10-QPeriod: Q2 FY2022

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 5, 2022For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported substantial growth in its second quarter 2022 results, largely driven by the acquisition of CIT Group Inc. (CIT) which closed in January 2022. Total assets more than doubled to $107.7 billion from $58.3 billion at year-end 2021. Net income available to common stockholders rose significantly to $238 million from $148 million in the prior-year quarter, though it saw a sequential decrease from Q1 2022 due to lower non-interest income. The company's net interest income increased substantially to $700 million, benefiting from higher interest rates and loan growth, with a net interest margin of 3.04%. The acquisition also significantly expanded the company's loan and deposit base, with total loans and leases reaching $67.7 billion and total deposits at $89.3 billion. The company reported a strong capital position, with its total risk-based capital ratio at 14.46%, exceeding regulatory requirements. While the company benefited from a preliminary gain on acquisition of $431 million in the first quarter, the second quarter reflects the ongoing integration and operational impacts of the expanded business, including new segment reporting and increased operating expenses related to the acquired rail and commercial banking operations.

Financial Highlights

37 data points
Beta

Net Income

$255.00M

EPS (Diluted)

$14.86

Total Assets

$107.67B

Cash & Equivalents

$583.00M

Free Cash Flow

$630.00M

Financial Statements
Beta
Operating Expenses$745.00M
Interest Expense$57.00M
Net Income$255.00M
EPS (Basic)$14.87
EPS (Diluted)$14.86
Shares Outstanding (Basic)16.02M
Shares Outstanding (Diluted)16.04M

Key Highlights

  • 1Total assets significantly increased to $107.7 billion at June 30, 2022, up from $58.3 billion at December 31, 2021, primarily due to the CIT merger.
  • 2Net income available to common stockholders increased by 61% year-over-year to $238 million for the three months ended June 30, 2022.
  • 3Net interest income more than doubled year-over-year to $700 million, driven by loan growth and higher interest rates, with Net Interest Margin (NIM) improving to 3.04%.
  • 4Total loans and leases grew to $67.7 billion, reflecting a $35.4 billion increase from year-end 2021, largely from the CIT acquisition.
  • 5Total deposits increased to $89.3 billion, a $37.9 billion rise from year-end 2021, primarily due to the CIT merger.
  • 6The company maintained a strong capital position, exceeding regulatory requirements with a total risk-based capital ratio of 14.46%.
  • 7Operating expenses increased significantly due to the integration of CIT's operations, including higher salaries, benefits, and costs related to the operating lease portfolio.

Frequently Asked Questions

The primary driver was the completion of the acquisition of CIT Group Inc. (CIT) on January 3, 2022. This merger significantly increased the company's asset and liability base, including loans, deposits, and operating lease equipment.

The CIT merger led to a substantial increase in net interest income and overall revenue. While the first quarter of 2022 included a significant preliminary gain on acquisition, the second quarter results reflect the ongoing operational integration, with higher interest income offset by increased operating expenses and a slightly higher provision for credit losses.

The company reported an increase in its Allowance for Credit Losses (ACL) to $850 million at June 30, 2022, up from $178 million at December 31, 2021. The ACL as a percentage of total loans and leases stood at 1.26%. Non-accrual loans increased due to the CIT merger, but the ratio of allowance for credit losses to non-accrual loans remained strong at 165.41%.

The deposit base increased significantly to $89.3 billion following the CIT merger. However, there was a sequential decrease from the first quarter of 2022, primarily in higher-cost money market and time deposits from acquired channels, partially offset by growth in noninterest-bearing deposits. The company focuses on retaining existing deposits and believes traditional deposit products remain attractive, though acknowledges potential liquidity impacts as economic conditions improve.