SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 28,2003
First Citizens BancShares, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-16471 56-1528994
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(State or other jurisdiction (Commission (IRS Employer Identification
of incorporation) File Number) Number)
3128 Smoketree Court; Raleigh, North Carolina 27604
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(Addreess of principal exectuive offices) (Zip Code)
Registrant's phone number including area code: 919-716-7000
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Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following exhibit is being filed with this Report:
Exhibit No. Exhibit Description
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99 Copy of press release dated July 28, 2003
Item 9. Regulation FD Disclosure (Being furnished under both Item 9 and
Item 12).
On July 28, 2003, Registrant announced its results of operations for the
quarter ended June 30, 2003. A copy of Registrant's press release issued this
date is attached as Exhibit 99 to this Report and is incorporated by reference
into this Report.
Disclosures About Forward Looking Statements
The discussions included in this Report and its exhibits may contain forward
looking statements within the meaning of the Private Securities Litigation Act
of 1995, including Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. Such statements involve known and
unknown risks, uncertainties and other factors that may cause actual results to
differ materially. For the purposes of these discussions, any statements that
are not statements of historical fact may be deemed to be forward looking
statements. Such statements are often characterized by the use of qualifying
words such as "expects," "anticipates," "believes," "estimates," "plans,"
"projects," or other statements concerning opinions or judgments of the
Registrant and its management about future events. The accuracy of such forward
looking statements could be affected by such factors as, including but not
limited to, the financial success or changing conditions or strategies of the
Registrant's customers or vendors, fluctuations in interest rates, actions of
government regulators, the availability of capital and personnel or general
economic conditions.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
First Citizens BancShares, Inc.
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(Registrant)
Date: July 28, 2003 By: /S/Kenneth A. Black
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Kenneth A.Black
Vice President
For Immediate Release Contact: Barbara Thompson
July 28, 2003 First Citizens Bank
(919) 716-2716
FIRST CITIZENS REPORTS EARNINGS FOR SECOND QUARTER 2003
RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings
for the quarter ending June 30, 2003, of $20.8 million compared to $24.8 million
for the corresponding period of 2002, a reduction of 16.2 percent, according to
Lewis R. Holding, chairman of the board.
First Citizens' earnings were negatively impacted by the current extreme
interest rate environment. The historically low market rates adversely
influenced the yields on the high levels of short-term, interest-sensitive
liquidity maintained by First Citizens, resulting in lower levels of net
interest income.
Per share income for the second quarter 2003 totaled $1.98 compared to $2.37 for
the same period a year ago. First Citizens' results generated an annualized
return on average assets of 0.68 percent for the second quarter of 2003,
compared to 0.85 percent for the same period of 2002. The annualized return on
average equity was 8.41 percent during the current quarter, compared to 10.86
percent for the same period of 2002.
During the second quarter, a reduction in net interest income and higher
noninterest expenses more than offset the favorable impact of higher noninterest
income and lower provision for loan losses. During the second quarter of 2003,
net interest income decreased $7.1 million or 7.3 percent from the same period
of 2002. The reduction in net interest income resulted from the unfavorable net
impact of lower interest rates on interest-earning assets and interest-bearing
liabilities. The taxable-equivalent yield on interest-earning assets fell 104
basis points to 4.77 percent during the second quarter of 2003 when compared to
the same period of 2002, while the rate on total interest-bearing liabilities
fell 70 basis points to 1.73 percent. The taxable-equivalent net yield on
interest-earning assets fell from 3.71 percent for the second quarter of 2002 to
3.31 percent for the second quarter of 2003. Total interest-earning assets
increased $398.6 million or 3.8 percent during the second quarter of 2003 when
compared to the same period of 2002.
Noninterest expense increased $10.3 million or 9.7 percent during the second
quarter of 2003. Salary expense increased $4.7 million or 10.5 percent during
2003, due primarily to the continued expansion of Atlantic States Bank's
franchise and higher incentive-based compensation within the mortgage operation.
Employee benefit expense increased $2.2 million or 22.3 percent due to higher
pension expense and health insurance costs. Occupancy expense increased $1.3
million or 13.7 percent during the second quarter due to higher facility costs,
while equipment expense increased $1.2 million or 10.5 percent, the result of
technology investments.
Noninterest income increased $11.7 million or 21.1 percent during the second
quarter. The second quarter of 2003 includes a $5.7 million nonrecurring gain on
the sale of branches and $1.1 million in securities gains. Mortgage income
increased $2.4 million from the second quarter of 2002 due primarily to heavy
refinance activity. Cardholder and merchant services income increased $1.7
million or 13.4 percent due to favorable volume growth.
The provision for loan losses declined $630,000 or 8.1 percent from the second
quarter of 2002 to the same period of 2003 due to lower net charge-offs. Net
charge-offs were $5.2 million during the second quarter of 2003, compared to
$6.0 million during the same period of 2002.
For the six-month period ending June 30, 2003, net income was $39.1 million, or
$3.73 per share, compared to $49.6 million, or $4.73 per share earned during the
same period of 2002. Annualized net income for 2003 represents 0.65 percent of
average assets compared to 0.85 percent for 2002. The annualized return on
average equity was 8.02 percent for the first six months of 2003, compared to
11.05 percent for the same period of 2002.
Year-to-date net interest income for 2003 decreased $15.2 million or 7.8 percent
from the same period of 2002. During 2003, the unfavorable impact of lower
interest rates more than offset the benefit of growth among interest-earning
assets. The taxable-equivalent net yield on interest-earning assets fell from
3.76 percent to 3.34 percent during 2003.
Noninterest income increased $13.8 million or 12.6 percent during the first six
months of 2003, the result of improved cardholder and merchant services income
and mortgage income. Noninterest income also included a $5.7 million
nonrecurring gain on the sale of branch offices. Noninterest expense increased
$14.6 million or 6.9 percent during the first six months of 2003, the result of
higher personnel expenses as well as higher equipment and occupancy costs.
For the six-month period ending June 30, the provision for loan losses was $12.8
million and $13.8 million for 2003 and 2002, respectively. The reduction in the
provision for loan losses resulted from lower levels of net charge-offs. Net
charge-offs were $9.9 million and $10.4 million during the respective six-month
periods, a reduction of $512,000 or 4.9 percent during 2003.
As of June 30, 2003, First Citizens had total assets of $12.39 billion. First
Citizens Bank has 341 branches in North Carolina, Virginia and West Virginia.
Atlantic States Bank and its western division IronStone Bank have xx branches in
Georgia, Florida, Texas, Arizona and California. For more information, visit the
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 June 30 Six Months Ended June 30
(thousands, except share data; unaudited) 2003 2002 2003 2002
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Interest income $ 129,173 $ 151,771 $ 260,247 $ 307,919
Interest expense 39,505 55,042 81,663 114,179
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Net interest income 89,668 96,729 178,584 193,740
Provision for loan losses 7,192 7,822 12,755 13,802
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Net interest income after provision for loan losses 82,476 88,907 165,829 179,938
Noninterest income 66,948 55,369 123,335 109,584
Noninterest expense 115,975 105,815 227,257 212,721
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Income before income taxes 33,449 38,461 61,907 76,801
Income taxes 12,677 13,659 22,841 27,175
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Net income $ 20,772 $ 24,802 $ 39,066 $ 49,626
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Taxable-equivalent net interest income $ 89,926 $ 97,074 $ 179,126 $ 194,456
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Net income per share $ 1.98 $ 2.37 $ 3.73 $ 4.73
Cash dividends per share 0.275 0.25 0.55 0.50
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Return on average assets 0.68 % 0.85 % 0.65 % 0.85 %
Return on average equity 8.41 10.86 8.02 11.05
Taxable-equivalent net yield on interest-earning asset3.31 3.71 3.34 3.76
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CONDENSED BALANCE SHEETS
June 30 December 31 June 30
(thousands, except share data; unaudited) 2003 2002 2002
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Cash and due from banks $ 810,546 $ 811,657 $ 814,540
Investment securities 2,475,821 2,539,236 2,464,779
Loans 7,857,220 7,620,263 7,434,662
Reserve for loan losses (115,382) (112,533) (110,472)
Other assets 1,366,539 1,373,267 1,264,249
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Total assets $ 12,394,744 $ 12,231,890 $ 11,867,758
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Deposits $ 10,558,616 $ 10,439,620 $ 10,065,180
Other liabilities 836,339 824,979 872,403
Shareholders' equity 999,789 967,291 930,175
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Total liabilities and shareholders' equity $ 12,394,744 $ 12,231,890 $ 11,867,758
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Book value per share $ 95.80 $ 92.36 $ 88.77
Tangible book value per share 85.36 81.73 78.28
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SELECTED AVERAGE BALANCES
Three Months Ended June 30 Six Months Ended June 30
(thousands, except shares outstanding; unaudited) 2003 2002 2003 2002
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Total assets $ 12,203,618 $ 11,756,150 $ 12,129,579 $ 11,710,516
Investment securities 2,594,983 2,641,898 2,536,032 2,672,816
Loans 7,811,739 7,312,384 7,727,674 7,260,359
Interest-earning assets 10,890,420 10,491,811 10,816,203 10,423,042
Deposits 10,394,829 9,934,615 10,339,295 9,856,089
Interest-bearing liabilities 9,177,931 9,075,549 9,175,761 9,074,598
Shareholders' equity $ 991,047 $ 916,387 $ 982,879 $ 905,432
Shares outstanding 10,465,909 10,480,527 10,468,970 10,481,091
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ASSET QUALITY
June 30 December 31 June 30
(thousands; unaudited) 2003 2002 2002
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Nonaccrual loans $ 17,438 $ 15,521 $ 17,397
Other real estate 8,147 7,330 10,563
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Total nonperforming assets $ 25,585 $ 22,851 $ 27,960
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Accruing loans 90 days or more past due $ 7,848 $ 9,566 $ 9,945
Net charge-offs (year-to-date) 9,906 21,104 10,417
Nonperforming assets to gross loans plus foreclosed real estate 0.33 % 0.30 % 0.38 %
Reserve for loan losses to gross loans 1.47 1.48 1.49
Net charge-offs to average total loans (annualized, year-to-date) 0.26 0.29 0.29
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CAPITAL INFORMATION
June 30 December 31 June 30
(dollars in thousands; unaudited) 2003 2002 2002
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Tier 1 capital $ 1,128,565 $ 1,096,537 $ 1,062,303
Total capital 1,240,801 1,204,142 1,168,606
Risk-weighted assets 8,424,376 8,123,321 8,024,193
Tier 1 capital ratio 13.40 % 13.50 % 13.24
Total capital ratio 14.73 14.82 14.56
Leverage capital ratio 9.33 9.17 9.12
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2002 data has been restated to reflect the adoption of Statement of Financial
Accounting Standards No. 147, which was adopted during the fourth quarter of
2002 with a retroactive effective date of January 1, 2002.