Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2019

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-16715

____________________________________________________

First Citizens BancShares Inc /DE/

(Exact name of Registrant as specified in its charter)

____________________________________________________



Delaware			56-1528994
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

4300 Six Forks Road	Raleigh	North Carolina	27609
(Address of principle executive offices)			(Zip code)

		(919)	716-7000
(Registrant’s telephone number, including area code)

____________________________________________________

Securities Registered Pursuant to Section 12(b) of the Securities Exchange Act of 1934:



Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $1	FCNCA	NASDAQ Global Select Market

Securities Registered Pursuant to Section 12(g) of the Securities Exchange Act of 1934.

Class B Common Stock, Par Value $1

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files) Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class A Common Stock—10,105,120 shares

Class B Common Stock—1,005,185 shares

(Number of shares outstanding, by class, as of August 2, 2019)

Financial Statements

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets



(Dollars in thousands, unaudited)	June 30, 2019			December 31, 2018
Assets
Cash and due from banks	$	284,147		$	327,440
Overnight investments	1,640,264			797,406
Investment in marketable equity securities (cost of $80,542 at June 30, 2019 and $73,809 at December 31, 2018)	111,489			92,599
Investment securities available for sale (cost of $4,362,725 at June 30, 2019 and $4,607,117 at December 31, 2018)	4,366,041			4,557,110
Investment securities held to maturity (fair value of $2,285,283 at June 30, 2019 and $2,201,502 at December 31, 2018)	2,218,048			2,184,653
Loans held for sale	52,837			45,505
Loans and leases	26,728,237			25,523,276
Allowance for loan and lease losses	(226,583		)	(223,712		)
Net loans and leases	26,501,654			25,299,564
Premises and equipment	1,213,296			1,204,179
Other real estate owned	46,236			48,030
Income earned not collected	115,303			109,903
Goodwill	296,764			236,347
Other intangible assets	69,575			72,298
Other assets	739,440			433,595
Total assets	$	37,655,094		$	35,408,629
Liabilities
Deposits:
Noninterest-bearing	$	12,950,394		$	11,882,670
Interest-bearing	19,769,277			18,789,790
Total deposits	32,719,671			30,672,460
Securities sold under customer repurchase agreements	544,527			543,936
Federal Home Loan Bank borrowings	197,131			193,556
Subordinated debentures	154,277			140,741
Other borrowings	18,446			13,921
FDIC shared-loss payable	108,892			105,618
Other liabilities	337,537			249,443
Total liabilities	34,080,481			31,919,675
Shareholders’ equity
Common stock:
Class A - $1 par value (16,000,000 shares authorized; 10,174,720 and 10,623,220 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively)	10,175			10,623
Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at June 30, 2019 and December 31, 2018)	1,005			1,005
Preferred stock - $0.01 par value (10,000,000 shares authorized; no shares issued and outstanding at June 30, 2019 and December 31, 2018)	—			—
Surplus	303,880			493,962
Retained earnings	3,440,284			3,218,551
Accumulated other comprehensive loss	(180,731		)	(235,187		)
Total shareholders’ equity	3,574,613			3,488,954
Total liabilities and shareholders’ equity	$	37,655,094		$	35,408,629

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Income



	Three months ended June 30				Six months ended June 30
(Dollars in thousands, except per share data, unaudited)	2019		2018		2019		2018
Interest income
Loans and leases	$	303,233	$	261,086	$	594,155	$	513,068
Investment securities interest and dividend income	40,209		37,179		79,821		72,199
Overnight investments	7,279		5,612		13,669		11,211
Total interest income	350,721		303,877		687,645		596,478
Interest expense
Deposits	19,158		4,521		32,084		8,277
Securities sold under customer repurchase agreements	515		373		974		777
Federal Home Loan Bank borrowings	1,586		852		2,871		3,236
Subordinated debentures	1,952		1,653		3,624		3,094
Other borrowings	162		259		272		438
Total interest expense	23,373		7,658		39,825		15,822
Net interest income	327,348		296,219		647,820		580,656
Provision for loan and lease losses	5,198		8,438		16,948		16,043
Net interest income after provision for loan and lease losses	322,150		287,781		630,872		564,613
Noninterest income
Cardholder services, net	18,479		14,925		35,112		29,707
Merchant services, net	6,455		6,478		12,290		12,655
Service charges on deposit accounts	25,790		25,952		50,855		52,495
Wealth management services	24,573		25,515		49,574		49,084
Securities gains, net	5,719		—		5,719		—
Marketable equity securities gains, net	3,144		4,440		14,472		5,411
Other service charges and fees	8,164		7,756		15,586		15,236
Mortgage income	5,038		4,703		8,696		8,940
Insurance commissions	2,854		2,940		6,145		6,716
ATM income	1,625		2,217		3,136		4,388
Gain on extinguishment of debt	—		—		—		25,814
Other	5,034		6,001		8,953		13,165
Total noninterest income	106,875		100,927		210,538		223,611
Noninterest expense
Salaries and wages	136,526		129,841		268,947		259,044
Employee benefits	30,197		29,715		62,732		61,806
Occupancy expense	26,886		26,100		54,647		54,054
Equipment expense	28,489		25,167		55,229		50,141
Processing fees paid to third parties	6,641		7,890		13,730		16,086
FDIC insurance expense	2,757		5,492		5,417		11,225
Collection and foreclosure-related expenses	3,659		3,974		6,681		8,120
Merger-related expenses	4,084		2,412		5,803		3,010
Other	34,158		35,402		67,868		70,570
Total noninterest expense	273,397		265,993		541,054		534,056
Income before income taxes	155,628		122,715		300,356		254,168
Income taxes	36,269		29,424		69,638		60,646
Net income	$	119,359	$	93,291	$	230,718	$	193,522
Weighted average shares outstanding	11,286,520		12,010,405		11,402,122		12,010,405
Net income per share	$	10.56	$	7.77	$	20.23	$	16.11

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income



	Three months ended June 30						Six months ended June 30
(Dollars in thousands, unaudited)	2019			2018			2019			2018
Net income	$	119,359		$	93,291		$	230,718		$	193,522
Other comprehensive income (loss)
Unrealized gains on securities available for sale:
Change in unrealized gains on securities available for sale arising during period	30,971			82,789			59,042			4,154
Tax effect	(7,123		)	(19,042		)	(13,579		)	(954		)
Reclassification adjustment for gains included in income before income taxes	(5,719		)	—			(5,719		)	—
Tax effect	1,315			—			1,315			—
Total change in unrealized gains on securities available for sale, net of tax	19,444			63,747			41,059			3,200
Unrealized losses on securities available for sale transferred to held to maturity:
Unrealized losses on securities available for sale transferred to held to maturity	—			(109,507		)	—			(109,507		)
Tax effect	—			25,186			—			25,186
Reclassification adjustment for accretion of unrealized losses on securities available for sale transferred to held to maturity	5,947			4,473			11,909			4,473
Tax effect	(1,368		)	(1,028		)	(2,739		)	(1,028		)
Total change in unrealized losses on securities available for sale transferred to held to maturity, net of tax	4,579			(80,876		)	9,170			(80,876		)
Change in pension obligation:
Amortization of actuarial losses and prior service cost	2,735			3,654			5,490			6,991
Tax effect	(629		)	(840		)	(1,263		)	(1,608		)
Total change in pension obligation, net of tax	2,106			2,814			4,227			5,383
Other comprehensive income (loss)	26,129			(14,315		)	54,456			(72,293		)
Total comprehensive income	$	145,488		$	78,976		$	285,174		$	121,229

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity



	Three months ended June 30
(Dollars in thousands, unaudited)	Class A Common Stock			Class B Common Stock		Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at March 31, 2018	$	11,005		$	1,005	$	658,918		$	2,931,509		$	(230,323	)	$	3,372,114
Net income	—			—		—			93,291			—			93,291
Other comprehensive loss, net of tax	—			—		—			—			(14,315		)	(14,315		)
Cash dividends declared ($0.35 per share)
Class A common stock	—			—		—			(3,852		)	—			(3,852		)
Class B common stock	—			—		—			(352		)	—			(352		)
Balance at June 30, 2018	$	11,005		$	1,005	$	658,918		$	3,020,596		$	(244,638	)	$	3,446,886

Balance at March 31, 2019	$	10,380		$	1,005	$	393,449		$	3,325,335		$	(206,860	)	$	3,523,309
Net income	—			—		—			119,359			—			119,359
Other comprehensive income, net of tax	—			—		—			—			26,129			26,129
Repurchase of 205,500 shares of Class A common stock	(205		)	—		(89,569		)	—			—			(89,774		)
Cash dividends declared ($0.40 per share)
Class A common stock	—			—		—			(4,008		)	—			(4,008		)
Class B common stock	—			—		—			(402		)	—			(402		)
Balance at June 30, 2019	$	10,175		$	1,005	$	303,880		$	3,440,284		$	(180,731	)	$	3,57



		Page No.

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets (Unaudited)	3

	Consolidated Statements of Income (Unaudited)	4

	Consolidated Statements of Comprehensive Income (Unaudited)	5

	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	6

	Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	60

Item 4.	Controls and Procedures	60

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 6.	Exhibits	61