0000798941-95-000006.txt : 19950815 0000798941-95-000006.hdr.sgml : 19950815 ACCESSION NUMBER: 0000798941-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST CITIZENS BANCSHARES INC /DE/ CENTRAL INDEX KEY: 0000798941 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 561528994 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16471 FILM NUMBER: 95563040 BUSINESS ADDRESS: STREET 1: 239 FAYETTEVILLE STREET MALL CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9197557000 MAIL ADDRESS: STREET 1: PO BOX 27131 STREET 2: CTWO7 CITY: RALEIGH STATE: NC ZIP: 27611-7131 10-Q 1 FIRST CITIZENS BANCSHARES, INC. AND SUBSIDIARIES 10-Q 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 period ended June 30, 1995 Commission File Number: 0-16471 First Citizens BancShares, Inc (Exact name of Registrant as specified in its charter) Delaware 56-1528994 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 239 Fayetteville Street, Raleigh, North Carolina 27601 (Address of principal executive offices) (zip code) (919) 755-7000 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes X No _____ Class A Common Stock--$1 Par Value--8,927,956 shares Class B Common Stock--$1 Par Value--1,769,251 shares (Number of shares outstanding, by class, as of August 14, 1995) INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Condition at June 30, 1995, December 31, 1994, and June 30, 1994 4 Consolidated Statements of Income for the three-month periods ended June 30, 1995,and June 30, 1994, and for the six-month periods ended June 30, 1995, and June 30, 1994 5 Consolidated Statements of Changes in Shareholders' Equity for the six-month periods ended June 30, 1995, and June 30, 1994 6 Consolidated Statements of Cash Flows for the six-month periods ended June 30, 1995, and June 30, 1994 7 Note to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition 9-16 and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. None. (b) Reports on Form 8-K. During the quarter ended June 30, 1995, Registrant filed no Current Reports on Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST CITIZENS BANCSHARES, INC. (Registrant) Dated: August 14, 1995 By: Kenneth A. Black Vice President, Treasurer, and Chief Financial Officer First Citizens BancShares, Inc and Subsidiaries Second Quarter 1995 Consolidated Statements of Condition First Citizens BancShares, Inc. and Subsidiaries
June 30 December 31 June 30 (thousands,except share data) 1995 1994 1994 Assets Cash and due from banks $ 402,949 $ 455,710 $ 377,540 Investment securities 1,554,180 1,458,969 1,581,245 Federal funds sold 166,425 6,750 20,750 Loans 4,480,235 4,148,133 3,781,407 Less reserve for loan losses 76,887 72,017 70,862 Net loans 4,403,348 4,076,116 3,710,545 Premises and equipment 203,654 188,824 186,677 Income earned not collected 49,909 45,194 45,587 Other assets 132,999 101,761 108,331 Total assets $6,913,464 $6,333,324 $6,030,675 Liabilities Deposits: Noninterest-bearing $921,945 $858,537 $790,460 Interest-bearing 5,108,940 4,659,052 4,502,346 Total deposits 6,030,885 5,517,589 5,292,806 Short-term borrowings 311,239 290,861 221,819 Long-term obligations 25,756 34,542 49,870 Other liabilities 53,236 40,921 53,213 Total liabilities 6,421,116 5,883,913 5,617,708 Shareholders' Equity Common stock: Class A - $1 par value (8,921,136;8,419,389; and 8,094,976 shares issued, respectively) 8,921 8,419 8,095 Class B - $1 par value (1,769,251;1,769,451; and 1,771,766 shares issued, respectively) 1,769 1,770 1,772 Surplus 104,912 82,631 67,036 Retained earnings 376,746 356,591 336,064 Total shareholders' equity 492,348 449,411 412,967 Total liabilities and shareholders' equity $6,913,464 $6,333,324 $6,030,675 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Consolidated Statements of Income First Citizens BancShares, Inc. and Subsidiaries
Three Months Ended Six Months Ended June 30 June 30 (thousands, except per share data) 1995 1994 1995 1994 Interest Income Loans $95,723 $72,419 $185,308 $141,186 Investment securities: U. S. Government 18,234 18,145 33,515 38,170 State, county and municipal 106 16 194 20 Other 51 - 93 - Total investment securities interest income 18,391 18,161 33,802 38,190 Federal funds sold 2,168 771 3,393 1,172 Total interest income 116,282 91,351 222,503 180,548 Interest Expense Deposits 51,546 32,885 94,308 65,441 Short-term borrowings 3,584 1,760 6,669 3,443 Long-term obligations 407 662 861 1,349 Total interest expense 55,537 35,307 101,838 70,233 Net interest income 60,745 56,044 120,665 110,315 Provision for loan losses 1,460 (947) 1,994 141 Net interest income after provision for loan losses 59,285 56,991 118,671 110,174 Noninterest Income Trust income 2,239 2,062 4,478 4,131 Service charges on deposit accounts 9,996 9,921 19,399 19,632 Credit card income 3,220 2,926 6,067 5,631 Other service charges and fees 5,291 4,609 10,190 8,057 Other 2,311 999 4,578 3,440 Total Noninterest income 23,057 20,517 44,712 40,891 82,342 77,508 163,383 151,065 Noninterest Expense Salaries and wages 27,160 24,472 52,913 49,151 Pension and other employee benefits 4,510 3,379 9,084 7,173 Occupancy expense 4,980 4,371 10,011 8,921 Equipment expense 6,183 5,918 12,290 11,564 Other 20,043 18,882 40,941 36,968 Total Noninterest expense 62,876 57,022 125,239 113,777 Income before income taxes 19,466 20,486 38,144 37,288 Income taxes 6,842 7,128 13,342 12,933 Net income $12,624 $13,358 $24,802 $24,355 Per Share Net income $1.19 $1.36 $2.36 $2.49 Cash dividends 0.20 0.175 0.40 0.35 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Consolidated Statements of Changes in Shareholders' Equity First Citizens BancShares, Inc. and Subsidiaries
Class A Class B Common Common Retained Total (thousands,except share data) Stock Stock Surplus Earnings Equity Balance at December 31, 1993 $7,986 $1,780 $61,717 $317,567 $389,050 Issuance of 75,235 shares of Class A common stock in connection with an acquisition 75 3,110 3,185 Issuance of 3,116 shares of Class A common stock pursuant to the Dividend Reinvestment Plan 3 124 127 Issuance of 68,206 shares of Class A common stock pursuant to the 1992 Employee Stock Purchase Plan 69 2,085 2,154 Redemption of 37,650 shares of Class A common stock and 8,302 shares of Class B common stock (38) (8) (1,932) (1,978) Net income 24,355 24,355 Cash dividends (3,424) (3,424) Other (502) (502) Balance at June 30, 1994 $8,095 $1,772 $67,036 $336,064 $412,967 Balance at December 31, 1994 $8,419 $1,770 $82,631 $356,591 $449,411 Issuance of 489,742 shares of Class A common stock in connection with an acquisitions 490 21,491 21,981 Issuance of 4,174 shares of Class A common stock pursuant to the Dividend Reinvestment Plan 4 173 177 Issuance of 16,331 shares of Class A common stock pursuant to the 1994 Employee Stock Purchase Plan 16 617 633 Redemption of 8,500 shares of Class A common stock and 200 shares of Class B common stock (8) (1) (383) (392) Net income 24,802 24,802 Cash dividends (4,264) (4,264) Balance at June 30, 1995 $8,921 $1,769 $104,912 $376,746 $492,348 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 CONSOLIDATED STATEMENTS OF CASH FLOWS First Citizens BancShares, Inc. and Subsidiaries
Six months ended June 30 (thousands) 1995 1994 Operating Activities Net income $24,802 $24,355 Adjustments: Amortization of intangibles 2,604 1,893 Provision for loan losses 1,994 141 Deferred tax expense (benefit) 208 (637) Change in current taxes payable 401 943 Depreciation 8,312 7,658 Change in accrued interest payable 10,303 1,174 Change in income earned not collected (3,418) 614 Origination of loans held for sale (8,397) (63,030) Proceeds from sale of mortgage loans 7,598 105,733 (Gain) loss on sale of mortgage loans (125) 788 Net amortization of premiums and discounts 9,998 14,161 Net change in other assets (2,937) 19,512 Net change in other liabilities 475 (5,230) Net periodic pension cost 598 324 Net cash provided by operating activities 52,416 108,399 Investing Activities Disposition of premises and equipment 2,006 2,023 Addition to premises and equipment (16,552) (11,374) Net increase in loans outstanding (161,170) (227,873) Purchase of investment securities (473,075) (122,529) Proceeds from maturities of investment securities 409,629 347,700 Net change in federal funds sold (151,003) (750) Purchase of institutions, net of cash acquired 106,092 2,243 Net cash used by investing activities (284,073) (10,560) Financing Activities Repurchase of common stock (392) (1,978) Proceeds from issuance of stock, net of related costs 810 2,281 Cash dividends paid (4,264) (3,424) Net change in time deposits 349,416 (44,700) Net change in demand and other interest-bearing deposits (174,173) (40,196) Net change in short-term borrowings 18,779 (13,678) Repayment of long-term obligations (11,280) (11,456) Net cash provided (used) by financing activities 178,896 (113,151) Change in cash and due from banks (52,761) (15,312) Cash and due from banks at beginning of period 455,710 392,852 Cash and due from banks at end of period $402,949 $377,540 Cash payments for: Interest $91,535 $69,059 Income taxes 13,098 12,572 Supplemental disclosure of noncash investing and financing activities: Common stock issued for acquisitions $21,981 $3,185 Long-term obligations issued for acquisitions 2,494 - See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 NOTE A ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete statements. Certain amounts for prior periods have been reclassified to conform with statement presentation for the current period. These reclassifications had no effect on shareholders' equity or net income. In the opinion of management, the consolidated statements contain all material adjustments necessary to present fairly the financial position of First Citizens BancShares, Inc. ("BancShares") as of and for each of the periods presented, and all such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes included in the 1994 First Citizens BancShares Annual Report, which is incorporated by reference on Form 10-K. Financial Summary
Table 1 1995 1994 Second First Fourth Third Second (thousands, except per share data and ratios) Quarter Quarter Quarter Quarter Quarter Summary of Operations Interest Income $116,282 $106,221 $100,203 $95,254 $91,351 Interest income - taxable equivalent 116,845 106,774 100,693 95,731 91,806 Interest expense 55,537 46,301 40,628 37,265 35,307 Net interest income-taxable equivalent 61,308 60,473 60,065 58,466 56,499 Taxable equivalent adjustment 563 553 490 477 455 Net interest income 60,745 59,920 59,575 57,989 56,044 Provision for loan losses 1,460 534 1,486 1,159 (947) Net interest income after provision for loan losses 59,285 59,386 58,089 56,830 56,991 Noninterest income 23,057 21,655 21,080 21,354 20,517 Noninterest expense 62,876 62,363 59,444 57,361 57,022 Income before income taxes 19,466 18,678 19,725 20,823 20,486 Income taxes 6,842 6,500 6,796 7,138 7,128 Net income $12,624 $12,178 $12,929 $13,685 $13,358 Selected Average Balances Total assets $6,702,692 $6,326,537 $6,227,704 $6,102,964 $6,061,930 Investment securities 1,493,415 1,380,424 1,498,143 1,543,548 1,641,857 Loans 4,424,724 4,253,117 3,999,377 3,854,738 3,712,429 Interest-earning assets 6,061,732 5,716,572 5,590,432 5,480,912 5,434,768 Deposits 5,858,280 5,533,654 5,422,018 5,338,095 5,303,041 Interest-bearing liabilities 5,299,570 5,009,276 4,895,564 4,818,665 4,810,625 Long-term obligations 26,174 32,564 43,854 48,908 57,534 Shareholders' equity $482,885 $460,695 $443,833 $423,982 $406,002 Shares outstanding 10,618,902 10,376,351 10,192,150 9,980,530 9,828,295 Profitability Ratios (averages) Rate of return (annualized) on: Total assets 0.76% 0.78% 0.82% 0.89% 0.88% Shareholders' equity 10.49 10.72 11.56 12.81 13.20 Dividend payout ratio 16.81 17.09 15.75 12.77 12.87 Liquidity and Capital Ratios (averages) Loans to deposits 75.53% 76.86% 73.76% 72.21% 70.01% Shareholders' equity to total assets 7.20 7.28 7.13 6.95 6.70 Time certificates of $100,000 or more to total deposits 8.04 7.30 6.63 6.41 6.28 Per Share of Stock Net income $1.19 $1.17 $1.27 $1.37 $1.36 Cash dividends 0.20 0.20 0.20 0.175 0.175 Book Value at period end 46.06 45.06 44.11 43.05 41.85
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Financial Summary
Table 1 Six Months Ended June 30 (thousands, except per share data and ratios) 1995 1994 Summary of Operations Interest Income $222,503 $180,548 Interest income - taxable equivalent 223,619 181,434 Interest expense 101,838 70,233 Net interest income-taxable equivalent 121,781 111,201 Taxable equivalent adjustment 1,116 886 Net interest income 120,665 110,315 Provision for loan losses 1,994 141 Net interest income after provision for loan losses 118,671 110,174 Noninterest income 44,712 40,891 Noninterest expense 125,239 113,777 Income before income taxes 38,144 37,288 Income taxes 13,342 12,933 Net income $24,802 $24,355 Selected Average Balances Total assets $6,515,649 $6,049,963 Investment securities 1,437,231 1,679,583 Loans 4,339,395 3,665,751 Interest-earning assets 5,890,106 5,410,997 Deposits 5,696,864 5,289,396 Interest-bearing liabilities 5,155,267 4,820,077 Long-term obligations 28,672 58,719 Shareholders' equity $471,050 $400,331 Shares outstanding 10,498,296 9,799,295 Profitability Ratios (averages) Rate of return (annualized) on: Total assets 0.77% 0.81% Shareholders' equity 10.62 12.27 Dividend payout ratio 16.95 14.06 Liquidity and Capital Ratios (averages) Loans to deposits 76.17% 69.30% Shareholders' equity to total assets 7.23 6.62 Time certificates of $100,000 or more to total deposits 7.67 6.61 Per Share of Stock Net income $2.36 $2.49 Cash dividends 0.40 0.35 Book Value at period end 46.06 41.85
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Acquisitions
Table 2 (thousands) Total Total Date Institution/Location Assets Deposits June 1995 Bank of White Sulphur Springs $64,589 $59,174 White Sulphur Springs, West Virginia May 1995 9 NationsBank of Virginia branches 25,482 143,494 Southern Virginia March 1995 State Bank 49,700 41,238 Fayetteville, North Carolina February 1995 First-Citizens Bank & Trust Company 58,660 53,303 (formerly Pace American Bank) Lawrenceville, Virginia February 1995 First Investors Savings Bank, Inc. SSB 44,426 40,846 Whiteville, North Carolina December 1994 First Rebublic Savings Bank, FSB 53,661 42,998 Roanoke Rapids, North Carolina September 1994 Bank of Marlinton 51,646 46,647 Marlinton, West Virginia August 1994 Edgecombe Homestead Savings Bank 39,181 30,195 Tarboro, North Carolina March 1994 Bank of Bladenboro 21,316 19,515 Bladenboro, North Carolina
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Outstanding Loans by Type
Table 3 1995 1994 Second First Fourth Third Second (thousands) Quarter Quarter Quarter Quarter Quarter Real estate: Construction and land development $ 111,285 $ 107,197 $ 100,708 $ 106,206 $ 103,100 Mortgage: 1-4 family residential 1,399,023 1,357,256 1,296,713 1,223,687 1,146,193 Commercial 743,367 741,948 720,407 601,887 597,163 Equity Line 395,412 385,581 349,092 302,478 291,519 Other 124,682 116,444 109,069 80,612 73,940 Commercial and industrial 459,446 415,968 373,947 469,145 469,316 Consumer 1,171,441 1,163,348 1,119,994 1,076,256 1,023,768 Lease financing 58,464 58,364 60,598 53,835 53,455 Other 17,115 16,863 17,605 25,158 22,953 Total loans 4,480,235 4,362,969 4,148,133 3,939,264 3,781,407 Less reserve for loan losses 76,887 73,897 72,017 71,537 70,862 Net loans $4,403,348 $4,289,072 $4,076,116 $3,867,727 $3,710,545
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Investment Securities
Table 4 June 30, 1995 June 30, 1994 Average Taxable Average Taxable Book Market Maturity Equivalent Book Market Maturity Equivalent (thousands) Value Value (Yrs./Mos.) Yield Value Value (Yrs./Mos.) Yield U. S. Government: Within one year $ 977,274 $ 972,324 0/6 4.52% $ 615,431 $ 612,373 0/7 4.50% One to five years 555,295 555,060 1/5 5.97 963,370 939,718 1/7 4.31 Five to ten years 3,159 3,108 7/3 5.78 - - - - Over ten years 6,968 6,944 19/6 7.25 992 992 18/2 8.03 Total 1,542,696 1,537,436 0/11 5.06 1,579,793 1,553,083 1/2 4.39 State, county and municipal: Within one year 1,208 1,218 0/7 7.52 426 433 0/6 8.67 One to five years 4,301 4,338 2/9 6.66 711 727 2/10 7.75 Five to ten years 2,777 2,845 6/4 6.84 - - - - Over ten years 205 205 22/2 6.19 - - - - Total 8,491 8,606 5/0 7.06 1,137 1,160 2/0 8.10 Other: Within one year - - - - - - - -- One to five years 2,938 2,911 2/3 8.65 260 260 3/3 8.75 Five to ten years 55 55 6/8 8.00 55 55 7/8 8.00 Total 2,993 2,966 2/5 8.64 315 315 3/5 8.74 Total investment securities $1,554,180 $1,549,008 1/0 5.08% $1,581,245 $1,554,558 1/2 4.39%
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Second Quarter
Table 5 1995 1994 Increase (decrease) due to: Interest Interest Average Income/ Yield/ Average Income/ Yield/ Yield/ Total (thousands) Balance Expense Rate Balance Expense Rate Volume Rate Change Assets Loans: Secured by real estate $2,738,350 $58,435 8.42% $2,193,641 $42,490 7.72% $11,300 $4,645 $15,945 Commercial and industrial 436,627 10,318 9.41 455,798 8,698 7.60 (400) 2,020 1,620 Consumer 1,174,422 26,102 8.86 988,372 20,310 8.22 4,017 1,775 5,792 Lease financing 58,362 1,106 7.58 49,501 937 9.78 328 (159) 169 Other 16,963 269 6.36 25,117 431 6.89 (134) (28) (162) Total loans 4,424,724 96,230 8.69 3,712,429 72,866 7.86 15,111 8,253 23,364 Investment securities: U. S. Government 1,481,917 18,219 4.93 1,639,653 18,127 4.48 (1,755) 1,847 92 State, county and municipal 8,382 161 7.70 1,889 36 7.73 125 0 125 Other 3,116 67 8.62 315 6 7.72 18 43 61 Total investment securities 1,493,415 18,447 4.95 1,641,857 18,169 4.49 (1,612) 1,890 278 Federal funds sold 143,593 2,168 6.06 80,482 771 3.84 778 619 1,397 Total interest-earning assets $6,061,732 116,845 7.71% $5,434,768 91,806 6.78% $14,277 $10,762 $25,039 Liabilities Deposits: Checking With Interest 799,992 3,524 1.77% 779,314 3,313 1.71% $91 120 211 Savings 688,033 3,888 2.27 686,704 3,827 2.24 9 52 61 Money market accounts 717,488 6,098 3.41 779,405 4,548 2.34 (445) 1,995 1,550 Time deposits 2,794,111 38,036 5.46 2,271,461 21,197 3.74 5,986 10,853 16,839 Total interest-bearing deposits 4,999,624 51,546 4.14 4,516,884 32,885 2.92 5,641 13,020 18,661 Federal funds purchased 30,091 452 6.02 17,162 166 3.88 160 126 286 Repurchase agreements 25,148 318 5.07 22,833 148 2.60 22 148 170 Master notes 186,819 2,396 5.14 158,594 1,066 2.70 278 1,052 1,330 U. S. Treasury tax and loan accounts 15,545 230 5.93 29,332 268 3.66 (165) 127 (38) Other short-term borrowings 16,169 188 4.66 8,286 112 5.42 99 (23) 76 Long-term obligations 26,174 407 6.24 57,534 662 4.62 (424) 169 (255) Total interest-bearing liabilities $5,299,570 $55,537 4.20% $4,810,625 $35,307 2.94% $5,611 $14,619 $20,230 Interest rate spread 3.51% 3.84% Net interest income and net yield on interest-earning assets $61,308 4.06% $56,499 4.17% $8,666 ($3,857) $4,809
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Six Months
Table 6 1995 1994 Increase (decrease) due to Interest Interest Average Income/ Yield/ Average Income/ Yield/ Yield/ Total (thousands) Balance Expense Rate Balance Expense Rate Volume Rate Change Assets Loans: Secured by real estate $2,689,550 $112,584 8.42 % $2,202,000 $83,812 7.62 % $19,230 $9,542 $28,772 Commercial and industrial 416,144 19,300 9.27 439,364 16,186 7.38 (947) 4,061 3,114 Consumer 1,157,978 51,609 8.89 952,547 39,434 8.30 8,922 3,253 12,175 Lease financing 58,687 2,205 7.51 47,510 1,834 9.75 724 (353) 371 Other 17,036 623 7.38 24,330 795 6.59 (254) 82 (172) Total loans 4,339,395 186,321 8.62 3,665,751 142,061 7.78 27,675 16,585 44,260 Investment securities: U. S. Government 1,427,008 33,515 4.74 1,678,540 38,162 4.58 (5,846) 1,199 (4,647) State, county and municipal 7,576 297 7.91 728 30 8.31 275 (8) 267 Other 2,647 93 7.09 315 9 5.76 74 10 84 Total investment securities 1,437,231 33,905 4.76 1,679,583 38,201 4.59 (5,497) 1,201 (4,296) Federal funds sold 113,480 3,393 6.03 65,663 1,172 3.60 1,142 1,079 2,221 Total interest-earning assets $5,890,106 $223,619 7.63 % $5,410,997 $181,434 6.74 % $23,320 $18,865 $42,185 Liabilities Deposits: Checking With Interest $793,502 $6,889 1.75 % $773,077 $6,551 1.71 % $179 159 338 Savings 682,914 7,653 2.26 672,013 7,451 2.24 128 74 202 Money market accounts 732,916 12,023 3.31 796,589 8,956 2.27 (879) 3,946 3,067 Time deposits 2,658,740 67,743 5.14 2,279,845 42,483 3.76 8,362 16,898 25,260 Total interest-bearing deposits 4,868,072 94,308 3.91 4,521,524 65,441 2.92 7,790 21,077 28,867 Federal funds purchased 26,017 766 5.94 23,557 394 3.37 56 316 372 Repurchase agreements 23,389 582 5.02 21,813 276 2.55 29 277 306 Master notes 179,168 4,524 5.09 156,779 2,062 2.65 430 2,032 2,462 U. S. Treasury tax and loan accounts 16,776 490 5.89 29,446 491 3.36 (291) 290 (1) Other short-term borrowings 13,173 307 4.70 8,239 220 5.38 123 (36) 87 Long-term obligations 28,672 861 6.06 58,719 1,349 4.63 (797) 309 (488) Total interest-bearing liabilities $5,155,267 $101,838 3.98 % $4,820,077 $70,233 2.94 % $7,340 $24,265 $31,605 Interest rate spread 3.65 % 3.80 % Net interest income and net yield on interest-earning assets $121,781 4.17 % $111,201 4.14 % $15,980 ($5,400) $10,580
First Citizens BancShares, Inc. and Subsidiaries Second Quarter 1995 Summary of Loan Loss Experience and Risk Elements
Table 7 1995 1994 Second First Fourth Third Second (thousands, except ratios) Quarter Quarter Quarter Quarter Quarter Reserve balance at beginning of period $73,897 $72,017 $71,537 $70,862 $70,662 Reserve of acquired institutions 1,986 1,272 436 360 - Provision for loan losses 1,460 534 1,486 1,159 (947) Net charge-offs: Charge-offs (1,670) (1,234) (3,022) (2,276) (1,432) Recoveries 1,214 1,308 1,580 1,432 2,579 Net (charge-offs) recoveries (456) 74 (1,442) (844) 1,147 Reserve balance at end of period $76,887 $73,897 $72,017 $71,537 $70,862 Historical Statistics Balances Average total loans $4,424,724 $4,253,117 $3,999,377 $3,854,738 $3,712,429 Total loans at period-end 4,480,235 4,362,969 4,148,133 3,939,264 3,781,407 Risk Elements Nonaccrual loans $16,406 $19,953 $21,069 $22,720 $21,508 Restructured debt - - - - 199 Other real estate acquired through foreclosure 3,590 4,296 5,926 7,614 $10,948 Total nonperforming assets $19,996 $24,249 $26,995 $30,334 $32,655 Accruing loans 90 days or more past due $3,524 $5,020 $5,326 $5,177 $4,443 Ratios Net charge-offs (annualized) to average total loans 0.04% -0.01% 0.14% 0.09% -0.12% Reserve for loan losses to total loans 1.72 1.69 1.74 1.82 1.87 Nonperforming assets to total loans plus foreclosed real estate at period-end 0.45 0.56 0.65 0.77 0.86
First Citizens BancShares, Inc and Subsidiaries Second Quarter 1995 Summary of Loan Loss Experience and Risk Elements
Table 7 Six Months Ended June 30 (thousands, except ratios) 1995 1994 Reserve balance at beginning of period $72,017 $70,049 Reserve of acquired institutions 3,258 213 Provision for loan losses 1,994 141 Net charge-offs: Charge-offs (2,904) (3,182) Recoveries 2,522 3,641 Net (charge-offs) recoveries (382) 459 Reserve balance at end of period $76,887 $70,862 Historical Statistics Balances Average total loans $4,339,395 $3,665,751 Total loans at period-end 4,480,235 3,781,407 Risk Elements Nonaccrual loans $16,406 $21,508 Restructured debt - 199 Other real estate acquired through foreclosure 3,590 10,948 Total nonperforming assets $19,996 $32,655 Accruing loans 90 days or more past due $3,524 $4,443 Ratios Net charge-offs (annualized) to average total loans 0.02% -0.03% Reserve for loan losses to total loans 1.72 1.87 Nonperforming assets to total loans plus foreclosed real estate at period-end 0.45 0.86
First Citizens BancShares, Inc and Subsidiaries Second Quarter 1995 INTRODUCTION Management's discussion and analysis of earnings and related financial data are presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. and Subsidiaries ("BancShares"). It should be read in conjunction with the unaudited Consolidated Financial Statements and related notes contained elsewhere in this report. The focus of this discussion concerns BancShares' four banking subsidiaries (collectively, the "Banks"), because BancShares itself made an insignificant contribution to the consolidated totals. Banks operate under the name First-Citizens Bank & Trust Company in North Carolina and Virginia, while Bank of Marlinton and Bank of White Sulphur Springs operate in West Virginia. Certain changes discussed herein result from various acquisitions that were consummated during 1995 and 1994. Table 2 describes the various business combinations, all of which were accounted for as purchases. SUMMARY BancShares realized an earnings decrease of 5.5 percent during the second quarter of 1995 compared to the second quarter of 1994. Consolidated net income during the second quarter of 1995 was $12.6 million, compared to $13.4 million earned during the corresponding period of 1994. The decrease was the result of higher noninterest expense. Net income per share during the second quarter of 1995 totaled $1.19, compared to $1.36 during the second quarter of 1994. Return on average assets was 0.76 percent for the second quarter of 1995 compared to 0.88 percent during the same period of 1994. For the six-month period ended June 30, consolidated net income increased from $24.4 million in 1994 to $24.8 million in 1995. This increase was the result of increases in net interest income and noninterest income, with such increases offsetting the increase in noninterest expense. Net income per share during 1995 totaled $2.36, compared to $2.49 during the same period of 1994. The reduction in net income per share despite an increase in consolidated net income reflects the higher number of average shares outstanding during 1995, the result of shares of Class A common stock being issued for certain business combinations. Return on average assets was 0.77 percent for 1995 compared to 0.81 percent during the same period of 1994. Other profitability, liquidity and capital ratios are presented in Table 1. To understand the changes and trends in interest-earning assets and interest-bearing liabilities, refer to the average balances, interest income and expense, and yields and rates presented in Tables 5 and 6. INTEREST-EARNING ASSETS Interest-earning assets averaged $6.06 billion for the second quarter of 1995, an increase of $627 million or 11.5 percent from the second quarter of 1994, the result of growth in the loan portfolio. For the six-month period ended June 30, 1995, earning assets averaged $5.89 billion, compared to $5.41 billion during the same period of 1994, an increase of 8.9 percent. Loans. At June 30, 1995, and 1994, gross loans totaled $4.48 billion and $3.78 billion, respectively. As of December 31, 1994, gross loans were $4.15 billion. The $332.1 million increase from December 31, 1994 to June 30, 1995, is the combined result of the $166.4 million in acquired loans and growth among consumer and commercial and industrial loans. The $698.8 million growth in loans from June 30, 1994 to June 30, 1995 results from acquisitions, which have added $265.6 million in loans, and strong growth within various loan products. Table 3 details outstanding loans by type for the past five quarters. During the second quarter of 1995, average loans were $4.42 billion, an increase of $712.3 million or 19.2 percent from the comparable period of 1994. Consumer loans averaged $1.17 billion during the second quarter of 1995, compared to $988.4 million during the same period of 1994, an increase of $186.1 million or 18.8 percent. This results from sustained demand for automobile financing. Loans secured by real estate averaged $2.17 billion during the second quarter of 1995, an increase of $544.7 million between the two periods, a 24.8 percent increase. Home equity loans contributed to much of the growth, expanding by 35.3 percent from the second quarter of 1994 to the same period of 1995. As of June 30, 1995, $6.3 million in fixed-rate residential mortgage loans were held for sale. All loans held for sale are carried at the lower of cost or market, and it is anticipated that these loans will be sold during the next quarter. Growth in the consumer portfolio is expected to continue throughout 1995. However, higher market rates during 1995 are likely to diminish demand, and management does not expect loans to display the growth rate seen during 1994. Growth among loans secured by real estate is expected to continue at moderate levels. Management anticipates stronger growth among commercial and industrial loans throughout the remainder of 1995. Investment securities. At June 30, 1995, and 1994, the investment portfolio totaled $1.55 billion and $1.58 billion, respectively. At December 31, 1994, the investment portfolio was $1.46 billion. All securities are classified as held-to-maturity, as BancShares has the ability and the positive intent to hold its investment portfolio until maturity. Table 4 presents detailed information relating to the investment portfolio. Income on Interest-Earning Assets. Taxable equivalent interest income amounted to $116.8 million during the second quarter of 1995, a 27.3 percent increase over the second quarter of 1994. The average yield on interest-earning assets for the second quarter of 1995 was 7.71 percent, compared to 6.78 percent for the corresponding period of 1994, a 93 basis point improvement resulting from higher market rates. Taxable equivalent loan income for the second quarter of 1995 increased $23.4 million or 32.1 percent from second quarter of 1994 due to growth in the loan portfolio and higher loan yields. The taxable equivalent yield on the loan portfolio was 8.69 percent during the second quarter of 1995, compared to 7.86 percent during the same period of 1994. Taxable equivalent loan income for the six-month period ended June 30 was $186.3 million, a 31.2 percent increase over the same period of 1994, the combined result of the volume increases and an 84 basis point yield increase. Taxable equivalent income earned on the investment portfolio amounted to $18.5 million during the second quarter of 1995 and $18.2 million during the same period of 1994. Although the average investment portfolio experienced a $148.4 million reduction between the second quarter of 1994 and the second quarter of 1995, the portfolio's taxable equivalent yield increased from 4.49 percent for the quarter ended June 30, 1994, to 4.95 percent for the quarter ended June 30, 1995. For the six-month period ended June 30, 1995, and 1994, investment securities taxable-equivalent interest income fell 11.2 percent, the result of a 14.4 percent reduction in the average portfolio, a decrease of $242.4 million. INTEREST-BEARING LIABILITIES. At June 30, 1995, and 1994, interest-bearing liabilities totaled $5.45 billion and $4.77 billion, respectively, compared to $4.98 billion as of December 31, 1994. Average interest-bearing liabilities for the second quarter of 1995 totaled $5.3 billion, an increase of 10.2 percent from the second quarter of 1994. Deposits. At June 30, 1995, total deposits were $6.03 billion, an increase of $738.1 million or 13.9 percent over June 30, 1994. Compared to the December 31, 1994 balance of $5.52 billion, total deposits have increased $513.3 million. Acquisitions during 1995 have generated $338.1 million in deposit liabilities. The remaining increase in deposits since December 31, 1994 has resulted from growth generated within the existing branch network, largely the result of a promotion of the one year certificate of deposit during the first quarter. Average interest-bearing deposits were $5 billion during the second quarter of 1995 compared to $4.52 billion during the second quarter of 1994, an increase of 10.7 percent. Much of the increase is attributed to average time deposits, which increased $522.7 million from the second quarter of 1994 to the second quarter of 1995. Average money market accounts decreased $61.9 million between the second quarter of 1994 and the same period of 1995. The migration of deposits from transaction accounts into time accounts results from higher market rates which have renewed customer interest in time deposit products. Time deposits of $100,000 or more averaged 8 percent of total average deposits during the second quarter of 1995, compared to 6.3 percent during the same period of 1994. Although this represents a greater reliance of funds typically viewed as volatile, management does not consider the current level to be excessive. Borrowed Funds. At June 30, 1995, short-term borrowings totaled $311.2 million compared to $290.9 million at December 31, 1994 and $221.8 million at June 30, 1994. For the quarters ended June 30, 1995, and 1994, short-term borrowings averaged $273.8 million and $236.2 million, respectively, a 15.9 percent increase resulting from higher levels of overnight borrowings. Long-term obligations averaged $26.2 million during the second quarter of 1995, compared to $57.5 million during the second quarter of 1994. The 54.5 percent reduction results from the repayment of Federal Home Loan Bank borrowings during 1994. Expense on Interest-Bearing Liabilities. Interest expense amounted to $55.5 million during the second quarter of 1995, a $20.2 million or 57.3 percent increase from the second quarter of 1994. The higher interest expense resulted from a 126 basis point increase in the aggregate rate on interest bearing liabilities, which was 4.2 percent during the second quarter of 1995, compared to 2.94 percent during the second quarter of 1994. The $488.9 million growth in average interest-bearing liabilities also contributed to the higher level of interest expense during 1995. For both the three-month and the six-month periods ended June 30, increases in interest expense also resulted from the shifting mix of deposits. Since time deposits typically carry higher rates than transaction accounts, the higher ratios of time deposits to total interest-bearing deposits in 1995 over 1994 contributed to the increase in interest expense. Interest expense for the six-month period ended June 30, 1995, was $101.8 million, a 45 percent increase over the comparable period of 1994. The increase resulted from a 104 basis point increase in the rate on interest-bearing liabilities and a $335.2 million increase in average interest-bearing liabilities. NET INTEREST INCOME Taxable equivalent net interest income totaled $61.3 million during the second quarter of 1995, an increase of 8.5 percent from the second quarter of 1994. The average net yield on interest-earning assets was 4.06 percent for the second quarter of 1995, 11 basis points below the net yield recorded during the second quarter of 1994. The taxable equivalent interest rate spread was 3.51 percent for the second quarter of 1995, compared to 3.84 percent for the second quarter of 1994. Management anticipates continued compression of the net yield in the coming quarters due to current market conditions. Although management views the ratio of interest-earning assets to interest-bearing liabilities within one year to be at an acceptable level, within the 12-month period, certain short-term repricing differences exist. Management is aware of the potential negative impact changes in interest rates may have on net interest income. A principal objective of BancShares' asset liability function is to manage interest rate risk or the exposure to changes in interest rates. Management maintains portfolios of interest-earning assets and interest-bearing liabilities with maturities or repricing opportunities that will protect against wide interest rate fluctuations, thereby limiting, to the extent possible, the ultimate interest rate exposure. ASSET QUALITY Reserve for loan losses. Management continuously analyzes the growth and risk characteristics of the total loan portfolio under current and projected economic conditions in order to evaluate the adequacy of the reserve for loan losses. At June 30, 1995, the reserve for loan losses amounted to $76.9 million or 1.72 percent of loans outstanding. This compares to $70.9 million or 1.87 percent at June 30, 1994. Lower levels of nonperforming assets during 1995 have allowed a slight reduction in the reserve ratio. Management considers the established reserve adequate to absorb future losses that relate to loans outstanding at June 30, 1995. While management uses available information to establish provisions for loan losses, future additions to the reserve may be necessary based on changes in economic conditions. In addition, various regulatory agencies may require the recognition of additions to the reserve based on their examinations. The provision for loan losses charged to operations during the six months ended June 30, 1995 was $1,994,000, compared to $141,000 during the same period of 1994. Net charge-offs for the six months ended June 30, 1995 totalled $382,000, compared to net recoveries of $459,000 during the same period of 1994. Table 7 provides details concerning the reserve and provision for loan losses over the past five quarters. Nonperforming assets. At June 30, 1995, BancShares' nonperforming assets amounted to $20 million or 0.45 percent of gross loans plus foreclosed properties, compared to $27 million at December 31, 1994, and $32.7 million at June 30, 1994. The $12.7 million reduction in nonperforming assets since June 30, 1994 was primarily the result of the disposition of foreclosed real estate. Management continues to closely monitor nonperforming assets, taking necessary actions to minimize potential exposure. NONINTEREST INCOME Noninterest income was $23.1 million for the second quarter of 1995, compared to $20.5 million for the second quarter of 1994. The $2.5 million increase was the result of a $1.3 million increase in other income from the second quarter of 1994 to the same period of 1995. Much of this is attributable to gains on loan sales. During the second quarter of 1994, BancShares recorded losses of $973,000 on the sale of mortgage loans, compared to a gain of $113,000 during the same period of 1995. Shifting market rates during 1995 caused the fair value of loans sold to increase. Fee income increased $682,000 between the two periods. The strongest growth was in revenues from operational services provided to affiliate banks and fee income generated by First Citizens Investor Services, a subsidiary providing mutual fund and annuity products. For the six-month period ended June 30, 1995, noninterest income totaled $44.7 million, an increase of $3.8 million from the same period of 1994. The 9.3 percent increase was the combined result of higher affiliate fee income. Other income improved $1.1 million during the first six months of 1995. Loan sales generated gains of $125,000 during 1995, compared to losses of $788,000 recorded during the same period of 1994. NONINTEREST EXPENSE Noninterest expense for the second quarter of 1995 amounted to $62.9 million. This was a 10.3 percent increase over the second quarter of 1994. Salaries and wages increased 11 percent between the periods, primarily the result of merit raises. Employee benefits expense increased 33.5 percent during the second quarter of 1995. While some personnel-related costs are the result of new employees, certain changes during 1995 have contributed to the increases. During 1995, substantially all employees received merit increases simultaneously during the second quarter, where such increases were distributed throughout 1994. Health care costs increased during 1995 following the introduction of a new plan for associates. While such an increase generally follows the introduction of a new plan, costs typically fall in subsequent periods. Occupancy expense increased 13.9 percent during the second quarter of 1995, compared to the corresponding period of 1994. For the six month period ended June 30, occupancy expense during 1995 was 12.2 percent above the 1994 level. Increases for both the quarters and the six month periods ended June 30, 1995 and 1994 resulted from increased operating costs, including higher rent expense and depreciation expense resulting from new and renovated branch facilities. Other expenses increased 6.1 percent and 10.7 percent, respectively, for the quarters and six-month periods ending June 30, 1995 and 1994. Contributing to these increases were higher levels of postage expense, credit card processing costs, and losses sustained from non-credit losses. INCOME TAXES Income tax expense amounted to $6.8 million during the second quarter of 1995, compared to $7.1 million during the second quarter of 1994. The effective tax rates for these periods were 35.1 percent and 34.8 percent, respectively. LIQUIDITY Management relies on the investment portfolio as a source of liquidity, with maturities designed to provide needed cash flows. Further, retail deposits generated throughout the extensive branch network has enabled management to fund asset growth and maintain liquidity. BancShares also maintains readily available sources to borrow funds as needed through its correspondent network. Loans to deposits averaged 75.5 percent during the second quarter of 1995 versus 70 percent for the same period of 1994. Although the strong loan growth during 1994 caused this ratio to increase, management continues to view liquidity as a key financial objective. SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY BancShares maintains an adequate capital position and exceeds all minimum regulatory capital requirements. At June 30, 1995, and 1994, the leverage capital ratio of BancShares was 6.1 percent and 6.5 percent, respectively, surpassing the minimum level of 3 percent. The reduction experienced during 1995 has resulted from intangible assets resulting from business combinations. As a percentage of risk-adjusted assets, BancShares' core capital ratio was 9.3 percent and 10.3 percent, respectively at June 30, 1995, and 1994. The minimum ratio allowed is 4 percent of risk-adjusted assets. The total capital ratio was 10.6 percent and 11.5 percent of risk-adjusted assets, above the minimum 8 percent level. The reduction in these capital ratios reflect the impact of the acquisition-related intangibles. EX-27 2 EXHIBIT 27
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 402,949 1,554,180 1,272 76,887 0 1,957,129 312,287 108,632 6,913,464 6,030,885 0 10,690 0 0 481,658 6,913,464 222,503 267,215 0 0 125,238 1,994 101,838 38,144 13,342 24,802 0 0 0 24,802 2.36 2.36