FIRST CITIZENS(FCNCP) - 2024 Q3 - Quarterly Report

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] 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] 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][9] PART I—FINANCIAL INFORMATION This part presents the core financial data, including financial statements, management's discussion, and risk disclosures Item 1. Financial Statements This section presents the unaudited consolidated financial statements of First Citizens BancShares, Inc. and its subsidiaries, along with detailed notes Consolidated Balance Sheets (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] - 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] Consolidated Statements of Income (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] - 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] Consolidated Statements of Comprehensive Income (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] - 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] Consolidated Statements of Changes in Stockholders' Equity (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] - During the nine months ended September 30, 2024, the company repurchased 353,058 shares of Class A common stock for $707 million[20] Consolidated Statements of Cash Flows (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] - 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] - 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] Notes to Unaudited Consolidated Financial Statements 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 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] - 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] - 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][41] - 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][39][42] - 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] - 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][48] NOTE 2 — BUSINESS COMBINATIONS 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][52][58] - 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] - 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] - 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][55][56][58] 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 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] 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][89] 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 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] 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] 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] - 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] 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 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] 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] NOTE 6 — LEASES 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] NOTE 7 — GOODWILL AND CORE DEPOSIT INTANGIBLES 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] 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] 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 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][162][164] 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] 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 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] NOTE 10 — DEPOSITS 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] 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] NOTE 11 — BORROWINGS 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] 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] - Investment securities with an aggregate carrying value of $3.82 billion were pledged as collateral at September 30, 2024[90] NOTE 12 — DERIVATIVE FINANCIAL INSTRUMENTS 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][177] 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] 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 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] - Deferred taxes primarily include those associated with the SVBB Acquisition[185] NOTE 14 — FAIR VALUE 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] 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][192][193] 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][203] - 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] NOTE 15 — STOCKHOLDERS' EQUITY 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] 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] NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME 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] 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 | $(159) | NOTE 17 — EARNINGS PER COMMON SHARE This note provides the computation of basic and diluted earnings per common share, including net income and weighted average shares Earnings per Common Share (millions, except per share data) - Nine Months Ended September 30 | Item | 2024 | 2023 | Change ($) | | :---------------------------------------- | :-------- | :-------- | :--------- | | 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] NOTE 18 — INCOME TAXES 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] - 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][229] NOTE 19 — EMPLOYEE BENEFIT PLANS 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] 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] NOTE 20 — BUSINESS SEGMENT INFORMATION 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] - General Bank offers consumer and business banking, residential mortgages, wealth management, and community association banking[234] - Commercial Bank provides lending, leasing, capital markets, asset management, and factoring services to small and middle market companies[236][237] - 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] - Rail segment offers customized leasing and financing solutions for railcars and locomotives to railroads and shippers[241] 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 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][252][253] - 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][258] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on First Citizens BancShares, Inc.'s financial condition and results of operations EXECUTIVE OVERVIEW 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] - 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] - 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] - 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] - 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][276] Recent Economic, Industry and Regulatory Developments 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] - 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] - 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] - 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] Financial Performance Summary 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] - 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] 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] - 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] Funding, Liquidity and Capital Overview 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] 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] - 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][297] - The investment securities portfolio had an average duration of approximately 2.8 years at September 30, 2024[298] - BancShares and FCB's regulatory capital ratios significantly exceed prompt corrective action well-capitalized thresholds and Basel III requirements[300] RESULTS OF OPERATIONS This section provides a detailed analysis of BancShares' financial performance, focusing on key income statement metrics Net Interest Income and Net Interest Margin 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] - 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] - 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] - 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] 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 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] - 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] 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 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][319] - 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] 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] Noninterest Expense 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] - 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] - 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] 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] Income Taxes 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] - 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] RESULTS BY BUSINESS SEGMENT This section provides a detailed analysis of the financial performance of BancShares' four business segments and Corporate General Bank 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] - 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] - Deposits in the General Bank segment increased by $690 million QoQ, primarily in money market deposits in the Branch Network[336] Commercial Bank 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] - Commercial Bank segment n