8-KMaterial AgreementsFinancial EventsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Material Agreement (Mar 4, 2020)

Filed March 4, 2020For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) filed an 8-K on March 4, 2020, detailing the successful completion of a public offering for $350 million in 3.375% Fixed-to-Floating Rate Subordinated Notes due 2030. These notes are intended to qualify as Tier 2 capital for regulatory purposes, strengthening the company's capital base. The offering was conducted under a standard underwriting agreement and a registration statement filed on Form S-3. The notes carry a fixed interest rate of 3.375% until March 15, 2025, after which they will convert to a floating rate based on Three-Month Term SOFR plus 246.5 basis points, payable quarterly. The notes are unsecured and subordinated, ranking junior to senior indebtedness and effectively subordinated to secured debt and debt at subsidiaries, including First-Citizens Bank & Trust Company. The company has the option to redeem the notes starting March 15, 2025, subject to Federal Reserve approval, or under specific circumstances such as adverse tax law changes or regulatory capital treatment changes.

Key Highlights

  • 1Completion of a $350 million public offering of 3.375% Fixed-to-Floating Rate Subordinated Notes due 2030.
  • 2Notes are intended to qualify as Tier 2 capital, enhancing regulatory capital ratios.
  • 3Fixed interest rate of 3.375% for the first five years (until March 15, 2025).
  • 4Floating interest rate thereafter, tied to Three-Month Term SOFR plus 246.5 basis points.
  • 5Notes are unsecured and subordinated obligations of the Company.
  • 6Company may redeem notes starting March 15, 2025, subject to regulatory approval.
  • 7Redemption is also possible prior to March 15, 2025, under specific tax or regulatory event triggers.

Frequently Asked Questions

The primary purpose of issuing these subordinated notes is to strengthen First Citizens BancShares' capital base. The notes are designed to qualify as Tier 2 capital for regulatory purposes, which helps improve the company's capital ratios and financial flexibility.

The notes carry a fixed interest rate of 3.375% per annum from the issuance date until March 15, 2025. After this date, the interest rate will become floating, calculated as Three-Month Term SOFR plus 246.5 basis points, and will be payable quarterly.

These notes are unsecured and subordinated obligations. They rank junior to any existing and future Senior Indebtedness of the Company. They are also effectively subordinated to secured indebtedness and structurally subordinated to debt and liabilities of the Company's subsidiaries, such as First-Citizens Bank & Trust Company.

Yes, the company has the option to redeem the notes in whole or in part starting March 15, 2025, subject to prior approval from the Federal Reserve. Additionally, the company can redeem the notes at any time, in whole but not in part, under specific conditions, including adverse changes in tax law affecting interest deductibility or if the notes no longer qualify as Tier 2 capital, also requiring Federal Reserve approval.