FORM 10-Q Cover Page This section presents the cover page details for First Citizens BancShares, Inc.'s Quarterly Report on Form 10-Q - First Citizens BancShares, Inc. filed its Quarterly Report on Form 10-Q for the period ended September 30, 2024[1](index=1&type=chunk) Securities Registered Pursuant to Section 12(b) | 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 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 | - The registrant is a large accelerated filer and has filed all required reports and interactive data files[3](index=3&type=chunk) Shares Outstanding as of October 31, 2024 | Class | Shares Outstanding | | :------------------- | :----------------- | | Class A Common Stock | 12,984,310 | | Class B Common Stock | 1,005,185 | Glossary of Abbreviations and Acronyms This section defines key abbreviations and acronyms used throughout the report for clarity - The report includes a glossary to define key abbreviations and acronyms used throughout the document, such as ALLL (Allowance for Loan and Lease Losses), MD&A (Management's Discussion and Analysis), NII (Net Interest Income), and SVBB (Silicon Valley Bridge Bank, N.A.)[8](index=8&type=chunk)[9](index=9&type=chunk) PART I—FINANCIAL INFORMATION This part presents the core financial data, including financial statements, management's discussion, and risk disclosures [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements of First Citizens BancShares, Inc. and its subsidiaries, along with detailed notes [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the unaudited consolidated balance sheets, detailing assets, liabilities, and equity at period-end Consolidated Balance Sheet Highlights (Unaudited) | Item | September 30, 2024 (millions) | December 31, 2023 (millions) | Change (millions) | Change (%) | | :---------------------------- | :---------------------------- | :--------------------------- | :---------------- | :--------- | | Total assets | $220,567 | $213,758 | $6,809 | 3.19% | | Loans and leases, net | $137,017 | $131,555 | $5,462 | 4.15% | | Total deposits | $151,574 | $145,854 | $5,720 | 3.92% | | Total borrowings | $37,161 | $37,654 | $(493) | -1.31% | | Total stockholders' equity | $22,828 | $21,255 | $1,573 | 7.40% | - Total assets increased by **$6.81 billion**, or **3.19%**, from December 31, 2023, to September 30, 2024, driven primarily by growth in net loans and investment securities[12](index=12&type=chunk) - Total deposits saw a notable increase of **$5.72 billion**, or **3.92%**, while total borrowings slightly decreased by **$493 million**, or **1.31%**[12](index=12&type=chunk) [Consolidated Statements of Income (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20(Unaudited)) This section presents the unaudited consolidated statements of income, highlighting revenue, expenses, and net income Consolidated Statements of Income Highlights (Unaudited) - Three Months Ended September 30 | Item (millions) | 2024 | 2023 | Change (millions) | Change (%) | | :------------------------------ | :------ | :------ | :---------------- | :--------- | | Total interest income | $3,138 | $3,110 | $28 | 0.90% | | Total interest expense | $1,342 | $1,120 | $222 | 19.82% | | Net interest income | $1,796 | $1,990 | $(194) | -9.75% | | Provision for credit losses | $117 | $192 | $(75) | -39.06% | | Total noninterest income | $650 | $615 | $35 | 5.69% | | Total noninterest expense | $1,456 | $1,416 | $40 | 2.82% | | Net income | $639 | $752 | $(113) | -15.03% | | Net income available to common stockholders | $624 | $737 | $(113) | -15.33% | | Diluted EPS | $43.42 | $50.67 | $(7.25) | -14.31% | Consolidated Statements of Income Highlights (Unaudited) - Nine Months Ended September 30 | Item (millions) | 2024 | 2023 | Change (millions) | Change (%) | | :------------------------------ | :------ | :------- | :---------------- | :--------- | | Total interest income | $9,352 | $7,274 | $2,078 | 28.57% | | Total interest expense | $3,918 | $2,473 | $1,445 | 58.43% | | Net interest income | $5,434 | $4,801 | $633 | 13.18% | | Provision for credit losses | $276 | $1,126 | $(850) | -75.49% | | Total noninterest income | $1,916 | $11,532 | $(9,616) | -83.39% | | Total noninterest expense | $4,218 | $3,843 | $375 | 9.76% | | Net income | $2,077 | $10,952 | $(8,875) | -81.04% | | Net income available to common stockholders | $2,031 | $10,908 | $(8,877) | -81.38% | | Diluted EPS | $140.26 | $750.19 | $(609.93) | -81.30% | - For the three months ended September 30, 2024, net interest income decreased by **9.75%** YoY due to a significant increase in interest expense, despite a slight rise in interest income. Net income decreased by **15.03%** YoY[14](index=14&type=chunk) - For the nine months ended September 30, 2024, net income saw a substantial decrease of **81.04%** YoY, primarily driven by a significant reduction in noninterest income (due to a large gain on acquisition in the prior year) and partially offset by a lower provision for credit losses[14](index=14&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) This section presents the unaudited consolidated statements of comprehensive income, including net income and other comprehensive income Consolidated Statements of Comprehensive Income Highlights (Unaudited) - Three Months Ended September 30 | Item (millions) | 2024 | 2023 | Change (millions) | Change (%) | | :---------------------------------------------------------------------------- | :----- | :------ | :---------------- | :--------- | | Net income | $639 | $752 | $(113) | -15.03% | | Other comprehensive income (loss), net of tax | $451 | $(108) | $559 | -517.59% | | Net unrealized gain (loss) on securities available for sale | $438 | $(108) | $546 | -505.56% | | Net change in unrealized loss on securities available for sale transferred to securities held to maturity | $1 | — | $1 | N/A | | Net unrealized gain on cash flow hedge derivatives | $12 | — | $12 | N/A | | Total comprehensive income | $1,090 | $644 | $446 | 69.25% | Consolidated Statements of Comprehensive Income Highlights (Unaudited) - Nine Months Ended September 30 | Item (millions) | 2024 | 2023 | Change (millions) | Change (%) | | :---------------------------------------------------------------------------- | :----- | :------- | :---------------- | :--------- | | Net income | $2,077 | $10,952 | $(8,875) | -81.04% | | Other comprehensive income (loss), net of tax | $332 | $(145) | $477 | -328.97% | | Net unrealized gain (loss) on securities available for sale | $325 | $(150) | $475 | -316.67% | | Net change in unrealized loss on securities available for sale transferred to securities held to maturity | $1 | $1 | $0 | 0.00% | | Net change in defined benefit pension items | $(8) | $4 | $(12) | -300.00% | | Net unrealized gain on cash flow hedge derivatives | $14 | — | $14 | N/A | | Total comprehensive income | $2,409 | $10,807 | $(8,398) | -77.71% | - Total comprehensive income for the three months ended September 30, 2024, increased by **69.25%** YoY, primarily due to a significant shift from an unrealized loss to an unrealized gain on securities available for sale[16](index=16&type=chunk) - For the nine months ended September 30, 2024, total comprehensive income decreased by **77.71%** YoY, largely mirroring the decline in net income, despite a positive swing in other comprehensive income[16](index=16&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20(Unaudited)) This section presents the unaudited consolidated statements of changes in stockholders' equity, detailing movements in capital accounts Consolidated Statements of Changes in Stockholders' Equity Highlights (Unaudited) - Three Months Ended September 30, 2024 | Item (millions) | Balance at June 30, 2024 | Net Income | Other Comprehensive Income | Stock Based Compensation | Repurchased Class A Common Stock | Cash Dividends Declared | Balance at September 30, 2024 | | :-------------------------------------------- | :----------------------- | :--------- | :------------------------- | :----------------------- | :------------------------------- | :---------------------- | :---------------------------- | | Total Stockholders' Equity | $22,487 | $639 | $451 | $(4) | $(707) | $(38) | $22,828 | Consolidated Statements of Changes in Stockholders' Equity Highlights (Unaudited) - Nine Months Ended September 30, 2024 | Item (millions) | Balance at December 31, 2023 | Net Income | Other Comprehensive Income | Stock Based Compensation | Repurchased Class A Common Stock | Cash Dividends Declared | Balance at September 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------- | :------------------------- | :----------------------- | :------------------------------- | :---------------------- | :---------------------------- | | Total Stockholders' Equity | $21,255 | $2,077 | $332 | $(13) | $(707) | $(116) | $22,828 | - Total stockholders' equity increased from **$21.26 billion** at December 31, 2023, to **$22.83 billion** at September 30, 2024, primarily driven by net income and other comprehensive income, partially offset by share repurchases and cash dividends[20](index=20&type=chunk) - During the nine months ended September 30, 2024, the company repurchased **353,058 shares** of Class A common stock for **$707 million**[20](index=20&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents the unaudited consolidated statements of cash flows, categorizing cash movements by activity Consolidated Statements of Cash Flows Highlights (Unaudited) - Nine Months Ended September 30 | Cash Flow Activity (millions) | 2024 | 2023 | Change (millions) | | :------------------------------------ | :------ | :------- | :---------------- | | Net cash provided by operating activities | $1,869 | $1,759 | $110 | | Net cash (used in) provided by investing activities | $(6,411) | $2,787 | $(9,198) | | Net cash provided by (used in) financing activities | $4,496 | $(4,273) | $8,769 | | Change in cash and due from banks | $(46) | $273 | $(319) | | Cash and due from banks at end of period | $862 | $791 | $71 | - Net cash provided by operating activities increased by **$110 million** YoY for the nine months ended September 30, 2024[23](index=23&type=chunk) - Investing activities shifted from providing **$2.79 billion** in cash in 2023 to using **$6.41 billion** in 2024, primarily due to increased purchases of investment securities available for sale and a net increase in loans[23](index=23&type=chunk) - Financing activities significantly improved, moving from using **$4.27 billion** in cash in 2023 to providing **$4.50 billion** in 2024, mainly driven by a net increase in demand and other interest-bearing deposits[23](index=23&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's financial statements, covering significant accounting policies and financial instruments [NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION](index=13&type=section&id=NOTE%201%20%E2%80%94%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20BASIS%20OF%20PRESENTATION) This note outlines the nature of operations, accounting for business combinations, principles of consolidation, and significant accounting policies - First Citizens BancShares, Inc. is a financial holding company operating through its banking subsidiary, First-Citizens Bank & Trust Company (FCB), providing commercial and consumer banking, lending, leasing, and wealth management services[26](index=26&type=chunk) - FCB acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank, N.A. (SVBB) on March 27, 2023, accounted for using the acquisition method[28](index=28&type=chunk) - Segment reporting was updated in Q1 2024: SVB's private banking and wealth management integrated into General Bank, SVB segment renamed SVB Commercial, and Direct Bank moved to Corporate[35](index=35&type=chunk)[41](index=41&type=chunk) - Loan classes were also recast in Q1 2024, moving certain private bank, CRE, and 'other' loans from the SVB portfolio to Commercial and Consumer portfolios[38](index=38&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk) - During Q2 2024, BancShares entered into floating-rate loan portfolio cash flow hedges, with fair value changes reported in Accumulated Other Comprehensive Income (AOCI) and reclassified to earnings[45](index=45&type=chunk) - Newly adopted ASUs (2023-02 and 2022-03) related to tax credit structures and fair value measurement of equity securities did not have a material impact on financial statements or disclosures[47](index=47&type=chunk)[48](index=48&type=chunk) [NOTE 2 — BUSINESS COMBINATIONS](index=16&type=section&id=NOTE%202%20%E2%80%94%20BUSINESS%20COMBINATIONS) This note details the Silicon Valley Bridge Bank Acquisition, including purchase price allocation and related agreements - FCB completed the SVBB Acquisition on March 27, 2023, acquiring assets with a fair value of approximately **$107.54 billion** and assuming liabilities of **$61.42 billion**, resulting in a gain on acquisition of **$9.81 billion** (net of income taxes)[49](index=49&type=chunk)[52](index=52&type=chunk)[58](index=58&type=chunk) - The acquisition included **$68.47 billion** in loans (net of initial ALLL for PCD loans) and **$35.31 billion** in cash and interest-earning deposits, with **$56.01 billion** in customer deposits assumed[52](index=52&type=chunk) - FCB entered into a Shared-Loss Agreement with the FDIC covering an estimated **$60 billion** of commercial loans, with FDIC reimbursing **50%** of losses exceeding **$5 billion**[53](index=53&type=chunk) - As consideration, FCB issued a five-year **$36.07 billion** Purchase Money Note to the FDIC (fair value **$35.81 billion**) and a **$500 million** Cash Settled Value Appreciation Instrument[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk) Fair Value Purchase Price Allocation as of March 27, 2023 | Item (millions) | Fair Value | | :---------------------------------- | :--------- | | **Purchase price consideration** | | | Purchase Money Note | $35,808 | | Value Appreciation Instrument | $500 | | **Total purchase price consideration** | **$36,308** | | **Assets acquired** | | | Cash and due from banks | $1,310 | | Interest-earning deposits at banks | $34,001 | | Loans and leases, net of initial PCD ALLL | $68,468 | | Core deposit intangibles | $230 | | Total assets acquired | $107,539 | | **Liabilities assumed** | | | Deposits | $56,014 | | Deferred tax liabilities | $3,364 | | Total liabilities assumed | $61,423 | | **Fair value of net assets acquired** | **$46,116** | | **Gain on acquisition, after income taxes** | **$9,808** | [NOTE 3 — INVESTMENT SECURITIES](index=21&type=section&id=NOTE%203%20%E2%80%94%20INVESTMENT%20SECURITIES) This note provides details on the company's investment securities portfolio, including available-for-sale and held-to-maturity securities Investment Securities Summary (millions) | Category | September 30, 2024 (Fair Value) | December 31, 2023 (Fair Value) | Change (millions) | Change (%) | | :---------------------------------------- | :------------------------------ | :----------------------------- | :---------------- | :--------- | | Investment securities available for sale | $28,190 | $19,936 | $8,254 | 41.40% | | Investment securities held to maturity | $9,168 | $8,503 | $665 | 7.82% | | Total investment securities | $37,440 | $28,523 | $8,917 | 31.26% | - Total investment securities increased by **$8.92 billion** (**31.26%**) from December 31, 2023, to September 30, 2024, primarily driven by a significant increase in available-for-sale securities[79](index=79&type=chunk) Gross Unrealized Losses on Debt Securities Available For Sale (September 30, 2024) | Security Type | Fair Value (millions) | Unrealized Losses (millions) | | :-------------------------------- | :-------------------- | :--------------------------- | | U.S. Treasury | $1,674 | $(26) | | Government agency | $85 | $(2) | | Residential mortgage-backed securities | $4,076 | $(419) | | Commercial mortgage-backed securities | $1,405 | $(172) | | Corporate bonds | $460 | $(30) | | **Total** | **$7,700** | **$(649)** | - As of September 30, 2024, there were **495** available-for-sale securities with continuous unrealized losses for more than **12 months**, but no allowance for credit loss was required due to strong credit ratings and historical performance[88](index=88&type=chunk)[89](index=89&type=chunk) Interest and Dividends on Investment Securities (millions) | Item | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest income - taxable investment securities | $357 | $178 | $967 | $402 | | Dividend income - marketable equity securities | $1 | — | $2 | $1 | | **Total Interest on investment securities** | **$358** | **$180** | **$970** | **$407** | [NOTE 4 — LOANS AND LEASES](index=25&type=section&id=NOTE%204%20%E2%80%94%20LOANS%20AND%20LEASES) This note details the composition of the loan and lease portfolio by class, including delinquency status and nonaccrual loans Loans by Class (millions) | Loan Class | September 30, 2024 | December 31, 2023 | Change (millions) | Change (%) | | :---------------- | :----------------- | :---------------- | :---------------- | :--------- | | Commercial | $70,261 | $66,232 | $4,029 | 6.08% | | Consumer | $28,582 | $27,559 | $1,023 | 3.71% | | SVB | $39,852 | $39,511 | $341 | 0.86% | | **Total loans and leases** | **$138,695** | **$133,302** | **$5,393** | **4.05%** | - Total loans and leases increased by **$5.39 billion** (**4.05%**) from December 31, 2023, to September 30, 2024, with Commercial loans showing the largest growth[93](index=93&type=chunk) Loans and Leases - Delinquency Status (September 30, 2024, millions) | Loan Class | Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater | Total Past Due | Total | | :---------------- | :--------- | :------------------ | :------------------ | :----------------- | :------------- | :---- | | Commercial | $69,391 | $244 | $124 | $502 | $870 | $70,261 | | Consumer | $28,252 | $167 | $45 | $118 | $330 | $28,582 | | SVB | $39,817 | $16 | $9 | $10 | $35 | $39,852 | | **Total** | **$137,460** | **$427** | **$178** | **$630** | **$1,235** | **$138,695** | - Total loans and leases past due (**30 days** or greater) were **$1.24 billion** at September 30, 2024, an increase from **$1.13 billion** at December 31, 2023[99](index=99&type=chunk) Loans on Nonaccrual Status (millions) | Loan Class | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------- | :----------------- | :---------------- | :---------------- | | Commercial | $868 | $698 | $170 | | Consumer | $169 | $154 | $15 | | SVB | $207 | $117 | $90 | | **Total nonaccrual loans** | **$1,244** | **$969** | **$275** | - Nonaccrual loans increased by **$275 million** (**28.38%**) from December 31, 2023, to September 30, 2024, with Commercial loans contributing the most to this increase[101](index=101&type=chunk) - During the nine months ended September 30, 2024, **$660 million** in loans were modified for borrowers experiencing financial difficulties, with term extensions being the most common modification type[128](index=128&type=chunk) Loans Pledged as Collateral (September 30, 2024, millions) | Facility | Lendable Collateral Value | Available Borrowing Capacity | | :---------------- | :------------------------ | :--------------------------- | | FHLB of Atlanta | $17,245 | $15,795 | | FRB | $5,621 | $5,621 | | FDIC | $44,117 | $8,126 | [NOTE 5 — ALLOWANCE FOR LOAN AND LEASE LOSSES](index=41&type=section&id=NOTE%205%20%E2%80%94%20ALLOWANCE%20FOR%20LOAN%20AND%20LEASE%20LOSSES) This note details the activity and composition of the Allowance for Loan and Lease Losses by segment Allowance for Loan and Lease Losses Activity (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------- | :------ | :------ | :---------------- | | Balance at beginning of period | $1,747 | $922 | $825 | | Initial PCD ALLL | — | $220 | $(220) | | Day 2 Provision for Loan and Lease Losses | — | $462 | $(462) | | Provision (benefit) for loan and lease losses | $311 | $452 | $(141) | | Charge-offs | $(464) | $(437) | $(27) | | Recoveries | $84 | $54 | $30 | | **Balance at end of period** | **$1,678** | **$1,673** | **$5** | - The ALLL at September 30, 2024, was **$1.68 billion**, a slight increase of **$5 million** from September 30, 2023. The prior year included significant initial provisions related to the SVBB Acquisition[145](index=145&type=chunk) Provision for Credit Losses (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :------- | :---------------- | | Total provision for loan and lease losses | $311 | $914 | $(603) | | Total (benefit) provision for off-balance sheet credit exposure | $(35) | $212 | $(247) | | Provision for credit losses | $276 | $1,126 | $(850) | - The total provision for credit losses for the nine months ended September 30, 2024, decreased by **$850 million** (**75.49%**) YoY, primarily due to the absence of the Day 2 Provision for Credit Losses from the SVBB Acquisition in the current year[146](index=146&type=chunk) [NOTE 6 — LEASES](index=43&type=section&id=NOTE%206%20%E2%80%94%20LEASES) This note provides information on BancShares' lease activities as both a lessee and a lessor Supplemental Lease Information (millions) | Item | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------------- | :----------------- | :---------------- | :---------------- | | Operating lease ROU assets | $331 | $354 | $(23) | | Operating leases (liabilities) | $373 | $396 | $(23) | | Weighted-average remaining lease terms (Operating leases) | 7.5 years | 8.1 years | -0.6 years | | Weighted-average discount rate (Operating leases) | 2.80% | 2.70% | 0.10% | Lease Income (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :----- | :---------------- | | Rental income on operating leases | $776 | $719 | $57 | | Interest income – Sales type and direct financing leases | $131 | $127 | $4 | | Variable lease income included in Other noninterest income | $46 | $44 | $2 | | Interest income – Leveraged leases | $3 | $11 | $(8) | | **Total lease income** | **$956** | **$901** | **$55** | - Total lease income increased by **$55 million** (**6.10%**) for the nine months ended September 30, 2024, primarily driven by higher rental income on operating leases[155](index=155&type=chunk) [NOTE 7 — GOODWILL AND CORE DEPOSIT INTANGIBLES](index=44&type=section&id=NOTE%207%20%E2%80%94%20GOODWILL%20AND%20CORE%20DEPOSIT%20INTANGIBLES) This note provides information on goodwill and core deposit intangibles, including amortization - Goodwill remained at **$346 million** at September 30, 2024, and December 31, 2023, with no impairment recorded during the nine months ended September 30, 2024 or 2023[156](index=156&type=chunk) Core Deposit Intangibles Activity (millions) - Nine Months Ended September 30, 2024 | Item | Amount | | :---------------------------------------- | :----- | | Balance at beginning of period, net of accumulated amortization | $312 | | Less: amortization for the period | $47 | | **Balance at end of period, net of accumulated amortization** | **$265** | - Core deposit intangibles, net of accumulated amortization, decreased by **$47 million** from **$312 million** at the beginning of the period to **$265 million** at September 30, 2024, due to amortization[157](index=157&type=chunk) Core Deposit Intangible Expected Amortization (millions) | Period | Expected Amortization | | :------------ | :-------------------- | | Remainder 2024 | $16 | | 2025 | $54 | | 2026 | $46 | | 2027 | $39 | | 2028 | $34 | | 2029 | $30 | | Thereafter | $46 | | **Total** | **$265** | [NOTE 8 — VARIABLE INTEREST ENTITIES](index=45&type=section&id=NOTE%208%20%E2%80%94%20VARIABLE%20INTEREST%20ENTITIES) This note discusses BancShares' involvement with Variable Interest Entities, primarily affordable housing tax credit investments - BancShares has no consolidated VIEs but holds unconsolidated VIEs, primarily in affordable housing tax credit investments, to fulfill CRA requirements and obtain tax credits[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) Unconsolidated VIEs Carrying Value (millions) | Item | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------------- | :----------------- | :---------------- | :---------------- | | Affordable housing tax credit investments | $2,066 | $1,887 | $179 | | Total assets (maximum loss exposure) | $2,217 | $2,052 | $165 | | Liabilities for commitments to tax credit investments | $1,033 | $947 | $86 | - Affordable housing tax credit investments increased by **$179 million** (**9.49%**) from December 31, 2023, to September 30, 2024[164](index=164&type=chunk) Net Income Tax Benefit from Affordable Housing Tax Credit Investments (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :----- | :---------------- | | Amortization of affordable housing tax credit investments | $176 | $111 | $65 | | Tax credits from affordable housing tax credit investments | $(173) | $(79) | $(94) | | Other tax benefits from affordable housing tax credit investments | $(29) | $(45) | $16 | | **Net income tax benefit** | **$(26)** | **$(13)** | **$(13)** | [NOTE 9 — OTHER ASSETS](index=46&type=section&id=NOTE%209%20%E2%80%94%20OTHER%20ASSETS) This note provides a detailed breakdown of the components comprising 'Other Assets' on the consolidated balance sheets Other Assets (millions) | Item | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------------------- | :----------------- | :---------------- | :---------------- | | Affordable housing tax credit and other unconsolidated investments | $2,217 | $2,052 | $165 | | Accrued interest receivable | $904 | $832 | $72 | | Fair value of derivative financial instruments | $553 | $640 | $(87) | | Pension assets | $482 | $474 | $8 | | Right of use assets for operating leases, net | $331 | $354 | $(23) | | Income tax receivable | $342 | $209 | $133 | | Other | $796 | $871 | $(75) | | **Total other assets** | **$6,091** | **$5,857** | **$234** | - Total other assets increased by **$234 million** (**4.00%**) from December 31, 2023, to September 30, 2024, primarily due to increases in affordable housing tax credit investments and income tax receivable, partially offset by decreases in derivative financial instruments and other assets[167](index=167&type=chunk) [NOTE 10 — DEPOSITS](index=46&type=section&id=NOTE%2010%20%E2%80%94%20DEPOSITS) This note provides a detailed breakdown of deposit types, including noninterest-bearing and various interest-bearing accounts Deposit Types (millions) | Deposit Type | September 30, 2024 | December 31, 2023 | Change (millions) | Change (%) | | :-------------------- | :----------------- | :---------------- | :---------------- | :--------- | | Noninterest-bearing demand | $39,396 | $39,799 | $(403) | -1.01% | | Checking with interest | $23,216 | $23,754 | $(538) | -2.27% | | Money market | $34,567 | $30,611 | $3,956 | 12.92% | | Savings | $40,266 | $35,258 | $5,008 | 14.21% | | Time | $14,129 | $16,432 | $(2,303) | -14.02% | | **Total deposits** | **$151,574** | **$145,854** | **$5,720** | **3.92%** | - Total deposits increased by **$5.72 billion** (**3.92%**) from December 31, 2023, to September 30, 2024, primarily driven by significant growth in money market and savings accounts, partially offset by declines in time and noninterest-bearing deposits[168](index=168&type=chunk) Scheduled Maturities of Time Deposits (September 30, 2024, millions) | Period | Amount | | :-------------------- | :----- | | Twelve months ended September 30, 2025 | $13,400 | | 2026 | $641 | | 2027 | $47 | | 2028 | $20 | | 2029 | $21 | | Thereafter | — | | **Total time deposits** | **$14,129** | - Time deposits with a denomination of **$250,000** or more decreased from **$4.16 billion** at December 31, 2023, to **$3.84 billion** at September 30, 2024[169](index=169&type=chunk) [NOTE 11 — BORROWINGS](index=47&type=section&id=NOTE%2011%20%E2%80%94%20BORROWINGS) This note details the company's short-term and long-term borrowings, including the Purchase Money Note to the FDIC Total Borrowings (millions) | Borrowing Type | September 30, 2024 | December 31, 2023 | Change (millions) | Change (%) | | :-------------------- | :----------------- | :---------------- | :---------------- | :--------- | | Short-term borrowings | $391 | $485 | $(94) | -19.38% | | Long-term borrowings | $36,770 | $37,169 | $(399) | -1.07% | | **Total borrowings** | **$37,161** | **$37,654** | **$(493)** | **-1.31%** | - Total borrowings decreased by **$493 million** (**1.31%**) from December 31, 2023, to September 30, 2024, primarily due to a reduction in long-term borrowings and securities sold under agreements to repurchase[12](index=12&type=chunk) Long-term Borrowings (millions) | Item | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------------------- | :----------------- | :---------------- | :---------------- | | Purchase Money Note to FDIC fixed at 3.50% | $35,991 | $36,072 | $(81) | | Fixed-to-Floating subordinated notes at 3.375% | $351 | $350 | $1 | | Senior unsecured fixed-to-floating rate notes at 2.969% | — | $316 | $(316) | | Junior subordinated debentures (FCB/SC Capital Trust II) | — | $20 | $(20) | - The company redeemed **$316 million** of senior unsecured fixed-to-floating rate notes and **$20 million** of junior subordinated debentures during the period[174](index=174&type=chunk) - Investment securities with an aggregate carrying value of **$3.82 billion** were pledged as collateral at September 30, 2024[90](index=90&type=chunk) [NOTE 12 — DERIVATIVE FINANCIAL INSTRUMENTS](index=48&type=section&id=NOTE%2012%20%E2%80%94%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes BancShares' use of derivative financial instruments for hedging interest rate exposure and customer risk management - BancShares uses interest rate swap contracts for hedging (floating-rate loan portfolio cash flow hedges and fair value hedges of fixed-rate borrowings and deposits) and for customer risk management (non-qualifying hedges)[176](index=176&type=chunk)[177](index=177&type=chunk) Notional Amount and Fair Value of Derivative Financial Instruments (millions) | Item | September 30, 2024 (Notional) | September 30, 2024 (Asset Fair Value) | September 30, 2024 (Liability Fair Value) | December 31, 2023 (Asset Fair Value) | December 31, 2023 (Liability Fair Value) | | :---------------------------------------- | :---------------------------- | :------------------------------------ | :---------------------------------------- | :----------------------------------- | :--------------------------------------- | | Derivatives designated as hedging instruments | $3,584 | — | — | — | — | | Derivatives not designated as hedging instruments | $35,044 | $553 | $(507) | $640 | $(636) | | **Total derivative assets** | | **$553** | | **$640** | | | **Total derivative liabilities** | | | **$(507)** | | **$(636)** | - Total derivative assets decreased from **$640 million** at December 31, 2023, to **$553 million** at September 30, 2024, while total derivative liabilities decreased from **$636 million** to **$507 million**[179](index=179&type=chunk) Gains (Losses) on Non-Qualifying Hedges (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :------------------------ | :----- | :----- | :---------------- | | Interest rate contracts | $6 | $37 | $(31) | | Foreign currency forward contracts | $3 | $10 | $(7) | | Other contracts | $1 | $1 | $0 | | **Total non-qualifying hedges - income statement impact** | **$10** | **$48** | **$(38)** | [NOTE 13 — OTHER LIABILITIES](index=51&type=section&id=NOTE%2013%20%E2%80%94%20OTHER%20LIABILITIES) This note provides a detailed breakdown of the components comprising 'Other Liabilities' on the consolidated balance sheets Other Liabilities (millions) | Item | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------------------- | :----------------- | :---------------- | :---------------- | | Deferred taxes | $3,561 | $3,579 | $(18) | | Commitments to fund tax credit investments | $1,033 | $947 | $86 | | Incentive plan liabilities | $570 | $689 | $(119) | | Fair value of derivative financial instruments | $507 | $636 | $(129) | | Lease liabilities | $373 | $396 | $(23) | | Reserve for off-balance sheet credit exposure | $281 | $316 | $(35) | | Other | $1,015 | $855 | $160 | | **Total other liabilities** | **$7,754** | **$7,906** | **$(152)** | - Total other liabilities decreased by **$152 million** (**1.92%**) from December 31, 2023, to September 30, 2024, primarily due to decreases in incentive plan liabilities, derivative financial instruments, and reserve for off-balance sheet credit exposure, partially offset by an increase in commitments to fund tax credit investments and other liabilities[185](index=185&type=chunk) - Deferred taxes primarily include those associated with the SVBB Acquisition[185](index=185&type=chunk) [NOTE 14 — FAIR VALUE](index=51&type=section&id=NOTE%2014%20%E2%80%94%20FAIR%20VALUE) This note details the fair value measurements of financial assets and liabilities, categorized into a three-level hierarchy - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[187](index=187&type=chunk) Assets and Liabilities Measured at Fair Value - Recurring Basis (September 30, 2024, millions) | Item | Total Fair Value | Level 1 | Level 2 | Level 3 | | :---------------------------------------- | :--------------- | :------ | :------ | :------ | | Investment securities available for sale | $28,190 | — | $28,026 | $164 | | Marketable equity securities | $82 | $31 | $51 | — | | Loans held for sale | $41 | — | $41 | — | | Total derivative assets | $553 | — | $538 | $15 | | Total derivative liabilities | $507 | — | $506 | $1 | - Most investment securities available for sale and derivatives are valued using Level 2 inputs, while a portion of corporate bonds and certain other derivative contracts utilize Level 3 unobservable inputs[189](index=189&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) Assets Measured at Fair Value - Non-recurring Basis (September 30, 2024, millions) | Item | Total Fair Value | Level 1 | Level 2 | Level 3 | | :---------------------------- | :--------------- | :------ | :------ | :------ | | Assets held for sale - loans | $3 | — | — | $3 | | Loans - collateral dependent loans | $314 | — | — | $314 | | Other real estate owned | $13 | — | — | $13 | | **Total** | **$331** | **—** | **—** | **$331** | - Non-recurring fair value measurements for assets like collateral-dependent loans and OREO primarily use Level 3 inputs, relying on appraisals or third-party value estimates with discounts for selling costs[202](index=202&type=chunk)[203](index=203&type=chunk) - Net loans are generally valued using discounted cash flow methodologies with market inputs and internal estimates, classifying them as Level 3 due to the significance of unobservable inputs[208](index=208&type=chunk) [NOTE 15 — STOCKHOLDERS' EQUITY](index=58&type=section&id=NOTE%2015%20%E2%80%94%20STOCKHOLDERS%27%20EQUITY) This note details the common stock activity, including shares outstanding and repurchases, and summarizes preferred stock Number of Shares of Common Stock Outstanding | Item | September 30, 2024 (Class A) | September 30, 2024 (Class B) | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Common stock - June 30, 2024 | 13,524,550 | 1,005,185 | | Shares purchased under authorized repurchase plan | (353,058) | — | | Restricted stock units vested, net of shares held to cover taxes | 2,531 | — | | **Common stock - September 30, 2024** | **13,174,023** | **1,005,185** | - During the three months ended September 30, 2024, BancShares repurchased **353,058 shares** of Class A common stock[217](index=217&type=chunk) Preferred Stock Summary (millions, except per share data) | Preferred Stock | Issuance Date | Earliest Redemption Date | Liquidation Preference Per Share | Total Liquidation Preference | | :-------------- | :------------ | :----------------------- | :------------------------------- | :--------------------------- | | Series A | March 12, 2020 | March 15, 2025 | $1,000 | $345 | | Series B | January 3, 2022 | January 4, 2027 | $1,000 | $325 | | Series C | January 3, 2022 | January 4, 2027 | $25 | $200 | - Dividends on BancShares Preferred Stock are non-cumulative and payable quarterly, if declared by the Board of Directors[219](index=219&type=chunk) [NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=58&type=section&id=NOTE%2016%20%E2%80%94%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note provides a detailed breakdown of the components of Accumulated Other Comprehensive Income, net of income taxes Components of Accumulated Other Comprehensive (Loss) Income (millions) | Item | September 30, 2024 (Net of Income Taxes) | December 31, 2023 (Net of Income Taxes) | Change (millions) | | :---------------------------------------- | :--------------------------------------- | :-------------------------------------- | :---------------- | | Unrealized loss on securities available for sale | $(252) | $(577) | $325 | | Defined benefit pension items | $83 | $91 | $(8) | | Unrealized gain on cash flow hedge derivatives | $14 | — | $14 | | **Total accumulated other comprehensive loss** | **$(159)** | **$(491)** | **$332** | - Total accumulated other comprehensive loss improved by **$332 million** from **$(491) million** at December 31, 2023, to **$(159) million** at September 30, 2024, primarily due to a reduction in unrealized losses on securities available for sale[220](index=220&type=chunk) Changes in Accumulated Other Comprehensive (Loss) Income by Component (millions) - Nine Months Ended September 30, 2024 | Item | Unrealized loss on securities available for sale | Unrealized loss on securities available for sale transferred to held to maturity | Defined benefit pension items | Unrealized gain on cash flow hedge derivatives | Total accumulated other comprehensive loss | | :---------------------------------------- | :----------------------------------------------- | :------------------------------------------------------------------------------- | :---------------------------- | :--------------------------------------------- | :----------------------------------------- | | Balance as of December 31, 2023 | $(577) | $(5) | $91 | — | $(491) | | Other comprehensive income (loss) for the period | $325 | $1 | $(8) | $14 | $332 | | **Balance as of September 30, 2024** | **$(252)** | **$(4)** | **$83** | **$14** | **$(159)** | [NOTE 17 — EARNINGS PER COMMON SHARE](index=60&type=section&id=NOTE%2017%20%E2%80%94%20EARNINGS%20PER%20COMMON%20SHARE) This note provides the computation of basic and diluted earnings per common share, including net income and weighted average shares Earnings per Common Share (millions, except per share data) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change ($) | | :---------------------------------------- | :-------- | :-------- | :--------- | | Net income available to common stockholders | $2,031 | $10,908 | $(8,877) | | Weighted average common shares outstanding (Diluted) | 14,481,919 | 14,539,383 | (57,464) | | **Diluted Earnings per common share** | **$140.26** | **$750.19** | **$(609.93)** | - Diluted earnings per common share decreased significantly from **$750.19** in the prior year to **$140.26** for the nine months ended September 30, 2024, primarily due to the lower net income available to common stockholders[225](index=225&type=chunk) [NOTE 18 — INCOME TAXES](index=61&type=section&id=NOTE%2018%20%E2%80%94%20INCOME%20TAXES) This note discusses BancShares' effective income tax rates and the factors influencing them, including the SVBB Acquisition Effective Income Tax Rates (ETRs) | Period | 2024 | 2023 | Change (bps) | | :-------------------------------------- | :------ | :------ | :----------- | | Three months ended September 30 | 26.8% | 24.6% | 220 | | Nine months ended September 30 | 27.3% | 3.6% | 2370 | - The ETR for the nine months ended September 30, 2024, significantly increased to **27.3%** from **3.6%** in the prior year, primarily due to the non-taxable nature of the gain on the SVBB Acquisition in the prior year period[226](index=226&type=chunk) - BancShares evaluates its ability to recognize deferred tax assets (DTAs) quarterly and recognizes tax benefits when it is more likely than not that the position will prevail[228](index=228&type=chunk)[229](index=229&type=chunk) [NOTE 19 — EMPLOYEE BENEFIT PLANS](index=61&type=section&id=NOTE%2019%20%E2%80%94%20EMPLOYEE%20BENEFIT%20PLANS) This note outlines BancShares' sponsorship of non-contributory defined benefit pension plans and presents net periodic benefit cost - BancShares sponsors non-contributory defined benefit pension plans for qualifying employees[230](index=230&type=chunk) Components of Net Periodic Benefit Cost (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :-------------------- | :----- | :----- | :---------------- | | Service cost | $7 | $7 | $0 | | Interest cost | $45 | $45 | $0 | | Expected return on assets | $(69) | $(64) | $(5) | | **Net periodic benefit** | **$(17)** | **$(12)** | **$(5)** | - Net periodic benefit cost for the nine months ended September 30, 2024, was **$(17) million**, a decrease of **$5 million** from the prior year, primarily due to a higher expected return on assets[231](index=231&type=chunk) [NOTE 20 — BUSINESS SEGMENT INFORMATION](index=61&type=section&id=NOTE%2020%20%E2%80%94%20BUSINESS%20SEGMENT%20INFORMATION) This note details BancShares' business segments: General Bank, Commercial Bank, SVB Commercial, and Rail, along with Corporate - BancShares' segments include General Bank, Commercial Bank, SVB Commercial, and Rail, with a Corporate section for unallocated financial information. Segment reporting was recast in Q1 2024[233](index=233&type=chunk) - General Bank offers consumer and business banking, residential mortgages, wealth management, and community association banking[234](index=234&type=chunk) - Commercial Bank provides lending, leasing, capital markets, asset management, and factoring services to small and middle market companies[236](index=236&type=chunk)[237](index=237&type=chunk) - SVB Commercial serves commercial clients and investors in the innovation ecosystem, including private equity and venture capital firms, with capital call lines of credit and investor-dependent loans[239](index=239&type=chunk) - Rail segment offers customized leasing and financing solutions for railcars and locomotives to railroads and shippers[241](index=241&type=chunk) Segment Net Income (millions) - Nine Months Ended September 30 | Segment | 2024 | 2023 | Change (millions) | | :---------------- | :----- | :------- | :---------------- | | General Bank | $718 | $666 | $52 | | Commercial Bank | $355 | $141 | $214 | | SVB Commercial | $632 | $370 | $262 | | Rail | $75 | $68 | $7 | | Corporate | $297 | $9,707 | $(9,410) | | **Total BancShares** | **$2,077** | **$10,952** | **$(8,875)** | [NOTE 21 — COMMITMENTS AND CONTINGENCIES](index=65&type=section&id=NOTE%2021%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines BancShares' financial instruments with off-balance sheet risk, legal proceedings, and other contingencies Credit-Related Commitments (millions) | Commitment Type | September 30, 2024 | December 31, 2023 | Change (millions) | | :---------------------------- | :----------------- | :---------------- | :---------------- | | Financing assets (excluding leases) | $56,147 | $57,567 | $(1,420) | | Standby letters of credit | $2,261 | $2,412 | $(151) | | Deferred Purchase Agreements | $1,902 | $2,076 | $(174) | | Purchase and Funding Commitments | $372 | $685 | $(313) | - Financing commitments, letters of credit, and deferred purchase agreements represent potential future cash outflows, but many are expected to expire unused or partially used[250](index=250&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) - BancShares is involved in various legal actions and estimates an aggregate range of reasonably possible losses of up to **$10 million** in excess of established reserves and insurance for certain litigation matters as of September 30, 2024[257](index=257&type=chunk)[258](index=258&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=68&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on First Citizens BancShares, Inc.'s financial condition and results of operations [EXECUTIVE OVERVIEW](index=68&type=section&id=EXECUTIVE%20OVERVIEW) This section provides an overview of BancShares' business, including its diverse financial services and the impact of the SVBB Acquisition - First Citizens BancShares, Inc. is a bank holding company providing diverse financial services, including retail and mortgage banking, wealth management, small and middle market banking, factoring, and leasing[266](index=266&type=chunk) - The SVBB Acquisition expanded the client base to include private equity and venture capital clients, diversified the loan portfolio across technology, life science, and healthcare industries, and enhanced digital capabilities[269](index=269&type=chunk) - On July 25, 2024, the Board authorized a share repurchase program of up to **$3.5 billion** through 2025, with approximately **$700 million** of Class A common stock repurchased in Q3 2024[272](index=272&type=chunk) - An estimated **$20 million** loan loss reserve was recorded related to Hurricane Helene as of September 30, 2024, with ongoing assessment for Hurricane Milton[274](index=274&type=chunk) - Segment reporting and loan classes were updated in Q1 2024, integrating SVB's private banking into General Bank and renaming the SVB segment to SVB Commercial[275](index=275&type=chunk)[276](index=276&type=chunk) [Recent Economic, Industry and Regulatory Developments](index=70&type=section&id=Recent%20Economic,%20Industry%20and%20Regulatory%20Developments) This section discusses recent changes in monetary policy, regulatory developments, and their potential impact on the company - The FOMC reduced the benchmark federal funds rate to **4.75%-5.00%** in September 2024 and further to **4.50%-4.75%** in November 2024, citing increased confidence in inflation moving towards **2%**[279](index=279&type=chunk) - An additional FDIC insurance special assessment charge of approximately **$11 million** was accrued in 2024 due to revised loss estimates from bank failures, payable in two quarterly installments starting in 2026[280](index=280&type=chunk) - Federal banking agencies issued NPRs in 2023 related to enhanced capital and long-term debt requirements for banking organizations with **$100 billion** or more in total assets, which BancShares is evaluating and expects to require raising additional long-term debt[281](index=281&type=chunk) - The FDIC adopted a final rule (CIDI Rule) effective October 1, 2024, requiring covered insured depository institutions like BancShares to submit full resolution plans every **three years**, with the first submission due in 2025[282](index=282&type=chunk) [Financial Performance Summary](index=70&type=section&id=Financial%20Performance%20Summary) This section summarizes BancShares' financial results for the current quarter, linked quarter, and year-to-date periods Selected Financial Data - Three Months Ended September 30 | Item (millions) | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | Change QoQ (millions) | Change YoY (millions) | | :------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :-------------------- | | Net income | $639 | $707 | $752 | $(68) | $(113) | | Diluted earnings per common share | $43.42 | $47.54 | $50.67 | $(4.12) | $(7.25) | | Net interest income | $1,796 | $1,821 | $1,990 | $(25) | $(194) | | Provision for credit losses | $117 | $95 | $192 | $22 | $(75) | | Total noninterest income | $650 | $639 | $615 | $11 | $35 | | Total noninterest expense | $1,456 | $1,386 | $1,416 | $70 | $40 | Selected Financial Data - Nine Months Ended September 30 | Item (millions) | Sep 30, 2024 | Sep 30, 2023 | Change YTD (millions) | | :------------------------------ | :----------- | :----------- | :-------------------- | | Net income | $2,077 | $10,952 | $(8,875) | | Diluted earnings per common share | $140.26 | $750.19 | $(609.93) | | Net interest income | $5,434 | $4,801 | $633 | | Provision for credit losses | $276 | $1,126 | $(850) | | Total noninterest income | $1,916 | $11,532 | $(9,616) | | Total noninterest expense | $4,218 | $3,843 | $375 | - Net income for Q3 2024 decreased by **$68 million** QoQ and **$113 million** YoY, mainly due to higher noninterest expense and lower net interest income[289](index=289&type=chunk) - Year-to-date net income decreased by **$8.88 billion** YoY, primarily due to the **$9.89 billion** gain on acquisition in the prior year related to the SVBB Acquisition[289](index=289&type=chunk) Select Ending Balances (millions) | Item | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Change from Dec 31, 2023 (millions) | | :---------------------------- | :----------- | :----------- | :----------- | :---------------------------------- | | Total loans and leases | $138,695 | $139,341 | $133,302 | $5,393 | | Investment securities | $38,663 | $37,666 | $30,000 | $8,663 | | Total deposits | $151,574 | $151,079 | $145,854 | $5,720 | | Total borrowings | $37,161 | $37,458 | $37,654 | $(493) | - Loans and leases increased by **$5.39 billion** (**4%**) from December 31, 2023, to September 30, 2024, driven by growth in commercial and consumer loans, but decreased by **$646 million** (**1%**) QoQ[290](index=290&type=chunk) - Deposits increased by **$5.72 billion** (**4%**) from December 31, 2023, to September 30, 2024, reflecting growth in the Branch Network, Direct Bank, and SVB Commercial segment[291](index=291&type=chunk) [Funding, Liquidity and Capital Overview](index=74&type=section&id=Funding,%20Liquidity%20and%20Capital%20Overview) This section provides an overview of BancShares' funding sources, liquidity position, investment securities duration, and capital position - Deposits represented approximately **80%** of total funding at September 30, 2024[292](index=292&type=chunk) Select Deposit Data (September 30, 2024) | Segment | Ending Balance (millions) | Average Size (thousands) | Uninsured % | | :------------------------ | :------------------------ | :----------------------- | :---------- | | General Bank segment | $72,169 | $35 | 36% | | Commercial Bank segment | $2,754 | $232 | 84% | | SVB Commercial segment | $35,945 | $502 | 72% | | Corporate and Rail segment | $40,706 | $56 | 8% | | **Total** | **$151,574** | **$53** | **39%** | - Total uninsured deposits were approximately **$58.59 billion**, or **39%** of total deposits, at September 30, 2024, up from **37%** at December 31, 2023[293](index=293&type=chunk) - At September 30, 2024, BancShares had **$58.36 billion** in high-quality liquid assets and **$29.64 billion** in unused borrowing capacity (FHLB and FRB), with an immediate available capacity of **$8.13 billion** from the FDIC Advance Facility Agreement[295](index=295&type=chunk)[297](index=297&type=chunk) - The investment securities portfolio had an average duration of approximately **2.8 years** at September 30, 2024[298](index=298&type=chunk) - BancShares and FCB's regulatory capital ratios significantly exceed prompt corrective action well-capitalized thresholds and Basel III requirements[300](index=300&type=chunk) [RESULTS OF OPERATIONS](index=75&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of BancShares' financial performance, focusing on key income statement metrics [Net Interest Income and Net Interest Margin](index=75&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income and net interest margin are analyzed based on changes in interest rates, volume, and composition of assets and liabilities - NII for Q3 2024 was **$1.80 billion**, a decrease of **$25 million** QoQ, primarily due to a **$33 million** increase in interest expense partially offset by an **$8 million** increase in interest income[304](index=304&type=chunk) - NIM for Q3 2024 was **3.53%**, a decrease of **11 basis points** (bps) QoQ, mainly related to lower Purchase Accounting Accretion (PAA) and changes in NII[304](index=304&type=chunk) - NII for the current YTD was **$5.43 billion**, an increase of **$633 million** (**13%**) YoY, reflecting the inclusion of acquired SVBB operations and higher interest income on loans and investment securities[309](index=309&type=chunk) - NIM for the current YTD was **3.62%**, a decrease of **33 bps** YoY, primarily due to higher average balances and rates paid on interest-bearing deposits and the Purchase Money Note, partially offset by higher yields on loans and investment securities[309](index=309&type=chunk) Average Balances and Yields/Rates - Three Months Ended September 30, 2024 vs. June 30, 2024 (millions) | Item | Sep 30, 2024 (Avg Balance) | Sep 30, 2024 (Yield/Rate) | Jun 30, 2024 (Avg Balance) | Jun 30, 2024 (Yield/Rate) | Change in NII Due to Volume | Change in NII Due to Yield/Rate | Total Change in NII | | :---------------------------------- | :------------------------- | :------------------------ | :------------------------- | :------------------------ | :-------------------------- | :------------------------------ | :------------------ | | Loans and leases | $137,602 | 7.03% | $135,965 | 7.15% | $38 | $(30) | $8 | | Investment securities | $38,189 | 3.70% | $36,445 | 3.60% | $16 | $11 | $27 | | Interest-earning deposits at banks | $26,167 | 5.33% | $28,059 | 5.42% | $(22) | $(6) | $(28) | | **Total interest-earning assets** | **$202,199** | **6.18%** | **$200,705** | **6.26%** | **$33** | **$(25)** | **$8** | | Interest-bearing deposits | $112,446 | 3.55% | $110,902 | 3.54% | $23 | $6 | $29 | | Borrowings | $37,448 | 3.61% | $37,480 | 3.56% | $(1) | $5 | $4 | | **Total interest-bearing liabilities** | **$149,894** | **3.57%** | **$148,382** | **3.54%** | **$22** | **$11** | **$33** | | **Net interest income** | | **3.53%** | | **3.64%** | | | **$(25)** | [Provision for Credit Losses](index=81&type=section&id=Provision%20for%20Credit%20Losses) This section analyzes the provision for credit losses, highlighting the impact of specific events and prior year acquisitions - Provision for credit losses was **$117 million** in Q3 2024, an increase of **$22 million** QoQ, mainly due to a **$20 million** estimate related to Hurricane Helene and increases in net charge-offs and specific reserves[311](index=311&type=chunk) - Provision for credit losses for the current YTD was **$276 million**, a decrease of **$850 million** (**76%**) YoY, primarily because the prior YTD included the **$716 million** Day 2 Provision for Credit Losses from the SVBB Acquisition[312](index=312&type=chunk) Provision for Credit Losses (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :------- | :---------------- | | Total provision for loan and lease losses | $311 | $914 | $(603) | | Total (benefit) provision for off-balance sheet credit exposure | $(35) | $212 | $(247) | | (Benefit) provision for investment securities available for sale credit losses | — | $(3) | $3 | | **Provision for credit losses** | **$276** | **$1,126** | **$(850)** | [Noninterest Income](index=82&type=section&id=Noninterest%20Income) This section analyzes the components of noninterest income, including rental income and other fee-based revenues - Noninterest income for Q3 2024 was **$650 million**, an increase of **$11 million** (**2%**) QoQ, driven by favorable fair value adjustments on marketable equity securities and higher capital market fees[318](index=318&type=chunk)[319](index=319&type=chunk) - Noninterest income for the current YTD was **$1.92 billion**, a decrease of **$9.62 billion** YoY, primarily due to the **$9.89 billion** gain on acquisition in the prior YTD related to the SVBB Acquisition[318](index=318&type=chunk) Noninterest Income (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :------- | :---------------- | | Rental income on operating lease equipment | $776 | $719 | $57 | | Fee income and other service charges | $233 | $188 | $45 | | Client investment fees | $159 | $106 | $53 | | Wealth management services | $157 | $140 | $17 | | Gain on acquisition | — | $9,891 | $(9,891) | | Other noninterest income | $92 | $102 | $(10) | | **Total noninterest income** | **$1,916** | **$11,532** | **$(9,616)** | - Rental income on operating lease equipment increased by **$57 million** (**8%**) for the current YTD, benefiting from growth in operating lease equipment and strong re-pricing in the rail portfolio[317](index=317&type=chunk) [Noninterest Expense](index=83&type=section&id=Noninterest%20Expense) This section analyzes the components of noninterest expense, including salaries, benefits, and acquisition-related costs - Noninterest expense for Q3 2024 was **$1.46 billion**, an increase of **$70 million** (**5%**) QoQ, primarily due to increases of **$43 million** in salaries and benefits and **$18 million** in professional fees[324](index=324&type=chunk) - The increase in salaries and benefits was mainly attributable to an additional working day, net staff additions, and higher incentive accruals and temporary labor costs associated with technology projects[324](index=324&type=chunk) - Noninterest expense for the current YTD was **$4.22 billion**, an increase of **$375 million** (**10%**) YoY, mostly due to the inclusion of acquired SVBB operations, leading to higher salaries and benefits and equipment expense[325](index=325&type=chunk) Noninterest Expense (millions) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :---------------------------------------- | :----- | :----- | :---------------- | | Depreciation on operating lease equipment | $293 | $275 | $18 | | Maintenance and other operating lease expenses | $164 | $163 | $1 | | Salaries and benefits | $2,277 | $1,922 | $355 | | Professional fees | $91 | $43 | $48 | | FDIC insurance expense | $105 | $76 | $29 | | Acquisition-related expenses | $148 | $354 | $(206) | | **Total noninterest expense** | **$4,218** | **$3,843** | **$375** | - Acquisition-related expenses decreased by **$206 million** YoY for the current YTD, from **$354 million** to **$148 million**[321](index=321&type=chunk) [Income Taxes](index=84&type=section&id=Income%20Taxes) This section analyzes BancShares' effective tax rates for both quarterly and year-to-date periods, explaining influencing factors Income Tax Data (millions, except ETR) | Item | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income before income taxes | $873 | $997 | $2,856 | $11,364 | | Income tax expense | $234 | $245 | $779 | $412 | | **Effective tax rate** | **26.8%** | **24.6%** | **27.3%** | **3.6%** | - The effective tax rate (ETR) for Q3 2024 was **26.8%**, a decrease from **27.8%** in the linked quarter due to state tax law changes[328](index=328&type=chunk) - The ETR for the current YTD was **27.3%**, a significant increase from **3.6%** in the prior YTD, primarily due to the non-taxable nature of the **$9.89 billion** gain on the SVBB Acquisition in the prior year[328](index=328&type=chunk) [RESULTS BY BUSINESS SEGMENT](index=85&type=section&id=RESULTS%20BY%20BUSINESS%20SEGMENT) This section provides a detailed analysis of the financial performance of BancShares' four business segments and Corporate [General Bank](index=85&type=section&id=General%20Bank) The General Bank segment's net income increased QoQ and YoY, driven by higher net interest income from loan growth General Bank: Financial Data (millions) - Three Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :------------------------ | :----- | :----- | :---------------- | | Net interest income | $768 | $681 | $87 | | Provision for credit losses | $38 | $24 | $14 | | Net income | $263 | $225 | $38 | | Loans and leases | $66,092 | $61,035 | $5,057 | | Deposits | $72,169 | $69,108 | $3,061 | - General Bank segment net income for Q3 2024 increased by **$18 million** QoQ and **$38 million** YoY, benefiting from higher NII due to loan growth and a lower provision for credit losses QoQ[333](index=333&type=chunk) - Loans and leases in the General Bank segment increased by **$897 million** QoQ, mainly from growth in commercial and business loans in the Branch Network[335](index=335&type=chunk) - Deposits in the General Bank segment increased by **$690 million** QoQ, primarily in money market deposits in the Branch Network[336](index=336&type=chunk) [Commercial Bank](index=86&type=section&id=Commercial%20Bank) The Commercial Bank segment experienced a decrease in net income QoQ due to higher provision for credit losses and increased noninterest expense Commercial Bank: Financial Data (millions) - Three Months Ended September 30 | Item | 2024 | 2023 | Change (millions) | | :------------------------ | :----- | :----- | :---------------- | | Net interest income | $274 | $249 | $25 | | Provision for credit losses | $29 | $132 | $(103) | | Net income | $110 | $37 | $73 | | Loans and leases | $32,689 | $30,220 | $2,469 | | Deposits | $2,754 | $3,370 | $(616) | - Commercial Bank segment net income for Q3 2024 decreased by **$13 million** QoQ, primarily due to a **$7 million** increase in provision for credit losses (driven by higher net charge-offs in CRE and Equipment Finance) and higher noninterest expense[338](index=338&type=chunk) - Commercial Bank segment n

Dollars in millions, except per share data | | | | | Three Months Ended | | | | | Nine Months Ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Summary Financial Data & Key Metrics | | September 30, 2024 | | June 30, 2024 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 | | Results of Operations: | | | | | | | | | | | | Net interest income | $ | 1,796 | $ | 1,821 | $ | 1,990 | $ | 5,434 | $ | 4,801 | | Provision for credit losses | | 117 | | 95 | | 192 | | 2 ...

Financial Performance - Net interest income for the three months ended June 30, 2024, was $1.821 billion, a decrease of 7.1% compared to $1.961 billion in the same period of 2023[14]. - Net income for the three months ended June 30, 2024, was $707 million, up 3.7% from $682 million in the same period of 2023[14]. - For the six months ended June 30, 2024, net income was $1,438 million, a decrease of 86.9% compared to $10,200 million for the same period in 2023[22]. - Noninterest income for the six months ended June 30, 2024, was $1.266 billion, significantly lower than $10.917 billion in the same period of 2023, primarily due to a one-time gain on acquisition in 2023[14]. - Earnings per common share for the three months ended June 30, 2024, was $47.54, compared to $45.90 for the same period in 2023, representing a growth of 3.6%[14]. Asset and Liability Management - Total assets increased to $219.827 billion as of June 30, 2024, up from $213.758 billion at December 31, 2023, representing a growth of 2.5%[12]. - Total liabilities increased to $197.340 billion as of June 30, 2024, compared to $192.503 billion at December 31, 2023, reflecting a growth of 2.9%[12]. - Total stockholders' equity increased to $22.487 billion as of June 30, 2024, up from $21.255 billion at December 31, 2023, marking a growth of 5.8%[12]. - The allowance for loan and lease losses was $1.700 billion as of June 30, 2024, slightly down from $1.747 billion at December 31, 2023[12]. Credit Quality - Provision for credit losses decreased to $95 million for the three months ended June 30, 2024, compared to $151 million in the same period of 2023, indicating improved credit quality[14]. - The provision for credit losses for the same period was $159 million, down from $934 million in 2023, indicating improved credit quality[22]. - BancShares reported no debt securities on nonaccrual status as of June 30, 2024, indicating a stable credit quality[90]. - The total delinquency status for loans and leases was $1.411 billion past due as of June 30, 2024, compared to $1.550 billion on December 31, 2023, indicating a decrease in delinquency[99]. Acquisition and Integration - The company completed the acquisition of Silicon Valley Bridge Bank on March 27, 2023, which included substantially all loans and certain other assets[27]. - The total purchase price consideration for the acquisition was $36.308 billion, which includes a Purchase Money Note of $35.808 billion and a Value Appreciation Instrument of $500 million[57]. - BancShares acquired assets with a total fair value of approximately $107.54 billion, including $68.47 billion of loans and $35.31 billion of cash and interest-earning deposits at banks[51]. - The company assumed liabilities with a total fair value of approximately $61.42 billion, primarily including $56.01 billion of customer deposits[51]. Investment Securities - The fair value of investment securities held to maturity was $8.946 billion as of June 30, 2024, with total investment securities valued at $36.077 billion[79]. - BancShares' investment securities available for sale had a fair value of $27.05 billion as of June 30, 2024, down from $19.94 billion at December 31, 2023[84]. - The total investment securities held to maturity had a fair value of $8.95 billion as of June 30, 2024, compared to $8.50 billion at December 31, 2023[84]. Loan Performance - Total loans and leases as of June 30, 2024, amounted to $139.341 billion, an increase from $133.302 billion on December 31, 2023[99]. - Nonaccrual loans totaled $1.141 billion as of June 30, 2024, up from $969 million on December 31, 2023[101]. - The total amount of loans greater than 90 days past due and still accruing was $152 million as of June 30, 2024[101]. - The total amount of other real estate owned (OREO) and repossessed assets was $64 million as of June 30, 2024, compared to $62 million on December 31, 2023[101]. Modifications and Charge-offs - Total loans and leases modified during the three months ended June 30, 2024, amounted to $293 million, with a total modification percentage of 0.21%[123]. - The total gross charge-offs for loans and leases reached $287 million for the six months ended June 30, 2024, compared to $238 million for the same period in 2023, reflecting an increase of approximately 20.6%[117]. - The total residential mortgage charge-offs were $2 million for the six months ended June 30, 2024, consistent with the previous year[117]. Deposits - Total deposits rose to $151.079 billion, an increase of 3.8% from $145.854 billion at the end of 2023[12]. - Time deposits decreased to $15.159 billion as of June 30, 2024, from $16.432 billion at December 31, 2023, a decline of 7.7%[167]. Derivative Instruments - The total notional amount of derivatives designated as hedging instruments is $3,999 million, with a liability fair value of $815 million[178]. - The total notional amount of derivatives not designated as hedging instruments is $35,184 million, with an asset fair value of $646 million and a liability fair value of $(636) million[178]. - The fair value of derivative financial instruments was $646 million as of June 30, 2024, slightly up from $640 million at December 31, 2023[165].

PART I [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of First Citizens BancShares, Inc. and its subsidiaries, including balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, business combinations, investment securities, loans, and other financial components [Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Consolidated Balance Sheet Highlights (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Total assets | $217,836 | $213,758 | | Total liabilities | $195,988 | $192,503 | | Total stockholders' equity | $21,848 | $21,255 | | Total deposits | $149,609 | $145,854 | | Loans and leases, net | $133,633 | $131,555 | [Consolidated Statements of Income (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Income%20(Unaudited)) Consolidated Statements of Income Highlights (dollars in millions, except per share data) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Total interest income | $3,084 | $1,211 | | Total interest expense | $1,267 | $361 | | Net interest income | $1,817 | $850 | | Provision for credit losses | $64 | $783 | | Net income | $731 | $9,518 | | Net income available to common stockholders | $716 | $9,504 | | Diluted Earnings per common share | $49.26 | $653.64 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Consolidated Statements of Comprehensive Income Highlights (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $731 | $9,518 | | Other comprehensive (loss) income, net of tax | $(91) | $66 | | Total comprehensive income | $640 | $9,584 | [Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20(Unaudited)) Changes in Stockholders' Equity (dollars in millions) | Item | Balance at Dec 31, 2023 | Net Income | Other Comprehensive Loss | Stock Based Compensation | Cash Dividends Declared | Preferred Stock Dividends Declared | Balance at Mar 31, 2024 | | :------------------------------------- | :---------------------- | :--------- | :----------------------- | :----------------------- | :---------------------- | :------------------------------- | :---------------------- | | Total Stockholders' Equity | $21,255 | $731 | $(91) | $(9) | $(23) | $(15) | $21,848 | [Consolidated Statements of Cash Flows (Unaudited)](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statements of Cash Flows Highlights (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $461 | $(362) | | Net cash (used in) provided by investing activities | $(4,291) | $2,628 | | Net cash provided by (used in) financing activities | $3,620 | $(1,186) | | Change in cash and due from banks | $(210) | $1,080 | | Cash and due from banks at end of period | $698 | $1,598 | [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%20%E2%80%94%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20BASIS%20OF%20PRESENTATION) This note outlines BancShares' nature of operations, accounting for business combinations (specifically the SVBB Acquisition), principles of consolidation, reclassification of prior period financial statements, changes in segment and loan class reporting, and the adoption of new accounting standards (ASU 2023-02 and ASU 2022-03) which had no material impact - BancShares is a financial holding company operating through its banking subsidiary, FCB, providing commercial and consumer banking, lending, leasing, and wealth management services across various U.S. regions[26](index=26&type=chunk) - The SVBB Acquisition on March 27, 2023, was accounted for using the acquisition method, with acquired assets and assumed liabilities recorded at estimated fair value[27](index=27&type=chunk)[28](index=28&type=chunk) - During Q1 2024, segment reporting was updated: SVB segment was renamed SVB Commercial, private banking/wealth management components of SVB were integrated into General Bank, and Direct Bank was transitioned to Corporate[34](index=34&type=chunk)[35](index=35&type=chunk)[41](index=41&type=chunk) - Loan classes were also remapped in Q1 2024, moving private bank, CRE, and 'other' loan classes from the SVB portfolio to Commercial and Consumer portfolios[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk) - BancShares adopted ASU 2023-02 (proportional amortization method for tax credit structures) and ASU 2022-03 (fair value measurement of equity securities with sale restrictions) as of January 1, 2024, neither of which had a material impact[45](index=45&type=chunk)[46](index=46&type=chunk) [NOTE 2 — BUSINESS COMBINATIONS](index=15&type=section&id=NOTE%202%20%E2%80%94%20BUSINESS%20COMBINATIONS) This note details the Silicon Valley Bridge Bank (SVBB) acquisition, finalized on March 27, 2023. It covers the fair value allocation of acquired assets and assumed liabilities, the Purchase Money Note issued to the FDIC, the Value Appreciation Instrument, and the recognition of a $9.81 billion gain on acquisition - FCB acquired substantially all loans and certain other assets, and assumed all customer deposits and certain other liabilities of SVBB from the FDIC on March 27, 2023[47](index=47&type=chunk) - Management finalized fair value estimates for acquired assets and assumed liabilities, with no Measurement Period Adjustments recorded during the three months ended March 31, 2024[49](index=49&type=chunk) SVBB Acquisition Fair Value Purchase Price Allocation (dollars in millions as of March 27, 2023) | Item | Fair Value | | :------------------------------------- | :--------- | | **Purchase Price Consideration:** | | | Purchase Money Note | $35,808 | | Value Appreciation Instrument | $500 | | **Total Purchase Price Consideration** | **$36,308** | | **Assets Acquired:** | | | Cash and due from banks | $1,310 | | Interest-earning deposits at banks | $34,001 | | Loans and leases, net of initial PCD ALLL | $68,468 | | Total assets acquired | $107,539 | | **Liabilities Assumed:** | | | Deposits | $56,014 | | Deferred tax liabilities | $3,364 | | Total liabilities assumed | $61,423 | | **Gain on acquisition, after income taxes** | **$9,808** | - As consideration, FCB issued a five-year **$36.07 billion Purchase Money Note** to the FDIC and a **$500 million Cash Settled Value Appreciation Instrument** (exercised March 28, 2023)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - A gain on acquisition of **$9.81 billion** (net of income taxes) was recognized, representing the excess of the fair value of net assets acquired over the purchase price[56](index=56&type=chunk) [NOTE 3 — INVESTMENT SECURITIES](index=20&type=section&id=NOTE%203%20%E2%80%94%20INVESTMENT%20SECURITIES) This note provides a detailed breakdown of BancShares' investment securities portfolio, including available-for-sale and held-to-maturity categories, their amortized cost, fair value, and unrealized gains and losses. It highlights a net pretax unrealized loss of $876 million for available-for-sale securities and $1,571 million for held-to-maturity securities as of March 31, 2024, with no allowance for credit loss deemed necessary Investment Securities Amortized Cost and Fair Value (dollars in millions) | Category | March 31, 2024 Amortized Cost | March 31, 2024 Fair Value | December 31, 2023 Amortized Cost | December 31, 2023 Fair Value | | :------------------------------------- | :-------------------------- | :------------------------ | :-------------------------- | :------------------------ | | Investment securities available for sale | $25,791 | $24,915 | $20,688 | $19,936 | | Investment in marketable equity securities | $75 | $79 | $75 | $84 | | Investment securities held to maturity | $10,050 | $8,479 | $9,979 | $8,503 | | **Total investment securities** | **$35,916** | **$33,473** | **$30,742** | **$28,523** | Gross Unrealized Losses on Investment Securities (dollars in millions) | Category | March 31, 2024 Gross Unrealized Losses | December 31, 2023 Gross Unrealized Losses | | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Investment securities available for sale | $(927) | $(867) | | Investment securities held to maturity | $(1,571) | $(1,476) | | **Total gross unrealized losses** | **$(2,498)** | **$(2,343)** | - No allowance for credit loss was required for available-for-sale or held-to-maturity debt securities as of March 31, 2024, due to strong credit ratings and historical performance[86](index=86&type=chunk)[87](index=87&type=chunk) - Investment securities with an aggregate carrying value of **$3.90 billion** were pledged as collateral at March 31, 2024[88](index=88&type=chunk) [NOTE 4 — LOANS AND LEASES](index=24&type=section&id=NOTE%204%20%E2%80%94%20LOANS%20AND%20LEASES) This note details the composition of BancShares' loan and lease portfolio, including commercial, consumer, and SVB segments. It provides delinquency status, nonaccrual loan information, credit quality indicators, and details on loan modifications for borrowers experiencing financial difficulties. The note also outlines loans pledged as collateral for various borrowing facilities Loans and Leases by Class (dollars in millions) | Loan Class | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Commercial | $67,601 | $66,232 | | Consumer | $27,923 | $27,559 | | SVB | $39,846 | $39,511 | | **Total loans and leases** | **$135,370** | **$133,302** | Loans on Nonaccrual Status (dollars in millions) | Loan Class | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Commercial | $805 | $698 | | Consumer | $145 | $154 | | SVB | $124 | $117 | | **Total nonaccrual loans** | **$1,074** | **$969** | Amortized Cost of Loans Modified (dollars in millions, Three Months Ended March 31, 2024) | Loan Class | Term Extension | Payment Delay | Interest Rate Reduction | Extension and Interest Rate Reduction | Other Combinations | Total | | :------------------------------------- | :------------- | :------------ | :---------------------- | :------------------------------------ | :----------------- | :---- | | Commercial | $79 | $0 | $1 | $9 | $36 | $125 | | Consumer | $7 | $0 | $0 | $3 | $0 | $10 | | SVB | $18 | $30 | $0 | $0 | $19 | $67 | | **Total loans and leases** | **$104** | **$30** | **$1** | **$12** | **$55** | **$202** | Loans Pledged as Collateral (dollars in millions, March 31, 2024) | Facility | Lendable Collateral Value | Available Borrowing Capacity | | :------------------------------------- | :-------------------------- | :--------------------------- | | FHLB of Atlanta | $15,882 | $14,432 | | FRB | $5,514 | $5,514 | | FDIC | $48,921 | $12,849 | [NOTE 5 — ALLOWANCE FOR LOAN AND LEASE LOSSES](index=41&type=section&id=NOTE%205%20%E2%80%94%20ALLOWANCE%20FOR%20LOAN%20AND%20LEASE%20LOSSES) This note details the Allowance for Loan and Lease Losses (ALLL) activity and the components of the provision for credit losses. The ALLL decreased by $10 million to $1.74 billion at March 31, 2024, primarily due to changes in macroeconomic forecasts and a decline in specific reserves. The total provision for credit losses was $64 million for the current quarter, a significant decrease from $783 million in the prior year quarter Allowance for Loan and Lease Losses Activity (dollars in millions, Three Months Ended March 31, 2024) | Item | Commercial | Consumer | SVB | Total | | :------------------------------------- | :--------- | :------- | :---- | :---- | | Balance at beginning of period | $1,126 | $166 | $455 | $1,747 | | Provision (benefit) for loan and lease losses | $59 | $(6) | $40 | $93 | | Charge-offs | $(75) | $(7) | $(46) | $(128) | | Recoveries | $10 | $2 | $13 | $25 | | **Balance at end of period** | **$1,120** | **$155** | **$462** | **$1,737** | Provision for Credit Losses (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Total provision for loan and lease losses | $93 | $533 | | Total (benefit) provision for off-balance sheet credit exposure | $(29) | $246 | | Provision for investment securities available for sale credit losses | $0 | $4 | | **Provision for credit losses** | **$64** | **$783** | [NOTE 6 — LEASES](index=42&type=section&id=NOTE%206%20%E2%80%94%20LEASES) This note details BancShares' lease activities as both a lessee (primarily administrative offices and bank locations) and a lessor (equipment to commercial end-users). It provides supplemental balance sheet information for lease assets and liabilities, weighted-average lease terms and discount rates, and components of net lease cost and lease income Supplemental Lease Information (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Operating lease ROU assets | $355 | $354 | | Operating lease liabilities | $397 | $396 | | Weighted-average remaining operating lease terms | 7.9 years | 8.1 years | | Weighted-average operating lease discount rate | 2.76% | 2.70% | Lease Income (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Rental income on operating leases | $255 | $233 | | Interest income – Sales type and direct financing leases | $43 | $41 | | Interest income – Leveraged leases | $1 | $5 | | **Total lease income** | **$315** | **$294** | [NOTE 7 — GOODWILL AND CORE DEPOSIT INTANGIBLES](index=43&type=section&id=NOTE%207%20%E2%80%94%20GOODWILL%20AND%20CORE%20DEPOSIT%20INTANGIBLES) This note reports BancShares' goodwill balance and details the activity and expected amortization of core deposit intangibles. Goodwill remained stable at $346 million, with no impairment. Core deposit intangibles, valued at $295 million net of amortization, are being amortized over an estimated useful life of 8 years - Goodwill remained at **$346 million** at March 31, 2024, with no impairment during the quarter[150](index=150&type=chunk) Core Deposit Intangibles (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Balance, net of accumulated amortization | $295 | $312 | | Amortization for the period (Q1 2024) | $17 | N/A | | Estimated Useful Life | 8 years | 8 years | Core Deposit Intangible Expected Amortization (dollars in millions) | Period | Amount | | :------------------------------------- | :----- | | Remainder 2024 | $46 | | 2025 | $54 | | 2026 | $46 | | 2027 | $39 | | 2028 | $34 | | 2029 | $30 | | Thereafter | $46 | | **Total net of accumulated amortization** | **$295** | [NOTE 8 — VARIABLE INTEREST ENTITIES](index=44&type=section&id=NOTE%208%20%E2%80%94%20VARIABLE%20INTEREST%20ENTITIES) This note clarifies that BancShares had no consolidated Variable Interest Entities (VIEs) but held unconsolidated VIEs, primarily affordable housing tax credit investments. These investments, totaling $1.95 billion at March 31, 2024, are accounted for using the proportional amortization method and provide tax benefits recognized in income tax expense - BancShares had **no consolidated VIEs** at March 31, 2024, or December 31, 2023[155](index=155&type=chunk) Unconsolidated VIEs Carrying Value (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Affordable housing tax credit investments | $1,942 | $1,887 | | Other tax credit equity investments | $3 | $3 | | Other unconsolidated investments | $154 | $162 | | **Total assets (maximum loss exposure)** | **$2,099** | **$2,052** | | Liabilities for commitments to tax credit investments | $982 | $947 | Tax Credit Investments Recognized in Income Tax Expense (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Amortization of affordable housing tax credit investments | $59 | $18 | | Tax credits from affordable housing tax credit investments | $(57) | $(15) | | Other tax benefits from affordable housing tax credit investments | $(11) | $0 | | **Net income tax (benefit) expense from affordable housing tax credit investments** | **$(9)** | **$3** | [NOTE 9 — OTHER ASSETS](index=45&type=section&id=NOTE%209%20%E2%80%94%20OTHER%20ASSETS) This note provides a detailed breakdown of BancShares' other assets, which totaled $5.83 billion at March 31, 2024. Key components include affordable housing tax credit investments, accrued interest receivable, and fair value of derivative financial instruments Other Assets (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Affordable housing tax credit and other unconsolidated investments | $2,099 | $2,052 | | Accrued interest receivable | $914 | $832 | | Fair value of derivative financial instruments | $659 | $640 | | Pension assets | $480 | $474 | | Right of use assets for operating leases, net | $355 | $354 | | Income tax receivable | $103 | $209 | | Counterparty receivables | $79 | $114 | | Bank-owned life insurance | $106 | $105 | | Nonmarketable equity securities | $107 | $103 | | Other real estate owned | $56 | $58 | | Mortgage servicing rights | $25 | $25 | | Federal Home Loan Bank stock | $20 | $20 | | Other | $828 | $871 | | **Total other assets** | **$5,831** | **$5,857** | [NOTE 10 — DEPOSITS](index=45&type=section&id=NOTE%2010%20%E2%80%94%20DEPOSITS) This note details BancShares' deposit composition, which totaled $149.61 billion at March 31, 2024, an increase from December 31, 2023. It provides a breakdown by type (noninterest-bearing, checking, money market, savings, and time deposits) and the scheduled maturities for time deposits Deposit Types (dollars in millions) | Deposit Type | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Noninterest-bearing demand | $39,276 | $39,799 | | Checking with interest | $24,244 | $23,754 | | Money market | $31,393 | $30,611 | | Savings | $37,688 | $35,258 | | Time | $17,008 | $16,432 | | **Total deposits** | **$149,609** | **$145,854** | Scheduled Maturities of Time Deposits (dollars in millions, as of March 31, 2024) | Period | Amount | | :------------------------------------- | :----- | | Twelve months ended March 31, 2025 | $15,831 | | Twelve months ended March 31, 2026 | $1,065 | | Twelve months ended March 31, 2027 | $66 | | Twelve months ended March 31, 2028 | $28 | | Twelve months ended March 31, 2029 | $18 | | Thereafter | $0 | | **Total time deposits** | **$17,008** | - Time deposits with a denomination of **$250,000 or more** were **$4.35 billion** at March 31, 2024, up from **$4.16 billion** at December 31, 2023[165](index=165&type=chunk) [NOTE 11 — BORROWINGS](index=46&type=section&id=NOTE%2011%20%E2%80%94%20BORROWINGS) This note details BancShares' short-term and long-term borrowings, which totaled $37.54 billion at March 31, 2024. It highlights a decrease in total borrowings from the prior quarter, primarily due to a decline in securities sold under repurchase agreements and repayments of subordinated debt, including the call of certain junior subordinated debentures Borrowings (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Securities sold under agreements to repurchase | $395 | $485 | | Long-term borrowings | $37,145 | $37,169 | | **Total borrowings** | **$37,540** | **$37,654** | Long-term Borrowings (dollars in millions, as of March 31, 2024) | Item | Maturity | Amount | | :------------------------------------- | :------------- | :----- | | Fixed-to-Floating subordinated notes at 3.375% | March 2030 | $350 | | Senior unsecured fixed-to-floating rate notes at 2.969% | September 2025 | $315 | | Fixed senior unsecured notes at 6.00% | April 2036 | $51 | | Fixed subordinated notes at 6.125% | March 2028 | $400 | | Fixed-to-Fixed subordinated notes at 4.125% | November 2029 | $100 | | Purchase Money Note to FDIC fixed at 3.50% | March 2028 | $36,072 | | Capital lease obligations | Through May 2057 | $8 | | Unamortized purchase accounting adjustments | N/A | $(151) | | **Total long-term borrowings** | | **$37,145** | - Junior subordinated debentures (FCB/SC Capital Trust II and SCB Capital Trust I) were called during Q1 2024, resulting in a **$2 million loss on extinguishment of debt**[170](index=170&type=chunk) [NOTE 12 — DERIVATIVE FINANCIAL INSTRUMENTS](index=47&type=section&id=NOTE%2012%20%E2%80%94%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note details BancShares' derivative financial instruments, categorizing them as designated hedging instruments (interest rate swaps) and non-designated instruments (interest rate and foreign exchange contracts for client needs). It provides notional amounts and fair values, highlighting that most derivatives are valued using Level 2 inputs, with a small portion using Level 3 inputs Notional Amount and Fair Value of Derivative Financial Instruments (dollars in millions, as of March 31, 2024) | Category | Notional Amount | Asset Fair Value | Liability Fair Value | | :------------------------------------- | :-------------- | :--------------- | :------------------- | | Derivatives designated as hedging instruments | $1,149 | $0 | $0 | | Interest rate contracts – non-qualifying hedges | $25,623 | $573 | $(590) | | Foreign exchange contracts – non-qualifying hedges | $8,630 | $78 | $(63) | | Other contracts – non-qualifying hedges | $1,145 | $8 | $(1) | | **Total derivatives not designated as hedging instruments** | **$35,398** | **$659** | **$(654)** | | **Gross derivatives fair values** | | **$659** | **$(654)** | - Gains on non-qualifying hedges recognized in the Consolidated Statements of Income totaled **$19 million** for the three months ended March 31, 2024[177](index=177&type=chunk) [NOTE 13 — OTHER LIABILITIES](index=50&type=section&id=NOTE%2013%20%E2%80%94%20OTHER%20LIABILITIES) This note details the components of BancShares' other liabilities, which totaled $7.69 billion at March 31, 2024. The largest components include deferred taxes, commitments to fund tax credit investments, and fair value of derivative financial instruments Other Liabilities (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Deferred taxes | $3,545 | $3,579 | | Commitments to fund tax credit investments | $982 | $947 | | Incentive plan liabilities | $283 | $676 | | Fair value of derivative financial instruments | $654 | $636 | | Accrued expenses and accounts payable | $549 | $351 | | Lease liabilities | $397 | $396 | | Reserve for off-balance sheet credit exposure | $287 | $316 | | Accrued interest payable | $141 | $137 | | Other | $849 | $868 | | **Total other liabilities** | **$7,687** | **$7,906** | [NOTE 14 — FAIR VALUE](index=50&type=section&id=NOTE%2014%20%E2%80%94%20FAIR%20VALUE) This note outlines BancShares' fair value measurements, categorizing financial instruments into a three-level hierarchy based on input observability. It details assets and liabilities measured at fair value on both a recurring and non-recurring basis, including investment securities, marketable equity securities, loans held for sale, and derivatives, and provides quantitative information on Level 3 measurements - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[180](index=180&type=chunk) Assets Measured at Fair Value - Recurring Basis (dollars in millions, March 31, 2024) | Item | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------- | :---- | :------ | :------ | :------ | | Investment securities available for sale | $24,915 | $0 | $24,754 | $161 | | Marketable equity securities | $79 | $32 | $47 | $0 | | Loans held for sale | $50 | $0 | $50 | $0 | | Total derivative assets | $659 | $0 | $650 | $9 | | **Total Assets** | **$25,703** | **$32** | **$25,401** | **$170** | Liabilities Measured at Fair Value - Recurring Basis (dollars in millions, March 31, 2024) | Item | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------- | :---- | :------ | :------ | :------ | | Total derivative liabilities | $654 | $0 | $653 | $1 | | **Total Liabilities** | **$654** | **$0** | **$653** | **$1** | Assets Measured at Fair Value - Non-recurring Basis (dollars in millions, March 31, 2024) | Item | Total | Level 1 | Level 2 | Level 3 | | :------------------------------------- | :---- | :------ | :------ | :------ | | Assets held for sale - loans | $11 | $0 | $0 | $11 | | Loans - collateral dependent loans | $157 | $0 | $0 | $157 | | Other real estate owned | $36 | $0 | $0 | $36 | | **Total** | **$204** | **$0** | **$0** | **$204** | [NOTE 15 — STOCKHOLDERS' EQUITY](index=57&type=section&id=NOTE%2015%20%E2%80%94%20STOCKHOLDERS%27%20EQUITY) This note details the composition and activity of BancShares' common and preferred stock. As of March 31, 2024, Class A common stock outstanding increased slightly due to vested restricted stock units, while Class B common stock remained stable. It also outlines the terms and dividend rates for Series A, B, and C non-cumulative perpetual preferred stock Number of Shares of Common Stock Outstanding | Class | December 31, 2023 | Restricted Stock Units Vested, Net of Taxes | March 31, 2024 | | :------------------------------------- | :---------------- | :------------------------------------------ | :------------- | | Class A Common Stock | 13,514,933 | 9,617 | 13,524,550 | | Class B Common Stock | 1,005,185 | — | 1,005,185 | - Class A common stock has **one vote per share**, while Class B common stock has **16 votes per share**[209](index=209&type=chunk) Non-Cumulative Perpetual Preferred Stock (dollars in millions, except per share data) | Series | Issuance Date | Earliest Redemption Date | Liquidation Preference Per Share | Total Liquidation Preference | Dividend | | :------------------------------------- | :------------ | :----------------------- | :----------------------------- | :--------------------------- | :------- | | Series A | March 12, 2020 | March 15, 2025 | $1,000 | $345 | 5.375% | | Series B | January 3, 2022 | January 4, 2027 | $1,000 | $325 | SOFR + 3.972% | | Series C | January 3, 2022 | January 4, 2027 | $25 | $200 | 5.625% | [NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=57&type=section&id=NOTE%2016%20%E2%80%94%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) This note details the components and changes in Accumulated Other Comprehensive (Loss) Income (AOCI). As of March 31, 2024, total AOCI was a loss of $582 million, primarily driven by unrealized losses on securities available for sale, which increased by $91 million during the quarter Components of Accumulated Other Comprehensive (Loss) Income (dollars in millions) | Item | March 31, 2024 Net of Income Taxes | December 31, 2023 Net of Income Taxes | | :------------------------------------- | :--------------------------------- | :--------------------------------- | | Unrealized loss on securities available for sale | $(668) | $(577) | | Unrealized loss on securities available for sale transferred to held to maturity | $(5) | $(5) | | Defined benefit pension items | $91 | $91 | | **Total accumulated other comprehensive loss** | **$(582)** | **$(491)** | Changes in Accumulated Other Comprehensive (Loss) Income by Component (dollars in millions, Three Months Ended March 31, 2024) | Item | Unrealized loss on securities available for sale | Total accumulated other comprehensive (loss) income | | :------------------------------------- | :--------------------------------------------- | :------------------------------------------ | | Balance as of December 31, 2023 | $(577) | $(491) | | AOCI activity before reclassifications | $(91) | $(91) | | Other comprehensive loss for the period | $(91) | $(91) | | **Balance as of March 31, 2024** | **$(668)** | **$(582)** | [NOTE 17 — EARNINGS PER COMMON SHARE](index=59&type=section&id=NOTE%2017%20%E2%80%94%20EARNINGS%20PER%20COMMON%20SHARE) This note provides the computation of basic and diluted earnings per common share for BancShares. For the three months ended March 31, 2024, basic EPS was $49.27 and diluted EPS was $49.26, based on net income available to common stockholders of $716 million Earnings per Common Share (dollars in millions, except per share data) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income available to common stockholders | $716 | $9,504 | | Basic shares outstanding | 14,533,302 | 14,526,693 | | Diluted shares outstanding | 14,536,442 | 14,539,709 | | Basic Earnings per common share | $49.27 | $654.22 | | Diluted Earnings per common share | $49.26 | $653.64 | [NOTE 18 — INCOME TAXES](index=59&type=section&id=NOTE%2018%20%E2%80%94%20INCOME%20TAXES) This note discusses BancShares' effective income tax rates (ETRs), which increased significantly to 27.2% for the three months ended March 31, 2024, from (0.5)% in the prior year quarter. This change was primarily due to the non-taxable nature of the gain on acquisition related to the SVBB Acquisition in the prior year - BancShares' effective income tax rate (ETR) was **27.2%** for the three months ended March 31, 2024, a significant increase from **(0.5)%** in the prior year quarter[215](index=215&type=chunk) - The increase in ETR was primarily due to the non-taxable nature of the gain on acquisition relating to the SVBB Acquisition in the prior year quarter[215](index=215&type=chunk) - The ETR is based on a projection of the annual ETR and is impacted by factors such as the mix of domestic and international earnings, changes in tax laws, and valuation allowances[216](index=216&type=chunk) [NOTE 19 — EMPLOYEE BENEFIT PLANS](index=59&type=section&id=NOTE%2019%20%E2%80%94%20EMPLOYEE%20BENEFIT%20PLANS) This note outlines the components of net periodic benefit cost for BancShares' non-contributory defined benefit pension plans. For the three months ended March 31, 2024, the net periodic benefit cost was a benefit of $6 million Components of Net Periodic Benefit Cost (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Service cost | $2 | $2 | | Interest cost | $15 | $15 | | Expected return on assets | $(23) | $(21) | | **Net periodic benefit** | **$(6)** | **$(4)** | [NOTE 20 — BUSINESS SEGMENT INFORMATION](index=60&type=section&id=NOTE%2020%20%E2%80%94%20BUSINESS%20SEGMENT%20INFORMATION) This note details the changes in BancShares' segment reporting during Q1 2024, now comprising General Bank, Commercial Bank, SVB Commercial, and Rail, with unallocated financial information in 'Corporate'. It provides descriptions for each segment, outlining their products, services, and revenue generation methods - Segment reporting was updated in Q1 2024; the SVB segment was renamed SVB Commercial, private banking/wealth management from SVB integrated into General Bank, and Direct Bank moved to Corporate[221](index=221&type=chunk)[222](index=222&type=chunk) - The General Bank segment serves consumers and businesses through branches and digital channels, offering deposits, loans, wealth management, and payment services[223](index=223&type=chunk)[224](index=224&type=chunk) - The Commercial Bank segment provides lending, leasing, capital markets, and factoring services to small and middle-market companies across various industries[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The SVB Commercial segment focuses on commercial clients and investors in the innovation ecosystem, including private equity and venture capital firms, offering specialized loan and deposit products[228](index=228&type=chunk)[229](index=229&type=chunk) - The Rail segment offers customized leasing and financing solutions for railcars and locomotives to railroads and shippers in North America, generating revenue primarily from rental income[230](index=230&type=chunk) - The Corporate segment includes centralized Treasury functions, managing investment securities, interest-earning deposits, and corporate/wholesale funding, and accounts for acquisition-related items[231](index=231&type=chunk)[232](index=232&type=chunk) [NOTE 21 — COMMITMENTS AND CONTINGENCIES](index=62&type=section&id=NOTE%2021%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) This note details BancShares' off-balance sheet financial instruments, including financing commitments, letters of credit, and deferred purchase agreements, which involve credit, interest rate, or liquidity risk. It also addresses legal proceedings, stating that no current actions are material to the consolidated financial statements, but estimates a reasonably possible loss range of up to $10 million for certain matters Credit-Related Commitments (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Financing assets (excluding leases) | $56,685 | $57,567 | | Standby letters of credit | $2,224 | $2,412 | | Other letters of credit | $104 | $103 | | Deferred Purchase Agreements | $1,742 | $2,076 | | Purchase and Funding Commitments | $551 | $685 | - Financing commitments, letters of credit, and deferred purchase agreements involve elements of credit, interest rate, or liquidity risk, with commitment amounts not necessarily reflecting actual future cash flow requirements[235](index=235&type=chunk)[239](index=239&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - Management estimates an aggregate range of reasonably possible losses of up to **$10 million** in excess of established reserves and insurance for certain litigation matters, but this does not represent maximum loss exposure[247](index=247&type=chunk)[248](index=248&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on First Citizens BancShares' financial condition and results of operations, covering an executive overview, detailed analysis of operating results, balance sheet changes, risk management strategies, capital position, critical accounting estimates, recent accounting pronouncements, and non-GAAP financial measures [EXECUTIVE OVERVIEW](index=65&type=section&id=EXECUTIVE%20OVERVIEW) This overview describes BancShares' business, regulatory environment, and significant events, including the SVBB acquisition and recent segment/loan class updates. It also discusses economic and regulatory developments, such as the Federal Reserve's interest rate policy and proposed capital requirements, and summarizes key financial performance and balance sheet highlights for Q1 2024 - BancShares provides diverse financial services, including retail, mortgage, wealth management, small and middle market banking, factoring, and leasing, through an extensive branch network and a nationwide digital banking platform (Direct Bank)[255](index=255&type=chunk)[256](index=256&type=chunk) - The SVBB Acquisition expanded the client base to private equity and venture capital, diversified the loan portfolio across technology and life sciences/healthcare, and enhanced wealth management capabilities[258](index=258&type=chunk) - Segment reporting was updated in Q1 2024, renaming SVB to SVB Commercial, integrating SVB private banking/wealth into General Bank, and moving Direct Bank to Corporate[264](index=264&type=chunk)[265](index=265&type=chunk) - The Federal Reserve maintained benchmark federal funds rate at **5.25%-5.50%** in May 2024, with potential rate cuts later in the year, while economic uncertainty and concerns over commercial real estate (CRE) credit trends persist[268](index=268&type=chunk)[269](index=269&type=chunk) - BancShares accrued an additional **$9 million FDIC insurance special assessment** in Q1 2024, following a **$64 million charge in 2023**, due to expected larger losses to the deposit insurance fund[270](index=270&type=chunk) Selected Financial Data Highlights (dollars in millions, except per share data) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net income | $731 | $514 | +$217 (42%) | | Net income available to common stockholders | $716 | $499 | +$217 (44%) | | Earnings per diluted common share | $49.26 | $34.33 | +$14.93 | | Net interest income | $1,817 | $1,911 | $(94) (5%) | | Net interest margin | 3.67% | 3.86% | -19 bps | | Provision for credit losses | $64 | $249 | $(185) (75%) | | Noninterest income | $627 | $543 | +$84 (16%) | | Noninterest expense | $1,376 | $1,492 | $(116) (8%) | | Total loans and leases (ending balance) | $135,370 | $133,302 | +$2,068 (2%) | | Total investment securities (ending balance) | $35,044 | $29,999 | +$5,045 (17%) | | Total deposits (ending balance) | $149,609 | $145,854 | +$3,755 (3%) | | Total borrowings (ending balance) | $37,540 | $37,654 | $(114) | | Common equity Tier 1 ratio | 13.44% | 13.36% | +0.08% | | Ratio of nonaccrual loans to total loans | 0.79% | 0.73% | +0.06% | | Allowance for loan and lease losses to loans ratio | 1.28% | 1.31% | -0.03% | | Net charge off ratio | 0.31% | 0.53% | -0.22% | [RESULTS OF OPERATIONS](index=71&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes BancShares' operating results, focusing on net interest income and margin, provision for credit losses, noninterest income, noninterest expense, and income taxes. It highlights the drivers of changes in these financial metrics for the current quarter compared to the linked and prior year quarters [NET INTEREST INCOME AND NET INTEREST MARGIN](index=71&type=section&id=NET%20INTEREST%20INCOME%20AND%20NET%20INTEREST%20MARGIN) Net interest income (NII) for Q1 2024 decreased by $94 million (5%) to $1.82 billion from the linked quarter, primarily due to a $61 million increase in interest expense and a $33 million decrease in interest income. Net interest margin (NIM) also decreased by 19 basis points to 3.67% Net Interest Income and Margin (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net interest income | $1,817 | $1,911 | $(94) | | Net interest margin | 3.67% | 3.86% | -19 bps | | Yield on total interest-earning assets | 6.23% | 6.30% | -7 bps | | Rate on total interest-bearing liabilities | 3.49% | 3.37% | +12 bps | Interest Income Components (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Interest and fees on loans | $2,354 | $2,391 | $(37) | | Interest on investment securities | $279 | $239 | +$40 | | Interest on deposits at banks | $448 | $485 | $(37) | Interest Expense Components (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Deposits | $928 | $865 | +$63 | | Borrowings | $339 | $341 | $(2) | - The decrease in loan interest income was primarily due to a **$35 million decline in loan discount accretion** from the SVBB Acquisition[292](index=292&type=chunk) - The increase in interest expense on deposits was driven by higher average balances in the Direct Bank and increased deposit rates[292](index=292&type=chunk) [PROVISION FOR CREDIT LOSSES](index=76&type=section&id=PROVISION%20FOR%20CREDIT%20LOSSES) The provision for credit losses for Q1 2024 significantly decreased by $185 million (75%) to $64 million from the linked quarter. This reduction was mainly due to a $158 million decrease in the provision for loan and lease losses, driven by changes in macroeconomic forecasts, lower specific reserves, and reduced net charge-offs, alongside an increased benefit from off-balance sheet credit exposure Provision for Credit Losses (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Provision for loan and lease losses | $93 | $251 | $(158) | | (Benefit) provision for off-balance sheet credit exposure | $(29) | $(2) | $(27) | | Provision for investment securities available for sale credit losses | $0 | $0 | $0 | | **Total provision for credit losses** | **$64** | **$249** | **$(185)** | - The decrease in provision for loan and lease losses was primarily related to changes in macroeconomic forecasts, a decline in specific reserves on individually evaluated loans, and lower net charge-offs[297](index=297&type=chunk) - The benefit from off-balance sheet credit exposure increased due to a continued decline in unfunded commitments[298](index=298&type=chunk) [NONINTEREST INCOME](index=78&type=section&id=NONINTEREST%20INCOME) Noninterest income for Q1 2024 increased by $84 million (16%) to $627 million from the linked quarter. This rise was primarily driven by an $83 million adjustment to the gain on acquisition in the linked quarter. Rental income on operating lease equipment saw a modest increase, while factoring commissions and capital markets fees decreased Noninterest Income (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Rental income on operating lease equipment | $255 | $252 | +$3 | | Fee income and other service charges | $75 | $80 | $(5) | | Client investment fees | $50 | $51 | $(1) | | Wealth management services | $51 | $48 | +$3 | | International fees | $28 | $30 | $(2) | | Service charges on deposit accounts | $44 | $44 | $0 | | Factoring commissions | $17 | $22 | $(5) | | Cardholder services, net | $40 | $36 | +$4 | | Merchant services, net | $12 | $12 | $0 | | Insurance commissions | $15 | $14 | +$1 | | Fair value adjustment on marketable equity securities, net | $(4) | $9 | $(13) | | Gain on sale of leasing equipment, net | $10 | $2 | +$8 | | Gain on acquisition | $0 | $(83) | +$83 | | Loss on extinguishment of debt | $(2) | $0 | $(2) | | Other noninterest income | $36 | $26 | +$10 | | **Total noninterest income** | **$627** | **$543** | **+$84** | - The increase in total noninterest income was primarily due to an **$83 million adjustment to the gain on acquisition** in the linked quarter, as income tax estimates related to the SVBB Acquisition were refined[303](index=303&type=chunk) - Rental income on operating lease equipment increased due to a higher operating lease equipment balance, improved utilization, and re-pricing in the rail portfolio[302](index=302&type=chunk) - Factoring commissions decreased by **$5 million**, mostly due to lower volume following seasonal holiday retail activity[303](index=303&type=chunk) [NONINTEREST EXPENSE](index=79&type=section&id=NONINTEREST%20EXPENSE) Noninterest expense for Q1 2024 decreased by $116 million (8%) to $1.38 billion from the linked quarter. This reduction was largely driven by lower acquisition-related expenses and a smaller FDIC insurance special assessment, partially offset by higher salaries and benefits due to seasonal adjustments and annual merit increases Noninterest Expense (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Depreciation on operating lease equipment | $96 | $96 | $0 | | Maintenance and other operating lease expenses | $45 | $59 | $(14) | | Salaries and benefits | $744 | $714 | +$30 | | Net occupancy expense | $62 | $65 | $(3) | | Equipment expense | $114 | $114 | $0 | | Professional fees | $25 | $28 | $(3) | | Third-party processing fees | $60 | $66 | $(6) | | FDIC insurance expense | $41 | $82 | $(41) | | Marketing expense | $14 | $24 | $(10) | | Acquisition-related expenses | $58 | $116 | $(58) | | Intangible asset amortization | $17 | $17 | $0 | | Other noninterest expense | $100 | $111 | $(11) | | **Total noninterest expense** | **$1,376** | **$1,492** | **$(116)** | - Salaries and benefits increased by **$30 million** due to seasonal adjustments for the 401(k) plan, payroll taxes, and annual merit adjustments[308](index=308&type=chunk) - FDIC insurance expense decreased by **$41 million**, primarily because the special assessment declined from **$64 million** in the linked quarter to **$9 million** in the current quarter[308](index=308&type=chunk) - Acquisition-related expenses decreased by **$58 million**, reflecting lower severance, retention costs, and professional fees[309](index=309&type=chunk)[310](index=310&type=chunk) [INCOME TAXES](index=80&type=section&id=INCOME%20TAXES) The effective tax rate (ETR) for Q1 2024 was 27.2%, a slight decrease from 27.9% in the linked quarter, primarily due to the impact of return to provision adjustments. The ETR is influenced by various factors, including domestic/international earnings mix and changes in tax laws Income Tax Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Income before income taxes | $1,004 | $713 | +$291 | | Income tax expense | $273 | $199 | +$74 | | Effective tax rate | 27.2% | 27.9% | -0.7% | - The decrease in ETR for the current quarter compared to the linked quarter was primarily due to the impact of return to provision adjustments recorded[313](index=313&type=chunk) [RESULTS BY BUSINESS SEGMENT](index=80&type=section&id=RESULTS%20BY%20BUSINESS%20SEGMENT) This section presents the financial performance of BancShares' updated business segments: General Bank, Commercial Bank, SVB Commercial, Rail, and Corporate. It highlights key income statement and balance sheet trends for each segment, reflecting the impact of strategic reclassifications and market dynamics [General Bank](index=81&type=section&id=General%20Bank) The General Bank segment's net income increased from the linked quarter, driven by lower taxes, reduced provision for credit losses, and higher noninterest income, despite increased noninterest expenses. Loan growth was concentrated in commercial and business loans, while deposits increased, particularly in time deposit and money market products General Bank: Financial Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net interest income | $691 | $692 | $(1) | | Provision for credit losses | $28 | $37 | $(9) | | Noninterest income | $145 | $137 | +$8 | | Noninterest expense | $520 | $490 | +$30 | | Segment net income | $210 | $205 | +$5 | | Loans and leases (period end) | $63,732 | $62,832 | +$900 | | Deposits (period end) | $71,150 | $68,729 | +$2,421 | - Segment NII was relatively flat as higher interest expense for deposits offset higher interest income from loan growth[317](index=317&type=chunk) - Loan growth was primarily in commercial and business loans, as well as from small business lending and wealth channels[318](index=318&type=chunk) - Deposit growth was mainly in the branch network, largely in time deposit and money market products[319](index=319&type=chunk) [Commercial Bank](index=81&type=section&id=Commercial%20Bank) The Commercial Bank segment's net income increased significantly from the linked quarter, primarily due to a lower provision for credit losses, despite higher noninterest expenses and slightly lower noninterest income. Loan growth was observed across various industry verticals, while deposits saw a modest decline Commercial Bank: Financial Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net interest income | $270 | $271 | $(1) | | Provision for credit losses | $14 | $164 | $(150) | | Noninterest income | $136 | $139 | $(3) | | Noninterest expense | $228 | $208 | +$20 | | Segment net income | $122 | $24 | +$98 | | Loans and leases (period end) | $31,730 | $30,936 | +$794 | | Operating lease equipment, net (period end) | $763 | $780 | $(17) | | Deposits (period end) | $3,023 | $3,228 | $(205) | - The decline in the provision for credit losses was primarily due to a release in the ALLL[322](index=322&type=chunk) - Loan growth was driven by increases in healthcare, technology, media and telecommunications, and energy industry verticals[323](index=323&type=chunk) [SVB Commercial](index=82&type=section&id=SVB%20Commercial) The SVB Commercial segment's net income increased from the linked quarter, driven by higher net interest income and a lower provision for credit losses. Loan balances increased due to global fund banking, partially offset by declines in technology and life science/healthcare. Deposits declined as client cash usage outpaced new funding SVB Commercial: Financial Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net interest income | $546 | $519 | +$27 | | Provision for credit losses | $22 | $48 | $(26) | | Noninterest income | $137 | $135 | +$2 | | Noninterest expense | $384 | $384 | $0 | | Segment net income | $202 | $174 | +$28 | | Loans and leases (period end) | $39,846 | $39,511 | +$335 | | Deposits (period end) | $34,014 | $34,730 | $(716) | - Net interest income increased due to higher loan balances and decreases in deposit balances, partially offset by higher deposit costs[324](index=324&type=chunk) - Loan growth was primarily in global fund banking loans, partially offset by declines in technology and life science/healthcare portfolios[325](index=325&type=chunk) - Deposits declined as cash usage by clients offset new funding activity[326](index=326&type=chunk) [Rail](index=83&type=section&id=Rail) The Rail segment's net income increased from the linked quarter, primarily due to lower maintenance expenses and higher rental income on operating lease equipment. Rental income benefited from improved utilization, strong re-pricing, and a larger fleet. The segment's fleet consists of approximately 122,900 railcars and locomotives, with a diverse composition Rail: Financial Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Rental income on operating leases | $198 | $195 | +$3 | | Depreciation on operating lease equipment | $50 | $49 | +$1 | | Maintenance and other operating lease expenses | $45 | $59 | $(14) | | Adjusted rental income on operating lease equipment (non-GAAP) | $103 | $87 | +$16 | | Segment net income | $33 | $22 | +$11 | | Operating lease equipment, net (period end) | $8,048 | $7,966 | +$82 | - Rental income on operating leases increased due to higher utilization, strong re-pricing (**125.0% of prior lease rate**), and a higher number of rail cars owned and leased[328](index=328&type=chunk)[329](index=329&type=chunk) - Maintenance and other operating lease expenses were lower due to reduced repairs and freight charges, as these expenses tend to be variable[328](index=328&type=chunk) - The total operating lease fleet at March 31, 2024, consisted of approximately **122,900 railcars and locomotives**, with **99.2% utilization**[330](index=330&type=chunk)[329](index=329&type=chunk) [Corporate](index=84&type=section&id=Corporate) The Corporate segment's net income increased from the linked quarter, primarily due to lower acquisition-related expenses and a reduced FDIC insurance special assessment. Net interest income decreased due to lower loan discount accretion and higher interest expense on Direct Bank deposits. The prior year quarter included significant impacts from the SVBB acquisition gain and related credit loss provisions Corporate: Financial Data (dollars in millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Change (QoQ) | | :------------------------------------- | :-------------------------------- | :----------------------------------- | :----------- | | Net interest income | $353 | $471 | $(118) | | Provision for credit losses | $0 | $0 | $0 | | Noninterest income | $7 | $(65) | +$72 | | Noninterest expense | $129 | $286 | $(157) | | Segment net income | $164 | $89 | +$75 | | Deposits (period end) | $41,408 | $39,154 | +$2,254 | - Net interest income decreased mainly from lower loan discount accretion income related to the SVBB Acquisition and higher interest expense on Direct Bank interest-bearing deposits[334](index=334&type=chunk) - Noninterest expenses were down due to decreases in acquisition-related expenses (**$58 million** in Q1 2024 vs. **$116 million** in Q4 2023) and the FDIC insurance special assessment (**$9 million** in Q1 2024 vs. **$64 million** in Q4 2023)[335](index=335&type=chunk) - The prior year quarter (Q1 2023) included a **$9.82 billion gain on acquisition** and **$716 million in day 2 provisions for credit losses** related to the SVBB Acquisition[336](index=336&type=chunk) [BALANCE SHEET ANALYSIS](index=85&type=section&id=BALANCE%20SHEET%20ANALYSIS) This section analyzes BancShares' balance sheet, focusing on interest-earning assets, operating lease equipment, and interest-bearing liabilities. It details changes in deposits at banks, investment securities, loans, and borrowings, highlighting growth trends and composition shifts [INTEREST-EARNING ASSETS](index=85&type=section&id=INTEREST-EARNING%20ASSETS) Interest-earning assets totaled $198.59 billion at March 31, 2024. Interest-earning deposits at banks decreased by $2.82 billion to $30.79 billion, while investment securities increased by $5.05 billion to $35.04 billion, primarily due to purchases of short-duration U.S. agency mortgage-backed and U.S. Treasury securities. Loans and leases increased by $2.07 billion to $135.37 billion - Interest-earning deposits at banks decreased by **$2.82 billion** to **$30.79 billion** at March 31, 2024, due to liquidity and funding management, including purchases of investment securities[338](index=338&type=chunk) - The carrying value of investment securities increased by **$5.05 billion (17%)** to **$35.04 billion** at March 31, 2024, primarily driven by **$6.47 billion** in purchases of U.S. agency residential mortgage-backed and short-duration U.S. Treasury investment securities[341](index=341&type=chunk) - Investment securities available for sale had a net pretax unrealized loss of **$876 million** at March 31, 2024, reflecting market interest rate impacts[342](index=342&type=chunk) Investment Securities Composition (dollars in millions, as of March 31, 2024) | Category | Amortized Cost | Fair Value | | :------------------------------------- | :------------- | :--------- | | Investment securities available for sale | $25,791 | $24,915 | | Investment in marketable equity securities | $75 | $79 | | Investment securities held to maturity | $10,050 | $8,479 | | **Total investment securities** | **$35,916** | **$33,473** | Loans and Leases (dollars in millions) | Category | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Commercial | $67,601 | $66,232 | | Consumer | $27,923 | $27,559 | | SVB | $39,846 | $39,511 | | **Total loans and leases** | **$135,370** | **$133,302** | - Loan growth was primarily in commercial and business loans in the General Bank, various industry verticals in the Commercial Bank, and global fund banking in SVB, partially offset by declines in SVB technology and life science/healthcare portfolios[351](index=351&type=chunk) [OPERATING LEASE EQUIPMENT, NET](index=88&type=section&id=OPERATING%20LEASE%20EQUIPMENT%2C%20NET) Operating lease equipment, net, totaled $8.81 billion at March 31, 2024, a slight increase from December 31, 2023. This portfolio is predominantly comprised of railcars and locomotives within the Rail segment, with the remainder in the Commercial Bank segment Operating Lease Equipment (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Railcars and locomotives | $8,048 | $7,966 | | Other equipment | $763 | $780 | | **Total** | **$8,811** | **$8,746** | [INTEREST-BEARING LIABILITIES](index=89&type=section&id=INTEREST-BEARING%20LIABILITIES) Total interest-bearing liabilities increased by $4.16 billion (3%) to $147.87 billion at March 31, 2024, primarily driven by deposit growth. Total deposits rose by $3.76 billion to $149.61 billion, mainly from savings deposit growth in the Direct Bank. Total borrowings decreased by $114 million to $37.54 billion due to declines in short-term borrowings and subordinated debt redemptions - Total interest-bearing liabilities increased by **$4.16 billion (3%)** to **$147.87 billion** at March 31, 2024, primarily due to deposit growth[356](index=356&type=chunk) Deposits by Type (dollars in millions) | Deposit Type | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Noninterest-bearing demand | $39,276 | $39,799 | | Interest-bearing deposits | $110,333 | $106,055 | | **Total deposits** | **$149,609** | **$145,854** | - The increase in deposits was mainly attributable to savings deposit growth in the Direct Bank[357](index=357&type=chunk)[361](index=361&type=chunk) - Uninsured deposits were estimated at **$54.85 billion (36.7% of total deposits)** at March 31, 2024[363](index=363&type=chunk) Borrowings (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Securities sold under customer repurchase agreements | $395 | $485 | | FDIC 3.500% fixed rate note due March 2028 | $35,858 | $35,846 | | Senior Unsecured Borrowings | $376 | $377 | | Subordinated debt | $903 | $938 | | Other borrowings | $8 | $8 | | **Total borrowings** | **$37,540** | **$37,654** | - The decrease in total borrowings was primarily due to declines in short-term borrowings and redemptions of Capital Trust debentures[366](index=366&type=chunk) [RISK MANAGEMENT](index=91&type=section&id=RISK%20MANAGEMENT) BancShares maintains a comprehensive Risk Management Framework and Risk Appetite Framework to manage various risks, including credit, counterparty, asset, market, and liquidity risks. The Board's Risk Committee oversees these functions, ensuring adherence to risk tolerances and monitoring potential impacts from economic conditions and geopolitical events - BancShares operates with a moderate risk appetite, utilizing a comprehensive Risk Management Framework and Risk Appetite Framework and Statement, with oversight from the Board's Risk Committee[369](index=369&type=chunk)[370](index=370&type=chunk) - Enterprise-wide stress testing activities are conducted for various risks to ensure continued operations during stressed periods[371](index=371&type=chunk) - Ongoing assessments monitor potential impacts from international tensions, elevated market volatility, global supply chain disruptions, and recessionary pressures, particularly concerning commercial real estate (CRE) properties[373](index=373&type=chunk) [CREDIT RISK](index=92&type=section&id=CREDIT%20RISK) BancShares manages credit risk through underwriting, periodic reviews, and maintaining an Allowance for Loan and Lease Losses (ALLL). The ALLL decreased by $10 million to $1.74 billion at March 31, 2024, with a ratio of 1.28% to total loans. Nonaccrual loans increased to $1.07 billion, primarily in commercial and SVB portfolios. The CRE portfolio is diversified, but general office loans show elevated non-performing metrics - The ALLL at March 31, 2024, was **$1.74 billion**, a decrease of **$10 million** from December 31, 2023, primarily due to changes in macroeconomic forecasts and a decline in specific reserves[381](index=381&type=chunk)[382](index=382&type=chunk) ALLL Ratios | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | ALLL to total loans and leases | 1.28% | 1.31% | | Commercial ALLL to commercial loans and leases | 1.66% | 1.70% | | Consumer ALLL to consumer loans | 0.56% | 0.60% | | SVB ALLL to SVB loans | 1.16% | 1.15% | - Net charge-offs during Q1 2024 were **$103 million**, a decrease of **$74 million** from the linked quarter, with a net charge-off ratio of **0.31%**[384](index=384&type=chunk) Non-Performing Assets (dollars in millions) | Item | March 31, 2024 | December 31, 2023 | | :------------------------------------- | :------------- | :---------------- | | Total nonaccrual loans | $1,074 | $969 | | Other real estate owned and repossessed assets | $58 | $62 | | **Total nonperforming assets** | **$1,132** | **$1,031** | | Ratio of total nonperforming assets to total loans, leases, OREO and repossessed assets | 0.84% | 0.77% | | Ratio of nonaccrual loans and leases to total loans and leases | 0.79% | 0.73% | - Nonaccrual loans increased by **$105 million**, primarily in commercial and industrial, non-owner occupied commercial

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ FORM 10-K ____________________________________________________ ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2023 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 spec ...

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, 2023 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 Registran ...

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 June 30, 2023 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 ...

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 March 31, 2023 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Commission File Number: 001-16715 ____________________________________________________ FIRST CITIZENS BANCSHARES, INC. (Exact name of Registrant as specified in its charter) _______________________________ ...