First Citizens BancShares Reports Earnings For Second Quarter 2021

Raleigh, North Carolina, UNITED STATES


RALEIGH, N.C., Aug. 03, 2021 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (“BancShares”) (Nasdaq: FCNCA) reported another quarter of strong earnings for the second quarter of 2021. Key results for the quarter ended June 30, 2021, are presented below:

SECOND QUARTER RESULTS
              
Q2 2021Q2 2020 Q2 2021Q2 2020 Q2 2021Q2 2020 Q2 2021Q2 2020 Q2 2021Q2 2020
Net income (in millions) Net income per share Net interest margin Return on average assets Return on average equity
$152.8$153.8 $15.09$14.74 2.68%3.14% 1.13%1.36% 14.64%16.43%
              
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
$300.1$211.0 $29.63$20.04 2.74%3.33% 1.14%0.98% 14.67%11.40%


SECOND QUARTER HIGHLIGHTS
   
Net income Net income was $152.8 million for the second quarter of 2021, a decrease of $1.0 million, or by 0.6% compared to the same quarter in 2020. Net income per common share was $15.09 for the second quarter of 2021, compared to $14.74 per share for the same quarter in 2020.
   
Return on average assets and equity Return on average assets for the second quarter of 2021 was 1.13%, down from 1.36% for the comparable quarter in 2020. Return on average equity for the second quarter of 2021 was 14.64%, down from 16.43% for the comparable quarter in 2020.
   
Net interest income and net interest margin  Net interest income was $346.4 million for the second quarter of 2021, an increase of $9.0 million, or by 2.7% compared to the same quarter in 2020. The taxable-equivalent net interest margin (“NIM”) was 2.68% for the second quarter of 2021, down 46 basis points from 3.14% for the comparable quarter in 2020.
   
Provision for credit losses The provision for credit losses was a benefit of $19.6 million during the second quarter of 2021, compared to a $20.6 million expense during the same quarter in 2020. The allowance for credit losses (“ACL”) was $189.1 million at June 30, 2021, compared to $224.3 million at December 31, 2020, representing 0.58% and 0.68% of loans, respectively.
   
Operating performance Noninterest income was $134.2 million for the second quarter of 2021, a decrease of $31.3 million, or by 18.9% compared to the same quarter in 2020. Noninterest expense was $301.6 million for the second quarter of 2021, an increase of $9.9 million, or by 3.4% compared to the same quarter in 2020.
   
Loans and credit quality Total loans declined to $32.7 billion, a decrease of $102.3 million, or by 0.6% on an annualized basis since December 31, 2020. Excluding loans originated under the Small Business Administration Paycheck Protection Program (“SBA-PPP”), total loans increased $604.7 million, or by 3.7% on an annualized basis since December 31, 2020. The net charge-off ratio was 0.02% for the second quarter of 2021 compared to 0.09% for the same quarter in 2020.
   
Deposits Total deposits grew to $48.4 billion, an increase of $5.0 billion, or by 23.1% on an annualized basis since December 31, 2020 driven by organic growth and the effects of government stimulus.
   
Capital  BancShares remained well capitalized with a total risk-based capital ratio of 14.2%, a Tier 1 risk-based capital ratio of 12.1%, a Common Equity Tier 1 ratio of 11.1% 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”). Completion of the proposed merger remains subject to approval from the Board of Governors of the Federal Reserve System and closing is expected in the third quarter, subject to such approval and the satisfaction or waiver of other customary closing conditions.

NET INTEREST INCOME

Net interest income was $346.4 million for the second quarter of 2021, an increase of $9.0 million, or by 2.7% compared to the same quarter in 2020. This was primarily due to lower rates paid on interest-bearing deposits, an increase in interest and fee income on SBA-PPP loans, and organic loan growth, partially offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $27.2 million in interest and fee income for the second quarter of 2021 compared to $19.0 million for the same quarter in 2020. Net interest income increased $6.7 million, or by 2.0% compared to the linked quarter primarily due to higher investment portfolio balance and yield. The taxable-equivalent NIM was 2.68% during the second quarter of 2021, a decrease of 46 basis points from 3.14% for the comparable quarter 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 the yield on SBA-PPP loans. The taxable-equivalent NIM declined 12 basis points from 2.80% for the linked quarter primarily due to changes in earning asset mix.

Net interest income was $686.0 million for the six months ended June 30, 2021, an increase of $10.3 million, or by 1.5% compared to the same period in 2020. This was primarily due to lower rates paid on interest-bearing deposits, an increase in interest and fee income on SBA-PPP loans, and organic loan growth, partially offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $58.1 million in interest and fee income for the six months ended June 30, 2021, compared to $19.0 million for the same period in 2020. The taxable-equivalent NIM was 2.74% for the six months ended June 30, 2021, a decrease of 59 basis points from 3.33% 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 the yield on SBA-PPP loans.

PROVISION FOR CREDIT LOSSES

Provision for credit losses was a benefit of $19.6 million for the second quarter of 2021 compared to $20.6 million in expense for the same quarter in 2020. The second quarter of 2021 was favorably impacted by $21.6 million in reserve release driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. The comparable quarter in 2020 included $14.6 million in reserve build related to uncertainties surrounding COVID-19. Total net charge-offs for the second quarter of 2021 were $2.0 million, a decrease from $7.4 million for the comparable quarter in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.02% for the second quarter of 2021 compared to 0.09% for the same quarter in 2020. Excluding the impact of SBA-PPP loans on average loan balances, the net charge-off ratio was 0.03% for the second quarter of 2021 compared to 0.10% for the same quarter in 2020.

Provision for credit losses was a benefit of $30.6 million for the six months ended June 30, 2021, compared to $48.9 million in expense for the same period in 2020. The six months ended June 30, 2021, was favorably impacted by $35.2 million in reserve release driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. The comparable period in 2020 included $36.1 million in reserve build related to uncertainties surrounding COVID-19. Total net charge-offs for the six months ended June 30, 2021, were $4.6 million, a decrease from $14.9 million for the comparable period in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.03% for the six months ended June 30, 2021, compared to 0.10% 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 six months ended June 30, 2021 and 2020.

NONINTEREST INCOME

Noninterest income was $134.2 million for the second quarter of 2021, a decrease of $31.3 million, or by 18.9% compared to $165.4 million for the same quarter in 2020. The primary driver of the decrease was a $52.9 million decline in fair market value adjustments on marketable equity securities. Fair market value adjustments on marketable equity securities were heightened in the second quarter of 2020 as BancShares built up its equity portfolio when the market contracted. As the market started to improve in the second quarter of 2020, BancShares sold a large portion of it to realize the gains. Additionally, there was a $3.9 million decrease in mortgage income due to a decline in gain on sale driven by interest rate movements. These decreases were partially offset by a $9.4 million increase in wealth management services due to increases in annuity fees, assets under management, and advisory and transaction fees, a $4.9 million increase in cardholder services income, net, a $4.4 million increase in service charges on deposit accounts, and a $3.2 million increase in merchant services income, net. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $106.7 million for the second quarter of 2021, an increase of $19.6 million, or by 22.5% compared to $87.1 million for the same quarter in 2020.

Noninterest income was $270.8 million for the six months ended June 30, 2021, an increase of $41.4 million, or by 18.0% compared to $229.4 million for the same period in 2020. The primary drivers of the increase were a $15.2 million increase in wealth management services due to increases in annuity fees, assets under management, and advisory and transaction fees, a $14.5 million increase in fair market value adjustments on marketable equity securities, a $6.7 million increase in cardholder services income, net, and a $6.2 million increase in merchant services income, net, and a $3.9 million increase in mortgage income. These increases were partially offset by an $8.5 million decrease 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 $218.1 million for the six months ended June 30, 2021, an increase of $35.4 million, or by 19.4% compared to $182.7 million for the same period in 2020.

NONINTEREST EXPENSE

Noninterest expense was $301.6 million for the second quarter of 2021, an increase of $9.9 million, or by 3.4% compared to the same quarter in 2020. The primary drivers of the increase were a $7.0 million increase in salaries and wages due to an increase in payroll incentives and a $4.9 million increase in employee benefits due to higher health insurance claims.

Noninterest expense was $597.5 million for the six months ended June 30, 2021, an increase of $5.9 million, or by 1.0% compared to the same period in 2020. The primary drivers of the increase were a $9.6 million increase in salaries and wages due to an increase in payroll incentives, a $7.5 million increase in processing fees paid to third parties as we continue to make investments in our digital and technological capabilities, and a $4.0 million increase in merger-related expense associated with the pending merger with CIT. These increases were partially offset by a $14.4 million decrease in other expense due to a decrease in other pension expense and a $5.6 million decrease in collection and foreclosure-related expenses.

INCOME TAXES

The effective tax rate was 23.1% for the second quarter of 2021 compared to 19.3% for the same quarter in 2020. The effective tax rate was 23.0% for the six months ended June 30, 2021, compared to 20.3% for the same period in 2020.

The effective tax rates for the prior year were favorably impacted by BancShares’ decision to utilize an allowable alternative for computing its 2020 federal income tax liability. The allowable alternative provided BancShares the ability to use the federal income tax rate for certain deductible amounts related to FDIC-assisted acquisitions that was applicable when these amounts were originally subject to tax.

LOANS AND DEPOSITS

At June 30, 2021, loans totaled $32.7 billion, a decrease of $102.3 million, or by 0.6% on an annualized basis since December 31, 2020. Excluding SBA-PPP loans, total loans increased $604.7 million, or by 3.7% on an annualized basis since December 31, 2020.

At June 30, 2021, deposits totaled $48.4 billion, an increase of $5.0 billion, or by 23.1% on an annualized basis since December 31, 2020, driven by organic growth and the effects of government stimulus.

ALLOWANCE FOR CREDIT LOSSES (ACL)

The ACL was $189.1 million at June 30, 2021, compared to $224.3 million at December 31, 2020. The ACL as a percentage of total loans was 0.58% at June 30, 2021, compared to 0.68% at December 31, 2020. The reduction was primarily due to $35.2 million in reserve release for the six months ended June 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 0.61% as of June 30, 2021, compared to 0.74% as of December 31, 2020.

NONPERFORMING ASSETS

Nonperforming assets, including nonaccrual loans and other real estate owned, were $231.1 million, or 0.71% of total loans and other real estate owned at June 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 0.74% as of June 30, 2021, compared to 0.80% at December 31, 2020.

CAPITAL TRANSACTIONS

During the second quarter of 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 346,000 shares of Class A common stock for $127.0 million at an average cost per share of $367.03 for the comparable quarter in 2020. For the six months ended June 30, 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 695,390 shares of Class A common stock for $286.7 million at an average cost per share of $412.28 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 August 3, 2021, at 9 a.m. Eastern time.

To access this call, dial:

Domestic:    833-654-8257
International: 602-585-9869
Conference ID: 6592133

The second quarter 2021 earnings presentation and news release will be 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 16, 2021, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 6592133.

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. 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 June 30, 2021, BancShares had total assets of $55.2 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 required 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 announcement or 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)June 30, 2021 December 31, 2020
Assets   
Cash and due from banks$395,364   $362,048  
Overnight investments7,871,382   4,347,336  
Investment in marketable equity securities (cost of $84,297 at June 30, 2021 and $84,837 at December 31, 2020)118,540   91,680  
Investment securities available for sale (cost of $7,335,745 at June 30, 2021 and $6,911,965 at December 31, 2020)7,381,083   7,014,243  
Investment securities held to maturity (fair value of $3,377,085 at June 30, 2021 and $2,838,499 at December 31, 2020)3,394,604   2,816,982  
Loans held for sale107,768   124,837  
Loans and leases32,689,652   32,791,975  
Allowance for credit losses(189,094) (224,314)
Net loans and leases32,500,558   32,567,661  
Premises and equipment1,237,860   1,251,283  
Other real estate owned43,685   50,890  
Income earned not collected133,043   145,694  
Goodwill350,298   350,298  
Other intangible assets47,439   50,775  
Other assets1,593,694   783,953  
Total assets$55,175,318   $49,957,680  
Liabilities   
Deposits:   
Noninterest-bearing$20,974,111   $18,014,029  
Interest-bearing27,436,485   25,417,580  
Total deposits48,410,596   43,431,609  
Securities sold under customer repurchase agreements692,604   641,487  
Federal Home Loan Bank borrowings646,667   655,175  
Subordinated debt497,290   504,518  
Other borrowings80,531   88,470  
FDIC shared-loss payable—   15,601  
Other liabilities371,140   391,552  
Total liabilities50,698,828   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 June 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 June 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 June 30, 2021 and December 31, 2020; $1,000 per share liquidity preference)339,937   339,937  
Retained earnings4,148,857   3,867,252  
Accumulated other comprehensive (loss) income(22,120) 12,263  
Total shareholders’ equity4,476,490   4,229,268  
Total liabilities and shareholders’ equity$55,175,318   $49,957,680  
        

CONSOLIDATED STATEMENTS OF INCOME

 Three months ended Six months ended
 June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share data, unaudited)2021 2021 2020 2021 2020
Interest income         
Loans and leases$324,288  $323,023  $326,099  $647,311  $651,647 
Investment securities interest and dividend income35,432  30,852  36,605  66,284  76,098 
Overnight investments2,105  1,448  553  3,553  5,071 
Total interest income361,825  355,323  363,257  717,148  732,816 
Interest expense         
Deposits8,542  8,793  17,916  17,335  42,110 
Securities sold under customer repurchase agreements356  338  399  694  841 
Federal Home Loan Bank borrowings2,099  2,087  2,472  4,186  5,456 
Subordinated debt4,181  4,188  4,677  8,369  7,432 
Other borrowings254  265  399  519  1,183 
Total interest expense15,432  15,671  25,863  31,103  57,022 
Net interest income346,393  339,652  337,394  686,045  675,794 
Provision (credit) for credit losses(19,603) (10,974) 20,552  (30,577) 48,907 
Net interest income after provision for credit losses365,996  350,626  316,842  716,622  626,887 
Noninterest income         
Wealth management services31,753  32,198  22,371  63,951  48,783 
Service charges on deposit accounts21,883  21,536  17,522  43,419  43,935 
Cardholder services, net22,471  19,960  17,587  42,431  35,747 
Mortgage income5,929  12,991  9,811  18,920  15,035 
Merchant services, net8,532  8,917  5,363  17,449  11,251 
Other service charges and fees8,959  8,489  7,145  17,448  14,937 
Insurance commissions3,704  3,998  3,189  7,702  6,877 
ATM income1,571  1,482  1,395  3,053  2,817 
Marketable equity securities gains, net11,654  16,011  64,570  27,665  13,162 
Realized gains on investment securities available for sale, net15,830  9,207  13,752  25,037  33,547 
Other1,864  1,860  2,697  3,724  3,322 
Total noninterest income134,150  136,649  165,402  270,799  229,413 
Noninterest expense         
Salaries and wages153,643  147,830  146,633  301,473  291,888 
Employee benefits35,298  35,725  30,364  71,023  68,875 
Occupancy expense28,439  29,743  29,556  58,182  57,036 
Equipment expense28,902  29,803  28,774  58,705  56,624 
Processing fees paid to third parties14,427  13,673  10,186  28,100  20,558 
FDIC insurance expense3,382  3,218  3,731  6,600  7,197 
Collection and foreclosure-related expenses173  2,198  3,949  2,371  8,003 
Merger-related expenses5,769  6,819  4,369  12,588  8,601 
Other31,545  26,917  34,117  58,462  72,868 
Total noninterest expense301,578  295,926  291,679  597,504  591,650 
Income before income taxes198,568  191,349  190,565  389,917  264,650 
Income taxes45,780  44,033  36,779  89,813  53,695 
Net income$152,788  $147,316  $153,786  $300,104  $210,955 
Preferred stock dividends4,636  4,636  4,790  9,272  4,790 
Net income available to common shareholders$148,152  $142,680  $148,996  $290,832  $206,165 
Weighted average common shares outstanding9,816,405  9,816,405  10,105,520  9,816,405  10,289,320 
Earnings per common share$15.09  $14.53  $14.74  $29.63  $20.04 
Dividends declared per common share0.47  0.47  0.40  0.94  0.80 
               

SELECTED QUARTERLY RATIOS

 Three months ended
June 30, 2021 March 31, 2021 June 30, 2020
SELECTED RATIOS     
Book value per share at period-end$421.39  $405.59  $367.57 
Annualized return on average assets1.13% 1.16% 1.36%
Annualized return on average equity14.64  14.70  16.43 
Total risk-based capital ratio14.2  14.1  13.6 
Tier 1 risk-based capital ratio12.1  12.0  11.4 
Common equity Tier 1 ratio11.1  11.0  10.3 
Tier 1 leverage capital ratio7.7  7.8  8.1 
 

ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY DISCLOSURES

 Three months ended
(Dollars in thousands, unaudited)June 30, 2021 March 31, 2021 June 30, 2020
ALLOWANCE FOR CREDIT LOSSES (1)  
ACL at beginning of period$210,651  $224,314  $209,259 
Provision for credit losses(19,603) (10,974) 20,552 
Net charge-offs of loans and leases:     
Charge-offs(7,528) (8,563) (12,064)
Recoveries5,574  5,874  4,703 
Net charge-offs of loans and leases(1,954) (2,689) (7,361)
ACL at end of period$189,094  $210,651  $222,450 
ACL at end of period allocated to:     
PCD$18,740  $22,935  $26,928 
Non-PCD170,354  187,716  195,522 
ACL at end of period$189,094  $210,651  $222,450 
Reserve for unfunded commitments$11,103  $11,571  $13,685 
SELECTED LOAN DATA     
Average loans and leases:     
PCD$414,183  $454,521  $546,998 
Non-PCD32,628,109  32,515,793  30,992,001 
Loans and leases at period-end:     
PCD396,506  432,773  530,651 
Non-PCD32,293,146  32,748,078  31,887,774 
RISK ELEMENTS     
Nonaccrual loans and leases$187,464  $194,534  $197,791 
Other real estate owned43,685  48,512  53,850 
Total nonperforming assets$231,149  $243,046  $251,641 
Accruing loans and leases 90 days or more past due$3,776  $7,377  $3,796 
RATIOS     
Net charge-offs (annualized) to average loans and leases0.02% 0.03% 0.09%
ACL to total loans and leases(2):     
PCD4.73  5.30  5.07 
Non-PCD0.53  0.57  0.61 
Total0.58  0.63  0.69 
Ratio of total nonperforming assets to total loans, leases and other real estate owned0.71  0.73  0.77 

(1) BancShares recorded no ACL on investment securities as of June 30, 2021, December 31, 2020, or June 30, 2020.

(2) Loans originated in relation to the SBA-PPP do not have a recorded ACL. As of June 30, 2021, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.56% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.61%. 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
 June 30, 2021 March 31, 2021 June 30, 2020
 Average    Yield/ Average    Yield/ Average   Yield/
(Dollars in thousands, unaudited)Balance Interest  Rate (2) Balance Interest  Rate (2) Balance Interest Rate (2)
INTEREST-EARNING ASSETS                 
Loans and leases (1)$33,166,049  $324,891  3.89% $33,086,656  $323,602  3.92% $31,635,958  $326,618  4.10%
Investment securities:                 
U.S. Treasury      383,300  171  0.18  206,575  679  1.32 
Government agency839,614  1,966  0.94  791,293  1,900  0.96  657,405  1,428  0.87 
Mortgage-backed securities8,968,779  25,273  1.13  7,882,679  20,607  1.05  7,555,947  28,532  1.51 
Corporate bonds612,516  7,806  5.10  602,883  7,742  5.14  299,250  3,782  5.06 
Other investments113,439  426  1.51  97,495  472  1.96  209,290  2,236  4.30 
Total investment securities10,534,348  35,471  1.35  9,757,650  30,892  1.27  8,928,467  36,657  1.64 
Overnight investments7,819,287  2,105  0.11  5,870,973  1,448  0.10  2,231,356  553  0.10 
Total interest-earning assets$51,519,684  $362,467  2.80  $48,715,279  $355,942  2.93  $42,795,781  $363,828  3.38 
Cash and due from banks364,303      333,069      404,517     
Premises and equipment1,242,700      1,251,542      1,260,566     
Allowance for credit losses(211,913)     (224,009)     (209,973)    
Other real estate owned46,074      48,590      55,554     
Other assets1,438,483      1,285,163      1,247,057     
Total assets$54,399,331      $51,409,634      $45,553,502     
INTEREST-BEARING LIABILITIES                 
Interest-bearing deposits:                 
Checking with interest$10,952,753  $1,504  0.06% $10,746,225  $1,409  0.05% $8,562,145  $1,310  0.06%
Savings3,796,686  326  0.03  3,461,780  299  0.04  2,846,557  312  0.04 
Money market accounts9,581,775  2,634  0.11  9,008,391  2,508  0.11  7,618,883  6,519  0.34 
Time deposits2,672,900  4,078  0.61  2,805,317  4,577  0.66  3,398,979  9,775  1.16 
Total interest-bearing deposits27,004,114  8,542  0.13  26,021,713  8,793  0.14  22,426,564  17,916  0.32 
Securities sold under customer repurchase agreements677,451  356  0.21  641,236  338  0.21  659,244  399  0.24 
Other short-term borrowings            45,549  248  2.16 
Long-term borrowings1,227,755  6,534  2.12  1,235,576  6,540  2.12  1,275,928  7,300  2.26 
Total interest-bearing liabilities28,909,320  $15,432  0.21  27,898,525  $15,671  0.23  24,407,285  $25,863  0.42 
Demand deposits20,746,989      18,836,485      16,719,851     
Other liabilities344,849      399,420      438,141     
Shareholders' equity4,398,173      4,275,204      3,988,225     
Total liabilities and shareholders' equity$54,399,331      $51,409,634      $45,553,502     
Interest rate spread    2.59%     2.70%     2.96%
Net interest income and net yield on interest-earning assets  $347,035  2.68%   $340,271  2.80%   $337,965  3.14%
                           

(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 June 30, 2021 and March 31, 2021, and 3.4% for the three months ended June 30, 2020. The taxable-equivalent adjustment was $642 thousand, $619 thousand, and $571 thousand for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

Contact:   Barbara Thompson
Corporate Communications
919-716-2716
                  Deanna Hart
Investor Relations
919-716-2137