RALEIGH,
N.C., Jan. 26, 2024 /PRNewswire/ -- First
Citizens BancShares, Inc. ("BancShares") (Nasdaq: FCNCA) reported
earnings for the fourth quarter ended December 31, 2023.
Chairman and CEO Frank B. Holding,
Jr. said: "Our fourth quarter financial results remained
solid as we completed what was a truly exceptional year. While
celebrating our bank's 125th anniversary, we completed our
integration with CIT and finished strong with the stabilization of
SVB, all while our teams continued to support our clients. We now
look forward to 2024, remaining focused on prudent risk management,
growing our core lines of business, and maintaining solid capital
and liquidity positions. We continue to be well-positioned to
deliver strong financial results and long-term tangible book value
growth for our stockholders."
FINANCIAL HIGHLIGHTS
Measures referenced as adjusted below are non-GAAP financial
measures (refer to the Financial Supplement available at
ir.firstcitizens.com or www.sec.gov for a reconciliation of
each non-GAAP measure to the most directly comparable GAAP
measure). Net income for the three months ended December 31,
2023 was $514 million compared to
$752 million for the three months
ended September 30, 2023. Net income available to common
stockholders for the three months ended December 31, 2023 was
$499 million, or $34.33 per diluted common share, a $238 million decrease from $737 million, or $50.67 per diluted common share, in the third
quarter of 2023.
For the fourth quarter, adjusted net income available to common
stockholders was $678 million, or
$46.58 per diluted common share, a
$135 million decrease from
$813 million, or $55.92 per diluted common share, in the third
quarter of 2023.
Fourth quarter 2023 results were impacted by the following
notable items to arrive at adjusted net income available to common
stockholders:
- Acquisition-related expenses of $116
million,
- Decrease in the preliminary gain on acquisition of $83 million,
- FDIC insurance special assessment of $64
million,
- Intangible asset amortization of $17
million,
- Fair value adjustment on marketable equity securities of
$9 million.
Financial highlights comparing significant components of net
income and adjusted net income from the fourth quarter of 2023 to
the third quarter of 2023 are summarized below:
- Net interest income totaled $1.91
billion compared to $1.99
billion in the third quarter. The $79
million decrease in net interest income was due to a
$86 million increase in interest
expense, partially offset by a $7
million increase in interest income.
- Interest income was $3.12 billion
compared to $3.11 billion in the
third quarter. The $7 million
increase in interest income was due to an increase of $61 million in interest on investment securities
from a higher average balance and increased yield, partially offset
by a $35 million decrease in interest
on loans and a $19 million decrease
in interest on interest-earning deposits at banks. The decline in
interest on loans was due to a $77
million decrease in loan accretion, primarily related to the
acquisition of Silicon Valley Bridge Bank, N.A. (the
"Acquisition"), partially offset by a $42
million increase in interest income on loans due to a higher
yield. The $19 million decline in
interest income on interest-earning deposits at banks was due to a
lower average balance resulting from purchases of short duration
investment securities.
- Interest expense was $1.21
billion compared to $1.12
billion in the third quarter. The $86
million increase in interest expense was due to a
$96 million increase in interest
expense on deposits, primarily from growth in the Direct Bank and a
higher rate paid, partially offset by a $10
million decrease in borrowing costs from a lower rate paid
and a lower average balance.
- Net interest margin was 3.86%, a decrease of 21 basis points
compared to the third quarter. The yield on interest-earning assets
was 6.30%, a decrease of 7 basis points from the third quarter. The
decrease in yield on interest-earning assets was primarily due to a
decrease of 9 basis points in the yield on loans, including a
decrease of 16 basis points from lower loan accretion, which was
partially offset by higher yields on loans. The rate on
interest-bearing liabilities increased 17 basis points, primarily
due to higher rates paid and average balances for interest-bearing
deposits.
- Noninterest income totaled $543
million, a decrease of $72
million compared to the third quarter. The decrease was
mainly due to a fourth quarter reduction of $83 million in the gain on acquisition as we
further refined income tax estimates related to the Acquisition.
This decrease was partially offset by the $12 million realized loss in the prior quarter
from the sale of the municipal bond portfolio acquired in the
Acquisition and a $10 million
increase in the net fair value adjustment on marketable equity
securities.
- Adjusted noninterest income totaled $455
million in the fourth quarter compared to $468 million in the third quarter, a decrease of
$13 million. The decrease was
primarily driven by an $11 million
decrease in other noninterest income from a decline in the fair
value of customer derivative positions as a result of declining
interest rates, a $5 million decrease
in adjusted rental income on operating lease equipment due to
higher maintenance costs, and a $5
million decrease in cardholder services due to lower volume
and higher rewards expense. The declines were partially offset by
higher capital markets fees that led to a $9
million increase in fee income and other service
charges.
- Noninterest expense totaled $1.49
billion compared to $1.42
billion in the third quarter, an increase of $76 million. The increase was largely related to
the FDIC insurance special assessment in the amount of $64 million. Adjusted noninterest expense totaled
$1.14 billion compared to
$1.13 billion in the third quarter,
an increase of $3 million. The
increases in adjusted noninterest expense were primarily due to
increases of $12 million in
professional fees, $12 million in
other noninterest expense, and $11
million in third-party processing fees, partially offset by
an $18 million decrease in FDIC
insurance expense and a $13 million
decrease in salaries and benefits.
BALANCE SHEET SUMMARY
- Loans and leases totaled $133.30
billion at December 31, 2023,
an increase of $100 million compared
to $133.20 billion as of September 30, 2023. The increase was mostly
related to $1.25 billion of growth in
the General Bank (10.8% annualized) and $716
million of growth in the Commercial Bank (9.4% annualized).
General Bank growth was primarily related to commercial and
business loan growth in the branch network. Commercial Bank growth
was driven primarily by strong performance in many of our industry
verticals and middle market banking. The increases were partially
offset by a $1.85 billion decline in
the Silicon Valley Banking segment (the "SVB segment"), mostly
concentrated in Global Fund Banking and Technology and Healthcare
Banking portfolios.
- Total investment securities were $30.00
billion at December 31, 2023,
an increase of $3.18 billion since
September 30, 2023. The increase was
primarily due to purchases of approximately $4.33 billion in short duration U.S. Treasury and
U.S. agency mortgage-backed investment securities available for
sale during the quarter, which were partially offset by paydowns
and maturities.
- Deposits totaled $145.85 billion
at December 31, 2023, a decrease of
$379 million, or 1.0% on an
annualized basis, since September 30,
2023. Deposits grew by $1.63
billion in the General Banking segment, mainly due to a
$2.02 billion increase in the Direct
Bank, partially offset by a $492
million decrease in the branch network as a result of
seasonal outflows. Deposits in the SVB segment declined by
$1.49 billion, primarily due to
continued client cash burn and muted fund raising activity in the
innovation economy.
- Noninterest-bearing deposits represented 27.3% of total
deposits as of December 31, 2023,
compared to 29.5% at September 30,
2023. The cost of average total deposits was 2.35% for the
fourth quarter, compared to 2.12% for the third quarter. While the
cost of deposits increased 23 basis points, the pace decelerated
from prior quarters.
- Funding mix remained stable with 79.5% of the total funding
composed of deposits.
PROVISION FOR CREDIT LOSSES AND CREDIT QUALITY
- Provision for credit losses totaled $249
million for the fourth quarter compared to $192 million in the third quarter, an increase of
$57 million. Fourth quarter provision
for credit losses included $251
million for loan and lease losses, partially offset by a
$2 million benefit for off-balance
sheet credit exposure.
- The provision for loan and lease losses increased $39 million, primarily related to a net reserve
build driven by specific reserves on individually evaluated loans
as net charge-offs were flat over the prior quarter.
- The benefit for off-balance sheet credit exposure decreased
$15 million, primarily due to a
higher decline in unfunded commitments during the prior
quarter.
- The benefit for credit losses for investment securities
available for sale decreased $3
million compared to the third quarter.
- Net charge-offs totaled $177
million during the fourth quarter, representing 0.53% of
average loans, compared to $176
million, or 0.53% of average loans, during the third
quarter. Net charge-offs in the Commercial Bank were $94 million, an increase of $36 million from the third quarter, and were
primarily in Equipment Finance, real estate finance and the energy
vertical. Net charge-offs in the SVB segment were $65 million, a decrease of $35 million from the third quarter, and were
primarily concentrated in the investor dependent portfolios. Net
charge-offs in the General Bank were unchanged at $18 million.
- Nonaccrual loans were $969
million, or 0.73% of loans, at December 31, 2023, compared to $899 million, or 0.68% of loans, at September 30, 2023.
- The allowance for loan and lease losses totaled $1.75 billion, or 1.31% of total loans, at
December 31, 2023, an increase of
$74 million compared to the third
quarter of 2023. The $74 million
reserve build for the quarter was primarily the result of mild
credit quality deterioration in our commercial portfolios,
including general office, increases in specific reserves in the
investor dependent portfolio and changes in the macroeconomic
forecasts.
CAPITAL AND LIQUIDITY
- Capital position remains strong and capital ratios are well
above regulatory requirements. The estimated total risk-based
capital, Tier 1 risk-based capital, Common equity Tier 1 risk-based
capital, and Tier 1 leverage ratios were 15.74%, 13.94% , 13.36% ,
and 9.83%, respectively, at December 31,
2023.
- During the fourth quarter, a dividend of $1.64 per share of common stock was declared.
- Liquidity position remains strong as liquid assets were
$57.28 billion at December 31, 2023 compared to $57.02 billion at September 30, 2023.
EARNINGS CALL/ WEBCAST DETAILS
BancShares will host a conference call to discuss the company's
financial results on Friday, January 26, 2024, at 9:00 a.m. Eastern time.
The call may be accessed via webcast on the company's website at
ir.firstcitizens.com, or through the dial in details below:
United States:
1-833-470-1428
Canada: 1-833-950-0062
All other locations: 1-929-526-1599
Access code: 268898
Our earnings release, investor presentation, and financial
supplement are available at ir.firstcitizens.com. In addition,
these materials will be furnished to the Securities and Exchange
Commission (the "SEC") on a Form 8-K and will be available on the
SEC website at www.sec.gov. After the event, a replay of the call
will be available via webcast at ir.firstcitizens.com.
ABOUT FIRST CITIZENS BANCSHARES
First Citizens BancShares, Inc., a top 20 U.S. financial
institution with more than $200
billion in assets, is the financial holding company for
First-Citizens Bank & Trust Company ("First Citizens Bank").
Headquartered in Raleigh, N.C.,
First Citizens Bank has built a unique legacy of strength,
stability and long-term thinking that has spanned generations.
First Citizens offers an array of general banking services
including a network of more than 500 branches and offices in 30
states; commercial banking expertise delivering best-in-class
lending, leasing and other financial services coast to coast;
innovation banking serving businesses at every stage; and a
nationwide direct bank. Discover more at firstcitizens.com.
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, asset quality, future performance, and other strategic goals
of BancShares. Words such as "anticipates," "believes,"
"estimates," "expects," "predicts," "forecasts," "intends,"
"plans," "projects," "targets," "designed," "could," "may,"
"should," "will," "potential," "continue," "aims" 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 risk 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, general competitive, economic,
political, geopolitical events (including conflicts in Ukraine, Israel and the Gaza
Strip) and market conditions, including changes in
competitive pressures among financial institutions and the impacts
related to or resulting from recent bank failures and other
volatility, the financial success or changing conditions or
strategies of BancShares' vendors or customers, including changes
in demand for deposits, loans and other financial services,
fluctuations in interest rates, changes in the quality or
composition of BancShares' loan or investment portfolio, actions of
government regulators, including the recent interest rate hikes by
the Board of Governors of the Federal Reserve Board (the "Federal
Reserve"), changes to estimates of future costs and benefits of
actions taken by BancShares, BancShares' ability to maintain
adequate sources of funding and liquidity, the potential impact of
decisions by the Federal Reserve on BancShares' capital plans,
adverse developments with respect to U.S. or global economic
conditions, including the significant turbulence in the capital or
financial markets, the impact of the current inflationary
environment, the impact of implementation and compliance with
current or proposed laws, regulations and regulatory
interpretations, including potential increased regulatory
requirements, limitations, and costs, such as FDIC special
assessments and the interagency proposed rule on regulatory
capital, along with the risk that such laws, regulations and
regulatory interpretations may change, the availability of capital
and personnel, and the failure to realize the anticipated benefits
of BancShares' previous acquisition transactions, including the
Acquisition and the previously completed transaction with CIT Group
Inc. ("CIT"), which acquisition risks include (1) disruption from
the transactions with customer, supplier or employee relationships,
(2) the possibility that the amount of the costs, fees, expenses
and charges related to the transactions may be greater than
anticipated, including as a result of unexpected or unknown
factors, events or liabilities or increased regulatory compliance
obligations or oversight, (3) reputational risk and the reaction of
the parties' customers to the transactions, (4) the risk that the
cost savings and any revenue synergies from the transactions may
not be realized or take longer than anticipated to be realized, (5)
difficulties experienced in completing the integration of the
businesses, (6) the ability to retain customers following the
transactions and (7) adjustments to BancShares' estimated purchase
accounting impacts of the Acquisition.
Except to the extent required by applicable laws or regulations,
BancShares disclaims any obligation to update forward-looking
statements or to publicly announce the results of any revisions to
any of the forward-looking statements included herein to reflect
future events or developments. Additional factors which could
affect the forward-looking statements can be found in BancShares'
Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in BancShares' subsequent
quarterly reports on Form 10-Q and its other filings with the
SEC.
NON-GAAP MEASURES
Certain measures in this release and supporting tables,
including those referenced as "Adjusted," are "non-GAAP", meaning
they are not presented in accordance with generally accepted
accounting principles in the U.S. and also are not codified in U.S.
banking regulations currently applicable to BancShares. BancShares
believes that non-GAAP financial measures, when reviewed in
conjunction with GAAP financial information, can provide
transparency about or an alternative means of assessing its
operating results and financial position to its investors, analysts
and management. Each non-GAAP measure is reconciled to the most
comparable GAAP measure in the non-GAAP reconciliation. This
information can be found in the Financial Supplement located in the
Quarterly Results section of our website at
https://ir.firstcitizens.com/financial-information/quarterly-results/default.aspx.
Contact:
|
Deanna Hart
|
Barbara
Thompson
|
|
Investor
Relations
|
Corporate
Communications
|
|
919-716-2137
|
919-716-2716
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/first-citizens-bancshares-reports-fourth-quarter-2023-earnings-302045250.html
SOURCE First Citizens BancShares, Inc.