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First Citizens BancShares(FCNCA) - 2024 Q4 - Annual Report
FCNCAFirst Citizens BancShares(FCNCA)2025-02-21 21:55
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Financial Performance and Assets - As of December 31, 2024, BancShares had total consolidated assets of 223.72billion[17].−AsofDecember31,2024,BancSharesemployedapproximately17,475staff,reflectingacommitmenttotalentretentionanddevelopment[38].−Thetotalrisk−basedcapitalratiorequiredunderBaselIIIis10.50223.72 billion[17]. - As of December 31, 2024, BancShares employed approximately 17,475 staff, reflecting a commitment to talent retention and development[38]. - The total risk-based capital ratio required under Basel III is 10.50%, with a Tier 1 risk-based capital ratio of 8.50% and a common equity Tier 1 ratio of 7.00%[62]. - The Parent Company relies on dividends from FCB, which may be restricted by state and federal laws, affecting its ability to service debt and pay dividends[144]. - The company issued a five-year note of approximately 36.07 billion payable to the FDIC, with a fixed interest rate of 3.50%[212]. Market Presence and Competition - BancShares operates a network of more than 500 branches and offices nationwide, with significant concentrations in North Carolina (11.3%) and South Carolina (9.3%) based on deposit market share[34]. - The acquisition of Silicon Valley Bridge Bank on March 27, 2023, included all customer deposits and certain liabilities, enhancing BancShares' market presence[26]. - The CIT Group merger completed on January 3, 2022, further expanded BancShares' operational capabilities and market reach[27]. - BancShares faces significant competition from various financial service providers, which may reduce market share and profitability[130]. - The company is subject to significant competition in attracting and retaining qualified personnel, which is critical for executing its growth and acquisition strategies[171]. Regulatory Compliance and Risk Management - BancShares is subject to enhanced prudential standards as a bank holding company with more than 100billioninconsolidatedassets[53].−BancSharesisrequiredtomaintainanenterprise−wideriskmanagementsystemcommensuratewithitssize,risks,activities,andcomplexity[64].−TheproposedBaselIIIEndgamerulewouldapplyadditionalcapitalrequirementsforbankingorganizationswith100 billion in consolidated assets[53]. - BancShares is required to maintain an enterprise-wide risk management system commensurate with its size, risks, activities, and complexity[64]. - The proposed Basel III Endgame rule would apply additional capital requirements for banking organizations with 100 billion or more in total consolidated assets[67]. - FCB is required to submit a full Resolution Plan every three years under the CIDI Rule, with the first submission due by July 1, 2025[63]. - The company is required to maintain adequate liquidity to meet obligations, with enhanced liquidity risk management requirements as a Category IV banking organization[121]. Capital and Investment Strategies - BancShares submitted a capital plan in 2024 in accordance with regulatory requirements, which includes an assessment of expected uses and sources of capital[57]. - FCB is committed to invest 16billionoverfiveyearsincommunitydevelopment,including16 billion over five years in community development, including 5.9 billion in small business lending and 6.9billionincommunitydevelopmentlending[85].−Anaddendumtothecommunitybenefitsplanincludesa6.9 billion in community development lending[85]. - An addendum to the community benefits plan includes a 6.5 billion target, with 2.25billionallocatedforsmallbusinesslendingand2.25 billion allocated for small business lending and 3.6 billion for CRA development lending[86]. - The company anticipates increased compliance costs and risks associated with climate change regulations, which may require significant capital expenditures[178]. Economic and Market Risks - Economic uncertainty could reduce demand for the company's products and services, impacting loan volumes and fee income[135]. - Unfavorable economic conditions could adversely affect the company's operations and financial condition, particularly in key markets such as North Carolina, South Carolina, California, Texas, New York, Massachusetts, and Florida[203]. - Concerns regarding the U.S. debt ceiling and budget deficit could lead to economic slowdowns or recessions, impacting financial markets and the company's earnings[205]. - The Federal Reserve's actions on interest rates could significantly influence net interest income (NII) and net interest margin (NIM)[197]. Cybersecurity and Operational Risks - Cybersecurity threats necessitate significant resources for protective measures, with ongoing risks of data breaches and operational disruptions[154]. - The company faces heightened cybersecurity risks due to geopolitical tensions, particularly from Russia and Iran, which could lead to malicious cyber activities against its operations[155]. - The company is exposed to operational risks from third-party dependencies, which could lead to significant disruptions in business activities if any of these entities experience failures or cyberattacks[158]. - There have been no material losses reported to date from cyberattacks, but the company acknowledges the potential for future losses that may exceed insurance coverage limits[160]. Strategic Initiatives and Future Outlook - BancShares plans to continue pursuing acquisition opportunities to enhance profitability, but future acquisitions may face increased regulatory scrutiny due to recent changes in bank merger review standards[123]. - The SVBB Acquisition increased the complexity of BancShares' business and expanded its geographic scope, with legacy loans concentrated in technology, life science, and healthcare sectors[128]. - Rapid technological changes require the company to continuously adapt its product offerings to remain competitive, with risks associated with customer adoption of new technologies[145]. - BancShares is actively monitoring and evaluating proposals related to AI regulation and their potential impact on operations[108].