10-QPeriod: Q2 FY2017

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 3, 2017For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported a strong second quarter for 2017, driven by successful acquisitions and solid organic growth. The company's net income more than doubled year-over-year, reaching $134.7 million, or $11.21 per share, a significant improvement from $69.3 million, or $5.77 per share, in the same period of the previous year. This performance was boosted by a substantial gain on the acquisition of Guaranty Bank, contributing $122.7 million pre-tax. The company's net interest income also saw robust growth, up 12.7% year-over-year, supported by increased loan volumes and a favorable interest rate environment. The net interest margin expanded by 15 basis points to 3.28%, reflecting effective asset and liability management. Total assets grew to $34.8 billion, with loans and leases increasing by 10.5% to $22.9 billion, driven by both acquisitions and organic portfolio growth. Deposits also increased by 8.1% year-over-year to $29.5 billion, underscoring the company's stable funding base. Despite a slight increase in nonperforming assets, the company maintained strong capital adequacy ratios, well above regulatory minimums, demonstrating a sound financial position.

Financial Highlights

32 data points
Beta

Revenue

$84.77M

Net Income

$134.66M

158.9% Net Margin

EPS (Diluted)

$11.21

Total Assets

$34.77B

Cash & Equivalents

$556.77M

Free Cash Flow

$32.85M

Financial Statements
Beta
Revenue$84.77M
Interest Expense$10.93M
Net Income$134.66M
EPS (Basic)$11.21
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income significantly increased to $134.7 million ($11.21/share) in Q2 2017, up from $69.3 million ($5.77/share) in Q2 2016.
  • 2Acquisition of Guaranty Bank contributed a pre-tax gain of $122.7 million.
  • 3Net interest income grew 12.7% year-over-year to $261.6 million.
  • 4Taxable-equivalent net interest margin improved by 15 basis points to 3.28%.
  • 5Total assets reached $34.8 billion, an increase from $32.2 billion in the prior year.
  • 6Loans and leases increased by 10.5% year-over-year to $22.9 billion.
  • 7Deposits increased by 8.1% year-over-year to $29.5 billion.
  • 8The company maintained strong capital adequacy ratios, with a Tier 1 risk-based capital ratio of 12.69%.

Frequently Asked Questions

The substantial increase in net income was primarily driven by the acquisition of Guaranty Bank, which resulted in a $122.7 million pre-tax gain. This, combined with organic loan growth and improved net interest margin, contributed to the strong performance.

Total assets grew to $34.8 billion. The loan and lease portfolio expanded by 10.5% to $22.9 billion, supported by both acquisitions and organic origination. Deposits also saw an 8.1% year-over-year increase, reaching $29.5 billion.

Management indicated a strategy focused on maintaining an interest rate risk profile that benefits from a rising rate environment. The net interest margin improved by 15 basis points to 3.28% in Q2 2017, benefiting from higher federal funds rates and a favorable deposit mix.

Nonperforming assets saw a slight increase compared to the prior quarter but decreased year-over-year. The allowance for loan and lease losses remained stable as a percentage of total loans. The company continues to focus on credit quality through rigorous underwriting and monitoring.