10-QPeriod: Q2 FY2016

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 4, 2016For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /de/ (FCNCA) reported strong performance for the second quarter of 2016, with net income increasing to $69.3 million, or $5.77 per share, a significant rise from $44.5 million, or $3.71 per share, in the same period of the prior year. This growth was driven by a combination of organic loan expansion, successful FDIC-assisted acquisitions (First CornerStone Bank and North Milwaukee State Bank), and a beneficial one-time impact from the early termination of FDIC loss share agreements, which added $16.6 million pre-tax to earnings. The company's balance sheet remained robust, with total assets growing to $32.23 billion. Loans and leases increased by 5.0% to $20.74 billion, reflecting both organic growth and contributions from recent acquisitions. The allowance for loan and lease losses remained strong at $208.0 million, with the ALLL to total loans and leases ratio at 1.00%, indicating prudent credit risk management. Capital ratios remained well above regulatory requirements, demonstrating a solid capital position.

Financial Highlights

31 data points
Beta

Net Income

$69.32M

EPS (Diluted)

$5.77

Total Assets

$32.23B

Cash & Equivalents

$507.57M

Free Cash Flow

$3.31M

Financial Statements
Beta
Interest Expense$11.18M
Net Income$69.32M
EPS (Basic)$5.77
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income surged to $69.3 million ($5.77/share) in Q2 2016, up from $44.5 million ($3.71/share) in Q2 2015.
  • 2Total assets grew to $32.23 billion as of June 30, 2016.
  • 3Loans and leases increased by 5.0% to $20.74 billion, supported by organic growth and recent acquisitions.
  • 4The early termination of FDIC loss share agreements provided a $16.6 million pre-tax benefit to earnings in Q2 2016.
  • 5The company successfully completed acquisitions of First CornerStone Bank and North Milwaukee State Bank, adding $43.2 million and $36.9 million in loans, respectively.
  • 6Capital ratios remained strong, exceeding regulatory requirements, with a Tier 1 risk-based capital ratio of 12.63% and a common equity Tier 1 ratio of 12.63%.

Frequently Asked Questions

Earnings growth was primarily driven by organic loan growth, the successful completion of two FDIC-assisted acquisitions (First CornerStone Bank and North Milwaukee State Bank), and a significant positive impact of $16.6 million pre-tax from the early termination of FDIC loss share agreements.

The total loan and lease portfolio grew by 5.0% to $20.74 billion. This growth was a result of both organic expansion, particularly in the commercial portfolio, and the inclusion of loans acquired through the First CornerStone Bank and North Milwaukee State Bank acquisitions.

First Citizens BancShares maintained a strong capital position, exceeding regulatory requirements. As of June 30, 2016, the Tier 1 risk-based capital ratio was 12.63%, and the common equity Tier 1 ratio was also 12.63%. The company remains well-capitalized under Basel III guidelines.

The early termination of five FDIC loss share agreements resulted in a one-time pre-tax benefit of $16.6 million to earnings in the second quarter of 2016. This was achieved through a net payment to the FDIC for termination and adjustments to clawback liabilities, yielding a positive net impact.