10-QPeriod: Q2 FY2010

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported a substantial increase in net income for the six months ended June 30, 2010, primarily driven by significant gains from FDIC-assisted acquisitions. Net income for the period reached $133.2 million, a significant jump from $14.9 million in the prior year's comparable period. This performance was largely fueled by acquisition gains totaling $132.6 million, offsetting continued pressure on core earnings from the prevailing recessionary economic conditions. The company's balance sheet expanded considerably, with total assets growing to $21.1 billion. This growth was a direct result of the successful integration of acquired entities, notably First Regional Bank and Sun American Bank, which contributed significantly to loan and deposit balances. While the company benefited from these strategic acquisitions, it also faced increased provisions for loan and lease losses, reflecting the post-acquisition deterioration of some acquired loan portfolios.

Financial Highlights

30 data points
Beta

Net Income

$28.60M

Total Assets

$21.11B

Cash & Equivalents

$625.86M

Free Cash Flow

$56.57M

Financial Statements
Beta
Interest Expense$52.57M
Net Income$28.60M

Key Highlights

  • 1Net income significantly increased to $133.2 million for the six months ended June 30, 2010, up from $14.9 million in the same period of 2009, largely due to acquisition gains.
  • 2Total assets grew to $21.1 billion as of June 30, 2010, reflecting the impact of FDIC-assisted acquisitions.
  • 3Net interest income saw a substantial increase of 40.9% in Q2 2010 and 35.7% year-to-date, driven by balance sheet growth and improved net yield on interest-earning assets.
  • 4Noninterest income increased significantly due to $132.6 million in gains from FDIC-assisted transactions.
  • 5Provision for loan and lease losses increased by 23.5% year-to-date, influenced by post-acquisition deterioration of acquired loans.
  • 6The company's capital ratios remained strong, exceeding regulatory minimums, with Tier 1 risk-based capital at 14.26% and Tier 1 leverage capital at 8.90% as of June 30, 2010.
  • 7The company actively participated in FDIC-assisted acquisitions, integrating First Regional Bank and Sun American Bank during 2010, which significantly impacted the balance sheet and income statement.

Frequently Asked Questions

The substantial increase in net income to $133.2 million was primarily driven by significant gains recognized from FDIC-assisted acquisitions, totaling $132.6 million. These gains offset pressures on core earnings from the ongoing recessionary economic environment.

The acquisitions of First Regional Bank and Sun American Bank, among others, significantly expanded the company's balance sheet. Total assets grew to $21.1 billion as of June 30, 2010, with increases in both loans and deposits directly attributable to these transactions.

Net interest income showed strong growth, increasing by 40.9% in the second quarter and 35.7% year-to-date. This was attributed to balance sheet growth from acquisitions and an improved net yield on interest-earning assets, driven by favorable deposit costs and yields on acquired loans and deposits. The company expects continued pressure on yields from investment securities due to low market interest rates.

First Citizens BancShares maintains strong capital adequacy, with its capital ratios comfortably exceeding regulatory requirements. As of June 30, 2010, the Tier 1 risk-based capital ratio was 14.26% and the Tier 1 leverage capital ratio was 8.90%. The company has not applied for TARP funding.