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Comments from Corporate

 
We are pleased to present a 2013 year-to-date financial report that further extends a record of consistent growth and superior shareholder return. Total shareholder return over the first three quarters of 2013 was a robust 15.87%. Over the past two years, which have proven to be very challenging, First Citizens’ shareholder return averaged 19.39%.  As we strive to be superior in shareholder return, customer service and as the employer of choice, we are pleased to also report that First Citizens National Bank was recently recognized in American Banker Magazine as the 6th Best Bank to Work For among U. S. banks with assets of less than $3 billion.
 
Results of Operations
 
Net income for first nine months of 2013 totals $10.2 million or $2.83 per share compared to $10.3 million or $2.85 per share for the nine months ended September 30, 2012. Return on average equity was 11.91% compared to peer average of 5.49% for the nine months ended September 30, 2013. The decrease of less than one percent in net income during the nine months ended September 30, 2013 compared to the same period last year is primarily attributable to approximately $391,000 less in realized gains on the sale of securities. Net interest income increased approximately $923,000 primarily due to reduced interest expense of approximately $1 million.   
 
Non-interest income also increased approximately $866,000 in first nine months of 2013 compared to first nine months of 2012. The largest component of the change in non-interest income is losses on the write-down or sale of other real estate totaled approximately $291,000 compared to net losses of $1.0 million in 2012. In addition, non-interest income divisions including mortgage, trust, brokerage and insurance divisions also have each had modest to moderate increases in income for 2013 compared to the prior year. Non-interest expense increased approximately $1.8 million in nine months ended September 30, 2013 compared to September 30, 2012 due primarily to increased salaries and benefits expenses, depreciation, and advertising and promotions expenses. Increased expenses were expected and are a result of strategic efforts to drive quality growth and expansion, superior customer service and retention of teammates and customers. 
 
Provision for loan losses totaled $775,000 for the first nine months of 2013 compared to $500,000 for first nine months of 2012 and $1.9 million first nine months of 2011. Net loans charged off for first nine months of 2013 totaled approximately $625,000 compared to approximately $601,000 and $1.9 million in first nine months of 2012 and 2011, respectively. Reserve for losses on loans as a percent of total loans was 1.36% as of September 30, 2013 compared to 1.48% as of September 30, 2012 and 1.46% as of September 30, 2011. 
 
Financial Position
 
As of September 30, 2013, total assets were $1.2 billion compared to $1.1 billion as of September 30, 2012 and reflect growth of $67 million or 6.1% over the past twelve months. Growth in available-for-sale investments and loans totaled 4.9% and 11.1%, respectively from September 2012 to September 2013. Deposits totaled $948 million as September 30, 2013 compared to $885 million as of September 30, 2012 and account for more than 90% of total funding for the company. Capital decreased approximately 1% when comparing September 2013 to September 2012 as a result of offsetting increase in undistributed net income of $9.1 million and a decrease of $10.2 million in accumulated other comprehensive income. Decreased accumulated other comprehensive income is a due to reduction in unrealized gains on the investment portfolio. Unrealized gains on investments retreated significantly in 2013 relative to the rise in 10-year Treasury yields which were up about 100 basis points from September 2012 to September 2013.
 
The banking industry continues to deal with repercussions from the recently ended recession. There seems to be no end in sight as elected officials in Washington, D.C. bombard the industry with increased regulations that suppress consumer confidence, discourage loan demand and further dampens economic growth. The Board and Management of First Citizens understand these challenges but are committed to looking past today’s political chaos to develop the most dynamic strategic plan ever. We have confidence in the long-term direction of this company and our Country. God Bless America!
Jeff Agee, President & CEO
Katie Winchester, Chairman
 
 

 

 Jeff Agee
President/CEO

 

Katie Winchester
Chairman of the Board