First Citizens BancShares Reports Earnings for Third Quarter 2020
RALEIGH, N.C., (GLOBE NEWSWIRE) — First Citizens BancShares Inc. (“BancShares”) (Nasdaq: FCNCA) reported strong earnings for the third quarter of 2020. Key results for the quarter ended are presented below:
BancShares remains in a very strong capital and liquidity position providing stability in navigating the COVID-19 crisis. Our leadership team continues to ensure appropriate measures are in place to protect the welfare of our employees and soundness of the organization, while continuing to support our customers. Our branches have re-opened with enhanced safety protocols, and our corporate locations remain at limited occupancy due to current virus trends.
Through , over 94% of all COVID-19 related loan extensions have begun repayment. Delinquency trends among loans entering repayment are in line with the remainder of the portfolio. We have not seen significant declines in overall credit quality, though the impacts of the SBA-PPP and payment extensions could be delaying signs of credit deterioration.
On , BancShares, First-Citizens Bank & Trust Company, the bank subsidiary of BancShares (“FCB”), FC Merger Subsidiary IX, Inc
During 2020, BancShares originated over 23,000 SBA-PPP loans with an outstanding balance of $3.11 billion at . We collected $117.2 million in SBA-PPP related loan fees per the program terms. These fees were deferred and are being recognized in interest income over the life of the respective loans. We have begun accepting and processing applications for forgiveness during the third quarter, and we anticipate acceleration of the fee income as the volume of approved forgiveness applications increases and payments are received from the SBA.
In addition to liquid assets, we had contingent sources of liquidity totaling approximately $ billion in the form of Federal Home Loan Bank borrowing capacity, Federal Reserve Discount Window availability, fed funds lines and a committed line of credit.
As of , liquid assets (available cash and unencumbered high quality liquid assets at market value) totaled approximately $8
At , BancShares’ regulatory capital ratios were well in excess of Basel III capital requirements with a total risk-based capital ratio of 13.7%, a Tier 1 risk-based capital ratio of 11.5%, a common equity Tier 1 ratio of 10.4%, a Tier 1 leverage ratio of 7.8% and a capital conservation buffer of 5.5%, more than twice the required level of 2.5%.
, a subsidiary of FCB, and CIT Group Inc. (“CIT”) entered into a definitive merger agreement through which the companies will combine in an all-stock merger of equals. The transaction is anticipated to close during the first half of 2021 subject to the receipt of regulatory approvals, the approval of CIT’s and BancShares’ stockholders and the satisfaction of other customary closing conditions.
Net interest income for the third quarter of 2020 totaled $353.7 million, an increase of $17.2 million, or 5.1%, compared to the third quarter of 2019. This was primarily due to an increase in interest earned on loans, driven by SBA-PPP loans and organic loan top payday loan growth, and lower rates paid on interest-bearing liabilities, partially offset by declines in yields on interest-earning assets and increased borrowings. SBA-PPP loans contributed $28.9 million in interest and fee income during the quarter. The taxable-equivalent NIM was 3.06% during the third quarter of 2020, a decrease of 71 basis points from 3.77% for the comparable quarter in the prior year. The margin decline was primarily due to a decrease in the yield on interest-earning assets, partially offset by a decline in rates paid on deposits and borrowings. The taxable-equivalent NIM declined 8 basis points from 3.14% in the linked quarter primarily related to a decline in yield on interest-earning assets, partially offset by a decline in the rate paid on interest-bearing deposits.