10-KPeriod: FY2018

FIRST CITIZENS BANCSHARES INC /DE/ Annual Report, Year Ended Dec 31, 2018

Filed February 20, 2019For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported strong financial performance for the year ended December 31, 2018, with net income increasing by 23.6% to $400.3 million, or $33.53 per share. This growth was driven by a 14.1% increase in net interest income, benefiting from loan growth, higher yields, and lower debt balances. The bank also saw an improvement in its net interest margin to 3.69% on a taxable-equivalent basis. However, noninterest income saw a significant decrease, primarily due to the absence of acquisition gains recorded in the prior year. The company continued its growth strategy through strategic acquisitions, completing three in 2018, which expanded its footprint in new markets and contributed to loan and deposit growth. BancShares maintained robust capital ratios, exceeding regulatory requirements and remaining well-capitalized under Basel III standards.

Financial Highlights

34 data points
Beta

Net Income

$400.31M

EPS (Diluted)

$33.53

Total Assets

$35.41B

Cash & Equivalents

$327.44M

Free Cash Flow

$313.32M

Financial Statements
Beta
Interest Expense$36.86M
Net Income$400.31M
EPS (Basic)$33.53
Shares Outstanding (Basic)11.94M

Key Highlights

  • 1Net income increased by 23.6% to $400.3 million in 2018, with earnings per share of $33.53.
  • 2Net interest income grew by 14.1% to $1.21 billion, driven by loan growth and improved yields.
  • 3The taxable-equivalent net interest margin expanded by 39 basis points to 3.69% in 2018.
  • 4Noninterest income decreased primarily due to the absence of significant acquisition gains in 2017.
  • 5The company completed three strategic acquisitions in 2018: Palmetto Heritage Bancshares, Capital Commerce Bancorp, and HomeBancorp, expanding its market presence.
  • 6Total assets grew to $35.41 billion by December 31, 2018.
  • 7Capital ratios remained strong, with BancShares and its subsidiary FCB well-capitalized under Basel III requirements.

Frequently Asked Questions

The primary driver of earnings growth was a 14.1% increase in net interest income, fueled by loan growth and improved yields on both loans and investment securities. Additionally, a significant decrease in interest expense due to debt extinguishments also contributed positively.

The company completed three acquisitions in 2018: Palmetto Heritage Bancshares, Capital Commerce Bancorp, and HomeBancorp. These acquisitions contributed to loan and deposit growth and expanded the company's geographic footprint, particularly in South Carolina and Florida. While these acquisitions boosted assets and loans, the overall noninterest income saw a decrease due to the absence of large acquisition gains recorded in the prior year (2017).

First Citizens BancShares maintained a strong capital position throughout 2018. Both BancShares and its subsidiary FCB remained well-capitalized under Basel III capital requirements, exceeding all minimum and well-capitalized standards for Tier 1 risk-based capital, Common Equity Tier 1, Total risk-based capital, and Leverage capital ratios. The capital conservation buffers were also robust, exceeding regulatory requirements.

Key risks include operational risks such as cybersecurity threats and system failures, credit risk stemming from loan portfolio concentrations (especially in medical/dental and real estate sectors) and potential insufficiency of loan loss allowances, market risk related to interest rate fluctuations, and compliance risk due to the highly regulated nature of the banking industry. The company also noted strategic risks associated with competition and the integration of acquisitions.