First Citizens BancShares(US:FCNCA)2024-05-09 13:20PART I—FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q1 2024, including balance sheets, income statements, and notes on the SVBB acquisition Consolidated Balance Sheets Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2024 (Billions) | December 31, 2023 (Billions) | | :--- | :--- | :--- | | Total Assets | $217.84 billion | $213.76 billion | | Loans and leases, net | $133.63 billion | $131.56 billion | | Total Deposits | $149.61 billion | $145.85 billion | | Total Liabilities | $195.99 billion | $192.50 billion | | Total Stockholders' Equity | $21.85 billion | $21.26 billion | - Total assets increased by $4.08 billion from year-end 2023, primarily driven by growth in loans and leases and investment securities available for sale15 - Total deposits grew by $3.76 billion during the first quarter of 2024, reflecting an increase in interest-bearing deposits that offset a slight decline in noninterest-bearing accounts15 Consolidated Statements of Income Consolidated Income Statement Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 (Millions) | Three Months Ended March 31, 2023 (Millions) | | :--- | :--- | :--- | | Net Interest Income | $1,817 million | $850 million | | Provision for Credit Losses | $64 million | $783 million | | Noninterest Income | $627 million | $10,259 million | | Noninterest Expense | $1,376 million | $855 million | | Net Income | $731 million | $9,518 million | | Diluted EPS | $49.26 | $653.64 | - Net income for Q1 2024 was significantly lower than Q1 2023, as the prior year period included a $9.8 billion pre-tax gain on the SVBB acquisition17 - Net interest income more than doubled year-over-year, reflecting the full-quarter impact of the SVBB acquisition on interest-earning assets and liabilities17 - The provision for credit losses decreased substantially from the prior year, which had included a large initial provision related to the SVBB acquisition17 Notes to Unaudited Consolidated Financial Statements - In Q1 2024, the company updated its segment reporting, renaming the SVB segment to SVB Commercial and reallocating private banking and wealth management components to the General Bank segment. Loan class disclosures were also recast to remap certain SVB portfolios into Commercial and Consumer categories394244 - The SVBB acquisition on March 27, 2023, resulted in a final after-tax gain of $9.81 billion. The company acquired assets with a fair value of approximately $107.5 billion and assumed liabilities of $61.4 billion315460 - Total loans and leases reached $135.4 billion. Nonaccrual loans increased to $1.07 billion, or 0.79% of total loans, up from 0.73% at year-end 202398106 - The Allowance for Loan and Lease Losses (ALLL) stood at $1.74 billion, or 1.28% of total loans. The provision for credit losses for the quarter was $64 million154156 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2024 financial performance, covering net income, margin, balance sheet, and capital adequacy Executive Overview Q1 2024 Financial Performance Summary | Metric | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Net Income (Millions) | $731 million | $514 million | | Diluted EPS | $49.26 | $34.33 | | Return on Average Assets | 1.36% | 0.95% | | Net Interest Margin | 3.67% | 3.86% | - Net income increased 42% sequentially, driven by lower provision for credit losses and noninterest expenses, partially offset by lower net interest income304 - The company maintains a strong liquidity position with $59.3 billion in liquid assets and an additional $32.9 billion in contingent liquidity sources as of March 31, 2024308464 - Capital ratios remain robust, with a Common Equity Tier 1 ratio of 13.44%, well above regulatory requirements300312 Results of Operations - Net interest income (NII) decreased by 5% from the linked quarter to $1.82 billion, and the net interest margin (NIM) compressed by 19 basis points to 3.67%. This was primarily due to higher interest expense on deposits and lower loan discount accretion from the SVBB acquisition318 - The provision for credit losses was $64 million, a significant decrease of 75% from $249 million in the linked quarter, reflecting improved macroeconomic forecasts and lower net charge-offs322323 - Noninterest income increased to $627 million from $543 million in the linked quarter. The prior quarter included an $83 million negative adjustment to the gain on the SVBB acquisition328330 - Noninterest expense decreased by 8% to $1.38 billion, largely due to lower acquisition-related expenses ($58 million vs. $116 million) and a smaller FDIC special assessment ($9 million vs. $64 million) compared to the linked quarter332336337 Results by Business Segment Segment Net Income (Q1 2024) | Segment | Net Income (Millions) | | :--- | :--- | | General Bank | $210 | | Commercial Bank | $122 | | SVB Commercial | $202 | | Rail | $33 | | Corporate | $164 | - The General Bank segment saw loan growth in commercial and business lending and deposit growth in time and money market products345346347 - The SVB Commercial segment experienced loan growth in global fund banking, which was partially offset by declines in technology and life science/healthcare loans. Deposits in this segment decreased slightly to $34.0 billion351352353 - The Rail segment's net income increased due to higher rental income and lower maintenance expenses, with railcar utilization improving to 99.2%354355356 Balance Sheet Analysis - Total loans and leases grew by $2.07 billion (2%) during the quarter to $135.4 billion, with growth across all segments379 - Investment securities increased by $5.05 billion (17%) to $35.0 billion, driven by purchases of short-duration U.S. Treasury and agency mortgage-backed securities368 - Total deposits grew by $3.76 billion (3%) to $149.6 billion, primarily from growth in savings deposits at the Direct Bank385 - Uninsured deposits were estimated at $54.85 billion, representing 36.7% of total deposits as of March 31, 2024391 Risk Management Asset Quality Metrics | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Nonperforming Assets (Millions) | $1,132 million | $1,031 million | | NPA Ratio | 0.84% | 0.77% | | Nonaccrual Loans Ratio | 0.79% | 0.73% | | ALLL to Total Loans | 1.28% | 1.31% | - The Commercial Real Estate (CRE) portfolio totaled $21.1 billion, or 15.6% of total loans. The general office sub-portfolio accounted for $2.75 billion, or 2.0% of total loans423 - The company remains asset-sensitive to interest rate changes. A hypothetical immediate 100 basis point parallel increase in rates is estimated to increase Net Interest Income by 8.2% over the next 12 months452 Capital Regulatory Capital Ratios (BancShares) | Ratio | March 31, 2024 | Well-Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 | 13.44% | 6.50% | | Tier 1 Risk-Based Capital | 14.00% | 8.00% | | Total Risk-Based Capital | 15.66% | 10.00% | | Tier 1 Leverage | 10.11% | 5.00% | - The Board declared a quarterly dividend of $1.64 per common share, payable in June 2024475 Item 3. Quantitative and Qualitative Disclosures about Market Risk Refers to the MD&A's Risk Management section for detailed disclosures on market risk, primarily interest rate risk - The company's disclosures regarding market risk are incorporated by reference from the "Risk Management" section of the MD&A495 Item 4. Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal controls over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the period496 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls497 PART II—OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal actions, not expected to materially impact financial statements - The company is a defendant in various legal actions from normal business activities, but management believes the outcomes will not be material to the financial statements500 Item 1A. Risk Factors No material changes to risk factors were reported compared to the 2023 Annual Report on Form 10-K - No material changes in risk factors were reported during the first quarter of 2024 compared to those disclosed in the 2023 Form 10-K501 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any of its stock during the first quarter ended March 31, 2024 - The company did not repurchase any of its stock during the first quarter of 2024502 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter503 Item 6. Exhibits Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL data - The report includes certifications from the CEO and CFO as required by securities regulations504