10-QPeriod: Q3 FY2016

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 31, 2016For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ reported solid financial performance for the nine months ended September 30, 2016, with net income reaching $172.8 million, a modest increase from $167.6 million in the same period of 2015. Total assets grew to $32.97 billion, driven by loan growth and acquisitions. The company successfully integrated three FDIC-assisted acquisitions (Cordia Bancorp, First CornerStone Bank, and North Milwaukee State Bank) during the year, which contributed to a 7.0% annualized increase in loans and leases to $21.30 billion. Despite a slight compression in net interest margin to 3.10% for the third quarter, the company demonstrated effective management of its deposit base, with deposits increasing by 9.7% on an annualized basis. The early termination of five FDIC loss share agreements provided a one-time pre-tax benefit of $20.0 million, positively impacting earnings. The company maintained strong capital ratios, exceeding minimum regulatory requirements under Basel III, with a Tier 1 risk-based capital ratio of 12.50% at quarter-end.

Financial Highlights

31 data points
Beta

Net Income

$51.40M

EPS (Diluted)

$4.28

Total Assets

$32.97B

Cash & Equivalents

$495.70M

Free Cash Flow

$97.40M

Financial Statements
Beta
Interest Expense$10.64M
Net Income$51.40M
EPS (Basic)$4.28
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income for the nine months ended September 30, 2016, was $172.8 million, up from $167.6 million in the prior year period.
  • 2Total assets grew to $32.97 billion, primarily driven by organic loan growth and strategic acquisitions.
  • 3The company completed three FDIC-assisted acquisitions in 2016 (Cordia Bancorp, First CornerStone Bank, and North Milwaukee State Bank), contributing to a $1.06 billion increase in loans and leases.
  • 4Net interest income for the first nine months of 2016 was $700.8 million, a 0.9% increase year-over-year.
  • 5Net interest margin for Q3 2016 was 3.10%, a slight decrease from the prior year period, attributed to PCI loan portfolio runoff and lower investment securities yields.
  • 6The early termination of FDIC loss share agreements resulted in a one-time pre-tax benefit of $20.0 million.
  • 7Capital ratios remained strong, with a Tier 1 risk-based capital ratio of 12.50% and a Common Equity Tier 1 ratio of 12.50% at September 30, 2016.

Frequently Asked Questions

For the first nine months of 2016, First Citizens BancShares reported a net income of $172.8 million, or $14.39 per share, an increase from $167.6 million, or $13.96 per share, in the same period of 2015. Total assets grew to $32.97 billion, and the company successfully executed several strategic acquisitions.

The loan and lease portfolio grew by $1.06 billion to $21.30 billion by September 30, 2016. This growth was a combination of organic growth in the non-PCI portfolio and contributions from acquisitions, particularly Cordia Bancorp. The PCI loan portfolio continued to decline due to runoff.

First Citizens BancShares entered into an agreement to terminate five FDIC loss share agreements, making a net payment of $20.1 million. However, this early termination resulted in a total one-time pre-tax benefit of $20.0 million due to adjustments to clawback liabilities and released reserves, positively impacting earnings.

The company maintained strong capital adequacy, exceeding regulatory requirements. At September 30, 2016, its Tier 1 risk-based capital ratio was 12.50%, Common Equity Tier 1 ratio was 12.50%, Total risk-based capital ratio was 13.96%, and the Leverage capital ratio was 9.07%, all well above the regulatory minimums.