• First Citizens BancShares Reports Earnings for Third Quarter 2021

    Source: Nasdaq GlobeNewswire / 27 Oct 2021 05:31:01   America/Chicago

    RALEIGH, N.C., Oct. 27, 2021 (GLOBE NEWSWIRE) -- First Citizens BancShares, Inc. (“BancShares”) (Nasdaq: FCNCA) reported earnings for the third quarter of 2021. Key results for the quarter ended September 30, 2021, are presented below:

    THIRD QUARTER RESULTS
                  
    Q3 2021Q3 2020 Q3 2021Q3 2020 Q3 2021Q3 2020 Q3 2021Q3 2020 Q3 2021Q3 2020
    Net income (in millions) Net income per share Net interest margin Return on average assets Return on average equity
    $124.1$142.7 $12.17$14.03 2.61%3.06% 0.88%1.18% 11.29%14.93%
                  
    YEAR-TO-DATE (“YTD”) RESULTS
                  
    20212020 20212020 20212020 20212020 20212020
    Net income (in millions) Net income per share Net interest margin Return on average assets Return on average equity
    $424.2$353.6 $41.79$33.96 2.69%3.23% 1.05%1.05% 13.50%12.59%


    THIRD QUARTER HIGHLIGHTS
       
    Net income Net income was $124.1 million for the third quarter of 2021, a decrease of $18.6 million, or by 13.0% compared to the same quarter in 2020. Net income per common share was $12.17 for the third quarter of 2021, compared to $14.03 per share for the same quarter in 2020.
       
    Return on average assets and equity Return on average assets for the third quarter of 2021 was 0.88%, down from 1.18% for the comparable quarter in 2020. Return on average equity for the third quarter of 2021 was 11.29%, down from 14.93% for the comparable quarter in 2020.
       
    Net interest income and net interest margin  Net interest income was $346.9 million for the third quarter of 2021, a decrease of $6.8 million, or by 1.9% compared to the same quarter in 2020 but was relatively stable compared to the second quarter of 2021. The taxable-equivalent net interest margin (“NIM”) was 2.61% for the third quarter of 2021, down 45 basis points from 3.06% for the comparable quarter in 2020 and down 7 basis points from 2.68% in the second quarter of 2021.
       
    Provision for credit losses The provision for credit losses was a net benefit of $1.1 million during the third quarter of 2021, compared to a $4.0 million expense during the same quarter in 2020. The allowance for credit losses (“ACL”) was $183.2 million at September 30, 2021, compared to $224.3 million at December 31, 2020, representing 0.56% and 0.68% of loans, respectively.
       
    Operating performance Noninterest income was $122.9 million for the third quarter of 2021, an increase of $2.4 million, or by 2.0% compared to the same quarter in 2020. Noninterest expense was $312.8 million for the third quarter of 2021, an increase of $21.2 million, or by 7.3% compared to the same quarter in 2020.
       
    Loans and credit quality Total loans were $32.5 billion, a decrease of $275.8 million, or by 1.1% on an annualized basis since December 31, 2020. Excluding loans originated under the Small Business Administration Paycheck Protection Program (“SBA-PPP”), total loans increased $1.0 billion, or by 4.6% on an annualized basis since December 31, 2020. Total loans decreased $173.5 million, or by 2.1% on an annualized basis compared to June 30, 2021. Excluding SBA-PPP loans, total loans increased $437.4 million, or by 5.6% in the third quarter of 2021. The net charge-off ratio was 0.06% for the third quarter of 2021 compared to 0.03% for the same quarter in 2020.
       
    Deposits Total deposits grew to $50.1 billion, an increase of $6.6 billion, or by 20.4% on an annualized basis since December 31, 2020, driven by organic growth. Deposits increased $1.7 billion, or by 13.6% on an annualized basis compared to June 30, 2021.
       
    Capital  BancShares remained well-capitalized with a total risk-based capital ratio of 14.3%, a Tier 1 risk-based capital ratio of 12.3%, a Common Equity Tier 1 ratio of 11.3% and a Tier 1 leverage ratio of 7.7%.
       

    MERGER WITH CIT GROUP INC.

    On October 15, 2020, BancShares entered into a definitive merger agreement with CIT Group Inc. (“CIT”) through which the companies plan to combine in an all-stock merger. The transaction has been approved by the shareholders of both companies and has received regulatory approval from the North Carolina Commissioner of Banks and the Federal Deposit Insurance Corporation (“FDIC”).

    On September 20, 2021, the parties entered into an amendment to the merger agreement pursuant to which the parties mutually agreed to extend until March 1, 2022, the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed. Completion of the proposed merger remains subject to approval from the Board of Governors of the Federal Reserve System and both parties are committed to continuing to seek such approval. The parties have responded to all questions issued by the Staff of the Federal Reserve Board. The parties have been informed that the application is presently at the Governor level, but the Board of Governors has not provided a time frame for its decision on the application. Closing is expected to occur as soon as practicable following receipt of such approval and the satisfaction or waiver of other customary closing conditions.

    NET INTEREST INCOME & NET INTEREST MARGIN

    Net interest income was $346.9 million for the third quarter of 2021, a decrease of $6.8 million, or by 1.9% compared to the same quarter in 2020. This was primarily due to a decline in the yield on interest-earning assets and a decrease in interest and fee income on SBA-PPP loans, partially offset by organic loan growth, higher investment balances, and lower rates on interest-bearing deposits. SBA-PPP loans contributed $20.0 million in interest and fee income for the third quarter of 2021 compared to $28.9 million for the same quarter in 2020. Net interest income increased $0.5 million compared to the linked quarter due primarily to higher investment and overnight yields and balances, organic loan growth and lower interest expense on deposits. This increase was largely offset by a decline in SBA-PPP interest and fee income and lower loan yields. SBA-PPP loans contributed $27.2 million in the second quarter of 2021.

    The taxable-equivalent NIM was 2.61% during the third quarter of 2021, a decrease of 45 basis points from 3.06% for the comparable quarter in 2020. The margin decline was primarily due to changes in earning asset mix driven by excess liquidity and higher balances in overnight investments, and a decline in the yield on loans, partially offset by lower rates paid on interest-bearing deposits and increased income on SBA-PPP loans. The taxable-equivalent NIM declined 7 basis points from 2.68% for the linked quarter primarily due to changes in earning asset mix partially offset by higher investment yields and lower rates paid on interest-bearing deposits.

    Net interest income was $1.03 billion for the nine months ended September 30, 2021, an increase of $3.5 million, or by 0.3% compared to the same period in 2020. This increase was primarily due to organic loan growth, an increase in interest and fee income on SBA-PPP loans and lower rates paid on interest-bearing deposits. These increases were largely offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $78.1 million in interest and fee income for the nine months ended September 30, 2021, compared to $47.9 million for the same period in 2020.

    The taxable-equivalent NIM was 2.69% for the nine months ended September 30, 2021, a decrease of 54 basis points from 3.23% for the comparable period in 2020. The margin decline was primarily due to changes in earning asset mix and a decline in the yield on interest-earning assets, partially offset by lower rates paid on interest-bearing deposits and increased income from SBA-PPP loans.

    PROVISION FOR CREDIT LOSSES

    Provision for credit losses was a net benefit of $1.1 million for the third quarter of 2021 compared to $4.0 million in expense for the same quarter in 2020. The third quarter of 2021 was favorably impacted by a $5.9 million reserve release driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors. The comparable quarter in 2020 included a $1.5 million reserve build due to continued uncertainties surrounding COVID-19 and net loan growth. Total net charge-offs for the third quarter of 2021 were $4.8 million, an increase from $2.6 million for the comparable quarter in 2020 due to a higher volume of charge-offs and lower recoveries. The net charge-off ratio was 0.06% for the third quarter of 2021 compared to 0.03% for the same quarter in 2020. The impact of SBA-PPP loans on average loan balances did not affect the net charge-off ratio in either three-month period.

    Provision for credit losses was a benefit of $31.7 million for the nine months ended September 30, 2021, compared to $52.9 million in expense for the same period in 2020. Provision for credit losses for the nine months ended September 30, 2021 was favorably impacted by a $41.1 million reserve release driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors. The comparable period in 2020 included a $36.1 million reserve build related to uncertainties surrounding COVID-19. Net charge-offs for the nine months ended September 30, 2021 were $9.4 million, a decrease from $17.4 million for the comparable period in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.04% for the nine months ended September 30, 2021 compared to 0.07% for the same period in 2020. The impact of SBA-PPP loans on average loan balances did not have an impact on the net charge-off ratio for the nine months ended September 30, 2021. Excluding the impact of SBA-PPP loans on average loan balances, the net charge-off ratio was 0.08% for the nine months ended September 30, 2020.

    NONINTEREST INCOME

    Noninterest income was $122.9 million for the third quarter of 2021, an increase of $2.4 million, or by 2.0% compared to $120.6 million for the same quarter in 2020. Contributing to the increase was a $6.1 million favorable change in fair market value adjustments on marketable equity securities. Other primary drivers of the increase included a $5.6 million increase in wealth management services due to growth in assets under management resulting in higher advisory and transaction fees, a $4.0 million increase in service charges on deposit accounts, a $3.1 million increase in cardholder services income, net, and a $1.6 million increase in merchant services income, net. These increases were partially offset by a $13.3 million reduction in realized gains on available for sale securities as well as a $7.0 million decline in mortgage income due to reductions in gain on sale margins and production volume driven by higher mortgage rates and increased competition. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $111.5 million for the third quarter of 2021, an increase of $9.7 million, or by 9.5% compared to $101.8 million for the same quarter in 2020.

    Noninterest income was $393.7 million for the nine months ended September 30, 2021, an increase of $43.8 million, or by 12.5% compared to $350.0 million for the same period in 2020. The primary drivers of the increase were a $20.7 million increase in wealth management services due to due to growth in assets under management resulting in higher advisory and transaction fees, a $20.6 million favorable change in fair market value adjustments on marketable equity securities, a $9.8 million increase in cardholder services income, net, and a $7.8 million increase in merchant services income, net. These increases were partially offset by a $21.9 million reduction in realized gains on available for sale securities. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $329.6 million for the nine months ended September 30, 2021, an increase of $45.0 million, or by 15.8% compared to $284.6 million for the same period in 2020.

    NONINTEREST EXPENSE

    Noninterest expense was $312.8 million for the third quarter of 2021, an increase of $21.2 million, or by 7.3% compared to the same quarter in 2020. The primary driver of the increase was a $13.7 million increase in salaries and wages driven by annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel costs. Additionally contributing to the increase was a $3.7 million increase in third-party service fees driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes, as well as a $3.5 million increase in merger expense associated with the pending merger with CIT.

    Noninterest expense was $910.3 million for the nine months ended September 30, 2021, an increase of $27.0 million, or by 3.1% compared to the same period in 2020. The most significant driver of the increase was a $23.2 million increase in salaries and wages due primarily to annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel costs. Also contributing to the increase was an $11.2 million increase in processing fees paid to third parties driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes, and a $7.5 million increase in merger-related expense associated with the pending merger with CIT. These increases were partially offset by a $16.5 million decrease in other expense due to a decrease in other pension expense and a release in the reserve for unfunded commitments, as well as a $7.0 million decrease in collection and foreclosure-related expenses.

    INCOME TAXES

    Income tax expense totaled $34.1 million and $35.8 million for the third quarter of 2021 and 2020, respectively, representing effective tax rates of 21.5% and 20.1% for the respective periods.

    Income tax expense totaled $123.9 million and $89.5 million for the first nine months of 2021 and 2020, respectively, representing effective tax rates of 22.6% and 20.2% for the respective periods.

    The effective tax rates during 2020 were favorably impacted by BancShares’ decision to utilize an allowable alternative for computing its federal income tax liability. The allowable alternative provided BancShares the ability to use the federal income tax rate for certain current year deductible amounts related to prior year FDIC-assisted acquisitions that was applicable when these amounts were originally subjected to tax. Without this alternative, the effective tax rate is materially unchanged for the third quarter and first nine months of 2021 and the effective tax rate for the third quarter and first nine months of 2020 would have been approximately 22.0% and 22.6%, respectively.

    LOANS AND DEPOSITS

    At September 30, 2021, loans totaled $32.5 billion, a decrease of $275.8 million, or by 1.1% on an annualized basis since December 31, 2020. SBA-PPP loans totaled $1.0 billion as of September 30, 2021 compared to $2.4 billion as of December 31, 2021. Excluding SBA-PPP loans, total loans increased $1.0 billion, or by 4.6% on an annualized basis since December 31, 2020. Total loans decreased $173.5 million, or by 2.1% on an annualized basis compared to June 30, 2021. Excluding SBA-PPP loans, total loans increased $437.4 million, or by 5.6% in the third quarter of 2021.

    At September 30, 2021, deposits totaled $50.1 billion, an increase of $6.6 billion, or by 20.4% on an annualized basis since December 31, 2020, driven by organic growth. Deposits increased $1.7 billion, or by 13.6% on an annualized basis compared to June 30, 2021.

    ALLOWANCE FOR CREDIT LOSSES (ACL)

    The ACL was $183.2 million at September 30, 2021, compared to $224.3 million at December 31, 2020, a decrease of $41.1 million. The ACL as a percentage of total loans and leases was 0.56% at September 30, 2021, compared to 0.68% at December 31, 2020. The reduction was primarily due to a $41.1 million reserve release for the nine months ended September 30, 2021, driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. Excluding SBA-PPP loans, which have no associated ACL, the ACL as a percentage of total loans was 0.58% at September 30, 2021, compared to 0.74% at December 31, 2020.

    NONPERFORMING ASSETS

    Nonperforming assets, including nonaccrual loans and other real estate owned, were $204.4 million, or 0.63% of total loans and other real estate owned at September 30, 2021, compared to $242.4 million or 0.74% at December 31, 2020. Excluding the impact of SBA-PPP loans on loan balances, the ratio of total nonperforming assets to total loans, leases and other real estate owned was 0.65% as of September 30, 2021, compared to 0.80% at December 31, 2020.

    CAPITAL TRANSACTIONS

    During the third quarter of 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 117,700 shares of Class A common stock for $47.1 million at an average cost per share of $399.83 for the comparable quarter in 2020. For the nine months ended September 30, 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 813,090 shares of Class A common stock for $333.8 million at an average cost per share of $410.48 for the comparable period in 2020. All Class A common stock repurchases completed in 2020 were consummated under previously approved authorizations. Following the expiration of our latest share repurchase authorization on July 31, 2020, share repurchase activity was suspended.

    EARNINGS CALL DETAILS

    First Citizens BancShares, Inc. will host a conference call to discuss the company's financial results on October 27, 2021, at 9 a.m. Eastern time.

    To access this call, dial:

    Domestic: 833-654-8257
    International: 602-585-9869
    Conference ID: 3942569

    The third quarter 2021 earnings presentation and 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 10, 2021, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 3942569.

    For investor inquiries, contact Deanna Hart, Investor Relations, at 919-716-2137.

    ABOUT FIRST CITIZENS BANCSHARES

    BancShares is the financial holding company for Raleigh, North Carolina-headquartered First Citizens Bank & Trust Company (“First Citizens Bank”). First Citizens Bank provides a broad range of financial services to individuals, businesses, professionals and the medical community through branch offices in 19 states, including digital banking, mobile banking, ATMs and telephone banking. As of September 30, 2021, BancShares had total assets of $56.9 billion.

    For more information, visit First Citizens’ website at 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” 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, 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, the availability of capital and personnel, the delay in closing (or failure to close) one or more of BancShares’ previously announced acquisition transaction(s), the failure to realize the anticipated benefits of BancShares’ previously announced acquisition transaction(s), and general competitive, economic, political, and market conditions, as well as risks related to the proposed transaction with CIT Group Inc (“CIT”) including, in addition to those described above and among others, (1) the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed transaction may not be realized or may take longer than anticipated to be realized, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the condition of the economy and competitive factors in areas where BancShares and CIT do business, (2) disruption to BancShares’ and CIT’s businesses as a result of the pendency of the proposed transaction and diversion of management’s attention from ongoing business operations and opportunities, (3) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement, (4) the risk that the integration of BancShares’ and CIT’s operations will be materially delayed or will be more costly or difficult than expected or that BancShares and CIT are otherwise unable to successfully integrate their businesses, (5) the outcome of any legal proceedings that may be or have been instituted against BancShares and/or CIT, (6) the failure to obtain remaining governmental approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction), (7) reputational risk and potential adverse reactions of BancShares’ and/or CIT’s customers, suppliers, employees or other business partners, including those resulting from the completion of the proposed transaction, (8) the failure of any of the closing conditions in the definitive merger agreement to be satisfied on a timely basis or at all, (9) delays in closing the proposed transaction, (10) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (11) the dilution caused by BancShares’ issuance of additional shares of its capital stock in connection with the proposed transaction, (12) other factors that may affect future results of BancShares and CIT including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms, and (13) the impact of the global COVID-19 pandemic on CIT’s business, the parties’ ability to complete the proposed transaction and/or any of the other foregoing risks.

    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. Further information regarding BancShares and factors which could affect the forward-looking statements contained herein can be found in BancShares’ Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and its other filings with the Securities and Exchange Commission.


    CONSOLIDATED BALANCE SHEETS

    (Dollars in thousands, unaudited)September 30,
    2021    		 December 31,
    2020
    Assets   
    Cash and due from banks$337,450   $362,048  
    Overnight investments9,875,063   4,347,336  
    Investment in marketable equity securities (cost of $85,554 at September 30, 2021 and $84,837 at December 31, 2020)123,147   91,680  
    Investment securities available for sale (cost of $7,345,143 at September 30, 2021 and $6,911,965 at December 31, 2020)7,371,129   7,014,243  
    Investment securities held to maturity (fair value of $3,353,078 at September 30, 2021 and $2,838,499 at December 31, 2020)3,381,078   2,816,982  
    Loans held for sale98,451   124,837  
    Loans and leases32,516,189   32,791,975  
    Allowance for credit losses(183,194)  (224,314) 
    Net loans and leases32,332,995   32,567,661  
    Premises and equipment1,230,572   1,251,283  
    Other real estate owned40,649   50,890  
    Income earned not collected132,911   145,694  
    Goodwill350,298   350,298  
    Other intangible assets44,142   50,775  
    Other assets1,584,092   783,953  
    Total assets$56,901,977   $49,957,680  
    Liabilities   
    Deposits:   
    Noninterest-bearing$21,514,407   $18,014,029  
    Interest-bearing28,551,355   25,417,580  
    Total deposits50,065,762   43,431,609  
    Securities sold under customer repurchase agreements663,575   641,487  
    Federal Home Loan Bank borrowings645,663   655,175  
    Subordinated debt497,427   504,518  
    Other borrowings76,139   88,470  
    FDIC shared-loss payable—   15,601  
    Other liabilities372,116   391,552  
    Total liabilities52,320,682   45,728,412  
    Shareholders’ equity   
    Common stock:   
    Class A - $1 par value (16,000,000 shares authorized; 8,811,220 shares issued and outstanding at September 30, 2021 and December 31, 2020)8,811   8,811  
    Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at September 30, 2021 and December 31, 2020)1,005   1,005  
    Preferred stock - $0.01 par value (10,000,000 shares authorized; 345,000 shares issued and outstanding at September 30, 2021 and December 31, 2020; $1,000 per share liquidity preference)339,937   339,937  
    Retained earnings4,263,679   3,867,252  
    Accumulated other comprehensive (loss) income(32,137)  12,263  
    Total shareholders’ equity4,581,295   4,229,268  
    Total liabilities and shareholders’ equity$56,901,977   $49,957,680  
              


    CONSOLIDATED STATEMENTS OF INCOME

     Three months ended Nine months ended
    (Dollars in thousands, except per share data, unaudited)September 30, June 30, September 30, September 30, September 30,
    2021 2021 2020 2021 2020
    Interest income         
    Loans and leases$319,214   $324,288   $336,382   $966,525   $988,029 
    Investment securities interest and dividend income39,246   35,432   37,195   105,530   113,293 
    Overnight investments3,395   2,105   757   6,948   5,828 
    Total interest income361,855   361,825   374,334   1,079,003   1,107,150 
    Interest expense         
    Deposits8,073   8,542   13,468   25,408   55,578 
    Securities sold under customer repurchase agreements358   356   395   1,052   1,236 
    Federal Home Loan Bank borrowings2,114   2,099   2,156   6,300   7,612 
    Subordinated debt4,174   4,181   4,351   12,543   11,783 
    Other borrowings249   254   305   768   1,488 
    Total interest expense14,968   15,432   20,675   46,071   77,697 
    Net interest income346,887   346,393   353,659   1,032,932   1,029,453 
    Provision (credit) for credit losses(1,120)  (19,603)  4,042   (31,697)  52,949 
    Net interest income after provision for credit losses348,007   365,996   349,617   1,064,629   976,504 
    Noninterest income         
    Wealth management services31,935   31,753   26,369   95,886   75,152 
    Service charges on deposit accounts24,858   21,883   20,841   68,277   64,776 
    Cardholder services, net22,879   22,471   19,756   65,310   55,503 
    Other service charges and fees9,205   8,959   7,892   26,653   22,829 
    Merchant services, net8,409   8,532   6,763   25,858   18,014 
    Mortgage income6,106   5,929   13,106   25,026   28,141 
    Insurance commissions4,000   3,704   3,576   11,702   10,453 
    ATM income1,481   1,571   1,537   4,534   4,354 
    Realized gains on investment securities available for sale, net8,082   15,830   21,425   33,119   54,972 
    Marketable equity securities gains (losses), net3,350   11,654   (2,701)  31,015   10,461 
    Other2,639   1,864   2,008   6,363   5,330 
    Total noninterest income122,944   134,150   120,572   393,743   349,985 
    Noninterest expense         
    Salaries and wages160,947   153,643   147,297   462,420   439,185 
    Employee benefits32,146   35,298   31,788   103,169   100,663 
    Occupancy expense29,101   28,439   27,990   87,283   85,026 
    Equipment expense30,229   28,902   29,430   88,934   86,054 
    Processing fees paid to third parties15,602   14,427   11,927   43,702   32,485 
    FDIC insurance expense3,661   3,382   2,167   10,261   9,364 
    Collection and foreclosure-related expenses836   173   2,168   3,207   10,171 
    Merger-related expenses7,013   5,769   3,507   19,601   12,108 
    Other33,283   31,545   35,388   91,745   108,256 
    Total noninterest expense312,818   301,578   291,662   910,322   883,312 
    Income before income taxes158,133   198,568   178,527   548,050   443,177 
    Income taxes34,060   45,780   35,843   123,873   89,538 
    Net income$124,073   $152,788   $142,684   $424,177   $353,639 
    Preferred stock dividends4,636   4,636   4,636   13,908   9,426 
    Net income available to common shareholders$119,437   $148,152   $138,048   $410,269   $344,213 
    Weighted average common shares outstanding9,816,405   9,816,405   9,836,629   9,816,405   10,137,321 
    Earnings per common share$12.17   $15.09   $14.03   $41.79   $33.96 
    Dividends declared per common share0.47   0.47   0.40   1.41   1.20 
                       


    SELECTED QUARTERLY RATIOS

     Three months ended
    September 30, 2021 June 30, 2021 September 30, 2020
    SELECTED RATIOS (1)     
    Book value per share at period-end$432.07  $421.39  $380.43 
    Annualized return on average assets0.88% 1.13% 1.18%
    Annualized return on average equity11.29  14.64  14.93 
    Total risk-based capital ratio14.3  14.2  13.7 
    Tier 1 risk-based capital ratio12.3  12.1  11.5 
    Common equity Tier 1 ratio11.3  11.1  10.4 
    Tier 1 leverage capital ratio7.7  7.7  7.8 
    (1) Capital ratios are preliminary
     


    ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY DISCLOSURES

     Three months ended
    (Dollars in thousands, unaudited)September 30, 2021 June 30, 2021 September 30, 2020
    ALLOWANCE FOR CREDIT LOSSES (1)  
    ACL at beginning of period$189,094   $210,651   $222,450  
    Provision for credit losses(1,120)  (19,603)  4,042  
    Net charge-offs of loans and leases:     
    Charge-offs(11,073)  (7,528)  (8,932) 
    Recoveries6,293   5,574   6,376  
    Net charge-offs of loans and leases(4,780)  (1,954)  (2,556) 
    ACL at end of period$183,194   $189,094   $223,936  
    ACL at end of period allocated to:     
    PCD$18,438   $18,740   $25,127  
    Non-PCD164,756   170,354   198,809  
    ACL at end of period$183,194   $189,094   $223,936  
    Reserve for unfunded commitments$11,472   $11,103   $13,971  
    SELECTED LOAN DATA     
    Average loans and leases:     
    PCD$384,673   $414,183   $512,559  
    Non-PCD32,222,960   32,628,109   32,065,084  
    Loans and leases at period-end:     
    PCD373,255   396,506   495,878  
    Non-PCD32,142,934   32,293,146   32,349,266  
    RISK ELEMENTS     
    Nonaccrual loans and leases$163,775   $187,464   $186,454  
    Other real estate owned40,649   43,685   52,789  
    Total nonperforming assets$204,424   $231,149   $239,243  
    Accruing loans and leases 90 days or more past due$5,614   $3,776   $3,587  
    RATIOS     
    Net charge-offs (annualized) to average loans and leases0.06 % 0.02 % 0.03 %
    ACL to total loans and leases(2):     
    PCD4.94   4.73   5.07  
    Non-PCD0.51   0.53   0.61  
    Total0.56   0.58   0.68  
    Ratio of total nonperforming assets to total loans, leases and other real estate owned0.63   0.71   0.73  

    (1) BancShares recorded no ACL on investment securities as of September 30, 2021, June 30, 2021, or September 30, 2020.
    (2) Loans originated in relation to the SBA-PPP do not have a recorded ACL. As of September 30, 2021, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.53% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.58%. As of December 31, 2020, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.67% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.74%.


    AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN

     Three months ended
     September 30, 2021 June 30, 2021 September 30, 2020
    (Dollars in thousands, unaudited)Average    Yield/ Average    Yield/ Average   Yield/
    Balance Interest  Rate (2) Balance Interest  Rate (2) Balance Interest Rate (2)
    INTEREST-EARNING ASSETS                 
    Loans and leases (1)$32,707,591  $319,738  3.85% $33,166,049  $324,891  3.89% $32,694,996  $336,934  4.06%
    Investment securities:                 
    U.S. Treasury—  —  —  —  —  —  695,419  497  0.28 
    Government agency824,499  2,076  1.01  839,614  1,966  0.94  587,377  1,335  0.91 
    Mortgage-backed securities9,164,180  29,056  1.27  8,968,779  25,273  1.13  8,047,247  28,236  1.40 
    Corporate bonds597,386  7,610  5.10  612,516  7,806  5.10  489,602  6,433  5.26 
    Other investments121,454  544  1.78  113,439  426  1.51  110,552  739  2.66 
    Total investment securities10,707,519  39,286  1.47  10,534,348  35,471  1.35  9,930,197  37,240  1.50 
    Overnight investments8,956,055  3,395  0.15  7,819,287  2,105  0.11  2,992,183  757  0.10 
    Total interest-earning assets$52,371,165  $362,419  2.73  $51,519,684  $362,467  2.80  $45,617,376  $374,931  3.24 
    Cash and due from banks364,593      364,303      349,079     
    Premises and equipment1,239,111      1,242,700      1,261,864     
    Allowance for credit losses(189,885)     (211,913)     (222,793)    
    Other real estate owned40,786      46,074      52,716     
    Other assets2,096,588      1,438,483      1,203,913     
    Total assets$55,922,358      $54,399,331      $48,262,155     
    INTEREST-BEARING LIABILITIES                 
    Interest-bearing deposits:                 
    Checking with interest$11,323,503  $1,350  0.05% $10,952,753  $1,504  0.06% $9,239,838  $1,369  0.06%
    Savings3,979,389  342  0.03  3,796,686  326  0.03  3,070,619  314  0.04 
    Money market accounts9,866,327  2,357  0.09  9,581,775  2,634  0.11  8,108,832  3,634  0.18 
    Time deposits2,599,006  4,024  0.61  2,672,900  4,078  0.61  3,205,850  8,151  1.01 
    Total interest-bearing deposits27,768,225  8,073  0.12  27,004,114  8,542  0.13  23,625,139  13,468  0.23 
    Securities sold under customer repurchase agreements672,114  358  0.21  677,451  356  0.21  710,237  395  0.22 
    Other short-term borrowings—  —  —  —  —  —  —  —  — 
    Long-term borrowings1,222,452  6,537  2.09  1,227,755  6,534  2.12  1,256,331  6,812  2.15 
    Total interest-bearing liabilities29,662,791  $14,968  0.20  28,909,320  $15,432  0.21  25,591,707  $20,675  0.32 
    Demand deposits21,338,862      20,746,989      18,280,705     
    Other liabilities384,113      344,849      370,668     
    Shareholders' equity4,536,592      4,398,173      4,019,075     
    Total liabilities and shareholders' equity$55,922,358      $54,399,331      $48,262,155     
    Interest rate spread    2.53%     2.59%     2.92%
    Net interest income and net yield on interest-earning assets  $347,451  2.61%   $347,035  2.68%   $354,256  3.06%

    (1) Loans and leases include PCD and non-PCD loans, nonaccrual loans and loans held for sale.
    (2) Yields related to loans, leases and securities exempt from both federal and state income taxes, federal income taxes only, or state income taxes only are stated on a taxable-equivalent basis assuming statutory federal income tax rates of 21.0% for all periods presented, as well as state income tax rates of 3.3% for the three months ended September 30, 2021 and June 30, 2021, and 3.4% for the three months ended September 30, 2020. The taxable-equivalent adjustment was $564 thousand, $642 thousand, and $597 thousand for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively.


    Contact:Barbara ThompsonDeanna Hart
     Corporate CommunicationsInvestor Relations
     919-716-2716919-716-2137

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