10-QPeriod: Q3 FY2015

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 4, 2015For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported a strong performance for the nine months ended September 30, 2015, with net income significantly increasing to $167.6 million ($13.96 per share) from $75.7 million ($7.87 per share) in the prior year period. This growth was largely driven by strategic acquisitions, including the merger with First Citizens Bancorporation, Inc. and the FDIC-assisted acquisition of Capitol City Bank & Trust (CCBT), which contributed significantly to asset and deposit growth. The company also saw a substantial increase in interest income, largely due to loan growth and higher yields on investment securities, coupled with a reduction in interest expense. The balance sheet reflects robust asset growth, with total assets reaching $31.45 billion at September 30, 2015, up from $30.08 billion at December 31, 2014. This growth was supported by a significant increase in deposits, particularly non-interest-bearing deposits, and managed by strong capital ratios which remained well above regulatory requirements under Basel III guidelines. The company's loan portfolio also saw healthy growth, with both non-PCI and PCI loans showing increases, though the PCI portfolio continued to decline due to run-off. Asset quality remained a focus, with nonperforming assets as a percentage of total loans and OREO decreasing from the prior year.

Financial Highlights

31 data points
Beta

Net Income

$55.96M

EPS (Diluted)

$4.66

Total Assets

$31.45B

Cash & Equivalents

$546.44M

Free Cash Flow

$96.84M

Financial Statements
Beta
Interest Expense$10.45M
Net Income$55.96M
EPS (Basic)$4.66
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income for the first nine months of 2015 was $167.6 million ($13.96 per share), a significant increase from $75.7 million ($7.87 per share) in the same period of 2014.
  • 2Total assets grew to $31.45 billion as of September 30, 2015, up from $30.08 billion at December 31, 2014, driven by acquisitions and organic growth.
  • 3The company completed the integration of First Citizens Bancorporation, Inc. and the acquisition of Capitol City Bank & Trust (CCBT), contributing to asset and deposit growth.
  • 4Net interest income increased by 40.9% for the first nine months of 2015 compared to the prior year, driven by loan growth and improved investment yields.
  • 5Noninterest income saw substantial growth, up to $368.0 million for the first nine months of 2015 from $207.5 million in the prior year, boosted by an acquisition gain and securities gains.
  • 6Non-PCI loans grew significantly, driven by organic growth and acquisitions, while the PCI loan portfolio continued to decline due to run-off.
  • 7Capital ratios remained strong and well above regulatory requirements, even after the implementation of Basel III guidelines.

Frequently Asked Questions

The significant increase in net income was primarily driven by the successful completion of strategic acquisitions, including the merger with First Citizens Bancorporation, Inc. and the FDIC-assisted acquisition of Capitol City Bank & Trust (CCBT). These acquisitions contributed to asset and deposit growth. Additionally, improved loan growth and higher yields on investment securities, combined with a reduction in interest expenses, boosted net interest income. Noninterest income also saw substantial growth due to an acquisition gain and securities gains.

Total assets increased to $31.45 billion at September 30, 2015, from $30.08 billion at December 31, 2014. This growth was supported by an increase in total deposits to $26.72 billion, particularly in non-interest-bearing deposits. The loan portfolio also grew, with non-PCI loans showing strong organic growth and PCI loans declining due to run-off. The company maintained strong capital ratios, exceeding regulatory requirements.

Asset quality remained strong, with nonperforming assets as a percentage of total loans and OREO decreasing to 0.82% at September 30, 2015, compared to 1.13% at September 30, 2014. The company focuses on prudent underwriting standards and actively monitors its loan portfolio for credit quality trends. While nonaccrual non-PCI loans increased due to some large commercial relationships and system enhancements, overall nonperforming assets decreased, driven by reduced OREO balances and PCI nonaccrual loans.

The acquisitions significantly impacted the financial results. The First Citizens Bancorporation merger added substantial assets, including loans and investment securities, and liabilities, primarily deposits. The CCBT acquisition resulted in a gain on acquisition of $42.9 million. These transactions contributed to increased revenues from both interest and noninterest income, as well as increased operating expenses due to integration efforts.