8-KAcquisitions & DispositionsMaterial AgreementsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Material Agreement (Mar 11, 2010)

Filed March 11, 2010For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

On March 5, 2010, First Citizens BancShares Inc. (FCNCA) announced through its wholly-owned subsidiary, First-Citizens Bank & Trust Company (FCB), the acquisition of substantially all assets and the assumption of most liabilities of Sun American Bank, a failed institution in Boca Raton, Florida. This transaction was executed with the Federal Deposit Insurance Corporation (FDIC) in its role as Receiver for Sun American Bank. The acquisition was structured as an "at a discount" deal, with FCB purchasing the assets and assuming liabilities for $69.4 million less than their book value, and notably, with no premium paid for deposits. A significant aspect for investors is the inclusion of loss share agreements with the FDIC. These agreements protect FCB by stipulating that the FDIC will cover 80% of net losses up to a threshold of $99.0 million, and 95% of losses exceeding that threshold. This structure mitigates the financial risk associated with the acquired loan portfolio, which at December 31, 2009, represented $424.1 million of Sun American's $535.7 million in total assets.

Key Highlights

  • 1FCB acquired substantially all assets and assumed most liabilities of Sun American Bank through an agreement with the FDIC.
  • 2The acquisition was completed on March 5, 2010, with a discount of $69.4 million and no deposit premium.
  • 3Sun American Bank had total assets of $535.7 million, loans of $424.1 million, and deposits of $443.5 million as of December 31, 2009.
  • 4Loss share agreements with the FDIC provide FCB with significant protection against future loan losses.
  • 5The FDIC will reimburse FCB for 80% of net losses up to $99.0 million, and 95% for losses above that threshold.
  • 6Financial statements and pro forma information for the acquisition will be filed in an amendment to this report.

Frequently Asked Questions

The report states that estimates of the anticipated effects on the financial condition, liquidity, capital resources, and operating results will be available after the FDIC provides final information. These estimates will be filed in an amendment to this report.

The FDIC is acting as Receiver for Sun American Bank. The loss share agreements are designed to protect FCB by having the FDIC reimburse a significant percentage (80% up to $99.0 million, and 95% thereafter) of any net losses incurred on the acquired assets, primarily loans.

The filing indicates that these details are not being provided at this time as per specific SEC rules for such transactions. They will be filed later in an amendment to this Form 8-K once the FDIC provides final information on the purchased assets and assumed liabilities.

As of December 31, 2009, Sun American Bank reported total assets of $535.7 million, loans totaling $424.1 million, and total deposits amounting to $443.5 million.