EX-99.1 2 earningsrelease-q42016.htm EXHIBIT 99.1 Exhibit
 
NEWS RELEASE
 
 
For Immediate Release
image4a02.jpg 
January 25, 2017
Contact:
Barbara Thompson
 
First Citizens BancShares
 
(919) 716-2716
 
 
 
FIRST CITIZENS BANCSHARES REPORTS EARNINGS FOR FOURTH QUARTER 2016
RALEIGH, N.C. -- First Citizens BancShares Inc. (BancShares) (Nasdaq: FCNCA) reports earnings for the quarter ended December 31, 2016. Net income for the fourth quarter of 2016 was $52.7 million, or $4.39 per share, compared to $51.4 million, or $4.28 per share, for the third quarter of 2016, and $42.7 million, or $3.56 per share, for the corresponding period of 2015, according to Frank B. Holding, Jr., chairman of the board. BancShares’ current quarter results generated an annualized return on average assets of 0.63 percent and an annualized return on average equity of 6.86 percent, compared to respective returns of 0.63 percent and 6.69 percent for the third quarter of 2016 and 0.53 percent and 5.92 percent for the fourth quarter of 2015.
For the years ended December 31, 2016 and 2015, net income was $225.5 million, or $18.77 per share, and $210.4 million, or $17.52 per share, respectively. Returns on average assets and average equity were 0.70 percent and 7.51 percent during 2016, compared to 0.68 percent and 7.52 percent during 2015. Earnings in 2016 included a pre-tax benefit of $16.6 million resulting from the early termination of FDIC loss share agreements during the second quarter of 2016 and gains of $5.8 million recognized in connection with the acquisition of North Milwaukee State Bank (NMSB) of Milwaukee, Wisconsin, on March 11, 2016, and the acquisition of First CornerStone Bank (FCSB) of King of Prussia, Pennsylvania, on May 6, 2016. Earnings in 2015 included a $42.9 million gain on the February 13, 2015, acquisition of Capitol City Bank & Trust (CCBT) of Atlanta, Georgia.
FINANCIAL HIGHLIGHTS
•
Loans grew by $440.9 million during the fourth quarter and $1.50 billion for the year primarily as a result of strong originated portfolio growth.
•
Deposit growth continued, up $236.1 million and $1.23 billion from September 30, 2016, and December 31, 2015, respectively.
•
In addition to the acquisitions of FCSB and NMSB, First Citizens Bank completed the merger of Midlothian, Virginia-based Cordia Bancorp, Inc. (Cordia) and its subsidiary, Bank of Virginia, into First Citizens Bank on September 1, 2016. All three acquisitions contributed to growth in loans and deposits during 2016.
•
The taxable-equivalent net interest margin was 3.14 percent in the fourth quarter of 2016, an increase of 4 basis points from the third quarter of 2016. The increase was due to originated loan growth and an improvement in investment yields, partially offset by continued purchased credit impaired (PCI) loan portfolio runoff.
•
BancShares remained well-capitalized at December 31, 2016, under Basel III capital requirements with a leverage capital ratio of 9.05 percent, Tier 1 risk-based capital ratio of 12.42 percent, common equity Tier 1 ratio of 12.42 percent and total risk-based capital ratio of 13.85 percent.
LOANS AND DEPOSITS
Loans at December 31, 2016, were $21.74 billion, a net increase of $440.9 million compared to September 30, 2016, representing growth of 8.2 percent on an annualized basis. Originated loan growth was $499.9 million, primarily due to continued growth in the commercial portfolio. PCI loans decreased by $59.0 million, as a result of loan runoff.



Loan balances increased by a net $1.50 billion, or 7.4 percent, since December 31, 2015. This increase was primarily driven by $1.41 billion of organic growth in the non-PCI portfolio and the addition of $225.0 million to the non-PCI portfolio from the Cordia acquisition at December 31, 2016. The PCI portfolio declined over this period by $141.3 million, as a result of continued loan runoff of $206.6 million offset by net loans acquired from NMSB and FCSB, which were $29.5 million and $35.8 million, respectively, at December 31, 2016.
At December 31, 2016, deposits were $28.16 billion, an increase of $236.1 million since September 30, 2016, due to organic growth primarily in checking with interest accounts and money market accounts, offset by runoff in time deposits. Deposits increased by $1.23 billion, or 4.6 percent, since December 31, 2015, due to organic growth in low-cost demand deposits and checking with interest and the additions of deposit balances from the NMSB, FCSB and Cordia acquisitions of $318.2 million at December 31, 2016, offset by continued runoff in time deposits.
ALLOWANCE AND PROVISION FOR LOAN AND LEASE LOSSES
The allowance for loan and lease losses was $218.8 million at December 31, 2016, an increase of $6.8 million and $12.6 million since September 30, 2016, and December 31, 2015, respectively. The allowance as a percentage of total loans at December 31, 2016, was 1.01 percent, compared to 1.00 percent and 1.02 percent at September 30, 2016, and December 31, 2015, respectively.

BancShares recorded net provision expense of $16.0 million for loan and leases losses during the fourth quarter of 2016, and $7.5 million and $7.0 million for the third quarter of 2016 and fourth quarter of 2015, respectively. The higher provision expense in the current quarter resulted from higher net charge-offs and increases in reserves on PCI loans.

Non-PCI loan provision expense was $13.9 million for the fourth quarter of 2016, compared to $7.4 million and $7.9 million for the third quarter of 2016 and fourth quarter of 2015, respectively. The increase in provision expense in the current quarter resulted from higher net charge-offs. The PCI loan portfolio provision expense was $2.1 million during the fourth quarter of 2016, compared to provision expense of $77 thousand and a net provision credit of $903 thousand during the third quarter of 2016 and fourth quarter of 2015, respectively. The increase in provision expense in the current quarter was due to higher loss rates for certain pools of PCI loans.
NONPERFORMING ASSETS
At December 31, 2016, BancShares’ nonperforming assets, including nonaccrual loans and other real estate owned (OREO), were $147.0 million, down from $160.1 million at September 30, 2016 and $169.0 million at December 31, 2015. The decreases from September 30, 2016, and December 31, 2015, were due to $5.4 million and $17.7 million reductions in nonaccrual loans, respectively, primarily in commercial loans, and $7.7 million and $4.3 million declines in OREO balances as a result of problem asset resolutions.
NET INTEREST INCOME
Net interest income increased $8.1 million, or by 3.4 percent, to $243.9 million from the third quarter of 2016. The increase was due to higher non-PCI loan interest income of $6.3 million related to originated loan volume and a $2.2 million increase in investment securities interest income due to improved yields and portfolio growth.
Net interest income increased $13.2 million, or by 5.7 percent, from the fourth quarter of 2015. The increase was primarily due to higher non-PCI loan interest income of $14.5 million as a result of originated loan growth, a $4.3 million improvement in interest income earned on investments and a $277 thousand reduction in interest expense. These favorable impacts were partially offset by a decline in PCI loan interest income of $5.9 million due to continued loan runoff.
The taxable-equivalent net interest margin was 3.14 percent in the fourth quarter of 2016, an increase of 4 basis points from the third quarter of 2016 and 2 basis points from the same quarter in the prior year. The margin improvement was due to originated loan volume and an improvement in investment yields, partially offset by continued PCI loan portfolio runoff. The current quarter also benefited from lower deposit funding rates compared to the fourth quarter of 2015.



NONINTEREST INCOME
Total noninterest income for the fourth quarter of 2016 was $124.7 million, an increase of $6.9 million from the third quarter of 2016. The increase was due to higher securities gains of $8.8 million and a $3.4 million increase in recoveries of PCI loans previously charged-off. These increases were partially offset by a $3.8 million gain on the sale of certain residential mortgage loans and a $837 thousand fair value refinement to the gain on the FCSB acquisition, both recognized in the third quarter of 2016.
Noninterest income increased $25.6 million from the fourth quarter of 2015, primarily driven by higher securities gains of $9.2 million, higher favorable adjustments to the FDIC receivable of $7.2 million and a $4.6 million increase in mortgage income due to favorable changes in valuation adjustments on mortgage servicing assets and increased production and sales of loans. Noninterest income also benefited from a $4.5 million increase in merchant and cardholder services as a result of higher sales volume and a $3.0 million increase in recoveries of PCI loans previously charged-off.
NONINTEREST EXPENSE
Noninterest expense increased by $4.3 million to $271.5 million compared to the third quarter of 2016. The increase was primarily due to a $4.9 million increase in salaries and wages related to higher termination pay and temporary labor, an increase in bank building repairs related to Hurricane Matthew of approximately $1.2 million and higher unfunded commitment reserves of $754 thousand resulting from refined loss estimates. These increases were offset by a $3.6 million reduction in merger-related expense.
Noninterest expense increased by $15.6 million from the same quarter last year due to a $7.2 million increase in salaries and wages related to higher temporary labor and annual merit increases. Noninterest expense also increased due to higher foreclosure-related expense of $3.9 million resulting from lower gains on OREO sales, which offset this expense, an increase in cardholder and merchant processing expense of $2.0 million due to higher sales volume, higher bank building repairs related to Hurricane Matthew and an increase in unfunded commitment reserves.
INCOME TAXES
Higher pre-tax earnings contributed to income tax expense of $28.4 million in the fourth quarter of 2016, up from $27.5 million and $24.2 million in the third quarter of 2016 and fourth quarter of 2015, respectively. Effective tax rates were 35.0 percent, 34.9 percent and 36.1 percent during the respective periods. Reductions in the North Carolina corporate income tax rate contributed to lower effective tax rates during 2016.
ABOUT FIRST CITIZENS BANCSHARES
BancShares is the financial holding company for Raleigh, North Carolina-headquartered First-Citizens Bank & Trust Company (First Citizens Bank). First Citizens Bank provides a broad range of financial services to individuals, businesses, professionals and the medical community through branch offices in 21 states, digital banking, ATMs and telephone banking. As of December 31, 2016, BancShares had total assets of $33.0 billion.
For more information, visit First Citizens' website at firstcitizens.com. First Citizens Bank. Forever First®.
###



CONSOLIDATED FINANCIAL HIGHLIGHTS
 
Three months ended
 
Year ended December 31
(Dollars in thousands, except share data; unaudited)
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
SUMMARY OF OPERATIONS
 
 
 
 
 
 
 
 
 
Interest income
$
254,782

 
$
246,494

 
$
241,861

 
$
987,757

 
$
969,209

Interest expense
10,865

 
10,645

 
11,142

 
43,082

 
44,304

Net interest income
243,917

 
235,849

 
230,719

 
944,675

 
924,905

Provision for loan and lease losses
16,029

 
7,507

 
7,046

 
32,941

 
20,664

Net interest income after provision for loan and lease losses
227,888

 
228,342

 
223,673

 
911,734

 
904,241

Gain on acquisitions
—

 
837

 
—

 
5,831

 
42,930

Noninterest income
124,698

 
117,004

 
99,135

 
482,240

 
424,158

Noninterest expense
271,531

 
267,233

 
255,886

 
1,048,738

 
1,038,915

Income before income taxes
81,055

 
78,950

 
66,922

 
351,067

 
332,414

Income taxes
28,365

 
27,546

 
24,174

 
125,585

 
122,028

Net income
$
52,690

 
$
51,404

 
$
42,748

 
$
225,482

 
$
210,386

Taxable-equivalent net interest income
$
245,330

 
$
237,146

 
$
232,147

 
$
949,768

 
$
931,231

PER SHARE DATA
 
 
 
 
 
 
 
 
 
Net income
$
4.39

 
$
4.28

 
$
3.56

 
$
18.77

 
$
17.52

Cash dividends
0.30

 
0.30

 
0.30

 
1.20

 
1.20

Book value at period-end
250.82

 
256.76

 
239.14

 
250.82

 
239.14

CONDENSED BALANCE SHEET
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
539,741

 
$
495,705

 
$
534,086

 
$
539,741

 
$
534,086

Overnight investments
1,872,594

 
2,997,086

 
2,063,132

 
1,872,594

 
2,063,132

Investment securities
7,006,678

 
6,384,940

 
6,861,548

 
7,006,678

 
6,861,548

Loans and leases
21,737,878

 
21,296,980

 
20,239,990

 
21,737,878

 
20,239,990

Less allowance for loan and lease losses
(218,795
)
 
(211,950
)
 
(206,216
)
 
(218,795
)
 
(206,216
)
FDIC loss share receivable
4,172

 
3,108

 
4,054

 
4,172

 
4,054

Other assets
2,048,568

 
2,006,041

 
1,979,340

 
2,048,568

 
1,979,340

Total assets
$
32,990,836

 
$
32,971,910

 
$
31,475,934

 
$
32,990,836

 
$
31,475,934

Deposits
28,161,343

 
27,925,253

 
26,930,755

 
28,161,343

 
26,930,755

Other liabilities
1,817,066

 
1,962,909

 
1,673,070

 
1,817,066

 
1,673,070

Shareholders' equity
3,012,427

 
3,083,748

 
2,872,109

 
3,012,427

 
2,872,109

Total liabilities and shareholders' equity
$
32,990,836

 
$
32,971,910

 
$
31,475,934

 
$
32,990,836

 
$
31,475,934

SELECTED PERIOD AVERAGE BALANCES
 
 
 
 
 
 
 
 
Total assets
$
33,223,995

 
$
32,655,417

 
$
31,753,223

 
$
32,439,492

 
$
31,072,235

Investment securities
6,716,873

 
6,452,532

 
6,731,183

 
6,616,355

 
7,011,767

Loans and leases
21,548,313

 
21,026,510

 
20,059,556

 
20,897,395

 
19,528,153

Interest-earning assets
31,078,428

 
30,446,592

 
29,565,715

 
30,267,788

 
28,893,157

Deposits
28,231,477

 
27,609,418

 
27,029,650

 
27,515,161

 
26,485,245

Interest-bearing liabilities
19,357,282

 
19,114,740

 
18,933,443

 
19,158,317

 
18,986,755

Shareholders' equity
$
3,056,426

 
$
3,058,155

 
$
2,867,177

 
$
3,001,269

 
$
2,797,300

Shares outstanding
12,010,405

 
12,010,405

 
12,010,405

 
12,010,405

 
12,010,405

SELECTED RATIOS
 
 
 
 
 
 
 
 
 
Annualized return on average assets
0.63
%
 
0.63
%
 
0.53
%
 
0.70
%
 
0.68
%
Annualized return on average equity
6.86

 
6.69

 
5.92

 
7.51

 
7.52

Taxable-equivalent net interest margin
3.14

 
3.10

 
3.12

 
3.14

 
3.22

Efficiency ratio (1)
75.54

 
75.81

 
77.57

 
75.79

 
77.63

Tier 1 risk-based capital ratio
12.42

 
12.50

 
12.65

 
12.42

 
12.65

Common equity Tier 1 ratio
12.42

 
12.50

 
12.51

 
12.42

 
12.51

Total risk-based capital ratio
13.85

 
13.96

 
14.03

 
13.85

 
14.03

Leverage capital ratio
9.05

 
9.07

 
8.96

 
9.05

 
8.96

(1)The efficiency ratio is a non-GAAP financial measure which measures productivity and is generally calculated as noninterest expense divided by total revenue (net interest income and noninterest income). The efficiency ratio removes the impact of BancShares' securities gains, acquisition gains and FDIC loss share termination from the calculation. Management uses this ratio to monitor performance and believes this measure provides meaningful information to investors.
 




ALLOWANCE FOR LOAN AND LEASE LOSSES AND ASSET QUALITY DISCLOSURES
 
Three months ended
 
Year ended December 31
(Dollars in thousands, unaudited)
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)
 
 
 
 
 
 
 
 
 
ALLL at beginning of period
$
211,950

 
$
208,008

 
$
205,463

 
$
206,216

 
$
204,466

(Credit) provision for loan and lease losses:
 
 
 
 
 
 
 
 
 
Purchased credit-impaired (PCI) loans (1)
2,137

 
77

 
(903
)
 
(1,929
)
 
(2,273
)
Non-PCI loans (1)
13,892

 
7,430

 
7,949

 
34,870

 
22,937

Net charge-offs of loans and leases:
 
 
 
 
 
 
 
 
 
Charge-offs
(11,316
)
 
(6,210
)
 
(8,551
)
 
(30,201
)
 
(28,348
)
Recoveries
2,132

 
2,645

 
2,258

 
9,839

 
9,434

Net charge-offs of loans and leases
(9,184
)
 
(3,565
)
 
(6,293
)
 
(20,362
)
 
(18,914
)
ALLL at end of period
$
218,795

 
$
211,950

 
$
206,216

 
$
218,795

 
$
206,216

ALLL at end of period allocated to loans and leases:
 
 
 
 
 
 
 
 
 
PCI
$
13,769

 
$
11,632

 
$
16,312

 
$
13,769

 
$
16,312

Non-PCI 
205,026

 
200,318

 
189,904

 
205,026

 
189,904

ALLL at end of period
$
218,795

 
$
211,950

 
$
206,216

 
$
218,795

 
$
206,216

Net charge-offs of loans and leases:
 
 
 
 
 
 
 
 
 
PCI
$
—

 
$
—

 
$
342

 
$
614

 
$
3,044

Non-PCI 
9,184

 
3,565

 
5,951

 
19,748

 
15,870

Total net charge-offs
$
9,184

 
$
3,565

 
$
6,293

 
$
20,362

 
$
18,914

Reserve for unfunded commitments
$
1,133

 
$
379

 
$
379

 
$
1,133

 
$
379

SELECTED LOAN DATA
 
 
 
 
 
 
 
 
 
Average loans and leases:
 
 
 
 
 
 
 
 
 
PCI
$
831,858

 
$
931,820

 
$
996,637

 
$
898,706

 
$
1,112,286

Non-PCI 
20,716,455

 
19,725,274

 
19,062,919

 
19,998,689

 
18,415,867

Loans and leases at period-end:
 
 
 
 
 
 
 
 
 
PCI
809,169

 
868,200

 
950,516

 
809,169

 
950,516

Non-PCI 
20,928,709

 
20,428,780

 
19,289,474

 
20,928,709

 
19,289,474

RISK ELEMENTS
 
 
 
 
 
 
 
 
 
Nonaccrual loans and leases:
 
 
 
 
 
 
 
 
 
PCI
$
3,451

 
$
4,142

 
$
7,579

 
$
3,451

 
$
7,579

Non-PCI
82,307

 
87,043

 
95,854

 
82,307

 
95,854

Other real estate
61,231

 
68,964

 
65,559

 
61,231

 
65,559

 Total nonperforming assets
$
146,989

 
$
160,149

 
$
168,992

 
$
146,989

 
$
168,992

Accruing loans and leases 90 days or more past due
$
68,241

 
$
69,312

 
$
77,066

 
$
68,241

 
$
77,066

RATIOS
 
 
 
 
 
 
 
 
 
Net charge-offs (annualized) to average loans and leases:
 
 
 
 
 
 
 
 
 
PCI
—
%
 
—
%
 
0.14
%
 
0.07
%
 
0.27
%
Non-PCI
0.18

 
0.07

 
0.12

 
0.10

 
0.09

Total
0.17

 
0.07

 
0.12

 
0.10

 
0.10

ALLL to total loans and leases:
 
 
 
 
 
 
 
 
 
PCI
1.70

 
1.34

 
1.72

 
1.70

 
1.72

Non-PCI
0.98

 
0.98

 
0.98

 
0.98

 
0.98

Total
1.01

 
1.00

 
1.02

 
1.01

 
1.02

Ratio of nonperforming assets to total loans, leases and other real estate
 
 
 
 
 
 
 
 
 
Covered
0.66

 
0.75

 
3.51

 
0.66

 
3.51

Noncovered
0.67

 
0.75

 
0.79

 
0.67

 
0.79

Total
0.67

 
0.75

 
0.83

 
0.67

 
0.83

(1) Loans and leases are evaluated at acquisition and where a discount is noted at least in part due to credit quality, the loans are accounted for under the guidance in ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Loans for which it is probable at acquisition that all required payments will not be collected in accordance with the contractual terms are considered purchased credit-impaired (PCI) loans. PCI loans and leases are recorded at fair value at the date of acquisition. No allowance for loan and lease losses is recorded on the acquisition date as the fair value of the acquired assets incorporates assumptions regarding credit risk. An allowance is recorded if there is additional credit deterioration after the acquisition date. Conversely, Non-PCI loans include originated and purchased non-impaired loans.



AVERAGE BALANCE AND NET INTEREST MARGIN SUMMARY
 
Three months ended
 
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
 
Average
 
 
 
 Yield/
 
Average
 
 
 
 Yield/
 
Average
 
 
 
 Yield/
 
(Dollars in thousands, unaudited)
Balance
 
Interest
 
 Rate
 
Balance
 
Interest
 
 Rate
 
Balance
 
Interest
 
 Rate
 
INTEREST-EARNING ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans and leases
$
21,548,313

 
$
226,651

 
4.19

%
$
21,026,510

 
$
220,480

 
4.17

%
$
20,059,556

 
$
218,048

 
4.32

%
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U. S. Treasury
1,593,610

 
3,328

 
0.83

 
1,528,010

 
3,018

 
0.79

 
1,686,269

 
3,092

 
0.73

 
Government agency
172,037

 
396

 
0.92

 
321,664

 
711

 
0.88

 
599,048

 
1,282

 
0.86

 
Mortgage-backed securities
4,802,198

 
20,937

 
1.74

 
4,470,507

 
18,833

 
1.69

 
4,437,936

 
18,632

 
1.68

 
Corporate bonds
54,255

 
772

 
5.69

 
43,535

 
648

 
5.95

 
—

 
—

 
—

 
Other
94,773

 
253

 
1.06

 
88,816

 
316

 
1.41

 
7,930

 
205

 
10.30

 
Total investment securities
6,716,873

 
25,686

 
1.53

 
6,452,532

 
23,526

 
1.46

 
6,731,183

 
23,211

 
1.38

 
Overnight investments
2,813,242

 
3,858

 
0.55

 
2,967,550

 
3,785

 
0.51

 
2,774,976

 
2,030

 
0.29

 
Total interest-earning assets
$
31,078,428

 
$
256,195

 
3.28

%
$
30,446,592

 
$
247,791

 
3.24

%
$
29,565,715

 
$
243,289

 
3.27

%
INTEREST-BEARING LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Checking with interest
$
4,696,279

 
$
261

 
0.02

%
$
4,475,963

 
$
231

 
0.02

%
$
4,234,147

 
$
204

 
0.02

%
Savings
2,080,598

 
161

 
0.03

 
2,055,877

 
157

 
0.03

 
1,887,520

 
142

 
0.03

 
Money market accounts
8,113,686

 
1,619

 
0.08

 
8,060,290

 
1,568

 
0.08

 
8,175,228

 
1,605

 
0.08

 
Time deposits
2,892,143

 
2,411

 
0.33

 
2,900,840

 
2,501

 
0.34

 
3,200,354

 
2,900

 
0.36

 
Total interest-bearing deposits
17,782,706

 
4,452

 
0.10

 
17,492,970

 
4,457

 
0.10

 
17,497,249

 
4,851

 
0.11

 
Repurchase agreements
726,318

 
485

 
0.27

 
766,893

 
489

 
0.25

 
728,526

 
471

 
0.26

 
Other short-term borrowings
12,749

 
52

 
1.63

 
12,162

 
51

 
1.68

 
3,203

 
7

 
1.39

 
Long-term obligations
835,509

 
5,876

 
2.81

 
842,715

 
5,648

 
2.68

 
704,465

 
5,813

 
3.30

 
Total interest-bearing liabilities
$
19,357,282

 
$
10,865

 
0.22

%
$
19,114,740

 
$
10,645

 
0.22

%
$
18,933,443

 
$
11,142

 
0.23

%
Interest rate spread
 
 
 
 
3.06

%
 
 
 
 
3.02

%
 
 
 
 
3.04

%
Net interest income and net yield on interest-earning assets
 
 
$
245,330

 
3.14

%
 
 
$
237,146

 
3.10

%
 
 
$
232,147

 
3.12

%
Loans and leases include PCI loans, non-PCI loans, nonaccrual loans and loans held for sale. Yields related to loans, leases and securities exempt from both federal and state income taxes, federal income taxes only, or state income taxes only are stated on a taxable-equivalent basis assuming statutory federal income tax rates of 35.0 percent for each period and state income tax rates of 3.1 percent, 5.5 percent and 5.5 percent for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively. The taxable-equivalent adjustment was $1,413, $1,297 and $1,428 for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively. The rate/volume variance is allocated equally between the changes in volume and rate.