10-KPeriod: FY2023

FIRST CITIZENS BANCSHARES INC /DE/ Annual Report, Year Ended Dec 31, 2023

Filed February 23, 2024For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported a significant increase in net income for the year ended December 31, 2023, primarily driven by a substantial preliminary gain on the acquisition of Silicon Valley Bridge Bank, N.A. (SVBB). This acquisition, alongside the prior year's merger with CIT Group, has considerably expanded the company's asset base and operational scope. The company experienced robust growth in net interest income due to higher loan volumes and increased interest rates, though this was partially offset by higher deposit and borrowing costs. The SVBB acquisition significantly impacted noninterest income and expenses, with the gain on acquisition being the dominant factor in the period's profitability. BancShares maintained strong capital and liquidity positions throughout the year, exceeding regulatory requirements. The company is navigating a dynamic regulatory environment with proposed changes to capital and liquidity standards for larger banking organizations, and is actively working to integrate its recent acquisitions while managing associated operational and compliance risks.

Financial Highlights

38 data points
Beta

Revenue

$18.79B

Net Income

$11.47B

61.0% Net Margin

EPS (Diluted)

$784.51

Total Assets

$213.76B

Cash & Equivalents

$908.00M

Free Cash Flow

$2.25B

Financial Statements
Beta
Revenue$18.79B
Interest Expense$3.68B
Net Income$11.47B
EPS (Basic)$785.14
EPS (Diluted)$784.51
Shares Outstanding (Basic)14.53M
Shares Outstanding (Diluted)14.54M

Key Highlights

  • 1Reported a preliminary gain on acquisition of $9.81 billion net of tax from the SVBB acquisition, contributing significantly to a net income of $11.47 billion for 2023, a substantial increase from $1.10 billion in 2022.
  • 2Net interest income grew by 128% to $6.71 billion in 2023, driven by higher average loan balances from acquisitions and organic growth, coupled with a higher interest rate environment.
  • 3Total assets increased to $213.76 billion as of December 31, 2023, up from $109.30 billion at the end of 2022, largely due to the SVBB acquisition.
  • 4Total deposits grew by 63% to $145.85 billion at December 31, 2023, reflecting both the SVBB acquisition and organic growth, particularly in the Direct Bank channel.
  • 5The company maintained strong capital adequacy ratios, with Common Equity Tier 1 at 13.36%, Tier 1 risk-based capital at 13.94%, and Total risk-based capital at 15.75%, all significantly exceeding regulatory requirements.
  • 6Noninterest expense increased by 74% to $5.34 billion, largely due to higher salaries and benefits and acquisition-related expenses stemming from the SVBB acquisition.
  • 7The company is subject to enhanced prudential standards and supervision as a Category IV banking organization with over $100 billion in assets, and is actively integrating acquired entities and managing associated regulatory requirements.

Frequently Asked Questions

The primary driver was the substantial preliminary gain of $9.81 billion, net of taxes, recognized from the acquisition of Silicon Valley Bridge Bank, N.A. (SVBB) in March 2023. This acquisition, along with the prior CIT merger, significantly expanded the company's balance sheet and contributed to higher net interest income.

The acquisitions of SVBB and CIT significantly increased FCNCA's total assets to $213.76 billion and total deposits to $145.85 billion as of December 31, 2023. The company also saw a substantial increase in borrowings, mainly due to the $36.07 billion Purchase Money Note issued to the FDIC in connection with the SVBB acquisition.

FCNCA maintained strong capital adequacy ratios as of December 31, 2023, with its Common Equity Tier 1, Tier 1 risk-based capital, and Total risk-based capital ratios significantly exceeding regulatory requirements. The company also reported substantial liquidity, with $57.28 billion in liquid assets and significant unused borrowing capacity.

FCNCA is exposed to interest rate risk primarily through its net interest income. The company generally maintains an asset-sensitive position, meaning its assets reprice faster than its liabilities, which historically has benefited net interest income in rising rate environments. This risk is managed through various strategies including product pricing, the investment portfolio, funding strategies, and the use of derivatives, with oversight from the Asset Liability Committee.

Key risks include intense competition in the financial services industry, potential for economic downturns impacting credit quality, interest rate volatility affecting net interest margin, cybersecurity threats, and the increasing burden of regulatory compliance, especially given its size and the proposed changes to capital and liquidity requirements for larger banks. The successful integration of recent acquisitions and management of associated operational complexities are also critical.