8-K/AAcquisitions & DispositionsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K/A Report, Acquisition Completed (Feb 1, 2010)

Filed February 1, 2010For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

This Form 8-K/A filing by First Citizens BancShares, Inc. (FCNCA) on February 1, 2010, details an amendment to a previous report concerning the acquisition of Temecula Valley Bank (TVB) by its subsidiary, First-Citizens Bank & Trust Company (FCB), on July 17, 2009. The acquisition was a federally assisted transaction with the FDIC, involving the assumption of deposits, borrowings, and substantially all assets of TVB. The filing provides updated financial information and disclosures related to this acquisition, noting that certain regulatory financial statement requirements were omitted under Staff Accounting Bulletin Topic 1:K due to the nature of acquiring a troubled financial institution with FDIC assistance. The primary focus for investors is the nature of the acquisition and its financial impact. FCB acquired assets valued at $1.11 billion and assumed liabilities valued at $1.08 billion. A significant aspect of the deal is the loss-share agreement with the FDIC, which covers 80% to 95% of potential losses on acquired loans and other real estate owned (OREO) within specified thresholds. This agreement provides substantial credit protection to FCB, mitigating potential future losses from the acquired portfolio. The transaction resulted in a gain of $56.4 million for BancShares.

Key Highlights

  • 1First Citizens BancShares, Inc. (FCNCA) filed an amendment to its Form 8-K to provide updated financial details on the acquisition of Temecula Valley Bank (TVB) completed on July 17, 2009.
  • 2The acquisition was a federally assisted transaction where FCB assumed deposits and assets of TVB, with the FDIC providing significant loss protection.
  • 3FCB acquired assets valued at $1.11 billion and assumed liabilities valued at $1.08 billion.
  • 4A key feature is the loss-share agreement with the FDIC, covering 80-95% of losses on acquired loans and OREO, up to certain thresholds, providing substantial credit risk mitigation.
  • 5The transaction resulted in a gain of $56.4 million for BancShares due to the discount on acquired assets and assumption of liabilities.
  • 6The filing notes the omission of certain detailed financial statements of TVB, in accordance with SAB 1:K, due to the nature of acquiring a troubled financial institution.
  • 7The company continues to monitor the impact of this and other recent acquisitions (like Venture Bank) on its capital ratios, which remain strong and well-capitalized.

Frequently Asked Questions

This amended 8-K/A filing was made to update disclosures and provide required financial information related to the acquisition of Temecula Valley Bank (TVB) by First-Citizens Bank & Trust Company (FCB) on July 17, 2009. It clarifies the financial impact and specific terms of the transaction, particularly those involving FDIC assistance.

The loss-share agreement is a crucial element for investors as it significantly reduces First Citizens' exposure to potential losses on the acquired loan portfolio and other real estate owned. The FDIC will cover 80% to 95% of covered losses within specified ranges, providing substantial protection against credit deterioration in the acquired assets.

The acquisition of TVB resulted in a gain of $56.4 million for BancShares. This gain arose from the difference between the purchase price and the estimated fair values of the acquired assets and assumed liabilities, particularly benefiting from a discount on the assets acquired. The transaction also increased the company's asset and liability base by approximately 6.4% and 6.8%, respectively, as of June 30, 2009.

While the FDIC loss-share agreement mitigates credit risk, investors should be aware of general risks associated with mergers and acquisitions, such as integration challenges, potential customer attrition, and operational disruptions. Additionally, broader economic conditions, particularly in the real estate markets, and operational/data security risks remain pertinent factors for the company's overall performance.