First Citizens BancShares Inc. (“BancShares”) (Nasdaq: FCNCA)
reported earnings for the first quarter of 2020 which were impacted
by the global spread of the coronavirus (“COVID-19”) and its
effects on the economic environment. Key results for the quarter
ended March 31, 2020, are presented below:
FIRST QUARTER RESULTS |
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Q1 2020 |
Q1 2019 |
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Q1 2020 |
Q1 2019 |
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Q1 2020 |
Q1 2019 |
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Q1 2020 |
Q1 2019 |
Net income (in
millions) |
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Net income per
share |
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Return on average
assets |
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Return on average
equity |
$57.2 |
$111.4 |
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$5.46 |
$9.67 |
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0.57% |
1.27% |
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6.24% |
12.86% |
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FIRST QUARTER HIGHLIGHTS |
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Net
income |
Net income for the
first quarter of 2020 totaled $57.2 million, a decrease of $54.2
million, or 48.7% compared to the same quarter in 2019. Net income
per common share decreased to $5.46 in the first quarter of 2020,
from $9.67 per share during the same quarter in 2019. First quarter
2020 earnings were impacted by a $51.4 million ($39.7 million net
of tax) decline in fair value in the equity securities portfolio,
as well as $21.5 million ($16.6 million net of tax) additional
provision expense for the potential impact of COVID-19. |
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Return on
average assets and equity |
Return on average
assets for the first quarter of 2020 was 0.57%, down from 1.27% in
the same quarter in 2019. Return on average equity for the first
quarter of 2020 was 6.24%, down from 12.86% in the same period of
2019. The impact of the adjustments described above reduced the
first quarter ROA and ROE by 0.56% and 6.14%, respectively. |
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Net interest
income and net interest margin |
BancShares reported
total net interest income of $338.4 million for the first quarter
of 2020, an increase of $17.9 million, or 5.6% compared to the same
quarter in 2019. The taxable-equivalent net interest margin (“NIM”)
was 3.55% for the first quarter of 2020, down 31 basis points from
3.86% during the same quarter in 2019. |
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Allowance
for credit losses |
The allowance for
credit losses was $209.3 million at March 31, 2020, compared
to $225.1 million at December 31, 2019. The $15.8 million change
was due primarily to the $37.9 million reduction in the allowance
as a result of adopting the Current Expected Credit Loss standard
(“CECL”), partially offset by a $21.5 million increase as a result
of COVID-19. |
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Operating
performance |
Noninterest income
totaled $64.0 million for the first quarter of 2020, compared to
$103.7 million for the same quarter of 2019, a decrease of $39.7
million or 38.3%. Noninterest expense was $300.0 million for the
first quarter of 2020, compared to $267.7 million during the same
quarter of 2019, an increase of $32.3 million or 12.1%. |
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Loans and
credit quality |
Total loans grew to
$29.24 billion, an increase of $359.5 million, or 5.0% on an
annualized basis since December 31, 2019. Excluding acquired loans,
total loans increased $224.2 million since December 31, 2019, or by
3.1% on an annualized basis. The net charge-off ratio was 0.10% for
the first quarter of 2020, down from 0.11% for the same quarter in
2019. |
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Deposits |
Total deposits grew
to $35.35 billion, an increase of $915.5 million, or 10.7% on an
annualized basis since December 31, 2019. Excluding acquired
deposits, total deposits increased $697.5 million since December
31, 2019, or by 8.1% on an annualized basis. |
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Capital |
During the first
quarter of 2020, BancShares successfully completed a $695 million
capital raise, which consisted of $350 million of subordinated
notes and $345 million of Series A preferred stock. BancShares
additionally repurchased 349,390 shares of its Class A common stock
totaling approximately $159.7 million. At March 31, 2020,
BancShares remained well capitalized with a total risk-based
capital ratio of 13.7%, a Tier 1 risk-based capital ratio of 11.4%,
a common equity Tier 1 ratio of 10.4%, and a Tier 1 leverage ratio
of 9.0%. |
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COVID-19 CRISIS PREPAREDNESS AND RESPONSE
Chairman and CEO, Frank B. Holding, Jr.
Comments
“We know the coronavirus and prevention measures
are directly impacting everyone in a deeply personal way. We
understand that it’s a stressful and challenging time for
many and we’re here to assist. We’re working day and night to
help our associates, customers and communities through this. At
First Citizens, our financial position is strong. We’ve been in
business for 122 years and continue to focus strategically on the
long-term. We’re a bank people can count on for strength, stability
and sustainability. Our branches are open for business, and we’re
able to provide meaningful relief options to our customers in their
time of need.
“I want to thank our dedicated associates for
their expertise in keeping our operations running smoothly as we
respond to the many challenges we are facing in the current
environment. I am very proud of them. My gratitude also goes out to
everyone on the front lines, including our first responders and
health care professionals.”
Broad and Extensive Response
BancShares’ strong capital and liquidity
positions, along with a history of sound risk management, provide
flexibility and stability to navigate this crisis. At the onset,
BancShares assembled a cross-functional leadership team to ensure
business continuity, protect the safety of our associates, and
support our customers and communities. Our continued investment in
technology allowed our team to respond to customers without
interruption. Digital account openings and virtual logins increased
approximately 25% from pre-COVID-19 levels and we have successfully
deployed a remote work strategy for numerous associates. Our
leadership team, with the help of all our dedicated associates, has
been working diligently to ensure our high standards of customer
service continue while also protecting the safety and soundness of
our organization and the health and welfare of our
stakeholders.
Supporting Our Associates
- More than 90% of associates at our corporate locations are
working remotely.
- Branches transitioned to drive-thru and lobby by appointment
only service to limit exposure to our associates and our
customers.
- Increased access to employee assistance programs, including
emotional support and assistance with childcare and eldercare
services.
- Offering paid leave and medical treatment for associates with
COVID-19-related illnesses.
- Established an internal COVID-19 platform to provide daily
communication across the company.
Supporting Our Customers
- Ensuring the majority of our branches remain operational for
our customers with appropriate safety protocols.
- Waiving early withdrawal penalties on certificates of deposit
when customers need the funds for relief.
- Offering 90-day payment deferrals for qualified borrowers with
no late fees.
- Increasing access to funds through our traditional lending
products and offering special unsecured loans for up to 24 months
with a low fixed interest rate and no payments for 90 days.
- Participating in the Small Business Administration Paycheck
Protection Program (“SBA-PPP”).
Diversified Loan Portfolio and Ongoing Monitoring of Credit
Risk
While we understand that helping our customers
through this trying time may defer a full understanding of the
impact of COVID-19, we are actively monitoring our loan portfolio
for areas of increased risk. As of April 24, 2020, we have approved
or processed loan payment extensions on approximately $5.9 billion
in loans (approximately $180 million in deferred payments) for
customers in good standing who have been affected by COVID-19.
BancShares has a well-diversified loan portfolio by geography and
industry, however, extensions have been concentrated in industries
impacted the most by the pandemic which includes our dental and
medical portfolios, as well as the hospitality industry. The risk
profile is somewhat mitigated as our typical customer’s dental or
medical practice is well established and actively managed. Social
distancing requirements had an immediate impact on both of these
industries; however, they should also see immediate demand for
services once those restrictions are lessened. Through April 24,
2020, we have not seen significant shifts in credit line
utilization or overall declines in credit quality. BancShares
continues to have solid credit performance that has matched or
exceeded its peer group net charge-off ratios over time.
We are actively participating in the SBA-PPP
program, which will provide much needed funds to our small business
customers. In March, we put together a detailed and comprehensive
framework to enable us to accept applications from our customers to
help them in this time of need. As of April 24, 2020, we have
processed approximately 5,000 SBA-PPP loan applications, securing
funding for our customers of approximately $1.8 billion.
Strong Liquidity Position and Low Cost Funding
Sources
We maintain a strong level of liquidity, which
positions us well to adapt to stresses posed by this environment.
As of March 31, 2020, we had liquid assets (available cash and
unencumbered high quality liquid assets at market value) totaling
approximately $5.5 billion. This represented 13.2% of consolidated
assets as of March 31, 2020.
In addition to liquid assets, we had contingent
sources of liquidity totaling approximately $11.3 billion in the
form of Federal Home Loan Bank borrowing capacity, Federal Reserve
Discount Window availability, fed funds lines and a committed line
of credit.
Our funding base is composed of 94.8% deposits,
of which 38.7% are demand deposit accounts. Of our total deposits,
97.7% are core deposits. As of March 31, 2020, our loan to deposit
ratio was 83.7% and our cost of total deposits was 0.28%.
Strong Capital Position
In accordance with our capital plan, we operate
with a level of capital above regulatory established
well-capitalized limits. This plan considers an assessment of
internal and external risk factors and is further informed by
combined idiosyncratic and market-stressed scenarios.
At March 31, 2020, BancShares’ regulatory
capital ratios were well in excess of Basel III capital
requirements to withstand these market-stressed scenarios with a
total risk-based capital ratio of 13.7%, a Tier 1 risk-based
capital ratio of 11.4%, a common equity Tier 1 ratio of 10.4%, a
Tier 1 leverage ratio of 9.0%, and a capital conservation buffer of
5.4%, twice the required level of 2.5%.
RECENT MERGER ACTIVITY
On February 1, 2020, BancShares’ bank subsidiary
First Citizens Bank & Trust Company (“FCB”) completed the
merger of Duluth, Georgia-based Community Financial Holding Co.
Inc. (“Community Financial”) and its bank subsidiary, Gwinnett
Community Bank. Under the terms of the agreement, total cash
consideration of $2.3 million was paid to the shareholders of
Community Financial. FCB acquired $221.4 million in
assets, $134.0 million in loans and $209.3
million in deposits.
On April 17, 2020, FCB completed the previously
announced sale of three Entegra Bank branches to Select Bank &
Trust Company.
NET INTEREST INCOME
Net interest income for the first quarter of
2020 totaled $338.4 million, an increase of $17.9 million, or 5.6%,
compared to the first quarter of 2019. The increase in net interest
income was primarily due to an increase of $34.6 million in
interest earned on loans driven by loan growth, partially offset by
increases in interest expense on deposits of $11.3 million and
borrowings of $3.4 million. The taxable-equivalent NIM was 3.55%
during the first quarter of 2020, a decrease of 31 basis points
from 3.86% for the comparable quarter in the prior year. The
primary drivers of the margin decline were an increase in the rates
paid on interest bearing deposits, largely in time deposits and
money market accounts, and a decline in the yield on interest
earning assets.
Net interest income increased $11.3 million, or
3.4% compared to the fourth quarter of 2019. The change in interest
income was primarily due to loan growth, partially offset by
increased volume in deposits and borrowings. The taxable equivalent
NIM decreased 4 basis points from 3.59% in the fourth quarter of
2019 primarily due to a decline in the yield on non-purchased
credit deteriorated (“non-PCD”) loans and investment securities,
and an increase in borrowings, partially offset by a higher yield
on purchased credit deteriorated (“PCD”) loans.
PROVISION FOR CREDIT LOSSES
Provision expense was $28.4 million for the
three month period ended March 31, 2020, as compared to $11.8
million and $7.7 million for the three month periods ended
March 31, 2019, and December 31, 2019, respectively. The increase
in the current period was primarily COVID-19 related. Loss
estimates consider the potential impact of slower economic activity
with increasing unemployment, as well as potential mitigating
impacts from the government stimulus and loan modification
programs. The increase in provision was mostly related to
commercial and industrial loans and commercial real estate.
Total net charge-offs in the first quarter of
2020 were $7.5 million, compared with $6.7 million in the first
quarter of 2019, and $9.4 million for the fourth quarter of 2019.
The net charge-off ratio was 0.10% for the three month period ended
March 31, 2020, compared to 0.14% and 0.11% for the three month
periods ended December 31, 2019, and March 31, 2019,
respectively.
NONINTEREST INCOME
Noninterest income for the first quarter of 2020
totaled $64.0 million, a decrease of $39.7 million, or 38.3%
compared to the first quarter of 2019. Excluding fair value
adjustments on marketable equity securities and realized gains on
available for sale securities sales, noninterest income was $95.6
million for the three months ended March 31, 2020, compared to
$92.3 million for the same period in 2019. This $3.3 million
increase was primarily driven by increases in mortgage income,
cardholder services income and wealth advisory services income of
$1.6 million, $1.5 million and $1.4 million, respectively.
NONINTEREST EXPENSE
Noninterest expense totaled $300.0 million for
the first quarter of 2020, a $32.3 million, or 12.1% increase
compared to the same period in 2019. The increase was largely
driven by an $18.8 million increase in personnel-related expenses
primarily due to increased salaries and wages as a result of net
staff additions, including personnel from acquisitions, and merit
increases. This was coupled with increases in processing fees
paid to third parties and merger-related expenses of $3.3 million
and $2.5 million, respectively.
INCOME TAXES
Income tax expense totaled $16.9 million and
$33.4 million for the first quarter of 2020 and 2019, respectively,
representing effective tax rates of 22.8% and 23.1% for the
respective periods.
LOANS AND DEPOSITS
At March 31, 2020, loans totaled $29.24
billion, an increase of $359.4 million since December 31, 2019. Of
this growth, $135.2 million was related to the acquisition of
Community Financial. Excluding acquired loans, total loans
increased $224.2 million since December 31, 2019, or by 3.1% on an
annualized basis.
At March 31, 2020, deposits totaled $35.35
billion, an increase of $915.5 million since December 31, 2019. Of
this growth, $218.0 million was related to the acquisition of
Community Financial. Excluding acquired deposits, total deposits
increased $697.5 million since December 31, 2019, or by 8.1% on an
annualized basis.
ADOPTION OF CECL & ALLOWANCE FOR CREDIT
LOSSES
On January 1, 2020, BancShares adopted CECL,
which resulted in a net decrease of $37.9 million in the allowance
for credit losses (“ACL”) which included a decrease of $56.9
million in the ACL on non-PCD loans, offset by an increase of $19.0
million in the ACL on PCD loans. The $56.9 million reduction in the
ACL on non-PCD loans, partially offset by an $8.9 million increase
in the reserve for unfunded commitments, net of deferred taxes,
resulted in an increase in retained earnings of $36.9 million. The
$19.0 million increase in the ACL on PCD loans resulted in a gross
up of loan balances by this same amount and did not have any effect
on retained earnings.
The largest changes in the ACL, affecting
beginning retained earnings as a result of the adoption, were
decreases in the ACL on commercial loan segments as these
portfolios have exhibited strong historical credit performance and
have relatively short average lives. The reduction in ACL on this
segment was partially offset by increases in ACL on our consumer
loan segment primarily due to longer average lives.
The ACL was $209.3 million at March 31,
2020, compared to $225.1 million at December 31, 2019. The ACL as a
percentage of total loans was 0.72% at March 31, 2020,
compared to 0.78% at December 31, 2019. The $15.8 million change
was due primarily due to the $37.9 million reduction in the ACL as
a result of adopting CECL, partially offset by a $21.5 million
increase in provision expense as a result of potential COVID-19
impact.
NONPERFORMING ASSETS
Nonperforming assets, including nonaccrual loans
and other real estate owned, were $230.3 million, or 0.79% of total
loans and other real estate owned at March 31, 2020, compared
to $168.3 million or 0.58% at December 31, 2019. The increase was
largely due to the dissolution of purchased credit impaired (“PCI”)
pools as part of the adoption of CECL, which moved $47.0 million in
loans from performing PCI pools, not previously considered
nonaccrual, into nonaccrual status.
CAPITAL TRANSACTIONS
On March 4, 2020, BancShares completed the
public offering of $350 million aggregate principal amount of its
3.375% Fixed-to-Floating Rate Subordinated Notes due 2030. On March
12, 2020, BancShares issued and sold an aggregate of 13,800,000
depositary shares, each representing a 1/40th interest in a share,
of 5.375% Non-Cumulative Perpetual Preferred Stock, Series A, par
value $0.01 per share, with a liquidation preference of $25 per
Depositary Share (equivalent to $1,000 per share of Series A
Preferred Stock). The capital raise provides liquidity for general
corporate purposes, which may include, but is not limited to,
providing capital to support our growth organically or through
strategic acquisitions, financing investments and capital
expenditures, for funding investments in First Citizens Bank as
regulatory capital, and redeeming or repurchasing our common
stock.
During the first quarter of 2020, BancShares
repurchased 349,390 shares of Class A common stock for $159.7
million at an average cost per share of $457.05 compared to a total
of 243,000 shares of Class A common stock for $100.7 million at an
average cost per share of $414.58 for the first three months of
2019. All Class A common stock repurchases completed in 2020 and
2019 were consummated under previously approved authorizations.
On April 28, 2020, the Board authorized share
repurchases of up to 500,000 of BancShares’ Class A common stock
for the period May 1, 2020, through July 31, 2020. This authority
will supersede all previously approved authorities.
ABOUT FIRST CITIZENS BANCSHARES
BancShares is the financial holding company for
Raleigh, North Carolina-headquartered First Citizens Bank. First
Citizens Bank provides a broad range of financial services to
individuals, businesses, professionals and the medical community
through branch offices in 19 states, including digital banking,
mobile banking, ATMs and telephone banking. As of March 31,
2020, BancShares had total assets of $41.59 billion.
For more information, visit First Citizens’ website at
firstcitizens.com. First Citizens Bank. Forever First®.
DISCLOSURES ABOUT FORWARD LOOKING
STATEMENTS
The discussions included in this Press Release
may contain forward-looking statements within the meaning of the
Private Securities Litigation Act of 1995, including Section 21E of
the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. For the purposes of these discussions, any
statements that are not statements of historical fact may be deemed
to be forward-looking statements. Such statements are often
characterized by the use of qualifying words such as “expects,”
“anticipates,” “believes,” “estimates,” “plans,” “projects,” or
other statements concerning opinions or judgments of the Registrant
and its management about future events. Such statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results to differ materially from those described in
the statements. The accuracy of such forward-looking statements
could be affected by factors beyond the Registrant’s control,
including, but not limited to, the impacts of COVID-19 on our
business, the financial success or changing conditions or
strategies of the Registrant’s customers or vendors, fluctuations
in interest rates, actions of government regulators, the
availability of capital and personnel, the delay in closing (or
failure to close) one or more of our previously announced
acquisition transaction(s), the failure to realize the anticipated
benefits of our previously announced acquisition transaction(s), or
general competitive, economic, political, and market conditions.
These forward-looking statements are made only as of the date of
this Press Release, and the Registrant undertakes no obligation to
revise or update these statements following the date of this Press
Release, except as may be required by law.
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CONSOLIDATED FINANCIAL HIGHLIGHTS |
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(Dollars in thousands, except share data; unaudited) |
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For the three months ended |
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March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
SUMMARY OF OPERATIONS |
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Interest income |
|
$ |
369,559 |
|
|
$ |
354,048 |
|
|
$ |
336,924 |
|
Interest expense |
|
31,159 |
|
|
26,924 |
|
|
16,452 |
|
Net interest income |
|
338,400 |
|
|
327,124 |
|
|
320,472 |
|
Provision for credit losses |
|
28,355 |
|
|
7,727 |
|
|
11,750 |
|
Net interest income after provision for credit losses |
|
310,045 |
|
|
319,397 |
|
|
308,722 |
|
Noninterest income |
|
64,011 |
|
|
104,393 |
|
|
103,663 |
|
Noninterest expense |
|
299,971 |
|
|
292,262 |
|
|
267,657 |
|
Income before income taxes |
|
74,085 |
|
|
131,528 |
|
|
144,728 |
|
Income taxes |
|
16,916 |
|
|
29,654 |
|
|
33,369 |
|
Net income |
|
$ |
57,169 |
|
|
$ |
101,874 |
|
|
$ |
111,359 |
|
Taxable-equivalent net interest income |
|
$ |
339,174 |
|
|
$ |
328,045 |
|
|
$ |
321,372 |
|
PER COMMON SHARE DATA |
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|
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Net income |
|
$ |
5.46 |
|
|
$ |
9.55 |
|
|
$ |
9.67 |
|
Cash dividends |
|
0.40 |
|
|
0.40 |
|
|
0.40 |
|
Book value at period-end |
|
351.90 |
|
|
337.38 |
|
|
309.46 |
|
CONDENSED BALANCE SHEET |
|
|
|
|
|
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Cash and due from banks |
|
$ |
454,220 |
|
|
$ |
376,719 |
|
|
$ |
268,599 |
|
Overnight investments |
|
688,518 |
|
|
1,107,844 |
|
|
1,386,525 |
|
Investment securities |
|
8,845,197 |
|
|
7,173,003 |
|
|
6,914,513 |
|
Loans and leases |
|
29,240,959 |
|
|
28,881,496 |
|
|
25,463,785 |
|
Less allowance for credit losses |
|
(209,259 |
) |
|
(225,141 |
) |
|
(228,775 |
) |
Other assets |
|
2,574,818 |
|
|
2,510,575 |
|
|
2,157,023 |
|
Total assets |
|
$ |
41,594,453 |
|
|
$ |
39,824,496 |
|
|
$ |
35,961,670 |
|
Deposits |
|
$ |
35,346,711 |
|
|
$ |
34,431,236 |
|
|
$ |
31,198,093 |
|
Other liabilities |
|
2,290,222 |
|
|
1,807,076 |
|
|
1,240,268 |
|
Shareholders’ equity |
|
3,957,520 |
|
|
3,586,184 |
|
|
3,523,309 |
|
Total liabilities and shareholders’ equity |
|
$ |
41,594,453 |
|
|
$ |
39,824,496 |
|
|
$ |
35,961,670 |
|
SELECTED
PERIOD AVERAGE BALANCES |
|
|
|
|
Total assets |
|
$ |
40,648,806 |
|
|
$ |
38,326,641 |
|
|
$ |
35,625,885 |
|
Investment securities |
|
7,453,159 |
|
|
7,120,023 |
|
|
6,790,671 |
|
Loans and leases |
|
29,098,101 |
|
|
27,508,062 |
|
|
25,515,988 |
|
Interest-earning assets |
|
38,004,341 |
|
|
36,032,680 |
|
|
33,432,162 |
|
Deposits |
|
34,750,061 |
|
|
33,295,141 |
|
|
30,802,567 |
|
Interest-bearing liabilities |
|
23,153,777 |
|
|
20,958,943 |
|
|
19,655,434 |
|
Shareholders’ equity |
|
$ |
3,682,634 |
|
|
$ |
3,570,872 |
|
|
$ |
3,509,746 |
|
Common shares outstanding |
|
10,473,119 |
|
|
10,708,084 |
|
|
11,519,008 |
|
SELECTED RATIOS |
|
|
|
|
|
|
Annualized return on average assets |
|
0.57 |
% |
|
1.05 |
% |
|
1.27 |
% |
Annualized return on average equity |
|
6.24 |
|
|
11.32 |
|
|
12.86 |
|
Taxable-equivalent net interest margin |
|
3.55 |
|
|
3.59 |
|
|
3.86 |
|
Efficiency ratio (1) |
|
68.1 |
|
|
68.9 |
|
|
64.8 |
|
Tier 1 risk-based capital ratio |
|
11.4 |
|
|
10.9 |
|
|
12.7 |
|
Common equity Tier 1 ratio |
|
10.4 |
|
|
10.9 |
|
|
12.7 |
|
Total risk-based capital ratio |
|
13.7 |
|
|
12.1 |
|
|
14.0 |
|
Tier 1 leverage capital ratio |
|
9.0 |
|
|
8.8 |
|
|
9.8 |
|
(1) The efficiency ratio is a non-GAAP financial measure which
measures productivity and is generally calculated as noninterest
expense divided by total revenue (net interest income and
noninterest income). The efficiency ratio removes the impact of
BancShares’ securities gains, fair market value adjustment on
marketable equity securities, merger-related expenses and other
material one time items from the calculation. Management uses this
ratio to monitor performance and believes this measure provides
meaningful information to investors. |
ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY
DISCLOSURES |
|
|
Three months ended |
(Dollars in thousands, unaudited) |
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
ALLOWANCE FOR CREDIT
LOSSES (1) |
|
|
|
|
|
|
|
|
|
ACL at beginning of period |
$ |
225,141 |
|
|
$ |
226,825 |
|
|
$ |
223,712 |
|
Adoption of ASU 2016-13 |
(37,924 |
) |
|
— |
|
|
— |
|
Initial PCD allowance on new acquisitions(2) |
1,193 |
|
|
— |
|
|
— |
|
Provision expense for credit losses |
28,355 |
|
|
7,727 |
|
|
11,750 |
|
Net charge-offs of loans and leases: |
|
|
|
|
|
Charge-offs |
(14,261 |
) |
|
(12,624 |
) |
|
(10,154 |
) |
Recoveries |
6,755 |
|
|
3,213 |
|
|
3,467 |
|
Net charge-offs of loans and leases |
(7,506 |
) |
|
(9,411 |
) |
|
(6,687 |
) |
ACL at end of period |
$ |
209,259 |
|
|
$ |
225,141 |
|
|
$ |
228,775 |
|
ACL at end of period allocated to: |
|
|
|
|
|
PCD |
$ |
26,916 |
|
|
$ |
7,536 |
|
|
$ |
8,980 |
|
Non-PCD |
182,343 |
|
|
217,605 |
|
|
219,795 |
|
ACL at end of period |
$ |
209,259 |
|
|
$ |
225,141 |
|
|
$ |
228,775 |
|
Reserve for unfunded commitments |
$ |
10,512 |
|
|
$ |
1,055 |
|
|
$ |
1,052 |
|
SELECTED LOAN
DATA |
|
|
|
|
|
Average loans and leases: |
|
|
|
|
|
PCD |
$ |
530,087 |
|
|
$ |
495,783 |
|
|
$ |
579,080 |
|
Non-PCD |
28,502,231 |
|
|
26,937,524 |
|
|
24,936,898 |
|
Loans and leases at period-end: |
|
|
|
|
|
PCD |
560,352 |
|
|
558,716 |
|
|
557,356 |
|
Non-PCD |
28,680,607 |
|
|
28,322,780 |
|
|
24,906,429 |
|
RISK
ELEMENTS |
|
|
|
|
|
Nonaccrual loans and leases(3) |
$ |
174,571 |
|
|
$ |
121,689 |
|
|
$ |
90,625 |
|
Other real estate |
55,707 |
|
|
46,591 |
|
|
43,306 |
|
Total nonperforming assets |
$ |
230,278 |
|
|
$ |
168,280 |
|
|
$ |
133,931 |
|
Accruing loans and leases 90 days or more past due(3) |
$ |
2,970 |
|
|
$ |
27,548 |
|
|
$ |
37,474 |
|
RATIOS |
|
|
|
|
|
Net charge-offs (annualized) to average loans and leases |
0.10 |
|
|
0.14 |
|
|
0.11 |
|
ACL to total loans and leases: |
|
|
|
|
|
PCD |
4.80 |
|
|
1.35 |
|
|
1.61 |
|
Non-PCD |
0.64 |
|
|
0.77 |
|
|
0.88 |
|
Total |
0.72 |
|
|
0.78 |
|
|
0.90 |
|
Ratio of total nonperforming assets to total loans, leases and
other real estate owned |
0.79 |
|
|
0.58 |
|
|
0.53 |
|
(1) BancShares recorded no ACL on investment
securities as part of the adoption of ASU 2016-13 Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments as of January 1, 2020, or at March 31,
2020.
(2) Upon adoption of ASU 2016-13 as of January
1, 2020, the concept of purchased credit impaired loans under ASC
310-30 was eliminated. Loans and leases determined at the date of
acquisition, to have experienced more than insignificant credit
quality since origination are accounted for under the guidance in
ASC Topic 326-20, Credit Losses as purchased credit deteriorated
assets. PCD loans and leases are recorded at fair value at the date
of acquisition with an initial reserve booked directly to the
allowance for credit losses. Provision is recorded if there is
additional credit deterioration after the acquisition date. Non-PCD
loans include originated and purchased non-credit deteriorated
loans. Loans previously classified as PCI were determined to be
PCD.
(3) Upon adoption of ASU 2016-13, we dissolved
pooling of PCI loans allowed under ASC 310-10. This increased the
amount of nonaccrual loans as those nonaccrual loans within
performing PCI pools were previously excluded from reporting. As of
January 1, 2020, there were $47.0 million of nonaccrual loans
released from performing PCI pools including $24.2 million of loans
that were greater than 90 days past due.
|
AVERAGE BALANCE AND NET INTEREST MARGIN
SUMMARY |
|
|
Three months ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
Average |
|
|
|
Yield/ |
|
Average |
|
|
|
Yield/ |
|
Average |
|
|
|
Yield/ |
(Dollars in thousands,
unaudited) |
Balance |
|
Interest |
|
Rate (2) |
|
Balance |
|
Interest |
|
Rate (2) |
|
Balance |
|
Interest |
|
Rate (2) |
INTEREST-EARNING
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases (1) |
$ |
29,098,101 |
|
|
$ |
326,155 |
|
|
4.46 |
% |
|
$ |
27,508,062 |
|
|
$ |
308,832 |
|
|
4.42 |
% |
|
$ |
25,515,988 |
|
|
$ |
291,569 |
|
|
4.59 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Treasury |
299,777 |
|
|
1,677 |
|
|
2.25 |
|
|
595,515 |
|
|
3,706 |
|
|
2.47 |
|
|
1,208,231 |
|
|
6,496 |
|
|
2.18 |
|
Government agency |
721,254 |
|
|
4,121 |
|
|
2.29 |
|
|
659,857 |
|
|
4,224 |
|
|
2.56 |
|
|
286,514 |
|
|
2,309 |
|
|
3.22 |
|
Mortgage-backed securities |
6,060,434 |
|
|
30,707 |
|
|
2.03 |
|
|
5,563,653 |
|
|
29,964 |
|
|
2.15 |
|
|
5,051,416 |
|
|
28,834 |
|
|
2.28 |
|
Corporate bonds |
205,504 |
|
|
2,477 |
|
|
4.82 |
|
|
172,424 |
|
|
2,165 |
|
|
5.02 |
|
|
145,127 |
|
|
1,937 |
|
|
5.34 |
|
Other investments |
166,190 |
|
|
678 |
|
|
1.64 |
|
|
128,574 |
|
|
653 |
|
|
2.02 |
|
|
99,383 |
|
|
282 |
|
|
1.15 |
|
Total investment
securities |
7,453,159 |
|
|
39,660 |
|
|
2.13 |
|
|
7,120,023 |
|
|
40,712 |
|
|
2.29 |
|
|
6,790,671 |
|
|
39,858 |
|
|
2.35 |
|
Overnight investments |
1,453,081 |
|
|
4,518 |
|
|
1.25 |
|
|
1,404,595 |
|
|
5,425 |
|
|
1.53 |
|
|
1,125,503 |
|
|
6,397 |
|
|
2.31 |
|
Total interest-earning
assets |
$ |
38,004,341 |
|
|
$ |
370,333 |
|
|
3.88 |
% |
|
$ |
36,032,680 |
|
|
$ |
354,969 |
|
|
3.89 |
% |
|
$ |
33,432,162 |
|
|
$ |
337,824 |
|
|
4.06 |
% |
INTEREST-BEARING
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking with interest |
$ |
8,188,983 |
|
|
$ |
1,701 |
|
|
0.08 |
% |
|
$ |
7,608,857 |
|
|
$ |
1,561 |
|
|
0.08 |
% |
|
$ |
7,557,991 |
|
|
$ |
1,377 |
|
|
0.07 |
% |
Savings |
2,593,869 |
|
|
285 |
|
|
0.04 |
|
|
2,596,608 |
|
|
439 |
|
|
0.07 |
|
|
2,523,543 |
|
|
206 |
|
|
0.03 |
|
Money market accounts |
7,016,587 |
|
|
9,109 |
|
|
0.52 |
|
|
6,248,735 |
|
|
7,066 |
|
|
0.45 |
|
|
5,847,740 |
|
|
4,140 |
|
|
0.29 |
|
Time deposits |
3,761,216 |
|
|
13,099 |
|
|
1.40 |
|
|
3,513,432 |
|
|
13,367 |
|
|
1.51 |
|
|
2,843,773 |
|
|
7,203 |
|
|
1.03 |
|
Total interest-bearing
deposits |
21,560,655 |
|
|
24,194 |
|
|
0.45 |
|
|
19,967,632 |
|
|
22,433 |
|
|
0.45 |
|
|
18,773,047 |
|
|
12,926 |
|
|
0.28 |
|
Securities sold under customer
repurchase agreements |
474,231 |
|
|
442 |
|
|
0.38 |
|
|
495,804 |
|
|
479 |
|
|
0.38 |
|
|
538,162 |
|
|
459 |
|
|
0.35 |
|
Other short-term
borrowings |
157,759 |
|
|
804 |
|
|
2.02 |
|
|
28,284 |
|
|
190 |
|
|
2.63 |
|
|
— |
|
|
— |
|
|
— |
|
Long-term borrowings |
961,132 |
|
|
5,719 |
|
|
2.35 |
|
|
467,223 |
|
|
3,822 |
|
|
3.20 |
|
|
344,225 |
|
|
3,067 |
|
|
3.56 |
|
Total interest-bearing
liabilities |
$ |
23,153,777 |
|
|
$ |
31,159 |
|
|
0.54 |
|
|
$ |
20,958,943 |
|
|
$ |
26,924 |
|
|
0.51 |
|
|
$ |
19,655,434 |
|
|
$ |
16,452 |
|
|
0.34 |
|
Interest rate spread |
|
|
|
|
3.34 |
% |
|
|
|
|
|
3.38 |
% |
|
|
|
|
|
3.72 |
% |
Net interest income and net
yield on interest-earning assets |
|
|
$ |
339,174 |
|
|
3.55 |
% |
|
|
|
$ |
328,045 |
|
|
3.59 |
% |
|
|
|
$ |
321,372 |
|
|
3.86 |
% |
(1) Loans and leases include PCD and non-PCD
loans, nonaccrual loans and loans held for sale.
(2) Yields related to loans, leases and
securities exempt from both federal and state income taxes, federal
income taxes only, or state income taxes only are stated on a
taxable-equivalent basis assuming statutory federal income tax
rates of 21.0%, as well as state income tax rates of 3.4% for all
periods presented. The taxable-equivalent adjustment was $774, $921
and $900 for the three months ended March 31, 2020,
December 31, 2019 and March 31, 2019, respectively.
|
|
Contact: |
Barbara Thompson |
|
First Citizens BancShares |
|
919.716.2716 |
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