10-QPeriod: Q1 FY2016

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported its first quarter 2016 results, showing a net income of $52.1 million, or $4.34 per share, a decrease from $67.2 million, or $5.59 per share, in the same period of 2015. This decline was largely impacted by a significant gain on acquisition of $42.9 million recorded in the prior year's first quarter for the Capitol City Bank & Trust acquisition, which was not repeated in the current quarter. However, the current quarter benefited from a $1.7 million gain on the acquisition of North Milwaukee State Bank (NMSB). The bank experienced loan growth of $177.7 million, reaching $20.42 billion, driven by originated portfolio growth and the NMSB acquisition. Deposits also saw a healthy increase of $434.5 million, primarily from organic growth in low-cost accounts. The net interest margin remained stable year-over-year at 3.18%, benefiting from originated loan growth and improved overnight investment yields, though partially offset by the runoff of purchased credit-impaired (PCI) loans. Capital ratios remain strong, exceeding regulatory requirements.

Financial Highlights

31 data points
Beta

Net Income

$52.07M

EPS (Diluted)

$4.34

Total Assets

$32.20B

Cash & Equivalents

$457.76M

Free Cash Flow

$61.56M

Financial Statements
Beta
Interest Expense$10.39M
Net Income$52.07M
EPS (Basic)$4.34
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income for Q1 2016 was $52.1 million ($4.34/share), down from $67.2 million ($5.59/share) in Q1 2015, primarily due to the absence of a large prior year acquisition gain.
  • 2Total loans and leases increased by $177.7 million to $20.42 billion, driven by originated loan growth and the North Milwaukee State Bank (NMSB) acquisition.
  • 3Total deposits increased by $434.5 million, or 1.6%, to $27.37 billion, largely from organic growth in low-cost accounts.
  • 4Net interest income increased 5.7% to $232.7 million, with a stable taxable-equivalent net interest margin of 3.18%.
  • 5Noninterest income was $105.3 million, down from $150.8 million in Q1 2015, impacted by the absence of the prior year's large acquisition gain, though offset by a $1.7 million gain from the NMSB acquisition and increased investment securities gains.
  • 6Noninterest expense decreased by $6.5 million year-over-year to $251.7 million, mainly due to lower personnel and merger-related expenses.
  • 7The company maintained strong capital adequacy ratios, exceeding regulatory minimums under Basel III guidelines.

Frequently Asked Questions

The decrease in net income was primarily driven by the absence of a significant $42.9 million gain on acquisition of Capitol City Bank & Trust (CCBT) that was recognized in the first quarter of 2015. While the current quarter included a $1.7 million gain from the North Milwaukee State Bank (NMSB) acquisition, it did not offset the impact of the prior year's larger gain.

The total loan and lease portfolio grew by $177.7 million to $20.42 billion. This growth was attributed to both continued originated portfolio expansion and the acquisition of North Milwaukee State Bank (NMSB). Non-PCI loans, representing the originated and purchased non-impaired portfolio, saw an increase, while the Purchased Credit-Impaired (PCI) loan portfolio continued to decline due to runoff.

First Citizens BancShares maintained a strong capital position, exceeding regulatory requirements. At March 31, 2016, the Tier 1 risk-based capital ratio was 12.58%, the Common Equity Tier 1 ratio was 12.58%, and the Tier 1 leverage ratio was 9.00%, all comfortably above the minimum 'well-capitalized' thresholds under Basel III guidelines.

The investment securities portfolio decreased slightly to $6.69 billion at March 31, 2016, from $6.86 billion at December 31, 2015. This decrease was due to reinvesting some proceeds from sales, maturities, and calls into overnight investments, pending further reinvestment. The portfolio composition shifted slightly, with an increase in mortgage-backed securities and equity securities, and a decrease in U.S. Treasury and government agency securities.