First Citizens Bank revenue jumps 33 percent

Spurred by gains from acquisitions and a previously announced deal with the Federal Deposit Insurance Corp., the corporate parent of First Citizens Bank reported a 33 percent jump in net income for the second quarter.

The Raleigh-based bank reported Wednesday that it generated net income of $69.3 million, or $5.77 per share, versus $52.1 million a year ago.

The increase in earnings included a gain of $2.1 million from the purchase in May of First CornerStone Bank, a failed six-branch community bank based in Pennsylvania; and a $1.2 million gain from the March acquisition of North Milwaukee State Bank, a failed two-branch bank in Wisconsin.

Pre-tax earnings also were boosted as a result of a deal with the FDIC that ended five of the nine-loss share agreements it entered into when it acquired failed banks. Those loss-share agreements called for the federal agency to absorb most of First Citizens’ losses stemming from problem loans, but banks across the country have been shedding those deals because of burdensome accounting and administrative requirements and because some banks have found that the loan losses that trigger payments from the FDIC have been lower than expected.

First Citizens paid $20.1 million to the FDIC in that deal, triggering a one-time expense of $3.4 million in the second quarter.

But at the same time the bank eliminated its “clawback” liabilities under which the bank could have owed the FDIC money when the agreements expired, and it adjusted its estimated clawback liabilities under two of its remaining loss-share agreements. The upshot is that its pre-tax earnings were boosted by $16.6 million.

Loans rose $324.9 million to $20.74 billion in the second quarter, a growth rate of 6.4 percent on an annualized basis.

Deposits fell $107.5 million from the end of the first quarter to $27.26 billion.

First Citizens has more than 550 branches in 20 states. Its shares were trading Wednesday at $262.50, down $2.30. Its shares have risen 2 percent this year.

David Ranii: 919-829-4877, @dranii