[CITIZENS BANKING CORPORATION LOGO]
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Charles D. Christy
Chief Financial Officer
(810) 237-4200
Charlie.Christy@cbcf-net.com
CONTACT: Kathleen Miller
Investor Relations
(810) 257-2486
Kathleen.Miller@cbcf-net.com
TRADED: NASDAQ
SYMBOL: CBCF
JULY 15, 2004
CITIZENS BANKING CORPORATION
ANNOUNCES SECOND QUARTER 2004 RESULTS
FLINT, MICHIGAN --- Citizens Banking Corporation announced net income of
$18,722,000 for the three months ended June 30, 2004, compared with net income
of $13,214,000 in the same quarter of 2003 and net income of $17,443,000 in the
first quarter of 2004. Diluted net income per share was $0.43, an increase of
43.3% compared with $0.30 per diluted share for the same quarter of last year,
and an increase of 7.5% compared with $0.40 per diluted share for the first
quarter of 2004. Annualized returns on average assets and average equity during
the second quarter were 0.97% and 12.00%, respectively, compared with 0.68% and
8.29% in the second quarter of 2003. For the six months ended June 30, 2004, net
income was $36,165,000 or $0.83 per diluted share compared with net income of
$28,272,000 or $0.65 per diluted share for the same period of 2003.
"Once again, improved credit quality led the way toward a solid quarter of
results. We are also pleased with the continued quality growth in our home
equity portfolio and the progress being made in our fee-based businesses,"
stated William R. Hartman, chairman, president and CEO. "The implementation of
our `Achieving the Vision' initiatives continues to be well on track enabling us
to better serve clients and improve performance," Hartman continued.
KEY HIGHLIGHTS IN THE QUARTER:
o Provision for loan losses declined to $4.5 million compared with $7.0
million in the first quarter of 2004 and $25.7 million in the same quarter
of 2003. Net charge-offs declined to $4.4 million in the second quarter
compared with $6.8 million in the first quarter of 2004 and $12.0 million
in the same quarter of 2003.
o Nonperforming assets decreased $4.2 million or 6.7% to $58.2 million at
June 30, 2004 compared with the first quarter and decreased $38.4 million
or 39.7% compared with the second quarter of 2003. Both nonperforming
assets and net charge-offs are now at their lowest levels in more than
three years.
o Compared with the prior quarter, all major categories of fee income
increased, led by significantly higher deposit service charges, increased
brokerage and investment fees, higher mortgage and other loan income, and
higher trust fees and bankcard fees.
o Citizens designated certain securities for sale during the quarter,
generating a loss of $2.1 million. The proceeds from the sale will be
reinvested in higher yielding securities, which should benefit net interest
income in future periods.
o Home equity loans outstanding grew $59.7 million or 7.3% during the second
quarter and $247.3 million or 39.5% compared with June 30, 2003 as a result
of four successful campaigns completed over the past year.
o Although total deposits declined, market rate savings product promotions
contributed to core deposit growth, generating $52 million in new core
deposits in the second quarter and $92 million in the first six months of
2004.
o Citizens introduced a new business checking suite of products offering
tiered bundled pricing, internet access, and image rendered checks. At
quarter end 1,180 new business checking accounts had been opened, resulting
in $16.1 million in new core deposits.
o
o Consumer and Wealth Management lines of business collaborated in a
brokerage sales campaign generating $34 million in brokerage and investment
sales and $1.4 million in fee income.
o Mortgage closing volumes declined to $217 million compared with $491
million in the same quarter of 2003, indicative of the increasing interest
rate environment.
o Citizens announced the opening of its second major Oakland County hub
facility in Novi as part of the Oakland County initiative.
BALANCE SHEET
Citizens' total assets at June 30, 2004 were $7.748 billion, an increase of
$36.8 million or 0.5% compared with December 31, 2003 and an increase of $55.5
million or .7% from March 31, 2004. Total assets increased due to growth in
portfolio loans. Portfolio loans increased $44.4 million or 0.8% compared with
year end 2003 and $90.2 million or 1.7% compared with March 31, 2004 as consumer
loans, excluding mortgage loans, increased, while mortgage and commercial loans
declined.
Consumer loans, excluding mortgage loans, increased $168.1 million or 9.5% at
June 30, 2004 compared with December 31, 2003 due to strong growth in home
equity loans. Home equity loans increased $124 million or 16.6% in the six
months ended June 30, 2004. The recreational vehicle and marine segments of the
indirect loan portfolio also experienced strong growth due to higher seasonal
demand in the second quarter. Compared with June 30, 2003, consumer loans
excluding mortgage loans increased $343.7 million or 21.6%. Compared with June
30, 2003, home equity loans grew $247.3 million or 39.5% as a result of
successful loan campaigns and indirect loans grew $125.1 million or 18.5%, due
to growth in the recreational vehicle and marine segments. The recreational
vehicle and marine segments increased due to higher volume from the addition of
new dealers, continued emphasis on relationships with existing dealers and lower
liquidations.
Since year end 2003, mortgage loans declined $24.1 million or 4.9% to $470.5
million. The decline in the mortgage portfolio occurred due to normal repayment
and refinance activity coupled with Citizens' strategy to sell most new mortgage
loan production into the secondary market. Closed mortgage loan volume declined
to $217 million in the second quarter of 2004 compared with $491 million in the
second quarter of 2003. New mortgage loan production was spurred during the
second quarter of 2003 by a strong refinance market as a result of the low
interest rate environment. Compared with June 30, 2003, mortgage loans declined
$111.5 million or 19.2% at June 30, 2004 as a result of prepayments from
refinancing activity.
Commercial loans decreased $99.6 million or 3.3% at June 30, 2004 compared with
December 31, 2003, due to lower demand for commercial credit, high repayment
activity and continued reduction of exposure on credits not meeting Citizens'
risk parameters. The decline moderated in the second quarter as commercial loans
decreased only $9.1 million compared with the $90.5 million reduction in the
first quarter of 2004. Continued declines in Citizens' Wisconsin and Iowa
markets during the second quarter of 2004 were nearly offset by accelerating
growth in Michigan's Oakland County market. Compared with June 30, 2003,
commercial loans declined $229.3 million or 7.4% at June 30, 2004.
Deposits decreased $80.8 million to $5.361 billion at June 30, 2004 compared
with $5.442 billion at December 31, 2003. The decline in deposits occurred
largely within time deposits, reflecting Citizens' less aggressive pricing
posture during the low interest rate environment. Time deposits declined $222
million to $1.738 billion at June 30, 2004 compared with $1.960 billion at
December 31, 2003.
Core deposits, which exclude time deposits, totaled $3.623 billion at June 30,
2004 an increase of $140.8 million or 4.0% compared with December 31, 2003 and
an increase of $65.2 million or 1.8% compared with March 31, 2004. The increase
in core deposits occurred primarily as a result of the growth in a new market
rate savings product, and to a lesser extent, growth in noninterest checking
deposits. A decline in interest-bearing checking deposits partially offset the
increase in other core deposits.
CREDIT QUALITY
Nonperforming assets totaled $58.2 million at June 30, 2004, a decrease of $4.2
million or 6.7% compared with March 31, 2004 and a decrease of $38.4 million or
39.7% compared with June 30, 2003 levels. Nonperforming assets represent 1.10%
of total loans at June 30, 2004 compared with 1.20% at March 31, 2004 and 1.82%
at June 30, 2003. Loans added to the commercial nonperforming asset category
increased to $17.3 million for the quarter compared with $11.7 million in the
first quarter of 2004 while loans removed from that category totaled $23.2
million for the quarter compared with $25.1 million in the first quarter of
2004.
The allowance for loan losses totaled $123.8 million or 2.34% of loans at June
30, 2004, consistent with both the March 31, 2004 level of $123.7 million or
2.38% of loans and the December 31, 2003 level of $123.5 million or 2.36% of
loans. Net charge-offs declined to $4.4 million in the second quarter of 2004
compared with $6.8 million in the prior quarter and $12.0 million in the second
quarter of 2003. The decline in net charge-offs compared with both the first
quarter of 2004 and the second quarter of the prior year was due primarily to
lower net charge-offs in the commercial loan portfolio, and to a lesser extent,
lower consumer loan net charge-offs.
The provision for loan losses decreased to $4.5 million in the second quarter of
2004 compared with $7.0 million in the first quarter and $25.6 million in the
second quarter of 2003. The decline in the provision for loan losses reflects
the lower level of net charge-offs, the decline in nonperforming assets and
fewer risk rating downgrades on commercial credits during the quarter.
Citizens anticipates both net charge-offs and provision expense to be slightly
higher in the third quarter than in the second quarter of 2004, due to the
unusually low level of consumer loan charge-offs in the second quarter.
NET INTEREST MARGIN AND NET INTEREST INCOME
Net interest margin declined to 3.98% in the second quarter of 2004 compared
with 4.01% in the prior quarter and 4.17% in the second quarter of 2003. The
decline in net interest margin compared with the first quarter of 2004 was due
to slightly lower yields on earning assets, primarily fixed rate commercial and
consumer loans, partially offset by a two basis point decline in the cost of
interest-bearing liabilities. The decrease in net interest margin compared with
the second quarter of 2003 resulted from declines in yields on all earning asset
categories as a result of the lower interest rate environment, as well as a mix
shift in earning assets from loans to lower yielding investment securities. For
the six months ended June 30, 2004, net interest margin declined to 3.99%
compared with 4.25% for the same period of 2003.
Net interest income decreased $3.7 million to $69.2 million in the second
quarter of 2004 compared with $72.9 million in the same quarter of 2003 and
increased $0.9 million compared with $68.3 million in the first quarter of 2004.
The decrease in net interest income compared with the second quarter of 2003
resulted from the aforementioned decline in the net interest margin and lower
average earning assets. The increase in net interest income compared with the
first quarter of 2004 resulted from an increase in average earning assets as
both loans and investment securities balances increased, partially offset by the
aforementioned three basis point decline in the net interest margin. For the six
months ended June 30, 2004, net interest income declined $6.9 million to $137.5
million compared with the same period of the prior year due to the decline in
net interest margin, partially offset by higher earning assets. Earning assets
increased due to the $500 million expansion of the investment portfolio which
began late in the first quarter of 2003.
Excluding the effects of the Illinois Bank sale, which is expected to close in
the third quarter, Citizens anticipates its net interest income in the third and
fourth quarters to be slightly higher than the second quarter level due to an
increased volume of earning assets.
NONINTEREST INCOME
Noninterest income for the second quarter of 2004 declined $2.0 million to $22.8
million compared with the second quarter of 2003. The decrease occurred as a
result of a $2.1 million loss on investment securities designated for sale
during the second quarter. The market value of these available-for-sale
securities was below cost due to an increase in market interest rates. The
anticipated proceeds of approximately $75 million from the sale of these
agency-backed collateralized mortgage obligation securities are expected to be
reinvested into securities with a more favorable prepayment risk profile at
higher yields, which should benefit net interest income in future periods.
Compared with the prior quarter, all major categories of fee income increased,
led by significantly higher deposit service charges, increased brokerage and
investment fees, higher mortgage and other loan income, and higher trust fees
and bankcard fees. Fees and other income totaled $24.8 million for the second
quarter of 2004, unchanged from the same quarter of the prior year and an
increase of $2.3 million from the prior quarter. Fees and other income for the
second quarter includes a $500,000 gain from the sale of a branch property that
was previously anticipated to close in the third quarter.
Noninterest income for the six months ended June 30, 2004 decreased $2.8 million
to $45.3 million compared with $48.1 million in the first six months of 2003 due
largely to the $2.1 million loss on the sale
of investment securities in the second quarter of 2004. A significant decline in
mortgage and other loan income in the first six months of 2004 compared with the
same period of 2003 was mostly offset by sharply higher deposit service charges,
increased brokerage and investment fees, and higher trust and bankcard fees.
Deposit service charges for the second quarter of 2004 increased $1.5 million or
20.1% to $9.1 million compared with the second quarter of 2003. For the six
month period ended June 30, 2004, deposit service charges increased $3.0 million
or 21.0% to $17.1 million compared with the same period in 2003. Initiatives
implemented over the last twelve months have improved the revenue generated from
overdrafts and, to a lesser extent, other monthly transaction-based charges.
Trust fees increased $0.2 million or 4.7% to $4.5 million in the second quarter
of 2004 compared with $4.3 million in the second quarter of 2003, and increased
$0.3 million or 3.4% to $8.8 million in the first six months of 2004 compared
with $8.5 million in the same period in 2003. The second quarter and
year-to-date increases in trust fees were primarily due to stronger financial
markets and Citizens' sales and sales management processes implemented in the
first quarter of 2004, which are focused on relationship management and new
business development strategies. Total trust assets under administration
increased $6 million to $2.626 billion at June 30, 2004 from $2.620 billion at
June 30, 2003.
Mortgage and other loan income declined $2.4 million or 43.7% to $3.0 million in
the second quarter of 2004 compared with the second quarter of 2003. For the six
months ended June 30, 2004, mortgage and other loan income declined $5.3 million
or 49.8% to $5.3 million compared with the same period in 2003. The decline in
revenue is reflective of the decrease in mortgage origination volume in the
three and six months ended June 30, 2004 compared with the same periods of the
prior year. Loans sold declined $527 million to $198 million in the six month
period ended June 30, 2004 compared with the same period of the prior year.
Brokerage and investment fees increased $0.7 million or 38.5% to $2.7 million in
the second quarter of 2004 compared with the second quarter of 2003, and
increased $0.8 million or 20.4% to $4.4 million in the first six months of 2004
compared with the same period in 2003. The increases in brokerage and investment
fees were primarily due to the successful brokerage sales campaign previously
mentioned.
Excluding the effects of the Illinois Bank sale which is expected to close in
the third quarter, and excluding the effects of the second quarter securities
loss and gain on sale of the branch property, Citizens anticipates total
noninterest income in the third and fourth quarters to be comparable to slightly
higher than the second quarter level.
NONINTEREST EXPENSE
Noninterest expense increased $5.7 million or 10.3% to $62.1 million in the
second quarter of 2004 compared with $56.4 million in the second quarter of 2003
and increased $1.6 million or 2.6% compared with $60.5 million in the first
quarter of 2004. The increase from the second quarter of the prior year was due
to higher costs in all categories of noninterest expense except equipment. The
increase in noninterest expense from the prior quarter was due to higher
compensation, professional fees, postage and delivery and loan fee expenses. For
the six month period ended June 30, 2004, noninterest expense increased $9.7
million or 8.6% to $122.7 million compared with the same period in 2003. Nearly
all categories of noninterest expense increased with the exception of equipment
and stationery and supplies.
Salaries and employee benefits increased $1.8 million and $3.6 million for the
three and six month periods ended June 30, 2004, respectively, compared with the
same periods of the prior year. Salary expense increased in Oakland County by
$1.0 million and $2.3 million in the three and six month periods, respectively,
due to the previously announced Oakland County expansion initiative. Employee
benefits increased in both the three and six month periods due to higher pension
and other employee benefits expenses. Normal salary merit increases were offset
by a reduction in staffing levels. Citizens had 2,272 full time equivalent
employees at June 30, 2004, down from 2,376 at June 30, 2003.
Occupancy costs increased $0.6 million and $1.3 million for the three and six
month periods ended June 30, 2004, respectively, compared with the same periods
of the prior year. Building rent and other occupancy costs increased $0.2
million and $0.3 million for the three and six month periods, respectively, due
to the opening of new branches and an administrative office in Oakland County.
Building repair increased $0.1 million and $0.3 million in the three and six
month periods, respectively, due to a change in Citizens' capitalization policy
during the fourth quarter of 2003 incorporating higher capitalization
thresholds on new expenditures. Other occupancy costs increased $0.3 million and
$0.7 million in the three and six month periods, respectively, largely due to
higher maintenance, energy and real estate tax expenses.
Advertising and public relations expense increased $1.4 million and $1.5 million
for the three and six month periods ended June 30, 2004, respectively, compared
with the same periods of the prior year. Advertising to support Citizens'
Oakland County initiative accounted for $1.0 million and deposit-focused
promotions accounted for $0.5 million of the six month period increase.
Other loan fee expense increased $0.5 million in both the three and six month
periods ended June 30, 2004 compared with the same periods of the prior year.
Loan fee expenses increased due to a higher provision for losses on unfunded
loan commitments, waiver of certain client-paid mortgage loan fees and lower
deferral of mortgage loan expenses due to the lower mortgage loan origination
volume.
Data processing services increased $0.4 million and $0.7 million for the three
and six month periods ended June 30, 2004, respectively, compared with the same
periods of the prior year. The increase in both periods is due to higher
processing costs related to the fourth quarter 2003 system implementation of the
new trust and investment accounting systems and operations with SEI Investments,
and retirement services recordkeeping systems and operations with EPIC Advisors,
Inc. These increases were partially offset by lower processing costs in both
periods on Citizens' core loan and deposit systems.
Professional services expense increased $0.3 million and $0.5 million for the
three and six month periods ended June 30, 2004, respectively, due to higher
legal and other professional fees related to loan collection activity, and
higher audit costs related to new control evaluation procedures to comply with
section 404 of the Sarbanes-Oxley Act. Equipment expense decreased $0.2 million
and $0.7 million, and telephone expense increased $0.3 million and $0.7 million
for the three and six month periods ended June 30, 2004, respectively, due to
the reclassification of data transmission costs from equipment expense to
telephone expense in connection with a new services contract.
Other noninterest expense increased $0.4 million and $1.6 million for the three
and six month periods ended June 30, 2004, respectively, compared with the same
periods of the prior year. Contributing to the increases were higher non-credit
related losses of $0.3 million and $0.8 million for the three and six month
periods ended June 30, 2004, respectively, due to higher losses in the current
year periods and an unusually low level of such losses in the prior year
periods. In addition, training and travel expenses increased $0.3 and $0.6
million in the three and six month periods, respectively, while lower deferred
loan origination costs also increased other expenses by $0.3 million and $0.5
million in the three and six month periods, respectively. Partially offsetting
these increases were lower expenses for other real estate which declined $0.5
million and $0.7 million in the three and six month periods, respectively.
Excluding the effects of the Illinois Bank sale which is expected to close in
the third quarter, Citizens anticipates that noninterest expense in the third
and fourth quarters will remain comparable to the second quarter level.
OAKLAND COUNTY
Citizens continued its expansion in Oakland County, Michigan, in June with the
opening of its second major hub facility, located in the Novi Centre at Haggerty
Centre II in Novi. Similar to the Troy hub opened in February 2004, this
facility houses commercial banking, commercial real estate lending, business
banking, mortgage banking, and wealth management, as well as a new temporary
branch. A new stand-alone bank branch will be constructed on property adjacent
to Novi Centre. Citizens announced in November 2003 that its Oakland County
expansion would include the two new hub offices and the eventual opening of as
many as 10 to 14 new branches. Three locations are now complete with plans for
an additional three this year.
CONSOLIDATION OF CHARTERS
On July 9, 2004, Citizens Banking Corporation announced that the company had
filed applications with the Federal Reserve Bank of Chicago and the State of
Michigan Office of Financial and Insurance Services to consolidate its Michigan
and Wisconsin subsidiary banks. Upon completion of the consolidation, F&M Bank
- -- Wisconsin will become part of Citizens' Michigan subsidiary bank. The
resulting bank will be regulated as a State of Michigan, Federal Reserve member
bank.
Although the consolidation is not expected to have a significant effect on
Citizens' financial statements, Charles D. Christy, chief financial officer,
said the consolidation of the charters will create a more efficient banking
franchise by allowing the combined banks to operate as a single entity. "The
consolidation will
eliminate the need for separate regulatory reporting and separate accounting and
financial tracking by the two banks," Christy said. "This action also will allow
the company to make more efficient use of its capital." The consolidation of
charters was driven more by the decision making and operational efficiencies
gained than by any new cost reductions. Most of the cost reductions were
achieved in 2000 when Citizens converted F&M's operating systems to a common
platform. All clients of the Wisconsin and Michigan banks will be notified of
the consolidation following Federal Reserve and State of Michigan approval,
which is expected to take 60 to 90 days. The corporation's F&M Bank-Iowa
franchise was not included in the consolidation at this time because of certain
legal and regulatory issues that exist in the state of Iowa.
ILLINOIS BANK SALE
As previously announced Citizens entered a definitive agreement to sell its
subsidiary -- Citizens Bank-Illinois, N.A. -- to Metropolitan Bank Group, Inc.,
of Chicago, Ill., in a cash transaction valued at $26,250,000. The sale is
expected to close in the third quarter of 2004. Citizens expects to realize a
gain of approximately $12 million on the sale, and anticipates re-deploying the
proceeds into one or more strategic alternatives to achieve a similar return. As
such, the sale is anticipated to have a negligible impact on future earnings per
share. Citizens Bank--Illinois, N.A. has approximately $79 million of loans,
$159 million of deposits and $179 million of total assets as of June 30, 2004.
INITIATIVES
Over the past 18 months Citizens has chartered over 70 significant initiatives
critical to the achievement of its corporate vision. Of the more than 70
"Achieving the Vision" (ATV) initiatives, 47 have been completed, 23 are in
process with 15 of the 23 having a projected completion date prior to year end.
Five initiatives were completed in the second quarter including enhanced voice
communications and Human Resource selection, compensation and learning
alignment. Active initiatives address among other things, growth, product
development, process improvement, service quality and improved technology.
ATV project office manager, Karen Magidsohn, notes "Developing effective change
as a core competency is important to the success of our corporation. The ATV
initiatives not only bring the vision to life, they are helping build that core
competency. Over 400 staff members have been involved in these change
initiatives, including all members of the Leadership team."
DIVIDEND ANNOUNCEMENT
The Board of Directors of Citizens Banking Corporation declared a cash dividend
of $0.285 per share of common stock. The dividend is payable on August 4, 2004,
to shareholders of record on July 26, 2004.
OTHER NEWS
Citizens' new brand introduced in November of last year in Oakland County, is
being unveiled to the rest of Michigan. During the week of June 2, retail and
commercial households in Michigan received a special mailer introducing the new
brand of Citizens. This mailer touched on some of the major changes clients will
see, such as signage, new logos on their statements, new checks and check cards,
advertising and a redesigned web site. The message this mailer conveys to
clients is simple: "fresh new look, same great bank." Additionally, Citizens is
continuing to plan for the rollout of the new brand in Wisconsin and Iowa in
2005.
During the second quarter of 2004, Citizens repurchased a total of 108,000
shares of its stock at an average price of $30.02. Since the stock repurchase
program was announced in October 2001, Citizens has repurchased 2,955,200 shares
at an average price of $28.32. As of June 30, 2004, 3,044,800 shares remain to
be purchased under programs approved by the Board.
CONFERENCE CALL ANNOUNCEMENT
William R. Hartman, chairman, president and CEO, Charles D. Christy, CFO, John
D. Schwab, chief credit officer, Martin E. Grunst, treasurer and Daniel E.
Bekemeier, chief accounting officer will review the quarter's results in a
conference call for investors and analysts beginning at 10:00 AM EDT ON FRIDAY,
JULY 16, 2004.
A live audio web cast is available at http://viavid.net/dce.aspx?sid=00001CA3 To
participate in the conference call, please call the number below approximately
10 minutes prior to the scheduled conference time: US/Canada Dial-In Number:
(800) 374-2419 International Dial-In Number: (706) 634-1073 Conference ID:
8318484 Conference Name: "Citizens Banking Corporation 2nd Quarter Earnings"
R.S.V.P. is not required.
A playback of the conference call will be available after 2:00pm EDT through
July 30, 2004, by dialing US/Canada Dial-In Number: (800) 642-1687 or
International Dial-In Number: (706) 645-9291 conference ID: 8318484. Also, a
playback of the call can be accessed via Citizens' web site, through the
Investor Relations section at www.citizensonline.com
CORPORATE PROFILE
Citizens Banking Corporation is a diversified financial services company
providing a full range of commercial, consumer, mortgage banking, trust and
financial planning services to a broad client base. Citizens operates 180
branch, private banking, and financial center locations throughout Michigan,
Wisconsin, Iowa, and in suburban Chicago, Illinois.
SAFE HARBOR STATEMENT
Discussions in this release that are not statements of historical fact
(including statements that include terms such as "may," "should," "believe,"
"expect," "anticipate," "estimate," "intend," and "plan") are forward-looking
statements that involve risks and uncertainties, and Citizens' actual future
results could materially differ from those discussed. Factors that could cause
or contribute to such differences include, without limitation, adverse changes
in Citizens' loan and lease portfolios and the resulting credit risk-related
losses and expenses (including losses due to fraud and economic factors),
Citizens' future lending and collections experience and the potential inadequacy
of Citizens' loan loss reserves, Citizens' potential inability to continue to
obtain third party financing on favorable terms, interest rate fluctuations and
the effects on net interest income of changes in Citizens' interest rate risk
position, other adverse changes in economic or financial market conditions, the
potential inability to hedge certain risks economically, adverse changes in
competition and pricing environments, Citizens' potential failure to maintain or
improve loan quality levels and origination volume, Citizens' potential
inability to continue to attract core deposits, the potential lack of market
acceptance of Citizens' products and services, adverse changes in Citizens'
relationship with major customers, unanticipated technological changes that
require major capital expenditures, adverse changes in applicable laws and
regulatory requirements, impairment of the ability of the banking subsidiaries
to pay dividends to the holding company parent, changes in accounting rules that
negatively impact results of operations or capital, unanticipated environmental
liabilities or costs, Citizens' potential inability to integrate acquired
operations or complete its restructuring, Citizens' potential inability to
successfully expand its Oakland county operations, the effects of terrorist
attacks and potential attacks, and Citizens' success in managing the risks
involved in the foregoing, and other risks and uncertainties detailed from time
to time in its filings with the Securities and Exchange Commission.
Other factors not currently anticipated by management may also materially and
adversely affect Citizens' results of operations. There can be no assurance that
the future results will meet expectations. While Citizens believes that its
forward-looking statements are reasonable, you should not place undue reliance
on any forward-looking statement. In addition, these statements speak only as of
the date made. Citizens does not undertake, and expressly disclaims any
obligation, to update or alter its statements whether as a result of new
information, future events or otherwise, except as required by applicable law.
####
(Financial highlights follow)
Visit our Web site at http://www.CitizensOnline.com
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
CITIZENS BANKING CORPORATION AND SUBSIDIARIES
JUNE 30, December 31,
(in thousands) 2004 2003
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ASSETS
Cash and due from banks $ 173,117 $ 182,545
Interest-bearing deposits with banks 2,169 2,223
Securities available-for-sale:
Taxable 1,527,613 1,536,145
Tax-exempt 405,944 429,056
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Total securities available-for-sale 1,933,557 1,965,201
Securities held-to-maturity (fair value of $41,232 and $19,913, respectively) 42,523 19,857
Mortgage loans held for sale 36,994 44,677
Loans 5,290,078 5,245,702
Less: Allowance for loan losses (123,805) (123,545)
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Net loans 5,166,273 5,122,157
Premises and equipment 118,675 112,784
Goodwill 54,785 54,785
Other intangible assets 15,482 16,932
Bank owned life insurance 81,452 80,461
Other assets 122,880 109,448
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TOTAL ASSETS $ 7,747,907 $ 7,711,070
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LIABILITIES
Noninterest-bearing deposits $ 919,924 $ 882,429
Interest-bearing deposits 4,441,510 4,559,838
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Total deposits 5,361,434 5,442,267
Federal funds purchased and securities sold
under agreements to repurchase 700,279 588,593
Other short-term borrowings 47,641 43,077
Other liabilities 79,415 65,112
Long-term debt 931,390 936,859
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Total liabilities 7,120,159 7,075,908
SHAREHOLDERS' EQUITY
Preferred stock - no par value
Common stock - no par value 99,333 100,314
Retained earnings 523,581 512,045
Accumulated other comprehensive income 4,834 22,803
----------- -----------
Total shareholders' equity 627,748 635,162
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,747,907 $ 7,711,070
=========== ===========
- ------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
CITIZENS BANKING CORPORATION AND SUBSIDIARIES Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share amounts) 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 74,073 $ 82,519 $ 147,779 $ 167,023
Interest and dividends on investment securities:
Taxable 16,021 17,107 31,463 31,541
Tax-exempt 5,279 5,045 10,523 10,229
Money market investments 2 12 4 99
--------- --------- --------- ---------
Total interest income 95,375 104,683 189,769 208,892
--------- --------- --------- ---------
INTEREST EXPENSE
Deposits 15,892 22,522 32,343 47,559
Short-term borrowings 1,798 1,414 3,070 2,034
Long-term debt 8,467 7,827 16,810 14,873
--------- --------- --------- ---------
Total interest expense 26,157 31,763 52,223 64,466
--------- --------- --------- ---------
NET INTEREST INCOME 69,218 72,920 137,546 144,426
Provision for loan losses 4,500 25,650 11,500 44,642
--------- --------- --------- ---------
Net interest income after provision for loan losses 64,718 47,270 126,046 99,784
--------- --------- --------- ---------
NONINTEREST INCOME
Service charges on deposit accounts 9,069 7,549 17,111 14,139
Trust fees 4,528 4,324 8,838 8,544
Mortgage and other loan income 3,047 5,409 5,303 10,563
Brokerage and investment fees 2,651 1,914 4,433 3,682
Bankcard fees 911 814 1,694 1,549
Other 4,650 4,826 9,989 9,598
--------- --------- --------- ---------
Total fees and other income 24,856 24,836 47,368 48,075
Investment securities gains (losses) (2,053) 11 (2,053) 59
--------- --------- --------- ---------
Total noninterest income 22,803 24,847 45,315 48,134
NONINTEREST EXPENSE
Salaries and employee benefits 33,185 31,400 65,124 61,512
Occupancy 4,922 4,314 10,264 9,009
Equipment 3,668 3,869 7,310 8,038
Professional services 4,281 3,959 8,209 7,667
Data processing services 3,440 3,058 7,086 6,374
Postage and delivery 1,862 1,683 3,418 3,361
Advertising and public relations 2,038 623 4,183 2,672
Telephone 1,451 1,135 2,985 2,310
Stationery and supplies 916 873 1,758 1,768
Other loan fees 1,631 1,146 2,760 2,287
Other 4,749 4,301 9,580 7,944
--------- --------- --------- ---------
Total noninterest expense 62,143 56,361 122,677 112,942
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 25,378 15,756 48,684 34,976
Income tax provision 6,656 2,542 12,519 6,704
--------- --------- --------- ---------
NET INCOME $ 18,722 $ 13,214 $ 36,165 $ 28,272
========= ========= ========= =========
NET INCOME PER SHARE:
Basic 0.43 0.30 0.83 0.65
Diluted 0.43 0.30 0.83 0.65
AVERAGE SHARES OUTSTANDING:
Basic 43,292 43,248 43,303 43,376
Diluted 43,752 43,478 43,806 43,612
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
SELECTED QUARTERLY INFORMATION
CITIZENS BANKING CORPORATION AND SUBSIDIARIES
2ND QTR 2004 1ST QTR 2004 4TH QTR 2003 3RD QTR 2003 2ND QTR 2003
- ---------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS (THOUSANDS)
Interest income $ 95,375 $ 94,394 $ 97,398 $ 99,687 $ 104,683
Interest expense 26,157 26,066 26,720 28,533 31,763
Net interest income 69,218 68,328 70,678 71,154 72,920
Provision for loan losses 4,500 7,000 8,020 10,300 25,650
Net interest income after provision for loan
losses 64,718 61,328 62,658 60,854 47,270
Total fees and other income 24,856 22,512 21,629 25,012 24,836
Investment securities gains (losses) (2,053) -- 2 42 11
Noninterest expense 62,143 60,534 60,446 59,600 56,361
Income tax provision 6,656 5,863 5,769 6,703 2,542
Net income 18,722 17,443 18,074 19,605 13,214
- ---------------------------------------------------------------------------------------------------------------------
AT PERIOD END (MILLIONS)
Total assets $ 7,748 $ 7,692 $ 7,711 $ 7,787 $ 7,789
Total earning assets 7,305 7,279 7,278 7,356 7,334
Total loans 5,290 5,200 5,246 5,226 5,287
Total deposits 5,361 5,461 5,442 5,482 5,660
Total shareholders' equity 628 654 635 634 639
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES (MILLIONS)
Total assets $ 7,769 $ 7,640 $ 7,697 $ 7,812 $ 7,809
Total earning assets 7,338 7,228 7,279 7,378 7,387
Total loans 5,269 5,197 5,220 5,183 5,253
Total deposits 5,435 5,474 5,481 5,610 5,723
Total shareholders' equity 628 644 626 620 639
Shareholders' equity / assets 8.08 % 8.43 % 8.13 % 7.94 % 8.18 %
- ---------------------------------------------------------------------------------------------------------------------
CREDIT QUALITY STATISTICS (THOUSANDS)
Nonaccrual loans $ 48,191 $ 54,565 $ 68,744 $ 83,278 $ 87,928
Loans 90 or more days past due and still
accruing 298 201 345 601 607
Restructured loans 52 52 -- -- --
--------- --------- --------- --------- ---------
Total nonperforming loans 48,541 54,818 69,089 83,879 88,535
Other repossessed assets acquired (ORAA) 9,673 7,592 7,943 7,350 8,044
--------- --------- --------- --------- ---------
Total nonperforming assets $ 58,214 $ 62,410 $ 77,032 $ 91,229 $ 96,579
========= ========= ========= ========= =========
Allowance for loan losses $ 123,805 $ 123,703 $ 123,545 $ 123,265 $ 123,302
Allowance for loan losses ratio 2.34 % 2.38 % 2.36 % 2.36 % 2.33 %
Allowance for loan losses as a percent of
nonperforming assets 212.67 198.21 160.38 135.12 127.67
Allowance for loan losses as a percent of
nonperforming loans 255.05 225.66 178.82 146.96 139.27
Nonperforming assets as a percent of loans
plus ORAA 1.10 1.20 1.47 1.74 1.82
Nonperforming assets as a percent of total
assets 0.75 0.81 1.00 1.17 1.24
Net loans charged off as a percent of
average loans (annualized) 0.33 0.53 0.59 0.80 0.92
Net loans charged off (000) $ 4,398 $ 6,842 $ 7,740 $ 10,337 $ 12,043
- ---------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Net Income (loss):
Basic $ 0.43 $ 0.40 $ 0.42 $ 0.45 $ 0.30
Diluted 0.43 0.40 0.41 0.45 0.30
Dividends 0.285 0.285 0.285 0.285 0.285
Market Value:
High $ 33.99 $ 34.00 $ 34.26 $ 28.01 $ 28.17
Low 28.31 31.55 26.41 24.77 21.72
Close 31.05 32.63 32.72 26.41 27.01
Book value 14.51 15.09 14.69 14.67 14.77
Shares outstanding, end of period (000) 43,263 43,343 43,242 43,220 43,260
- ---------------------------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS (ANNUALIZED)
Net interest margin (FTE) 3.98 % 4.01 % 4.07 % 4.06 % 4.17 %
Return on average assets 0.97 0.92 0.93 1.00 0.68
Return on average shareholders' equity 12.00 10.89 11.45 12.55 8.29
Efficiency ratio (1) 63.78 64.26 63.16 59.90 55.74
- ---------------------------------------------------------------------------------------------------------------------
(1) Excludes investment securities gains (losses)
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL SUMMARY AND COMPARISON FOR THE SIX MONTHS ENDED
CITIZENS BANKING CORPORATION AND SUBSIDIARIES JUNE 30,
2004 2003 % CHANGE
- -------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS (THOUSANDS)
Interest income $ 189,769 $ 208,892 (9.2)%
Interest expense 52,223 64,466 (19.0)
Net interest income 137,546 144,426 (4.8)
Provision for loan losses 11,500 44,642 (74.2)
Net interest income after provision for loan losses 126,046 99,784 26.3
Total fees and other income 47,368 48,075 (1.5)
Investment securities gains (losses) (2,053) 59 N/M
Noninterest expense 122,677 112,942 8.6
Income tax provision 12,519 6,704 86.7
Net income 36,165 28,272 27.9
- -------------------------------------------------------------------------------------------------------------------
AT PERIOD END (MILLIONS)
Total assets $ 7,748 $ 7,789 (0.5)%
Total earning assets 7,305 7,334 (0.4)
Total loans 5,290 5,287 0.1
Total deposits 5,361 5,660 (5.3)
Total shareholders' equity 628 639 (1.8)
- -------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES (MILLIONS)
Total assets $ 7,705 $ 7,633 0.9 %
Total earning assets 7,283 7,216 0.9
Total loans 5,233 5,297 (1.2)
Total deposits 5,455 5,788 (5.8)
Total shareholders' equity 636 641 (0.8)
Shareholders' equity / assets 8.25% 8.40% (1.7)
- -------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE DATA
Net Income:
Basic $ 0.83 $ 0.65 27.7 %
Diluted 0.83 0.65 27.7
Dividends 0.570 0.570 0.0
Market Value:
High $ 34.00 $ 28.17 20.7
Low 28.31 21.72 30.3
Close 31.05 27.01 15.0
Book value 14.51 14.77 (1.8)
Tangible book value 12.89 13.08 (1.5)
Shares outstanding, end of period (000) 43,263 43,260 0.0
- -------------------------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS (ANNUALIZED)
Net interest margin (FTE) (1) 3.99 % 4.25 % (6.1)%
Return on average assets 0.94 0.75 25.3
Return on average shareholders' equity 11.44 8.89 28.7
Net loans charged off as a percent of average loans 0.43 1.06 (59.4)
- -------------------------------------------------------------------------------------------------------------------
(1) Net interest margin is presented on an annual basis and includes taxable
equivalent adjustments to interest income of $6,718,000 and $6,829,000 for
the six months ended June 30, 2004 and 2003, respectively, based on a tax
rate of 35%.
N/M - not meaningful
- ----------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME AND NONINTEREST EXPENSE (UNAUDITED)
CITIZENS BANKING CORPORATION AND SUBSIDIARIES
Quarter Ended
--------------------------------------------------------------------------
June 30 Mar 31 Dec 31 Sept 30 June 30
(in thousands) 2004 2004 2003 2003 2003
- ----------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME:
Service charges on deposit accounts $ 9,069 $ 8,042 $ 8,074 $ 7,703 $ 7,549
Trust fees 4,528 4,310 4,615 4,368 4,324
Mortgage and other loan income 3,047 2,256 2,079 5,404 5,409
Brokerage and investment fees 2,651 1,782 1,705 2,333 1,914
Bankcard fees 911 783 732 761 814
Other income 4,650 5,339 4,424 4,443 4,826
-------- -------- -------- -------- --------
Total fees and other income 24,856 22,512 21,629 25,012 24,836
Investment securities gains (losses) (2,053) -- 2 42 11
-------- -------- -------- -------- --------
TOTAL NONINTEREST INCOME $ 22,803 $ 22,512 $ 21,631 $ 25,054 $ 24,847
======== ======== ======== ======== ========
NONINTEREST EXPENSE:
Salaries and employee benefits $ 33,185 $ 31,939 $ 29,774 $ 31,036 $ 31,400
Occupancy 4,922 5,342 5,112 4,328 4,314
Equipment 3,668 3,642 3,989 4,060 3,869
Professional services 4,281 3,928 5,202 4,946 3,959
Data processing services 3,440 3,646 3,145 3,225 3,058
Postage and delivery 1,862 1,556 1,796 1,739 1,683
Advertising and public relations 2,038 2,145 1,719 1,395 623
Telephone 1,451 1,534 1,314 1,169 1,135
Stationery and supplies 916 842 1,256 911 873
Other loan fees 1,631 1,129 1,192 1,360 1,146
Special charge -- -- -- (370) (221)
Other expense 4,749 4,831 5,947 5,801 4,522
-------- -------- -------- -------- --------
TOTAL NONINTEREST EXPENSE $ 62,143 $ 60,534 $ 60,446 $ 59,600 $ 56,361
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES, YIELDS AND RATES
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
JUNE 30, 2004 MARCH 31, 2004 JUNE 30, 2003
-------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
(in thousands) BALANCE RATE (1) BALANCE RATE (1) BALANCE (2) RATE (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
Money market investments $ 1,904 0.38 % $ 1,977 0.48 % $ 7,715 0.61 %
Investment securities (3):
Taxable 1,579,623 4.06 1,528,829 4.04 1,484,937 4.61
Tax-exempt 427,115 7.61 421,589 7.65 396,288 7.83
Mortgage loans held for sale 43,839 6.10 31,885 5.53 183,545 5.70
Loans:
Commercial 2,900,981 5.38 2,920,584 5.40 3,164,230 5.75
Real estate 483,023 5.74 496,450 5.76 548,778 6.19
Direct consumer 1,114,663 5.51 1,040,543 5.70 890,033 6.59
Indirect consumer 769,978 6.73 739,210 6.89 649,677 7.43
------------ ------------ -----------
Total earning assets 7,321,126 5.41 7,181,067 5.47 7,325,203 5.91
NONEARNING ASSETS
Cash and due from banks 161,584 160,763 163,210
Investment security fair value adjustment 17,220 47,041 62,182
Other nonearning assets 394,071 377,037 376,946
Allowance for loan losses (125,200) (125,637) (118,463)
------------ ------------ -----------
Total assets $ 7,768,801 $ 7,640,271 $ 7,809,078
============ ============ ===========
INTEREST-BEARING LIABILITIES
Deposits:
Interest-bearing demand $ 1,315,875 0.72 $ 1,358,556 0.73 $ 1,289,092 0.96
Savings deposits 1,383,164 0.64 1,288,269 0.52 1,355,646 0.79
Time deposits 1,818,784 2.50 1,955,036 2.53 2,209,352 3.05
Short-term borrowings 687,927 1.05 508,252 1.00 476,878 1.19
Long-term debt 935,479 3.64 938,677 3.57 877,184 3.58
------------ ------------ -----------
Total interest-bearing liabilities 6,141,229 1.71 6,048,790 1.73 6,208,152 2.05
NONINTEREST-BEARING LIABILITIES AND
SHAREHOLDERS' EQUITY
Noninterest-bearing demand 917,203 872,200 869,347
Other liabilities 82,768 75,116 92,470
Shareholders' equity 627,601 644,165 639,109
------------ ------------ -----------
Total liabilities and shareholders $ 7,768,801 $ 7,640,271 $ 7,809,078
' equity ============ ============ ===========
INTEREST SPREAD 3.70 % 3.74 % 3.86 %
Contribution of noninterest bearing
sources of funds 0.28 0.27 0.31
---- ---- ----
NET INTEREST INCOME AS A PERCENT OF
EARNING ASSETS 3.98 % 4.01 % 4.17 %
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30,
---------------------------------------------------------
2004 2003
---------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
(in thousands) BALANCE RATE (1) BALANCE (2) RATE (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
Money market investments $ 1,941 0.43 % $ 19,327 1.02 %
Investment securities (3):
Taxable 1,554,226 4.05 1,274,279 4.95
Tax-exempt 424,352 7.63 400,880 7.85
Mortgage loans held for sale 37,892 5.86 161,035 5.76
Loans:
Commercial 2,910,782 5.39 3,209,850 5.80
Real estate 489,707 5.75 568,128 6.27
Direct consumer 1,077,603 5.60 873,819 6.75
Indirect consumer 754,594 6.81 645,630 7.61
----------- -----------
Total earning assets 7,251,097 5.44 7,152,948 6.07
NONEARNING ASSETS
Cash and due from banks 161,174 167,327
Investment security fair value adjustment 32,131 63,131
Other nonearning assets 385,553 365,813
Allowance for loan losses (125,419) (116,588)
----------- -----------
Total assets $ 7,704,536 $ 7,632,631
=========== ===========
INTEREST-BEARING LIABILITIES
Deposits:
Interest-bearing demand $ 1,337,216 0.73 $ 1,301,783 1.05
Savings deposits 1,335,716 0.42 1,362,502 0.82
Time deposits 1,886,910 2.52 2,262,726 3.14
Short-term borrowings 598,090 1.03 346,556 1.18
Long-term debt 937,078 3.61 784,170 3.82
----------- -----------
Total interest-bearing liabilities 6,095,010 1.72 6,057,737 2.15
NONINTEREST-BEARING LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand 894,704 860,686
Other liabilities 78,939 72,985
Shareholders' equity 635,883 641,223
----------- -----------
Total liabilities and shareholders' equity $ 7,704,536 $ 7,632,631
=========== ===========
INTEREST SPREAD 3.72 % 3.92 %
Contribution of noninterest bearing sources of funds 0.27 0.33
---- ----
NET INTEREST INCOME AS A PERCENT OF EARNING ASSETS 3.99 % 4.25 %
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Average rates are presented on an annual basis and include taxable
equivalent adjustments to interest income.
(2) Certain amounts have been reclassified to conform with current year
presentation.
(3) For presentation in this table, average balances and the corresponding
average rates for investment securities are based upon historical cost,
adjusted for amortization of premiums and accretion of discounts.
- -----------------------------------------------------------------------------------------------------------------------------
NONPERFORMING ASSETS
CITIZENS BANKING CORPORATION AND SUBSIDIARIES
Quarter Ended
----------------------------------------------------------------------
June Mar 31 Dec 31 Sept 30 June 30
(in thousands) 2004 2004 2003 2003 2003
- -----------------------------------------------------------------------------------------------------------------------------
Commercial(1)
Commercial $18,066 $24,359 $37,171 $51,158 $52,760
Commercial real estate 14,982 15,310 16,385 17,379 19,568
Small business 2,749 2,052 1,603 1,648 1,466
------- ------- ------- ------- -------
Total commercial 35,797 41,721 55,159 70,185 73,794
Consumer:
Direct 4,042 3,471 3,177 3,291 3,208
Indirect 655 1,087 1,247 1,625 1,094
Mortgage 7,697 8,286 9,161 8,177 9,832
Loans 90 days or more past due and still accruing 298 201 345 601 607
Restructured loans 52 52 -- -- --
------- ------- ------- ------- -------
Total Nonperforming Loans 48,541 54,818 69,089 83,879 88,535
Other Reposessed Assets Acquired 9,673 7,592 7,943 7,350 8,044
------- ------- ------- ------- -------
Total Nonperforming Assets $58,214 $62,410 $77,032 $91,229 $96,579
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------
(1)Changes in commercial nonperforming assets for the quarter (in millions):
Inflows $ 17.3 $ 11.7 $ 17.8 $ 21.1 $ 36.3
Outflows (23.2) (25.1) (32.8) (24.7) (33.7)
------- ------- ------- ------- -------
Net change $ (5.9) $ (13.4) $ (15.0) $ (3.6) $ 2.6
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------
SUMMARY OF LOAN LOSS EXPERIENCE
CITIZENS BANKING CORPORATION AND SUBSIDIARIES
Quarter Ended
--------------------------------------------------------------------------
June 30 Mar 31 Dec 31 Sept 30 June 30
(in thousands) 2004 2004 2003 2003 2003
- --------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses - beginning of period $123,703 $123,545 $123,265 $123,302 $109,695
Provision for loan losses 4,500 7,000 8,020 10,300 25,650
Charge-offs:
Commercial 2,982 5,703 7,323 9,539 7,577
Commercial real estate 1,918 1,151 2,276 1,531 4,321
Small business 167 218 551 348 273
-------- -------- -------- -------- --------
Total commercial 5,067 7,072 10,150 11,418 12,171
Real estate mortgage 305 193 320 213 76
Consumer - Direct 1,220 1,630 1,388 1,628 1,790
Consumer - Indirect 1,630 1,891 2,580 1,941 2,152
-------- -------- -------- -------- --------
Total charge-offs 8,222 10,786 14,438 15,200 16,189
-------- -------- -------- -------- --------
Recoveries:
Commercial 2,202 2,332 4,452 2,882 2,115
Commercial real estate 225 432 927 595 623
Small business 107 17 165 139 93
-------- -------- -------- -------- --------
Total commercial 2,534 2,781 5,544 3,616 2,831
Real estate mortgage 23 13 -- 27 8
Consumer - Direct 560 438 461 504 479
Consumer - Indirect 707 712 693 716 828
-------- -------- -------- -------- --------
Total recoveries 3,824 3,944 6,698 4,863 4,146
-------- -------- -------- -------- --------
Net charge-offs 4,398 6,842 7,740 10,337 12,043
-------- -------- -------- -------- --------
Allowance for loan losses - end of period $123,805 $123,703 $123,545 $123,265 $123,302
======== ======== ======== ======== ========
Reserve for loan commitments - end of period $ 3,000 $ 2,757 $ 2,690 $ 2,690 $ 2,690
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------
For the Quarter Ended June 30, 2004
-----------------------------------------------------------------------
Consumer - Consumer -
Commercial Real estate Direct Indirect Total
-----------------------------------------------------------------------
Charge-offs:
Michigan $ 1,218 $ 136 $ 737 $ 1,630 $ 3,721
Wisconsin 2,853 121 302 -- 3,276
Iowa 531 48 159 -- 738
Illinois 465 -- 22 -- 487
------- ------- ------- ------- -------
Total charge-offs 5,067 305 1,220 1,630 8,222
------- ------- ------- ------- -------
Recoveries:
Michigan 1,567 9 362 693 2,631
Wisconsin 918 -- 141 -- 1,059
Iowa 49 14 31 -- 94
Illinois -- -- 26 14 40
------- ------- ------- ------- -------
Total recoveries 2,534 23 560 707 3,824
------- ------- ------- ------- -------
Net charge-offs $ 2,533 $ 282 $ 660 $ 923 $ 4,398
======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------
For the Six Months Ended June 30, 2004
-----------------------------------------------------------------------
Consumer - Consumer -
Commercial Real estate Direct Indirect Total
-----------------------------------------------------------------------
Charge-offs:
Michigan $ 4,637 $ 166 $ 2,033 $ 3,521 $10,357
Wisconsin 5,786 227 521 -- 6,534
Iowa 1,099 105 240 -- 1,444
Illinois 617 -- 56 -- 673
------- ------- ------- ------- -------
Total charge-offs 12,139 498 2,850 3,521 19,008
------- ------- ------- ------- -------
Recoveries:
Michigan 2,829 9 663 1,400 4,901
Wisconsin 2,054 13 253 -- 2,320
Iowa 324 14 50 -- 388
Illinois 108 -- 32 19 159
------- ------- ------- ------- -------
Total recoveries 5,315 36 998 1,419 7,768
------- ------- ------- ------- -------
Net charge-offs $ 6,824 $ 462 $ 1,852 $ 2,102 $11,240
======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------