8-KOther Events

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Dec 1, 2014)

Filed December 1, 2014For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

FIRST CITIZENS BANCSHARES INC /DE/ (FCNCA) announced the upcoming redemption of its $51.55 million in 8.25% Junior Subordinated Deferrable Interest Debentures due March 15, 2028, effective December 31, 2014. The redemption price is set at 101.65% of the principal amount, plus accrued interest. This redemption is a direct consequence of all debentures being held by FCB/SC Capital Trust I, which will also redeem its associated $50 million in 8.25% trust preferred securities on the same date, at a price of 101.65% of their liquidation amount plus accrued distributions. Furthermore, FCNCA is proceeding with the merger of its recently acquired bank subsidiary, First Citizens Bank and Trust Company, Inc., Columbia, S.C. (FCB/SC), into its existing bank subsidiary, First-Citizens Bank & Trust Company, Raleigh, N.C. (FCB/NC). This strategic integration is slated for January 1, 2015, with FCB/NC as the surviving entity. The operational and data processing system conversions are anticipated in the latter half of 2015, signaling a move towards streamlining the company's banking operations following the earlier acquisition.

Key Highlights

  • 1First Citizens BancShares (FCNCA) to redeem $51.55 million of 8.25% Junior Subordinated Debentures on December 31, 2014.
  • 2Redemption price for the debentures is 101.65% of principal plus accrued interest.
  • 3The Trust Preferred Securities of FCB/SC Capital Trust I, with a liquidation amount of $50 million, will also be redeemed concurrently on December 31, 2014.
  • 4Redemption price for Trust Preferred Securities is 101.65% of liquidation amount plus accrued distributions.
  • 5The debentures and trust preferred securities originated from entities related to a prior merger, with BancShares assuming obligations.
  • 6Merger of bank subsidiary FCB/SC into FCB/NC is planned for January 1, 2015, with FCB/NC as the survivor.
  • 7System conversion for FCB/SC's operations is expected in the latter half of 2015.

Frequently Asked Questions

The redemption is a strategic move following the effective merger of Bancorp into BancShares on October 1, 2014. The debentures were assumed by BancShares, and since they were held by the Trust, this redemption allows for the concurrent redemption of the Trust's associated preferred securities, simplifying the capital structure.

The redemption price is 101.65% of the principal amount for the debentures ($51.55 million) and 101.65% of the liquidation amount for the trust preferred securities ($50 million), plus any accrued and unpaid interest/distributions up to December 31, 2014. This represents a premium payment to the holders.

The merger of FCB/SC into FCB/NC is a crucial step in integrating the operations of the acquired Bancorp entity. By consolidating into a single bank subsidiary (FCB/NC), FCNCA aims to streamline operations, achieve cost efficiencies, and present a unified banking brand to its customers. The system conversion in late 2015 will further complete this integration.

While the legal merger of the bank subsidiaries is effective January 1, 2015, the conversion of FCB/SC's operations and data processing systems is expected to occur in the latter half of 2015. This indicates that the full operational integration will take some time to materialize.