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First Citizens Reports Earnings For Second Quarter 2013

Stocks in this article: FCNCA

RALEIGH, N.C., Aug. 7, 2013 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (Nasdaq:FCNCA) reports earnings for the quarter ended June 30, 2013, of $43.9 million, compared to $37.6 million for the corresponding period of 2012, according to Frank B. Holding, Jr., chairman of the board. The increase in net income in 2013 reflects significantly lower provision for loan and lease losses, partially offset by lower net interest income, both of which primarily relate to acquired loans.

Per share income for the second quarter of 2013 totaled $4.56, compared to $3.66 for the same period a year ago. First Citizens' current quarter results generated an annualized return on average assets of 0.83 percent and an annualized return on average equity of 9.13 percent, compared to respective returns of 0.71 percent and 7.93 percent for the same period of 2012.

For the first six months of 2013, net income totaled $99.5 million, compared to $73.1 million for the same period of 2012, the result of lower provision for loan and lease losses, partially offset by lower net interest income.

Net income for 2013 represents $10.34 per share outstanding, compared to $7.11 per share for 2012. The annualized return on average assets was 0.95 percent for the first six months of 2013, compared to 0.70 percent for the same period of 2012. The annualized return on shareholders' equity was 10.55 percent and 7.79 percent for the respective periods.

SECOND QUARTER FINANCIAL HIGHLIGHTS

  • 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 9.68 percent at June 30, 2013, down 53 basis points from June 30, 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 June 30, 2012, to levels of 16.41 percent and 14.91 percent at June 30, 2013, respectively, largely due to the July 2012 redemption of trust preferred securities.  
  • Asset quality remains strong, with favorable trends for both acquired and originated assets. Provision expense decreased $34.2 million for acquired loans and $8.8 million for originated loans during the second quarter of 2013 as compared to the same period of 2012. Net charge-offs of acquired loans equaled $4.5 million for the second quarter of 2013, or an annualized 1.17 percent of average acquired loans, down $12.5 million from the second quarter of 2012. Net charge-offs of originated loans equaled $4.4 million for the second quarter of 2013, representing an annualized loss ratio of 0.15 percent of originated loans, down $7.9 million from the second quarter of 2012.  
  • BancShares' liquidity position continues to be very strong. As of June 30, 2013, BancShares' free liquidity position exceeded $3.5 billion. Average investment securities increased $564.8 million, or 12.3 percent, compared to the second quarter of 2012.  
  • The six FDIC-assisted transactions completed between 2009 and 2011 continue to have a significant impact on earnings. Significant variances affecting earnings during the second quarter of 2013 compared to the same period a year ago include:
  • $15.5 million credit to provision for loan and lease losses in 2013 compared to provision expense of $18.7 million in 2012;  
  • $52.0 million and $60.9 million, respectively, in loan accretion income.
  • Interest rate pressures and acquired loan balance runoff continue to adversely affect earnings. Second quarter net interest income equaled $179.5 million, down 16.7 percent, compared to the second quarter of 2012.  
  • Acquired loan balances continue to decline due to resolution of problem assets and repayments of performing loans. Acquired loan balances totaled $1.44 billion at June 30, 2013, down $365.9 million since December 31, 2012, and down $556.0 million since June 30, 2012.  
  • Originated commercial mortgage loans increased $252.0 million and originated residential mortgage loans increased $74.8 million at June 30, 2013, compared to June 30, 2012.  
  • Cash dividends of $0.30 per share were declared during the second quarter of 2013, consistent with cash dividends declared during 2012.

LOANS AND DEPOSITS

Originated loans increased $193.0 million from $11.46 billion at June 30, 2012, to $11.66 billion at June 30, 2013, and increased $79.4 million since December 31, 2012. Acquired loans totaled $1.44 billion at June 30, 2013, compared to $1.81 billion at December 31, 2012, and $2.00 billion at June 30, 2012. Originated loan demand improved during the second quarter of 2013, while acquired loan balances continued to decline due to repayments and charge-offs.

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