The corporate parent of Raleigh-based First Citizens Bank reported a 36 percent decline in third-quarter net income.
Net income totaled $26.4 million, or $2.74 per share, down from $41 million a year ago.
The bank attributed the decline in earnings to a $9.2 million increase in its provision for loan and lease losses and “acquired loan portfolio runoff.”
The latter refers to loans the banks obtained in recent years when it acquired other banks that paid higher interest rates than newly originated loans. As a result, when those acquired loans are repaid or refinanced, interest income suffers.
From 2009 to 2011, First Citizens acquired a half-dozen failed banks that were taken over by the Federal Deposit Insurance Corp. Those transactions included loss-share agreements that protect the bank from losses arising from loans it acquired.
Net interest income for the quarter totaled $166.2 million, down from $179.2 million a year ago.
The third quarter numbers don’t include results from the $600 million-plus acquisition of South Carolina-based First Citizens Bank and Trust, which was completed Oct. 1.
The two First Citizens banks will continue operating as separate, wholly owned subsidiaries of First Citizens BancShares until they are merged early next year. Raleigh’s Holding family owned a controlling stake in both banks, and the merger created the nation’s largest family-controlled bank.
As of Sept. 30, the combined banks had assets of $30.2 billion, deposits of $25.6 billion, and 573 branches in 18 states and the District of Columbia.