10-QPeriod: Q1 FY2014

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 7, 2014For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported a net income of $22.4 million for the first quarter of 2014, a decrease from $55.6 million in the same quarter of the prior year. This decline was primarily driven by lower net interest income, influenced by nonrecurring adjustments and a decline in FDIC-assisted loan portfolios, although partially offset by improved investment yields and reduced funding costs. The company completed a merger with 1st Financial Services Corporation on January 1, 2014, which expanded its presence in Western North Carolina and added $316.3 million in loans and $631.9 million in deposits. Despite the decrease in net income, the company maintained strong capital ratios, with a Tier 1 leverage ratio of 9.66% and a total risk-based capital ratio of 16.05%, both comfortably exceeding regulatory requirements. Total assets grew to $22.15 billion from $21.20 billion at the end of 2013, largely due to the 1st Financial merger. Deposits also saw a significant increase, reaching $18.76 billion. The company continues to focus on managing credit risk and interest rate risk, with initiatives in place to address evolving regulatory requirements.

Financial Highlights

32 data points
Beta

Net Income

$22.48M

EPS (Diluted)

$2.34

Total Assets

$22.15B

Cash & Equivalents

$543.47M

Free Cash Flow

$45.76M

Financial Statements
Beta
Interest Expense$12.46M
Net Income$22.48M
EPS (Basic)$2.34
Shares Outstanding (Basic)9.62M

Key Highlights

  • 1Net income for Q1 2014 was $22.4 million, down from $55.6 million in Q1 2013.
  • 2Completed the merger with 1st Financial Services Corporation on January 1, 2014, expanding market presence and adding assets and liabilities.
  • 3Total assets increased to $22.15 billion as of March 31, 2014, up from $21.20 billion at December 31, 2013.
  • 4Total deposits increased to $18.76 billion as of March 31, 2014, up from $17.87 billion at December 31, 2013.
  • 5Net interest income decreased significantly due to FDIC-assisted loan portfolio changes and nonrecurring adjustments.
  • 6The company maintained strong capital adequacy ratios, exceeding regulatory minimums.
  • 7Securities available for sale increased by 5.4% to $5.7 billion, reflecting investment of excess funds.

Frequently Asked Questions

The primary driver for the decrease in net income was lower net interest income, which was impacted by nonrecurring adjustments and the expected decline in FDIC-assisted loan portfolios. This was partially offset by improved investment yields and reduced funding costs.

The merger, completed on January 1, 2014, expanded the company's presence in Western North Carolina. It added $316.3 million in loans, $631.9 million in deposits, and resulted in the recording of $24.5 million in goodwill and $3.8 million in core deposit intangibles. The merger was accretive to net interest income and is expected to continue to contribute positively.

First Citizens BancShares maintained strong capital adequacy. The Tier 1 leverage ratio was 9.66% and the total risk-based capital ratio was 16.05% as of March 31, 2014. Both ratios comfortably exceeded the 'well-capitalized' regulatory minimums.

Despite economic conditions that continue to suppress loan demand, the company saw growth in originated loans in the first quarter of 2014. Management expects originated loan growth to continue for the remainder of 2014, indicating a general improvement in consumer confidence.