8-K/AAcquisitions & DispositionsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K/A Report, Acquisition Completed (Apr 16, 2010)

Filed April 16, 2010For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

This 8-K/A filing from First Citizens Bancshares, Inc. (FCNCA) on April 16, 2010, provides an amendment to a previous report concerning the acquisition of First Regional Bank (First Regional) by its subsidiary, First-Citizens Bank & Trust Company (FCB), on January 29, 2010. The acquisition was facilitated through an agreement with the FDIC, and importantly, involved significant loss share agreements. These agreements provide FCB with substantial protection against losses on the purchased loans and other real estate acquired from First Regional. This filing details the fair value of the acquired assets and assumed liabilities, reporting total acquired assets at $1.76 billion and assumed liabilities at $1.65 billion. A key takeaway for investors is the favorable pricing of the deal, with FCB receiving a discount of $299.4 million on assets and no deposit premium paid, alongside the significant risk mitigation provided by the FDIC's loss sharing. The filing also outlines the terms of the loss share agreements, where the FDIC will cover 80% of losses up to $1.0 billion and 95% of losses above that threshold. While these agreements mitigate credit risk, the potential for a future 'true-up' payment by FCB to the FDIC is noted. The report indicates that the transaction is expected to improve net interest income and resulted in a gain of approximately $110.0 million, to be recognized in the March 31, 2010, quarterly report. Despite the acquisition, BancShares and its subsidiary FCB are noted to remain "well-capitalized" based on their capital ratios as of December 31, 2009, even considering this and other recent acquisitions.

Key Highlights

  • 1First Citizens Bancshares, Inc. (FCNCA) subsidiary, First-Citizens Bank & Trust Company (FCB), acquired substantially all assets and liabilities of First Regional Bank on January 29, 2010.
  • 2The acquisition was completed under an agreement with the FDIC, with FCB receiving a $299.4 million discount on assets and paying no deposit premium.
  • 3FCB purchased assets valued at $1.76 billion, including $1.28 billion in loans and $41.1 million in OREO, and assumed liabilities totaling $1.65 billion, including $1.29 billion in deposits.
  • 4Significant loss share agreements with the FDIC provide FCB with 80% coverage on covered loan and OREO losses up to $1.0 billion, and 95% coverage for losses exceeding that amount.
  • 5The transaction is expected to enhance net interest income and resulted in a preliminary gain of approximately $110.0 million, to be recognized in the Q1 2010 earnings.
  • 6Despite the acquisition, both BancShares and FCB maintained 'well-capitalized' status as of December 31, 2009.
  • 7The filing amends a prior 8-K to update disclosures and provide required financial information regarding the acquisition, noting relief from certain financial statement requirements due to the nature of acquiring a troubled institution.

Frequently Asked Questions

This filing is an amendment to a previous 8-K report. Its main purpose is to update disclosures related to the acquisition of First Regional Bank and to provide the necessary financial information (Item 9.01) that was initially omitted based on guidance for acquiring troubled financial institutions.

The FDIC loss share agreements provided substantial protection to FCB against potential losses on the acquired loans and other real estate. The FDIC agreed to cover 80% of covered losses up to $1.0 billion and 95% of losses above that threshold, significantly reducing FCB's credit risk exposure from the acquired portfolio.

The acquisition is expected to improve net interest income and resulted in a gain of approximately $110.0 million, which will be recorded in the March 31, 2010, quarterly report. The company also noted that it remains 'well-capitalized' after the acquisition.

Yes, the filing mentions a 'true-up payment' that FCB may be required to make to the FDIC at the end of year 10 (March 17, 2020). This payment is contingent on the excess of a certain threshold related to the initial discount and cumulative shared-loss payments, among other factors.