10-QPeriod: Q2 FY2023

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 4, 2023For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported strong financial results for the second quarter of 2023, significantly boosted by the acquisition of Silicon Valley Bridge Bank, N.A. (SVBB). The company saw a substantial increase in total assets to $209.5 billion and total deposits to $141.16 billion, driven by the SVBB transaction. Net income available to common stockholders surged to $10.17 billion for the first six months of 2023, compared to $502 million in the prior year period, largely due to a significant gain on the SVBB acquisition. Net interest income also saw a substantial increase, reflecting the expanded balance sheet and a favorable interest rate environment. Despite increased non-interest expenses related to the acquisition and integration, the company's capital ratios remain robust and well above regulatory requirements. The integration of SVB is progressing, and the company is closely monitoring market developments and regulatory changes. Investors should note the significant impact of the SVBB acquisition on the company's scale and financial performance, while also being aware of the ongoing integration efforts and market dynamics.

Financial Highlights

35 data points
Beta

Net Income

$682.00M

EPS (Diluted)

$45.87

Total Assets

$209.50B

Cash & Equivalents

$917.00M

Free Cash Flow

$832.00M

Financial Statements
Beta
Interest Expense$992.00M
Net Income$682.00M
EPS (Basic)$45.90
EPS (Diluted)$45.87
Shares Outstanding (Basic)14.53M
Shares Outstanding (Diluted)14.54M

Key Highlights

  • 1Total assets grew significantly to $209.5 billion as of June 30, 2023, up from $109.3 billion at December 31, 2022, primarily due to the SVBB acquisition.
  • 2Total deposits increased to $141.16 billion as of June 30, 2023, up from $89.41 billion at December 31, 2022, also driven by the SVBB acquisition.
  • 3Net income available to common stockholders for the six months ended June 30, 2023, was $10.17 billion, a substantial increase from $502 million in the prior year period, largely attributable to a $9.88 billion gain on the SVBB acquisition.
  • 4Net interest income for the six months ended June 30, 2023, rose to $2.81 billion, an increase of 108% from $1.35 billion in the prior year period, benefiting from higher interest-earning assets and a favorable rate environment.
  • 5The company maintained strong capital ratios, with Common Equity Tier 1 at 13.38% and Total Risk-Based Capital at 15.84% as of June 30, 2023, well exceeding regulatory minimums.
  • 6Provision for credit losses for the six months ended June 30, 2023, was $934 million, up from $506 million in the prior year period, reflecting the inclusion of day-2 provisions related to the SVBB acquisition and higher loan growth.
  • 7Noninterest income for the six months ended June 30, 2023, reached $10.92 billion, significantly higher than $1.27 billion in the prior year period, primarily due to the large gain on acquisition.

Frequently Asked Questions

The primary driver of the significant increase in First Citizens BancShares' assets and deposits was the acquisition of Silicon Valley Bridge Bank, N.A. (SVBB) on March 27, 2023. This transaction substantially expanded the company's balance sheet, adding billions in loans, deposits, and other assets.

The SVBB acquisition resulted in a significant preliminary after-tax gain on acquisition of $9.88 billion for the six months ended June 30, 2023. This gain was the primary contributor to the substantial increase in net income available to common stockholders for the period, boosting it to $10.17 billion from $502 million in the prior year period.

First Citizens BancShares manages interest rate risk through its Asset Liability Management process, monitoring Net Interest Income (NII) Sensitivity and Economic Value of Equity (EVE) Sensitivity. The company generally maintains an asset-sensitive position, meaning its assets reprice faster than its liabilities, which is beneficial in a rising rate environment. The company also utilizes strategies such as optimizing deposit mix, managing investment portfolios, and using derivatives to mitigate interest rate risk.

The company experienced significant loan growth driven by the SVBB acquisition, with total loans and leases increasing to $133.02 billion. While the SVB loan portfolio saw some decline, overall growth was supported by commercial and consumer loan expansion. The company is closely monitoring credit quality, with non-performing assets increasing slightly but remaining manageable. The allowance for credit losses as a percentage of total loans was 1.23% at June 30, 2023. Management notes potential impacts from economic slowdowns and specific sectors like commercial real estate.