8-KOther Events

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Jun 28, 2012)

Filed June 28, 2012For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) announced on June 28, 2012, its intention to redeem its entire outstanding aggregate principal amount of $154,640,000 of 8.05% Junior Subordinated Deferrable Interest Debentures due March 1, 2028. The redemption is scheduled to occur on July 31, 2012, with a redemption price set at 102.42% of the principal amount, plus any accrued and unpaid interest. This redemption will trigger a corresponding redemption of the trust preferred securities issued by FCB/NC Capital Trust I, a subsidiary of First Citizens BancShares. These securities, with an aggregate liquidation amount of $150,000,000, were issued in 1998 and also carry an 8.05% rate. Investors in these trust preferred securities will receive a redemption price of 102.42% of their liquidation amount, plus accrued and unpaid distributions up to the redemption date. The entire process is being managed through Deutsche Bank National Trust Company, acting as indenture trustee for the debentures and property trustee for the capital trust.

Key Highlights

  • 1First Citizens BancShares (FCNCA) to redeem all $154,640,000 of its 8.05% Junior Subordinated Deferrable Interest Debentures due 2028.
  • 2Redemption date set for July 31, 2012.
  • 3Redemption price for debentures will be 102.42% of principal plus accrued interest.
  • 4This action will lead to the full redemption of $150,000,000 of 8.05% trust preferred securities issued by FCB/NC Capital Trust I in 1998.
  • 5Trust preferred securities redemption price will be 102.42% of liquidation amount plus accrued distributions.
  • 6Deutsche Bank National Trust Company is serving as the trustee for both the debentures and the trust preferred securities.
  • 7The redemption reflects a call provision, allowing the company to repurchase the debt ahead of its maturity date.

Frequently Asked Questions

The filing indicates the company is exercising its option to redeem the securities. This is typically done when interest rates have fallen, allowing the company to refinance its debt at a lower cost, or to simplify its capital structure.

Investors will receive $1,024.20 for each $1,000 principal of debentures, plus any interest that has accrued and remains unpaid up to the redemption date of July 31, 2012.

Holders of the trust preferred securities will receive 102.42% of their liquidation amount, plus any accrued and unpaid distributions up to the redemption date of July 31, 2012.

The redemption will reduce the company's outstanding debt and associated interest expense. While generally viewed positively as deleveraging, the direct impact on credit ratings would depend on the company's overall financial health and strategic decisions following the redemption. Investors should monitor subsequent filings for any further related announcements.