10-QPeriod: Q3 FY2017

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 2, 2017For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ reported a solid third quarter of 2017, with net income of $67.1 million, or $5.58 per share. This represents a significant increase from the same period in the prior year, driven by strong growth in net interest income and successful acquisitions. The company's net interest margin improved, reflecting higher loan volumes and favorable interest rate movements. The balance sheet remains robust, with total assets reaching $34.6 billion and shareholders' equity at $3.3 billion. The company successfully integrated two FDIC-assisted acquisitions (Guaranty Bank and Harvest Community Bank) during the year, which contributed positively to both loan growth and non-interest income. Despite a challenging interest rate environment, First Citizens BancShares has strategically focused on core customer deposits and loans, growth in non-interest income sources, and efficient expense management to maintain profitability. The company also maintained strong capital ratios, well above regulatory requirements, indicating a stable financial position.

Financial Highlights

33 data points
Beta

Revenue

$87.54M

Net Income

$67.06M

76.6% Net Margin

EPS (Diluted)

$5.58

Total Assets

$34.58B

Cash & Equivalents

$296.39M

Free Cash Flow

$89.03M

Financial Statements
Beta
Revenue$87.54M
Interest Expense$11.16M
Net Income$67.06M
EPS (Basic)$5.58
Shares Outstanding (Basic)12.01M

Key Highlights

  • 1Net income for Q3 2017 was $67.1 million, or $5.58 per share, a notable increase from $51.4 million, or $4.28 per share, in Q3 2016.
  • 2Net interest income increased by 15.8% year-over-year, reaching $273.2 million, driven by loan growth and acquisitions.
  • 3Taxable-equivalent net interest margin improved to 3.35% in Q3 2017, up from 3.10% in Q3 2016, indicating better lending profitability.
  • 4Total assets grew to $34.6 billion as of September 30, 2017, up from $33.0 billion at December 31, 2016.
  • 5Shareholders' equity increased to $3.3 billion as of September 30, 2017, up from $3.0 billion at December 31, 2016.
  • 6The company successfully completed acquisitions of Guaranty Bank and Harvest Community Bank, contributing to asset and income growth.
  • 7Capital ratios remained strong, with a Tier 1 risk-based capital ratio of 12.95%, significantly exceeding regulatory minimums.

Frequently Asked Questions

First Citizens BancShares reported a net income of $67.1 million ($5.58 per share) in Q3 2017, compared to $51.4 million ($4.28 per share) in Q3 2016. This represents a significant improvement, driven by higher net interest income, increased loan volumes, and positive contributions from recent acquisitions.

The acquisitions of Guaranty Bank and Harvest Community Bank, completed in May 2017 and January 2017 respectively, contributed positively to the company's financial results. These FDIC-assisted transactions added $689.1 million in loans from Guaranty and $85.1 million from Harvest Community Bank, along with other assets, and significantly boosted non-interest income through acquisition gains of $122.7 million from Guaranty and $12.0 million from Harvest.

The company's strategy focuses on maintaining an interest rate risk profile that benefits from a rising rate environment. This is achieved by concentrating on core customer deposits and loans, growing non-interest income, controlling non-interest expenses, and optimizing its branch network and technology. The analysis shows that a 100 basis point increase in interest rates would lead to a 4.84% increase in net interest income over 24 months, indicating a beneficial position in a rising rate environment.

First Citizens BancShares maintained a strong capital position as of September 30, 2017. Its Tier 1 risk-based capital ratio was 12.95%, Common Equity Tier 1 ratio was 12.95%, and Total Risk-Based Capital ratio was 14.34%. These ratios significantly exceed the minimum regulatory requirements, classifying the company as 'well-capitalized' under Basel III guidelines.