10-QPeriod: Q3 FY2023

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2023

Filed November 3, 2023For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) reported a substantial increase in total assets to $213.765 billion as of September 30, 2023, primarily driven by the acquisition of Silicon Valley Bridge Bank (SVBB) on March 27, 2023. This acquisition significantly expanded the company's scale, loan portfolio, and deposit base. Net income available to common stockholders for the nine months ended September 30, 2023, reached $10.91 billion, a significant jump from $805 million in the same period last year, largely due to a preliminary after-tax gain on acquisition of $9.89 billion related to the SVBB transaction. Despite the significant asset growth and the integration of SVB, First Citizens demonstrated strong capital adequacy, with all regulatory capital ratios well above minimum requirements. The company's net interest margin remained robust at 4.07% for the quarter, though slightly down from the linked quarter. The provision for credit losses saw an increase, reflecting the growth in the loan portfolio and evolving macroeconomic factors, particularly impacting the commercial real estate and specific SVB loan segments. The company also highlighted strategic efforts to manage its investment portfolio and liquidity, including managing deposit trends and borrowing costs.

Financial Highlights

36 data points
Beta

Net Income

$752.00M

EPS (Diluted)

$50.67

Total Assets

$213.76B

Cash & Equivalents

$791.00M

Free Cash Flow

$1.14B

Financial Statements
Beta
Interest Expense$1.12B
Net Income$752.00M
EPS (Basic)$50.71
EPS (Diluted)$50.67
Shares Outstanding (Basic)14.53M
Shares Outstanding (Diluted)14.54M

Key Highlights

  • 1Total assets grew significantly to $213.765 billion as of September 30, 2023, largely due to the SVBB acquisition.
  • 2Net income available to common stockholders for the nine months ended September 30, 2023, was $10.91 billion, bolstered by a preliminary $9.89 billion after-tax gain on the SVBB acquisition.
  • 3Net interest income for the nine months ended September 30, 2023, increased by 124% year-over-year to $4.80 billion, benefiting from loan growth, higher yields, and the SVBB acquisition.
  • 4Net interest margin (NIM) was strong at 4.07% for the third quarter of 2023.
  • 5The provision for credit losses increased by 99% year-over-year to $1.13 billion for the nine months ended September 30, 2023, reflecting loan growth and macroeconomic factors.
  • 6Total deposits increased by 64% year-over-year to $146.23 billion, with a significant portion from the SVBB acquisition, though SVB deposits showed some decline and stabilization during the quarter.
  • 7Regulatory capital ratios remain strong, significantly exceeding well-capitalized thresholds.

Frequently Asked Questions

The primary driver for the substantial increase in total assets and net income was the acquisition of Silicon Valley Bridge Bank (SVBB) on March 27, 2023. This acquisition significantly expanded the company's balance sheet and generated a preliminary after-tax gain on acquisition of $9.89 billion.

The SVBB acquisition added approximately $39.97 billion in deposits by September 30, 2023. While this significantly increased the overall deposit base, it also contributed to higher interest expense on interest-bearing deposits due to increased rates and balances, impacting the cost of funds.

The loan portfolio grew substantially due to the SVBB acquisition. While the overall allowance for loan and lease losses (ALLL) ratio remained stable at 1.26% at September 30, 2023, the provision for credit losses increased year-over-year. The company noted a deterioration in macroeconomic factors and specific portfolio segments, including commercial real estate and certain SVB loans, which influenced the provision.

First Citizens BancShares maintained a significant investment securities portfolio, with available-for-sale securities having a net pre-tax unrealized loss of $1.18 billion as of September 30, 2023, primarily due to interest rate sensitivity. The company has been investing in shorter-duration U.S. Treasuries and agency mortgage-backed securities to manage this risk.