EX-99.1 2 earningsrelease-q32021.htm EX-99.1 Document
Exhibit 99.1
fcbslogo2014a01a01a13a.jpg
NEWS RELEASE
For Immediate ReleaseContact:Barbara ThompsonDeanna Hart
October 27, 2021Corporate CommunicationsInvestor Relations
919-716-2716919-716-2137

FIRST CITIZENS BANCSHARES REPORTS EARNINGS FOR THIRD QUARTER 2021
RALEIGH, N.C. -- First Citizens BancShares, Inc. (“BancShares”) (Nasdaq: FCNCA) reported earnings for the third quarter of 2021. Key results for the quarter ended September 30, 2021, are presented below:
THIRD QUARTER RESULTS
Q3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020Q3 2021Q3 2020
Net income (in millions)Net income per shareNet interest marginReturn on average assets Return on average equity
$124.1$142.7$12.17$14.032.61%3.06%0.88%1.18%11.29%14.93%
YEAR-TO-DATE (“YTD”) RESULTS
2021202020212020202120202021202020212020
Net income (in millions)Net income per shareNet interest marginReturn on average assets Return on average equity
$424.2$353.6$41.79$33.962.69%3.23%1.05%1.05%13.50%12.59%
THIRD QUARTER HIGHLIGHTS
Net income
Net income was $124.1 million for the third quarter of 2021, a decrease of $18.6 million, or by 13.0% compared to the same quarter in 2020. Net income per common share was $12.17 for the third quarter of 2021, compared to $14.03 per share for the same quarter in 2020.
Return on average assets and equity
Return on average assets for the third quarter of 2021 was 0.88%, down from 1.18% for the comparable quarter in 2020. Return on average equity for the third quarter of 2021 was 11.29%, down from 14.93% for the comparable quarter in 2020.
Net interest income and net interest margin
Net interest income was $346.9 million for the third quarter of 2021, a decrease of $6.8 million, or by 1.9% compared to the same quarter in 2020 but was relatively stable compared to the second quarter of 2021. The taxable-equivalent net interest margin (“NIM”) was 2.61% for the third quarter of 2021, down 45 basis points from 3.06% for the comparable quarter in 2020 and down 7 basis points from 2.68% in the second quarter of 2021.
Provision for credit losses
The provision for credit losses was a net benefit of $1.1 million during the third quarter of 2021, compared to a $4.0 million expense during the same quarter in 2020. The allowance for credit losses (“ACL”) was $183.2 million at September 30, 2021, compared to $224.3 million at December 31, 2020, representing 0.56% and 0.68% of loans, respectively.
Operating performance
Noninterest income was $122.9 million for the third quarter of 2021, an increase of $2.4 million, or by 2.0% compared to the same quarter in 2020. Noninterest expense was $312.8 million for the third quarter of 2021, an increase of $21.2 million, or by 7.3% compared to the same quarter in 2020.
Loans and credit quality
Total loans were $32.5 billion, a decrease of $275.8 million, or by 1.1% on an annualized basis since December 31, 2020. Excluding loans originated under the Small Business Administration Paycheck Protection Program (“SBA-PPP”), total loans increased $1.0 billion, or by 4.6% on an annualized basis since December 31, 2020. Total loans decreased $173.5 million, or by 2.1% on an annualized basis compared to June 30, 2021. Excluding SBA-PPP loans, total loans increased $437.4 million, or by 5.6% in the third quarter of 2021. The net charge-off ratio was 0.06% for the third quarter of 2021 compared to 0.03% for the same quarter in 2020.
Deposits
Total deposits grew to $50.1 billion, an increase of $6.6 billion, or by 20.4% on an annualized basis since December 31, 2020, driven by organic growth. Deposits increased $1.7 billion, or by 13.6% on an annualized basis compared to June 30, 2021.
Capital BancShares remained well-capitalized with a total risk-based capital ratio of 14.3%, a Tier 1 risk-based capital ratio of 12.3%, a Common Equity Tier 1 ratio of 11.3% and a Tier 1 leverage ratio of 7.7%.



MERGER WITH CIT GROUP INC.
On October 15, 2020, BancShares entered into a definitive merger agreement with CIT Group Inc. (“CIT”) through which the companies plan to combine in an all-stock merger. The transaction has been approved by the shareholders of both companies and has received regulatory approval from the North Carolina Commissioner of Banks and the Federal Deposit Insurance Corporation (“FDIC”).
On September 30, 2021, the parties entered into an amendment to the merger agreement pursuant to which the parties mutually agreed to extend until March 1, 2022, the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed. Completion of the proposed merger remains subject to approval from the Board of Governors of the Federal Reserve System and both parties are committed to continuing to seek such approval. The parties have responded to all questions issued by the Staff of the Federal Reserve Board. The parties have been informed that the application is presently at the Governor level, but the Board of Governors has not provided a time frame for its decision on the application. Closing is expected to occur as soon as practicable following receipt of such approval and the satisfaction or waiver of other customary closing conditions.
NET INTEREST INCOME & NET INTEREST MARGIN
Net interest income was $346.9 million for the third quarter of 2021, a decrease of $6.8 million, or by 1.9% compared to the same quarter in 2020. This was primarily due to a decline in the yield on interest-earning assets and a decrease in interest and fee income on SBA-PPP loans, partially offset by organic loan growth, higher investment balances, and lower rates on interest-bearing deposits. SBA-PPP loans contributed $20.0 million in interest and fee income for the third quarter of 2021 compared to $28.9 million for the same quarter in 2020. Net interest income increased $0.5 million compared to the linked quarter due primarily to higher investment and overnight yields and balances, organic loan growth and lower interest expense on deposits. This increase was largely offset by a decline in SBA-PPP interest and fee income and lower loan yields. SBA-PPP loans contributed $27.2 million in the second quarter of 2021.
The taxable-equivalent NIM was 2.61% during the third quarter of 2021, a decrease of 45 basis points from 3.06% for the comparable quarter in 2020. The margin decline was primarily due to changes in earning asset mix driven by excess liquidity and higher balances in overnight investments, and a decline in the yield on loans, partially offset by lower rates paid on interest-bearing deposits and increased income on SBA-PPP loans. The taxable-equivalent NIM declined 7 basis points from 2.68% for the linked quarter primarily due to changes in earning asset mix partially offset by higher investment yields and lower rates paid on interest-bearing deposits.
Net interest income was $1.03 billion for the nine months ended September 30, 2021, an increase of $3.5 million, or by 0.3% compared to the same period in 2020. This increase was primarily due to organic loan growth, an increase in interest and fee income on SBA-PPP loans and lower rates paid on interest-bearing deposits. These increases were largely offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $78.1 million in interest and fee income for the nine months ended September 30, 2021, compared to $47.9 million for the same period in 2020.
The taxable-equivalent NIM was 2.69% for the nine months ended September 30, 2021, a decrease of 54 basis points from 3.23% for the comparable period in 2020. The margin decline was primarily due to changes in earning asset mix and a decline in the yield on interest-earning assets, partially offset by lower rates paid on interest-bearing deposits and increased income from SBA-PPP loans.


PROVISION FOR CREDIT LOSSES
Provision for credit losses was a net benefit of $1.1 million for the third quarter of 2021 compared to $4.0 million in expense for the same quarter in 2020. The third quarter of 2021 was favorably impacted by a $5.9 million reserve release driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors. The comparable quarter in 2020 included a $1.5 million reserve build due to continued uncertainties surrounding COVID-19 and net loan growth. Total net charge-offs for the third quarter of 2021 were $4.8 million, an increase from $2.6 million for the comparable quarter in 2020 due to a higher volume of charge-offs and lower recoveries. The net charge-off ratio was 0.06% for the third quarter of 2021 compared to 0.03% for the same quarter in 2020. The impact of SBA-PPP loans on average loan balances did not affect the net charge-off ratio in either three-month period.
Provision for credit losses was a benefit of $31.7 million for the nine months ended September 30, 2021, compared to $52.9 million in expense for the same period in 2020. Provision for credit losses for the nine months ended September 30, 2021 was favorably impacted by a $41.1 million reserve release driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors. The comparable period in 2020 included a $36.1 million reserve build related to uncertainties surrounding COVID-19. Net charge-offs for the nine months ended September 30, 2021 were $9.4 million, a decrease from $17.4 million for the comparable period in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.04% for the nine months ended September 30, 2021 compared to 0.07% for the same period in 2020. The impact of SBA-PPP loans on average loan balances did not have an impact on the net charge-off ratio for the nine months ended September 30, 2021. Excluding the impact of SBA-PPP loans on average loan balances, the net charge-off ratio was 0.08% for the nine months ended September 30, 2020.
NONINTEREST INCOME
Noninterest income was $122.9 million for the third quarter of 2021, an increase of $2.4 million, or by 2.0% compared to $120.6 million for the same quarter in 2020. Contributing to the increase was a $6.1 million favorable change in fair market value adjustments on marketable equity securities. Other primary drivers of the increase included a $5.6 million increase in wealth management services due to growth in assets under management resulting in higher advisory and transaction fees, a $4.0 million increase in service charges on deposit accounts, a $3.1 million increase in cardholder services income, net, and a $1.6 million increase in merchant services income, net. These increases were partially offset by a $13.3 million reduction in realized gains on available for sale securities as well as a $7.0 million decline in mortgage income due to reductions in gain on sale margins and production volume driven by higher mortgage rates and increased competition. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $111.5 million for the third quarter of 2021, an increase of $9.7 million, or by 9.5% compared to $101.8 million for the same quarter in 2020.
Noninterest income was $393.7 million for the nine months ended September 30, 2021, an increase of $43.8 million, or by 12.5% compared to $350.0 million for the same period in 2020. The primary drivers of the increase were a $20.7 million increase in wealth management services due to due to growth in assets under management resulting in higher advisory and transaction fees, a $20.6 million favorable change in fair market value adjustments on marketable equity securities, a $9.8 million increase in cardholder services income, net, and a $7.8 million increase in merchant services income, net. These increases were partially offset by a $21.9 million reduction in realized gains on available for sale securities. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $329.6 million for the nine months ended September 30, 2021, an increase of $45.0 million, or by 15.8% compared to $284.6 million for the same period in 2020.


NONINTEREST EXPENSE
Noninterest expense was $312.8 million for the third quarter of 2021, an increase of $21.2 million, or by 7.3% compared to the same quarter in 2020. The primary driver of the increase was a $13.7 million increase in salaries and wages driven by annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel costs. Additionally contributing to the increase was a $3.7 million increase in third-party service fees driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes, as well as a $3.5 million increase in merger expense associated with the pending merger with CIT.
Noninterest expense was $910.3 million for the nine months ended September 30, 2021, an increase of $27.0 million, or by 3.1% compared to the same period in 2020. The most significant driver of the increase was a $23.2 million increase in salaries and wages due primarily to annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel costs. Also contributing to the increase was an $11.2 million increase in processing fees paid to third parties driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes, and a $7.5 million increase in merger-related expense associated with the pending merger with CIT. These increases were partially offset by a $16.5 million decrease in other expense due to a decrease in other pension expense and a release in the reserve for unfunded commitments, as well as a $7.0 million decrease in collection and foreclosure-related expenses.
INCOME TAXES
Income tax expense totaled $34.1 million and $35.8 million for the third quarter of 2021 and 2020, respectively, representing effective tax rates of 21.5% and 20.1% for the respective periods.
Income tax expense totaled $123.9 million and $89.5 million for the first nine months of 2021 and 2020, respectively, representing effective tax rates of 22.6% and 20.2% for the respective periods.
The effective tax rates during 2020 were favorably impacted by BancShares’ decision to utilize an allowable alternative for computing its federal income tax liability. The allowable alternative provided BancShares the ability to use the federal income tax rate for certain current year deductible amounts related to prior year FDIC-assisted acquisitions that was applicable when these amounts were originally subjected to tax. Without this alternative, the effective tax rate is materially unchanged for the third quarter and first nine months of 2021 and the effective tax rate for the third quarter and first nine months of 2020 would have been approximately 22.0% and 22.6%, respectively.
LOANS AND DEPOSITS
At September 30, 2021, loans totaled $32.5 billion, a decrease of $275.8 million, or by 1.1% on an annualized basis since December 31, 2020. SBA-PPP loans totaled $1.0 billion as of September 30, 2021 compared to $2.4 billion as of December 31, 2021. Excluding SBA-PPP loans, total loans increased $1.0 billion, or by 4.6% on an annualized basis since December 31, 2020. Total loans decreased $173.5 million, or by 2.1% on an annualized basis compared to June 30, 2021. Excluding SBA-PPP loans, total loans increased $437.4 million, or by 5.6% in the third quarter of 2021.
At September 30, 2021, deposits totaled $50.1 billion, an increase of $6.6 billion, or by 20.4% on an annualized basis since December 31, 2020, driven by organic growth. Deposits increased $1.7 billion, or by 13.6% on an annualized basis compared to June 30, 2021.
ALLOWANCE FOR CREDIT LOSSES (ACL)
The ACL was $183.2 million at September 30, 2021, compared to $224.3 million at December 31, 2020, a decrease of $41.1 million. The ACL as a percentage of total loans and leases was 0.56% at September 30, 2021, compared to 0.68% at December 31, 2020. The reduction was primarily due to a $41.1 million reserve release for the nine months ended September 30, 2021, driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. Excluding SBA-PPP loans, which have no associated ACL, the ACL as a percentage of total loans was 0.58% at September 30, 2021, compared to 0.74% at December 31, 2020.




NONPERFORMING ASSETS
Nonperforming assets, including nonaccrual loans and other real estate owned, were $204.4 million, or 0.63% of total loans and other real estate owned at September 30, 2021, compared to $242.4 million or 0.74% at December 31, 2020. Excluding the impact of SBA-PPP loans on loan balances, the ratio of total nonperforming assets to total loans, leases and other real estate owned was 0.65% as of September 30, 2021, compared to 0.80% at December 31, 2020.
CAPITAL TRANSACTIONS
During the third quarter of 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 117,700 shares of Class A common stock for $47.1 million at an average cost per share of $399.83 for the comparable quarter in 2020. For the nine months ended September 30, 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 813,090 shares of Class A common stock for $333.8 million at an average cost per share of $410.48 for the comparable period in 2020. All Class A common stock repurchases completed in 2020 were consummated under previously approved authorizations. Following the expiration of our latest share repurchase authorization on July 31, 2020, share repurchase activity was suspended.
EARNINGS CALL DETAILS
First Citizens BancShares, Inc. will host a conference call to discuss the company's financial results on October 27, 2021, at 9 a.m. Eastern time.
To access this call, dial:
Domestic: 833-654-8257
International: 602-585-9869
Conference ID: 3942569

The third quarter 2021 earnings presentation and news release are available on the company’s website at www.firstcitizens.com/investor-relations.
After the conference call, you may access a replay of the call through November 10, 2021, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 3942569.
For investor inquiries, contact Deanna Hart, Investor Relations, at 919-716-2137.
ABOUT FIRST CITIZENS BANCSHARES
BancShares is the financial holding company for Raleigh, North Carolina-headquartered First Citizens Bank & Trust Company (“First Citizens Bank”). First Citizens Bank provides a broad range of financial services to individuals, businesses, professionals and the medical community through branch offices in 19 states, including digital banking, mobile banking, ATMs and telephone banking. As of September 30, 2021, BancShares had total assets of $56.9 billion.
For more information, visit First Citizens’ website at firstcitizens.com. First Citizens Bank. Forever First®.
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of BancShares. Words such as “anticipates,” “believes,” “estimates,” “expects,” “predicts,” “forecasts,” “intends,” “plans,” “projects,” “targets,” “designed,” “could,” “may,” “should,” “will,” “potential,” “continue” or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on BancShares’ current expectations and assumptions regarding BancShares’ business, the economy, and other future conditions.


Because forward-looking statements relate to future results and occurrences, they are subject to inherent risks, uncertainties, changes in circumstances and other risk factors that are difficult to predict. Many possible events or factors could affect BancShares’ future financial results and performance and could cause the actual results, performance or achievements of BancShares to differ materially from any anticipated results expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, the impacts of the global COVID-19 pandemic on BancShares’ business and customers, the financial success or changing conditions or strategies of BancShares’ customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel, the delay in closing (or failure to close) one or more of BancShares’ previously announced acquisition transaction(s), the failure to realize the anticipated benefits of BancShares’ previously announced acquisition transaction(s), and general competitive, economic, political, and market conditions, as well as risks related to the proposed transaction with CIT Group Inc (“CIT”) including, in addition to those described above and among others, (1) the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed transaction may not be realized or may take longer than anticipated to be realized, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the condition of the economy and competitive factors in areas where BancShares and CIT do business, (2) disruption to BancShares’ and CIT’s businesses as a result of the pendency of the proposed transaction and diversion of management’s attention from ongoing business operations and opportunities, (3) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement, (4) the risk that the integration of BancShares’ and CIT’s operations will be materially delayed or will be more costly or difficult than expected or that BancShares and CIT are otherwise unable to successfully integrate their businesses, (5) the outcome of any legal proceedings that may be or have been instituted against BancShares and/or CIT, (6) the failure to obtain remaining governmental approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction), (7) reputational risk and potential adverse reactions of BancShares’ and/or CIT’s customers, suppliers, employees or other business partners, including those resulting from the completion of the proposed transaction, (8) the failure of any of the closing conditions in the definitive merger agreement to be satisfied on a timely basis or at all, (9) delays in closing the proposed transaction, (10) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (11) the dilution caused by BancShares’ issuance of additional shares of its capital stock in connection with the proposed transaction, (12) other factors that may affect future results of BancShares and CIT including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms, and (13) the impact of the global COVID-19 pandemic on CIT’s business, the parties’ ability to complete the proposed transaction and/or any of the other foregoing risks.
Except to the extent required by applicable laws or regulations, BancShares disclaims any obligation to update forward-looking statements or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding BancShares and factors which could affect the forward-looking statements contained herein can be found in BancShares’ Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and its other filings with the Securities and Exchange Commission.


###


CONSOLIDATED BALANCE SHEETS

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


CONSOLIDATED STATEMENTS OF INCOME

Three months endedNine months ended
September 30,June 30,September 30,September 30,September 30,
(Dollars in thousands, except per share data, unaudited)20212021202020212020
Interest income
Loans and leases$319,214 $324,288 $336,382 $966,525 $988,029 
Investment securities interest and dividend income39,246 35,432 37,195 105,530 113,293 
Overnight investments3,395 2,105 757 6,948 5,828 
Total interest income361,855 361,825 374,334 1,079,003 1,107,150 
Interest expense
Deposits8,073 8,542 13,468 25,408 55,578 
Securities sold under customer repurchase agreements358 356 395 1,052 1,236 
Federal Home Loan Bank borrowings2,114 2,099 2,156 6,300 7,612 
Subordinated debt4,174 4,181 4,351 12,543 11,783 
Other borrowings249 254 305 768 1,488 
Total interest expense14,968 15,432 20,675 46,071 77,697 
Net interest income346,887 346,393 353,659 1,032,932 1,029,453 
Provision (credit) for credit losses(1,120)(19,603)4,042 (31,697)52,949 
Net interest income after provision for credit losses348,007 365,996 349,617 1,064,629 976,504 
Noninterest income
Wealth management services31,935 31,753 26,369 95,886 75,152 
Service charges on deposit accounts24,858 21,883 20,841 68,277 64,776 
Cardholder services, net22,879 22,471 19,756 65,310 55,503 
Other service charges and fees9,205 8,959 7,892 26,653 22,829 
Merchant services, net8,409 8,532 6,763 25,858 18,014 
Mortgage income6,106 5,929 13,106 25,026 28,141 
Insurance commissions4,000 3,704 3,576 11,702 10,453 
ATM income1,481 1,571 1,537 4,534 4,354 
Realized gains on investment securities available for sale, net8,082 15,830 21,425 33,119 54,972 
Marketable equity securities gains (losses), net3,350 11,654 (2,701)31,015 10,461 
Other2,639 1,864 2,008 6,363 5,330 
Total noninterest income122,944 134,150 120,572 393,743 349,985 
Noninterest expense
Salaries and wages160,947 153,643 147,297 462,420 439,185 
Employee benefits32,146 35,298 31,788 103,169 100,663 
Occupancy expense29,101 28,439 27,990 87,283 85,026 
Equipment expense30,229 28,902 29,430 88,934 86,054 
Processing fees paid to third parties15,602 14,427 11,927 43,702 32,485 
FDIC insurance expense3,661 3,382 2,167 10,261 9,364 
Collection and foreclosure-related expenses836 173 2,168 3,207 10,171 
Merger-related expenses7,013 5,769 3,507 19,601 12,108 
Other 33,283 31,545 35,388 91,745 108,256 
Total noninterest expense312,818 301,578 291,662 910,322 883,312 
Income before income taxes158,133 198,568 178,527 548,050 443,177 
Income taxes34,060 45,780 35,843 123,873 89,538 
Net income$124,073 $152,788 $142,684 $424,177 $353,639 
Preferred stock dividends4,636 4,636 4,636 13,908 9,426 
Net income available to common shareholders$119,437 $148,152 $138,048 $410,269 $344,213 
Weighted average common shares outstanding9,816,405 9,816,405 9,836,629 9,816,405 10,137,321 
Earnings per common share$12.17 $15.09 $14.03 $41.79 $33.96 
Dividends declared per common share0.47 0.47 0.40 1.41 1.20 


SELECTED QUARTERLY RATIOS

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

Three months ended
(Dollars in thousands, unaudited)September 30, 2021June 30, 2021September 30, 2020
ALLOWANCE FOR CREDIT LOSSES (1)
ACL at beginning of period$189,094 $210,651 $222,450 
Provision for credit losses(1,120)(19,603)4,042 
Net charge-offs of loans and leases:
Charge-offs(11,073)(7,528)(8,932)
Recoveries6,293 5,574 6,376 
Net charge-offs of loans and leases(4,780)(1,954)(2,556)
ACL at end of period$183,194 $189,094 $223,936 
ACL at end of period allocated to:
PCD$18,438 $18,740 $25,127 
Non-PCD164,756 170,354 198,809 
ACL at end of period$183,194 $189,094 $223,936 
Reserve for unfunded commitments$11,472 $11,103 $13,971 
SELECTED LOAN DATA
Average loans and leases:
PCD$384,673 $414,183 $512,559 
Non-PCD32,222,960 32,628,109 32,065,084 
Loans and leases at period-end:
PCD373,255 396,506 495,878 
Non-PCD32,142,934 32,293,146 32,349,266 
RISK ELEMENTS
Nonaccrual loans and leases$163,775 $187,464 $186,454 
Other real estate owned40,649 43,685 52,789 
Total nonperforming assets$204,424 $231,149 $239,243 
Accruing loans and leases 90 days or more past due$5,614 $3,776 $3,587 
RATIOS
Net charge-offs (annualized) to average loans and leases0.06 %0.02 %0.03 %
ACL to total loans and leases(2):
PCD4.94 4.73 5.07 
Non-PCD0.51 0.53 0.61 
Total0.56 0.58 0.68 
Ratio of total nonperforming assets to total loans, leases and other real estate owned0.63 0.71 0.73 
(1) BancShares recorded no ACL on investment securities as of September 30, 2021, June 30, 2021, or September 30, 2020.
(2) Loans originated in relation to the SBA-PPP do not have a recorded ACL. As of September 30, 2021, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.53% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.58%. As of December 31, 2020, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.67% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.74%.


AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN

Three months ended
September 30, 2021June 30, 2021September 30, 2020
Average Yield/Average Yield/AverageYield/
(Dollars in thousands, unaudited)BalanceInterest
 Rate (2)
BalanceInterest
 Rate (2)
BalanceInterest
Rate (2)
INTEREST-EARNING ASSETS
Loans and leases (1)
$32,707,591 $319,738 3.85 %$33,166,049 $324,891 3.89 %$32,694,996 $336,934 4.06 %
Investment securities:
U.S. Treasury— — — — — — 695,419 497 0.28 
Government agency824,499 2,076 1.01 839,614 1,966 0.94 587,377 1,335 0.91 
Mortgage-backed securities9,164,180 29,056 1.27 8,968,779 25,273 1.13 8,047,247 28,236 1.40 
Corporate bonds597,386 7,610 5.10 612,516 7,806 5.10 489,602 6,433 5.26 
Other investments121,454 544 1.78 113,439 426 1.51 110,552 739 2.66 
Total investment securities10,707,519 39,286 1.47 10,534,348 35,471 1.35 9,930,197 37,240 1.50 
Overnight investments8,956,055 3,395 0.15 7,819,287 2,105 0.11 2,992,183 757 0.10 
Total interest-earning assets$52,371,165 $362,419 2.73 $51,519,684 $362,467 2.80 $45,617,376 $374,931 3.24 
Cash and due from banks364,593 364,303 349,079 
Premises and equipment1,239,111 1,242,700 1,261,864 
Allowance for credit losses(189,885)(211,913)(222,793)
Other real estate owned40,786 46,074 52,716 
Other assets2,096,588 1,438,483 1,203,913 
Total assets$55,922,358 $54,399,331 $48,262,155 
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Checking with interest$11,323,503 $1,350 0.05 %$10,952,753 $1,504 0.06 %$9,239,838 $1,369 0.06 %
Savings3,979,389 342 0.03 3,796,686 326 0.03 3,070,619 314 0.04 
Money market accounts9,866,327 2,357 0.09 9,581,775 2,634 0.11 8,108,832 3,634 0.18 
Time deposits2,599,006 4,024 0.61 2,672,900 4,078 0.61 3,205,850 8,151 1.01 
Total interest-bearing deposits27,768,225 8,073 0.12 27,004,114 8,542 0.13 23,625,139 13,468 0.23 
Securities sold under customer repurchase agreements672,114 358 0.21 677,451 356 0.21 710,237 395 0.22 
Other short-term borrowings— — — — — — — — — 
Long-term borrowings1,222,452 6,537 2.09 1,227,755 6,534 2.12 1,256,331 6,812 2.15 
Total interest-bearing liabilities29,662,791 $14,968 0.20 28,909,320 $15,432 0.21 25,591,707 $20,675 0.32 
Demand deposits21,338,862 20,746,989 18,280,705 
Other liabilities384,113 344,849 370,668 
Shareholders' equity4,536,592 4,398,173 4,019,075 
Total liabilities and shareholders' equity$55,922,358 $54,399,331 $48,262,155 
Interest rate spread2.53 %2.59 %2.92 %
Net interest income and net yield on interest-earning assets$347,451 2.61 %$347,035 2.68 %$354,256 3.06 %
(1) Loans and leases include PCD and non-PCD loans, nonaccrual loans and loans held for sale.
(2) Yields related to loans, leases and securities exempt from both federal and state income taxes, federal income taxes only, or state income taxes only are stated on a taxable-equivalent basis assuming statutory federal income tax rates of 21.0% for all periods presented, as well as state income tax rates of 3.3% for the three months ended September 30, 2021 and June 30, 2021, and 3.4% for the three months ended September 30, 2020. The taxable-equivalent adjustment was $564 thousand, $642 thousand, and $597 thousand for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively.