-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AbUiPTOBsUemGOO1JfAcebxcRZCEyP30pOqMQiyA/bGBO345bBEFMA+qTvDQvZeC ghPsl+8XQ9O3oVmM2c0O/w== 0000798941-95-000007.txt : 19951119 0000798941-95-000007.hdr.sgml : 19951119 ACCESSION NUMBER: 0000798941-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590242 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 September 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--8,933,912 shares Class B Common Stock--$1 Par Value--1,766,464 shares (Number of shares outstanding, by class, as of November 13, 1995) INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Statements of Condition at September 30, 1995, December 31, 1994, and September 30, 1994 3-4 Consolidated Statements of Income for the three-month periods ended September 30, 1995, and September 30, 1994, and for the nine-month periods ended September 30, 1995, and September 30, 1994 4-5 Consolidated Statements of Changes in Shareholders' Equity for the nine-month periods ended September 30, 1995, and September 30, 1994 5 Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 1995, and September 30, 1994 6 Note to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 7-19 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 September 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: November 13, 1995 By: Kenneth A. Black Vice President, Treasurer, and Chief Financial Officer First Citizens BancShares, Inc and Subsidiaries Third Quarter 1995 Consolidated Statements of Condition First Citizens BancShares, Inc. and Subsidiaries
September 30 December 31 September 30 (thousands,except share data) 1995 1994 1994 Assets Cash and due from banks $483,627 $455,710 $378,627 Investment securities 1,744,233 1,458,969 1,497,252 Federal funds sold 77,740 6,750 92,750 Loans 4,540,056 4,148,133 3,939,264 Less reserve for loan losses 77,986 72,017 71,537 Net loans 4,462,070 4,076,116 3,867,727 Premises and equipment 206,349 188,824 190,151 Income earned not collected 54,188 45,194 43,910 Other assets 140,565 101,761 113,034 Total assets $7,168,772 $6,333,324 $6,183,451 Liabilities Deposits: Noninterest-bearing $945,885 $858,537 $834,985 Interest-bearing 5,282,079 4,659,052 4,575,823 Total deposits 6,227,964 5,517,589 5,410,808 Short-term borrowings 343,101 290,861 231,491 Long-term obligations 23,593 34,542 47,926 Other liabilities 68,240 40,921 54,418 Total liabilities 6,662,898 5,883,913 5,744,643 Shareholders' Equity Common stock: Class A - $1 par value (8,923,855;8,419,389; and 8,421,815 shares issued, respectively) 8,924 8,419 8,422 Class B - $1 par value (1,766,464;1,769,451; and 1,770,441 shares issued, respectively) 1,767 1,770 1,770 Surplus 105,797 82,631 82,315 Retained earnings 389,386 356,591 346,301 Total shareholders'equity 505,874 449,411 438,808 Total liabilities and shareholders' equity $7,168,772 $6,333,324 $6,183,451 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Consolidated Statements of Income First Citizens BancShares, Inc. and Subsidiaries
Three Months Ended Nine Months Ended September 30 September 30 (thousands, except per share data) 1995 1994 1995 1994 Interest Income Loans $97,380 $77,360 $282,688 $218,546 Investment securities: U. S. Government 22,052 16,894 55,567 55,016 State, county and municipal 108 31 302 51 Other 48 26 141 74 Total investment securities income 22,208 16,951 56,010 55,141 Federal funds sold 2,646 943 6,039 2,115 Total interest income 122,234 95,254 344,737 275,802 Interest Expense Deposits 55,155 34,609 149,463 100,050 Short-term borrowings 4,287 2,048 10,956 5,491 Long-term obligations 416 608 1,277 1,957 Total interest expense 59,858 37,265 161,696 107,498 Net interest income 62,376 57,989 183,041 168,304 Provision for loan losses 1,716 1,159 3,710 1,300 Net interest income after provision 60,660 56,830 179,331 167,004 Noninterest Income Trust income 2,178 2,041 6,656 6,172 Service charges on deposit accounts 10,249 9,609 29,648 29,241 Credit card income 3,773 3,394 9,840 9,025 Other service charges and fees 5,328 4,326 15,518 12,383 Other 2,032 1,984 6,610 5,424 Total noninterest income 23,560 21,354 68,272 62,245 84,220 78,184 247,603 229,249 Noninterest Expense Salaries and wages 26,578 24,951 79,491 74,102 Pension and other employee benefits 4,040 3,512 13,124 10,685 Occupancy expense 5,224 4,820 15,235 13,741 Equipment expense 6,286 5,665 18,576 17,229 Other 17,588 18,413 58,529 55,381 Total noninterest expense 59,716 57,361 184,955 171,138 Income before income taxes 24,504 20,823 62,648 58,111 Income taxes 8,686 7,138 22,028 20,071 Net income $15,818 $13,685 $40,620 $38,040 Per Share Net income $1.49 $1.37 $3.85 $3.86 Cash dividends 0.20 0.175 0.600 0.525 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Third 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 73,128 shares of Class A common stock pursuant to the Employee Stock Purchase Plan 73 2,338 2,411 Issuance of 5,100 shares of Class A common stock pursuant to the Dividend Reinvestment Plan 5 208 213 Issuance of 433,068 shares of Class A common stock in connection with acquisitions 433 18,052 18,485 Redemption of 75,550 shares of Class A common stock and 9,627 shares of (75) (10) (3,655) (3,740) Class B common stock Net income 38,040 38,040 Cash dividends (5,150) (5,150) Other (501) (501) Balance at September 30, 1994 $8,422 $1,770 $82,315 $346,301 $438,808 Balance at December 31, 1994 $8,419 $1,770 $82,631 $356,591 $449,411 Issuance of 39,412 shares of Class A common stock pursuant to the Employee Stock Purchase Plan 39 1,508 1,547 Issuance of 6,839 shares of Class A common stock pursuant to the Dividend Reinvestment Plan 7 298 305 Issuance of 484,821 shares of Class A common stock in connection with various acquisitions 485 21,360 21,845 Redemption of 26,606 shares of Class A common stock and 2,987 shares of Class B common stock (26) (3) (1,421) (1,450) Net income 40,620 40,620 Cash dividends (6,404) (6,404) Balance at September 30, 1995 $8,924 $1,767 $105,797 $389,386 $505,874 See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 CONSOLIDATED STATEMENTS OF CASH FLOWS First Citizens BancShares, Inc. and Subsidiaries
Nine months ended September 30 (thousands) 1995 1994 Operating Activities Net income $40,620 $38,040 Adjustments: Amortization of intangibles 4,235 2,939 Provision for loan losses 3,710 1,300 Deferred tax benefit (21) (610) Change in current taxes payable 4,298 1,820 Depreciation 12,619 11,661 Change in accrued interest payable 18,843 687 Change in income earned not collected (7,697) 2,291 Origination of loans held for sale (28,771) (68,508) Proceeds from sale of loans 24,095 112,796 (Gain) loss on sale of mortgage loans (431) 806 Net amortization of premiums and discounts 14,873 21,261 Net change in other assets (12,046) 11,695 Net change in other liabilities 3,271 (5,246) Net periodic pension cost 510 482 Net cash provided by operating activities 78,108 131,414 Investing Activities Disposition of premises and equipment 2,940 2,364 Addition to premises and equipment (24,488) (18,384) Net increase in loans outstanding (217,425) (337,651) Purchase of investment securities (883,303) (120,433) Proceeds from maturities of investment securities 624,929 454,175 Net change in federal funds sold (62,318) (69,700) Purchase of institutions, net of cash acquired 106,092 13,397 Net cash used by investing activities (453,573) (76,232) Financing Activities Repurchase of common stock (1,450) (3,740) Proceeds from issuance of stock, net of related costs 1,716 2,624 Cash dividends paid (6,404) (5,149) Net change in time deposits 461,154 (78,989) Net change in demand and other interest-bearing deposits (88,832) 35,253 Net change in short-term borrowings 37,198 (19,406) Net cash provided (used) by financing activities 403,382 (69,407) Change in cash and due from banks 27,917 (14,225) Cash and due from banks at beginning of period 455,710 392,852 Cash and due from banks at end of period $483,627 $378,627 Cash payments for: Interest $142,853 $106,549 Income taxes 20,115 17,567 Supplemental disclosure of noncash investing and financing activities: Common stock issued for acquisitions $21,981 $18,485 Long-term obligations issued for acquisitions 2,494 - See accompanying Note to Consolidated Financial Statements.
First Citizens BancShares, Inc. and Subsidiaries Third 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 Third Second First Fourth Third (thousands, except per share data and ratios) Quarter Quarter Quarter Quarter Quarter Summary of Operations Interest Income $122,234 $116,282 $106,221 $100,203 $95,254 Interest income - taxable equivalent 122,801 116,845 106,774 100,693 95,731 Interest expense 59,858 55,537 46,301 40,628 37,265 Net interest income-taxable equivalent 62,943 61,308 60,473 60,065 58,466 Taxable equivalent adjustment 567 563 553 490 477 Net interest income 62,376 60,745 59,920 59,575 57,989 Provision for loan losses 1,716 1,460 534 1,486 1,159 Net interest income after provision for loan losses 60,660 59,285 59,386 58,089 56,830 Noninterest income 23,560 23,057 21,655 21,080 21,354 Noninterest expense 59,716 62,876 62,363 59,444 57,361 Income before income taxes 24,504 19,466 18,678 19,725 20,823 Income taxes 8,686 6,842 6,500 6,796 7,138 Net income $15,818 $12,624 $12,178 $12,929 $13,685 Selected Average Balances Total assets $7,053,579 $6,702,692 $6,323,537 $6,227,704 $6,102,964 Investment securities 1,694,776 1,493,415 1,380,424 1,498,143 1,543,548 Loans 4,500,192 4,424,724 4,253,117 3,999,377 3,854,738 Interest-earning assets 6,376,273 6,061,732 5,716,572 5,590,432 5,480,912 Deposits 6,124,360 5,858,280 5,533,654 5,422,018 5,338,095 Interest-bearing liabilities 5,569,496 5,299,570 5,009,276 4,895,564 4,818,665 Long-term obligations 24,595 26,174 32,564 43,854 48,908 Shareholders' equity $498,108 $482,885 $460,695 $443,833 $423,982 Shares outstanding 10,688,019 10,618,902 10,376,351 10,192,150 9,980,530 Profitability Ratios (averages) Rate of return (annualized) on: Total assets 0.89% 0.76% 0.78% 0.82% 0.89% Shareholders' equity 12.60 10.49 10.72 11.56 12.81 Dividend payout ratio 13.42 16.81 17.09 15.75 12.77 Liquidity and Capital Ratios (averages) Loans to deposits 73.48% 75.53% 76.86% 73.76% 72.21% Shareholders' equity to total assets 7.06 7.20 7.29 7.13 6.95 Time certificates of $100,000 or more to total deposits 8.61 8.04 7.30 6.63 6.41 Per Share of Stock Net income $1.49 $1.19 $1.17 $1.27 $1.37 Cash dividends 0.20 0.20 0.20 0.20 0.175 Book Value at period end 47.32 46.06 45.06 44.11 43.05
First Citizens BancShares, Inc and Subsidiaries Third Quarter 1995 Financial Summary
Table 1 Nine Months Ended September 30 (thousands, except per share data and ratios) 1995 1994 Summary of Operations Interest Income $344,737 $275,802 Interest income - taxable equivalent 346,420 277,165 Interest expense 161,696 107,498 Net interest income-taxable equivalent 184,724 169,667 Taxable equivalent adjustment 1,683 1,363 Net interest income 183,041 168,304 Provision for loan losses 3,710 1,300 Net interest income after provision for loan losses 179,331 167,004 Noninterest income 68,272 62,245 Noninterest expense 184,955 171,138 Income before income taxes 62,648 58,111 Income taxes 22,028 20,071 Net income $40,620 $38,040 Selected Average Balances Total assets $6,700,778 $6,067,841 Investment securities 1,524,023 1,633,744 Loans 4,393,583 3,729,439 Interest-earning assets 6,053,942 5,434,562 Deposits 5,840,928 5,305,807 Interest-bearing liabilities 5,294,890 4,819,603 Long-term obligations 27,298 55,413 Shareholders' equity $479,744 $408,424 Shares outstanding 10,562,232 9,860,370 Profitability Ratios (averages) Rate of return (annualized) on: Total assets 0.81% 0.84% Shareholders' equity 11.32 12.45 Dividend payout ratio 15.58 13.60 Liquidity and Capital Ratios (averages) Loans to deposits 75.22% 70.29% Shareholders' equity to total assets 7.16 6.73 Time certificates of $100,000 or more to total deposits 8.00 6.33 Per Share of Stock Net income $3.85 $3.86 Cash dividends 0.60 0.525 Book Value at period end 47.32 43.05
First Citizens BancShares, Inc. and Subsidiaries Third 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 Third Quarter 1995 Outstanding Loans by Type
Table 3 1995 1994 Third Second First Fourth Third (thousands) Quarter Quarter Quarter Quarter Quarter Real estate: Construction and land development $ 109,597 $ 111,285 $ 107,197 $ 100,708 $ 106,206 Mortgage: 1-4 family residential 1,456,076 1,399,023 1,357,256 1,296,713 1,223,687 Commercial 744,811 743,367 741,948 720,407 601,887 Equity Line 394,088 395,412 385,581 349,092 302,478 Other 130,952 124,682 116,444 109,069 80,612 Commercial and industrial 455,781 459,446 415,968 373,947 469,145 Consumer 1,173,740 1,171,441 1,163,348 1,119,994 1,076,256 Lease financing 58,013 58,464 58,364 60,598 53,835 Other 16,998 17,115 16,863 17,605 25,158 Total loans 4,540,056 4,480,235 4,362,969 4,148,133 3,939,264 Less reserve for loan losses 77,986 76,887 73,897 72,017 71,537 Net loans $4,462,070 $4,403,348 $4,289,072 $4,076,116 $3,867,727
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Investment Securities
Table 4 September 30, 1995 September 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 $ 950,133 $ 947,448 0/6 4.86% $ 730,097 $ 724,059 0/7 4.21% One to five years 773,616 774,519 1/8 6.01 757,585 734,870 1/6 4.43 Five to ten years 2,403 2,330 7/8 5.95 3,383 2,597 13/8 5.70 Over ten years 6,736 6,718 19/3 7.24 779 779 17/9 8.04 Total 1,732,888 1,731,015 1/2 5.39 1,491,065 1,461,526 1/1 4.32 State, county and municipal: Within one year 1,326 1,333 0/6 7.27 562 568 0/5 8.18 One to five years 4,058 4,109 2/7 6.67 1,874 1,891 3/1 7.27 Five to ten years 2,776 2,868 5/8 7.35 2,657 2,647 7/1 7.30 Over ten years 195 195 12/11 9.00 779 779 17/11 8.03 Total 8,355 8,505 3/11 7.05 5,872 5,885 4/10 7.38 Other One to five years 2,935 2,905 2/8 8.63 260 260 3/0 8.75 Five to ten years 55 55 6/5 8.00 55 55 7/5 8.00 Total 2,990 2,960 2/2 8.62 315 315 3/0 8.74 Total investment securities $1,744,233 $1,742,480 1/2 5.40% $1,497,252 $1,467,726 1/1 4.34%
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Third 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 $2,795,987 $ 59,992 8.47% $2,251,162 $45,135 7.98% $11,518 $3,339 $14,857 Commercial and industrial 462,375 10,821 9.26 473,858 9,520 7.92 (264) 1,565 1,301 Consumer 1,166,488 25,494 8.73 1,051,439 21,725 8.25 2,440 1,329 3,769 Lease financing 57,906 1,117 7.58 53,048 985 7.43 101 31 132 Other 17,436 464 8.46 25,231 456 7.16 (108) 116 8 Total loans 4,500,192 97,888 8.64 3,854,738 77,821 8.04 13,687 6,380 20,067 Investment securities: U. S. Government 1,683,096 22,052 5.20 1,539,885 16,894 4.35 1,715 3,443 5,158 State, county and municipal 8,688 168 7.67 2,367 47 7.88 124 (3) 121 Mortgage-backed 2,992 47 6.23 1,296 26 7.96 30 (9) 21 Total investment securities 1,694,776 22,267 5.21 1,543,548 16,967 4.36 1,869 3,431 5,300 Federal funds sold 181,305 2,646 5.79 82,626 943 4.53 1,284 419 1,703 Total interest-earning assets $6,376,273 $122,801 7.65% $5,480,912 $95,731 6.95% $16,840 $10,230 $27,070 Liabilities Deposits: Checking With Interest $ 825,813 $ 3,324 1.60% $ 794,433 $ 3,418 1.71% $ 131 ($225) ($94) Savings 705,058 4,045 2.28 701,358 3,951 2.23 13 81 94 Money market accounts 737,178 6,058 3.26 776,667 4,988 2.55 (287) 1,357 1,070 Time deposits 2,937,613 41,728 5.64 2,264,533 22,252 3.90 8,080 11,396 19,476 Total interest-bearing deposits 5,205,662 55,155 4.20 4,536,991 34,609 3.03 7,937 12,609 20,546 Federal funds purchased 65,637 955 5.77 13,450 149 4.40 669 137 806 Repurchase agreements 22,021 264 4.76 19,345 167 3.42 27 70 97 Master notes 216,337 2,610 4.79 175,094 1,462 3.31 419 729 1,148 U. S. Treasury tax and loan accounts 18,831 262 5.52 17,307 181 4.15 19 62 81 Other short-term borrowings 16,413 197 4.76 7,570 89 4.66 105 3 108 Long-term obligations 24,595 415 6.69 48,908 608 4.93 (356) 163 (193) Total interest-bearing liabilities $5,569,496 $ 59,858 4.26% $4,818,665 $37,265 3.07% $ 8,820 $13,773 $22,593 Interest rate spread 3.39% 3.88% Net interest income and net yield on interest-earning assets $62,943 3.92% $58,466 4.23% $ 8,020 ($3,543) $ 4,477
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Nine 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 $2,727,870 $172,573 8.44% $2,220,719 $128,947 7.70% $30,271 $13,355 $43,626 Commercial and industrial 430,158 30,128 9.33 449,849 25,706 7.59 (1,275) 5,697 4,422 Consumer 1,159,949 77,099 8.87 984,886 61,159 8.28 11,227 4,713 15,940 Lease financing 58,424 3,322 7.58 49,376 2,820 7.62 517 (15) 502 Other 17,182 1,087 8.46 24,609 1,250 6.79 (424) 261 (163) Total loans 4,393,583 284,209 8.62 3,729,439 219,882 7.87 40,316 24,011 64,327 Investment securities: U. S. Government 1,513,309 55,567 4.91 1,632,140 55,066 4.51 (4,195) 4,696 501 State, county and municipal 7,951 465 7.82 1,280 79 8.25 401 (15) 386 Other 2,763 140 6.77 324 23 9.49 148 (31) 117 Total investment securities 1,524,023 56,172 4.93 1,633,744 55,168 4.51 (3,646) 4,650 1,004 Federal funds sold 136,336 6,039 5.92 71,379 2,115 3.96 2,401 1,523 3,924 Total interest-earning assets $6,053,942 $346,420 7.63% $5,434,562 $277,165 6.81% $39,071 $30,184 $69,255 Liabilities Deposits: Checking With Interest $804,391 $10,213 1.70% $780,274 $9,969 1.71% $305 (61) 244 Savings 690,376 11,698 2.27 681,902 11,402 2.24 142 154 296 Money market accounts 734,353 18,081 3.29 789,876 13,944 2.36 (1,169) 5,306 4,137 Time deposits 2,752,719 109,471 5.32 2,274,685 64,735 3.80 16,231 28,505 44,736 Total interest-bearing deposits 4,981,839 149,463 4.01 4,526,737 100,050 2.96 15,509 33,904 49,413 Federal funds purchased 39,369 1,721 5.84 20,151 543 3.60 679 499 1,178 Repurchase agreements 22,928 846 4.93 20,982 443 2.82 56 347 403 Master notes 191,723 7,134 4.97 162,951 3,524 2.89 848 2,762 3,610 U. S. Treasury tax and loan accounts 17,468 752 5.76 25,355 672 3.54 (275) 355 80 Other short-term borrowings 14,265 504 4.72 8,014 309 5.16 231 (36) 195 Long-term obligations 27,298 1,276 6.25 55,413 1,957 4.72 (1,154) 473 (681) Total interest-bearing liabilities $5,294,890 $161,696 4.08% $4,819,603 $107,498 2.98% $15,894 $38,304 $54,198 Interest rate spread 3.55% 3.83% Net interest income and net yield on interest-earning assets $184,724 4.08% $169,667 4.17% $23,177 ($8,120) $15,057
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Summary of Loan Loss Experience and Risk Elements
Table 7 1995 1994 Third Second First Fourth Third (thousands, except ratios) Quarter Quarter Quarter Quarter Quarter Reserve balance at beginning of period $76,887 $73,897 $72,017 $71,537 $70,862 Reserve of acquired institution (6) 1,986 1,272 436 360 Provision for loan losses 1,716 1,460 534 1,486 1,159 Net charge-offs: Charge-offs (1,783) (1,670) (1,234) (3,022) (2,276) Recoveries 1,172 1,214 1,308 1,580 1,432 Net (charge-offs) recoveries (611) (456) 74 (1,442) (844) Reserve balance at end of period $77,986 $76,887 $73,897 $72,017 $71,537 Historical Statistics Balances Average total loans $4,500,192 $4,424,724 $4,253,117 $3,999,377 $3,854,738 Total loans at period-end 4,540,056 4,480,235 4,362,969 4,148,133 3,939,264 Risk Elements Nonaccrual loans $14,296 $16,406 $19,953 $21,069 $22,720 Other real estate acquired through forclosure 2,739 3,590 4,296 5,926 7,614 Total nonperforming assets $17,035 $19,996 $24,249 $26,995 $30,334 Accruing loans 90 days or more past due $4,874 $3,524 $5,020 $5,326 $5,177 Ratios Net charge-offs (annualized) to average total loans 0.05% 0.04% -0.01% 0.14% 0.09% Reserve for loan losses to total loans 1.72 1.72 1.69 1.87 1.82 Nonperforming assets to total loans plus foreclosed real estate at period-end 0.37 0.45 0.56 0.65 0.77
First Citizens BancShares, Inc. and Subsidiaries Third Quarter 1995 Summary of Loan Loss Experience and Risk Elements
Table 7 Nine Months Ended (thousands, except ratios) September 30 1995 1994 Reserve balance at beginning of period $72,017 $70,049 Reserve of acquired institution 3,252 573 Provision for loan losses 3,710 1,300 Net charge-offs: Charge-offs (4,687) (5,458) Recoveries 3,694 5,073 Net (charge-offs) recoveries (993) (385) Reserve balance at end of period $77,986 $71,537 Historical Statistics Balances Average total loans $4,393,583 $3,729,439 Total loans at period-end 4,540,056 3,939,264 Risk Elements Nonaccrual loans $14,296 $22,720 Other real estate acquired through forclosure 2,739 7,614 Total nonperforming assets $17,035 $30,334 Accruing loans 90 days or more past due $4,874 $5,177 Ratios Net charge-offs (annualized) to average total loans 0.03% 0.01% Reserve for loan losses to total loans 1.72 1.82 Nonperforming assets to total loans plus foreclosed real estate at period-end 0.37 0.77
First Citizens BancShares, Inc. and Subsidiaries Third 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 increase of 15.6 percent during the third quarter of 1995 compared to the third quarter of 1994. Consolidated net income during the third quarter of 1995 was $15.8 million, compared to $13.7 million earned during the corresponding period of 1994. The decrease was the result of higher noninterest expense. Net income per share during the third quarter of 1995 totaled $1.49, compared to $1.37 during the third quarter of 1994. Return on average assets was 0.89 percent for the third quarters of 1995 and 1994. For the nine-month period ended September 30, consolidated net income increased from $38 million in 1994 to $40.6 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 $3.85, compared to $3.86 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 0.81 percent for 1995 compared to 0.84 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 $6.38 billion for the third quarter of 1995, an increase of $895.4 million or 16.3 percent from the third quarter of 1994, the result of growth in the loan portfolio. For the nine-month period ended September 30, 1995, earning assets averaged $6.05 billion, compared to $5.43 billion during the same period of 1994, an increase of 11.4 percent. Loans. At September 30, 1995, and 1994, gross loans totaled $4.54 billion and $3.94 billion, respectively. As of December 31, 1994, gross loans were $4.15 billion. The $391.9 million increase from December 31, 1994 to September 30, 1995, is the combined result of the $170.4 million in acquired loans and growth among consumer and commercial and industrial loans. The $600.8 million growth in loans from September 30, 1994 to September 30, 1995 results from acquisitions, which have added $219 million in loans, and strong growth within various loan products. Table 3 details outstanding loans by type for the past five quarters. During the third quarter of 1995, average loans were $4.5 billion, an increase of $645.5 million or 16.7 percent from the comparable period of 1994. Consumer loans averaged $1.17 billion during the third quarter of 1995, compared to $1.05 billion during the same period of 1994, an increase of $115 million or 10.9 percent. This results from sustained demand for automobile financing. Loans secured by real estate averaged $2.8 billion during the third quarter of 1995, an increase of $544.8 million or 24.2 percent between the two periods. 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 September 30, 1995, and 1994, the investment portfolio totaled $1.74 billion and $1.5 billion, respectively. At December 31, 1994, the investment portfolio was $1.46 billion. The growth in the portfolio during 1995 has resulted from increased liquidity. 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 $122.8 million during the third quarter of 1995, a 28.3 percent increase over the third quarter of 1994. The average yield on interest-earning assets for the third quarter of 1995 was 7.65 percent, compared to 6.95 percent for the corresponding period of 1994, a 70 basis point improvement resulting from higher market rates. Taxable equivalent loan income for the third quarter of 1995 was $97.9 million, an increase of $20.1 million or 25.8 percent from the third quarter of 1994 due to growth in the loan portfolio and higher loan yields. The taxable equivalent yield on the loan portfolio was 8.64 percent during the third quarter of 1995, compared to 8.04 percent during the same period of 1994. Taxable equivalent loan income for the nine-month period ended September 30 was $284.2 million, a 29.3 percent increase over the same period of 1994, the combined result of the volume increases and a 75 basis point yield increase. Taxable equivalent income earned on the investment portfolio amounted to $22.3 million during the third quarter of 1995 and $17 million during the same period of 1994. The portfolio's taxable equivalent yield increased from 4.36 percent for the quarter ended September 30, 1994, to 5.21 percent for the quarter ended September 30, 1995. Additionally, the average portfolio during the third quarter of 1995 was $1.69 billion, an increase of $151.2 million or 9.8 percent over the same period of 1994. For the nine-month period ended September 30, 1995, and 1994, investment securities taxable-equivalent interest income increased 1.8 percent, the result of a 42 basis point yield improvement. INTEREST-BEARING LIABILITIES. At September 30, 1995, and 1994, interest-bearing liabilities totaled $5.65 billion and $4.86 billion, respectively, compared to $4.98 billion as of December 31, 1994. Average interest-bearing liabilities for the third quarter of 1995 totaled $5.57 billion, an increase of 15.6 percent from the third quarter of 1994. Deposits. At September 30, 1995, total deposits were $6.23 billion, an increase of $817.2 million or 15.1 percent over September 30, 1994. Compared to the December 31, 1994 balance of $5.52 billion, total deposits have increased $710.4 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 $5.2 billion during the third quarter of 1995 compared to $4.54 billion during the third quarter of 1994, an increase of 14.7 percent. Much of the increase is attributed to average time deposits, which increased $673.1 million from the third quarter of 1994 to the third quarter of 1995. Borrowed Funds. At September 30, 1995, short-term borrowings totaled $343.1 million compared to $290.9 million at December 31, 1994 and $231.5 million at September 30, 1994. For the quarters ended September 30, 1995, and 1994, short-term borrowings averaged $339.2 million and $232.8 million, respectively, a 45.7 percent increase resulting from higher levels of overnight borrowings. Long-term obligations averaged $24.6 million during the third quarter of 1995, compared to $48.9 million during the third quarter of 1994. The 49.7 percent reduction results from the reclassification of Federal Home Loan Bank borrowings to short-term status. Expense on Interest-Bearing Liabilities. Interest expense amounted to $59.9 million during the third quarter of 1995, a $22.6 million or 60.6 percent increase from the third quarter of 1994. The higher interest expense resulted from a 119 basis point increase in the aggregate rate on interest bearing liabilities, which was 4.26 percent during the third quarter of 1995, compared to 3.07 percent during the third quarter of 1994. The $750.8 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 nine-month periods ended September 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 nine-month period ended September 30, 1995, was $161.7 million, a 50.4 percent increase over the comparable period of 1994. The increase resulted from a 110 basis point increase in the rate on interest-bearing liabilities and a $475.3 million increase in average interest-bearing liabilities. NET INTEREST INCOME Taxable equivalent net interest income totaled $62.9 million during the third quarter of 1995, an increase of 7.7 percent from the third quarter of 1994. The average net yield on interest-earning assets was 3.92 percent for the third quarter of 1995, 31 basis points below the net yield recorded during the third quarter of 1994. The taxable equivalent interest rate spread was 3.39 percent for the third quarter of 1995, compared to 3.88 percent for the third quarter of 1994. Management anticipates continued compression of the net yield in the coming quarters due to current market conditions. Management views the ratio of interest-earning assets to interest-bearing liabilities within one year to be at an acceptable level. 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 September 30, 1995, the reserve for loan losses amounted to $78 million or 1.72 percent of loans outstanding. This compares to $71.5 million or 1.82 percent at September 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 September 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 nine months ended September 30, 1995 was $3.3 million, compared to $573,000 during the same period of 1994. Net charge-offs for the nine months ended September 30, 1995 totalled $993,000, compared to net charge-offs of $385,000 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 September 30, 1995, BancShares' nonperforming assets amounted to $17 million or 0.37 percent of gross loans plus foreclosed properties, compared to $27 million at December 31, 1994, and $30.3 million at September 30, 1994. The $13.3 million reduction in nonperforming assets since September 30, 1994 reflected reductions in nonaccrual loans and foreclosed assets. Management continues to closely monitor nonperforming assets, taking necessary actions to minimize potential exposure. NONINTEREST INCOME Noninterest income was $23.6 million for the third quarter of 1995, compared to $21.4 million for the third quarter of 1994. The $2.2 million increase was primarily due to higher fee income, the result of growth among fees collected from other banks for processing services. Total fee income during the third quarter of 1995 was $5.3 million, compared to $4.3 million from the same period of 1994. During the third quarter of 1995, service charge income was $10.2 million, a 6.7 percent increase over the $9.6 million earned during the same period of 1994. Bolstered by growth in merchant activity, credit card income increased 11.2 percent from the third quarter of 1994 to the same period of 1995. For the nine-month period ended September 30, 1995, noninterest income totaled $68.3 million, an increase of $6 million from the same period of 1994. The 9.7 percent increase was the combined result of higher service charge income and improved fee income. Loan sales generated gains of $432,000 during 1995, compared to losses of $806,000 recorded during the same period of 1994. NONINTEREST EXPENSE Noninterest expense for the third quarter of 1995 amounted to $59.7 million. This was a 4.1 percent increase over the third quarter of 1994. Salaries and wages increased 6.5 percent between the periods, primarily the result of merit raises. Employee benefits expense increased 15 percent during the third quarter of 1995, much of which resulted from higher health care costs. Occupancy expense increased 8.4 percent during the third quarter of 1995, compared to the corresponding period of 1994. For the nine month period ended September 30, occupancy expense during 1995 was 10.9 percent above the 1994 level. Increases for both the quarters and the nine month periods ended September 30, 1995 and 1994 resulted from increased operating costs. Other expenses decreased 4.5 percent for the third quarter of 1995 versus the same period of 1994. The reduction resulted from a refund received from the FDIC for deposit insurance. This nonrecurring item contributed to a 74 percent reduction in FDIC insurance expense during the third quarter of 1995 when compared to the third quarter of 1994. For the year-to-date the $58.5 million in other expenses represents an increase of 5.7 percent increase, driven by increases in intangible amortization, non-credit charge offs, and expenses related to the credit card operation. Various proposals are currently being considered by committees of the United States Congress concerning a possible merger of the Savings Association Insurance Fund ("SAIF") and Bank Insurance Fund ("BIF"), both of which are controlled by the FDIC. One of the principal issues under discussion is the amount of additional funds needed to recapitalize the SAIF prior to such a merger. Substantially all of the proposals under consideration contemplate a one-time special assessment to be levied on SAIF-insured deposits, which assessment has ranged up to $.85 per $100 of SAIF-insured deposits maintained by the institution assessed. In addition, the various proposals differ as to whether the proposed assessment will be deductible for tax purposes by the institution assessed. At March 31, 1995, the Banks had approximately $1.7 billion of SAIF-insured deposits which would be subject to such a special assessment. Due to the uncertainty as to which, if any, of the various proposals will be adopted and the ultimate amount and tax deductibility of the assessment to be levied on the Banks, the impact of the proposals and the assessment is imposible to predict with certainty at this time. INCOME TAXES Income tax expense amounted to $8.7 million during the third quarter of 1995, compared to $7.1 million during the third quarter of 1994. The effective tax rates for these periods were 35.4 percent and 34.3 percent, respectively. The year-to-date effective tax rates are 35.1 percent and 34.5 percent, respectively, for 1995 and 1994. 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 73.5 percent during the third quarter of 1995 versus 72.2 percent for the same period of 1994. 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 September 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 is due to intangible assets that result from business combinations. As a percentage of risk-adjusted assets, BancShares' core capital ratio was 9.6 percent and 10.4 percent, respectively at September 30, 1995, and 1994. The minimum ratio allowed is 4 percent of risk-adjusted assets. The total capital ratio was 10.9 percent and 11.6 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 9-MOS DEC-31-1995 SEP-30-1995 483,627 1,744,233 1,939 77,986 0 2,227,860 316,465 110,116 7,168,772 6,227,964 0 10,690 0 0 495,183 7,168,772 344,737 413,009 0 0 184,955 3,710 161,696 62,648 22,028 40,620 0 0 0 40,620 3.85 3.85
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