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First Citizens Reports Earnings For First Quarter 2013

RALEIGH, N.C., May 9, 2013 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (Nasdaq:FCNCA) reports earnings for the quarter ended March 31, 2013, of $55.6 million, compared to $35.5 million for the corresponding period of 2012, according to Frank B. Holding, Jr., chairman of the board. The increase in net income in 2013 resulted from significantly reduced provision for loan and lease losses and higher noninterest income, partially offset by lower net interest income and higher noninterest expense.

Per share income for the first quarter of 2013 totaled $5.78, compared to $3.45 for the same period a year ago. First Citizens' current quarter results generated an annualized return on average assets of 1.07 percent and an annualized return on average equity of 12.01 percent, compared to respective returns of 0.68 percent and 7.63 percent for the same period of 2012.

First Citizens BancShares is committed to effectively managing capital to protect depositors, creditors and shareholders. BancShares remains well-capitalized with a tier 1 leverage capital ratio of 9.36 percent at March 31, 2013, down 80 basis points from March 31, 2012, primarily due to the July 2012 redemption of $150 million of trust preferred securities. Both the total risk-based capital and tier 1 risk-based capital ratios declined from March 31, 2012, to levels of 16.19 percent and 14.50 percent at March 31, 2013, respectively, due to redemption of the trust preferred securities.

HIGHLIGHTS

  • First quarter 2013 and 2012 earnings were influenced by several significant items arising from FDIC-assisted transactions, including: -- $22.6 million credit to provision for loan and lease losses in 2013 compared to a $9.6 million provision expense in 2012, which reflects a $32.2 million reduction in the provision for loan and lease losses on covered loans -- $79.9 million and $64.9 million, respectively, in interest income from accretion of fair value discounts -- $24.1 million and $26.8 million, respectively, of charges to noninterest income arising from adjustments to the FDIC receivable
  • Provision expense for noncovered loans decreased $17.1 million during the first quarter of 2013 as compared to the same period of 2012. Net charge-offs of noncovered loans equaled $6.5 million for the first quarter of 2013, or an annualized 0.23 percent of average noncovered loans, down $9.1 million from the first quarter of 2012.
  • During the first quarter of 2013, BancShares sold a large portion of our client bank processing service relationships, resulting in $7.5 million in noninterest income representing cash proceeds generated from the sale, $1.4 million of other noninterest expense resulting from fixed asset impairments and $531,000 of salary expense related to severance accruals generating a net pre-tax gain of $5.5 million.
  • First quarter net interest income equaled $204.9 million, down 7.3 percent, compared to the first quarter of 2012.
  • Average loans and leases for the first quarter of 2013 fell $532.4 million, or 3.9 percent, from the first quarter of 2012. Average loans covered by loss share agreements fell $556.9 million, while loans and leases not covered by loss share agreements increased by $24.5 million.
  • Liquidity generated by loan run-off caused average investment securities to increase $1.06 billion, or 25.5 percent, compared to the first quarter of 2012.
  • Average interest-bearing liabilities decreased $338.4 million, or 2.3 percent, from the first quarter of 2012 to the first quarter of 2013. Average total deposits, including noninterest-bearing balances, increased to $17.92 billion, compared to $17.50 billion for the same period of 2012.
  • Noninterest income increased $10.6 million, or 22.5 percent, during the first quarter of 2013 as compared to the same period of 2012, $7.5 million of which related to the sale of a large portion of our client bank processing service relationships.
  • First quarter 2013 noninterest expenses increased $11.0 million, or 6.0 percent, primarily caused by higher employee benefit expense related to the pension liability and retirement benefits, and $1.4 million of fixed asset impairments resulting from the sale of a large portion of our client bank processing service relationships.

NET INTEREST INCOME

First quarter net interest income decreased $16.1 million, or 7.3 percent, from the same period of 2012 primarily due to the impact of loan shrinkage. Average interest-earning assets increased $595.7 million, or 3.2 percent, due to growth in the investment securities portfolio. Accretion of discounts on acquired assets resulted in $79.9 million of interest income, compared to $64.9 million recorded in the first quarter of 2012. As discussed more fully under the caption Comparability of Financial Statements , accretion income is subject to volatility resulting from unexpected payments. The taxable-equivalent net yield on interest-earning assets decreased 45 basis points when compared to the first quarter of 2012 as proceeds from loan repayments were invested in lower-yielding investment securities.

Average interest-bearing liabilities decreased $338.4 million, or 2.3 percent, during the first quarter of 2013 due to lower levels of short-term borrowings and long-term obligations. The rate on interest-bearing liabilities fell 27 basis points from the first quarter of 2012 to 0.45 percent during the first quarter of 2013. The reduction was principally due to the repayment of the trust preferred securities and an improved mix of lower-rate transaction account balances versus time deposits.

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