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the quarter ending Sept. 30, 2006, of $32.9 million compared to $30.0 million for the corresponding period of 2005, an increase of 9.9 percent, according to Lewis R. Holding, chairman of the board.
 
Per share income for the third quarter 2006 totaled $3.16 compared to $2.87 for the same period a year ago. First Citizens’ results generated an annualized return on average assets of 0.84 percent for the third quarter of 2006, unchanged from the same period of 2005. The annualized return on average equity was 10.45 percent during the current quarter, compared to 10.39 percent for the same period of 2005.
 
During the third quarter of 2006, net interest income grew $3.6 million or 3.2 percent when compared to the same period of 2005, due to strong growth in average interest-earning assets. Average investment securities increased $307.7 million or 11.1 percent, while average loans and leases increased $751.9 million or 8.1 percent. Rising interest rates contributed modestly to the growth in net interest income, although the flat yield curve caused a 17 basis point reduction in the net yield on interest-earning assets. Compared to the second quarter of 2006, net interest income during the third quarter of 2006 declined $1.1 million or 0.9%, due primarily to the unfavorable impact of the flat yield curve.
 
Noninterest income increased $4.5 million or 6.6 percent during the third quarter, the result of improvements in cardholder and merchant services income and commission income generated by First Citizens Investor Services. Cardholder and merchant services income increased $3.6 million or 18.5 percent from the third quarter of 2005 as a result of higher merchant and interchange income. Commission income increased $1.8 million or 27.4 percent, due primarily to significantly higher fees generated by broker-dealer activities. Deposit service charges declined by $1.5 million or 7.8 percent because of reductions in commercial service charge income.
 
Noninterest expense increased $6.2 million or 4.8 percent during the third quarter of 2006. Salary expense increased $3.7 million or 6.6 percent due to incremental head count from franchise expansion and higher incentive compensation. Employee benefit expense declined $2.8 million or 20.1 percent due to lower current year pension expense and the absence of a 2005 adjustment to an executive post-retirement plan. Occupancy expense increased $1.3 million or 10.4 percent due to increased depreciation cost for new facilities. Other expense increased $3.1 million or 9.0 percent primarily due to higher external processing costs for cardholder, merchant and wealth management services.
 
The provision for credit losses decreased $3.4 million or 47.1 percent from the third quarter of 2005 to the same period of 2006 due to a significant reduction in net charge-offs. Net charge-offs were $2.7 million during the third quarter of 2006, compared to $7.2 million during the same period of 2005, a $4.5 million or 62.5 percent reduction. The ratio of net charge-offs to average loans and leases for the current quarter equaled 0.11 percent compared to 0.30 percent in the third quarter of 2005.
 
For the nine-month period ending Sept. 30, 2006, net income was $93.3 million, or $8.94 per share, compared to $85.0 million, or $8.15 per share earned during the same period of 2005. The annualized return on average assets for the first nine months of 2006 and 2005 equaled 0.83 percent. The annualized return on average equity amounted to 10.23 percent for the first nine months of 2006, compared to 10.16 percent for the same period of 2005.
 
Year-to-date net interest income for 2006 increased $24.1 million or 7.3 percent from the same period of 2005. A $1.2 billion or 9.6 percent increase in average interest-earning assets contributed to the improved level of net interest income. While higher interest rates during 2006 also contributed to higher net interest income, the pressure on long-term interest rates caused the net yield on interest-earning assets to decline 7 basis points to 3.53 percent for the first nine months of 2006.
 
Noninterest income increased $10.1 million or 5.1 percent during the first nine months of 2006, the result of improved cardholder and merchant services income, commission income generated by First Citizens Investor Services and fees from processing services. These favorable variances were partially offset by lower service charge income. Noninterest expense increased $27.8 million or 7.4 percent during the first nine months of 2006, the result of higher personnel expenses, credit card processing and occupancy costs.
 
For the nine-month period ending Sept. 30, the provision for credit losses equaled $13.5 million and $19.5 million for 2006 and 2005, respectively. The $6.0 million decrease in the provision for credit losses resulted principally from lower levels of net charge-offs. Net charge-offs were $11.0 million in 2006 and $15.6 million in 2005 during the respective nine-month periods, a decrease of $4.5 million or 29.0 percent. Year-to-date net charge-offs represent 0.15 percent of average loans outstanding during 2006, compared to 0.22 percent for the same period of 2005.
 
As of Sept. 30, 2006, First Citizens had total assets of $15.6 billion. First Citizens Bank has 339 branches in North Carolina, Virginia, Maryland, Tennessee and West Virginia. IronStone Bank has 56 branches in Georgia, Florida, Texas, Arizona, New Mexico, California, Oregon, Washington, and Colorado. For more information, visit the First Citizens Web site at firstcitizens.com.
 
 
###
 
This news release may contain forward-looking statements. A discussion of factors that could cause First Citizens' actual results to differ materially from those expressed in such forward-looking statements is included in First Citizens' filings with the SEC.
 


 
 
 

CONDENSED STATEMENTS OF INCOME
  
   
Three Months Ended September 30
  
Nine Months Ended September 30
  
(thousands, except share data; unaudited)
  
2006
 
2005
 
2006
 
2005
 
Interest income
  
$
214,650
  
$
173,534
  
$
607,150
  
$
481,985
  
Interest expense
    
96,773
   
59,306
   
252,522
   
151,420
 
Net interest income
    
117,877
   
114,228
   
354,628
   
330,565
 
Provision for credit losses
    
3,813
   
7,211
   
13,523
   
19,531
 
Net interest income after provision for credit losses
    
114,064
   
107,017
   
341,105
   
311,034
 
Noninterest income
    
72,605
   
68,106
   
207,963
   
197,895
 
Noninterest expense
    
134,865
   
128,665
   
401,784
   
373,961
 
Income before income taxes
    
51,804
   
46,458
   
147,284
   
134,968
 
Income taxes
    
18,877
   
16,505
   
53,988
   
49,942
 
Net income
  
$
32,927
  
$
29,953
  
$
93,296
  
$
85,026
  
Taxable-equivalent net interest income
  
$
118,345
  
$
114,603
  
$
355,922
  
$
331,655
  
Net income per share
 
$
3.16
  
$
2.87
  
$
8.94
  
$
8.15
  
Cash dividends per share
    
0.275
   
0.275
   
0.825
   
0.825
 
Profitability Information (annualized)
                          
Return on average assets
    
0.84
%
  
0.84
%
  
0.83
%
  
0.83
%
Return on average equity
    
10.45
   
10.39
   
10.23
   
10.16
 
Taxable-equivalent net yield on interest-earning assets
   
3.40
   
3.57
   
3.53
   
3.60
 
                           
CONDENSED BALANCE SHEETS
  
 
    
 
    
September 30
   
December 31
   
September 30
 
(thousands, except share data; unaudited)
          
2006
   
2005
   
2005
 
Cash and due from banks
        
$
909,702
  
$
777,928
  
$
702,837
  
Investment securities
          
3,118,025
   
2,929,516
   
2,871,731
 
Loans and leases
          
10,129,423
   
9,642,994
   
9,359,540
 
Allowance for loan and lease losses
          
(131,652
)
  
(128,847
)
  
(126,297
)
Other assets
          
1,603,745
   
1,417,801
   
1,677,108
 
Total assets
       
$
15,629,243
  
$
14,639,392
  
$
14,484,919
  
                           
Deposits
        
$
12,681,150
  
$
12,173,858
  
$
12,123,491
  
Other liabilities
          
1,675,839
   
1,284,475
   
1,202,543
 
Shareholders' equity
          
1,272,254
   
1,181,059
   
1,158,885
 
Total liabilities and shareholders' equity
       
$
15,629,243
  
$
14,639,392
  
$
14,484,919
  
Book value per share
        
$
121.93
  
$
113.19
  
$
111.06
  
Tangible book value per share
          
111.26
   
102.35
   
100.17
 
                           
SELECTED AVERAGE BALANCES
  
 
  
 Three Months Ended September 30
    
Nine Months Ended September 30
  
(thousands, except shares outstanding; unaudited)
    
2006
   
2005
   
2006
   
2005
 
Total assets
  
$
15,473,638
  
$
14,160,391
  
$
15,105,050
  
$
13,699,234
  
Investment securities
    
3,072,113
   
2,764,377
   
2,978,353
   
2,396,451
 
Loans and leases
    
10,075,016
   
9,323,115
   
9,902,909
   
9,334,806
 
Interest-earning assets
    
13,820,610
   
12,750,494
   
13,493,251
   
12,314,757
 
Deposits
    
12,571,525
   
11,836,193
   
12,402,826
   
11,594,227
 
Interest-bearing liabilities
    
11,485,378
   
10,312,675
   
11,148,071
   
9,943,013
 
Shareholders' equity
  
$
1,250,197
  
$
1,143,391
  
$
1,219,829
  
$
1,118,609
  
Shares outstanding
    
10,434,453
   
10,434,453
   
10,434,453
   
10,434,453
 
                           
ASSET QUALITY
  
 
          
September 30
    
December 31
   
September 30
 
(dollars in thousands; unaudited)
          
2006
   
2005
   
2005
 
Nonaccrual loans and leases
        
$
18,348
  
$
18,969
  
$
11,065
  
Other real estate
          
6,711
   
6,753
   
4,843
 
Total nonperforming assets
        
$
25,059
  
$
25,722
  
$
15,908
  
Accruing loans and leases 90 days or more past due
        
$
6,975
  
$
9,180
  
$
7,712
  
Net charge-offs (year-to-date)
        
$
11,047
    
26,586
 
$
15,558
  
Nonperforming assets to loans and leases plus other real estate   
    
0.25
%
  
0.27
%
  
0.17
%
Allowance for credit losses to total loans and leases
          
1.36
   
1.41
   
1.42
 
Net charge-offs to average loans and leases (annualized, year-to-date)   
    
0.15
   
0.28
   
0.22
 
                           
CAPITAL INFORMATION
  
 
          
September 30
   
December 31
   
September 30
 
(dollars in thousands; unaudited)
          
2006
   
2005
   
2005
 
Tier 1 capital
        
$
1,521,585
  
$
1,320,152
  
$
1,294,600
  
Total capital
          
1,796,475
   
1,588,141
   
1,560,206
 
Risk-weighted assets
          
11,179,369
   
10,510,254
   
10,346,169
 
Tier 1 capital ratio
          
13.61
%
  
12.56
%
  
12.51
%
Total capital ratio
          
16.07
   
15.11
   
15.08
 
Leverage capital ratio
          
9.90
   
9.17
   
9.22