01—Abstract
Summary
Summary of the 10-K filed February 21, 2018. Cited figures are marked; the original filing is the authoritative source.
First Citizens BancShares, Inc. (BancShares) reported solid financial performance for the year ended December 31, 2017.
The company achieved a significant increase in net income, driven by robust loan growth, higher interest income from investments and overnight cash, and substantial gains from strategic acquisitions. Noninterest income also saw growth, primarily from merchant and cardholder services, along with service charges on deposit accounts and wealth management services. The company maintained strong capital ratios under Basel III, exceeding regulatory requirements, and continued to grow its loan and deposit portfolios.
Management focused on enhancing operational efficiency and controlling noninterest expenses while strategically pursuing growth opportunities through acquisitions. The company also navigated a changing regulatory landscape, including the impact of the Tax Cuts and Jobs Act, which resulted in a one-time tax expense but is expected to lower future tax rates. Looking ahead, BancShares aims to build on its strong foundation by continuing to focus on core customer deposits and loans, optimizing its branch network, and investing in technology and delivery channels.
The company remains committed to prudent risk management and maintaining high levels of liquidity and capital adequacy. The planned acquisition of HomeBancorp, Inc. is expected to further strengthen its presence in Florida, indicating a continued strategy of growth through acquisitions.
02—Key points
Key Highlights
- Net income increased by 43.6% to $323.8 million in 2017, with earnings per share rising to $26.96 from $18.77 in 2016.
- Total assets grew to $34.5 billion, and total deposits reached $29.3 billion by the end of 2017.
- Net loans and leases increased by 8.6% to $23.6 billion, driven by both organic growth and acquisitions.
- Acquisitions of Guaranty Bank and Harvest Community Bank contributed $134.7 million in gains and expanded the company's footprint.
- The company maintained strong capital adequacy ratios, with a total risk-based capital ratio of 14.21% and a leverage capital ratio of 9.47% at December 31, 2017, exceeding regulatory well-capitalized standards.
- Net interest income increased by 12.2% to $1.06 billion, reflecting higher loan balances and improved yields on investments.
- Noninterest income grew by 31.3% to $641.0 million, boosted by acquisition gains and increased fee-based revenues.
- The provision for loan and lease losses decreased by 22% to $25.7 million, reflecting favorable loan loss factors and improved projected cash flows for PCI loans.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 21, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Interest Expense | $43.79M$43.08M | +1.7% |
| Net Income | $323.75M$225.48M | +43.6% |
| EPS (Basic) | $29.96$18.77 | +59.6% |
| Shares Outstanding (Basic) | 12.01M12.01M | 0.0% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of First Citizens BancShares in 2017?
In 2017, First Citizens BancShares experienced strong financial performance, marked by a significant increase in net income to $323.8 million, a rise in earnings per share to $26.96, and growth in both total assets and deposits. The company benefited from robust loan growth, strategic acquisitions, and an improvement in net interest income and noninterest income.
How did the company's acquisitions impact its financial results?
The acquisitions of Guaranty Bank and Harvest Community Bank were significant contributors to the company's 2017 results, generating $134.7 million in gains and expanding BancShares' market presence. These acquisitions also contributed to loan and deposit growth.
What is the company's capital position, and does it meet regulatory requirements?
Yes, BancShares maintained a strong capital position throughout 2017. Its capital ratios, including the total risk-based capital ratio of 14.21% and the leverage capital ratio of 9.47% as of December 31, 2017, comfortably exceeded the regulatory requirements for being well-capitalized under Basel III.
How did the company manage its loan portfolio and associated risks?
The company experienced an 8.6% increase in its net loans and leases to $23.6 billion, driven by both organic growth and acquisitions. The allowance for loan and lease losses as a percentage of total loans decreased slightly to 0.94% from 1.01% in the prior year, reflecting favorable loan loss factors and improved credit quality indicators. Net charge-offs remained low at 0.10%.
06—Continue