RALEIGH, N.C., July 28, 2022 (GLOBE NEWSWIRE) -- First Citizens BancShares, Inc. (“BancShares”) (Nasdaq: FCNCA) reported earnings for the second quarter and year to date period ended June 30, 2022.
Chairman and CEO, Frank B. Holding, Jr. on second quarter results, "We are pleased to announce another quarter of solid results. Our integration efforts remain on track, and we completed our first major customer conversion of the OneWest Bank division and certain CIT treasury management customers. Merger integration is now substantially complete with some optimization efforts continuing into 2023. In addition, we are excited to announce that our Board of Directors approved a share repurchase plan which will allow us to repurchase up to 1.5 million shares of our Class A common stock over the next 12 months. Returning excess capital to our shareholders is a key strategic focus and we are excited about the opportunity to execute on the plan.
"Loan growth was strong this quarter, and pre-provision net revenue continued its momentum as our net interest margin expanded, our fee income producing lines of business performed well and expense control remained solid. We remain committed to achieving our cost savings goal as we continue to optimize our operations.”
FINANCIAL HIGHLIGHTS
Second quarter net income available to common stockholders was $238 million, or $14.86 per share, compared to first quarter net income available to common stockholders of $264 million or $16.70 per share. Adjusted for notable items, second quarter net income available to common stockholders was $270 million or $16.86, down from $299 million, or $18.95 per share in the first quarter of 2022.
The primary driver of the decline in adjusted net income was a provision expense in the second quarter totaling $42 million versus a $49 million benefit in the first quarter. The increase in provision expense was largely offset by solid pre-provision net revenue growth.
BancShares completed the acquisition of CIT Group, Inc. (“CIT”) on January 3, 2022 (the “CIT Merger”). BancShares’ financial information presented for the periods ended March 31, 2022 and June 30, 2022 reflects the acquisition of CIT. Certain historical financial information referenced as “Combined” in the commentary below reflects the combination of BancShares and CIT for historical periods prior to completion of the CIT Merger. For Combined financial information, refer to pages 8 through 12. For GAAP financial information, refer to pages 5 through 7. Certain financial results referenced as “Adjusted” in the commentary below excludes notable items, which are detailed on page 10. For Adjusted financial information, refer to page 11. The Combined and Adjusted financial information are non-GAAP measures.
2Q22 vs 1Q22:
- Adjusted pre-provision net revenue increased by $60 million over the first quarter due to growth in net revenue as net interest margin expanded and fee income grew, while expenses declined.
- Net interest income increased by $51 million. Interest income increased $47 million due to higher interest income on loans, as earning asset yields rose, and we experienced strong loan growth. Interest expense declined by $4 million as an increase in interest expense on deposits was more than offset by a decline in interest on borrowings.
- Net interest margin expanded from 2.73% to 3.04% due primarily to higher loan yields and balances, the impact of the $3 billion debt redemption in the first quarter and higher yields on investment securities and overnight investments, partially offset by higher deposit rates and lower SBA-PPP income.
- Adjusted noninterest income increased by $3 million. The increase was primarily due to higher capital markets and wealth management revenue, partially offset by a decline in rental income on operating leases, net.
- Adjusted noninterest expense decreased by $6 million primarily due to a decline in personnel expense.
- Provision for credit losses, adjusted for the CECL Day 2 provision, increased by $91 million primarily due to changes in CECL macroeconomic forecasts and loan growth.
- Total loans increased $2.2 billion or by 13.5% on an annualized basis. We experienced strong growth in our branch network and residential mortgage portfolio as well as in our commercial bank from a number of our industry verticals, middle market banking and business capital.
- Deposits declined $2.3 billion or by 9.9% on an annualized basis. The main components of the decline were a $3.0 billion decline in interest-bearing deposits (money market deposits and time deposits) as we saw sensitive customers begin to move funds in response to recent rate increases. The reductions were primarily concentrated in acquired higher cost channels including the direct bank and legacy OneWest branches, offset by growth in our branch network. These declines in interest-bearing deposits were offset by growth in noninterest-bearing deposits of $747 million, or 11.6% annualized.
2Q22 vs 2Q21 (Combined):
- Adjusted pre-provision net revenue increased by $114 million or 37.6% due to double digit percentage growth in net revenue as net interest margin expanded and fee income grew, while expenses increased at a modest pace.
- Net interest income increased by $88 million. Interest income increased $24 million due to higher yields on investment securities and overnight investments, partially offset by reduced accretion income on acquired loans and SBA-PPP income. Interest expense declined $64 million driven primarily by lower borrowings.
- Net interest margin improved from 2.56% to 3.04% due primarily to the impact of the $3 billion debt redemption in the first quarter, higher earning asset yields, partially offset by lower SBA-PPP income, lower accretion income and a reduction in loan balances.
- Adjusted noninterest income increased by $37 million primarily due to higher rental income on operating leases, net and increases in wealth management income, service charges on deposits and card income.
- Adjusted noninterest expense increased $11 million due to higher personnel costs, increased occupancy and equipment expense and higher third-party processing fees, partially offset by declines in professional fees and FDIC insurance expense.
- Provision for credit losses increased by $136 million primarily due to changes in CECL macroeconomic forecasts, releases of COVID-related reserves in the second quarter of 2021 and loan growth.
- Loans increased $1.3 billion or by 2.0%. Excluding the impact of SBA-PPP loans and purchase accounting adjustments, loans increased $2.8 billion or by 4.3%. Growth was attributable to the same factors as noted for the linked quarter above.
- Deposits declined $367 million or by 0.4% compared to the prior year quarter. The decline was a result of a $2.5 billion reduction in interest-bearing deposits partially offset by a $2.1 billion increase in noninterest-bearing deposits. The changes are due to similar reasons as noted for the linked quarter.
EARNINGS CALL DETAILS
BancShares will host a conference call to discuss the company's financial results on Thursday, July 28, 2022, at 9 a.m. Eastern time.
To access this call, dial:
Domestic: 1-844-200-6205
Canada: 1-833-950-0062
All other locations: +1 929-526-1599
Access code: 158564
The second 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 August 18, 2022, by dialing 1-866-813-9403 (domestic), 1-226-828-7578 (Canada) or +44 204-525-0658 (all other locations) using the access code 908758.
ABOUT FIRST CITIZENS BANCSHARES
First Citizens BancShares, Inc. is the financial holding company for 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 over $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, 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”).
SUPPLEMENTAL FINANCIAL TABLES
The following section includes supplemental financial information and key performance metrics for current and historical periods.
Certain measures in these tables, including the previously defined Combined and Adjusted financial information, 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).
| Dollars in millions, except per share data | |||||||||||
| Summary Financial Data & Key Metrics (1) | BancShares 2Q22 | BancShares 1Q22 | BancShares 2Q21 | BancShares YTD22 | BancShares YTD21 | ||||||
| Key Performance Metrics: | |||||||||||
| Diluted earnings per common share (EPS) | $ | 14.86 | 16.70 | 15.09 | 31.48 | 29.63 | |||||
| Diluted earnings per common share (EPS) - adjusted | 16.86 | 18.95 | 13.63 | 35.67 | 26.99 | ||||||
| Book value per common share | 609.95 | 605.48 | 421.39 | 609.95 | 421.39 | ||||||
| Tangible book value per common share (TBV) | 578.92 | 574.09 | 383.19 | 578.92 | 383.19 | ||||||
| Return on average assets (ROA) | 0.95 | % | 1.00 | % | 1.13 | % | 0.97 | % | 1.14 | % | |
| Return on average assets (ROA) - adjusted | 1.07 | % | 1.12 | % | 1.02 | % | 1.10 | % | 1.04 | % | |
| Return on average common equity (ROE) | 9.87 | % | 11.18 | % | 14.64 | % | 10.51 | % | 14.67 | % | |
| Return on average common equity (ROE) - adjusted | 11.19 | % | 12.67 | % | 13.23 | % | 11.91 | % | 13.37 | % | |
| Return on average tangible common equity (ROTCE) | 10.40 | % | 11.83 | % | 16.14 | % | 11.11 | % | 16.21 | % | |
| Return on average tangible common equity (ROTCE) - adjusted | 11.80 | % | 13.41 | % | 14.58 | % | 12.58 | % | 14.76 | % | |
| Efficiency ratio | 57.55 | % | 61.57 | % | 64.61 | % | 59.50 | % | 63.98 | % | |
| Net interest margin (NIM) | 3.04 | % | 2.73 | % | 2.67 | % | 2.89 | % | 2.73 | % | |
| Select Balance Sheet Items: | |||||||||||
| Total investment securities | $ | 19,136 | 19,469 | 10,895 | 19,136 | 10,895 | |||||
| Total loans and leases | 67,735 | 65,524 | 32,690 | 67,735 | 32,690 | ||||||
| Total operating lease equipment, net | 7,971 | 7,972 | — | 7,971 | — | ||||||
| Total deposits | 89,329 | 91,597 | 48,410 | 89,329 | 48,410 | ||||||
| Total borrowings | 3,813 | 2,676 | 1,225 | 3,813 | 1,225 | ||||||
| Loan to deposit ratio | 75.83 | % | 71.54 | % | 67.53 | % | 75.83 | % | 67.53 | % | |
| Noninterest-bearing deposits to total deposits | 29.83 | % | 28.27 | % | 43.33 | % | 29.83 | % | 43.33 | % | |
| Capital Ratios: (2) | |||||||||||
| Total risk-based capital ratio | 14.46 | % | 14.47 | % | 14.15 | % | 14.46 | % | 14.15 | % | |
| Tier 1 risk-based capital ratio | 12.37 | % | 12.39 | % | 12.13 | % | 12.37 | % | 12.13 | % | |
| Common equity Tier 1 ratio | 11.34 | % | 11.34 | % | 11.14 | % | 11.34 | % | 11.14 | % | |
| Tier 1 leverage capital ratio | 9.85 | % | 9.55 | % | 7.67 | % | 9.85 | % | 7.67 | % | |
| Asset Quality: | |||||||||||
| Nonaccrual loans to total loans and leases | 0.76 | % | 0.82 | % | 0.57 | % | 0.76 | % | 0.57 | % | |
| Allowance for credit losses (ACL) to loans and leases | 1.26 | % | 1.29 | % | 0.58 | % | 1.26 | % | 0.58 | % | |
| Net charge-off ratio | 0.13 | % | 0.09 | % | 0.02 | % | 0.11 | % | 0.02 | % | |
| (1) The financial information above is BancShares GAAP and Adjusted (non-GAAP) information. | |||||||||||
| (2) Capital ratios for the current quarter are preliminary pending completion of quarterly regulatory filings. | |||||||||||
| Dollars in millions, except share and per share data | |||||||||||
| Income Statement (unaudited) (1) | BancShares 2Q22 | BancShares 1Q22 | BancShares 2Q21 | BancShares YTD22 | BancShares YTD21 | ||||||
| INTEREST INCOME | |||||||||||
| Interest and fees on loans | $ | 655 | 621 | 324 | 1,276 | 647 | |||||
| Interest on investment securities | 89 | 83 | 36 | 172 | 66 | ||||||
| Interest on deposits at banks | 13 | 6 | 2 | 19 | 4 | ||||||
| Total interest income | 757 | 710 | 362 | 1,467 | 717 | ||||||
| INTEREST EXPENSE | |||||||||||
| Deposits | 42 | 39 | 8 | 81 | 17 | ||||||
| Borrowings | 15 | 22 | 8 | 37 | 14 | ||||||
| Total interest expense | 57 | 61 | 16 | 118 | 31 | ||||||
| Net interest income | 700 | 649 | 346 | 1,349 | 686 | ||||||
| Provision (benefit) for credit losses | 42 | 464 | (20 | ) | 506 | (31 | ) | ||||
| Net interest income after provision for credit losses | 658 | 185 | 366 | 843 | 717 | ||||||
| NONINTEREST INCOME | |||||||||||
| Rental income on operating leases | 213 | 208 | — | 421 | — | ||||||
| Fee income and other service charges | 39 | 35 | 10 | 74 | 21 | ||||||
| Wealth management services | 37 | 35 | 32 | 72 | 64 | ||||||
| Service charges on deposit accounts | 28 | 28 | 21 | 56 | 43 | ||||||
| Factoring commissions | 27 | 27 | — | 54 | — | ||||||
| Cardholder services, net | 26 | 25 | 22 | 51 | 42 | ||||||
| Merchant services, net | 9 | 10 | 8 | 19 | 17 | ||||||
| Insurance commissions | 11 | 12 | 4 | 23 | 8 | ||||||
| Realized gain on sales of investment securities available for sale, net | — | — | 16 | — | 25 | ||||||
| Fair value adjustment on marketable equity securities, net | (6 | ) | 3 | 12 | (3 | ) | 28 | ||||
| Bank-owned life insurance | 9 | 8 | — | 17 | 1 | ||||||
| Gain on sales of leasing equipment, net | 5 | 6 | — | 11 | — | ||||||
| Gain on acquisition | — | 431 | — | 431 | — | ||||||
| Gain on extinguishment of debt | — | 6 | — | 6 | — | ||||||
| Other noninterest income | 26 | 16 | 8 | 42 | 21 | ||||||
| Total noninterest income | 424 | 850 | 133 | 1,274 | 270 | ||||||
| NONINTEREST EXPENSE | |||||||||||
| Depreciation on operating lease equipment | 89 | 81 | — | 170 | — | ||||||
| Maintenance and other operating lease expenses | 47 | 43 | — | 90 | — | ||||||
| Salaries and benefits | 341 | 352 | 188 | 693 | 372 | ||||||
| Net occupancy expense | 48 | 49 | 28 | 97 | 58 | ||||||
| Equipment expense | 54 | 52 | 29 | 106 | 59 | ||||||
| Professional fees | 15 | 16 | 4 | 31 | 8 | ||||||
| Third-party processing fees | 26 | 24 | 14 | 50 | 28 | ||||||
| FDIC insurance expense | 9 | 12 | 4 | 21 | 7 | ||||||
| Marketing | 9 | 8 | 2 | 17 | 4 | ||||||
| Merger-related expenses | 34 | 135 | 6 | 169 | 13 | ||||||
| Intangible asset amortization | 6 | 6 | 3 | 12 | 6 | ||||||
| Other noninterest expense | 67 | 32 | 22 | 99 | 42 | ||||||
| Total noninterest expense | 745 | 810 | 300 | 1,555 | 597 | ||||||
| Income before income taxes | 337 | 225 | 199 | 562 | 390 | ||||||
| Income tax expense (benefit) | 82 | (46 | ) | 46 | 36 | 90 | |||||
| Net income | $ | 255 | 271 | 153 | 526 | 300 | |||||
| Preferred stock dividends | 17 | 7 | 5 | 24 | 9 | ||||||
| Net income available to common stockholders | $ | 238 | 264 | 148 | 502 | 291 | |||||
| Basic earnings per common share | $ | 14.87 | 16.70 | 15.09 | 31.52 | 29.63 | |||||
| Diluted earnings per common share | $ | 14.86 | 16.70 | 15.09 | 31.48 | 29.63 | |||||
| Weighted average common shares outstanding (basic) | 16,023,613 | 15,779,153 | 9,816,405 | 15,918,978 | 9,816,405 | ||||||
| Weighted average common shares outstanding (diluted) | 16,035,090 | 15,779,153 | 9,816,405 | 15,937,826 | 9,816,405 | ||||||
| (1) The financial information above is BancShares GAAP information. | |||||||||||
| Dollars in millions | |||||||
| Balance Sheet (unaudited) (1) | BancShares 2Q22 | BancShares 1Q22 | BancShares 2Q21 | ||||
| ASSETS | |||||||
| Cash and due from banks | $ | 583 | 523 | 395 | |||
| Interest-earning deposits at banks | 6,476 | 9,285 | 7,871 | ||||
| Securities purchased under agreements to resell | — | — | — | ||||
| Investment in marketable equity securities | 94 | 100 | 119 | ||||
| Investment securities available for sale | 9,210 | 9,295 | 7,381 | ||||
| Investment securities held to maturity | 9,832 | 10,074 | 3,395 | ||||
| Assets held for sale | 38 | 83 | 108 | ||||
| Loans and leases | 67,735 | 65,524 | 32,690 | ||||
| Allowance for credit losses | (850 | ) | (848 | ) | (189 | ) | |
| Loans and leases, net of allowance for credit losses | 66,885 | 64,676 | 32,501 | ||||
| Operating lease equipment, net | 7,971 | 7,972 | — | ||||
| Premises and equipment, net | 1,415 | 1,431 | 1,238 | ||||
| Bank-owned life insurance | 1,334 | 1,326 | 115 | ||||
| Goodwill | 346 | 346 | 350 | ||||
| Other intangible assets | 150 | 156 | 25 | ||||
| Other assets | 3,339 | 3,330 | 1,677 | ||||
| Total assets | $ | 107,673 | 108,597 | 55,175 | |||
| LIABILITIES | |||||||
| Deposits | |||||||
| Noninterest-bearing | $ | 26,645 | 25,898 | 20,974 | |||
| Interest-bearing | 62,684 | 65,699 | 27,436 | ||||
| Total deposits | 89,329 | 91,597 | 48,410 | ||||
| Credit balances of factoring clients | 1,070 | 1,150 | — | ||||
| Securities sold under customer repurchase agreements | 646 | 616 | 693 | ||||
| Federal Home Loan Bank borrowings | 1,785 | 639 | 647 | ||||
| Senior unsecured borrowings | 892 | 895 | — | ||||
| Subordinated debt | 1,055 | 1,058 | 497 | ||||
| Other borrowings | 81 | 84 | 81 | ||||
| Other liabilities | 2,173 | 1,988 | 370 | ||||
| Total liabilities | $ | 97,031 | 98,027 | 50,698 | |||
| STOCKHOLDERS' EQUITY | |||||||
| Preferred stock | 881 | 881 | 340 | ||||
| Common Stock: | |||||||
| Class A | 15 | 15 | 9 | ||||
| Class B | 1 | 1 | 1 | ||||
| Additional paid in capital | 5,345 | 5,344 | — | ||||
| Retained earnings | 4,865 | 4,634 | 4,149 | ||||
| Accumulated other comprehensive (loss) | (465 | ) | (305 | ) | (22 | ) | |
| Total stockholders’ equity | 10,642 | 10,570 | 4,477 | ||||
| Total liabilities and stockholders’ equity | $ | 107,673 | 108,597 | 55,175 | |||
| (1) The financial information above is BancShares GAAP information. | |||||||
| Dollars in millions, except per share data | |||||||||||
| Summary Financial Data & Key Metrics | BancShares 2Q22 | BancShares 1Q22 | Combined (1) 2Q21 | BancShares YTD22 | Combined (1) YTD21 | ||||||
| Key Performance Metrics: | |||||||||||
| Diluted earnings per common share (EPS) | $ | 14.86 | 16.70 | 15.09 | 31.48 | 29.63 | |||||
| Diluted earnings per common share (EPS) - adjusted | 16.86 | 18.95 | 13.63 | 35.67 | 26.99 | ||||||
| Book value per common share | 609.95 | 605.48 | 421.39 | 609.95 | 421.39 | ||||||
| Tangible book value per common share (TBV) | 578.92 | 574.09 | 383.19 | 578.92 | 383.19 | ||||||
| Return on average assets (ROA) | 0.95 | % | 1.00 | % | 1.13 | % | 0.97 | % | 1.14 | % | |
| Return on average assets (ROA) - adjusted | 1.07 | % | 1.12 | % | 1.02 | % | 1.10 | % | 1.04 | % | |
| Return on average common equity (ROE) | 9.87 | % | 11.18 | % | 14.64 | % | 10.51 | % | 14.67 | % | |
| Return on average common equity (ROE) - adjusted | 11.19 | % | 12.67 | % | 13.23 | % | 11.91 | % | 13.37 | % | |
| Return on average tangible common equity (ROTCE) | 10.40 | % | 11.83 | % | 16.14 | % | 11.11 | % | 16.21 | % | |
| Return on average tangible common equity (ROTCE) - adjusted | 11.80 | % | 13.41 | % | 14.58 | % | 12.58 | % | 14.76 | % | |
| Efficiency ratio | 57.55 | % | 61.57 | % | 64.73 | % | 59.50 | % | 64.17 | % | |
| Net interest margin (NIM) | 3.04 | % | 2.73 | % | 2.56 | % | 2.89 | % | 2.58 | % | |
| Select Balance Sheet Items: | |||||||||||
| Total investment securities | $ | 19,136 | 19,469 | 16,129 | 19,136 | 16,129 | |||||
| Total loans and leases | 67,735 | 65,524 | 66,401 | 67,735 | 66,401 | ||||||
| Total operating lease equipment, net | 7,971 | 7,972 | 7,782 | 7,971 | 7,782 | ||||||
| Total deposits | 89,329 | 91,597 | 89,696 | 89,329 | 89,696 | ||||||
| Total borrowings | 3,813 | 2,676 | 5,469 | 3,813 | 5,469 | ||||||
| Loan to deposit ratio | 75.83 | % | 71.54 | % | 74.03 | % | 75.83 | % | 74.03 | % | |
| Noninterest-bearing deposits to total deposits | 29.83 | % | 28.27 | % | 27.32 | % | 29.83 | % | 27.32 | % | |
| Capital Ratios: (2) | |||||||||||
| Total risk-based capital ratio | 14.46 | % | 14.47 | % | 14.15 | % | 14.46 | % | 14.15 | % | |
| Tier 1 risk-based capital ratio | 12.37 | % | 12.39 | % | 12.13 | % | 12.37 | % | 12.13 | % | |
| Common equity Tier 1 ratio | 11.34 | % | 11.34 | % | 11.14 | % | 11.34 | % | 11.14 | % | |
| Tier 1 leverage capital ratio | 9.85 | % | 9.55 | % | 7.67 | % | 9.85 | % | 7.67 | % | |
| Asset Quality: | |||||||||||
| Nonaccrual loans to total loans and leases | 0.76 | % | 0.82 | % | 1.11 | % | 0.76 | % | 1.11 | % | |
| Allowance for credit losses (ACL) to loans and leases | 1.26 | % | 1.29 | % | 1.57 | % | 1.26 | % | 1.57 | % | |
| Net charge-off ratio | 0.13 | % | 0.09 | % | 0.16 | % | 0.11 | % | 0.12 | % | |
| (1) EPS, book value per common shares, TBV per common share, ROA, ROE, ROTCE and all capital ratios for the quarter-to-date and year-to-date periods ending June 30, 2021 are based on historical BancShares financial information, which excludes CIT. | |||||||||||
| (2) Capital ratios for the current quarter are preliminary pending completion of quarterly regulatory filings. | |||||||||||
| Dollars in millions, except share and per share data | |||||||||||
| Income Statement (unaudited) | BancShares 2Q22 | BancShares 1Q22 | Combined (1) 2Q21 | BancShares YTD22 | Combined (1) YTD21 | ||||||
| INTEREST INCOME | |||||||||||
| Interest and fees on loans | $ | 655 | 621 | 680 | 1,276 | 1,367 | |||||
| Interest on investment securities | 89 | 83 | 51 | 172 | 102 | ||||||
| Interest on deposits at banks | 13 | 6 | 2 | 19 | 6 | ||||||
| Total interest income | 757 | 710 | 733 | 1,467 | 1,475 | ||||||
| INTEREST EXPENSE | |||||||||||
| Deposits | 42 | 39 | 59 | 81 | 130 | ||||||
| Borrowings | 15 | 22 | 62 | 37 | 127 | ||||||
| Total interest expense | 57 | 61 | 121 | 118 | 257 | ||||||
| Net interest income | 700 | 649 | 612 | 1,349 | 1,218 | ||||||
| Provision (benefit) for credit losses | 42 | 464 | (94 | ) | 506 | (224 | ) | ||||
| Net interest income after provision for credit losses | 658 | 185 | 706 | 843 | 1,442 | ||||||
| NONINTEREST INCOME | |||||||||||
| Rental income on operating leases | 213 | 208 | 188 | 421 | 383 | ||||||
| Fee income and other service charges | 39 | 35 | 39 | 74 | 73 | ||||||
| Wealth management services | 37 | 35 | 32 | 72 | 64 | ||||||
| Service charges on deposit accounts | 28 | 28 | 23 | 56 | 46 | ||||||
| Factoring commissions | 27 | 27 | 27 | 54 | 51 | ||||||
| Cardholder services, net | 26 | 25 | 23 | 51 | 43 | ||||||
| Merchant services, net | 9 | 10 | 9 | 19 | 18 | ||||||
| Insurance commissions | 11 | 12 | 10 | 23 | 19 | ||||||
| Realized gain on sales of investment securities available for sale, net | — | — | 19 | — | 133 | ||||||
| Fair value adjustment on marketable equity securities, net | (6 | ) | 3 | 12 | (3 | ) | 28 | ||||
| Bank-owned life insurance | 9 | 8 | 9 | 17 | 18 | ||||||
| Gain on sales of leasing equipment, net | 5 | 6 | 29 | 11 | 57 | ||||||
| Gain on acquisition | — | 431 | — | 431 | — | ||||||
| Gain on extinguishment of debt | — | 6 | — | 6 | — | ||||||
| Other noninterest income | 26 | 16 | 63 | 42 | 112 | ||||||
| Total noninterest income | 424 | 850 | 483 | 1,274 | 1,045 | ||||||
| NONINTEREST EXPENSE | |||||||||||
| Depreciation on operating lease equipment | 89 | 81 | 83 | 170 | 168 | ||||||
| Maintenance and other operating lease expenses | 47 | 43 | 54 | 90 | 106 | ||||||
| Salaries and benefits | 341 | 352 | 330 | 693 | 670 | ||||||
| Net occupancy expense | 48 | 49 | 46 | 97 | 94 | ||||||
| Equipment expense | 54 | 52 | 51 | 106 | 104 | ||||||
| Professional fees | 15 | 16 | 19 | 31 | 30 | ||||||
| Third-party processing fees | 26 | 24 | 22 | 50 | 43 | ||||||
| FDIC insurance expense | 9 | 12 | 13 | 21 | 26 | ||||||
| Marketing | 9 | 8 | 8 | 17 | 13 | ||||||
| Merger-related expenses | 34 | 135 | 6 | 169 | 18 | ||||||
| Intangible asset amortization | 6 | 6 | 11 | 12 | 23 | ||||||
| Other noninterest expense | 67 | 32 | 48 | 99 | 104 | ||||||
| Total noninterest expense | 745 | 810 | 691 | 1,555 | 1,399 | ||||||
| Income before income taxes | 337 | 225 | 498 | 562 | 1,088 | ||||||
| Income tax expense (benefit) | 82 | (46 | ) | 118 | 36 | 258 | |||||
| Net income | $ | 255 | 271 | 380 | 526 | 830 | |||||
| Preferred stock dividends | 17 | 7 | 17 | 24 | 24 | ||||||
| Net income available to common stockholders | $ | 238 | 264 | 363 | 502 | 806 | |||||
| (1) Combined financial information for the three and six month periods ending June 30, 2021 reflect historical BancShares and CIT information on a combined basis. Please see “Income Statement - Combined June 30, 2021” below for a reconciliation of these amounts to the most comparable GAAP amounts for such periods. | |||||||||||
| Dollars in millions, except share and per share data | |||||||||||
| Notable Items (1) | BancShares 2Q22 | BancShares 1Q22 | Combined (2) 2Q21 | BancShares YTD22 | Combined (2) YTD21 | ||||||
| NONINTEREST INCOME | |||||||||||
| Rental income on operating leases, net (2) | $ | (136 | ) | (124 | ) | (137 | ) | (260 | ) | (274 | ) |
| Realized gain on sales of investment securities available for sale, net | — | — | (19 | ) | — | (133 | ) | ||||
| Fair value adjustment on marketable equity securities, net | 6 | (3 | ) | (12 | ) | 3 | (28 | ) | |||
| Gain on sales of leasing equipment, net | (5 | ) | (6 | ) | (29 | ) | (11 | ) | (57 | ) | |
| Gain on acquisition | — | (431 | ) | — | (431 | ) | — | ||||
| Gain on extinguishment of debt | — | (6 | ) | — | (6 | ) | — | ||||
| Gain on sales of legacy consumer mortgage loans | — | — | (33 | ) | — | (56 | ) | ||||
| Gain on other loan and asset sales | (6 | ) | — | (8 | ) | (6 | ) | (8 | ) | ||
| Noninterest income - total adjustments | $ | (141 | ) | (570 | ) | (238 | ) | (711 | ) | (555 | ) |
| NONINTEREST EXPENSE | |||||||||||
| Depreciation on operating lease equipment (3) | (89 | ) | (81 | ) | (83 | ) | (170 | ) | (168 | ) | |
| Maintenance and other operating lease equipment expense (3) | (47 | ) | (43 | ) | (54 | ) | (90 | ) | (106 | ) | |
| Merger-related expenses | (34 | ) | (135 | ) | (6 | ) | (169 | ) | (18 | ) | |
| Intangible asset amortization | (6 | ) | (6 | ) | (11 | ) | (12 | ) | (23 | ) | |
| Employee benefits-related expense (4) | — | 27 | 8 | 27 | 8 | ||||||
| Other noninterest expense (5) | (3 | ) | — | 10 | (3 | ) | 5 | ||||
| Noninterest expense - total adjustments | $ | (179 | ) | (238 | ) | (136 | ) | (417 | ) | (302 | ) |
| CECL Day 2 provision and reserve for unfunded commitments | — | (513 | ) | — | (513 | ) | — | ||||
| Provision for credit losses - total adjustments | $ | — | (513 | ) | — | (513 | ) | — | |||
| Impact of notable items on pre-tax income | $ | 38 | 181 | (102 | ) | 219 | (253 | ) | |||
| Income tax impact | 6 | 146 | (24 | ) | 152 | (60 | ) | ||||
| Impact of notable items on net income | $ | 32 | 35 | (78 | ) | 67 | (193 | ) | |||
| Impact of notable items on basic and diluted EPS | 2.00 | 2.25 | N/A | 4.19 | N/A | ||||||
| (1) The notable items above reconcile the GAAP items (with the exception of quarter-to-date and year-to-date periods ending June 30, 2021 which reflect the historical results of BancShares and CIT on a combined basis) to the non-GAAP items. | |||||||||||
| (2) Combined financial information for the three and six month periods ending June 30, 2021 reflect historical BancShares and CIT information on a combined basis. The combined financial information is non-GAAP. | |||||||||||
| (3) Rental income on operating leases is net of depreciation and maintenance expense. | |||||||||||
| (4) A portion of the adjustment for employee benefits-related expenses is included in salaries and benefits and the remainder is included in other noninterest expense. | |||||||||||
| (5) In 2021, other expense includes a reserve release related to the prior sale of certain mortgage loans and the establishment of a litigation reserve. | |||||||||||
| Dollars in millions, except share and per share data | |||||||||||
| Condensed Income Statement (unaudited) - Adjusted for Notable Items (1) | BancShares 2Q22 | BancShares 1Q22 | Combined (2) 2Q21 | BancShares YTD22 | Combined (2) YTD21 | ||||||
| Interest income | $ | 757 | 710 | 733 | 1,467 | 1,475 | |||||
| Interest expense | 57 | 61 | 121 | 118 | 257 | ||||||
| Net interest income | 700 | 649 | 612 | 1,349 | 1,218 | ||||||
| Provision (benefit) for credit losses | 42 | (49 | ) | (94 | ) | (7 | ) | (224 | ) | ||
| Net interest income after provision for credit losses | 658 | 698 | 706 | 1,356 | 1,442 | ||||||
| Noninterest income | 283 | 280 | 246 | 563 | 491 | ||||||
| Noninterest expense | 566 | 572 | 555 | 1,138 | 1,097 | ||||||
| Income before income taxes | 375 | 406 | 397 | 781 | 836 | ||||||
| Income tax expense | 88 | 100 | 94 | 188 | 198 | ||||||
| Net income | $ | 287 | 306 | 303 | 593 | 638 | |||||
| Preferred stock dividends | 17 | 7 | 17 | 24 | 24 | ||||||
| Net income available to common stockholders | $ | 270 | 299 | 286 | 569 | 614 | |||||
| Basic earnings per common share (3) | $ | 16.87 | 18.95 | 13.63 | 35.71 | 26.99 | |||||
| Diluted earnings per common share (3) | $ | 16.86 | 18.95 | 13.63 | 35.67 | 26.99 | |||||
| Weighted average common shares outstanding (basic) (3) | 16,023,613 | 15,779,153 | 9,816,405 | 15,918,978 | 9,816,405 | ||||||
| Weighted average common shares outstanding (diluted) (3) | 16,035,090 | 15,779,153 | 9,816,405 | 15,937,826 | 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 items (with the exception of quarter-to-date and year-to-date periods ending June 30, 2021 which reflect the historical results of BancShares and CIT on a combined basis) to the non-GAAP items. | |||||||||||
| (2) Combined financial information for the three and six month periods ending June 30, 2021 reflect historical BancShares and CIT information on a combined basis. The combined financial information is non-GAAP. Please see “Income Statement - Combined June 30, 2021” below for a reconciliation of these amounts to the most comparable GAAP amounts for such periods. | |||||||||||
| (3) Per share and share data for the three and six month periods ending June 30, 2021 reflect historical BancShares financial information, which excludes CIT. | |||||||||||
| Dollars in millions | |||||||
| Balance Sheet (unaudited) | BancShares 2Q22 | BancShares 1Q22 | Combined (1) 2Q21 | ||||
| ASSETS | |||||||
| Cash and due from banks | $ | 583 | 523 | 542 | |||
| Interest-earning deposits at banks | 6,476 | 9,285 | 13,006 | ||||
| Securities purchased under agreements to resell | — | — | 150 | ||||
| Investment in marketable equity securities | 94 | 100 | 119 | ||||
| Investment securities available for sale | 9,210 | 9,295 | 12,463 | ||||
| Investment securities held to maturity | 9,832 | 10,074 | 3,397 | ||||
| Assets held for sale | 38 | 83 | 159 | ||||
| Loans and leases | 67,735 | 65,524 | 66,401 | ||||
| Allowance for credit losses | (850 | ) | (848 | ) | (1,040 | ) | |
| Loans and leases, net of allowance for credit losses | 66,885 | 64,676 | 65,361 | ||||
| Operating lease equipment, net | 7,971 | 7,972 | 7,782 | ||||
| Premises and equipment, net | 1,415 | 1,431 | 1,423 | ||||
| Bank-owned life insurance | 1,334 | 1,326 | 1,301 | ||||
| Goodwill | 346 | 346 | 350 | ||||
| Other intangible assets | 150 | 156 | 143 | ||||
| Other assets | 3,339 | 3,330 | 3,683 | ||||
| Total assets | $ | 107,673 | 108,597 | 109,879 | |||
| LIABILITIES | |||||||
| Deposits | |||||||
| Noninterest-bearing | $ | 26,645 | 25,898 | 24,505 | |||
| Interest-bearing | 62,684 | 65,699 | 65,191 | ||||
| Total deposits | 89,329 | 91,597 | 89,696 | ||||
| Credit balances of factoring clients | 1,070 | 1,150 | 1,531 | ||||
| Securities sold under customer repurchase agreements | 646 | 616 | 693 | ||||
| Federal Home Loan Bank borrowings | 1,785 | 639 | 647 | ||||
| Senior unsecured borrowings | 892 | 895 | 3,739 | ||||
| Subordinated debt | 1,055 | 1,058 | 992 | ||||
| Other borrowings | 81 | 84 | 91 | ||||
| Other liabilities | 2,173 | 1,988 | 1,977 | ||||
| Total liabilities | $ | 97,031 | 98,027 | 99,366 | |||
| STOCKHOLDERS' EQUITY | |||||||
| Preferred stock | 881 | 881 | 865 | ||||
| Common Stock: | 2 | ||||||
| Class A | 15 | 15 | 9 | ||||
| Class B | 1 | 1 | 1 | ||||
| Additional paid in capital | 5,345 | 5,344 | 3,751 | ||||
| Retained earnings | 4,865 | 4,634 | 6,023 | ||||
| Accumulated other comprehensive (loss) | (465 | ) | (305 | ) | (138 | ) | |
| Total stockholders’ equity | 10,642 | 10,570 | 10,513 | ||||
| Total liabilities and stockholders’ equity | $ | 107,673 | 108,597 | 109,879 | |||
| (1) Combined financial information as of June 30, 2021 reflect historical BancShares and CIT information on a combined basis. The combined financial information is non-GAAP. Please see “Balance Sheet - Combined as of June 30, 2021” below for a reconciliation of these amounts to the most comparable GAAP amounts. | |||||||
| Dollars in millions | |||||||
| Loans & Leases by Class (end of period) | BancShares 2Q22 | BancShares 1Q22 | Combined 2Q21 | ||||
| Loans & Leases by Class | |||||||
| Commercial | |||||||
| Commercial construction | $ | 2,783 | 2,633 | 2,649 | |||
| Owner-occupied commercial mortgages | 13,795 | 13,553 | 13,121 | ||||
| Non-owner-occupied commercial mortgages | 9,167 | 9,293 | 9,948 | ||||
| Commercial and industrial | 23,554 | 22,402 | 22,752 | ||||
| Leases | 2,178 | 2,220 | 2,424 | ||||
| Total commercial | $ | 51,477 | 50,101 | 50,894 | |||
| Consumer | |||||||
| Residential mortgage | $ | 12,441 | 11,711 | 11,635 | |||
| Revolving mortgage | 1,893 | 1,840 | 1,981 | ||||
| Consumer auto | 1,338 | 1,320 | 1,288 | ||||
| Consumer other | 586 | 552 | 604 | ||||
| Total consumer | $ | 16,258 | 15,423 | 15,507 | |||
| Total loans and leases | $ | 67,735 | 65,524 | 66,401 | |||
| Less: Allowance for credit losses | (850 | ) | 848 | (1,040 | ) | ||
| Total loans and leases, net of allowance for credit losses | $ | 66,885 | 64,676 | 65,361 | |||
| Deposits by Type (end of period) | BancShares 2Q22 | BancShares 1Q22 | Combined 2Q21 | ||||
| Demand | $ | 26,645 | 25,898 | $ | 24,505 | ||
| Checking with interest | 16,285 | 16,702 | 14,733 | ||||
| Money market | 24,699 | 26,249 | 25,239 | ||||
| Savings | 13,319 | 13,506 | 14,334 | ||||
| Time | 8,381 | 9,242 | 10,885 | ||||
| Total deposits | $ | 89,329 | 91,597 | $ | 89,696 | ||
| Dollars in millions | |||||||||||
| Credit Quality & Allowance | BancShares 2Q22 | BancShares 1Q22 | Combined 2Q21 | BancShares YTD22 | Combined YTD21 | ||||||
| Nonaccrual loans | $ | 513 | 538 | 736 | 513 | 736 | |||||
| Ratio of nonaccrual loans to total loans | 0.76 | % | 0.82 | % | 1.11 | % | 0.76 | % | 1.11 | % | |
| Charge-offs | $ | (41 | ) | (33 | ) | (55 | ) | (74 | ) | (92 | ) |
| Recoveries | 19 | 18 | 29 | 37 | 52 | ||||||
| Net charge-offs | $ | (22 | ) | (15 | ) | (26 | ) | (37 | ) | (40 | ) |
| Net charge-off ratio | 0.13 | % | 0.09 | % | 0.16 | % | 0.11 | % | 0.12 | % | |
| Allowance for credit losses to loans ratio | 1.26 | % | 1.29 | % | 1.57 | % | 1.26 | % | 1.57 | % | |
| Allowance for credit losses - beginning | $ | 848 | 178 | 1,153 | 178 | 1,288 | |||||
| Initial PCD allowance | (12 | ) | 284 | — | 272 | — | |||||
| Initial Non-PCD allowance | — | 454 | — | 454 | — | ||||||
| Provision (benefit) for credit losses | 36 | (53 | ) | (87 | ) | (17 | ) | (208 | ) | ||
| Net charge-offs | (22 | ) | (15 | ) | (26 | ) | (37 | ) | (40 | ) | |
| Allowance for credit losses - ending | $ | 850 | 848 | 1,040 | 850 | 1,040 | |||||
| Dollars in millions | ||||||||||||||||||
| Average Balance Sheet | BancShares 2Q22 | BancShares 1Q22 | Combined 2Q21 | |||||||||||||||
| Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | ||||||||||
| Loans and leases | $ | 65,298 | $ | 655 | 4.01 | % | $ | 64,144 | $ | 621 | 3.88 | % | $ | 66,393 | $ | 680 | 4.08 | % |
| Investment securities | 19,185 | 89 | 1.85 | % | 19,492 | 83 | 1.71 | % | 15,471 | 51 | 1.28 | % | ||||||
| Interest-earning deposits at banks | 7,630 | 13 | 0.72 | % | 11,476 | 6 | 0.19 | % | 13,402 | 2 | 0.11 | % | ||||||
| Total interest-earning assets | $ | 92,113 | $ | 757 | 3.28 | % | $ | 95,112 | $ | 710 | 2.99 | % | $ | 95,266 | $ | 733 | 3.07 | % |
| Interest-bearing deposits | $ | 64,070 | $ | 42 | 0.26 | % | $ | 66,258 | $ | 39 | 0.24 | % | $ | 65,287 | $ | 59 | 0.37 | % |
| Securities sold under customer repurchase agreements | 627 | — | 0.16 | % | 600 | — | 0.16 | % | 677 | 1 | 0.21 | % | ||||||
| Borrowings | 2,419 | 15 | 2.43 | % | 4,506 | 22 | 1.95 | % | 6,060 | 61 | 4.03 | % | ||||||
| Total interest-bearing liabilities | $ | 67,116 | $ | 57 | 0.34 | % | $ | 71,364 | $ | 61 | 0.35 | % | $ | 72,024 | $ | 121 | 0.67 | % |
| Net interest income | $ | 700 | $ | 649 | $ | 612 | ||||||||||||
| Net interest spread | 2.94 | % | 2.64 | % | 2.39 | % | ||||||||||||
| Net interest margin | 3.04 | % | 2.73 | % | 2.56 | % | ||||||||||||
| Average Balance Sheet | BancShares YTD22 | Combined YTD21 | ||||||||||||||||
| Avg Balance | Income/ Expense | Yield/ Rate | Avg Balance | Income/ Expense | Yield/ Rate | |||||||||||||
| Loans and leases | $ | 64,724 | $ | 1,276 | 3.96 | % | $ | 67,032 | $ | 1,367 | 4.09 | % | ||||||
| Investment securities | 19,338 | 172 | 1.78 | % | 15,554 | 102 | 1.30 | % | ||||||||||
| Interest-earning deposits at banks | 9,542 | 19 | 0.40 | % | 11,962 | 6 | 0.11 | % | ||||||||||
| Total interest-earning assets | $ | 93,604 | $ | 1,467 | 3.14 | % | $ | 94,548 | $ | 1,475 | 3.12 | % | ||||||
| Interest-bearing deposits | $ | 65,158 | $ | 81 | 0.25 | % | $ | 65,305 | $ | 130 | 0.40 | % | ||||||
| Securities sold under customer repurchase agreements | 614 | — | 0.16 | % | 659 | 1 | 0.21 | % | ||||||||||
| Borrowings | 3,457 | 37 | 2.12 | % | 6,373 | 126 | 3.94 | % | ||||||||||
| Total interest-bearing liabilities | $ | 69,229 | $ | 118 | 0.34 | % | $ | 72,337 | $ | 257 | 0.71 | % | ||||||
| Net interest income | $ | 1,349 | $ | 1,218 | ||||||||||||||
| Net interest spread | 2.80 | % | 2.41 | % | ||||||||||||||
| Net interest margin | 2.89 | % | 2.58 | % | ||||||||||||||
| Dollars in millions, except per share data | ||||||||||||
| Non-GAAP Reconciliations | BancShares 2Q22 | BancShares 1Q22 | Combined (2) 2Q21 | BancShares YTD22 | Combined (2) YTD21 | |||||||
| Reconciliations from GAAP to Adjusted (1) | ||||||||||||
| Net income available to common stockholders (GAAP) | $ | 238 | 264 | 363 | 502 | 806 | ||||||
| Tax-effected notable items | 32 | 35 | (77 | ) | 67 | (192 | ) | |||||
| Adjusted net income available to common stockholders (non-GAAP) | $ | 270 | 299 | 286 | 569 | 614 | ||||||
| Basic EPS (GAAP) (2) | $ | 14.87 | 16.70 | 15.09 | 31.52 | 29.63 | ||||||
| Tax-effected notable items | 2.00 | 2.25 | (1.46 | ) | 4.19 | (2.64 | ) | |||||
| Basic EPS- adjusted (non-GAAP) (2) | 16.87 | 18.95 | 13.63 | 35.71 | 26.99 | |||||||
| Diluted EPS (GAAP) (2) | $ | 14.86 | 16.70 | 15.09 | 31.48 | 29.63 | ||||||
| Tax-effected notable items | 2.00 | 2.25 | (1.46 | ) | 4.19 | (2.64 | ) | |||||
| Diluted EPS- adjusted (non-GAAP) (2) | 16.86 | 18.95 | 13.63 | 35.67 | 26.99 | |||||||
| ROA (GAAP) | 0.95 | % | 1.00 | % | 1.13 | % | 0.97 | % | 1.14 | % | ||
| Tax-effected notable items | 0.12 | % | 0.12 | % | (0.11 | )% | 0.13 | % | (0.10 | )% | ||
| ROA- adjusted (non-GAAP) | 1.07 | % | 1.12 | % | 1.02 | % | 1.10 | % | 1.04 | % | ||
| ROE (GAAP) (2) (3) | 9.87 | % | 11.18 | % | 14.64 | % | 10.51 | % | 14.67 | % | ||
| Tax-effected notable items | 1.32 | % | 1.49 | % | (1.41 | )% | 1.40 | % | (1.30 | )% | ||
| ROE- adjusted (non-GAAP) (2) (3) | 11.19 | % | 12.67 | % | 13.23 | % | 11.91 | % | 13.37 | % | ||
| ROTCE (2) (3) | 10.40 | % | 11.83 | % | 16.14 | % | 11.11 | % | 16.21 | % | ||
| Tax-effected notable items | 1.40 | % | 1.58 | % | (1.56 | )% | 1.47 | % | (1.45 | )% | ||
| ROTCE- adjusted (non-GAAP measure) (2) (3) | 11.80 | % | 13.41 | % | 14.58 | % | 12.58 | % | 14.76 | % | ||
| Provision (benefit) for credit losses | $ | 42 | 464 | (94 | ) | 506 | (224 | ) | ||||
| Day 2 provision related to CIT Merger | — | (513 | ) | — | (513 | ) | — | |||||
| Provision (benefit) for credit losses- adjusted | $ | 42 | (49 | ) | (94 | ) | (7 | ) | (224 | ) | ||
| (1) The GAAP income statements, adjusted condensed income statements (which reflect non-GAAP results including adjusted noninterest income and expense), and the individual notable items, which reconcile GAAP (with the exception of quarter-to-date and year-to-date periods ending June 30, 2021, which reflect the historical results of BancShares and CIT on a combined basis) to non-GAAP items are included previously in this release. The notable items in the table above represent the aggregate impacts of all of the notable items. | ||||||||||||
| (2) Basic and diluted EPS, ROE, and ROTCE for the quarter-to-date and year-to-date periods ending June 30, 2021 are based on historical FCB financial information, which excludes CIT. All other information for such periods is based on the combined balance sheets and historical results of BancShares and CIT. See "Balance Sheet - Combined as of June 30, 2021" and "Income Statement - Combined June 30, 2021" below for more information. | ||||||||||||
| (3) ROE and ROTCE are calculated based on common equity, which excludes preferred stock. | ||||||||||||
| Dollars in millions, except per share data | |||||||||||
| Non-GAAP Reconciliations | BancShares 2Q22 | BancShares 1Q22 | Combined (1) 2Q21 | BancShares YTD22 | Combined (1) YTD21 | ||||||
| Pre-tax, pre-provision net revenue | |||||||||||
| Net income (GAAP) | $ | 255 | 271 | 380 | 526 | 830 | |||||
| Provision (benefit) for credit losses | 42 | 464 | (94 | ) | 506 | (224 | ) | ||||
| Income tax expense (benefit) | 82 | (46 | ) | 118 | 36 | 258 | |||||
| Pre-tax, pre-provision net revenue (PPNR) (non-GAAP) | $ | 379 | 689 | 404 | 1,068 | 864 | |||||
| ROTCE | |||||||||||
| ROE (1) (GAAP) | 9.87 | % | 11.18 | % | 14.64 | % | 10.51 | % | 14.67 | % | |
| Exclusion of goodwill and other intangible assets | 0.53 | % | 0.65 | % | 1.50 | % | 0.60 | % | 1.54 | % | |
| ROTCE (1) (non-GAAP) | 10.40 | % | 11.83 | % | 16.14 | % | 11.11 | % | 16.21 | % | |
| TBV per common share | |||||||||||
| Book value per common share (1) (GAAP) | $ | 609.95 | 605.48 | 421.39 | 609.95 | 421.39 | |||||
| Exclusion of goodwill and other intangible assets | (31.03 | ) | (31.39 | ) | (38.20 | ) | (31.03 | ) | (38.20 | ) | |
| TBV per common share (1) (non-GAAP) | $ | 578.92 | 574.09 | 383.19 | 578.92 | 383.19 | |||||
| Efficiency Ratio | |||||||||||
| Net interest income (GAAP) | $ | 700 | 649 | 612 | 1,349 | 1,218 | |||||
| Adjusted noninterest income (non-GAAP) | 283 | 280 | 246 | 563 | 491 | ||||||
| Total efficiency revenue | $ | 983 | 929 | 858 | 1,912 | 1,709 | |||||
| Adjusted noninterest expense (non-GAAP) | $ | 566 | 572 | 555 | 1,138 | 1,097 | |||||
| Efficiency ratio (non-GAAP) | 57.55 | % | 61.57 | % | 64.73 | % | 59.50 | % | 64.17 | % | |
| Average Interest-earning Assets and Net Interest Margin | |||||||||||
| Average interest-earning assets (GAAP) | $ | 92,113 | 95,112 | 95,266 | 93,604 | 94,548 | |||||
| Less: credit balances for factoring clients | 1,189 | 1,160 | 1,586 | 1,175 | 1,607 | ||||||
| Adjusted average interest earning assets (non-GAAP) | $ | 90,924 | 93,952 | 93,680 | 92,429 | 92,941 | |||||
| Net interest margin (non-GAAP) | 3.04 | % | 2.73 | % | 2.56 | % | 2.89 | % | 2.58 | % | |
| (1) ROE, ROTCE, book value per common share, and TBV per common share are calculated based on common equity, which excludes preferred stock. ROE, ROTCE, book value per common share, and TBV per common share for the quarter-to-date and year-to-date periods ending June 30, 2021 are based on historical FCB financial information which excludes CIT. All other information for such periods is based on the combined balance sheets and historical results of BancShares and CIT. See "Balance Sheet - Combined as of June 30, 2021" and "Income Statement - Combined June 30, 2021" below for more information. | |||||||||||
| Dollars in millions, except share and per share data | |||||||||||||
| Income Statement- Combined June 30, 2021 | BancShares QTD | CIT QTD | Combined QTD (1) | BancShares YTD | CIT YTD | Combined YTD (1) | |||||||
| INTEREST INCOME | |||||||||||||
| Interest and fees on loans | $ | 324 | 356 | 680 | 647 | 720 | 1,367 | ||||||
| Interest on investment securities | 36 | 15 | 51 | 66 | 36 | 102 | |||||||
| Interest on deposits at banks | 2 | — | 2 | 4 | 2 | 6 | |||||||
| Total interest income | 362 | 371 | 733 | 717 | 758 | 1,475 | |||||||
| INTEREST EXPENSE | |||||||||||||
| Deposits | 8 | 51 | 59 | 17 | 113 | 130 | |||||||
| Borrowings | 8 | 54 | 62 | 14 | 113 | 127 | |||||||
| Total interest expense | 16 | 105 | 121 | 31 | 226 | 257 | |||||||
| Net interest income | 346 | 266 | 612 | 686 | 532 | 1,218 | |||||||
| Provision (benefit) for credit losses | (20 | ) | (74 | ) | (94 | ) | (31 | ) | (193 | ) | (224 | ) | |
| Net interest income after provision for credit losses | 366 | 340 | 706 | 717 | 725 | 1,442 | |||||||
| NONINTEREST INCOME | |||||||||||||
| Rental income on operating leases | — | 188 | 188 | — | 383 | 383 | |||||||
| Fee income and other service charges | 10 | 29 | 39 | 21 | 52 | 73 | |||||||
| Wealth management services | 32 | — | 32 | 64 | — | 64 | |||||||
| Service charges on deposit accounts | 21 | 2 | 23 | 43 | 3 | 46 | |||||||
| Factoring commissions | — | 27 | 27 | — | 51 | 51 | |||||||
| Cardholder services, net | 22 | 1 | 23 | 42 | 1 | 43 | |||||||
| Merchant services, net | 8 | 1 | 9 | 17 | 1 | 18 | |||||||
| Insurance commissions | 4 | 6 | 10 | 8 | 11 | 19 | |||||||
| Realized gain on sales of investment securities available for sale, net | 16 | 3 | 19 | 25 | 108 | 133 | |||||||
| Fair value adjustment on marketable equity securities, net | 12 | — | 12 | 28 | — | 28 | |||||||
| Bank-owned life insurance | — | 9 | 9 | 1 | 17 | 18 | |||||||
| Gain on sales of leasing equipment, net | — | 29 | 29 | — | 57 | 57 | |||||||
| Other noninterest income | 8 | 55 | 63 | 21 | 91 | 112 | |||||||
| Total noninterest income | 133 | 350 | 483 | 270 | 775 | 1,045 | |||||||
| NONINTEREST EXPENSE | |||||||||||||
| Depreciation on operating lease equipment | — | 83 | 83 | — | 168 | 168 | |||||||
| Maintenance and other operating lease expenses | — | 54 | 54 | — | 106 | 106 | |||||||
| Salaries and benefits | 188 | 142 | 330 | 372 | 298 | 670 | |||||||
| Net occupancy expense | 28 | 18 | 46 | 58 | 36 | 94 | |||||||
| Equipment expense | 29 | 22 | 51 | 59 | 45 | 104 | |||||||
| Professional fees | 4 | 15 | 19 | 8 | 22 | 30 | |||||||
| Third-party processing fees | 14 | 8 | 22 | 28 | 15 | 43 | |||||||
| FDIC insurance expense | 4 | 9 | 13 | 7 | 19 | 26 | |||||||
| Marketing | 2 | 6 | 8 | 4 | 9 | 13 | |||||||
| Merger-related expenses | 6 | — | 6 | 13 | 5 | 18 | |||||||
| Intangible asset amortization | 3 | 8 | 11 | 6 | 17 | 23 | |||||||
| Other noninterest expense | 22 | 26 | 48 | 42 | 62 | 104 | |||||||
| Total noninterest expense | 300 | 391 | 691 | 597 | 802 | 1,399 | |||||||
| Income before income taxes | 199 | 299 | 498 | 390 | 698 | 1,088 | |||||||
| Income tax expense (benefit) | 46 | 72 | 118 | 90 | 168 | 258 | |||||||
| Net income | $ | 153 | 227 | 380 | 300 | 530 | 830 | ||||||
| Preferred stock dividends | 5 | 12 | 17 | 9 | 15 | 24 | |||||||
| Net income available to common stockholders | $ | 148 | 215 | 363 | 291 | 515 | 806 | ||||||
| Basic earnings per common share | $ | 15.09 | N/A | N/A | 29.63 | N/A | N/A | ||||||
| Diluted earnings per common share | $ | 15.09 | N/A | N/A | 29.63 | N/A | N/A | ||||||
| Weighted average common shares outstanding (basic) | 9,816,405 | N/A | N/A | 9,816,405 | N/A | N/A | |||||||
| Weighted average common shares outstanding (diluted) | 9,816,405 | N/A | N/A | 9,816,405 | N/A | N/A | |||||||
| (1) The income statements for the quarter-to-date and year-to-date periods ending June 30, 2021 reflect the historical results of BancShares and CIT on a combined basis to facilitate more meaningful comparisons to historical periods prior to the CIT Merger. The table reconciles BancShares’ historical results (GAAP) to the combined results (non-GAAP). The combined historical information is presented as reported by each company without adjustment for the acquisition method of accounting and is intended for comparative purposes only. Such combined historical information is not necessarily indicative of the results that might have occurred had the CIT Merger taken place as of the beginning of the applicable period presented nor is it indicative of results to be expected in any future period. | |||||||||||||
| Dollars in millions, except share and per share data | |||||||||||||
| Adjusted Income Statement- Combined June 30, 2021 | BancShares QTD | CIT QTD | Combined QTD (1) | BancShares YTD | CIT YTD | Combined YTD (1) | |||||||
| Interest income | $ | 362 | 371 | 733 | 717 | 758 | 1,475 | ||||||
| Interest expense | 16 | 105 | 121 | 31 | 226 | 257 | |||||||
| Net interest income | 346 | 266 | 612 | 686 | 532 | 1,218 | |||||||
| Provision (benefit) for credit losses | (20 | ) | (74 | ) | (94 | ) | (31 | ) | (193 | ) | (224 | ) | |
| Net interest income after provision for credit losses | 366 | 340 | 706 | 717 | 725 | 1,442 | |||||||
| Noninterest income | 106 | 140 | 246 | 218 | 273 | 491 | |||||||
| Noninterest expense | 291 | 264 | 555 | 578 | 519 | 1,097 | |||||||
| Income before income taxes | 181 | 216 | 397 | 357 | 479 | 836 | |||||||
| Income tax expense (benefit) | 41 | 53 | 94 | 82 | 116 | 198 | |||||||
| Net income | $ | 140 | 163 | 303 | 275 | 363 | 638 | ||||||
| Preferred stock dividends | 5 | 12 | 17 | 9 | 15 | 24 | |||||||
| Net income available to common stockholders | $ | 135 | 151 | 286 | 266 | 348 | 614 | ||||||
| Basic earnings per common share | $ | 13.63 | N/A | N/A | 26.99 | N/A | N/A | ||||||
| Diluted earnings per common share | $ | 13.63 | N/A | N/A | 26.99 | N/A | N/A | ||||||
| Weighted average common shares outstanding (basic) | 9,816,405 | N/A | N/A | 9,816,405 | N/A | N/A | |||||||
| Weighted average common shares outstanding (diluted) | 9,816,405 | N/A | N/A | 9,816,405 | N/A | N/A | |||||||
| (1) The adjusted income statements for the quarter-to-date and year-to-date periods ending June 30, 2021 reflect the historical results of BancShares and CIT on a combined basis to facilitate more meaningful comparisons to historical periods prior to the CIT Merger. The table above reconciles BancShares’ historical adjusted results to the combined results.The combined historical information is presented as reported by each company without adjustment for the acquisition method of accounting and is intended for comparative purposes only. Such combined historical information is not necessarily indicative of the results that might have occurred had the CIT Merger taken place as of the beginning of the applicable period presented nor is it indicative of results to be expected in any future period. | |||||||||||||
| Dollars in millions | |||||||
| Balance Sheet- Combined as of June 30, 2021 | BancShares 2Q21 | CIT 2Q21 | Combined (1) 2Q21 | ||||
| ASSETS | |||||||
| Cash and due from banks | $ | 395 | 147 | 542 | |||
| Interest-earning deposits at banks | 7,871 | 5,135 | 13,006 | ||||
| Securities purchased under agreements to resell | — | 150 | 150 | ||||
| Investments in marketable equity securities | 119 | — | 119 | ||||
| Investment securities available for sale | 7,381 | 5,082 | 12,463 | ||||
| Investment securities held to maturity | 3,395 | 2 | 3,397 | ||||
| Assets held for sale | 108 | 51 | 159 | ||||
| Loans and leases | 32,690 | 33,711 | 66,401 | ||||
| Allowance for credit losses | (189 | ) | (851 | ) | (1,040 | ) | |
| Loans and leases, net of allowance for credit losses | 32,501 | 32,860 | 65,361 | ||||
| Operating lease equipment, net | — | 7,782 | 7,782 | ||||
| Premises and equipment, net | 1,238 | 185 | 1,423 | ||||
| Bank-owned life insurance | 115 | 1,186 | 1,301 | ||||
| Goodwill | 350 | — | 350 | ||||
| Other intangible assets | 25 | 118 | 143 | ||||
| Other assets | 1,677 | 2,006 | 3,683 | ||||
| Total assets | $ | 55,175 | 54,704 | 109,879 | |||
| LIABILITIES | |||||||
| Deposits | |||||||
| Noninterest-bearing | $ | 20,974 | 3,531 | 24,505 | |||
| Interest-bearing | 27,436 | 37,755 | 65,191 | ||||
| Total deposits | 48,410 | 41,286 | 89,696 | ||||
| Credit balances of factoring clients | — | 1,531 | 1,531 | ||||
| Securities sold under customer repurchase agreements | 693 | — | 693 | ||||
| Federal Home Loan Bank borrowings | 647 | — | 647 | ||||
| Senior unsecured borrowings | — | 3,739 | 3,739 | ||||
| Subordinated debt | 497 | 495 | 992 | ||||
| Other borrowings | 81 | 10 | 91 | ||||
| Other liabilities | 370 | 1,607 | 1,977 | ||||
| Total liabilities | $ | 50,698 | 48,668 | 99,366 | |||
| STOCKHOLDERS' EQUITY | |||||||
| Preferred stock | 340 | 525 | 865 | ||||
| Common Stock: | — | 2 | 2 | ||||
| Class A | 9 | — | 9 | ||||
| Class B | 1 | — | 1 | ||||
| Additional paid in capital | — | 3,751 | 3,751 | ||||
| Retained earnings | 4,149 | 1,874 | 6,023 | ||||
| Accumulated other comprehensive (loss) | (22 | ) | (116 | ) | (138 | ) | |
| Total stockholders’ equity | 4,477 | 6,036 | 10,513 | ||||
| Total liabilities and stockholders’ equity | $ | 55,175 | 54,704 | 109,879 | |||
| (1) The balance sheet as of June 30, 2021 reflects the historical balance sheets of BancShares and CIT on a combined basis to facilitate more meaningful comparisons to historical periods prior to the CIT Merger. The table above reconciles BancShares’ historical balance sheet (GAAP) to the combined balance sheet (non-GAAP). The combined historical information is presented as reported by each company without adjustment for the acquisition method of accounting and is intended for comparative purposes only. Such combined historical information is not necessarily indicative of the results that might have occurred had the CIT Merger taken place as of the beginning of the applicable period presented nor is it indicative of results to be expected in any future period. | |||||||
| Contact: | Deanna Hart | Barbara Thompson |
| Investor Relations | Corporate Communications | |
| 919-716-2137 | 919-716-2716 |
