RALEIGH, N.C., Nov. 5, 2009 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (Nasdaq:FCNCA) reports earnings for the quarter ending September 30, 2009, of $82.5 million, compared to $19.6 million for the corresponding period of 2008, according to Frank B. Holding Jr., chairman of the board. Results for the third quarter of 2009 include after-tax gains of $63.9 million related to the Federal Deposit Insurance Corporation (FDIC) assisted acquisitions of Temecula Valley Bank in Temecula, California, and Venture Bank in Lacey, Washington. The gains resulted from the excess of the fair value of the recorded assets over the fair value of the liabilities assumed.
Under the purchase and assumption agreements with the FDIC, First Citizens received cash, investments securities, loans, foreclosed real estate, deposits and borrowings. The loans and foreclosed real estate acquired are covered by loss-sharing agreements with the FDIC that provide significant loss protection to First Citizens.
Per share income for the third quarter 2009 totaled $7.90, compared to $1.87 for the same period a year ago. The after-tax gains represented $6.12 per share. First Citizens' current quarter results generated an annualized return on average assets of 1.83 percent and an annualized return on average equity of 22.45 percent, compared to respective returns of 0.47 percent and 5.20 percent for the same period of 2008.
Third quarter net interest income increased $8.0 million, or 6.3 percent, from the same period of 2008, due to a $1.09 billion increase in average interest-earning assets. Acquisitions accounted for a significant portion of the growth in interest-earning assets. The net yield on interest-earning assets declined 6 basis points from the third quarter of 2008 but improved 39 basis points on a linked quarter basis.
Interest-earning assets averaged $15.86 billion during the third quarter of 2009, an increase of 7.4 percent over the third quarter of 2008, due to growth in loans and investment securities. Average loans outstanding increased $637.8 million, or 5.6 percent, since the third quarter of 2008, while investment securities grew $639.1 million, or 21.6 percent. As a result of interest rate reductions affecting all asset classes, the taxable-equivalent yield on interest-earning assets declined 74 basis points to 4.66 percent during the third quarter of 2009.
Average interest-bearing liabilities increased by $950.3 million, or 7.8 percent during the third quarter of 2009, due primarily to higher levels of deposits. The rate on interest-bearing liabilities decreased 70 basis points to 1.64 percent during the third quarter of 2009.
The provision for credit losses equaled $18.3 million during the third quarter of 2009, a $1.7 million, or 8.7 percent, decline from the same period of 2008 caused by lower internal loan growth. Net charge-offs during the third quarter 2009 equaled $15.3 million, compared to $11.6 million during the third quarter 2008. Charge-offs increased among all retail loan categories, including a $1.7 million and $1.3 million increase respectively in charge-offs on revolving credit and EquityLine loans. On an annualized basis, net charge-offs for the third quarter of 2009 represented 0.50 percent of average loans and leases, compared to 0.40 percent for the same period of 2008.
Other noninterest income totaled $77.7 million during the third quarter of 2009, compared to $77.5 million during the third quarter of 2008. Mortgage income and fees from processing services increased while service charge income declined.
Noninterest expense equaled $166.3 million during the third quarter of 2009, up $10.5 million, or 6.8 percent. Noninterest expenses incurred during the third quarter within the acquired locations amounted to $6.6 million. FDIC insurance expense increased $4.5 million in the third quarter of 2009, due to higher rates and a larger deposit base. Litigation-related expenses increased $4.5 million, due to resolution of a previously disclosed contingency. Employee benefits expense and foreclosure-related expenses also increased during 2009.
For the nine-month period ending September 30, 2009, net income equaled $97.3 million or $9.33 per share, compared to $78.2 million, or $7.49 per share, earned during the same period of 2008. Annualized net income as a percentage of average assets was 0.75 percent during 2009, compared to 0.64 percent during 2008. The annualized return on average equity was 9.01 percent for the first nine months of 2009, compared to 7.05 percent for the same period of 2008.
The $19.2 million increase in net income for 2009 reflects the impact of the acquisition gains, higher FDIC insurance costs and provision for credit losses, and lower revenues.
Year-to-date net interest income decreased $6.1 million, or 1.6 percent, during 2009. Average loans and leases grew $601.6 million, or 5.4 percent, during the 2009. Average investment securities increased $400.9 million, or 12.9 percent. The taxable-equivalent net yield on interest-earning assets declined 27 basis points to 3.17 percent during 2009, versus 3.44 percent recorded during the comparable period of 2008.
The provision for credit losses totaled $57.7 million for the first nine months of 2009, compared to $43.3 million during 2008, a $14.5 million increase resulting from higher net charge-offs and nonperforming assets. Net charge-offs totaled $50.0 million in 2009, up $22.7 million from 2008. Net charge-offs for 2009 represent 0.57 percent of average loans and leases, compared to 0.33 percent for 2008. Nonperforming assets not covered by FDIC loss-sharing agreements totaled $106.3 million at September 30, 2009, compared to $62.2 million at September 30, 2008, the growth resulting primarily from deterioration in the residential construction loan portfolio. Nonperforming assets not covered by FDIC loss-sharing agreements represent 0.92 percent of non-covered loans, leases and foreclosed properties as of September 30, 2009, compared to 0.54 percent as of September 30, 2008. Nonperforming assets covered by FDIC loss-sharing agreements totaled $205.1 million as of September 30, 2009, representing 15.08 percent of total assets covered under those loss-sharing agreements.
Other noninterest income equaled $222.4 million for the nine-month period ending September 30, 2009, a decrease of $18.9 million, or 7.8 percent. The decrease resulted from an $8.1 million securities gain recognized in 2008 and lower service charges, cardholder and merchant services and wealth management income during 2009. Service charges on deposit accounts decreased $4.8 million, or 7.7 percent, due to continued growth in free checking products and lower overdraft fees. Fees from wealth management services decreased $3.8 million, or 10.0 percent, due to weaker trust and brokerage income. Cardholder and merchant services income declined $3.5 million, or 4.7 percent, due to lower transaction volumes.
Noninterest expense increased $32.4 million, or 7.2 percent, during the first nine months of 2009. Much of the increase relates to FDIC deposit insurance expense, which increased $21.2 million during 2009, due to higher insurance rates, a larger deposit base and a special assessment. During 2008, we recorded a $3.3 million reduction in noninterest expense, due to the termination of a contingent liability established in 2007 for Visa member bank litigation exposure. Salaries and wages increased $2.6 million, or 1.3 percent, during 2009, due primarily to costs within the acquired locations. Employee benefit costs increased $3.5 million during 2009, due to higher health care and pension costs, partially offset by lower executive retirement costs. Occupancy expense increased $3.3 million, or 7.2 percent, during 2009, due to new branches.
As of September 30, 2009, First Citizens BancShares had total assets of $18.5 billion. BancShares' banking subsidiaries, First Citizens Bank and IronStone Bank, provide a broad range of financial services to individuals, businesses, professionals and the medical community through a network of 432 branch offices, telephone banking, online banking and ATMs. For more information, visit First Citizens' Web site at firstcitizens.com.
This news release may contain forward-looking statements. A discussion of factors that could cause First Citizens' actual results to differ materially from those expressed in such forward-looking statements is included in First Citizens' filings with the SEC.
CONDENSED STATEMENTS OF INCOME
------------------------------
(thousands, except Three Months Ended Nine Months Ended
share data; September 30 September 30
unaudited) 2009 2008 2009 2008
--------------------------------------------------------------------
Interest income $ 189,690 $ 199,080 $ 546,183 $ 617,985
Interest
expense 54,413 71,761 178,069 243,734
--------------------------------------------------------------------
Net interest
income 135,277 127,319 368,114 374,251
Provision for
credit losses 18,265 20,008 57,747 43,286
--------------------------------------------------------------------
Net interest
income after
provision for
credit losses 117,012 107,311 310,367 330,965
Gain on
acquisitions 104,970 -- 104,970 --
Other
noninterest
income 77,661 77,536 222,366 241,302
Noninterest
expense 166,277 155,746 483,487 451,058
--------------------------------------------------------------------
Income before
income taxes 133,366 29,101 154,216 121,209
Income taxes 50,898 9,547 56,885 43,044
--------------------------------------------------------------------
Net income $ 82,468 $ 19,554 $ 97,331 $ 78,165
====================================================================
Taxable-
equivalent
net interest
income $ 136,426 $ 128,872 $ 372,001 $ 379,372
====================================================================
Net income per
share $ 7.90 $ 1.87 $ 9.33 $ 7.49
Cash dividends
per share 0.275 0.275 0.825 0.825
--------------------------------------------------------------------
Profitability
Information
(annualized)
Return on
average assets 1.83% 0.47% 0.75% 0.64%
Return on
average equity 22.45 5.20 9.01 7.05
Taxable-
equivalent net
yield on
interest-
earning
assets 3.41 3.47 3.17 3.44
--------------------------------------------------------------------
CONDENSED BALANCE SHEETS
------------------------
(thousands, except
share data; Sept. 30 Dec. 31 Sept. 30
unaudited) 2009 2008 2008
--------------------------------------------------------------------
Cash and due
from banks $ 723,031 $ 593,375 $ 724,216
Investment
securities 3,287,309 3,225,853 2,934,934
Loans and leases
covered under
FDIC loss sharing
agreements 1,257,478 -- --
Loans and leases
not covered under
FDIC loss
sharing
agreements 11,520,683 11,649,886 11,563,711
Allowance for
loan and lease
losses (165,282) (157,569) (152,946)
FDIC receivable
for loss
sharing
agreements 243,000 -- --
Other assets 1,646,659 1,434,117 1,595,690
--------------------------------------------------------------------
Total assets $18,512,878 $16,745,662 $16,665,605
====================================================================
Deposits $15,348,955 $13,713,763 $13,372,468
Other liabilities 1,649,239 1,588,524 1,788,803
Shareholders'
equity 1,514,684 1,443,375 1,504,334
--------------------------------------------------------------------
Total liabilities
and
shareholders'
equity $18,512,878 $16,745,662 $16,665,605
====================================================================
Book value per
share $ 145.16 $ 138.33 $ 144.17
Tangible book
value per share 134.66 128.13 133.92
--------------------------------------------------------------------
SELECTED AVERAGE BALANCES
-------------------------
(thousands,
except shares Three Months Ended Nine Months Ended
outstanding; September 30 September 30
unaudited) 2009 2008 2009 2008
--------------------------------------------------------------------
Total assets $17,892,599 $16,377,570 $17,385,950 $16,362,573
Investment
securities 3,596,422 2,957,353 3,506,187 3,105,268
Loans and leases 12,078,390 11,440,563 11,788,104 11,186,487
Interest-earning
assets 15,862,964 14,773,446 15,686,614 14,748,235
Deposits 14,792,449 13,003,821 14,338,639 12,961,679
Interest-bearing
liabilities 13,137,412 12,187,085 12,860,014 12,259,025
Shareholders'
equity $ 1,457,599 $ 1,496,573 $ 1,444,605 $ 1,481,519
Shares
outstanding 10,434,453 10,434,453 10,434,453 10,434,453
--------------------------------------------------------------------
ASSET QUALITY
-------------
(dollars in
thousands; Sept. 30 Dec. 31 Sept. 30
unaudited) 2009 2008 2008
--------------------------------------------------------------------
Nonaccrual
loans
and leases $ 159,101 $ 39,361 $ 39,598
Other real
estate 147,303 29,956 21,580
Restructured
loans 4,990 2,349 988
--------------------------------------------------------------------
Total non-
performing
assets $ 311,394 $ 71,666 $ 62,166
====================================================================
Nonperforming
assets covered
under loss
share
agreements $ 205,073 $ -- $ --
Nonperforming
assets not
covered under
loss share
agreements 106,321 71,666 62,166
--------------------------------------------------------------------
Total non-
performing
assets $ 311,394 $ 71,666 $ 62,166
====================================================================
Net charge-offs
(year-to-date) $ 50,034 $ 45,331 $ 27,314
Ratio of non-
performing
assets to loans,
leases and other
real estate:
Covered under loss
share agreements 15.08% -- --
Not covered under
loss share
agreements 0.92% 0.61% 0.54%
Total 2.41% 0.61% 0.54%
Allowance for
loan and lease
losses to loans
and leases
not covered
under loss share
agreements 1.43% 1.35% 1.32%
Net charge-offs
to average loans
and leases not
covered
under loss share
agreements
(annualized,
year-to-date) 0.57 0.40 0.33
--------------------------------------------------------------------
CAPITAL INFORMATION
-------------------
(dollars in
thousands; Sept. 30 Dec. 31 Sept. 30
unaudited) 2009 2008 2008
--------------------------------------------------------------------
Tier 1 capital $ 1,734,984 $ 1,649,675 $ 1,628,743
Total capital 2,028,621 1,935,993 1,918,384
Risk-weighted
assets 13,019,522 12,499,545 12,516,318
Tier 1 capital
ratio 13.33% 13.20% 13.01%
Total capital
ratio 15.58 15.49 15.33
Leverage capital
ratio 9.73 9.88 10.01
--------------------------------------------------------------------