fcnca-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

FORM 10-Q

____________________________________________________


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			For the quarterly period ended September 30, 2022
			or
☐			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 Securities Exchange Act of 1934:
Title of each class	Trading Symbol(s)	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
5.625% Non-Cumulative Perpetual Preferred Stock, Series C	FCNCO	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 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 for 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, a 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— 13,498,535 shares

Class B Common Stock— 1,005,185 shares

(Number of shares outstanding, by class, as of October 31, 2022)

CONTENTS

Part One — Financial Information:

Item 1.

Financial Statements

Consolidated Balance Sheets (Unaudited)

Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Notes to the Unaudited Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

106

Item 4.

Controls and Procedures

107

Part Two — Other Information:

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Item 6.

GLOSSARY OF ABBREVIATIONS AND ACRONYMS

The following is a list of certain abbreviations and acronyms we use throughout this document. You may find it helpful to refer back to this table. We also include a Glossary of Key Terms in Part 1, Item 2. Management’s Discussion and Analysis.


Acronym	Definition	Acronym	Definition
ACL	Allowance for Credit Losses	IRC	Internal Revenue Code
AOCI	Accumulated Other Comprehensive Income	ISDA	International Swaps and Derivative Association
ASC	Accounting Standards Codification	LIBOR	London Inter-Bank Offered Rate
ASU	Accounting Standards Update	LOCOM	Lower of the Cost or Market Value
BHC	Bank Holding Company	MD&A	Management’s Discussion and Analysis
BOLI	Bank Owned Life Insurance	MSRs	Mortgage Servicing Rights
bps	Basis point(s); 1 bp = 0.01%	NCCOB	North Carolina Commissioner of Banks
CAB	Community Association Banking	NII	Net Interest Income
CECL	Current Expected Credit Losses	NII Sensitivity	Net Interest Income Sensitivity
DPA	Deferred Purchase Agreement	NIM	Net Interest Margin
DTAs	Deferred Tax Assets	NSF	Nonsufficient Funds
ETR	Effective Tax Rate	OREO	Other Real Estate Owned
EVE Sensitivity	Economic Value of Equity Sensitivity	PAA	Purchase Accounting Adjustments
FASB	Financial Accounting Standards Board	PB	Primary Beneficiary
FCB	First-Citizens Bank & Trust Company	PCA	Prompt corrective action
FDIC	Federal Deposit Insurance Corporation	PCD	Purchased Credit Deteriorated
FHA	Federal Housing Administration	PD	Probability of Obligor Default
FHC	Financial Holding Company	ROU	Right of Use
FHLB	Federal Home Loan Bank	RSU	Restricted Stock Unit
FOMC	Federal Open Market Committee	SBA	Small Business Administration
FRB	Federal Reserve Bank	SBA-PPP	Small Business Administration Paycheck Protection Plan
GAAP	Accounting Principles Generally Accepted in the U.S.	SOFR	Secured Overnight Financing Rate
GDP	Gross Domestic Product	TDRs	Troubled Debt Restructuring
HAMP	Home Affordable Modification Program	UPB	Unpaid Principal Balance
HOA	Home Owner’s Association	VA	Veteran’s Administration
HQLS	High Quality Liquid Securities	VIE	Variable Interest Entity

PART I

Item 1. Financial Statements

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)


dollars in millions, except share data	September 30, 2022		December 31, 2021
Assets
Cash and due from banks	$	481	$	338
Interest-earning deposits at banks	6,172		9,115

Investments in marketable equity securities (cost of $73 million at September 30, 2022 and December 31, 2021)	92		98
Investment securities available for sale (cost of $10,083 million at September 30, 2022 and $9,215 million at December 31, 2021)	9,088		9,203
Investment securities held to maturity (fair value of $8,166 million at September 30, 2022 and $3,759 million at December 31, 2021)	9,661		3,809
Assets held for sale	21		99
Loans and leases	69,790		32,372
Allowance for credit losses	(882)		(178)
Loans and leases, net of allowance for credit losses	68,908		32,194
Operating lease equipment, net	7,984		—
Premises and equipment, net	1,410		1,233
Bank-owned life insurance	1,342		116
Goodwill	346		346
Other intangible assets	145		19
Other assets	3,660		1,739
Total assets	$	109,310	$	58,309
Liabilities
Deposits:
Noninterest-bearing	$	26,587	$	21,405
Interest-bearing	60,966		30,001
Total deposits	87,553		51,406
Credit balances of factoring clients	1,147		—
Borrowings:



Short-term borrowings	3,128		589




Long-term borrowings	5,215		1,195
Total borrowings	8,343		1,784
Other liabilities	2,434		381
Total liabilities	99,477		53,571
Stockholders’ equity
Preferred stock - $0.01 par value (10,000,000 shares authorized at September 30, 2022 and December 31, 2021)	881		340
Common stock:
Class A - $1 par value (16,000,000 shares authorized; 13,970,944 and 8,811,220 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	14		9
Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at September 30, 2022 and December 31, 2021)	1		1
Additional paid in capital	4,506		—
Retained earnings	5,160		4,378
Accumulated other comprehensive (loss) income	(729)		10
Total stockholders’ equity	9,833		4,738
Total liabilities and stockholders’ equity	$	109,310	$	58,309

See accompanying Notes to the Unaudited Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
dollars in millions, except share and per share data	2022		2021		2022		2021
Interest income
Interest and fees on loans	$	785	$	320	$	2,061	$	967
Interest on investment securities	90		40		262		106
Interest on deposits at banks	31		3		50		7
Total interest income	906		363		2,373		1,080
Interest expense
Deposits	78		8		159		25
Borrowings	33		8		70		22
Total interest expense	111		16		229		47
Net interest income	795		347		2,144		1,033
Provision (benefit) for credit losses	60		(1)		566		(32)
Net interest income after provision for credit losses	735		348		1,578		1,065
Noninterest income
Rental income on operating leases	219		—		640		—
Fee income and other service charges	44		10		118		31
Wealth management services	35		32		107		96
Service charges on deposit accounts	21		26		77		69
Factoring commissions	24		—		78		—
Cardholder services, net	25		23		76		65
Merchant services, net	8		9		27		26
Insurance commissions	11		4		34		12
Realized gain on sale of investment securities available for sale, net	—		8		—		33
Fair value adjustment on marketable equity securities, net	(2)		3		(5)		31
Bank-owned life insurance	8		1		25		2
Gain on sale of leasing equipment, net	2		—		13		—
Gain on acquisition	—		—		431		—
Gain on extinguishment of debt	1		—		7		—
Other noninterest income	37		8		79		29
Total noninterest income	433		124		1,707		394
Noninterest expense
Depreciation on operating lease equipment	87		—		257		—
Maintenance and other operating lease expenses	52		—		142		—
Salaries and benefits	351		194		1,044		566
Net occupancy expense	47		29		144		87
Equipment expense	55		30		161		89
Professional fees	13		5		44		13
Third-party processing fees	27		16		77		44
FDIC insurance expense	5		3		26		10
Marketing	15		3		32		7
Merger-related expenses	33		7		202		20
Intangible asset amortization	5		3		17		9
Other noninterest expense	70		24		169		66
Total noninterest expense	760		314		2,315		911
Income before income taxes	408		158		970		548
Income tax expense	93		34		129		124
Net income	$	315	$	124	$	841	$	424
Preferred stock dividends	12		5		36		14
Net income available to common stockholders	$	303	$	119	$	805	$	410
Earnings per common share
Basic	$	19.27	$	12.17	$	50.76	$	41.79
Diluted	$	19.25	$	12.17	$	50.70	$	41.79
Weighted average common shares outstanding
Basic	15,711,976		9,816,405		15,849,219		9,816,405
Diluted	15,727,993		9,816,405		15,867,314		9,816,405

See accompanying Notes to the Unaudited Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
dollars in millions	2022		2021		2022		2021
Net income	$	315	$	124	$	841	$	424
Other comprehensive loss, net of tax
Net unrealized loss on securities available for sale	(266)		(15)		(747)		(59)
Net change in unrealized loss on securities available for sale transferred to securities held to maturity	—		(1)		1		(1)
Net change in pension obligations	2		6		7		16


Other comprehensive loss, net of tax	$	(264)	$	(10)	$	(739)	$	(44)
Total comprehensive income	$	51	$	114	$	102	$	380

See accompanying Notes to the Unaudited Consolidated Financial Statements.

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


	Three Months Ended September 30,
dollars in millions, except share data	Preferred Stock		Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
Balance at June 30, 2022	$	881	$	15	$	1	$	5,345	$	4,865	$	(465)	$	10,642
Net income	—		—		—		—		315		—		315
Other comprehensive loss, net of tax	—		—		—		—		—		(264)		(264)






Stock based compensation	—		—		—		2		—		—		2
Repurchased 1,027,414 shares of Class A common stock	—		(1)		—		(841)		—		—		(842)
Cash dividends declared ($0.47 per common share):
Class A common stock	—		—		—		—		(7)		—		(7)
Class B common stock	—		—		—		—		(1)		—		(1)
Preferred stock dividends declared:
Series A	—		—		—		—		(5)		—		(5)
Series B	—		—		—		—		(5)		—		(5)
Series C	—		—		—		—		(2)		—		(2)
Balance at September 30, 2022	881		14		1		4,506		5,160		(729)		9,833

Balance at June 30, 2021	340		9		1		—		4,149		(22)		4,477
Net income	—		—		—		—		124		—		124
Other comprehensive income, net of tax	—		—		—		—		—		(10)		(10)
Cash dividends declared ($0.47 per common share):
Class A common stock	—		—		—		—		(4)		—		(4)
Class B common stock	—		—		—		—		—		—		—
Preferred stock dividends declared	—		—		—		—		(5)		—		(5)
Balance at September 30, 2021	$	340	$	9	$	1	$	—	$	4,264	$	(32)	$	4,582


	Nine Months Ended September 30,
dollars in millions, except share data	Preferred Stock		Class A Common Stock		Class B Common Stock		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
Balance at December 31, 2021	$	340	$	9	$	1	$	—	$	4,378	$	10	$	4,738
Net income	—		—		—		—		841		—		841
Other comprehensive loss, net of tax	—		—		—		—		—		(739)		(739)
Issued in CIT Merger:
Common stock	—		6		—		5,273		—		—		5,279
Series B preferred stock	334		—		—		—		—		—		334
Series C preferred stock	207		—		—		—		—		—		207


Stock based compensation	—		—		—		74		—		—		74
Repurchased 1,027,414 shares of Class A common stock	—		(1)		—		(841)		—		—		(842)
Cash dividends declared ($0.47 per common share):
Class A common stock	—		—		—		—		(21)		—		(21)
Class B common stock	—		—		—		—		(2)		—		(2)
Preferred stock dividends declared:
Series A	—		—		—		—		(14)		—		(14)
Series B	—		—		—		—		(14)		—		(14)
Series C	—		—		—		—		(8)		—		(8)
Balance at September 30, 2022	881		14		1		4,506		5,160		(729)		9,833

Balance at December 31, 2020	340		9		1		—		3,867		12		4,229
Net income	—		—		—		—		424		—		424