10-QPeriod: Q1 FY2017

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported a strong first quarter in 2017, with net income increasing to $67.6 million, or $5.63 per share, a notable rise from $52.1 million, or $4.34 per share, in the same period of the previous year. This growth was driven by a combination of organic loan and deposit expansion, as well as a significant gain from the acquisition of Harvest Community Bank (HCB) in January 2017. The HCB acquisition contributed $85.1 million in loans and $121.8 million in deposits, resulting in a $12.0 million gain on acquisition, positively impacting the company's financial performance. The bank maintained a healthy net interest margin of 3.25%, up from 3.18% in the prior year's first quarter, benefiting from improved investment yields and increased loan and investment portfolio balances. Asset quality remained stable, with nonperforming assets decreasing year-over-year. Favorable regulatory capital ratios, including a Tier 1 risk-based capital ratio of 12.57%, demonstrate the company's strong financial foundation.

Financial Highlights

31 data points
Beta

Net Income

$67.62M

EPS (Diluted)

$5.63

Total Assets

$34.02B

Cash & Equivalents

$502.27M

Free Cash Flow

$122.14M

Financial Statements
Beta
Interest Expense$10.51M
Net Income$67.62M
EPS (Basic)$5.63
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income rose to $67.6 million ($5.63/share) in Q1 2017 from $52.1 million ($4.34/share) in Q1 2016.
  • 2Acquisition of Harvest Community Bank (HCB) on January 13, 2017, contributed $85.1 million in loans and $121.8 million in deposits, generating a $12.0 million gain on acquisition.
  • 3Net interest margin improved to 3.25% in Q1 2017, up from 3.18% in Q1 2016, driven by better investment yields and higher loan/investment balances.
  • 4Total loans and leases increased by 3.2% to $21.91 billion in Q1 2017, fueled by originated portfolio growth and the HCB acquisition.
  • 5Deposits grew by 12.1% (annualized) to $29.0 billion, driven by organic growth in low-cost accounts and HCB deposits.
  • 6Nonperforming assets decreased to $144.0 million at March 31, 2017, down from $162.8 million at March 31, 2016.
  • 7Capital ratios remained strong, with the Tier 1 risk-based capital ratio at 12.57% and Common Equity Tier 1 ratio at 12.57% as of March 31, 2017.

Frequently Asked Questions

The primary driver of the net income increase was a combination of organic loan and deposit growth, along with a significant gain of $12.0 million from the acquisition of Harvest Community Bank (HCB) in January 2017. The HCB acquisition also contributed positively to loan and deposit balances.

The HCB acquisition added $85.1 million in loans and $121.8 million in deposits to the balance sheet as of March 31, 2017. The acquisition was accounted for under the acquisition method, with assets and liabilities recorded at their fair values, resulting in a $12.0 million gain.

Loan and lease balances increased by 3.2% on an annualized basis in Q1 2017, reaching $21.91 billion, driven by both originated loan growth and the HCB acquisition. Deposits saw a substantial increase of 12.1% (annualized) to $29.0 billion, attributed to organic growth in low-cost accounts and deposits acquired from HCB.

The company continues to focus on maintaining high asset quality through stringent underwriting and monitoring. Nonperforming assets decreased to $144.0 million at March 31, 2017, down from $162.8 million in the prior year, reflecting successful asset resolutions and a decline in other real estate owned.