RALEIGH,
N.C., April 25, 2024 /PRNewswire/ -- First
Citizens BancShares, Inc. ("BancShares") (Nasdaq: FCNCA) reported
earnings for the first quarter of 2024.
Chairman and CEO Frank B. Holding,
Jr. said: "We are pleased with our first quarter performance
where we delivered strong financial results. We posted solid loan
and deposit growth and credit quality held up well. Our capital and
liquidity levels increased, positioning our balance sheet well for
further growth. It's been over one year since SVB became part of
First Citizens, and we continue to successfully execute on our
integration efforts, which are accelerating the momentum of our
franchise. We believe we are well-positioned to continue delivering
strong financial results while executing on our strategic
plan."
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 first quarter of 2024 ("current quarter") was
$731 million compared to $514 million for the fourth quarter of 2023
("linked quarter"). Net income available to common stockholders for
the current quarter was $716 million,
or $49.26 per diluted common share, a
$217 million increase from
$499 million, or $34.33 per diluted common share, in the linked
quarter.
Adjusted net income for the current quarter was $784 million compared to $693 million for the linked quarter. Adjusted net
income available to common stockholders was $769 million, or $52.92 per diluted common share, a $91 million increase from $678 million, or $46.58 per diluted common share, in the linked
quarter.
Current quarter results were primarily impacted by the following
notable items to arrive at adjusted net income available to common
stockholders:
- Acquisition-related expenses of $58
million,
- Intangible asset amortization of $17
million,
- FDIC insurance special assessment of $9 million, and
- Unfavorable fair value adjustment on marketable equity
securities of $4 million.
SEGMENT REPORTING INTEGRATION
At December 31, 2023, BancShares reported its financial
results in General Bank, Commercial Bank, Silicon Valley Bank
("SVB"), and Rail segments. All other financial information was
included in the "Corporate" section of the segment results.
BancShares made the following changes to its segment reporting
during the current quarter to better align components of the SVB
segment and the Direct Bank with the segment reporting
structure:
- the private banking and wealth management components of
the SVB segment were integrated into the General Bank segment
which already included other wealth management activities;
- the SVB segment was renamed SVB Commercial as its
customers now primarily include commercial clients in key
innovation markets, as well as private equity and venture capital
clients; and
- the Direct Bank (a nationwide digital banking platform that
delivers deposit products to consumers) previously included in the
General Bank segment is now reflected in Corporate which already
included wholesale funding and brokered deposits.
Segment results for prior periods discussed in this release were
recast to reflect the segment reporting changes.
NET INTEREST INCOME AND MARGIN
- Net interest income totaled $1.82
billion compared to $1.91
billion in the linked quarter. The $94 million decrease in net interest income was
due to a $61 million increase in
interest expense and a $33 million
decrease in interest income.
- Interest income was $3.08 billion
compared to $3.12 billion in the
linked quarter. The $33 million
decrease in interest income was due to a $37
million decrease in interest on loans and a $37 million decrease in interest on
interest-earning deposits at banks, partially offset by a
$41 million increase in interest on
investment securities. The decrease in interest on loans was
primarily due to a $35 million
decrease in loan accretion, primarily related to the acquisition of
Silicon Valley Bridge Bank, N.A. (the "SVBB Acquisition").
Continued purchases of short duration investment securities led to
a higher average balance and increased interest income on
investment securities and a lower average balance and a decrease in
interest income on interest-earning deposits at banks.
- Interest expense was $1.27
billion compared to $1.21
billion in the linked quarter. The $61 million increase was due to a $63 million increase in interest expense on
deposits, primarily from growth in the Direct Bank and a higher
rate paid, partially offset by a $2
million decrease in borrowing costs from a slightly lower
average balance.
- Net interest margin was 3.67%, a decrease of 19 basis points
compared to the linked quarter. The yield on average
interest-earning assets was 6.23%, a decrease of 7 basis points
from the linked quarter primarily due to lower loan accretion. The
rate paid on average interest-bearing liabilities increased 12
basis points, primarily due to a higher rate paid on average
interest-bearing deposits.
NONINTEREST INCOME AND EXPENSE
- Noninterest income totaled $627
million, an increase of $84
million compared to the linked quarter. The increase was
mainly due to a reduction of $83
million to the gain on acquisition as we further refined
income tax estimates related to the SVBB Acquisition in the linked
quarter.
- Adjusted noninterest income totaled $478 million compared to $455 million in the linked quarter, an increase
of $23 million. The increase was
mostly due to a $17 million increase
in adjusted rental income on operating lease equipment due to lower
maintenance expenses and higher rental income, and an $11 million increase in other noninterest income
primarily related to changes in the fair value of customer
derivative positions. The increases were partially offset by a
$5 million decrease in factoring
commissions due to lower volume following seasonal holiday retail
activity and a $5
million decrease in fee income and other service charges
primarily resulting from lower capital markets fees.
- Noninterest expense totaled $1.38
billion compared to $1.49
billion in the linked quarter, a decrease of $116 million. The decrease was primarily
attributable to a $58 million
decrease in acquisition-related expenses, a $41 million decrease in total FDIC
insurance expense, and a $14
million decrease in maintenance and other operating
lease expenses.
- Adjusted noninterest expense totaled $1.15 billion compared to $1.14 billion in the linked quarter, an increase
of $19 million. The increase was
primarily due to an increase of $30
million in salaries and benefits, partially offset by a
$10 million decrease in marketing
expense and a $6 million decrease in
third-party processing fees.
BALANCE SHEET SUMMARY
- Loans and leases totaled $135.37
billion at March 31, 2024, an
increase of $2.07 billion compared to
$133.30 billion at December 31, 2023. The increase was mostly
related to $900 million of growth in
the General Bank segment (5.8% annualized) and $794 million of growth in the Commercial Bank
segment (10.3% annualized). The General Bank segment growth was
primarily related to commercial and business loans in the branch
network. The Commercial Bank segment generated growth in many of
our industry verticals. Loans in the SVB Commercial segment
increased $335 million (3.4%
annualized) as growth in global fund banking portfolio was
partially offset by declines in the technology and healthcare
portfolio.
- Total investment securities were $35.04
billion at March 31, 2024, an
increase of $5.05 billion since
December 31, 2023. The increase was
due to purchases of approximately $6.67
billion, primarily in short duration U.S. Treasury and
U.S. agency mortgage-backed investment securities available for
sale during the current quarter, partially offset by paydowns and
maturities.
- Deposits totaled $149.61 billion
at March 31, 2024, an increase of
$3.76 billion, or 10.4% on an
annualized basis, since December 31,
2023. Deposits in the Direct Bank increased $2.15 billion and deposits in the General Bank
segment increased $2.42 billion,
primarily due to growth in the branch network and wealth. The
increases were partially offset by declines in deposits in the
Commercial Bank and SVB Commercial segments of $205 million and $716
million, respectively.
- Noninterest-bearing deposits represented 26.3% of total
deposits as of March 31, 2024, compared to 27.3% at
December 31, 2023. The cost of average total deposits was
2.53% for the current quarter, compared to 2.35% for the linked
quarter. While the cost of deposits increased 18 basis points, the
pace continued to decelerate.
- Funding mix remained stable with 79.9% of the total funding
composed of deposits.
PROVISION FOR CREDIT LOSSES AND CREDIT QUALITY
- Provision for credit losses totaled $64
million for the current quarter compared to $249 million in the linked quarter, a decrease of
$185 million. The current quarter
provision for credit losses included $93
million for loan and lease losses, partially offset by a
$29 million benefit for off-balance
sheet credit exposure.
- Provision for loan and lease losses decreased $158 million compared to the linked quarter, due
to a $74 million decrease in net
charge-offs and a reserve release of $10
million in the current quarter compared to a $74 million reserve build in the linked quarter.
The reserve release for the current quarter was primarily the
result of changes in the macroeconomic forecasts and a decline
in specific reserves on individually evaluated loans. The reserve
build in the linked 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.
- The benefit for off-balance sheet credit exposure of
$29 million increased $27 million compared to the linked quarter,
primarily due to a continued decline in unfunded commitments.
- Net charge-offs totaled $103
million during the current quarter, representing 0.31% of
average loans, compared to $177
million, or 0.53% of average loans, during the linked
quarter. Net charge-offs in the Commercial Bank segment were
$49 million, a decrease of
$44 million compared to the linked
quarter, and were primarily in real estate finance and equipment
finance portfolios. Net charge-offs in the SVB Commercial segment
were $33 million, a decrease of $31 million from the
linked quarter, and were primarily concentrated in the investor
dependent portfolios. Net charge-offs in the General Bank segment
were $21 million, an increase of $1 million compared
to the linked quarter.
- Nonaccrual loans were $1.07
billion, or 0.79% of loans, at March 31, 2024, compared
to $969 million, or 0.73% of loans,
at December 31, 2023.
- The allowance for loan and lease losses totaled $1.74 billion, or 1.28% of total loans, at
March 31, 2024, a decrease of
$10 million compared to the linked
quarter.
CAPITAL AND LIQUIDITY
- 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 15.66%, 14.00%, 13.44%, and 10.11%, respectively, at
March 31, 2024.
- During the current quarter, a dividend of $1.64 per share of common stock was declared and
paid.
- Liquidity position remains strong as liquid assets were
$59.33 billion at March 31, 2024 compared to $57.28 billion at December
31, 2023.
EARNINGS CALL/ WEBCAST DETAILS
BancShares will host a conference call to discuss the company's
financial results on Thursday, April 25, 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:
North America:
1-833-470-1428
All other locations: 1-929-526-1599
Access code: 401165
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; personalized
service and resources to help grow and manage wealth; 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 factors that are difficult to
predict. Many possible events or factors could affect BancShares'
future financial results and performance and could cause 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 and the Middle East) and market conditions, including
changes in competitive pressures among financial institutions and
the impacts related to or resulting from recent bank failures, the
risks and impacts of future bank failures and other volatility in
the banking industry, public perceptions of our business practices,
including our deposit pricing and acquisition activity, 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 recent interest rate hikes and any changes 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 significant turbulence in the capital or
financial markets, the impact of any sustained or elevated
inflationary environment, the impact of any cyberattack,
information or security breach, 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, increases to FDIC deposit insurance premiums
and the recently proposed interagency 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 risks associated with BancShares' previous
acquisition transactions, including the SVBB Acquisition and the
previously completed transaction with CIT Group Inc., or any future
transactions.
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, 2023 and its other filings with the
SEC.
NON-GAAP MEASURES
Certain measures in this release, including those referenced as
"adjusted", are "non-GAAP," meaning they are numerical measures of
BancShares' financial performance, financial position or cash flows
that are not presented in accordance with generally accepted
accounting principles in the U.S. ("GAAP") because they exclude or
include amounts or are adjusted in some way so as to be different
than the most direct comparable measures calculated and presented
in accordance with GAAP in BancShares' statements of income,
balance sheets or statements of cash flows and also are not
codified in U.S. banking regulations currently applicable to
BancShares. BancShares management 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, financial position or cash
flows to its investors, analysts and management. These non-GAAP
measures should be considered in addition to, and not superior to
or a substitute for, GAAP measures. 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
|
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SOURCE First Citizens BancShares, Inc.