10-QPeriod: Q2 FY2012

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 9, 2012For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares Inc. /DE/ (FCNCA) reported a net income of $37.6 million for the second quarter of 2012, a significant increase from $21.3 million in the same period of the previous year. This growth was primarily driven by a substantial increase in net interest income, which rose by 3.9% to $215.4 million, and a decrease in the provision for loan and lease losses, which fell by 45.2% year-over-year to $29.7 million. Despite a decline in non-interest income, largely due to the absence of acquisition gains recorded in the prior year and lower cardholder and merchant services revenue following new regulations, the company's overall financial performance showed improvement. The bank continues to strategically manage its balance sheet, with total assets growing to $21.24 billion. The company's capital ratios remain strong, exceeding regulatory requirements, underscoring its financial stability. Investors should note the ongoing impact of FDIC-assisted transactions and the evolving regulatory landscape, which management is actively navigating.

Financial Highlights

31 data points
Beta

Net Income

$37.58M

EPS (Diluted)

$3.66

Total Assets

$21.33B

Cash & Equivalents

$571.00M

Free Cash Flow

$63.57M

Financial Statements
Beta
Interest Expense$25.09M
Net Income$37.58M
EPS (Basic)$3.66
Shares Outstanding (Basic)10.27M

Key Highlights

  • 1Net income increased to $37.6 million in Q2 2012 from $21.3 million in Q2 2011.
  • 2Net interest income grew by 3.9% to $215.4 million in Q2 2012.
  • 3Provision for loan and lease losses decreased by 45.2% to $29.7 million in Q2 2012.
  • 4Total assets grew to $21.24 billion as of June 30, 2012.
  • 5The bank maintained strong capital ratios, exceeding regulatory minimums.
  • 6Non-interest income decreased due to the absence of acquisition gains from prior periods and regulatory impacts on cardholder services.
  • 7The company is actively managing the integration of FDIC-assisted transactions and adapting to new regulatory requirements.

Frequently Asked Questions

The increase in net income was primarily driven by a stronger net interest income, benefiting from lower funding costs and improved yields on acquired loans, combined with a substantial reduction in the provision for loan and lease losses.

The Dodd-Frank Act, specifically the regulation on debit card interchange fees, has led to a significant decrease in cardholder and merchant services income. This regulatory change is expected to continue to negatively impact non-interest income.

The company has strategically participated in FDIC-assisted transactions, which have provided growth opportunities and have been protected by loss-share agreements. Management continues to navigate the complexities of integrating these transactions while managing associated risks and regulatory changes.

First Citizens BancShares maintains strong capital ratios that exceed regulatory requirements. Management is actively monitoring and adapting to evolving regulatory capital guidelines, including those from Basel III, and the phase-out of trust preferred securities from Tier 1 capital due to the Dodd-Frank Act.