10-KPeriod: FY2022

FIRST CITIZENS BANCSHARES INC /DE/ Annual Report, Year Ended Dec 31, 2022

Filed February 24, 2023For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported a significant increase in net income for the year ended December 31, 2022, primarily driven by the successful completion of its merger with CIT Group Inc. This strategic acquisition more than doubled the company's asset size, integrating new business lines and expanding its geographic footprint. The company's net income available to common stockholders rose to $1.05 billion, with diluted earnings per share increasing to $67.40. Financially, the CIT merger significantly impacted the balance sheet, with total assets reaching $109.3 billion and total deposits reaching $89.4 billion as of December 31, 2022. The company's net interest income also saw a substantial increase, up 112% to $2.95 billion, largely due to the expanded asset and liability base and a favorable interest rate environment. Despite this growth, the provision for credit losses increased notably to $645 million, reflecting the Day 2 provision for acquired loans and leases and a more challenging economic outlook. The company maintains strong capital adequacy ratios, exceeding regulatory requirements.

Financial Highlights

39 data points
Beta

Revenue

$5.08B

Net Income

$1.10B

21.6% Net Margin

EPS (Diluted)

$67.40

Total Assets

$109.30B

Cash & Equivalents

$518.00M

Free Cash Flow

$2.64B

Financial Statements
Beta
Revenue$5.08B
Interest Expense$467.00M
Net Income$1.10B
EPS (Basic)$67.47
EPS (Diluted)$67.40
Shares Outstanding (Basic)15.53M
Shares Outstanding (Diluted)15.55M

Key Highlights

  • 1The CIT merger, completed in January 2022, was a transformative event, significantly increasing the company's asset size to $109.3 billion and expanding its operational scope.
  • 2Net income available to common stockholders increased by 98% year-over-year to $1.05 billion, reflecting the positive impact of the CIT acquisition.
  • 3Net interest income grew by 112% to $2.95 billion, driven by higher asset yields and increased interest-bearing liabilities, partly due to the CIT merger and the rising interest rate environment.
  • 4The provision for credit losses increased significantly to $645 million, primarily due to the "Day 2" provision related to acquired loans from CIT and a weaker economic outlook.
  • 5The company is now segmented into four reportable segments: General Banking, Commercial Banking, Rail, and Corporate, following the CIT merger.
  • 6Capital ratios remain strong, with the Common Equity Tier 1 ratio at 10.08% and the Total Risk-Based Capital ratio at 13.18% as of December 31, 2022, well above regulatory minimums.
  • 7The company is classified as a Category IV banking organization under the Tailoring Rules, subject to certain enhanced prudential standards and supervision by the Federal Reserve.

Frequently Asked Questions

The primary driver of the significant increase in financial results for 2022 was the completion of the merger with CIT Group Inc. This acquisition substantially increased the company's asset size, loan and deposit balances, and diversified its revenue streams, particularly with the addition of the Rail segment and expanded Commercial Banking operations.

The CIT merger significantly increased the company's asset and liability base, but the company maintained strong capital adequacy ratios. As of December 31, 2022, its Common Equity Tier 1 ratio was 10.08% and its Total Risk-Based Capital ratio was 13.18%, both comfortably exceeding regulatory requirements, demonstrating the company's ability to integrate the acquisition while remaining well-capitalized.

The company acknowledges the deteriorating economic outlook and its potential impact on credit quality. This is reflected in the increased provision for credit losses in 2022, which included a substantial 'Day 2' provision for acquired loans from CIT and provisions related to macroeconomic forecasts. Management continues to monitor economic trends closely and adjust its allowance for credit losses accordingly.

Following the CIT merger, First Citizens BancShares' total consolidated assets exceeded $100 billion, classifying it as a Category IV banking organization under the Federal Reserve's Tailoring Rules. This subjects the company to certain enhanced prudential standards and supervision, including annual capital plan submissions and biennial supervisory stress testing under the CCAR process. The company is actively developing policies and systems to comply with these requirements.