First Citizens Reports Earnings for Fourth Quarter 2012

First Citizens Reports Earnings for Fourth Quarter 2012

RALEIGH, N.C., March 1, 2013 (GLOBE NEWSWIRE) -- First Citizens BancShares
Inc. (Nasdaq:FCNCA) reports earnings for the quarter ended December 31, 2012,
of $21.7 million, compared to $30.5 million for the corresponding period of
2011, according to Frank B. Holding Jr., chairman of the board. Net income for
the fourth quarter of 2012 decreased $8.8 million, or 28.8 percent, from the
same quarter of 2011.

Per share income for the fourth quarter of 2012 totaled $2.15, compared to
$2.97 for the same period a year ago. First Citizens' current quarter results
generated an annualized return on average assets of 0.41 percent and an
annualized return on average equity of 4.43 percent, compared to respective
returns of 0.58 percent and 6.48 percent for the same period of 2011. Fourth
quarter 2012 earnings declined due to lower noninterest income resulting from
adjustments to the FDIC receivable, partially offset by higher net interest
income and lower provision for loan and lease losses.

For the year ended December 31, 2012, net income equaled $134.3 million, or
$13.11 per share, compared to $195.0 million, or $18.80 per share, during
2011. Net income as a percentage of average assets was 0.64 percent during
2012, compared to 0.92 percent during 2011. The return on average equity was
7.01 percent for 2012, compared to 10.77 percent for 2011. The $60.7 million,
or 31.1 percent decrease in 2012 net income was primarily due to 2011
acquisition gains that had an after-tax impact of $91.5 million or $8.79 per
share. No acquisition gains were recorded in 2012. Net income for 2012 was
also affected by a reduction in the provision for loan and lease losses on
covered loans, lower noninterest expense and higher net interest income.

The comparability of BancShares' results of operations for the fourth quarter
and year ending December 31, 2012, are affected by the FDIC-assisted
transactions. Acquisition gains, recorded at the date of the transaction,
result from the difference between the estimated fair values of acquired
assets and assumed liabilities. Various post-acquisition adjustments to the
carrying value of acquired assets may have a significant impact on net
interest income, provision for loan and lease losses and noninterest income.
Accretable fair value discounts recorded on acquired loans are recognized in
interest income over the estimated life of the loans, with accelerated
accretion recognized if repayments occur sooner than originally estimated.
When post-acquisition deterioration of credit quality is identified for
acquired loans, allowances are established through the provision for loan and
lease losses. When credit quality improves subsequent to the date of
acquisition, fair value discounts that were initially identified as
nonaccretable are reclassified as accretable and are recognized over the
remaining life of the loan, and the FDIC receivable is amortized over the
shorter of the loan life or the indemnification period. For loans and other
real estate (OREO) covered by FDIC loss share agreements, the net increase or
decrease in the estimated recoverable amount resulting from deterioration or
improvement is recognized as an adjustment to the FDIC receivable with an
offset to noninterest income.

HIGHLIGHTS

  *Fourth quarter net interest income totaled $262.9 million, up 8.5 percent
    from the fourth quarter of 2011. Net interest income for 2012 totaled
    $914.7 million, up 5.0 percent from 2011.
  *Average loans and leases, including those acquired in FDIC-assisted
    transactions, decreased $735.1 million, or 5.2 percent, from the fourth
    quarter of 2011.
  *Fourth quarter average interest-earning assets totaled $19.27 billion, up
    3.2 percent from the fourth quarter of 2011.
  *Average deposits, including those assumed in FDIC-assisted transactions,
    increased $303.9 million, or 1.7 percent, from the fourth quarter of 2011.
  *Average interest-bearing liabilities decreased $526.0 million, or 3.6
    percent, during the fourth quarter of 2012.
  *Fourth quarter 2012 and 2011 earnings were influenced by several
    significant items from FDIC-assisted transactions, including:

 -- a reduction of $8.1 million to the provision for loan and
lease losses for covered loans

 -- $113.2 million and $126.8 million, respectively, in interest
income from accretion of fair value discounts

 -- $43.8 million of charges to noninterest income in the fourth
quarter of 2012 as compared to $24.0 million of credits in the fourth quarter
of 2011 arising from adjustments to the FDIC receivable

  *Earnings in 2012 and 2011 included various items arising from
    FDIC-assisted transactions, including:

 -- a $73.6 million decline in the provision for loan and lease
losses for covered loans

 -- $306.6 million and $319.4 million, respectively, in interest
income from accretion of fair value discounts

 -- $101.6 million and $19.3 million, respectively in charges to
noninterest income arising from adjustments to the FDIC receivable

  *The 2012 provision for loan and lease losses on noncovered loans declined
    $15.8 million from 2011 and declined $16.3 million in the fourth quarter
    2012 compared to 2011. Net charge-offs on noncovered loans for 2012
    equaled $43.9 million, or 0.38 percent of average noncovered loans, down
    $9.6 million from 2011.
  *Excluding acquisition gains and the effect of post-acquisition adjustments
    from the FDIC-assisted transactions, noninterest income decreased 5.2
    percent during the fourth quarter of 2012 and 12.7 percent during 2012,
    when compared to the prior year.
  *Fourth quarter noninterest expenses declined $12.9 million, or 6.1
    percent. For 2012, noninterest expenses decreased $26.0 million, or 3.3
    percent. The declines in both periods were primarily due to reductions in
    foreclosure-related expenses, FDIC deposit insurance premiums, card
    loyalty program expense and external processing fees.

NET INTEREST INCOME

Fourth quarter net interest income increased $20.5 million, or 8.5 percent,
from the same period of 2011. Average interest-earning assets totaled $19.27
billion, an increase of $602.9 million, or 3.2 percent, in the fourth quarter
of 2012 due to increases in investment securities and overnight investments.
The taxable-equivalent net yield on interest-earning assets increased 27 basis
points when compared to the fourth quarter of 2011 primarily due to lower
funding costs.

Average loans for the fourth quarter of 2012 decreased $735.1 million, or 5.2
percent, since the fourth quarter of 2011, due to liquidation of acquired loan
balances and weak loan demand. Average investment securities grew $1.11
billion, or 27.4 percent, due primarily to liquidity resulting from loan
reductions.

Average interest-bearing liabilities decreased $526.0 million, or 3.6 percent,
during the fourth quarter of 2012, principally due to a significant reduction
in average time deposits. The rate on interest-bearing liabilities decreased
30 basis points from 0.81 percent during the fourth quarter of 2011 to 0.51
percent during the fourth quarter of 2012, as market interest rates remained
low and maturing time deposits repriced to current low rates.

Net interest income increased $43.7 million, or 5.0 percent, during 2012, due
to reduced deposit costs and a $150.2 million increase in interest-earning
assets. Average loans and leases declined $489.7 million, or 3.5 percent,
during 2012. Loan interest income included $306.6 million of discount
accretion during 2012, compared to $319.4 million during 2011. The
taxable-equivalent net yield on interest-earning assets increased 19 basis
points to 4.84 percent during 2012 versus 4.65 percent recorded during 2011.

Average interest-bearing liabilities decreased $746.9 million, or 5.0 percent,
due to a significant reduction in average time deposits and repayments of
long-term debt obligations.

PROVISION FOR LOAN AND LEASE LOSSES

The provision for loan and lease losses equaled $64.9 million during the
fourth quarter of 2012, a $24.4 million decrease from the same period of 2011,
due to lower post-acquisition deterioration of covered loans and reduced
provision for noncovered loans. Net charge-offs on noncovered loans during the
fourth quarter of 2012 equaled $9.5 million, down $7.5 million from the fourth
quarter of 2011, due primarily to higher losses on residential construction
loans in 2011. The annualized ratio of noncovered net charge-offs to average
noncovered loans and leases equaled 0.33 percent during the fourth quarter of
2012 versus 0.58 percent during the same period of 2011. Net charge-offs
resulting from post-acquisition deterioration of covered loans equaled $12.9
million and $56.2 million, respectively, during the fourth quarter of 2012 and
2011.

The provision for loan and lease losses decreased $89.4 million to $142.9
million for 2012, compared to $232.3 million for 2011, the result of lower net
charge-offs on noncovered loans and reduced post-acquisition deterioration of
acquired loans covered by loss share agreements. Net charge-offs of noncovered
loans for 2012 and 2011 totaled $43.9 million and $53.4 million, respectively.
The decrease in net charge-offs during 2012 resulted from lower losses on
revolving mortgage, consumer and construction loans. Net charge-offs of
noncovered loans represented 0.38 percent of average noncovered loans and
leases during 2012 compared to 0.46 percent during 2011. Net charge-offs of
covered loans equaled $50.1 million and $136.5 million during 2012 and 2011,
equal to 2.52 percent and 5.49 percent of average covered loans, respectively,
substantially all of which were partially reimbursable under the terms of the
respective loss share agreement.

NONINTEREST INCOME

Noninterest income decreased $72.0 million, or 68.4 percent, from the fourth
quarter of 2011 to the fourth quarter of 2012, primarily due to differences
between the two periods in the adjustments made to the FDIC receivable
resulting from post-acquisition changes in projected losses on covered loans.

Noninterest income totaled $189.3 million during 2012, a decrease of $275.1
million, or 59.2 percent, from 2011, due primarily to the 2011 acquisition
gains and an $82.3 million increase in the net charge to noninterest income
for adjustments to the FDIC receivable.

Cardholder and merchant services income decreased $15.4 million during 2012
resulting from the fourth quarter 2011 enactment of debit card interchange fee
limits mandated by the Dodd-Frank Act. Income from wealth management services
increased $2.3 million, or 4.1 percent, due to increased broker-dealer
revenue.

For 2012, mortgage income equaled $11.3 million compared to $12.2 million in
2011. The reduction in mortgage income during 2012 includes the impact of $3.6
million in reserves for estimated recourse obligations for residential
mortgage loans sold to various investors in prior years.

Fees from processing services increased $4.3 million, or 14.2 percent, during
2012 due to accrual adjustments and nonrecurring charges for special services.
Although fees from processing services increased during 2012, revenues derived
from this line of business will decline in subsequent periods due to client
bank attrition and our decision in early-2013 to sell nearly all processing
service relationships to another servicer.

Other noninterest income decreased $24.7 million during 2012, due to
amortization of the FDIC receivable during 2012 and $13.8 million in
recoveries of amounts charged off prior to acquisition and a $9.7million gain
on the redemption of trust preferred securities, both during 2011.

NONINTEREST EXPENSE

Noninterest expense equaled $198.7 million during the fourth quarter of 2012,
down $12.9 million, or 6.1 percent from 2011. Foreclosure-related expenses
decreased $10.7 million in the fourth quarter of 2012 compared to the fourth
quarter of 2011. Other expenses for the fourth quarter of 2012 declined $7.2
million when compared to the fourth quarter of 2011, due to lower FDIC
insurance expense and a decline in cardholder loyalty program expense.

Noninterest expense for 2012 amounted to $766.9 million, a $26.0 million, or
3.3 percent decrease from 2011. Employee benefits expense increased $6.3
million, or 8.7 percent during 2012, the result of unfavorable pension plan
assumption changes and higher 401(k) expense. Equipment expenses increased
$4.9 million, or 7.0 percent, during 2012. Cardholder and merchant processing
expense decreased $3.5 million, or 7.2 percent, during 2012, due to vendor
reductions connected with the Dodd-Frank imposed fee changes. Cardholder
rewards programs decreased $7.5 million, or 63.3 percent, compared to 2011,
due to the termination of a debit card rewards program and adjustments to
estimated redemption rates for credit card rewards programs.

FDIC deposit insurance expense declined $5.8 million, or 35.3 percent, during
2012 following a reduction of $6.7 million during 2011. The 2012 decrease is
the result of a new assessment formula adopted by the FDIC in 2011.
Foreclosure-related expenses decreased $5.5 million, or 11.9 percent, during
2012 almost all of which was attributable to activity arising from the
FDIC-assisted transactions.

NONPERFORMING ASSETS

Nonperforming assets as of December31, 2012 totaled $310.4 million, compared
to $553.8 million as of December31, 2011. Of the $310.4 million in
nonperforming assets as of December31, 2012, $177.1 million are covered by
FDIC loss share agreements while the remaining $133.4 million are not covered
by loss share agreements. The reduction in covered nonperforming assets from
previous periods was primarily caused by the 2012 deployment of the remaining
unconverted covered loans to an acquired loan accounting system, which
resulted in a reduction in nonaccrual loans for those loans that were
previously accounted for under the cost recovery method but are now accreting
yield. Nonperforming assets not covered by loss share agreements represent
1.15 percent of noncovered loans, leases and OREO as of December31, 2012,
compared to 0.89 percent as of December31, 2011. The $30.2 million increase
in nonperforming assets not covered by loss share agreements was primarily the
result of the 2012 decision to place collateral dependent loans in the process
of foreclosure on nonaccrual status even if the loan is adequately
collateralized.

CAPITAL

First Citizens BancShares remains well capitalized with a leverage capital
ratio of 9.22 percent as of December 31, 2012, down from 9.90 percent as of
December 31, 2011. Both the tier 1 and total risk-based capital ratios
decreased from December 31, 2011. The tier 1 risk-based and total risk-based
capital ratios were 14.27 percent and 15.95 percent as of December 31, 2012,
respectively. The reductions were due primarily to the 2012 redemption of $150
million of trust preferred securities and 2012 stock purchases.

ABOUT FIRST CITIZENS BANCSHARES

BancShares is the financial holding company for First Citizens Bank. First
Citizens Bank provides a broad range of financial services to individuals,
businesses, professionals and the medical community through a network of 414
branch offices, telephone banking, online banking and ATMs. As of December 31,
2012, BancShares had consolidated assets totaling $21.28 billion. For more
information, visit First Citizens' Web site at firstcitizens.com.

This news release may contain forward-looking statements. A discussion of
factors that could cause First Citizens' actual results to differ materially
from those expressed in such forward-looking statements is included in First
Citizens' filings with the SEC.

CONDENSED STATEMENTS OF INCOME
                                                              
                              Three Months Ended    Year Ended December 31
                               December 31
(thousands, except share data; 2012       2011       2012         2011
unaudited)
Interest income                $280,891 $272,176 $1,004,836 $1,015,159
Interest expense               17,943     29,758     90,148       144,192
Net interest income            262,948    242,418    914,688      870,967
Provision for loan and lease   64,880     89,253     142,885      232,277
losses
Net interest income after
provision for loan and lease   198,068    153,165    771,803      638,690
losses
Gains on acquisitions          —          —          —            150,417
Other noninterest income       33,219     105,238    189,300      313,949
Noninterest expense            198,728    211,583    766,933      792,925
Income before income taxes     32,559     46,820     194,170      310,131
Income taxes                   10,813     16,273     59,822       115,103
Net income                     $21,746  $30,547  $134,348   $195,028
Taxable-equivalent net         $263,635 $243,309 $917,664   $874,727
interest income
Net income per share           $2.15    $2.97    $13.11     $18.80
Cash dividends per share       0.30      0.30      1.20        1.20
Profitability Information                                      
(annualized)
Return on average assets       0.41%      0.58%      0.64%        0.92%
Return on average equity       4.43       6.48       7.01         10.77
Taxable-equivalent net yield   5.44       5.17       4.84         4.65
on interest-earning assets


CONDENSED BALANCE SHEETS
                                                               
                                                  December 31
(thousands, except share data; unaudited)          2012          2011
Assets                                                          
Cash and due from banks                            $639,730    $590,801
Investment securities                              5,227,570     4,058,245
Loans covered under loss share agreements          1,809,235     2,362,152
Loans and leases not covered under loss share      11,576,115    11,581,637
agreements
Less allowance for loan and lease losses           319,018       270,144
Receivable from FDIC for loss share agreements     270,192       617,377
Other assets                                       2,079,828     2,057,230
                                                               
Total assets                                       $21,283,652 $20,997,298
Liabilities and shareholders' equity                            
Deposits                                           $18,086,025 $17,577,274
Other liabilities                                  1,333,620     1,558,896
Shareholders' equity                               1,864,007     1,861,128
                                                               
Total liabilities and shareholders' equity         $21,283,652 $20,997,298
Book value per share                               $193.75     $180.97
                                                               

SELECTED AVERAGE BALANCES
                                                 
                      Three Months Ended December Year Ended December 31
                       31
(thousands, except
shares outstanding;    2012          2011          2012          2011
unaudited)
Total assets           $21,245,425 $21,042,227 $21,077,444 $21,135,572
Investment securities  5,169,159     4,056,949     4,698,559     4,215,761
Loans and leases       13,357,928    14,093,034    13,560,773    14,050,453
Interest-earning       19,273,850    18,670,998    18,974,915    18,824,668
assets
Deposits               17,983,033    17,679,125    17,727,117    17,776,419
Interest-bearing       14,109,359    14,635,353    14,298,026    15,044,889
liabilities
Shareholders' equity   $1,951,874  $1,869,479  $1,915,269  $1,811,520
Shares outstanding     10,159,262    10,286,271    10,244,472    10,376,445


CAPITAL INFORMATION
                                             
                                 December 31
(dollars in thousands; unaudited) 2012         2011
Tier 1 capital                    $1,949,985 $2,072,610
Total capital                     2,179,370    2,323,022
Risk-weighted assets              13,663,353   13,447,702
Tier 1 capital ratio              14.27%       15.41%
Total capital ratio               15.95        17.27
Leverage capital ratio            9.22         9.90
                                             

NONPERFORMING ASSETS
                                                   December 31
                                                   2012          2011
                                                   (thousands, except ratios)
Nonaccrual loans and leases:                                     
Covered under loss share agreements                 $74,479     $302,102
Not covered under loss share agreements             89,845        52,741
Other real estate owned:                                         
Covered under loss share agreements                 102,577       148,599
Not covered under loss share agreements             43,513        50,399
Total nonperforming assets                          $310,414    $553,841
Nonperforming assets covered under loss share      $177,056    $450,701
agreements
Nonperforming assets not covered under loss share  133,358       103,140
agreements
Total nonperforming assets                          $310,414    $553,841
Accruing loans and leases 90 days or more past due:              
Covered under loss share agreements                 $281,000    $292,194
Not covered under loss share agreements             11,272        14,840
Loans and leases at December 31:                                 
Covered under loss share agreements                 1,809,235     2,362,152
Not covered under loss share agreements             11,576,115    11,581,637
Ratio of nonperforming assets to total loans,                    
leases and other real estate:
Covered under loss share agreements                 9.26%         17.95%
Not covered under loss share agreements             1.15          0.89
Ratio of nonperforming assets to total loans,       2.29          3.92
leases and other real estate

CONTACT: Barbara Thompson
         First Citizens BancShares
         (919) 716-2716
 
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