FIRST CITIZENS BANCSHARES INC DE

Previous wording

Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. See the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.

Current wording

Management uses certain financial measures that are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in its analysis of the financial condition and results of operations of BancShares. Refer to the "Non-GAAP Financial Measurements" section of this MD&A for a reconciliation of these financial measures to the most directly comparable financial measures in accordance with GAAP.

Previous wording

BancShares provides financial services for a wide range of consumer and commercial clients. This includes retail and mortgage banking, wealth management, small and middle market banking, factoring and leasing. BancShares provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies.

Current wording

BancShares provides financial services for a wide range of consumer and commercial clients. This includes retail and mortgage banking, wealth management, small and middle market banking, factoring and leasing. BancShares provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics. BancShares also provides deposit, cash management and lending to homeowner associations and property management companies. BancShares also owns a fleet of railcars and locomotives that are leased to railroads and shippers.

Previous wording

On July 25, 2024, BancShares announced that its Board of Directors (the “Board”) had authorized a share repurchase program, which will allow BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $3.5 billion through 2025.

Current wording

On July 25, 2024, BancShares announced that its Board of Directors (the “Board”) authorized a share repurchase program, which allows BancShares to repurchase shares of its Class A common stock in an aggregate amount up to $3.5 billion through 2025. During the third quarter of 2024, we repurchased approximately $700 million of our Class A common stock. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional information regarding repurchase activity during the current quarter and through October 31, 2024.

Previous wording

Under the newly authorized share repurchase program, shares of BancShares’ Class A common stock may be purchased from time to time on the open market or in privately negotiated transactions, including through a Rule 10b5-1 plan, but the Board’s action does not obligate BancShares to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice.

Current wording

Under the authorized share repurchase program, shares of BancShares’ Class A common stock may be purchased from time to time on the open market or in privately negotiated transactions, including through a Rule 10b5-1 plan, but the Board’s action does not obligate BancShares to repurchase any minimum or particular number of shares, and repurchases may be suspended or discontinued at any time (subject to the terms of any Rule 10b5-1 plan in effect) without prior notice.

Previous wording

We made changes to our segment reporting during the first quarter of 2024 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. Segment disclosures for 2023 periods included in this Form 10-Q were recast to reflect the segment reporting changes. BancShares’ segments include General Bank, Commercial Bank, SVB Commercial, and Rail. All other financial information not allocated to the segments is included in the “Corporate” section of the segment disclosures. Refer to Note 20—Business Segment Information for the segment descriptions.

Current wording

We made changes to our segment reporting during the first quarter of 2024 as further discussed in Note 1—Significant Accounting Policies and Basis of Presentation. Segment disclosures for 2023 periods included in this Form 10-Q were recast to reflect the segment reporting changes. BancShares’ segments include General Bank, Commercial Bank, SVB Commercial, and Rail. All other financial information not allocated to the segments is included in the “Corporate” section of the segment disclosures. Refer to Note 20—Business Segment Information for the segment descriptions and the section entitled “Results by Business Segment” in this MD&A.

Previous wording

During 2023, the FDIC finalized a notice of proposed rulemaking (“NPR”) covering an industry-wide special assessment to recover losses associated with protecting uninsured depositors following the closures of Silicon Valley Bank, Signature Bank, and First Republic Bank. We accrued a FDIC insurance special assessment charge of $64 million in 2023 that will be paid in eight quarterly installments beginning in 2024. In March 2024, the FDIC revised its loss estimate, indicating higher losses than originally estimated to the deposit insurance fund. As a result, we accrued an additional FDIC insurance special assessment charge of $11 million in 2024 that will be paid in two quarterly installments beginning in 2026.

Current wording

During 2023, the FDIC finalized a notice of proposed rulemaking (“NPR”) covering an industry-wide special assessment to recover losses associated with protecting uninsured depositors following the closures of Silicon Valley Bank, Signature Bank, and First Republic Bank. We accrued a FDIC insurance special assessment charge of $64 million in 2023 that is payable in eight quarterly installments beginning in 2024. In 2024, the FDIC revised its loss estimate, indicating higher losses than originally estimated to the deposit insurance fund. As a result, we accrued an additional FDIC insurance special assessment charge of approximately $11 million in 2024. The additional FDIC insurance special assessment charge will be paid in two quarterly installments beginning in 2026. The projected number of additional quarters and the estimated rate applicable to those quarters are subject to change depending on any adjustments to estimated losses or amendments to uninsured deposits.

Previous wording

On June 20, 2024, the FDIC adopted a final rule to amend its Covered Insured Depository Institution rule (“CIDI Rule”). The CIDI Rule requires depository institutions insured by the FDIC with $50 billion or more in total consolidated assets to periodically submit resolution plans that will enable the FDIC as receiver to resolve the bank in the event of its insolvency under the Federal Deposit Insurance Act. As a result of the final rule, among other things, we will be required to submit to the FDIC full resolution plans every three years and interim targeted information between full resolution plan submissions. In addition, the final rule introduces a new credibility standard that will be used to evaluate full resolution plan submissions, which would be subject to potential FDIC enforcement action. The final rule is effective beginning October 1, 2024 and we are continuing to evaluate the impact of this final rule.

Current wording

On June 20, 2024, the FDIC adopted a final rule to amend its Covered Insured Depository Institution rule (“CIDI Rule”). The CIDI Rule requires depository institutions insured by the FDIC with $50 billion or more in total consolidated assets to periodically submit resolution plans that will enable the FDIC as receiver to resolve the bank in the event of its insolvency under the Federal Deposit Insurance Act. As a covered insured depository institution in group A under the CIDI Rule, we will be required to, among other things, submit to the FDIC full resolution plans every three years and interim targeted information between full resolution plan submissions. In addition, the final rule introduces a new credibility standard that will be used to evaluate full resolution plan submissions, which would be subject to potential FDIC enforcement action. While the final rule became effective beginning October 1, 2024, our first submission under the new regulatory reporting requirements will not be due until 2025.

Previous wording

The following tables in this MD&A include financial data for the three months ended June 30, 2024 (the “current quarter”), the three months ended March 31, 2024 (the “linked quarter”), the three months ended June 30, 2023 (the “prior year quarter”), the six months ended June 30, 2024 (“current YTD”), and the six months ended June 30, 2023 (“prior YTD”). The operations acquired in the SVBB Acquisition (the “acquired SVBB operations”) were included in our results of operations for the current YTD, but only from the SVBB Acquisition Date through June 30, 2023 (the “partial prior YTD”) in the prior YTD. Many year-to-date comparisons in this MD&A highlight the impact of including the acquired SVBB operations for the current YTD and the partial prior YTD.

Current wording

The following tables in this MD&A include financial data for the three months ended September 30, 2024 (the “current quarter”), the three months ended June 30, 2024 (the “linked quarter”), the three months ended September 30, 2023 (the “prior year quarter”), the nine months ended September 30, 2024 (“current YTD”), and the nine months ended September 30, 2023 (“prior YTD”). The operations acquired in the SVBB Acquisition (the “acquired SVBB operations”) were included in our results of operations for the current YTD, but only from the SVBB Acquisition Date through September 30, 2023 (the “partial prior YTD”). Many year-to-date comparisons in this MD&A highlight the impact of including the acquired SVBB operations for the current YTD and the partial prior YTD.

Previous wording

The following table summarizes BancShares’ results in accordance with GAAP:

Current wording

The following table summarizes BancShares’ results:

Previous wording

(3)Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Current wording

(3)Net interest margin (“NIM”), excluding purchase accounting accretion or amortization (“PAA”), is a non-GAAP financial measure. Refer to the “NIM, Excluding PAA” item in the“Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Previous wording

•Net income for the current quarter was $707 million, a decrease of $24 million or 3% from $731 million for the linked quarter. Net income available to common stockholders for the current quarter was $691 million, a decrease of $25 million or 4% from $716 million for the linked quarter. Earnings per diluted common share for the current quarter was $47.54, a decrease from $49.26 for the linked quarter.

Current wording

•Net income for the current quarter was $639 million, a decrease of $68 million or 10% from $707 million for the linked quarter. Net income available to common stockholders for the current quarter was $624 million, a decrease of $67 million or 10% from $691 million for the linked quarter. Earnings per diluted common share for the current quarter was $43.42, a decrease from $47.54 for the linked quarter.

Previous wording

◦As further discussed below, other changes in net income included slightly higher net interest income (“NII”) and higher noninterest income, which were partially offset by higher noninterest expense.

Current wording

◦As further discussed below, the decreases were mainly due to higher noninterest expense. Other changes in net income included lower net interest income (“NII”) and higher provision for credit losses, which were partially offset by higher noninterest income.

Previous wording

•Return on average assets for the current quarter was 1.30% compared to 1.36% for the linked quarter.

Current wording

•Return on average assets for the current quarter was 1.15% compared to 1.30% for the linked quarter.

Previous wording

•NIM for the current quarter was 3.64%, a decrease of 3 basis points (“bps”) from 3.67% for the linked quarter, primarily related to the items discussed above for NII. NIM, excluding PAA, was 3.36% compared to 3.35% in the linked quarter. See the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Current wording

•NIM for the current quarter was 3.53%, a decrease of 11 basis points (“bps”) from 3.64% for the linked quarter, primarily related to lower PAA and the items discussed above for NII. NIM, excluding PAA, was 3.33% compared to 3.36% in the linked quarter. Refer to the “NIM, Excluding PAA” item in the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Previous wording

•Net income for the current YTD was $1.44 billion, a decrease of $8.76 billion or 86% from $10.20 billion for the prior YTD. Net income available to common stockholders for the current YTD was $1.41 billion, a decrease of $8.76 billion from $10.17 billion for the prior YTD. Earnings per diluted common share for the current YTD was $96.80, a decrease from $699.53 for the prior YTD.

Current wording

•Net income for the current YTD was $2.08 billion, a decrease of $8.88 billion or 81% from $10.95 billion for the prior YTD. Net income available to common stockholders for the current YTD was $2.03 billion, a decrease of $8.88 billion from $10.91 billion for the prior YTD. Earnings per diluted common share for the current YTD was $140.26, a decrease from $750.19 for the prior YTD.

Previous wording

◦The decreases were mostly related to the SVBB Acquisition. Noninterest income was lower for the current YTD as the prior YTD included the gain on acquisition. This was partially offset by a lower provision for credit losses for the current YTD as the prior YTD included the provision for non-purchased credit deteriorated (“Non-PCD”) loans and leases and the unfunded commitments acquired in the SVBB Acquisition (collectively, the “day 2 provision for credit losses”).

Current wording

◦The decreases were mostly related to the SVBB Acquisition. Noninterest income was lower for the current YTD as the prior YTD included the$9.89 billion gain on acquisition. This was partially offset by a lower provision for credit losses for the current YTD as the prior YTD included theprovision for non-purchased credit deteriorated (“Non-PCD”) loans and leases and the unfunded commitments acquired in the SVBB Acquisition (collectively, the “Day 2 Provision for Credit Losses”).

Previous wording

•Return on average assets for the current YTD was 1.33% compared to 12.62% for the prior YTD.

Current wording

•Return on average assets for the current YTD was 1.27% compared to 7.81% for the prior YTD.

Previous wording

•NII for the current YTD was $3.64 billion, an increase of $827 million or 29% from $2.81 billion for the prior YTD. The increase was primarily due to the acquired SVBB operations and loan accretion income being included for the current YTD and the partial prior YTD. Additionally, interest income increased in the current YTD due to higher interest income on loans and investment securities, which was partially offset by higher interest expense on deposits and borrowings.

Current wording

•NII for the current YTD was $5.43 billion, an increase of $633 million or 13% from $4.80 billion for the prior YTD. The increase was primarily due to the acquired SVBB operations being included for the current YTD and the partial prior YTD. Additionally, interest income increased in the current YTD due to higher interest income on loans and investment securities, which was partially offset by higher interest expense on interest-bearing deposits and borrowings and lower loan accretion income.

Previous wording

•NIM for the current YTD was 3.66%, a decrease of 21 bps from 3.87% for the prior YTD. The decreases in NIM from higher average balances of interest-bearing deposits and the Purchase Money Note and higher rates paid on deposits were partially offset by higher average balances and yields on loans and investment securities. NIM, excluding PAA, was 3.36% for the current YTD compared to 3.49% for the prior YTD. See the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Current wording

•NIM for the current YTD was 3.62%, a decrease of 33 bps from 3.95% for the prior YTD. The decrease in NIM from higher average balances of interest-bearing deposits and the Purchase Money Note, higher rates paid on deposits, and lower PAA income were partially offset by the NIM impact of higher average balances and yields on loans and investment securities. NIM, excluding PAA, was 3.35% for the current YTD compared to 3.50% for the prior YTD. Refer to the “NIM, Excluding PAA” item in the “Non-GAAP Financial Measures” section of this MD&A for a reconciliation from the most comparable GAAP measure to the non-GAAP measure.

Previous wording

•Provision for credit losses for the current YTD was $159 million, a decrease of $775 million from $934 million for the prior YTD. The decrease was primarily related to the day 2 provisions for credit losses of $716 million in the prior YTD, lower reserves for individually evaluated loans, and changes in the macroeconomic forecast.

Current wording

•Provision for credit losses for the current YTD was $276 million, a decrease of $850 million from $1.13 billion for the prior YTD. The decrease was primarily related to the Day 2 Provision for Credit Losses of $716 million in the prior YTD and changes in the macroeconomic forecast, partially offset by the estimated loan loss provision related to Helene.

Previous wording

•Noninterest income for the current YTD was $1.27 billion, a decrease of $9.65 billion from $10.92 billion for the prior YTD. The decrease was mostly due to the gain on acquisition of $9.88 billion in the prior YTD, partially offset by increases in various components of noninterest income, mostly because the acquired SVBB operations were reflected in earnings for the current YTD and the partial prior YTD.

Current wording

•Noninterest income for the current YTD was $1.92 billion, a decrease of $9.62 billion from $11.53 billion for the prior YTD. The decrease was mostly due to the gain on acquisition of $9.89 billion in the prior YTD, partially offset by increases in various components of noninterest income, mostly because the acquired SVBB operations were reflected in earnings for the current YTD and the partial prior YTD.

Previous wording

•Noninterest expensefor the current YTD was $2.76 billion, an increase of $335 million or 14% from $2.43 billion. The increase was mostly due to the acquired SVBB operations being included for the current YTD and the partial prior YTD, including higher salaries and benefits, partially offset by lower acquisition-related expenses.

Current wording

•Noninterest expensefor the current YTD was $4.22 billion, an increase of $375 million or 10% from $3.84 billion. The increase was mostly due to the acquired SVBB operations being included for the current YTD and the partial prior YTD, including higher salaries and benefits, partially offset by lower acquisition-related expenses.

Previous wording

•Total loans and leases at June 30, 2024 were $139.34 billion, an increase of $6.04 billion or 5% from $133.30 billion at December 31, 2023 and an increase of $3.97 billion or 3% from $135.37 billion at March 31, 2024. Compared to December 31, 2023 and March 31, 2024, there was loan growth in each of our business segments. Loan growth in the General Bank segment was primarily related to business and commercial loans in our Branch Network. Loan growth in the Commercial Bank segment was mainly due to the technology media and telecommunications (“TMT”) industry and the Healthcare industry. Loan growth in the SVB Commercial segment was concentrated in global fund banking loans.

Current wording

•Loans and leases at September 30, 2024 were $138.70 billion, an increase of $5.39 billion or 4% from $133.30 billion at December 31, 2023 and a decrease of $646 million or 1% from $139.34 billion at June 30, 2024. Compared to December 31, 2023, there was loan growth in each of our business segments. Loan growth in the General Bank segment was primarily related to business and commercial loans in our Branch Network. Loan growth in the Commercial Bank segment was mainly due to the technology media and telecommunications (“TMT”) and the Healthcare industry verticals. Loan growth in the SVB Commercial segment was concentrated in global fund banking loans.

Previous wording

•Total investment securities at June 30, 2024 were $37.67 billion, an increase of $7.67 billion or 26% from $30.00 billion at December 31, 2023 and an increase of $2.62 billion or 8% from $35.04 billion at March 31, 2024. Compared to December 31, 2023 and March 31, 2024, the increases were primarily due to purchases of short-duration U.S. agency mortgage-backed and U.S. Treasury investment securities.

Current wording

•Investment securities at September 30, 2024 were $38.66 billion, an increase of $8.66 billion or 29% from $30.00 billion at December 31, 2023 and an increase of $997 million or 3% from $37.67 billion at June 30, 2024. Compared to December 31, 2023 and June 30, 2024, the increases were primarily due to purchases of short-duration U.S. agency mortgage-backed and U.S. Treasury investment securities.

Previous wording

•Total depositsat June 30, 2024 were $151.08 billion, an increase of $5.23 billion or 4% from $145.85 billion at December 31, 2023 and an increase of $1.47 billion or 1% from $149.61 billion at March 31, 2024. The increase from December 31, 2023 reflected deposit growth in our Branch Network, the Direct Bank, and the SVB Commercial segment. The largest increase from March 31, 2024 reflected deposit growth in the SVB Commercial segment, which was mainly due to slight improvement in the macroeconomic environment and client acquisition.

Current wording

•Depositsat September 30, 2024 were $151.57 billion, an increase of $5.72 billion or 4% from $145.85 billion at December 31, 2023 and an increase of $495 million or 0.3% from $151.08 billion at June 30, 2024. The increase from December 31, 2023 reflected deposit growth in our Branch Network in the General Bank segment, the Direct Bank in Corporate, and in the SVB Commercial segment. The increase from June 30, 2024 reflected deposit growth in our Branch Network and SVB Commercial segment, partially offset by declines in the Commercial Bank segment and Direct Bank.

Previous wording

•Total borrowingsat June 30, 2024 were $37.46 billion, a decrease of $196 million from $37.65 billion at December 31, 2023 and a decrease of $82 million from $37.54 billion at March 31, 2024. The decreases from December 31, 2023 and March 31, 2024 were mostly due to declines in securities sold under customer purchase agreements and the Purchase Money Note.

Current wording

•Borrowingsat September 30, 2024 were $37.16 billion, a decrease of $493 million from $37.65 billion at December 31, 2023 and a decrease of $297 million from $37.46 billion at June 30, 2024. The decrease from December 31, 2023 was mostly due to the current quarter redemption of our 2.969% senior unsecured borrowings, along with declines in securities sold under customer purchase agreements and the Purchase Money Note. The decrease from June 30, 2024 reflected the unsecured senior borrowings redemption, partially offset by higher securities sold under customer purchase agreements.

Previous wording

•At June 30, 2024, BancShares remained well capitalized with a total risk-based capital ratio of 15.45%, a Tier 1 risk-based capital ratio of 13.87%, a common equity Tier 1 ratio of 13.33% and a Tier 1 leverage ratio of 10.29%.

Current wording

•At September 30, 2024, BancShares remained well capitalized with a total risk-based capital ratio of 15.36%, a Tier 1 risk-based capital ratio of 13.78%, a common equity Tier 1 ratio of 13.24% and a Tier 1 leverage ratio of 10.17%.

Previous wording

The General Bank segment includes deposits from our branch network, which deploys a relationship-based approach to deposit gathering. The Commercial Bank segment includes deposits of commercial customers, and the SVB Commercial segment includes deposits related to its commercial customer base. Deposits in Corporate were primarily comprised of $39.67 billion in our Direct Bank and brokered deposits.

Current wording

The General Bank segment includes deposits from our Branch Network, which deploys a relationship-based approach to deposit gathering. The Commercial Bank segment includes deposits of commercial customers, and the SVB Commercial segment includes deposits related to its commercial customer base. Deposits in Corporate mainly included $39.50 billion in our Direct Bank, with the remaining primarily comprised of brokered deposits.

Previous wording

As displayed in the table above, the average size of deposits varies across our business segments. The uninsured data represents the percentage of such deposits in the respective segments and Corporate. At June 30, 2024, total uninsured deposits were approximately $57.15 billion or 38% of total deposits. Uninsured deposits were $54.15 billion or 37% of total deposits at December 31, 2023.

Current wording

As displayed in the table above, the average size of deposits varies across our business segments. The uninsured percentage is the percentage of uninsured deposits to total deposits at period end for the respective segments and Corporate. At September 30, 2024, total uninsured deposits were approximately $58.59 billion or 39% of total deposits. Uninsured deposits were $54.15 billion or 37% of total deposits at December 31, 2023.

Previous wording

We strive to maintain a strong liquidity position, and our risk appetite for liquidity is low. At June 30, 2024, liquidity metrics remained solid as we had $56.91 billion in high-quality liquid assets consisting of $24.48 billion in cash and interest-earning deposits at banks (primarily held at the FRB) and $32.43 billion in high-quality liquid securities (“HQLS”). We have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $14.68 billion and $5.53 billion, respectively.

Current wording

We strive to maintain a strong liquidity position, and our risk appetite for liquidity is low. At September 30, 2024, we had $58.36 billion in high-quality liquid assets consisting of $24.71 billion in cash and interest-earning deposits at banks (primarily held at the FRB) and $33.65 billion in high-quality liquid securities (“HQLS”). Additionally, we have unused borrowing capacity with the Federal Home Loan Bank (“FHLB”) and FRB of $15.80 billion and $5.62 billion, respectively.

Previous wording

In connection with the SVBB Acquisition, FCB and the FDIC, as lender and as collateral agent, entered into the Advance Facility Agreement, dated as of March 27, 2023, and effective as of November 20, 2023, providing total advances available through March 27, 2025 of up to $70 billion, subject to limits subsequently described in this MD&A as referenced below, solely to provide liquidity to offset deposit withdrawal or runoff of former SVBB deposit accounts and to fund the unfunded commercial lending commitments acquired in the SVBB Acquisition. The immediate available capacity of the Advance Facility Agreement was $11.34 billion at June 30, 2024. Refer to the “Liquidity Risk” section of this MD&A for further discussion.

Current wording

In connection with the SVBB Acquisition, FCB and the FDIC, as lender and as collateral agent, entered into the Advance Facility Agreement, dated as of March 27, 2023, and effective as of November 20, 2023 (the “Advance Facility Agreement”), providing total advances available through March 27, 2025 of up to $70 billion, subject to limits subsequently described in this MD&A as referenced below. The immediate available capacity of the Advance Facility Agreement was $8.13 billion at September 30, 2024. Refer to the “Liquidity Risk” section of this MD&A for further discussion.

Previous wording

At June 30, 2024, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. The duration of our investment securities was approximately 2.8 years at June 30, 2024. The investment securities available for sale portfolio had an average duration of 2.3 years and the held to maturity portfolio had an average duration of 4.5 years. Refer to the “Interest-earning Assets—Investment securities” section of this MD&A and Note 3—Investment Securities for further information.

Current wording

At September 30, 2024, our investment securities portfolio primarily consisted of debt securities available for sale and held to maturity as summarized below. The duration of our investment securities was approximately 2.8 years at September 30, 2024. The investment securities available for sale portfolio had an average duration of 2.2 years and the held to maturity portfolio had an average duration of 4.5 years. Refer to the “Interest-earning Assets—Investment securities” section of this MD&A and Note 3—Investment Securities for further information.

Previous wording

Our capital position remains strong, and all regulatory capital ratios for BancShares and FCB significantly exceed the prompt corrective action well capitalized thresholds and Basel III requirements as further discussed in the “Capital” section of this MD&A.

Current wording

All regulatory capital ratios for BancShares and FCB significantly exceed the prompt corrective action well capitalized thresholds and Basel III requirements as further discussed in the “Capital” section of this MD&A.

Previous wording

NII is affected by changes in interest rates and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. The following tables present the average balances, yields on interest-earning assets, rates on interest-bearing liabilities, and changes in NII due to changes in: (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates.

Current wording

The following tables present the average balances, yields on interest-earning assets, rates on interest-bearing liabilities, and changes in NII due to changes in volume and yields or rates. Changes in NII due to changes in (i) volume (average balances of interest-earning assets and interest-bearing liabilities) and (ii) yields or rates are based on the following:

Previous wording

◦Interest income earned on loans and leases for the current quarter was $2.42 billion, an increase of $68 million or 3% from $2.35 billion for the linked quarter. Loan growth and a higher yield led to an $86 million increase in loan interest income, partially offset by a decrease of $18 million in loan accretion income which was $145 million in the current quarter and $163 million in the linked quarter.

Current wording

◦Interest income earned on loans and leases for the current quarter was $2.43 billion, an increase of $8 million from $2.42 billion for the linked quarter. Higher average balances led to an increase of $46 million in loan interest income. This was partially offset by a decrease of $38 million in loan accretion income. Loan accretion income was $107 million in the current quarter compared to $145 million in the linked quarter and is expected to continue trending lower as the acquired loans approach maturity.

Previous wording

◦Interest income earned on investment securities for the current quarter was $327 million, an increase of $48 million or 17% from $279 million for the linked quarter. The increase reflected continued purchases of short duration agency mortgage-backed and U.S. Treasury investment securities, and to a lesser extent, higher yields on the more recently purchased investment securities.

Current wording

◦Interest income earned on investment securities for the current quarter was $358 million, an increase of $28 million or 8% from $330 million for the linked quarter. The increase reflected continued purchases of short duration agency mortgage-backed and U.S. Treasury investment securities available for sale, and to a lesser extent, higher yields on the more recently purchased investment securities.

Previous wording

◦Interest income on interest-earning deposits at banks for the current quarter was $378 million, a decrease of $70 million or 16% from $448 million for the linked quarter. The decrease was due to a lower average balance of interest-earning deposits at banks resulting from the purchases of investment securities described above.

Current wording

◦Interest income on interest-earning deposits at banks for the current quarter was $350 million, a decrease of $28 million or 7% from $378 million for the linked quarter. The decrease was mostly due to a lower average balance of interest-earning deposits at banks resulting from the purchases of investment securities described above.

Previous wording

•Average interest-earning assets for the current quarter were $200.71 billion, an increase of $2.12 billion or 1% from $198.59 billion for the linked quarter. The increase mainly reflected higher average balances for investment securities and loans. The yield on average interest-earning assets was 6.26%, an increase of 3 bps from the linked quarter, primarily due to higher average balances and yields on investment securities and loans, partially offset by lower average balances of interest-earning deposits at banks and lower loan accretion income.

Current wording

•Average interest-earning assets for the current quarter were $202.20 billion, an increase of $1.49 billion or 1% from $200.71 billion for the linked quarter. The increase mainly reflected higher average balances for loans, as the higher average investment securities balance was offset by the decline in average interest-earning deposits at banks. The yield on average interest-earning assets was 6.18%, a decrease of 8 bps from the linked quarter, primarily due to decreases in loan accretion and yield on interest-earning deposits at banks, partially offset by a higher yield on investment securities.

Previous wording

•Average interest-bearing liabilities for the current quarter were $148.38 billion, an increase of $2.74 billion or 2% from $145.64 billion in the linked quarter. The increase reflected higher average interest-bearing deposit balances. The rate paid on average interest-bearing liabilities increased by 5 bps from the linked quarter, primarily due to a higher rate paid on average interest-bearing deposits. While the rate paid on average interest-bearing deposits increased 9 bps from the linked quarter, the pace slowed relative to the 17 bps increase in the linked quarter compared to the fourth quarter of 2023.

Current wording

•Average interest-bearing liabilities for the current quarter were $149.89 billion, an increase of $1.51 billion or 1% from $148.38 billion in the linked quarter. The increase reflected higher average interest-bearing deposit balances. The rate paid on average interest-bearing liabilities increased by 3 bps from the linked quarter, primarily due to a higher average rate paid on money market deposits, while average rates paid on other deposit types were down. Although the rate paid on average money market deposits increased compared to the linked quarter, it declined late in the current quarter.

Previous wording

•NII for the current YTD was $3.64 billion, an increase of $827 million or 29% from $2.81 billion for the prior YTD. The increase was primarily due to the acquired SVBB operations and loan accretion income being included for the current YTD and the partial prior YTD. Additionally, interest income increased in the current YTD due to higher interest income on loans and investment securities, which was partially offset by higher interest expense on deposits and borrowings.

Current wording

•NII for the current YTD was $5.43 billion, an increase of $633 million or 13% from $4.80 billion for the prior YTD. The increase reflected the acquired SVBB operations being included for the current YTD and the partial prior YTD. Additionally, interest income increased in the current YTD due to higher interest income on loans and investment securities, which was partially offset by higher interest expense on deposits and borrowings and lower loan accretion income.