RALEIGH, N.C., Oct. 27, 2022 (GLOBE NEWSWIRE) — First Citizens BancShares, Inc. (“BancShares”) (Nasdaq: FCNCA) reported earnings for the third quarter and year-to-date period ended September 30, 2022.
Chairman and CEO Frank B. Holding, Jr. on third quarter results, “We are pleased with our financial performance during the third quarter and reported net income of $315 million, a 23.5% increase over the prior quarter. We remain focused on merger optimization efforts and achieving our cost savings target. In July, we announced a share repurchase plan that authorized repurchases of up to 1.5 million shares of our Class A common stock. I am pleased to report that as of October 25, 2022, we have repurchased 98.5% of the 1.5 million shares authorized under that share repurchase plan.
“Contributing to higher net income during the quarter was solid top line growth led by continued momentum in loans, net interest margin expansion and solid performance in our fee income producing lines of business. Core revenues outpaced expense growth contributing to a 23.5% increase in sequential quarter pre-provision net revenue. We are pleased that credit quality remained strong as the net charge-off and nonperforming loan ratios both declined during the quarter.”
FINANCIAL HIGHLIGHTS
For the third quarter, net income available to common stockholders was $303 million, or $19.25 per common share, compared to $238 million, or $14.86 per common share in the second quarter of 2022. Third quarter adjusted net income available to common stockholders was $326 million, or $20.77 per common share, up from $270 million, or $16.86 per common share in the second quarter. The following bullets highlight significant changes in the components of net income and adjusted net income between the second and third quarters:
- Pre-provision net revenue totaled $468 million compared to $379 million in the second quarter. Adjusted pre-provision net revenue totaled $506 million, an increase of $89 million or 21.3% compared to the second quarter due to core net revenue growth exceeding core noninterest expense growth.
- Net revenue growth was led by a $95 million, or a 13.6% increase in net interest income over the second quarter primarily due to loan growth and higher yields on loans and overnight investments, partially offset by higher funding costs.
- Net interest margin was 3.40%, an increase of 36 basis points over the second quarter, as the rising interest rate environment increased yields on our earning assets and BancShares had another quarter of strong loan growth, only partially offset by higher rates paid on interest-bearing deposits and higher borrowings.
- Noninterest income totaled $433 million compared to $424 million in the second quarter. Adjusted noninterest income totaled $288 million compared to $283 million in the second quarter, an increase of $5 million. The increase was primarily due to higher capital markets fees, rental income on operating leases, net and other operating income, partially offset by lower service charges on deposit accounts.
- Noninterest expense totaled $760 million compared to $745 million in the second quarter. Adjusted noninterest expense totaled $577 million compared to $566 million in the second quarter, an increase of $11 million. The increase was driven primarily by higher personnel costs and higher marketing expenses in the Direct Bank, partially offset by lower FDIC insurance expense and professional fees.
- Provision for credit losses totaled $60 million compared to $42 million in the second quarter, an increase of $18 million. The increase was primarily due to deterioration in CECL macroeconomic forecasts and loan growth, partially offset by improved credit quality and portfolio mix. Net charge-offs totaled $18 million or a ratio of 0.10% of average loans compared to $22 million or a ratio of 0.13% of average loans during the second quarter.
- Loans totaled $69.8 billion, an increase of $2.1 billion, or 12.0% on an annualized basis due to strong growth in our branch network and Mortgage as well as in our commercial bank from areas such as Commercial Finance and Business Capital.
- Deposits totaled $87.6 billion, a decrease of $1.8 billion, or 7.9% on an annualized basis. The main component of the decline was a $1.8 billion reduction in interest-bearing deposits as we saw our more sensitive customers move funds in response to continued rate increases. The reductions were primarily concentrated in acquired branches and commercial banking, partially offset by growth in our Direct Bank.
- Borrowings increased $3.9 billion during the quarter to support loan growth and offset declines in interest-bearing deposits.
EARNINGS CALL DETAILS
BancShares will host a conference call to discuss the company’s financial results on Thursday, October 27, 2022, at 8:30 a.m. Eastern time.
To access this call, dial:
United States: 1-833-927-1758
Canada: 1-833-950-0062
All other locations: 1-929-526-1599
Access code: 355751
The third quarter 2022 earnings presentation and this news release are available on the company’s website at www.firstcitizens.com/investor-relations.
After the conference call, you may access a replay of the call through November 17, 2022, by dialing 1-866-813-9403 (United States), 1-226-828-7578 (Canada) or +44 204-525-0658 (all other locations) using the access code 319469.
ABOUT FIRST CITIZENS BANCSHARES
First Citizens BancShares, Inc. is the financial holding company for First-Citizens Bank & Trust Company (“First Citizens Bank”). In January 2022, First Citizens BancShares and CIT Group Inc. merged, creating one of the top 20 U.S. financial institutions, with more than $100 billion in assets.
First Citizens Bank helps personal, business, commercial and wealth clients build financial strength that lasts. As the largest family-controlled bank in the United States, First Citizens is continuing a unique legacy of strength, stability and long-term thinking that has spanned generations. Its commercial banking segment brings a wide array of best-in-class lending, leasing and banking services to middle-market companies and small businesses from coast to coast. Founded in 1898 and headquartered in Raleigh, N.C., First Citizens also operates a nationwide direct bank and a network of more than 550 branches in 22 states, many in high-growth markets. Visit firstcitizens.com. First Citizens Bank. Forever First®
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of BancShares. Words such as “anticipates,” “believes,” “estimates,” “expects,” “predicts,” “forecasts,” “intends,” “plans,” “projects,” “targets,” “designed,” “could,” “may,” “should,” “will,” “potential,” “continue”, “aims” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BancShares’ current expectations and assumptions regarding BancShares’ business, the economy, and other future conditions.
Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other risk factors that are difficult to predict. Many possible events or factors could affect BancShares’ future financial results and performance and could cause the actual results, performance or achievements of BancShares to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, general competitive, economic, political, geopolitical events (including the military conflict between Russia and Ukraine) and market conditions, the impacts of the global COVID-19 pandemic on BancShares’ business and customers, the financial success or changing conditions or strategies of BancShares’ customers or vendors, fluctuations in interest rates, actions of government regulators, including the recent and projected interest rate hikes by the Board of Governors of the Federal Reserve Board (the “Federal Reserve”), the potential impact of decisions by the Federal Reserve on BancShares’ capital plans, adverse developments with respect to U.S. or global economic conditions, including the significant turbulence in the capital or financial markets, the impact of the current inflationary environment, the impact of implementation and compliance with current or proposed laws, regulations and regulatory interpretations, the availability of capital and personnel, and the failure to realize the anticipated benefits of BancShares’ previous acquisition transaction(s), including the recently completed transaction with CIT, which acquisition risks include (1) disruption from the transaction, or recently completed mergers, with customer, supplier or employee relationships, (2) the possibility that the amount of the costs, fees, expenses and charges related to the transaction may be greater than anticipated, including as a result of unexpected or unknown factors, events or liabilities, (3) reputational risk and the reaction of the parties’ customers to the transaction, (4) the risk that the cost savings and any revenue synergies from the transaction may not be realized or take longer than anticipated to be realized and (5) difficulties experienced in the integration of the businesses.
Except to the extent required by applicable laws or regulations, BancShares disclaims any obligation to update forward-looking statements or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Additional factors which could affect the forward-looking statements can be found in BancShares’ Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and its other filings with the Securities and Exchange Commission (the “SEC”).
NON-GAAP MEASURES
Certain measures in this release and supporting tables, including those referenced as “Adjusted” are “Non-GAAP”, meaning they are not presented in accordance with generally accepted accounting principles in the U.S. and also are not codified in U.S. banking regulations currently applicable to BancShares. BancShares believes that Non-GAAP financial measures, when reviewed in conjunction with GAAP financial information, can provide transparency about or an alternative means of assessing its operating results and financial position to its investors, analysts and management. The Non-GAAP measures are reconciled to the most comparable GAAP measure, in the Non-GAAP reconciliation table(s) and notable items are summarized in a separate table.
Dollars in millions, except per share data | |||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||
QTD | QTD | QTD | YTD | YTD | |||||||
Summary Financial Data & Key Metrics | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||
Results of Operations: | |||||||||||
Net interest income | $ | 795 | 700 | 347 | 2,144 | 1,033 | |||||
Provision (benefit) for credit losses | 60 | 42 | (1 | ) | 566 | (32 | ) | ||||
Net interest income after provision for credit losses | 735 | 658 | 348 | 1,578 | 1,065 | ||||||
Noninterest income | 433 | 424 | 124 | 1,707 | 394 | ||||||
Noninterest expense | 760 | 745 | 314 | 2,315 | 911 | ||||||
Income before income taxes | 408 | 337 | 158 | 970 | 548 | ||||||
Income tax expense | 93 | 82 | 34 | 129 | 124 | ||||||
Net income | 315 | 255 | 124 | 841 | 424 | ||||||
Preferred stock dividends | 12 | 17 | 5 | 36 | 14 | ||||||
Net income available to common stockholders | 303 | 238 | 119 | 805 | 410 | ||||||
Adjusted net income available to common stockholders(1) | 326 | 270 | 118 | 895 | 383 | ||||||
Pre-tax, pre-provision net revenue (PPNR)(1) | 468 | 379 | 157 | 1,536 | 516 | ||||||
Per Share Information: | |||||||||||
Diluted earnings per common share (EPS) | $ | 19.25 | 14.86 | 12.17 | 50.70 | 41.79 | |||||
Adjusted diluted earnings per common share (EPS)(1) | 20.77 | 16.86 | 12.04 | 56.41 | 39.03 | ||||||
Book value per common share | 597.75 | 609.95 | 432.07 | 597.75 | 432.07 | ||||||
Tangible book value per common share (TBV)(1) | 564.97 | 578.92 | 394.15 | 564.97 | 394.15 | ||||||
Key Performance Metrics: | |||||||||||
Return on average assets (ROA) | 1.16 | % | 0.95 | % | 0.88 | % | 1.03 | % | 1.05 | % | |
Adjusted ROA(1) | 1.24 | 1.07 | 0.87 | 1.15 | 0.98 | ||||||
PPNR ROA(1) | 1.72 | 1.41 | 1.11 | 1.89 | 1.28 | ||||||
Adjusted PPNR ROA(1) | 1.86 | 1.56 | 1.10 | 1.58 | 1.19 | ||||||
Return on average common equity (ROE) | 12.49 | 9.87 | 11.29 | 11.18 | 13.50 | ||||||
Adjusted ROE(1) | 13.47 | 11.19 | 11.18 | 12.44 | 12.61 | ||||||
Return on average tangible common equity (ROTCE)(1) | 13.17 | 10.40 | 12.39 | 11.80 | 14.88 | ||||||
Adjusted ROTCE(1) | 14.20 | 11.80 | 12.27 | 13.13 | 13.89 | ||||||
Efficiency ratio(1) | 53.32 | 57.55 | 66.09 | 57.25 | 64.69 | ||||||
Net interest margin (NIM)(2) | 3.40 | 3.04 | 2.61 | 3.06 | 2.69 | ||||||
Select Balance Sheet Items at Period End: | |||||||||||
Total investment securities | $ | 18,841 | 19,136 | 10,875 | 18,841 | 10,875 | |||||
Total loans and leases | 69,790 | 67,735 | 32,516 | 69,790 | 32,516 | ||||||
Total operating lease equipment, net | 7,984 | 7,971 | — | 7,984 | — | ||||||
Total deposits | 87,553 | 89,329 | 50,065 | 87,553 | 50,065 | ||||||
Total borrowings | 8,343 | 4,459 | 1,883 | 8,343 | 1,883 | ||||||
Loan to deposit ratio | 79.71 | % | 75.83 | % | 64.95 | % | 79.71 | % | 64.95 | % | |
Noninterest-bearing deposits to total deposits | 30.37 | % | 29.75 | % | 42.97 | % | 30.37 | % | 42.97 | % | |
Capital Ratios at Period End: (3) | |||||||||||
Total risk-based capital ratio | 13.46 | % | 14.46 | % | 14.30 | % | 13.46 | % | 14.30 | % | |
Tier 1 risk-based capital ratio | 11.36 | 12.37 | 12.32 | 11.36 | 12.32 | ||||||
Common equity Tier 1 ratio | 10.37 | 11.34 | 11.34 | 10.37 | 11.34 | ||||||
Tier 1 leverage capital ratio | 9.31 | 9.85 | 7.68 | 9.31 | 7.68 | ||||||
Asset Quality at Period End: | |||||||||||
Nonaccrual loans to total loans and leases | 0.65 | % | 0.76 | % | 0.50 | % | 0.65 | % | 0.50 | % | |
Allowance for credit losses (ACL) to loans and leases | 1.26 | 1.26 | 0.56 | 1.26 | 0.56 | ||||||
Net charge-off ratio | 0.10 | 0.13 | 0.06 | 0.11 | 0.04 | ||||||
(1) Denotes a non-GAAP measure. Refer to the non-GAAP reconciliation subsequently included in these materials for a reconciliation to the most directly comparable GAAP measure. “Adjusted” items exclude the impact of Notable Items. | |||||||||||
(2) Calculated net of average credit balances of factoring clients. | |||||||||||
(3) Capital ratios for the current quarter are preliminary pending completion of quarterly regulatory filings. | |||||||||||
Dollars in millions, except share and per share data | |||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||
QTD | QTD | QTD | YTD | YTD | |||||||
Income Statement (unaudited) | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||
Interest income | |||||||||||
Interest and fees on loans | $ | 785 | 655 | 320 | 2,061 | 967 | |||||
Interest on investment securities | 90 | 89 | 40 | 262 | 106 | ||||||
Interest on deposits at banks | 31 | 13 | 3 | 50 | 7 | ||||||
Total interest income | 906 | 757 | 363 | 2,373 | 1,080 | ||||||
Interest expense | |||||||||||
Deposits | 78 | 42 | 8 | 159 | 25 | ||||||
Borrowings | 33 | 15 | 8 | 70 | 22 | ||||||
Total interest expense | 111 | 57 | 16 | 229 | 47 | ||||||
Net interest income | 795 | 700 | 347 | 2,144 | 1,033 | ||||||
Provision (benefit) for credit losses | 60 | 42 | (1 | ) | 566 | (32 | ) | ||||
Net interest income after provision for credit losses | 735 | 658 | 348 | 1,578 | 1,065 | ||||||
Noninterest income | |||||||||||
Rental income on operating leases | 219 | 213 | — | 640 | — | ||||||
Fee income and other service charges | 44 | 39 | 10 | 118 | 31 | ||||||
Wealth management services | 35 | 37 | 32 | 107 | 96 | ||||||
Service charges on deposit accounts | 21 | 28 | 26 | 77 | 69 | ||||||
Factoring commissions | 24 | 27 | — | 78 | — | ||||||
Cardholder services, net | 25 | 26 | 23 | 76 | 65 | ||||||
Merchant services, net | 8 | 9 | 9 | 27 | 26 | ||||||
Insurance commissions | 11 | 11 | 4 | 34 | 12 | ||||||
Realized gain on sale of investment securities available for sale, net | — | — | 8 | — | 33 | ||||||
Fair value adjustment on marketable equity securities, net | (2 | ) | (6 | ) | 3 | (5 | ) | 31 | |||
Bank-owned life insurance | 8 | 9 | 1 | 25 | 2 | ||||||
Gain on sale of leasing equipment, net | 2 | 5 | — | 13 | — | ||||||
Gain on acquisition | — | — | — | 431 | — | ||||||
Gain on extinguishment of debt | 1 | — | — | 7 | — | ||||||
Other noninterest income | 37 | 26 | 8 | 79 | 29 | ||||||
Total noninterest income | 433 | 424 | 124 | 1,707 | 394 | ||||||
Noninterest expense | |||||||||||
Depreciation on operating lease equipment | 87 | 89 | — | 257 | — | ||||||
Maintenance and other operating lease expenses | 52 | 47 | — | 142 | — | ||||||
Salaries and benefits | 351 | 341 | 194 | 1,044 | 566 | ||||||
Net occupancy expense | 47 | 48 | 29 | 144 | 87 | ||||||
Equipment expense | 55 | 54 | 30 | 161 | 89 | ||||||
Professional fees | 13 | 15 | 5 | 44 | 13 | ||||||
Third-party processing fees | 27 | 26 | 16 | 77 | 44 | ||||||
FDIC insurance expense | 5 | 9 | 3 | 26 | 10 | ||||||
Marketing | 15 | 9 | 3 | 32 | 7 | ||||||
Merger-related expenses | 33 | 34 | 7 | 202 | 20 | ||||||
Intangible asset amortization | 5 | 6 | 3 | 17 | 9 | ||||||
Other noninterest expense | 70 | 67 | 24 | 169 | 66 | ||||||
Total noninterest expense | 760 | 745 | 314 | 2,315 | 911 | ||||||
Income before income taxes | 408 | 337 | 158 | 970 | 548 | ||||||
Income tax expense | 93 | 82 | 34 | 129 | 124 | ||||||
Net income | $ | 315 | 255 | 124 | 841 | 424 | |||||
Preferred stock dividends | 12 | 17 | 5 | 36 | 14 | ||||||
Net income available to common stockholders | $ | 303 | 238 | 119 | 805 | 410 | |||||
Basic earnings per common share | $ | 19.27 | 14.87 | 12.17 | 50.76 | 41.79 | |||||
Diluted earnings per common share | $ | 19.25 | 14.86 | 12.17 | 50.70 | 41.79 | |||||
Weighted average common shares outstanding (basic) | 15,711,976 | 16,023,613 | 9,816,405 | 15,851,385 | 9,816,405 | ||||||
Weighted average common shares outstanding (diluted) | 15,727,993 | 16,035,090 | 9,816,405 | 15,870,233 | 9,816,405 |
Dollars in millions | |||||||
BancShares | BancShares | BancShares | |||||
Balance Sheet (unaudited) | 9/30/22 | 6/30/22 | 9/30/21 | ||||
Assets | |||||||
Cash and due from banks | $ | 481 | 583 | 337 | |||
Interest-earning deposits at banks | 6,172 | 6,476 | 9,875 | ||||
Investments in marketable equity securities | 92 | 94 | 123 | ||||
Investment securities available for sale | 9,088 | 9,210 | 7,371 | ||||
Investment securities held to maturity | 9,661 | 9,832 | 3,381 | ||||
Assets held for sale | 21 | 38 | 98 | ||||
Loans and leases | 69,790 | 67,735 | 32,516 | ||||
Allowance for credit losses | (882 | ) | (850 | ) | (183 | ) | |
Loans and leases, net of allowance for credit losses | 68,908 | 66,885 | 32,333 | ||||
Operating lease equipment, net | 7,984 | 7,971 | — | ||||
Premises and equipment, net | 1,410 | 1,415 | 1,231 | ||||
Bank-owned life insurance | 1,342 | 1,334 | 116 | ||||
Goodwill | 346 | 346 | 350 | ||||
Other intangible assets | 145 | 150 | 22 | ||||
Other assets | 3,660 | 3,339 | 1,665 | ||||
Total assets | $ | 109,310 | 107,673 | 56,902 | |||
Liabilities | |||||||
Deposits: | |||||||
Noninterest-bearing | $ | 26,587 | 26,576 | 21,514 | |||
Interest-bearing | 60,966 | 62,753 | 28,551 | ||||
Total deposits | 87,553 | 89,329 | 50,065 | ||||
Credit balances of factoring clients | 1,147 | 1,070 | — | ||||
Borrowings: | |||||||
Short-term borrowings | 3,128 | 646 | 664 | ||||
Long-term borrowings | 5,215 | 3,813 | 1,219 | ||||
Total borrowings | 8,343 | 4,459 | 1,883 | ||||
Other liabilities | 2,434 | 2,173 | 372 | ||||
Total liabilities | $ | 99,477 | 97,031 | 52,320 | |||
Stockholders’ equity | |||||||
Preferred stock | 881 | 881 | 340 | ||||
Common stock: | |||||||
Class A – $1 par value | 14 | 15 | 9 | ||||
Class B – $1 par value | 1 | 1 | 1 | ||||
Additional paid in capital | 4,506 | 5,345 | — | ||||
Retained earnings | 5,160 | 4,865 | 4,264 | ||||
Accumulated other comprehensive loss | (729 | ) | (465 | ) | (32 | ) | |
Total stockholders’ equity | 9,833 | 10,642 | 4,582 | ||||
Total liabilities and stockholders’ equity | $ | 109,310 | 107,673 | 56,902 | |||
Dollars in millions, except share per share data | |||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||
QTD | QTD | QTD | YTD | YTD | |||||||
Notable Items (1) | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||
Noninterest income | |||||||||||
Rental income on operating leases, net(2) | $ | (139 | ) | (136 | ) | — | (399 | ) | — | ||
Realized gain on sale of investment securities available for sale, net | — | — | (8 | ) | — | (33 | ) | ||||
Fair value adjustment on marketable equity securities, net | 2 | 6 | (3 | ) | 5 | (31 | ) | ||||
Gain on sale of leasing equipment, net | (2 | ) | (5 | ) | — | (13 | ) | — | |||
Gain on acquisition | — | — | — | (431 | ) | — | |||||
Gain on extinguishment of debt | (1 | ) | — | — | (7 | ) | — | ||||
Gain on other loan and asset sales | (5 | ) | (6 | ) | — | (11 | ) | — | |||
Noninterest income – total adjustments | $ | (145 | ) | (141 | ) | (11 | ) | (856 | ) | (64 | ) |
Noninterest expense | |||||||||||
Depreciation on operating lease equipment (2) | (87 | ) | (89 | ) | — | (257 | ) | — | |||
Maintenance and other operating lease equipment expense (2) | (52 | ) | (47 | ) | — | (142 | ) | — | |||
Merger-related expenses | (33 | ) | (34 | ) | (7 | ) | (202 | ) | (20 | ) | |
Intangible asset amortization | (5 | ) | (6 | ) | (3 | ) | (17 | ) | (9 | ) | |
Other noninterest expense | (6 | ) | (3 | ) | — | 18 | — | ||||
Noninterest expense – total adjustments | $ | (183 | ) | (179 | ) | (10 | ) | (600 | ) | (29 | ) |
Day 2 provision, including provision for unfunded commitments | — | — | — | (513 | ) | — | |||||
Provision for credit losses – total adjustments | $ | — | — | — | (513 | ) | — | ||||
Impact of notable items on pre-tax income | $ | 38 | 38 | (1 | ) | 257 | (35 | ) | |||
Income tax impact (3) | 15 | 6 | — | 167 | (8 | ) | |||||
Impact of notable items on net income | $ | 23 | 32 | (1 | ) | 90 | (27 | ) | |||
Impact of notable items on basic and diluted EPS | 1.52 | 2.00 | (0.13 | ) | 5.71 | (2.76 | ) | ||||
(1) The notable items above reconcile the GAAP net income to adjusted net income, which is a non-GAAP measure. | |||||||||||
(2) Rental income on operating leases is net of depreciation and maintenance expense. | |||||||||||
(3) Includes the impact of tax discrete items and changes in the estimated annualized effective tax rate. | |||||||||||
Dollars in millions, except share and per share data | |||||||||||
Condensed Income Statement (unaudited) – Adjusted for Notable Items (1) | BancShares | BancShares | BancShares | BancShares | BancShares | ||||||
QTD | QTD | QTD | YTD | YTD | |||||||
9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | |||||||
Interest income | $ | 906 | 757 | 363 | 2,373 | 1,080 | |||||
Interest expense | 111 | 57 | 16 | 229 | 47 | ||||||
Net interest income | 795 | 700 | 347 | 2,144 | 1,033 | ||||||
Provision (benefit) for credit losses | 60 | 42 | (1 | ) | 53 | (32 | ) | ||||
Net interest income after provision for credit losses | 735 | 658 | 348 | 2,091 | 1,065 | ||||||
Noninterest income | 288 | 283 | 113 | 851 | 330 | ||||||
Noninterest expense | 577 | 566 | 304 | 1,715 | 882 | ||||||
Income before income taxes | 446 | 375 | 157 | 1,227 | 513 | ||||||
Income tax expense | 108 | 88 | 34 | 296 | 116 | ||||||
Net income | $ | 338 | 287 | 123 | 931 | 397 | |||||
Preferred stock dividends | 12 | 17 | 5 | 36 | 14 | ||||||
Net income available to common stockholders | $ | 326 | 270 | 118 | 895 | 383 | |||||
Basic earnings per common share | $ | 20.79 | 16.87 | 12.04 | 56.47 | 39.03 | |||||
Diluted earnings per common share | $ | 20.77 | 16.86 | 12.04 | 56.41 | 39.03 | |||||
Weighted average common shares outstanding (basic) | 15,711,976 | 16,023,613 | 9,816,405 | 15,851,385 | 9,816,405 | ||||||
Weighted average common shares outstanding (diluted) | 15,727,993 | 16,035,090 | 9,816,405 | 15,870,233 | 9,816,405 | ||||||
(1) The GAAP income statements are included previously in these materials. The adjusted income statements above reflect non-GAAP items (including core adjusted noninterest income and expense) as the impacts of the notable items are excluded. The notable items included previously in this release reconcile the GAAP net income to adjusted net income, which is a non-GAAP measure. | |||||||||||
Dollars in millions | |||||||
BancShares | BancShares | BancShares | |||||
Loans & Leases by Class (end of period) | 9/30/22 | 6/30/22 | 9/30/21 | ||||
Loans & Leases by Class | |||||||
Commercial | |||||||
Commercial construction | $ | 2,752 | 2,783 | 1,370 | |||
Owner-occupied commercial mortgages | 14,053 | 13,795 | 11,745 | ||||
Non-owner-occupied commercial mortgages | 9,683 | 9,167 | 3,077 | ||||
Commercial and industrial | 24,288 | 23,554 | 6,068 | ||||
Leases | 2,184 | 2,178 | 287 | ||||
Total commercial | $ | 52,960 | 51,477 | 22,547 | |||
Consumer | |||||||
Residential mortgage | $ | 12,910 | 12,441 | 6,122 | |||
Revolving mortgage | 1,923 | 1,893 | 1,861 | ||||
Consumer auto | 1,385 | 1,338 | 1,350 | ||||
Consumer other | 612 | 586 | 636 | ||||
Total consumer | $ | 16,830 | 16,258 | 9,969 | |||
Total loans and leases | $ | 69,790 | 67,735 | 32,516 | |||
Less: Allowance for credit losses | 882 | 850 | 183 | ||||
Total loans and leases, net of allowance for credit losses | $ | 68,908 | 66,885 | 32,333 | |||
BancShares | BancShares | BancShares | |||||
Deposits by Type (end of period) | 9/30/22 | 6/30/22 | 9/30/21 | ||||
Demand | $ | 26,587 | 26,645 | 21,514 | |||
Checking with interest | 16,118 | 16,285 | 11,769 | ||||
Money market | 21,818 | 24,699 | 10,146 | ||||
Savings | 14,722 | 13,319 | 4,063 | ||||
Time | 8,308 | 8,381 | 2,573 | ||||
Total deposits | $ | 87,553 | 89,329 | 50,065 | |||
Dollars in millions | |||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||
QTD | QTD | QTD | YTD | YTD | |||||||
Credit Quality & Allowance | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||
Nonaccrual loans | $ | 454 | 513 | 164 | 454 | 164 | |||||
Ratio of nonaccrual loans to total loans | 0.65 | % | 0.76 | % | 0.50 | % | 0.65 | % | 0.50 | % | |
Charge-offs | $ | (33 | ) | (41 | ) | (11 | ) | (107 | ) | (27 | ) |
Recoveries | 15 | 19 | 6 | 52 | 17 | ||||||
Net charge-offs | $ | (18 | ) | (22 | ) | (5 | ) | (55 | ) | (10 | ) |
Net charge-off ratio | 0.10 | % | 0.13 | % | 0.06 | % | 0.11 | % | 0.04 | % | |
Allowance for credit losses to loans ratio | 1.26 | % | 1.26 | % | 0.56 | % | 1.26 | % | 0.56 | % | |
Allowance for credit losses – beginning | $ | 850 | 848 | 189 | 178 | 225 | |||||
Initial PCD ACL | — | (12 | ) | — | 272 | — | |||||
Day 2 provision, excluding provision for unfunded commitments | — | — | — | 454 | — | ||||||
Provision (benefit) for credit losses | 50 | 36 | (1 | ) | 33 | (32 | ) | ||||
Net charge-offs | (18 | ) | (22 | ) | (5 | ) | (55 | ) | (10 | ) | |
Allowance for credit losses – ending | $ | 882 | 850 | 183 | 882 | 183 | |||||
Dollars in millions | |||||||||||||||||||||
Average Balance Sheet | BancShares QTD 9/30/22 | BancShares QTD 6/30/22 | BancShares QTD 9/30/21 | ||||||||||||||||||
Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | |||||||||||||
Loans and leases (1) (2) | $ | 67,733 | $ | 785 | 4.58 | % | $ | 65,298 | $ | 655 | 4.01 | % | $ | 32,708 | $ | 320 | 3.85 | % | |||
Total investment securities | 19,119 | 90 | 1.88 | 19,185 | 89 | 1.85 | 10,708 | 40 | 1.47 | ||||||||||||
Interest-earning deposits at banks | 5,685 | 31 | 2.17 | 7,629 | 13 | 0.72 | 8,956 | 3 | 0.15 | ||||||||||||
Total interest-earning assets (2) | $ | 92,537 | $ | 906 | 3.87 | % | $ | 92,112 | $ | 757 | 3.28 | % | $ | 52,372 | $ | 363 | 2.73 | % | |||
Operating lease equipment, net (including held for sale) | $ | 7,981 | $ | 7,973 | $ | — | |||||||||||||||
Cash and due from banks | 489 | 524 | 365 | ||||||||||||||||||
Allowance for credit losses | (851 | ) | (849 | ) | (190 | ) | |||||||||||||||
All other non-interest-earning assets | 7,831 | 7,815 | 3,377 | ||||||||||||||||||
Total assets | $ | 107,987 | $ | 107,575 | $ | 55,924 | |||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||
Checking with interest | $ | 16,160 | $ | 7 | 0.17 | % | $ | 16,503 | $ | 4 | 0.12 | % | $ | 11,324 | $ | 1 | 0.05 | % | |||
Money market | 22,993 | 32 | 0.55 | 25,468 | 18 | 0.28 | 9,866 | 2 | 0.09 | ||||||||||||
Savings | 13,956 | 28 | 0.78 | 13,303 | 11 | 0.34 | 3,979 | 1 | 0.03 | ||||||||||||
Time deposits | 8,436 | 11 | 0.54 | 8,796 | 9 | 0.38 | 2,599 | 4 | 0.61 | ||||||||||||
Total interest-bearing deposits | 61,545 | 78 | 0.50 | 64,070 | 42 | 0.26 | 27,768 | 8 | 0.12 | ||||||||||||
Borrowings: | |||||||||||||||||||||
Securities sold under customer repurchase agreements | 617 | 1 | 0.16 | 627 | — | 0.16 | 672 | — | 0.21 | ||||||||||||
Short-term FHLB borrowings | 1,188 | 8 | 2.57 | — | — | — | — | — | — | ||||||||||||
Short-term borrowings | 1,805 | 9 | 1.74 | 627 | — | 0.16 | 672 | — | 0.21 | ||||||||||||
Federal Home Loan Bank borrowings | 1,784 | 11 | 2.45 | 386 | 2 | 1.64 | 646 | 4 | 1.28 | ||||||||||||
Senior unsecured borrowings | 898 | 5 | 2.00 | 894 | 4 | 2.05 | — | — | — | ||||||||||||
Subordinated debt | 1,054 | 8 | 3.21 | 1,057 | 8 | 3.06 | 497 | 3 | 3.35 | ||||||||||||
Other borrowings | 67 | — | 4.51 | 83 | 1 | 2.46 | 79 | 1 | 1.24 | ||||||||||||
Long-term borrowings | 3,803 | 24 | 2.59 | 2,420 | 15 | 2.43 | 1,222 | 8 | 2.12 | ||||||||||||
Total borrowings | 5,608 | 33 | 2.32 | 3,047 | 15 | 1.96 | 1,894 | 8 | 1.44 | ||||||||||||
Total interest-bearing liabilities | $ | 67,153 | $ | 111 | 0.65 | % | $ | 67,117 | $ | 57 | 0.34 | % | $ | 29,662 | $ | 16 | 0.20 | % | |||
Noninterest-bearing deposits | $ | 26,877 | $ | 26,551 | $ | 21,339 | |||||||||||||||
Credit balances of factoring clients | 1,089 | 1,189 | — | ||||||||||||||||||
Other noninterest-bearing liabilities | 2,369 | 2,151 | 362 | ||||||||||||||||||
Stockholders’ equity | 10,499 | 10,567 | 4,561 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 107,987 | $ | 107,575 | $ | 55,924 | |||||||||||||||
Net interest income | $ | 795 | $ | 700 | $ | 347 | |||||||||||||||
Net interest spread (2) | 3.22 | % | 2.94 | % | 2.53 | % | |||||||||||||||
Net interest margin (2) | 3.40 | % | 3.04 | % | 2.61 | % | |||||||||||||||
(1) Loans and leases include non-PCD and PCD loans, nonaccrual loans and held for sale. Interest income on loans and leases includes accretion income and loan fees. | |||||||||||||||||||||
(2) The balance and rate presented is calculated net of average credit balances of factoring clients. | |||||||||||||||||||||
Dollars in millions | ||||||||||||||
Average Balance Sheet | BancShares YTD 9/30/22 | BancShares YTD 9/30/21 | ||||||||||||
Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | |||||||||
Loans and leases (1) (2) | $ | 65,739 | $ | 2,061 | 4.17 | % | $ | 32,985 | $ | 967 | 3.89 | % | ||
Total investment securities | 19,264 | 262 | 1.81 | 10,337 | 106 | 1.36 | ||||||||
Interest-earning deposits at banks | 8,242 | 50 | 0.81 | 7,560 | 7 | 0.12 | ||||||||
Total interest-earning assets(2) | $ | 93,245 | $ | 2,373 | 3.39 | % | $ | 50,882 | $ | 1,080 | 2.81 | % | ||
Operating lease equipment, net (including held for sale) | $ | 7,960 | $ | — | ||||||||||
Cash and due from banks | 517 | 354 | ||||||||||||
Allowance for credit losses | (871 | ) | (208 | ) | ||||||||||
All other non-interest-earning assets | 7,792 | 2,899 | ||||||||||||
Total assets | $ | 108,643 | $ | 53,927 | ||||||||||
Interest-bearing deposits: | ||||||||||||||
Checking with interest | $ | 16,437 | $ | 16 | 0.14 | % | $ | 11,010 | $ | 4 | 0.05 | % | ||
Money market | 24,875 | 65 | 0.35 | 9,489 | 7 | 0.11 | ||||||||
Savings | 13,640 | 48 | 0.47 | 3,748 | 1 | 0.03 | ||||||||
Time deposits | 9,004 | 30 | 0.45 | 2,692 | 13 | 0.63 | ||||||||
Total interest-bearing deposits | 63,956 | 159 | 0.33 | 26,939 | 25 | 0.13 | ||||||||
Borrowings: | ||||||||||||||
Securities sold under customer repurchase agreements | 615 | 1 | 0.16 | 664 | 1 | 0.21 | ||||||||
Short-term FHLB borrowings | 400 | 8 | 2.57 | — | — | — | ||||||||
Short-term borrowings | 1,015 | 9 | 1.11 | 664 | 1 | 0.21 | ||||||||
Federal Home Loan Bank borrowings | 941 | 15 | 2.07 | 649 | 7 | 1.28 | ||||||||
Senior unsecured borrowings | 1,497 | 21 | 1.83 | — | — | — | ||||||||
Subordinated debt | 1,057 | 24 | 3.07 | 497 | 10 | 3.36 | ||||||||
Other borrowings | 79 | 1 | 2.86 | 83 | 4 | 1.22 | ||||||||
Long-term borrowings | 3,574 | 61 | 2.29 | 1,229 | 21 | 2.12 | ||||||||
Total borrowings | 4,589 | 70 | 2.03 | 1,893 | 22 | 1.45 | ||||||||
Total interest-bearing liabilities | $ | 68,545 | $ | 229 | 0.45 | % | $ | 28,832 | $ | 47 | 0.21 | % | ||
Noninterest-bearing deposits | $ | 26,253 | $ | 20,316 | ||||||||||
Credit balances of factoring clients | 1,146 | — | ||||||||||||
Other noninterest-bearing liabilities | 2,202 | 352 | ||||||||||||
Stockholders’ equity | 10,497 | 4,427 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 108,643 | $ | 53,927 | ||||||||||
Net interest income | $ | 2,144 | $ | 1,033 | ||||||||||
Net interest spread (2) | 2.94 | % | 2.60 | % | ||||||||||
Net interest margin (2) | 3.06 | % | 2.69 | % | ||||||||||
(1) Loans and leases include non-PCD and PCD loans, nonaccrual loans and held for sale. Interest income on loans and leases includes accretion income and loan fees. | ||||||||||||||
(2) The balance and rate presented is calculated net of average credit balances of factoring clients. | ||||||||||||||
Dollars in millions, except share and per share data | |||||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||||
QTD | QTD | QTD | YTD | YTD | |||||||||
Non-GAAP Reconciliations | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
Net income and EPS | |||||||||||||
Net income (GAAP) | a | $ | 315 | 255 | 124 | 841 | 424 | ||||||
Preferred stock dividends | 12 | 17 | 5 | 36 | 14 | ||||||||
Net income available to common stockholders (GAAP) | b | 303 | 238 | 119 | 805 | 410 | |||||||
Total notable items, after income tax | c | 23 | 32 | (1 | ) | 90 | (27 | ) | |||||
Adjusted net income (non-GAAP) | d = (a+c) | 338 | 287 | 123 | 931 | 397 | |||||||
Adjusted net income available to common stockholders (non-GAAP) | e = (b+c) | $ | 326 | 270 | 118 | 895 | 383 | ||||||
Weighted average common shares outstanding | |||||||||||||
Basic | f | 15,711,976 | 16,023,613 | 9,816,405 | 15,851,385 | 9,816,405 | |||||||
Diluted | g | 15,727,993 | 16,035,090 | 9,816,405 | 15,870,233 | 9,816,405 | |||||||
EPS (GAAP) | |||||||||||||
Basic | b/f | $ | 19.27 | 14.87 | 12.17 | 50.76 | 41.79 | ||||||
Diluted | b/g | 19.25 | 14.86 | 12.17 | 50.70 | 41.79 | |||||||
Adjusted EPS (non-GAAP) | |||||||||||||
Basic | e/f | $ | 20.79 | 16.87 | 12.04 | 56.47 | 39.03 | ||||||
Diluted | e/g | 20.77 | 16.86 | 12.04 | 56.41 | 39.03 | |||||||
Noninterest income and expense | |||||||||||||
Noninterest income | h | $ | 433 | 424 | 124 | 1,707 | 394 | ||||||
Impact of notable items, before income tax | (145 | ) | (141 | ) | (11 | ) | (856 | ) | (64 | ) | |||
Adjusted or core noninterest income | i | $ | 288 | 283 | 113 | 851 | 330 | ||||||
Noninterest expense | j | $ | 760 | 745 | 314 | 2,315 | 911 | ||||||
Impact of notable items, before income tax | (183 | ) | (179 | ) | (10 | ) | (600 | ) | (29 | ) | |||
Adjusted or core noninterest expense | k | $ | 577 | 566 | 304 | 1,715 | 882 | ||||||
Provision (benefit) for credit losses | |||||||||||||
Provision (benefit) for credit losses | $ | 60 | 42 | (1 | ) | 566 | (32 | ) | |||||
Plus: Day 2 provision for credit losses | — | — | — | (513 | ) | — | |||||||
Adjusted provision (benefit) for credit losses | $ | 60 | 42 | (1 | ) | 53 | (32 | ) | |||||
PPNR | |||||||||||||
Net income (GAAP) | a | $ | 315 | 255 | 124 | 841 | 424 | ||||||
Plus: | |||||||||||||
Provision (benefit) for credit losses | 60 | 42 | (1 | ) | 566 | (32 | ) | ||||||
Income tax expense (benefit) | 93 | 82 | 34 | 129 | 124 | ||||||||
PPNR (non-GAAP) | l | $ | 468 | 379 | 157 | 1,536 | 516 | ||||||
Plus: total notable items, before income tax | 38 | 38 | (1 | ) | (256 | ) | (35 | ) | |||||
Adjusted PPNR (non-GAAP) | m | $ | 506 | 417 | 156 | 1,280 | 481 | ||||||
Note: Certain items above do not precisely recalculate as presented due to rounding. | |||||||||||||
Dollars in millions, except share and per share data | |||||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||||
QTD | QTD | QTD | YTD | YTD | |||||||||
Non-GAAP Reconciliations (continued) | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
ROA | |||||||||||||
Net income (GAAP) | a | $ | 315 | 255 | 124 | 841 | 424 | ||||||
Annualized net income | n = a annualized | 1,250 | 1,023 | 492 | 1,124 | 567 | |||||||
Adjusted net income (non-GAAP) | d | 338 | 287 | 123 | 931 | 397 | |||||||
Annualized adjusted net income | p = d annualized | 1,341 | 1,151 | 488 | 1,245 | 531 | |||||||
Average assets | o | 107,987 | 107,575 | 55,924 | 108,643 | 53,927 | |||||||
ROA | n/o | 1.16 | % | 0.95 | % | 0.88 | % | 1.03 | % | 1.05 | % | ||
Adjusted ROA | p/o | 1.24 | % | 1.07 | % | 0.87 | % | 1.15 | % | 0.98 | % | ||
PPNR ROA | |||||||||||||
PPNR (non-GAAP) | l | $ | 468 | 379 | 157 | 1,536 | 516 | ||||||
Annualized PPNR | q = l annualized | 1,858 | 1,519 | 623 | 2,054 | 690 | |||||||
Adjusted PPNR (non-GAAP) | m | 506 | 417 | 156 | 1,280 | 481 | |||||||
Annualized PPNR | r = m annualized | 2,009 | 1,672 | 621 | 1,712 | 643 | |||||||
PPNR ROA | q/o | 1.72 | % | 1.41 | % | 1.11 | % | 1.89 | % | 1.28 | % | ||
Adjusted PPNR ROA | r/o | 1.86 | % | 1.56 | % | 1.10 | % | 1.58 | % | 1.19 | % | ||
ROE and ROTCE | |||||||||||||
Annualized net income available to common shareholders | s = b annualized | $ | 1,202 | 955 | 472 | 1,076 | 548 | ||||||
Annualized adjusted net income available to common shareholders | t = e annualized | $ | 1,293 | 1,083 | 468 | 1,197 | 512 | ||||||
Average stockholders’ equity (GAAP) | $ | 10,499 | 10,567 | 4,561 | 10,497 | 4,427 | |||||||
Less: average preferred stock | 881 | 881 | 340 | 877 | 340 | ||||||||
Average common stockholders’ equity (non-GAAP) | u | $ | 9,618 | 9,686 | 4,221 | 9,620 | 4,087 | ||||||
Less: average goodwill | 346 | 346 | 350 | 346 | 350 | ||||||||
Less: average other intangible assets | 148 | 153 | 24 | 161 | 26 | ||||||||
Average tangible common equity (non-GAAP) | v | $ | 9,124 | 9,186 | 3,847 | 9,113 | 3,711 | ||||||
ROE | s/u | 12.49 | % | 9.87 | % | 11.29 | % | 11.18 | % | 13.50 | % | ||
Adjusted ROE | t/u | 13.47 | % | 11.19 | % | 11.18 | % | 12.44 | % | 12.61 | % | ||
ROTCE | s/v | 13.17 | % | 10.40 | % | 12.39 | % | 11.80 | % | 14.88 | % | ||
Adjusted ROTCE | t/v | 14.20 | % | 11.80 | % | 12.27 | % | 13.13 | % | 13.89 | % | ||
Tangible common equity to tangible assets | |||||||||||||
Stockholders’ equity (GAAP) | w | $ | 9,833 | 10,642 | 4,582 | 9,833 | 4,582 | ||||||
Less: preferred stock | 881 | 881 | 340 | 881 | 340 | ||||||||
Common equity (non-GAAP) | x | $ | 8,952 | 9,761 | 4,242 | 8,952 | 4,242 | ||||||
Less: goodwill | 346 | 346 | 350 | 346 | 350 | ||||||||
Less: other intangible assets | 145 | 150 | 22 | 145 | 22 | ||||||||
Tangible common equity (non-GAAP) | y | $ | 8,461 | 9,265 | 3,870 | 8,461 | 3,870 | ||||||
Total assets (GAAP) | z | 109,310 | 107,673 | 56,902 | 109,310 | 56,902 | |||||||
Tangible assets (non-GAAP) | aa | 108,819 | 107,177 | 56,530 | 108,819 | 56,530 | |||||||
Total equity to total assets | w/z | 9.00 | % | 9.88 | % | 8.05 | % | 9.00 | % | 8.05 | % | ||
Tangible common equity to tangible assets (non-GAAP) | y/aa | 7.78 | % | 8.64 | % | 6.84 | % | 7.78 | % | 6.84 | % | ||
Note: Certain items above do not precisely recalculate as presented due to rounding. | |||||||||||||
Dollars in millions, except share and per share data | |||||||||||||
BancShares | BancShares | BancShares | BancShares | BancShares | |||||||||
QTD | QTD | QTD | YTD | YTD | |||||||||
Non-GAAP Reconciliations (continued) | 9/30/22 | 6/30/22 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
Book value and tangible book value per common share | |||||||||||||
Common shares outstanding at period end | bb | 14,976,127 | 16,002,385 | 9,816,405 | 14,976,127 | 9,816,405 | |||||||
Book value per share | x/bb | $ | 597.75 | 609.95 | 432.07 | 597.75 | 432.07 | ||||||
Tangible book value per share | y/bb | $ | 564.97 | 578.92 | 394.15 | 564.97 | 394.15 | ||||||
Efficiency ratio | |||||||||||||
Net interest income | cc | $ | 795 | 700 | 347 | 2,144 | 1,033 | ||||||
Efficiency ratio (GAAP) | j / (h + cc) | 61.91 | % | 66.34 | % | 66.58 | % | 60.11 | % | 63.81 | % | ||
Adjusted efficiency ratio (non-GAAP)(1) | k / (i + cc) | 53.32 | % | 57.55 | % | 66.09 | % | 57.25 | % | 64.69 | % | ||
Note: Certain items above do not precisely recalculate as presented due to rounding. | |||||||||||||
Contact: | Deanna Hart | Barbara Thompson |
Investor Relations | Corporate Communications | |
919-716-2137 | 919-716-2716 |
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