fcnca-20210930

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, 2021

☐ 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.

(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 Act:


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
Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.375% Non-Cumulative Perpetual Preferred Stock, Series A	FCNCP	Nasdaq Global Select Market

Securities Registered Pursuant to Section 12(g) of the Act:

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 12 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 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 “large 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—8,811,220 shares

Class B Common Stock—1,005,185 shares

(Number of shares outstanding, by class, as of October 31, 2021)

Item 1.Financial Statements

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets


(Dollars in thousands, unaudited)	September 30, 2021		December 31, 2020
Assets
Cash and due from banks	$	337,450	$	362,048
Overnight investments	9,875,063		4,347,336
Investment in marketable equity securities (cost of $85,554 at September 30, 2021 and $84,837 at December 31, 2020)	123,147		91,680
Investment securities available for sale (cost of $7,345,143 at September 30, 2021 and $6,911,965 at December 31, 2020)	7,371,129		7,014,243
Investment securities held to maturity (fair value of $3,353,078 at September 30, 2021 and $2,838,499 at December 31, 2020)	3,381,078		2,816,982
Loans held for sale	98,451		124,837
Loans and leases	32,516,189		32,791,975
Allowance for credit losses	(183,194)		(224,314)
Net loans and leases	32,332,995		32,567,661
Premises and equipment	1,230,572		1,251,283
Other real estate owned	40,649		50,890
Income earned not collected	132,911		145,694
Goodwill	350,298		350,298
Other intangible assets	44,142		50,775
Other assets	1,584,092		783,953
Total assets	$	56,901,977	$	49,957,680
Liabilities
Deposits:
Noninterest-bearing	$	21,514,407	$	18,014,029
Interest-bearing	28,551,355		25,417,580
Total deposits	50,065,762		43,431,609
Securities sold under customer repurchase agreements	663,575		641,487

Federal Home Loan Bank borrowings	645,663		655,175
Subordinated debt	497,427		504,518
Other borrowings	76,139		88,470
FDIC shared-loss payable	—		15,601
Other liabilities	372,116		391,552
Total liabilities	52,320,682		45,728,412
Shareholders’ equity
Common stock:
Class A - $1 par value (16,000,000 shares authorized; 8,811,220 shares issued and outstanding at September 30, 2021 and December 31, 2020)	8,811		8,811
Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at September 30, 2021 and December 31, 2020)	1,005		1,005
Preferred stock - $0.01 par value (10,000,000 shares authorized; 345,000 shares issued and outstanding at September 30, 2021 and December 31, 2020; $1,000 per share liquidity preference)	339,937		339,937

Retained earnings	4,263,679		3,867,252
Accumulated other comprehensive (loss) income	(32,137)		12,263
Total shareholders’ equity	4,581,295		4,229,268
Total liabilities and shareholders’ equity	$	56,901,977	$	49,957,680

See accompanying Notes to Unaudited 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)	2021		2020		2021		2020
Interest income
Loans and leases	$	319,214	$	336,382	$	966,525	$	988,029
Investment securities interest and dividend income	39,246		37,195		105,530		113,293
Overnight investments	3,395		757		6,948		5,828
Total interest income	361,855		374,334		1,079,003		1,107,150
Interest expense
Deposits	8,073		13,468		25,408		55,578
Securities sold under customer repurchase agreements	358		395		1,052		1,236

Federal Home Loan Bank borrowings	2,114		2,156		6,300		7,612
Subordinated debt	4,174		4,351		12,543		11,783
Other borrowings	249		305		768		1,488
Total interest expense	14,968		20,675		46,071		77,697
Net interest income	346,887		353,659		1,032,932		1,029,453
Provision (credit) for credit losses	(1,120)		4,042		(31,697)		52,949
Net interest income after provision for credit losses	348,007		349,617		1,064,629		976,504
Noninterest income
Wealth management services	31,935		26,369		95,886		75,152
Service charges on deposit accounts	24,858		20,841		68,277		64,776
Cardholder services, net	22,879		19,756		65,310		55,503
Other service charges and fees	9,205		7,892		26,653		22,829
Merchant services, net	8,409		6,763		25,858		18,014
Mortgage income	6,106		13,106		25,026		28,141
Insurance commissions	4,000		3,576		11,702		10,453
ATM income	1,481		1,537		4,534		4,354
Realized gains on investment securities available for sale, net	8,082		21,425		33,119		54,972
Marketable equity securities gains (losses), net	3,350		(2,701)		31,015		10,461


Other	2,639		2,008		6,363		5,330
Total noninterest income	122,944		120,572		393,743		349,985
Noninterest expense
Salaries and wages	160,947		147,297		462,420		439,185
Employee benefits	32,146		31,788		103,169		100,663
Occupancy expense	29,101		27,990		87,283		85,026
Equipment expense	30,229		29,430		88,934		86,054
Processing fees paid to third parties	15,602		11,927		43,702		32,485
FDIC insurance expense	3,661		2,167		10,261		9,364
Collection and foreclosure-related expenses	836		2,168		3,207		10,171
Merger-related expenses	7,013		3,507		19,601		12,108
Other	33,283		35,388		91,745		108,256
Total noninterest expense	312,818		291,662		910,322		883,312
Income before income taxes	158,133		178,527		548,050		443,177
Income taxes	34,060		35,843		123,873		89,538
Net income	$	124,073	$	142,684	$	424,177	$	353,639
Preferred stock dividends	4,636		4,636		13,908		9,426
Net income available to common shareholders	$	119,437	$	138,048	$	410,269	$	344,213
Weighted average common shares outstanding	9,816,405		9,836,629		9,816,405		10,137,321
Earnings per common share	$	12.17	$	14.03	$	41.79	$	33.96

See accompanying Notes to Unaudited 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)	2021		2020		2021		2020
Net income	$	124,073	$	142,684	$	424,177	$	353,639
Other comprehensive income
Unrealized (losses) gains on securities available for sale:
Unrealized (losses) gains on securities available for sale arising during the period	(11,270)		9,781		(43,173)		182,690
Tax effect	2,593		(2,251)		9,930		(42,019)
Reclassification adjustment for realized gains on securities available for sale included in income before income taxes	(8,082)		(21,425)		(33,119)		(54,972)
Tax effect	1,858		4,928		7,617		12,644
Unrealized (losses) gains on securities available for sale arising during the period, net of tax	(14,901)		(8,967)		(58,745)		98,343






Unrealized gains on securities available for sale transferred to held to maturity:


Reclassification adjustment for accretion of unrealized gains on securities available for sale transferred to held to maturity	(430)		—		(1,690)		—
Tax effect	99		—		389		—
Total change in unrealized gains on securities available for sale transferred to held to maturity, net of tax	(331)		—		(1,301)		—
Change in pension obligation:


Amortization of actuarial losses	6,773		6,332		20,320		18,994
Tax effect	(1,558)		(1,457)		(4,674)		(4,370)
Total change in pension obligation, net of tax	5,215		4,875		15,646		14,624
Other comprehensive (loss) income	(10,017)		(4,092)		(44,400)		112,967
Total comprehensive income	$	114,056	$	138,592	$	379,777	$	466,606

See accompanying Notes to Unaudited 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		Preferred Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders’ Equity
Balance at June 30, 2020	$	8,929	$	1,005	$	339,937	$	—	$	3,651,237	$	(9,664)	$	3,991,444

Net income	—		—		—		—		142,684		—		142,684
Other comprehensive loss, net of tax	—		—		—		—		—		(4,092)		(4,092)
Issuance of preferred stock	—		—		—		—		—		—		—
Repurchase of 117,700 shares of Class A common stock	(118)		—		—		—		(46,942)		—		(47,060)

Cash dividends declared ($0.40 per common share)
Class A common stock	—		—		—		—		(3,524)		—		(3,524)
Class B common stock	—		—		—		—		(402)		—		(402)
Preferred stock dividends declared	—		—		—		—		(4,636)		—		(4,636)
Balance at September 30, 2020	$	8,811	$	1,005	$	339,937	$	—	$	3,738,417	$	(13,756)	$	4,074,414

Balance at June 30, 2021	$	8,811	$	1,005	$	339,937	$	—	$	4,148,857	$	(22,120)	$	4,476,490

Net income	—		—		—		—		124,073		—		124,073
Other comprehensive loss, net of tax	—		—		—		—		—		(10,017)		(10,017)



Cash dividends declared ($0.47 per common share)
Class A common stock	—		—		—		—		(4,143)		—		(4,143)
Class B common stock	—		—		—		—		(472)		—		(472)
Preferred stock dividends declared	—		—		—		—		(4,636)		—		(4,636)
Balance at September 30, 2021	$	8,811	$	1,005	$	339,937	$	—	$	4,263,679	$	(32,137)	$	4,581,295

	Nine months ended September 30
(Dollars in thousands, unaudited)	Class A Common Stock		Class B Common Stock		Preferred Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
Balance at December 31, 2019	$	9,624	$	1,005	$	—	$	44,081	$	3,658,197	$	(126,723)	$	3,586,184
Cumulative effect of adoption of ASC 326	—		—		—		—		36,943		—		36,943
Net income	—		—		—		—		353,639		—		353,639
Other comprehensive income, net of tax	—		—		—		—		—		112,967		112,967
Issuance of preferred stock	—		—		339,937		—		—		—		339,937
Repurchase of 813,090 shares of Class A common stock	(813)		—		—		(44,081)		(288,861)		—		(333,755)

Cash dividends declared ($1.20 per common share)
Class A common stock	—		—		—		—		(10,869)		—		(10,869)
Class B common stock	—		—		—		—		(1,206)		—		(1,206)
Preferred stock dividends declared	—		—		—		—		(9,426)		—		(9,426)
Balance at September 30, 2020	$	8,811	$	1,005	$	339,937	$	—	$	3,738,417	$	(13,756)	$	4,074,414

Balance at December 31, 2020	$	8,811	$	1,005	$	339,937	$	—	$	3,867,252	$	12,263	$	4,229,268

Net income	—		—		—		—		424,177		—		424,177
Other comprehensive loss, net of tax	—		—		—		—		—		(44,400)		(44,400)



Cash dividends declared ($1.41 per common share)
Class A common stock	—		—		—		—		(12,426)		—		(12,426)
Class B common stock	—		—		—		—		(1,416)		—		(1,416)
Preferred stock dividends declared	—		—		—		—		(13,908)		—		(13,908)
Balance at September 30, 2021	$	8,811	$	1,005	$	339,937	$	—	$	4,263,679	$	(32,137)	$	4,581,295

See accompanying Notes to Unaudited Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


	Nine months ended September 30
(Dollars in thousands, unaudited)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	424,177	$	353,639
Adjustments to reconcile net income to cash provided by operating activities:
Provision (credit) for credit losses	(31,697)		52,949
Deferred tax expense	9,266		16,227


		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	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	58

Item 4.	Controls and Procedures	58

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	59

Item 1A.	Risk Factors	59



Item 6.	Exhibits	60