First Citizens BancShares Inc. (“BancShares”) (Nasdaq: FCNCA)
reported strong earnings for the fourth quarter of 2020. Key
results for the quarter ended December 31, 2020, are presented
below:
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FOURTH QUARTER RESULTS |
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Q4 2020 |
Q4 2019 |
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Q4 2020 |
Q4 2019 |
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Q4 2020 |
Q4 2019 |
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Q4 2020 |
Q4 2019 |
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Q4 2020 |
Q4 2019 |
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Net income (in millions) |
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Net income per share |
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Net interest margin |
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Return on average assets |
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Return on average equity |
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$138.1 |
$101.9 |
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$13.59 |
$9.55 |
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3.02% |
3.59% |
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1.11% |
1.05% |
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14.02% |
11.32% |
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YEAR-TO-DATE (“YTD”) RESULTS |
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2020 |
2019 |
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2020 |
2019 |
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2020 |
2019 |
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2020 |
2019 |
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2020 |
2019 |
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Net income (in millions) |
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Net income per share |
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Net interest margin |
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Return on average assets |
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Return on average equity |
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$491.7 |
$457.4 |
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$47.50 |
$41.05 |
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3.17% |
3.74% |
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1.07% |
1.23% |
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12.96% |
12.88% |
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FOURTH QUARTER HIGHLIGHTS |
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Net income |
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Net income for the fourth quarter of 2020 was $138.1 million, an
increase of $36.2 million, or 35.5%, compared to the same quarter
in 2019. Net income per common share increased to $13.59 for the
fourth quarter of 2020, from $9.55 per share during the same
quarter in 2019. |
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Return onaverage assetsand equity |
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Return on average assets for the fourth quarter of 2020 was 1.11%,
up from 1.05% during the same quarter in 2019. Return on average
equity for the fourth quarter of 2020 was 14.02%, up from 11.32%
during the same period of 2019. |
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Net interestincome andnet interestmargin |
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BancShares reported total net interest income of $358.7 million for
the fourth quarter of 2020, an increase of $31.6 million, or 9.7%,
compared to the same quarter in 2019. The taxable-equivalent net
interest margin (“NIM”) was 3.02% for the fourth quarter of 2020,
down 57 basis points from 3.59% during the same quarter in 2019 and
down 4 basis points from 3.06% during the third quarter of
2020. |
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Provision forcredit losses |
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The provision for credit losses was $5.4 million during the fourth
quarter of 2020, compared to $7.7 million during the fourth quarter
of 2019. The allowance for credit losses (“ACL”) was $224.3 million
at December 31, 2020, compared to $225.1 million at December
31, 2019, representing 0.68% and 0.78% of loans, respectively. |
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Operatingperformance |
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Noninterest income totaled $126.8 million for the fourth quarter of
2020, an increase of $22.4 million, or 21.4%, compared to the same
quarter of 2019. Noninterest expense was $305.4 million for the
fourth quarter of 2020, an increase of $13.1 million, or 4.5%,
compared to the same quarter of 2019. |
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Loans andcredit quality |
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Total loans grew to $32.79 billion, an increase of $3.91 billion,
or by 13.5%, since December 31, 2019. Excluding $2.41 billion of
loans originated under the Small Business Administration Paycheck
Protection Program (“SBA-PPP”) and loans from acquisitions, total
loans increased $1.40 billion since December 31, 2019, or by 4.9%.
The net charge-off ratio was 0.06% and 0.07% for the three- and
twelve-month periods ended December 31, 2020, respectively,
compared to 0.14% and 0.11% for the three and twelve months ended
December 31, 2019, respectively. |
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Deposits |
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Total deposits grew to $43.43 billion, an increase of $9.00
billion, or by 26.1%, since December 31, 2019. Excluding estimated
SBA-PPP deposits, which totaled $0.93 billion, and deposits from
acquisitions, total deposits increased $7.87 billion since December
31, 2019, or by 22.9%. |
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Capital |
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BancShares remained well capitalized with a total risk-based
capital ratio of 13.8%, a Tier 1 risk-based capital ratio of 11.6%,
a common equity Tier 1 ratio of 10.6% and a Tier 1 leverage ratio
of 7.9%. |
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ONGOING COVID-19 RESPONSE
BancShares remains in a strong capital and
liquidity position providing stability in navigating the COVID-19
crisis. Our leadership team continues to work to identify and enact
appropriate measures in an effort to protect the welfare of our
employees and soundness of the organization, while continuing to
support our customers. Our branches have re-opened with enhanced
safety protocols and our corporate locations remain at limited
occupancy due to current virus trends.
Through December 31, 2020, over 97% of all
COVID-19 related loan extensions have begun repayment. Delinquency
trends among loans entering repayment are in line with the
remainder of the portfolio. We have not seen significant declines
in overall credit quality, though the impacts of the SBA-PPP and
payment extensions could be delaying signs of credit
deterioration.
During 2020, BancShares originated over 23,000
SBA-PPP loans, with outstanding aggregate loan balances of $2.41
billion at December 31, 2020. We collected $117.2 million in
SBA-PPP related loan fees per the program terms. These fees were
deferred and are being recognized in interest income over the life
of the respective loans. As of December 31, 2020, remaining
deferred fees were $41.1 million.
We began accepting and processing applications
for forgiveness during the third quarter of 2020 and have received
over 6,500 forgiveness decisions from the SBA to date, representing
over $900 million in forgiveness payments. The Consolidated
Appropriations Act 2021 was signed into law during the fourth
quarter of 2020 and contained provisions for new funding of SBA-PPP
loans. We have begun accepting applications for this round of
funding beginning in the first quarter of 2021.
Strong Liquidity and Capital Position
We continue to maintain a strong level of
liquidity. As of December 31, 2020, liquid assets (available cash,
overnight investments and unencumbered available for sale
securities) totaled approximately $9.63 billion, representing 19.8%
of consolidated assets.
In addition to liquid assets, we had contingent
sources of liquidity totaling approximately $11.90 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 as of December 31, 2020.
At December 31, 2020, BancShares’ regulatory
capital ratios were well in excess of Basel III capital
requirements with a total risk-based capital ratio of 13.8%, a Tier
1 risk-based capital ratio of 11.6%, a common equity Tier 1 ratio
of 10.6%, a Tier 1 leverage ratio of 7.9% and a capital
conservation buffer of 5.6%, more than twice the required level of
2.5%.
RECENT MERGER ACTIVITY
On October 15, 2020, BancShares announced a
definitive merger agreement with CIT Group Inc. (“CIT”) through
which the companies plan to combine in an all-stock merger of
equals. The transaction is anticipated to close during the first
half of 2021.
NET INTEREST INCOME
Net interest income for the fourth quarter of
2020 was $358.7 million, an increase of $31.6 million, or 9.7%,
compared to the fourth quarter of 2019. This was primarily due to
an increase in interest earned on loans, driven by SBA-PPP loans
and organic loan growth and lower rates paid on interest-bearing
liabilities, partially offset by declines in yields on
interest-earning assets and increased borrowings. SBA-PPP loans
contributed $42.2 million in interest and fee income during the
quarter. The taxable-equivalent NIM was 3.02% during the fourth
quarter of 2020, a decrease of 57 basis points from 3.59% for the
comparable quarter in the prior year. The margin decline was
primarily due to a decrease in the yield on interest-earning
assets, partially offset by a decline in rates paid on deposits and
borrowings. The taxable-equivalent NIM declined 4 basis points from
3.06% in the linked quarter primarily related to a decline in yield
on investment securities, partially offset by a decline in the rate
paid on interest-bearing deposits.
Net interest income for the year ended
December 31, 2020 was $1.39 billion, an increase of $76.8
million, or 5.9%, compared to the same period of 2019. The change
was primarily due to SBA-PPP loans and organic loan growth coupled
with lower rates paid on deposits and borrowings. This was
partially offset by declines in the yield on interest-earning
assets and higher deposit and borrowing balances. SBA-PPP loans
contributed $90.1 million in interest and fee income during 2020.
The taxable equivalent NIM decreased 57 basis points to 3.17%
compared to 3.74% for the year ended December 31, 2019, primarily
due to a decline in yield on interest-earning assets coupled with
an increase in total borrowings, partially offset by a decline in
the rate paid on interest-bearing deposits.
PROVISION FOR CREDIT LOSSES
Provision expense was $5.4 million and $58.4
million for the three- and twelve-month periods ended
December 31, 2020, respectively, as compared to $7.7 million
and $31.4 million for the three- and twelve-month periods ended
December 31, 2019, respectively. The increase in the
twelve-month period was primarily COVID-19 related as loss
estimates consider the potential impact of slower economic activity
and elevated unemployment, as well as potential mitigants due to
government stimulus and loan accommodations. The year-to-date
provision expense includes $36.1 million of reserve build for
credit losses specifically related to the potential impacts of
COVID-19. The decrease in provision for the three-month period was
due to limited movement in credit quality metrics and continued low
net charge-offs.
Total net charge-offs in the fourth quarter of
2020 were $5.0 million, a decrease from $9.4 million in the fourth
quarter of 2019 due to a lower volume of charge-offs and increased
recoveries. Net charge-offs were $22.4 million and $30.0 million
for the twelve months ended December 31, 2020 and 2019,
respectively. The net charge-off ratio was 0.06% and 0.07% for the
three- and twelve-month periods ended December 31, 2020,
respectively, compared to 0.14% and 0.11% for the three and
twelve-month periods ended December 31, 2019, respectively.
Excluding the impact of SBA-PPP loans on average loan balances, the
net charge-off ratio was 0.07% and 0.08% for the three and
twelve-month periods ended December 31, 2020.
NONINTEREST INCOME
Noninterest income for the fourth quarter of
2020 was $126.8 million compared to $104.4 million for the fourth
quarter of 2019, an increase of $22.4 million, or 21.4%. Fair value
adjustments on marketable equity securities and realized gains on
available for sale securities increased by a combined $16.8
million. Mortgage income increased by $6.5 million due to increased
production and sales resulting from lower mortgage interest rates.
Wealth income increased $3.2 million driven by an increase in
transaction volume and assets under management. Service charges on
deposits declined $4.3 million due to lower transaction volumes
related to COVID-19 stimulus.
Noninterest income for 2020 was $476.8 million
compared to $415.9 million for 2019, an increase of $60.9 million,
or 14.6%. Fair value adjustments on marketable equity securities
and realized gains on available for sale securities increased by a
combined $61.9 million. Mortgage income increased by $18.5 million
due to increased production and sales resulting from lower mortgage
interest rates. Service charges on deposits declined $17.5 million
due to lower transaction volumes related to COVID-19 stimulus.
NONINTEREST EXPENSE
Noninterest expense was $305.4 million for the
fourth quarter of 2020, a $13.1 million, or 4.5%, increase compared
to the same period in 2019. The increase was largely driven by an
$8.7 million increase in personnel expenses primarily from
acquisitions and merit increases. Occupancy and equipment expenses
increased $5.0 million primarily driven by sanitation and cleaning
expenses due to COVID-19 and repairs in the fourth quarter of
2020.
Noninterest expense was $1.19 billion for 2020,
an $84.9 million, or 7.7% increase compared to 2019. The increase
was largely driven by a $50.7 million increase in personnel
expenses as a result of merit increases and acquisitions, a $15.2
million increase in processing fees paid to third parties
reflecting continued investment in digital and technological
capabilities and an $8.2 million increase in pension expense as a
result of a decline in the discount rate.
INCOME TAXES
The effective tax rate was 21.0% for the fourth
quarter of 2020 and 22.5% for the fourth quarter of 2019. For
fiscal years 2020 and 2019, the effective tax rate was 20.4% and
22.7%, respectively.
The effective tax rates for the fourth quarter
and year ended December 31, 2020 were favorably impacted by $3.5
million and $13.9 million, respectively, due to BancShares’
decision to utilize an allowable alternative for computing its 2020
federal income tax liability. Without this alternative, the
effective tax rate would have been approximately 23.0% and 22.7%
for the fourth quarter and year ended December 31, 2020,
respectively. The allowable alternative provides BancShares the
ability to use the federal income tax rate for certain current year
deductible amounts related to prior year FDIC-assisted acquisitions
that was applicable when these amounts were originally subjected to
tax.
LOANS AND DEPOSITS
At December 31, 2020, loans totaled $32.79
billion, an increase of $3.91 billion since December 31, 2019. Of
this growth, $2.41 billion was related to SBA-PPP loans. Excluding
SBA-PPP loans and loans from acquisitions, total loans increased
$1.40 billion since December 31, 2019, or by 4.9%.
At December 31, 2020, deposits totaled
$43.43 billion, an increase of $9.00 billion since December 31,
2019. This growth includes estimated deposits of $0.93 billion
related to the SBA-PPP and deposits from acquisitions of $203.2
million. Excluding the impact of these deposits, total deposits
increased $7.87 billion since December 31, 2019, or by 22.9%.
ALLOWANCE FOR CREDIT LOSSES
The ACL was $224.3 million at December 31,
2020, compared to $225.1 million at December 31, 2019. The ACL as a
percentage of total loans was 0.68% at December 31, 2020,
compared to 0.78% at December 31, 2019. The reduction was due
primarily to the adoption of the Current Expected Credit Loss model
(“CECL”), resulting in a $37.9 million reduction in the ACL, with a
majority of the decrease offset by a reserve build of $36.1 million
due to an increase in potential loan losses related to the impact
of COVID-19. Excluding SBA-PPP loans, which have no associated ACL,
the ACL as a percentage of total loans was 0.74% as of December 31,
2020.
NONPERFORMING ASSETS
Nonperforming assets, including nonaccrual loans
and other real estate owned, were $242.4 million, or 0.74% of total
loans and other real estate owned at December 31, 2020,
compared to $168.3 million or 0.58% at December 31, 2019.
Contributing to the increase was the adoption of CECL, which moved
loans from performing purchased credit impaired pools into
nonaccrual status, and represents $24.9 million of nonaccrual loans
as of December 31, 2020.
CAPITAL TRANSACTIONS
During the fourth quarter of 2020, BancShares
did not repurchase any shares of Class A common stock compared to a
total of 254,510 shares of Class A common stock for $125.0 million
at an average cost per share of $490.96 for the fourth quarter of
2019. For the year ended December 31, 2020, BancShares repurchased
813,090 shares of Class A common stock for $333.8 million at an
average cost per share of $410.48 compared to 998,910 shares of
Class A common stock for $450.8 million at an average cost per
share of $451.33 for year ended December 31, 2019. All Class A
common stock repurchases completed in 2020 and 2019 were
consummated under previously approved authorizations. Following the
expiration of our latest share repurchase authorization on July 31,
2020, share repurchase activity was suspended.
EARNINGS CALL DETAILS
First Citizens will host a conference call to
discuss the company's financial results on Wednesday, Jan. 27,
2021, at 9 a.m. Eastern time.
To access this call, dial:
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833-654-8257 |
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602-585-9869 |
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7488743 |
The fourth quarter 2020 earnings presentation
and news release will be available on the company’s website at
www.firstcitizens.com/investor-relations.
After the conference call, you may access a
replay of the call through February 8, 2021, by dialing
855-859-2056 (domestic) or 404-537-3406 (international) with
conference ID 7488743.
For investor inquiries, contact Tom Heath,
director of Investor Relations, 919-716-4565.
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 December 31,
2020, BancShares had total assets of $49.96 billion.
For more information, visit First Citizens’ website at
firstcitizens.com. First Citizens Bank. Forever First®.
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 regarding the financial condition, results of
operations, business plans and future performance of BancShares.
Words such as “anticipates,” “believes,” “estimates,” “expects,”
“forecasts,” “intends,” “plans,” “projects,” “targets,” “designed,”
“could,” “may,” “should,” “will” or other similar words and
expressions are intended to identify these forward-looking
statements. These forward-looking statements are based on
BancShares’ current expectations and assumptions regarding
BancShares’ business, the economy, and other future conditions.
Because forward-looking statements relate to
future results and occurrences, they are subject to inherent risks,
uncertainties, changes in circumstances and other factors that are
difficult to predict. Many possible events or factors could affect
BancShares’ future financial results and performance and could
cause the actual results, performance or achievements of BancShares
to differ materially from any anticipated results expressed or
implied by such forward-looking statements. Such risks and
uncertainties include, among others, the impacts of the global
COVID-19 pandemic on BancShares’ business, and customers, the
financial success or changing conditions or strategies of
BancShares’ 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 BancShares’ previously announced acquisition transaction(s), the
failure to realize the anticipated benefits of BancShares’
previously announced acquisition transaction(s), and general
competitive, economic, political, and market conditions, as well as
risks related to the proposed transaction with CIT including, in
addition to those described above and among others, (1) the risk
that the cost savings, any revenue synergies and other anticipated
benefits of the proposed transaction may not be realized or may
take longer than anticipated to be realized, including as a result
of the impact of, or problems arising from, the integration of the
two companies or as a result of the condition of the economy and
competitive factors in areas where BancShares and CIT do business,
(2) disruption to BancShares’ and CIT’s businesses as a result of
the announcement and pendency of the proposed transaction and
diversion of management’s attention from ongoing business
operations and opportunities, (3) the occurrence of any event,
change or other circumstances that could give rise to the right of
one or both of the parties to terminate the definitive merger
agreement, (4) the risk that the integration of BancShares’ and
CIT’s operations will be materially delayed or will be more costly
or difficult than expected or that BancShares and CIT are otherwise
unable to successfully integrate their businesses, (5) the failure
to obtain the necessary approvals of the stockholders of BancShares
and/or CIT, (6) the outcome of any legal proceedings that may be or
have been instituted against BancShares and/or CIT, (7) the failure
to obtain required governmental approvals (and the risk that such
approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of
the proposed transaction), (8) reputational risk and potential
adverse reactions of BancShares’ and/or CIT’s customers, suppliers,
employees or other business partners, including those resulting
from the announcement or completion of the proposed transaction,
(9) the failure of any of the closing conditions in the definitive
merger agreement to be satisfied on a timely basis or at all, (10)
delays in closing the proposed transaction, (11) the possibility
that the proposed transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events, (12) the dilution caused by BancShares’ issuance of
additional shares of its capital stock in connection with the
proposed transaction, (13) general competitive, economic, political
and market conditions, (14) other factors that may affect future
results of BancShares and CIT including changes in asset quality
and credit risk, the inability to sustain revenue and earnings
growth, changes in interest rates and capital markets, inflation,
customer borrowing, repayment, investment and deposit practices,
the impact, extent and timing of technological changes, capital
management activities, and other actions of the Federal Reserve
Board and legislative and regulatory actions and reforms, and (15)
the impact of the global COVID-19 pandemic on CIT’s business, the
parties’ ability to complete the proposed transaction and/or any of
the other foregoing risks.
Except to the extent required by applicable laws
or regulations, BancShares disclaims any obligation to update such
factors or to publicly announce the results of any revisions to any
of the forward-looking statements included herein to reflect future
events or developments. Further information regarding BancShares
and factors which could affect the forward-looking statements
contained herein can be found in BancShares’ Annual Report on Form
10-K for the fiscal year ended December 31, 2019, its Quarterly
Reports on Form 10-Q for the periods ended March 31, 2020, June 30,
2020, and September 30, 2020 and its other filings with the
Securities and Exchange Commission.
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CONSOLIDATED FINANCIAL HIGHLIGHTS |
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| (Dollars in
thousands, except share data; unaudited) |
Three months ended |
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Twelve months ended December 31 |
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December 31,2020 |
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September 30,2020 |
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December 31,2019 |
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2020 |
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2019 |
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SUMMARY OF OPERATIONS |
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Interest income |
$ |
376,876 |
|
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$ |
374,334 |
|
|
$ |
354,048 |
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$ |
1,484,026 |
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$ |
1,404,011 |
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Interest expense |
18,160 |
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|
20,675 |
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|
26,924 |
|
|
95,857 |
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|
92,642 |
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Net interest income |
358,716 |
|
|
353,659 |
|
|
327,124 |
|
|
1,388,169 |
|
|
1,311,369 |
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Provision for credit losses |
5,403 |
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4,042 |
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7,727 |
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|
58,352 |
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|
31,441 |
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Net interest income after provision for credit losses |
353,313 |
|
|
349,617 |
|
|
319,397 |
|
|
1,329,817 |
|
|
1,279,928 |
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Noninterest income |
126,765 |
|
|
120,572 |
|
|
104,393 |
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|
476,750 |
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|
415,861 |
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Noninterest expense |
305,373 |
|
|
291,662 |
|
|
292,262 |
|
|
1,188,685 |
|
|
1,103,741 |
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Income before income taxes |
174,705 |
|
|
178,527 |
|
|
131,528 |
|
|
617,882 |
|
|
592,048 |
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Income taxes |
36,621 |
|
|
35,843 |
|
|
29,654 |
|
|
126,159 |
|
|
134,677 |
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Net income |
$ |
138,084 |
|
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$ |
142,684 |
|
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$ |
101,874 |
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$ |
491,723 |
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$ |
457,371 |
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Less: Preferred stock dividends |
4,636 |
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|
4,636 |
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— |
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|
14,062 |
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— |
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Net income available to common shareholders |
$ |
133,448 |
|
|
$ |
138,048 |
|
|
$ |
101,874 |
|
|
$ |
477,661 |
|
|
$ |
457,371 |
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Net interest income, taxable equivalent |
$ |
359,370 |
|
|
$ |
354,256 |
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$ |
328,045 |
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$ |
1,390,765 |
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$ |
1,314,940 |
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PER COMMON SHARE DATA |
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Net income |
$ |
13.59 |
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$ |
14.03 |
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|
$ |
9.55 |
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$ |
47.50 |
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$ |
41.05 |
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Cash dividends on common shares |
0.47 |
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|
0.40 |
|
|
0.40 |
|
|
1.67 |
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|
1.60 |
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Book value at period-end |
396.21 |
|
|
380.43 |
|
|
337.38 |
|
|
396.21 |
|
|
337.38 |
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CONDENSED BALANCE SHEET |
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Cash and due from banks |
$ |
362,048 |
|
|
$ |
352,419 |
|
|
$ |
376,719 |
|
|
$ |
362,048 |
|
|
$ |
376,719 |
|
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Overnight investments |
4,347,336 |
|
|
3,137,945 |
|
|
1,107,844 |
|
|
4,347,336 |
|
|
1,107,844 |
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|
Investment securities |
9,922,905 |
|
|
9,860,594 |
|
|
7,173,003 |
|
|
9,922,905 |
|
|
7,173,003 |
|
|
Loans and leases |
32,791,975 |
|
|
32,845,144 |
|
|
28,881,496 |
|
|
32,791,975 |
|
|
28,881,496 |
|
|
Less allowance for credit losses |
(224,314 |
) |
|
(223,936 |
) |
|
(225,141 |
) |
|
(224,314 |
) |
|
(225,141 |
) |
|
Other assets |
2,757,730 |
|
|
2,694,707 |
|
|
2,510,575 |
|
|
2,757,730 |
|
|
2,510,575 |
|
|
Total assets |
$ |
49,957,680 |
|
|
$ |
48,666,873 |
|
|
$ |
39,824,496 |
|
|
$ |
49,957,680 |
|
|
$ |
39,824,496 |
|
|
Deposits |
$ |
43,431,609 |
|
|
$ |
42,250,606 |
|
|
$ |
34,431,236 |
|
|
$ |
43,431,609 |
|
|
$ |
34,431,236 |
|
|
Other liabilities |
2,296,803 |
|
|
2,341,853 |
|
|
1,807,076 |
|
|
2,296,803 |
|
|
1,807,076 |
|
|
Shareholders’ equity |
4,229,268 |
|
|
4,074,414 |
|
|
3,586,184 |
|
|
4,229,268 |
|
|
3,586,184 |
|
|
Total liabilities and shareholders’ equity |
$ |
49,957,680 |
|
|
$ |
48,666,873 |
|
|
$ |
39,824,496 |
|
|
$ |
49,957,680 |
|
|
$ |
39,824,496 |
|
| SELECTED
PERIOD AVERAGE BALANCES |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
49,557,803 |
|
|
$ |
48,262,155 |
|
|
$ |
38,326,641 |
|
|
$ |
46,021,438 |
|
|
$ |
37,161,719 |
|
|
Investment securities |
9,889,124 |
|
|
9,930,197 |
|
|
7,120,023 |
|
|
9,054,933 |
|
|
6,919,069 |
|
|
Loans and leases |
32,964,390 |
|
|
32,694,996 |
|
|
27,508,062 |
|
|
31,605,090 |
|
|
26,656,048 |
|
|
Interest-earning assets |
46,922,823 |
|
|
45,617,376 |
|
|
36,032,680 |
|
|
43,351,119 |
|
|
34,866,734 |
|
|
Deposits |
43,123,312 |
|
|
41,905,844 |
|
|
33,295,141 |
|
|
39,746,616 |
|
|
32,218,536 |
|
|
Interest-bearing liabilities |
26,401,222 |
|
|
25,591,707 |
|
|
20,958,943 |
|
|
24,894,309 |
|
|
20,394,815 |
|
|
Common shareholders' equity |
3,786,158 |
|
|
3,679,138 |
|
|
3,570,872 |
|
|
3,684,889 |
|
|
3,551,781 |
|
|
Shareholders' equity |
$ |
4,126,095 |
|
|
$ |
4,019,075 |
|
|
$ |
3,570,872 |
|
|
$ |
3,954,007 |
|
|
$ |
3,551,781 |
|
|
Common shares outstanding |
9,816,405 |
|
|
9,836,629 |
|
|
10,708,084 |
|
|
10,056,654 |
|
|
11,141,069 |
|
|
SELECTED RATIOS |
|
|
|
|
|
|
|
|
|
|
Annualized return on average assets |
1.11 |
% |
|
1.18 |
% |
|
1.05 |
% |
|
1.07 |
% |
|
1.23 |
% |
|
Annualized return on average equity |
14.02 |
|
|
14.93 |
|
|
11.32 |
|
|
12.96 |
|
|
12.88 |
|
|
Net yield on interest-earning assets (taxable equivalent) |
3.02 |
|
|
3.06 |
|
|
3.59 |
|
|
3.17 |
|
|
3.74 |
|
|
Tier 1 risk-based capital ratio |
11.6 |
|
|
11.5 |
|
|
10.9 |
|
|
11.6 |
|
|
10.9 |
|
|
Tier 1 common equity ratio |
10.6 |
|
|
10.4 |
|
|
10.9 |
|
|
10.6 |
|
|
10.9 |
|
|
Total risk-based capital ratio |
13.8 |
|
|
13.7 |
|
|
12.1 |
|
|
13.8 |
|
|
12.1 |
|
|
Tier 1 leverage capital ratio |
7.9 |
|
|
7.8 |
|
|
8.8 |
|
|
7.9 |
|
|
8.8 |
|
|
|
| |
|
ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY
DISCLOSURES |
|
|
|
|
|
| |
Three months ended |
|
Twelve months ended December 31 |
|
(Dollars in thousands, unaudited) |
December 31, 2020 |
|
September 30, 2020 |
|
December 31, 2019 |
|
2020 |
|
2019 |
| ALLOWANCE
FOR CREDIT LOSSES (1) |
|
|
|
|
|
|
|
ACL at beginning of period |
$ |
223,936 |
|
|
$ |
222,450 |
|
|
$ |
226,825 |
|
|
$ |
225,141 |
|
|
$ |
223,712 |
|
|
Adoption of ASC 326 |
— |
|
|
— |
|
|
— |
|
|
(37,924 |
) |
|
— |
|
|
Initial PCD allowance on new acquisitions(2) |
— |
|
|
— |
|
|
— |
|
|
1,193 |
|
|
— |
|
|
Provision for credit losses |
5,403 |
|
|
4,042 |
|
|
7,727 |
|
|
58,352 |
|
|
31,441 |
|
|
Net charge-offs of loans and leases: |
|
|
|
|
|
|
|
|
|
|
Charge-offs |
(9,848 |
) |
|
(8,932 |
) |
|
(12,624 |
) |
|
(45,105 |
) |
|
(43,027 |
) |
|
Recoveries |
4,823 |
|
|
6,376 |
|
|
3,213 |
|
|
22,657 |
|
|
13,015 |
|
|
Net charge-offs of loans and leases |
(5,025 |
) |
|
(2,556 |
) |
|
(9,411 |
) |
|
(22,448 |
) |
|
(30,012 |
) |
|
ACL at end of period |
$ |
224,314 |
|
|
$ |
223,936 |
|
|
$ |
225,141 |
|
|
$ |
224,314 |
|
|
$ |
225,141 |
|
|
ACL at end of period allocated to: |
|
|
|
|
|
|
|
|
|
|
PCD |
$ |
23,987 |
|
|
$ |
25,127 |
|
|
$ |
7,536 |
|
|
$ |
23,987 |
|
|
$ |
7,536 |
|
|
Non-PCD |
200,327 |
|
|
198,809 |
|
|
217,605 |
|
|
200,327 |
|
|
217,605 |
|
|
ACL at end of period |
$ |
224,314 |
|
|
$ |
223,936 |
|
|
$ |
225,141 |
|
|
$ |
224,314 |
|
|
$ |
225,141 |
|
|
Reserve for unfunded commitments |
$ |
12,814 |
|
|
$ |
13,971 |
|
|
$ |
1,055 |
|
|
$ |
12,814 |
|
|
$ |
1,055 |
|
|
SELECTED LOAN DATA |
|
|
|
|
|
|
|
|
|
|
Average loans and leases: |
|
|
|
|
|
|
|
|
|
|
PCD |
$ |
479,302 |
|
|
$ |
512,559 |
|
|
$ |
495,783 |
|
|
$ |
517,121 |
|
|
$ |
537,131 |
|
|
Non-PCD |
32,374,204 |
|
|
32,065,084 |
|
|
26,937,524 |
|
|
30,990,135 |
|
|
26,058,370 |
|
|
Loans and leases at period-end: |
|
|
|
|
|
|
|
|
|
|
PCD |
462,882 |
|
|
495,878 |
|
|
558,716 |
|
|
462,882 |
|
|
558,716 |
|
|
Non-PCD |
32,329,093 |
|
|
32,349,266 |
|
|
28,322,780 |
|
|
32,329,093 |
|
|
28,322,780 |
|
|
RISK ELEMENTS |
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans and leases(3) |
$ |
191,483 |
|
|
$ |
186,454 |
|
|
$ |
121,689 |
|
|
$ |
191,483 |
|
|
$ |
121,689 |
|
|
Other real estate owned |
50,890 |
|
|
52,789 |
|
|
46,591 |
|
|
50,890 |
|
|
46,591 |
|
|
Total nonperforming assets |
$ |
242,373 |
|
|
$ |
239,243 |
|
|
$ |
168,280 |
|
|
$ |
242,373 |
|
|
$ |
168,280 |
|
|
Accruing loans and leases 90 days or more past due(3) |
$ |
5,862 |
|
|
$ |
3,587 |
|
|
$ |
27,548 |
|
|
$ |
5,862 |
|
|
$ |
27,548 |
|
|
RATIOS |
|
|
|
|
|
|
|
|
|
|
Net charge-offs (annualized) to average loans and leases |
0.06 |
% |
|
0.03 |
% |
|
0.14 |
% |
|
0.07 |
% |
|
0.11 |
% |
|
ACL to total loans and leases(4): |
|
|
|
|
|
|
|
|
|
|
PCD |
5.18 |
|
|
5.07 |
|
|
1.35 |
|
|
5.18 |
|
|
1.35 |
|
|
Non-PCD |
0.62 |
|
|
0.61 |
|
|
0.77 |
|
|
0.62 |
|
|
0.77 |
|
|
Total |
0.68 |
|
|
0.68 |
|
|
0.78 |
|
|
0.68 |
|
|
0.78 |
|
|
Ratio of total nonperforming assets to total loans, leases and
other real estate owned |
0.74 |
|
|
0.73 |
|
|
0.58 |
|
|
0.74 |
|
|
0.58 |
|
(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, September 30, 2020
or December 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
(“PCD”) assets. PCD loans and leases are recorded at fair value at
the date of acquisition with an initial reserve recorded 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 310-30. 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. Of these nonaccrual loans,
$24.9 million were outstanding as of December 31, 2020.(4) Loans
originated in relation to the SBA-PPP do not have a recorded ACL.
As of December 31, 2020, the ratio of ACL to total Non-PCD loans
excluding SBA-PPP loans was 0.67% while the ratio of ACL to total
loans excluding SBA-PPP loans was 0.74%.
| |
|
AVERAGE BALANCE AND NET INTEREST MARGIN
SUMMARY |
|
|
|
| |
Three months ended |
| |
December 31, 2020 |
|
September 30, 2020 |
|
December 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) |
$ |
32,964,390 |
|
|
$ |
345,300 |
|
|
4.12 |
% |
|
$ |
32,694,996 |
|
|
$ |
336,934 |
|
|
4.06 |
% |
|
$ |
27,508,062 |
|
|
$ |
308,832 |
|
|
4.42 |
% |
| Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
526,072 |
|
|
250 |
|
|
0.19 |
|
|
695,419 |
|
|
497 |
|
|
0.28 |
|
|
595,515 |
|
|
3,706 |
|
|
2.47 |
|
|
Government agency |
695,757 |
|
|
1,574 |
|
|
0.90 |
|
|
587,377 |
|
|
1,335 |
|
|
0.91 |
|
|
659,857 |
|
|
4,224 |
|
|
2.56 |
|
|
Mortgage-backed securities |
7,981,834 |
|
|
21,130 |
|
|
1.06 |
|
|
8,047,247 |
|
|
28,236 |
|
|
1.40 |
|
|
5,563,653 |
|
|
29,964 |
|
|
2.15 |
|
|
Corporate bonds |
591,780 |
|
|
7,657 |
|
|
5.18 |
|
|
489,602 |
|
|
6,433 |
|
|
5.26 |
|
|
172,424 |
|
|
2,165 |
|
|
5.02 |
|
|
Other investments |
93,681 |
|
|
600 |
|
|
2.55 |
|
|
110,552 |
|
|
739 |
|
|
2.66 |
|
|
128,574 |
|
|
653 |
|
|
2.02 |
|
| Total investment
securities |
9,889,124 |
|
|
31,211 |
|
|
1.26 |
|
|
9,930,197 |
|
|
37,240 |
|
|
1.50 |
|
|
7,120,023 |
|
|
40,712 |
|
|
2.29 |
|
| Overnight investments |
4,069,309 |
|
|
1,019 |
|
|
0.10 |
|
|
2,992,183 |
|
|
757 |
|
|
0.10 |
|
|
1,404,595 |
|
|
5,425 |
|
|
1.53 |
|
| Total interest-earning
assets |
$ |
46,922,823 |
|
|
$ |
377,530 |
|
|
3.17 |
|
|
$ |
45,617,376 |
|
|
$ |
374,931 |
|
|
3.24 |
|
|
$ |
36,032,680 |
|
|
$ |
354,969 |
|
|
3.89 |
|
| INTEREST-BEARING
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing
deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking with interest |
$ |
9,688,744 |
|
|
$ |
1,533 |
|
|
0.06 |
% |
|
$ |
9,239,838 |
|
|
$ |
1,369 |
|
|
0.06 |
% |
|
$ |
7,608,857 |
|
|
$ |
1,561 |
|
|
0.08 |
% |
|
Savings |
3,230,625 |
|
|
306 |
|
|
0.04 |
|
|
3,070,619 |
|
|
314 |
|
|
0.04 |
|
|
2,596,608 |
|
|
439 |
|
|
0.07 |
|
|
Money market accounts |
8,529,816 |
|
|
3,242 |
|
|
0.15 |
|
|
8,108,832 |
|
|
3,634 |
|
|
0.18 |
|
|
6,248,735 |
|
|
7,066 |
|
|
0.45 |
|
|
Time deposits |
3,017,044 |
|
|
5,976 |
|
|
0.79 |
|
|
3,205,850 |
|
|
8,151 |
|
|
1.01 |
|
|
3,513,432 |
|
|
13,367 |
|
|
1.51 |
|
| Total interest-bearing
deposits |
24,466,229 |
|
|
11,057 |
|
|
0.18 |
|
|
23,625,139 |
|
|
13,468 |
|
|
0.23 |
|
|
19,967,632 |
|
|
22,433 |
|
|
0.45 |
|
| Securities sold under customer
repurchase agreements |
684,311 |
|
|
374 |
|
|
0.22 |
|
|
710,237 |
|
|
395 |
|
|
0.22 |
|
|
495,804 |
|
|
479 |
|
|
0.38 |
|
| Other short-term
borrowings |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
28,284 |
|
|
190 |
|
|
2.63 |
|
| Long-term borrowings |
1,250,682 |
|
|
6,729 |
|
|
2.13 |
|
|
1,256,331 |
|
|
6,812 |
|
|
2.15 |
|
|
467,223 |
|
|
3,822 |
|
|
3.20 |
|
| Total interest-bearing
liabilities |
$ |
26,401,222 |
|
|
$ |
18,160 |
|
|
0.27 |
|
|
$ |
25,591,707 |
|
|
$ |
20,675 |
|
|
0.32 |
|
|
$ |
20,958,943 |
|
|
$ |
26,924 |
|
|
0.51 |
|
| Interest rate spread |
|
|
|
|
2.90 |
% |
|
|
|
|
|
2.92 |
% |
|
|
|
|
|
3.38 |
% |
|
Net interest income and net yield on interest-earning assets |
|
|
$ |
359,370 |
|
|
3.02 |
% |
|
|
|
$ |
354,256 |
|
|
3.06 |
% |
|
|
|
$ |
328,045 |
|
|
3.59 |
% |
(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 $654 thousand, $597 thousand and $921 thousand for the three
months ended December 31, 2020, September 30, 2020 and
December 31, 2019, respectively.
|
|
|
|
Contact: |
Barbara Thompson |
|
|
First Citizens BancShares |
|
|
919.716.2716 |
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