First Citizens Bancshares, Inc. is pleased to report continued strength and stability in its financial position and operating results for the quarter ended March 31, 2013. This follows record breaking results for the most recent two years as presented to Shareholders in the recently published annual report. The Company produced value for our shareholders as reflected in our return on equity of 12.59% versus peer’s 5.71%. Our dividend yield produces a material part of the value proposition delivered to our shareholders. Total shareholder return was 11.67% when comparing March 31, 2013 versus March 31, 2012. Seifried & Brew, a well known banking economic and consulting group, recently announced that First Citizens National Bank has been inducted into the 2012 Top 15th percentile of Community Banks for the second year in a row. The benchmark for this ranking includes institutions with assets between $100 million and $5 billion and the review was based off a total risk/return composite rating.
Operating Results
Net income totaled $3.6 million for first quarter 2013 which is a modest increase of 2% compared to first quarter 2012. Earnings per share for first quarter 2013 totaled $0.99 per share compared to $0.97 per share in first quarter of 2012. Increased earnings in 2013 were attributable to both increased net interest income and non-interest income which were partially offset by an increase in provision for loan losses and non-interest expense. Net interest income to average assets was 3.23% for first quarter 2013 compared to 3.60% in first quarter 2012. Margin dilution is a result of the continued trend of declining asset yields as the rate environment remains at or near historical lows. However, total net interest income increased approximately $400,000 or 5.1% in first quarter 2013 compared to first quarter 2012 as a result of overall growth in loans and investments and effective management of the Company’s cost of funds. Non-interest income increased 10.6% due to reduced losses on other real estate and improved core earnings from mortgage, brokerage, fiduciary and insurance services.
The Company recorded $225,000 in provision expense in first quarter 2013 compared to no provision for loan losses during first quarter 2012 In first quarter 2012, no provision was necessary primarily due to net recoveries which exceeded loans charged off by approximately $396,000. Net loans charged-off in first quarter 2013 totaled approximately $121,000. Non-interest expense increased 6.2% as a result of expenses associated primarily with salaries and benefits, information technology, advertising and promotions. Increased expenses are consistent with increased income streams and with core strategies regarding customer service, data integrity, brand awareness, and teammate retention.
Financial Position
The Company remains steadfast in its commitment to quality growth balanced by both strong liquidity and capital positions. Deposits totaled $957 million as March 31, 2013 compared to $876 million as of March 31, 2013. Other borrowings, consisting primarily of advances from the Federal Home Loan Bank (“FHLB”), increased to $99 million compared to $81 million in March 31, 2012. Capital increased $8.9 million or 8.4% from March 31, 2012 to March 31, 2013, the result of undistributed net income of $9.3 million and a decrease of approximately $353,000 in accumulated other comprehensive income. Total assets were $1.2 billion as of March 31, 2013 compared to $1.1 billion in March 2012. Growth in available-for-sale investments and loans totaled 27.4% and 6.6%, respectively from March 2012 to March 2013.
Expansion
In March 2013, First Citizens National Bank launched its Mobile Banking platform. Retail deposit customers can now securely and conveniently access their online banking services from any mobile device. We offer three modes of mobile banking. To learn more, visit our website at www.firstcitizens-bank.com.
In April 2013, First Citizens National Bank announced plans and applied for regulatory approval for a de novo branch office to be located at 1285 Union University Drive in Jackson, Tennessee. Pending the customary regulatory approval process, construction of the facility is expected to commence in second quarter 2013 and is anticipated to open in early 2014.
We thank our shareholders for your support and will strive to build a fortress franchise supported by a committed team, customer base, shareholders and risk management culture.