8-KOther EventsExhibits & Filings

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Jan 24, 2022)

Filed January 24, 2022For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

On January 24, 2022, First Citizens BancShares, Inc. (FCNCA) announced through its wholly-owned subsidiary, First Citizens Bank & Trust Company, its intention to redeem all outstanding senior unsecured notes. This includes approximately $1.147 billion in 5.000% Notes due 2022, $750 million in 5.000% Notes due 2023, $500 million in 4.750% Notes due 2024, and $500 million in 5.250% Notes due 2025. The total aggregate principal amount of notes subject to redemption is approximately $2.897 billion. These notes were assumed by First Citizens Bank following its merger with CIT Group Inc. The redemption is scheduled to occur on February 24, 2022. The redemption price will be determined based on the greater of par value or the present value of remaining payments, plus accrued interest. This proactive debt management move signals a potential strengthening of the company's balance sheet and improved financial flexibility post-merger. Investors should monitor the impact on the company's leverage ratios and overall capital structure.

Key Highlights

  • 1First Citizens Bank plans to redeem approximately $2.897 billion in aggregate principal amount of Senior Unsecured Notes across four series maturing between 2022 and 2025.
  • 2The redemption date is set for February 24, 2022.
  • 3The notes being redeemed were assumed as part of the merger with CIT Group Inc.
  • 4The redemption price will be the greater of 100% of the principal amount or a calculated present value of future payments plus accrued interest.
  • 5A formal Notice of Redemption will be distributed to registered holders on January 25, 2022.
  • 6A press release announcing this redemption was filed as an exhibit to the 8-K.
  • 7The filing also includes cautionary statements regarding forward-looking statements and risks associated with the CIT merger integration.

Frequently Asked Questions

First Citizens Bank is redeeming these notes as part of its debt management strategy, likely to optimize its capital structure and potentially reduce interest expenses following the acquisition of CIT Group Inc. The redemption allows the company to remove debt that was assumed in the merger.

The total aggregate principal amount of notes being redeemed is approximately $2.897 billion, comprising $1.147 billion of 5.000% Notes due 2022, $750 million of 5.000% Notes due 2023, $500 million of 4.750% Notes due 2024, and $500 million of 5.250% Notes due 2025.

The redemption price will be calculated as the greater of (1) 100% of the principal amount of the notes or (2) the sum of the present values of the remaining scheduled payments of principal and interest, discounted at the applicable Treasury Yield plus a spread (50 basis points for most notes, 30 basis points for the 2024 Notes), plus any accrued and unpaid interest up to the redemption date.

Investors holding these notes will receive the redemption price as determined by the formula, plus accrued interest, on February 24, 2022. They will no longer hold these debt instruments and will receive their principal and any earned interest. This action signals a deleveraging move by First Citizens Bank.