EX-99 2 v063067_ex99.htm
Exhibit 99

For Immediate Release
  
Contact:
  Barbara Thompson
Jan. 22, 2007
    
  First Citizens Bank
     
  (919) 716-2716

FIRST CITIZENS REPORTS EARNINGS FOR 2006

RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the year ending Dec. 31, 2006, of $126.5 million compared to $112.9 million for 2005, an increase of $13.6 million or 12.1 percent, according to Lewis R. Holding, chairman of the board. First Citizens also reports net income of $33.2 million for the quarter ending Dec. 31, 2006, compared to $27.8 million for the corresponding period of 2005, an increase of 19.3 percent.

Per share income for 2006 totaled $12.12 compared to $10.82 for 2005. First Citizens’ results generated a return on average assets of 0.83 percent during 2006, compared to 0.81 percent for 2005. The return on average equity was 10.23 percent in 2006, compared to 9.98 percent for 2005. Significant items affecting 2006 net income included improved levels of net interest and noninterest income and a reduction in the provision for loan and lease losses. These favorable trends were partially offset by higher noninterest expense.

Despite a narrowing margin, higher interest rates and growth in loans and investments contributed to a $23.7 million or 5.3 percent increase in net interest income during 2006. Average loans increased $596.7 million or 6.4 percent over 2005, while investment securities increased $495.2 million or 19.5 percent. The robust balance sheet growth was funded by strong deposit growth of $738.4 million or 6.3 percent, and commercial cash management balances, which grew $360.0 million or 72.3 percent during 2006. Due primarily to the adverse impact of a persistent flat yield curve, the taxable-equivalent net yield on interest-earning assets fell from 3.60 percent in 2005 to 3.48 percent in 2006.

Noninterest income increased $16.0 million or 6.1 percent during 2006. Cardholder and merchant services income increased $10.8 million or 14.3 percent from 2005 to 2006, while broker-dealer fees generated primarily by First Citizens Investor Services increased $4.3 million or 28.6 percent. Fees from processing services increased $4.0 million or 15.8 percent, and strong results in trust and asset management created improved revenues of $3.0 million or 16.1 percent. Offsetting these gains, service charge income declined $4.8 million or 6.2 percent during 2006, primarily due to higher interest rates, which caused commercial service charge income to decline.

Noninterest expense increased $34.7 million or 6.9 percent during 2006. Salaries and wages increased $15.9 million or 7.4 percent due to new hires in expansion markets and support functions, merit salary increases and higher incentive compensation. Employee benefit costs declined by $1.1 million or 2.1 percent due to reduced pension expense. Costs related to cardholder and merchant-related services increased $8.5 million.

The provision for credit losses equaled $20.9 million in 2006, compared to $33.1 million in 2005, a $12.2 million or 36.9 percent reduction resulting from lower net charge-offs among commercial and retail loans and reductions in the allowance prompted by lower charge-off estimates for retail loans. Net charge-offs amounted to $18.0 million and $26.6 million during 2006 and 2005, a reduction of $8.6 million or 32.2 percent during 2006. Net charge-offs equaled 0.18 percent of average loans and leases outstanding during 2006, compared to 0.28 percent for 2005.

Per share income for the fourth quarter 2006 totaled $3.18 compared to $2.67 for the same period a year ago. Fourth quarter results generated an annualized return on average assets of 0.84 percent for 2006, compared to 0.76 percent for the same period of 2005. The annualized return on average equity equaled 10.22 percent during the fourth quarter of 2006, compared to 9.45 percent for the same period of 2005. Net income benefited from both a reduction in the provision for loan losses and higher noninterest income. Higher noninterest expense offset a portion of these increases. In addition, net interest income declined by $331,000, or 0.3 percent, as the flat yield curve caused the net yield on interest-earning assets to fall 24 basis points.

The provision for credit losses decreased $6.2 million in the fourth quarter of 2006, compared to the same period of 2005 due to a significant reduction in net charge-offs. Net charge-offs were $7.0 million during the fourth quarter of 2006, compared to $11.0 million during the same period of 2005, a 36.7 percent decrease. Net charge-offs for the fourth quarter of 2006 equaled 0.27 percent of average loans and leases outstanding, compared to 0.46 percent for 2005.

Noninterest income increased $5.9 million or 9.1 percent during the fourth quarter. The fourth quarter growth resulted from higher cardholder and merchant services income, trust and asset management fees, commission income generated by the broker-dealers and fees from processing services. These increases were partially offset by a reduction in service charge income.

Noninterest expense increased $6.8 million or 5.4 percent during the fourth quarter of 2006, when compared to the same period of 2005, the result of higher salaries and wages and processing costs related to cardholder, merchant services and wealth management.
 
As of Dec. 31, 2006, Raleigh, NC-headquartered First Citizens BancShares had total assets of $15.7 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 396 branch offices, telephone banking, online banking and ATMs. For more information, visit First Citizens’ Web site at firstcitizens.com.
 
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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 December 31
  
Year Ended December 31
  
(thousands, except share data; unaudited)
  
2006
 
2005
 
2006
 
2005
 
Interest income
  
$
218,102
  
$
183,949
  
$
825,252
  
$
665,934
  
Interest expense
    
101,215
   
66,731
   
353,737
   
218,151
 
Net interest income
    
116,887
   
117,218
   
471,515
   
447,783
 
Provision for credit losses
    
7,383
   
13,578
   
20,906
   
33,109
 
Net interest income after provision for credit losses
    
109,504
   
103,640
   
450,609
   
414,674
 
Noninterest income
    
71,381
   
65,589
   
279,344
   
263,779
 
Noninterest expense
    
132,223
   
125,527
   
534,007
   
499,783
 
Income before income taxes
    
48,662
   
43,702
   
195,946
   
178,670
 
Income taxes
    
15,467
   
15,866
   
69,455
   
65,808
 
Net income
 
$
33,195
  
$
27,836
  
$
126,491
  
$
112,862
  
Taxable-equivalent net interest income
  
$
117,394
  
$
117,601
  
$
473,316
  
$
449,256
  
Net income per share
  
$
3.18
  
$
2.67
  
$
12.12
  
$
10.82
  
Cash dividends per share
    
0.275
   
0.275
   
1.10
   
1.10
 
Profitability Information (annualized)
                      
Return on average assets
    
0.84
%
  
0.76
%
  
0.83
%
  
0.81
%
Return on average equity
    
10.22
   
9.45
   
10.23
   
9.98
 
Taxable-equivalent net yield on interest-earning assets
   
3.34
   
3.58
   
3.48
   
3.60
 

CONDENSED BALANCE SHEETS
  
   
December 31
  
December 31
      
(thousands, except share data; unaudited)
  
2006
 
2005
 
Change
  
Cash and due from banks
  
$
1,010,984
  
$
777,928
    
29.96
%
Investment securities
    
3,221,048
   
2,929,516
   
9.95
%
Loans and leases
    
10,239,551
   
9,642,994
   
6.19
%
Allowance for loan and lease losses
    
(132,004
)
  
(128,847
)
  
2.45
%
Other assets
    
1,385,764
   
1,417,801
   
-2.26
%
Total assets
  
$
15,725,343
  
$
14,639,392
    
7.42
%
Deposits
  
$
12,743,324
  
$
12,173,858
    
4.68
%
Other liabilities
    
1,675,554
   
1,284,475
   
30.45
%
Shareholders' equity
    
1,306,465
   
1,181,059
   
10.62
%
Total liabilities and shareholders' equity
  
$
15,725,343
  
$
14,639,392
    
7.42
%
Book value per share
  
$
125.21
  
$
113.19
    
10.62
%
Tangible book value per share
    
114.60
   
102.35
   
11.97
%

SELECTED AVERAGE BALANCES
  
   
Three Months Ended December 31
  
Year Ended December 31
  
(thousands, except shares outstanding; unaudited)
  
2006
 
2005
 
2006
 
2005
 
Total assets
  
$
15,624,481
  
$
14,516,620
  
$
15,235,973
  
$
13,905,260
  
Investment securities
    
3,176,845
   
2,938,833
   
3,028,384
   
2,533,161
 
Loans and leases
    
10,133,502
   
9,455,059
   
9,961,032
   
9,364,327
 
Interest-earning assets
    
13,951,134
   
13,024,871
   
13,608,663
   
12,492,955
 
Deposits
    
12,601,708
   
12,071,673
   
12,452,955
   
11,714,569
 
Interest-bearing liabilities
    
11,601,752
   
10,621,384
   
11,262,423
   
10,113,999
 
Shareholders' equity
  
$
1,288,417
  
$
1,169,113
  
$
1,236,900
  
$
1,131,066
  
Shares outstanding
    
10,434,453
   
10,434,453
   
10,434,453
   
10,434,453
 

ASSET QUALITY
  
   
December 31
  
December 31
      
(dollars in thousands; unaudited)
  
2006
 
2005
 
Change
  
Nonaccrual loans and leases
  
$
14,882
  
$
18,969
    
-21.55
%
Other real estate
    
6,028
   
6,753
   
-10.74
%
Total nonperforming assets
  
$
20,910
  
$
25,722
    
-18.71
%
Accruing loans and leases 90 days or more past due
  
$
5,185
  
$
9,180
    
-43.52
%
Nonperforming assets to gross loans and leases plus other real estate
    
0.20
%
  
0.27
%
      
Allowance for credit losses to gross loans and leases
    
1.35
   
1.41
       
Net charge-offs to average loans and leases
    
0.18
   
0.28
       

CAPITAL INFORMATION
  
   
December 31
  
December 31
      
(dollars in thousands; unaudited)
  
2006
 
2005
 
Change
  
Tier 1 capital
  
$
1,452,593
  
$
1,320,152
    
10.03
%
Total capital
    
1,727,672
   
1,588,141
   
8.79
%
Risk-weighted assets
    
11,261,988
   
10,510,254
   
7.15
%
Tier 1 capital ratio
    
12.90
%
  
12.56
%
      
Total capital ratio
    
15.34
   
15.11
       
Leverage capital ratio
    
9.36
   
9.17
       
First Citizens BancShares, Inc. and Subsidiaries