10-QPeriod: Q3 FY2021

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 2, 2021For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares Inc. /DE/ (FCNCA) reported a net income of $124.1 million for the third quarter of 2021, a decrease of 13.0% compared to the same period in 2020. Diluted Earnings Per Share (EPS) also saw a decrease to $12.17 from $14.03 year-over-year. The company experienced a decline in its Net Interest Margin (NIM) to 2.61% from 3.06% in the prior year's quarter, largely due to a persistent low-interest-rate environment and a shift in asset mix towards lower-yielding overnight investments. Despite these pressures, total deposits grew significantly to $50.1 billion, reflecting strong customer confidence and a robust deposit-gathering capability. The company remains well-capitalized, exceeding regulatory requirements, and is progressing with its proposed merger with CIT Group Inc., with the closing date extended to March 1, 2022, pending Federal Reserve approval. For the first nine months of 2021, net income increased by 19.9% to $424.2 million compared to the same period in 2020, with EPS rising to $41.79 from $33.96. This growth was driven by strong noninterest income, which increased by 12.5% year-over-year, particularly in wealth management services and cardholder/merchant services. The company's loan portfolio saw a modest decrease excluding SBA-PPP loans, but the overall financial health appears stable, supported by a substantial deposit base and strong capital ratios. Investors should closely monitor the progress of the CIT merger and the impact of the evolving interest rate environment on net interest income and margins.

Financial Highlights

36 data points
Beta

Net Income

$124.00M

EPS (Diluted)

$12.17

Total Assets

$56.90B

Cash & Equivalents

$338.00M

Free Cash Flow

$133.00M

Financial Statements
Beta
Operating Expenses$314.00M
Interest Expense$16.00M
Net Income$124.00M
EPS (Basic)$12.17
EPS (Diluted)$12.17
Shares Outstanding (Basic)9.82M
Shares Outstanding (Diluted)9.82M

Key Highlights

  • 1Net income for Q3 2021 was $124.1 million, down 13.0% year-over-year, with EPS decreasing to $12.17.
  • 2Net Interest Margin (NIM) declined to 2.61% in Q3 2021, down from 3.06% in Q3 2020, influenced by low interest rates and asset mix shifts.
  • 3Total deposits grew significantly to $50.1 billion as of September 30, 2021, an increase of 20.4% on an annualized basis since December 31, 2020.
  • 4Year-to-date net income increased by 19.9% to $424.2 million, with EPS rising to $41.79 for the first nine months of 2021.
  • 5Noninterest income increased by 12.5% for the first nine months of 2021, driven by growth in wealth management, cardholder, and merchant services.
  • 6The company remains well-capitalized, exceeding regulatory requirements across all key ratios.
  • 7The proposed merger with CIT Group Inc. is proceeding, with the closing date extended to March 1, 2022, awaiting Federal Reserve approval.

Frequently Asked Questions

The primary driver for the decrease in net income was a reduction in Net Interest Margin (NIM) to 2.61% from 3.06% year-over-year. This was largely due to the persistent low-interest-rate environment and an increase in lower-yielding overnight investments, which offset organic loan growth and lower deposit costs.

The total loan portfolio decreased slightly by 1.1% year-over-year to $32.5 billion, excluding SBA-PPP loans, it increased by 4.6% annualized. Credit quality remains strong, with a low net charge-off ratio of 0.06% for Q3 2021. The allowance for credit losses decreased to $183.2 million, reflecting continued strong credit performance and improved macroeconomic factors.

The merger agreement with CIT Group Inc. has been amended to extend the termination date to March 1, 2022. While shareholder and initial regulatory approvals have been obtained, the transaction is still subject to approval from the Board of Governors of the Federal Reserve System. Both parties are committed to securing this final approval.

The company maintained a strong liquidity position, with total deposits growing significantly to $50.1 billion. Capital ratios remain well above regulatory requirements, indicating a strong financial foundation. The company continues to exceed minimum capital standards under Basel III guidelines.