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 September 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—9,732,720 shares

Class B Common Stock—1,005,185 shares

(Number of shares outstanding, by class, as of October 31, 2019)

Financial Statements

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets



(Dollars in thousands, unaudited)	September 30, 2019			December 31, 2018
Assets
Cash and due from banks	$	288,933		$	327,440
Overnight investments	949,899			797,406
Investment in marketable equity securities (cost of $87,588 at September 30, 2019 and $73,809 at December 31, 2018)	116,854			92,599
Investment securities available for sale (cost of $4,898,771 at September 30, 2019 and $4,607,117 at December 31, 2018)	4,904,883			4,557,110
Investment securities held to maturity (fair value of $2,217,800 at September 30, 2019 and $2,201,502 at December 31, 2018)	2,145,943			2,184,653
Loans held for sale	83,256			45,505
Loans and leases	27,196,511			25,523,276
Allowance for loan and lease losses	(226,825		)	(223,712		)
Net loans and leases	26,969,686			25,299,564
Premises and equipment	1,222,659			1,204,179
Other real estate owned	46,253			48,030
Income earned not collected	117,123			109,903
Goodwill	296,764			236,347
Other intangible assets	65,147			72,298
Other assets	540,924			433,595
Total assets	$	37,748,324		$	35,408,629
Liabilities
Deposits:
Noninterest-bearing	$	12,966,890		$	11,882,670
Interest-bearing	19,776,387			18,789,790
Total deposits	32,743,277			30,672,460
Securities sold under customer repurchase agreements	522,195			543,936
Federal Home Loan Bank borrowings	192,672			193,556
Subordinated debentures	149,051			140,741
Other borrowings	112,153			13,921
FDIC shared-loss payable	110,586			105,618
Other liabilities	349,908			249,443
Total liabilities	34,179,842			31,919,675
Shareholders’ equity
Common stock:
Class A - $1 par value (16,000,000 shares authorized; 9,878,820 and 10,623,220 shares issued and outstanding at September 30, 2019 and December 31, 2018 respectively)	9,879			10,623
Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at September 30, 2019 and December 31, 2018 respectively)	1,005			1,005
Preferred stock - $0.01 par value (10,000,000 shares authorized; no shares issued and outstanding at September 30, 2019 and December 31, 2018)	—			—
Surplus	168,790			493,962
Retained earnings	3,560,580			3,218,551
Accumulated other comprehensive loss	(171,772		)	(235,187		)
Total shareholders’ equity	3,568,482			3,488,954
Total liabilities and shareholders’ equity	$	37,748,324		$	35,408,629

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Income



	Three months ended September 30					Nine months ended September 30
(Dollars in thousands, except per share data, unaudited)	2019			2018		2019		2018
Interest income
Loans and leases	$	315,012		$	272,215	$	909,167	$	785,283
Investment securities interest and dividend income	40,155			38,770		119,976		110,969
Overnight investments	7,151			4,721		20,820		15,932
Total interest income	362,318			315,706		1,049,963		912,184
Interest expense
Deposits	21,737			5,147		53,821		13,424
Securities sold under customer repurchase agreements	542			398		1,516		1,175
Federal Home Loan Bank borrowings	1,316			1,099		4,187		4,335
Subordinated debentures	1,774			1,561		5,398		4,655
Other borrowings	524			139		796		577
Total interest expense	25,893			8,344		65,718		24,166
Net interest income	336,425			307,362		984,245		888,018
Provision for loan and lease losses	6,766			840		23,714		16,883
Net interest income after provision for loan and lease losses	329,659			306,522		960,531		871,135
Noninterest income
Cardholder services, net	15,957			14,678		51,069		44,385
Merchant services, net	6,034			5,857		18,324		18,512
Service charges on deposit accounts	27,112			25,994		77,967		78,489
Wealth management services	25,212			24,459		74,786		73,543
Realized gains on investment securities available for sale, net	1,136			—		6,855		—
Marketable equity securities (losses) gains, net	(967		)	3,854		13,505		9,265
Other service charges and fees	8,237			7,651		23,823		22,887
Mortgage income	7,438			4,123		16,134		13,063
Insurance commissions	2,960			2,755		9,105		9,471
ATM income	1,635			1,919		4,771		6,307
Gain on extinguishment of debt	—			703		—		26,517
Other	6,176			2,538		15,129		15,703
Total noninterest income	100,930			94,531		311,468		318,142
Noninterest expense
Salaries and wages	137,841			133,867		406,788		392,911
Employee benefits	28,358			28,850		91,090		90,656
Occupancy expense	28,163			26,632		82,810		80,686
Equipment expense	28,770			25,880		83,999		76,021
Processing fees paid to third parties	7,250			7,297		20,980		23,383
FDIC insurance expense	2,440			5,186		7,857		16,411
Collection and foreclosure-related expenses	3,044			4,269		9,725		12,389
Merger-related expenses	3,892			1,126		9,695		4,136
Other	30,667			34,430		98,535		105,000
Total noninterest expense	270,425			267,537		811,479		801,593
Income before income taxes	160,164			133,516		460,520		387,684
Income taxes	35,385			16,198		105,023		76,844
Net income	$	124,779		$	117,318	$	355,497	$	310,840
Weighted average shares outstanding	11,060,462			11,971,460		11,286,984		11,997,281
Net income per share	$	11.27		$	9.80	$	31.50	$	25.91

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income



	Three months ended September 30						Nine months ended September 30
(Dollars in thousands, unaudited)	2019			2018			2019			2018
Net income	$	124,779		$	117,318		$	355,497		$	310,840
Other comprehensive income (loss)
Unrealized gains (losses) on securities available for sale:
Unrealized gains (losses) on securities available for sale arising during the period	3,932			(13,810		)	62,974			(9,656		)
Tax effect	(906		)	3,175			(14,485		)	2,221
Reclassification adjustment for realized gains on securities available for sale included in income before income taxes	(1,136		)	—			(6,855		)	—
Tax effect	262			—			1,577			—
Net unrealized gains (losses) on securities available for sale arising during the period	2,152			(10,635		)	43,211			(7,435		)
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		)
Tax effect	—			—			—			25,186
Reclassification adjustment for accretion of unrealized losses on securities available for sale transferred to held to maturity	6,095			6,502			18,004			10,975
Tax effect	(1,402		)	(1,495		)	(4,141		)	(2,523		)
Total change in unrealized losses on securities available for sale transferred to held to maturity, net of tax	4,693			5,007			13,863			(75,869		)
Change in pension obligation:
Amortization of actuarial losses and prior service cost	2,745			3,495			8,235			10,486
Tax effect	(631		)	(804		)	(1,894		)	(2,412		)
Total change in pension obligation, net of tax	2,114			2,691			6,341			8,074
Other comprehensive income (loss)	8,959			(2,937		)	63,415			(75,230		)
Total comprehensive income	$	133,738		$	114,381		$	418,912		$	235,610

See accompanying Notes to Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity



	Three months ended September 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 June 30, 2018	$	11,005		$	1,005	$	658,918		$	3,020,596		$	(244,638	)	$	3,446,886
Net income	—			—		—			117,318			—			117,318
Other comprehensive loss, net of tax	—			—		—			—			(2,937		)	(2,937		)
Repurchase of 125,000 shares of Class A common stock	(125		)	—		(57,961		)	—			—			(58,086		)
Cash dividends declared ($0.35 per share)
Class A common stock	—			—		—			(3,817		)	—			(3,817		)
Class B common stock	—			—		—			(351		)	—			(351		)
Balance at September 30, 2018	$	10,880		$	1,005	$	600,957		$	3,133,746		$	(247,575	)	$	3,499,013

Balance at June 30, 2019	$	10,175		$	1,005	$	303,880		$	3,440,284		$	(180,731	)	$	3,574,613
Net income	—			—		—			124,779			—			124,779
Other comprehensive income, net of tax	—			—		—			—			8,959			8,959
Repurchase of 295,900 shares of Class A common stock	(296		)	—		(135,090		)	—			—			(135,386		)
Cash dividends declared ($0.40 per share)
Class A common stock	R



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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	42

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	61

Item 4.	Controls and Procedures	61

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	61

Item 1A.	Risk Factors	61

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61

Item 6.	Exhibits	62