10-QPeriod: Q1 FY2022

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 10, 2022For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported a significant increase in net income for the first quarter of 2022, primarily driven by the completion of its merger with CIT Group Inc. (CIT) on January 3, 2022. This transformative acquisition substantially expanded the company's balance sheet, with total assets growing from $58.3 billion at year-end 2021 to $108.6 billion at the end of the quarter. Net income available to common stockholders surged by 85% year-over-year to $264 million, or $16.70 per diluted share. The company also recorded a preliminary gain on acquisition of $431 million. Operationally, the integration of CIT has led to substantial growth in loans and leases, increasing by over 100% to $65.5 billion, and deposits, which grew by 78% to $91.6 billion. This expansion is reflected across the newly segmented business lines: General Banking, Commercial Banking, and Rail, with the latter two segments primarily representing acquired CIT operations. Despite the significant growth, the Net Interest Margin (NIM) saw a slight decrease of 6 basis points to 2.73%, influenced by higher rates on acquired deposits and a lower yield on acquired loans due to purchase accounting adjustments. The provision for credit losses increased substantially to $464 million, reflecting the adoption of the CECL methodology on acquired portfolios and the initial provision for non-purchased credit-deteriorated loans.

Financial Highlights

37 data points
Beta

Net Income

$271.00M

EPS (Diluted)

$16.70

Total Assets

$108.60B

Cash & Equivalents

$523.00M

Free Cash Flow

$562.00M

Financial Statements
Beta
Operating Expenses$810.00M
Interest Expense$61.00M
Net Income$271.00M
EPS (Basic)$16.70
EPS (Diluted)$16.70
Shares Outstanding (Basic)15.78M
Shares Outstanding (Diluted)15.78M

Key Highlights

  • 1Net income available to common stockholders increased by 85% to $264 million ($16.70 per diluted share) due to the CIT merger.
  • 2Total assets more than doubled, reaching $108.6 billion, reflecting the successful integration of CIT.
  • 3Loans and leases grew significantly to $65.5 billion, while total deposits increased to $91.6 billion, largely due to the CIT acquisition.
  • 4The company recorded a preliminary non-taxable gain on acquisition of $431 million.
  • 5Net Interest Margin (NIM) slightly decreased by 6 bps to 2.73% due to purchase accounting adjustments on acquired loans and higher deposit costs.
  • 6Provision for credit losses increased significantly to $464 million, reflecting the impact of the CIT merger and CECL adoption on acquired portfolios.
  • 7The company maintains strong capital ratios, with a Common Equity Tier 1 ratio of 11.34%, exceeding regulatory requirements.

Frequently Asked Questions

The primary driver of the company's financial performance in Q1 2022 was the completion of the merger with CIT Group Inc. This acquisition significantly increased total assets, loans, deposits, and net income.

The merger with CIT substantially expanded the balance sheet. Total assets grew from $58.3 billion at the end of 2021 to $108.6 billion at the end of Q1 2022. Loans and leases increased to $65.5 billion and deposits grew to $91.6 billion.

The NIM decreased slightly to 2.73% in Q1 2022 compared to the prior year. This was influenced by higher yields on investment securities and loans acquired in the CIT merger, offset by higher funding costs on acquired deposits and purchase accounting adjustments on loans.

The $431 million gain on acquisition is a preliminary, non-taxable gain recognized because the fair value of the net assets acquired in the CIT merger exceeded the purchase price. This gain is a direct result of the accounting treatment for business combinations.