News Release · April 28, 2022

First Citizens BancShares Reports Earnings for First Quarter of 2022

RALEIGH, N.C.—First Citizens BancShares, Inc. ("BancShares") (Nasdaq: FCNCA) reported earnings for the first quarter ended March 31, 2022.

Chairman and CEO, Frank B. Holding, Jr. on first quarter results, "We are pleased to announce solid first quarter results. We continue to remain focused on ensuring a timely and successful integration with CIT Group Inc. ("CIT") and made good progress during the quarter. We benefited from another quarter of deposit and loan growth. Net interest income grew and net interest margin expanded compared to the linked quarter, overcoming a reduction in SBA-PPP loans.

"We were additionally pleased with the positive momentum in our card, merchant, wealth and rail lines of business. Expenses were well-controlled during the quarter, and we're committed to achieving our target cost savings from the CIT merger. Credit quality remained strong and net charge-offs remained low. We closed the quarter with strong capital and liquidity levels and believe our current levels support resuming share repurchases in the second half of this year."

Merger with CIT Group, Inc.

As previously disclosed, BancShares closed its merger with CIT on January 3, 2022. Total assets acquired were $53.8 billion, which consisted of approximately $32.8 billion of loans, $7.8 billion of operating lease equipment and $6.6 billion of investment securities. Deposits acquired were $39.4 billion. The transaction also included approximately 80 bank branches, about 60 of which were in Southern California and the remaining primarily in the Southwest, Midwest and Southeast. BancShares additionally recorded a preliminary gain on acquisition of $431 million in the first quarter of 2022, representing the excess of the net assets acquired over the purchase price.

First Quarter Highlights

Merger with CIT Group Inc.

BancShares completed its previously announced merger with CIT in the first quarter, creating immediate accretion to tangible book value per share of over 40%. The ongoing financial benefits from the combination are already being realized, and BancShares remains confident in its ability to execute on its previously communicated $250 million in total cost savings by the end of 2023.

The merger with CIT resulted in a preliminary gain of $431 million, which partially offset the $387 million expense (net of $126 million in tax) to establish the initial allowance for credit losses ("ACL") on non-purchase credit deteriorated ("non-PCD") loans and establish the reserve for off balance sheet credit exposures, as well as the $102 million merger-related expenses (net of $33 million in tax) primarily for severance and retention payments, auditing and consulting fees.

Net income to common shareholders

Net income to common shareholders was $264 million or $16.70 per common share for the first quarter of 2022, compared to $142 million or $14.53 per common share for the same quarter in 2021. Results for the first quarter of 2022 were impacted materially by the CIT merger given the magnitude of the acquired balance sheet, the impacts of purchase accounting and the increases in net income from CIT's operations. First quarter results included a net $181 million in pre-tax notable items. Excluding notable items, adjusted first quarter net income available to common shareholders was $299 million or $18.95 per share.

Return on average assets and equity

Return on average assets for the first quarter of 2022 was 1.00%, down from 1.16% for the comparable quarter in 2021. When adjusted for notable items, return on average assets totaled 1.12% for the first quarter of 2022, compared to 1.07% for the comparable quarter in 2021. Return on average equity for the first quarter of 2022 was 11.18%, down from 14.70% for the comparable quarter in 2021. When adjusted for notable items, return on average equity totaled 12.67% for the first quarter of 2022, compared to 13.51% for the same quarter in 2021.

Net interest income and net interest margin

Net interest income was $649 million for the first quarter of 2022. The net interest margin ("NIM") was 2.73% for the first quarter of 2022, down 6 basis points from 2.79% for the comparable quarter in 2021 and up 16 basis points from 2.57% in the fourth quarter of 2021. Net interest margin benefited from growth in average loans and investments, as well as the redemption of approximately $3 billion in legacy CIT debt which occurred in late February.

Allowance for credit losses and credit equity

The ACL was $848 million or 1.29% of total loans at March 31, 2022, compared to $178 million or 0.55% of total loans at December 31, 2021. With the acquisition of CIT, BancShares established an ACL related to the CIT loan portfolio of $738 which was $26 million over CIT's ACL at December 31, 2021. The improvement of certain macroeconomic factors supporting the ACL estimate process during the quarter resulted in a release of $68 million. Credit quality remains strong and net charge-offs remain at historical lows. The net charge-off ratio was 0.09% for the first quarter of 2022 and nonaccrual loans to total loans was 0.82%.

Balance sheet growth

Total loans were $65.5 billion, an increase of $33.2 billion since December 31, 2021. Excluding the fair value of loans acquired from CIT and a decline from SBA-PPP loans, total loans grew $455 million or 2.8% on an annualized basis. Total deposits grew to $91.6 billion, an increase of $40.2 billion since December 31, 2021. Excluding net deposits acquired from CIT, deposits increased $833 million or by 3.7% on an annualized basis.

Capital

BancShares remained well-capitalized with a total risk-based capital ratio of 14.46%, a Tier 1 risk-based capital ratio of 12.39%, a Common Equity Tier 1 ratio of 11.34% and a Tier 1 leverage ratio of 9.43%.

Net Interest Income and Net Interest Margin (NIM)

Net interest income was $649 million for the first quarter of 2022, an increase of $310 million compared to the first quarter of 2021 and $292 million compared to the linked quarter. The increases in both periods were primarily due to impacts from the merger with CIT.

Interest income on loans was $621 million, and the portfolio yield was 3.88%. This compares to $323 million or 3.92% for the first quarter of 2021 and $328 million or 3.97% in the linked quarter. Interest income on investment securities totaled $83 million and the portfolio yield was 1.77%. This compares to $31 million or 1.27% for the first quarter of 2021 and $40 million or 1.39% in the linked quarter.

Interest expense for the first quarter of 2022 was $61 million, an increase of $45 million compared to the first quarter of 2021 and $46 million compared to the linked quarter. The rate paid on interest bearing deposits was 0.24% compared to 0.14% in the prior year period and 0.11% in the linked quarter. The rate paid on borrowings was 1.95% compared to 2.12% in both prior periods.

NIM was 2.73% for the first quarter of 2022, down 6 basis points from 2.79% for the comparable quarter in 2021 and up 16 basis points from 2.57% in the fourth quarter of 2021. Net interest margin benefited from a better macroeconomic rate environment, growth in average loans and investments, and the redemption of approximately $3 billion in legacy CIT debt, which occurred in late February.

Noninterest Income

Noninterest income was $850 million for the first quarter of 2022, compared to $137 million for the same period in 2021, an increase of $713 million driven primarily from the acquisition of CIT. The current period included a preliminary gain on acquisition of $431 million, which has been identified as notable. The CIT acquisition additionally contributed $208 million in gross rental income on operating leases, $27 million in factoring commissions, $23 million in fee income and other revenue, and $6 million in gain on the sale of leasing equipment. Lines of business such as wealth, card, and merchant services were positive for the quarter while mortgage income declined with the rising interest rates and decline in volumes.

Noninterest Expense

Noninterest expense was $810 million for the first quarter of 2022, compared to $296 million for the same period in 2021, an increase of $514 million driven primarily from the acquisition of CIT. During the quarter, we recorded $135 million in merger-related expenses, which have been identified as notable. Salaries and benefits were $352 million, an increase primarily related to the CIT merger. Depreciation and maintenance on operating leases were $81 million and $43 million, respectively. Occupancy expense, net and equipment expense were up $19 million and $22 million respectively, related to the merger with CIT. A benefit of $27 million was recognized with the termination of legacy retiree benefit plans.

Income Taxes

Income tax for the quarter was a benefit of $46 million compared to a provision expense of $44 million for the first quarter of 2021, representing effective tax rates of (20.4%) and 23.6% for the respective periods. The first quarter of 2022 included a non-taxable bargain purchase gain of $431 million and other discrete items.

Loans and Deposits

At March 31, 2022, loans totaled $65.5 billion, an increase of $33.2 billion since December 31, 2021. Loans and leases acquired from the CIT merger totaled $32.8 billion, which are net of initial purchase accounting marks. Excluding total net loans acquired from CIT and a decline of $299 million in SBA-PPP loans, total loans grew $455 million or 2.8% on an annualized basis.

At March 31, 2022, deposits totaled $91.6 billion, an increase of $40.2 billion since December 31, 2021. Deposits acquired from the CIT merger totaled $39.4 billion, net of initial purchase accounting marks. Excluding net deposits acquired from CIT, deposits increased $833 million or by 3.7% on an annualized basis.

Credit Quality

Total nonaccrual loans were $538 million or 0.82% of total loans at March 31, 2022, compared to $121 million or 0.37% of total loans at December 31, 2021. The increase in total nonaccrual loans was primarily the result of the CIT merger.

Allowance for Credit Losses (ACL) and Provision for Credit Losses

The ACL was $848 million or 1.29% of total loans at March 31, 2022, compared to $178 million or 0.55% of total loans at December 31, 2021. The increase in the ACL as compared to December 31, 2021, was primarily driven by the loans added in the CIT merger. Note that no ACL was carried over from CIT; therefore, the quarter included an ACL build for the loans added. We recorded an estimated reserve for purchase credit deteriorated ("PCD") loans of $284 million and an estimated reserve for non-PCD loans of $454 million.

Provision expense totaled $464 million for the quarter compared to a net benefit of $11 million in the first quarter of 2021. While net charge-offs were up compared to the prior year quarter, the 9 bps on an annualized basis remains below historical averages. Excluding the day 2 provision for non-PCD loans and the reserve for unfunded commitments of $513 million, we reported a net provision benefit of $49 million due to a net $68 million reserve release as we continue to see improvement in certain macroeconomic factors, specifically real estate values that positively impact the ACL estimate. Additionally, we saw improvement in the specific reserves on certain large, impaired loans which also contributed to the release.

Earnings Call Details

BancShares will host a conference call to discuss the company's financial results on Thursday, April 28, 2022, at 9 a.m. Eastern time.

To access this call, dial:

Domestic: 833-654-8257

International: 602-585-9869

Conference ID: 7780142

The first 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 May 13, 2022, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 7780142.

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 approximately $110 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 600 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" 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, 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. In addition, statements in this presentation related to future plans involving possible commencement of a share repurchase program remain subject to board and relevant regulatory approvals.

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").

Non-GAAP Measures

Certain measures in this presentation 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 presented in this presentation are reconciled to the most comparable GAAP measure in the Non-GAAP reconciliation table(s) appearing at the end of this release.

Note: References to "Adjusted" results exclude notable items and are Non-GAAP Financial Measures.

Download the First Citizens BancShares First Quarter 2022 Financials (PDF).

Contact Information:

Barbara Thompson
Corporate Communications
919-716-2716

Deanna Hart
Investor Relations
919-716-2137

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