8-KOther Events

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Apr 3, 2017)

Filed April 3, 2017For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First-Citizens Bancshares Inc. (FCNCA) has announced the early termination of a shared-loss agreement related to its 2009 acquisition of Venture Bank. This agreement, originally established with the Federal Deposit Insurance Corporation (FDIC), was terminated on March 28, 2017. The early termination was facilitated by a payment of $286,000 from FCNCA's subsidiary, First-Citizens Bank & Trust Company (FCB), to the FDIC. This action signifies a move by FCNCA to finalize outstanding obligations from a past FDIC-assisted acquisition. Investors should view this as a positive step towards simplifying the company's financial structure and potentially reducing contingent liabilities. The relatively small payment suggests that the residual risk or future obligations under the shared-loss agreement were not substantial.

Key Highlights

  • 1Early termination of shared-loss agreement with FDIC for Venture Bank acquisition.
  • 2Termination effective March 28, 2017.
  • 3FCNCA's subsidiary, First-Citizens Bank & Trust Company (FCB), made a $286,000 payment to the FDIC for early termination.
  • 4The shared-loss agreement was originally part of the September 11, 2009, FDIC-assisted acquisition of Venture Bank.
  • 5This action resolves a residual aspect of a past FDIC-assisted transaction.

Frequently Asked Questions

The shared-loss agreement was entered into in September 2009 when First-Citizens Bank & Trust Company (FCB) acquired assets and assumed liabilities of Venture Bank through an FDIC-assisted transaction. These agreements typically involve the FDIC sharing a portion of potential future losses on certain acquired assets to facilitate the transaction.

The filing indicates an 'early termination' for which FCB made a payment. While the exact strategic reasons are not detailed, early termination of such agreements usually signifies that the bank believes the remaining risk is minimal or that it wishes to remove contingent liabilities and simplify its financial reporting.

The direct financial impact is the payment of $286,000 made by FCB to the FDIC. This is a relatively small amount, suggesting that the ongoing contingent exposure from the Venture Bank acquisition was not material to First Citizens' overall financial position.

This termination primarily relates to a past acquisition and associated agreements. It is unlikely to have a direct impact on First Citizens' current day-to-day operations, but rather serves to clean up legacy items and reduce future potential liabilities.