10-QPeriod: Q3 FY2018

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 1, 2018For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported solid financial performance for the nine months ended September 30, 2018, with net income of $310.8 million, or $25.91 per share, a notable increase from the prior year's period. This growth was driven by strong net interest income, benefiting from loan growth and improved yields, as well as effective management of noninterest expenses. The company also completed three strategic acquisitions during the period, expanding its geographic footprint and enhancing its service offerings. The company's balance sheet reflects a growing loan portfolio, totaling $24.9 billion, with a healthy mix of commercial and noncommercial loans. Deposits also saw an increase, providing a stable funding base. BancShares maintained strong capital adequacy ratios, exceeding regulatory requirements, underscoring its financial stability. Despite some market headwinds such as rising interest rates impacting investment securities, the company demonstrated resilience and strategic execution.

Financial Highlights

33 data points
Beta

Revenue

$87.44M

Net Income

$117.32M

134.2% Net Margin

EPS (Diluted)

$9.80

Total Assets

$34.95B

Cash & Equivalents

$262.52M

Free Cash Flow

-$221.49M

Financial Statements
Beta
Revenue$87.44M
Interest Expense$8.34M
Net Income$117.32M
EPS (Basic)$9.80
Shares Outstanding (Basic)11.97M

Key Highlights

  • 1Net income for the first nine months of 2018 increased to $310.8 million from $269.3 million in the prior year's period.
  • 2Net interest income saw a significant increase of $102.9 million for the nine months ended September 30, 2018, driven by loan growth and improved yields.
  • 3The company completed three acquisitions in 2018: HomeBancorp, Capital Commerce Bancorp, and Palmetto Heritage Bancshares, expanding its market presence.
  • 4Total loans and leases grew to $24.9 billion by September 30, 2018, an increase of $1.29 billion from the end of 2017.
  • 5Total deposits increased to $30.16 billion, providing a strong and stable funding source.
  • 6BancShares maintained robust capital adequacy ratios, with a Tier 1 risk-based capital ratio of 13.23% at September 30, 2018, well above regulatory minimums.
  • 7The adoption of the Tax Cuts and Jobs Act of 2017 led to a significant reduction in the effective tax rate and income tax expense.

Frequently Asked Questions

Net income for the nine months ended September 30, 2018, was $310.8 million, or $25.91 per share, an increase from $269.3 million, or $22.43 per share, for the same period in 2017. This represents a significant improvement in profitability.

The increase in net interest income was primarily driven by higher loan interest income, resulting from both originated loan growth and the inclusion of loans acquired through acquisitions, as well as improved loan yields. Additionally, higher investment securities interest income and reduced borrowing costs contributed positively.

The total loan and lease portfolio grew to $24.9 billion by September 30, 2018, an increase of $1.29 billion from the end of 2017. This growth was primarily attributed to organic expansion in the non-PCI loan portfolio and the acquisition of non-PCI loans from HomeBancorp. The company maintains a strong focus on originated loan growth, particularly in the commercial sector.

The Tax Cuts and Jobs Act of 2017 significantly reduced the company's effective tax rate and income tax expense. For the nine months ended September 30, 2018, the effective tax rate was 19.8%, down from 36.0% in the prior year's period. The company also recorded a tax benefit of $15.7 million in the third quarter of 2018 related to further analysis of the Tax Act's effects.