GlobeNewswire Inc | Aug 3, 2021 06:32AM EDT

August 03, 2021

RALEIGH, N.C., Aug. 03, 2021 (GLOBE NEWSWIRE) -- First Citizens BancShares Inc. (BancShares) (Nasdaq: FCNCA) reported another quarter of strong earnings for the second quarter of 2021. Key results for the quarter ended June 30, 2021, are presented below:

SECOND QUARTER RESULTS Q2 2021 Q2 2020 Q2 Q2 Q2 Q2 Q2 2021 Q2 2020 Q2 2021 Q2 2020 2021 2020 2021 2020Net income (in Net income Net Return on Return onmillions) per share interest average assets average equity margin$152.8 $153.8 $15.09 $14.74 2.68% 3.14% 1.13% 1.36% 14.64% 16.43% YEAR-TO-DATE (?YTD?) RESULTS 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020Net income (in Net income Net Return on Return onmillions) per share interest average assets average equity margin$300.1 $211.0 $29.63 $20.04 2.74% 3.33% 1.14% 0.98% 14.67% 11.40%

SECOND QUARTER HIGHLIGHTS Net income was $152.8 million for the second quarter of 2021, a decrease of $1.0 million, or by 0.6% compared to the sameNet income quarter in 2020. Net income per common share was $15.09 for the second quarter of 2021, compared to $14.74 per share for the same quarter in 2020. Return on Return on average assets for the second quarter of 2021 wasaverage 1.13%, down from 1.36% for the comparable quarter in 2020.assets and Return on average equity for the second quarter of 2021 wasequity 14.64%, down from 16.43% for the comparable quarter in 2020. Net interest Net interest income was $346.4 million for the second quarterincome and of 2021, an increase of $9.0 million, or by 2.7% compared tonet interest the same quarter in 2020. The taxable-equivalent net interestmargin margin (?NIM?) was 2.68% for the second quarter of 2021, down 46 basis points from 3.14% for the comparable quarter in 2020. The provision for credit losses was a benefit of $19.6 million during the second quarter of 2021, compared to a $20.6 millionProvision for expense during the same quarter in 2020. The allowance forcredit losses credit losses (?ACL?) was $189.1 million at June 30, 2021, compared to $224.3 million at December 31, 2020, representing 0.58% and 0.68% of loans, respectively. Noninterest income was $134.2 million for the second quarter ofOperating 2021, a decrease of $31.3 million, or by 18.9% compared to theperformance same quarter in 2020. Noninterest expense was $301.6 million for the second quarter of 2021, an increase of $9.9 million, or by 3.4% compared to the same quarter in 2020. Total loans declined to $32.7 billion, a decrease of $102.3 million, or by 0.6% on an annualized basis since December 31,Loans and 2020. Excluding loans originated under the Small Businesscredit Administration Paycheck Protection Program (?SBA-PPP?), totalquality loans increased $604.7 million, or by 3.7% on an annualized basis since December 31, 2020. The net charge-off ratio was 0.02% for the second quarter of 2021 compared to 0.09% for the same quarter in 2020. Total deposits grew to $48.4 billion, an increase of $5.0Deposits billion, or by 23.1% on an annualized basis since December 31, 2020 driven by organic growth and the effects of government stimulus. BancShares remained well capitalized with a total risk-basedCapital capital ratio of 14.2%, a Tier 1 risk-based capital ratio of 12.1%, a Common Equity Tier 1 ratio of 11.1% and a Tier 1 leverage ratio of 7.7%.

MERGER WITH CIT GROUP INC.

On October 15, 2020, BancShares entered into a definitive merger agreement with CIT Group Inc. (CIT) through which the companies plan to combine in an all-stock merger. The transaction has been approved by the shareholders of both companies and has received regulatory approval from the North Carolina Commissioner of Banks and the Federal Deposit Insurance Corporation (FDIC). Completion of the proposed merger remains subject to approval from the Board of Governors of the Federal Reserve System and closing is expected in the third quarter, subject to such approval and the satisfaction or waiver of other customary closing conditions.

NET INTEREST INCOME

Net interest income was $346.4 million for the second quarter of 2021, an increase of $9.0 million, or by 2.7% compared to the same quarter in 2020. This was primarily due to lower rates paid on interest-bearing deposits, an increase in interest and fee income on SBA-PPP loans, and organic loan growth, partially offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $27.2 million in interest and fee income for the second quarter of 2021 compared to $19.0 million for the same quarter in 2020. Net interest income increased $6.7 million, or by 2.0% compared to the linked quarter primarily due to higher investment portfolio balance and yield. The taxable-equivalent NIM was 2.68% during the second quarter of 2021, a decrease of 46 basis points from 3.14% for the comparable quarter in 2020. The margin decline was primarily due to changes in earning asset mix and a decline in the yield on interest-earning assets, partially offset by lower rates paid on interest-bearing deposits and the yield on SBA-PPP loans. The taxable-equivalent NIM declined 12 basis points from 2.80% for the linked quarter primarily due to changes in earning asset mix.

Net interest income was $686.0 million for the six months ended June 30, 2021, an increase of $10.3 million, or by 1.5% compared to the same period in 2020. This was primarily due to lower rates paid on interest-bearing deposits, an increase in interest and fee income on SBA-PPP loans, and organic loan growth, partially offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $58.1 million in interest and fee income for the six months ended June 30, 2021, compared to $19.0 million for the same period in 2020. The taxable-equivalent NIM was 2.74% for the six months ended June 30, 2021, a decrease of 59 basis points from 3.33% for the comparable period in 2020. The margin decline was primarily due to changes in earning asset mix and a decline in the yield on interest-earning assets, partially offset by lower rates paid on interest-bearing deposits and the yield on SBA-PPP loans.

PROVISION FOR CREDIT LOSSES

Provision for credit losses was a benefit of $19.6 million for the second quarter of 2021 compared to $20.6 million in expense for the same quarter in 2020. The second quarter of 2021 was favorably impacted by $21.6 million in reserve release driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. The comparable quarter in 2020 included $14.6 million in reserve build related to uncertainties surrounding COVID-19. Total net charge-offs for the second quarter of 2021 were $2.0 million, a decrease from $7.4 million for the comparable quarter in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.02% for the second quarter of 2021 compared to 0.09% for the same quarter in 2020. Excluding the impact of SBA-PPP loans on average loan balances, the net charge-off ratio was 0.03% for the second quarter of 2021 compared to 0.10% for the same quarter in 2020.

Provision for credit losses was a benefit of $30.6 million for the six months ended June 30, 2021, compared to $48.9 million in expense for the same period in 2020. The six months ended June 30, 2021, was favorably impacted by $35.2 million in reserve release driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. The comparable period in 2020 included $36.1 million in reserve build related to uncertainties surrounding COVID-19. Total net charge-offs for the six months ended June 30, 2021, were $4.6 million, a decrease from $14.9 million for the comparable period in 2020 due to a lower volume of charge-offs and stable recoveries. The net charge-off ratio was 0.03% for the six months ended June 30, 2021, compared to 0.10% for the same period in 2020. The impact of SBA-PPP loans on average loan balances did not have an impact on the net charge-off ratio for the six months ended June 30, 2021 and 2020.

NONINTEREST INCOME

Noninterest income was $134.2 million for the second quarter of 2021, a decrease of $31.3 million, or by 18.9% compared to $165.4 million for the same quarter in 2020. The primary driver of the decrease was a $52.9 million decline in fair market value adjustments on marketable equity securities. Fair market value adjustments on marketable equity securities were heightened in the second quarter of 2020 as BancShares built up its equity portfolio when the market contracted. As the market started to improve in the second quarter of 2020, BancShares sold a large portion of it to realize the gains. Additionally, there was a $3.9 million decrease in mortgage income due to a decline in gain on sale driven by interest rate movements. These decreases were partially offset by a $9.4 million increase in wealth management services due to increases in annuity fees, assets under management, and advisory and transaction fees, a $4.9 million increase in cardholder services income, net, a $4.4 million increase in service charges on deposit accounts, and a $3.2 million increase in merchant services income, net. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $106.7 million for the second quarter of 2021, an increase of $19.6 million, or by 22.5% compared to $87.1 million for the same quarter in 2020.

Noninterest income was $270.8 million for the six months ended June 30, 2021, an increase of $41.4 million, or by 18.0% compared to $229.4 million for the same period in 2020. The primary drivers of the increase were a $15.2 million increase in wealth management services due to increases in annuity fees, assets under management, and advisory and transaction fees, a $14.5 million increase in fair market value adjustments on marketable equity securities, a $6.7 million increase in cardholder services income, net, and a $6.2 million increase in merchant services income, net, and a $3.9 million increase in mortgage income. These increases were partially offset by an $8.5 million decrease in realized gains on available for sale securities. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $218.1 million for the six months ended June 30, 2021, an increase of $35.4 million, or by 19.4% compared to $182.7 million for the same period in 2020.

NONINTEREST EXPENSE

Noninterest expense was $301.6 million for the second quarter of 2021, an increase of $9.9 million, or by 3.4% compared to the same quarter in 2020. The primary drivers of the increase were a $7.0 million increase in salaries and wages due to an increase in payroll incentives and a $4.9 million increase in employee benefits due to higher health insurance claims.

Noninterest expense was $597.5 million for the six months ended June 30, 2021, an increase of $5.9 million, or by 1.0% compared to the same period in 2020. The primary drivers of the increase were a $9.6 million increase in salaries and wages due to an increase in payroll incentives, a $7.5 million increase in processing fees paid to third parties as we continue to make investments in our digital and technological capabilities, and a $4.0 million increase in merger-related expense associated with the pending merger with CIT. These increases were partially offset by a $14.4 million decrease in other expense due to a decrease in other pension expense and a $5.6 million decrease in collection and foreclosure-related expenses.

INCOME TAXES

The effective tax rate was 23.1% for the second quarter of 2021 compared to 19.3% for the same quarter in 2020. The effective tax rate was 23.0% for the six months ended June 30, 2021, compared to 20.3% for the same period in 2020.

The effective tax rates for the prior year were favorably impacted by BancShares decision to utilize an allowable alternative for computing its 2020 federal income tax liability. The allowable alternative provided BancShares the ability to use the federal income tax rate for certain deductible amounts related to FDIC-assisted acquisitions that was applicable when these amounts were originally subject to tax.

LOANS AND DEPOSITS

At June30, 2021, loans totaled $32.7 billion, a decrease of $102.3 million, or by 0.6% on an annualized basis since December 31, 2020. Excluding SBA-PPP loans, total loans increased $604.7 million, or by 3.7% on an annualized basis since December 31, 2020.

At June30, 2021, deposits totaled $48.4 billion, an increase of $5.0 billion, or by 23.1% on an annualized basis since December 31, 2020, driven by organic growth and the effects of government stimulus.

ALLOWANCE FOR CREDIT LOSSES (ACL)

The ACL was $189.1 million at June30, 2021, compared to $224.3 million at December 31, 2020. The ACL as a percentage of total loans was 0.58% at June30, 2021, compared to 0.68% at December 31, 2020. The reduction was primarily due to $35.2 million in reserve release for the six months ended June 30, 2021, driven primarily by continued strong credit performance, low net charge-offs, and improvement in macroeconomic factors. Excluding SBA-PPP loans, which have no associated ACL, the ACL as a percentage of total loans was 0.61% as of June30, 2021, compared to 0.74% as of December 31, 2020.

NONPERFORMING ASSETS

Nonperforming assets, including nonaccrual loans and other real estate owned, were $231.1 million, or 0.71% of total loans and other real estate owned at June30, 2021, compared to $242.4 million or 0.74% at December 31, 2020. Excluding the impact of SBA-PPP loans on loan balances, the ratio of total nonperforming assets to total loans, leases, and other real estate owned was 0.74% as of June30, 2021, compared to 0.80% at December 31, 2020.

CAPITAL TRANSACTIONS

During the second quarter of 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 346,000 shares of Class A common stock for $127.0 million at an average cost per share of $367.03 for the comparable quarter in 2020. For the six months ended June 30, 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 695,390 shares of Class A common stock for $286.7 million at an average cost per share of $412.28 for the comparable period in 2020. All Class A common stock repurchases completed in 2020 were consummated under previously approved authorizations. Following the expiration of our latest share repurchase authorization on July 31, 2020, share repurchase activity was suspended.

EARNINGS CALL DETAILS

First Citizens BancShares Inc. will host a conference call to discuss the company's financial results on August 3, 2021, at 9 a.m. Eastern time.

To access this call, dial:

Domestic: 833-654-8257International: 602-585-9869Conference ID: 6592133

The second quarter 2021 earnings presentation and news release will be available on the companys website at www.firstcitizens.com/investor-relations.

After the conference call, you may access a replay of the call through August 16, 2021, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 6592133.

For investor inquiries, contact Deanna Hart, Investor Relations, at 919-716-2137.

ABOUT FIRST CITIZENS BANCSHARES

BancShares is the financial holding company for Raleigh, North Carolina-headquartered First Citizens Bank. First Citizens Bank provides a broad range of financial services to individuals, businesses, professionals and the medical community through branch offices in 19 states, including digital banking, mobile banking, ATMs and telephone banking. As of June30, 2021, BancShares had total assets of $55.2 billion.

For more information, visit First Citizens website at 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, 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, the delay in closing (or failure to close) one or more of BancShares previously announced acquisition transaction(s), the failure to realize the anticipated benefits of BancShares previously announced acquisition transaction(s), and general competitive, economic, political, and market conditions, as well as risks related to the proposed transaction with CIT Group Inc (CIT) including, in addition to those described above and among others, (1) the risk that the cost savings, any revenue synergies and other anticipated benefits of the proposed transaction may not be realized or may take longer than anticipated to be realized, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the condition of the economy and competitive factors in areas where BancShares and CIT do business, (2) disruption to BancShares and CITs businesses as a result of the pendency of the proposed transaction and diversion of managements attention from ongoing business operations and opportunities, (3) the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement, (4) the risk that the integration of BancShares and CITs operations will be materially delayed or will be more costly or difficult than expected or that BancShares and CIT are otherwise unable to successfully integrate their businesses, (5) the outcome of any legal proceedings that may be or have been instituted against BancShares and/or CIT, (6) the failure to obtain required governmental approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction), (7) reputational risk and potential adverse reactions of BancShares and/or CITs customers, suppliers, employees or other business partners, including those resulting from the announcement or completion of the proposed transaction, (8) the failure of any of the closing conditions in the definitive merger agreement to be satisfied on a timely basis or at all, (9) delays in closing the proposed transaction, (10) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (11) the dilution caused by BancShares issuance of additional shares of its capital stock in connection with the proposed transaction, (12) other factors that may affect future results of BancShares and CIT including changes in asset quality and credit risk, the inability to sustain revenue and earnings growth, changes in interest rates and capital markets, inflation, customer borrowing, repayment, investment and deposit practices, the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms, and (13) the impact of the global COVID-19 pandemic on CITs business, the parties ability to complete the proposed transaction and/or any of the other foregoing risks.

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. Further information regarding BancShares and factors which could affect the forward-looking statements contained herein can be found in BancShares Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and its other filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, unaudited) June 30, 2021 December 31, 2020Assets Cash and due from banks $ 395,364 $ 362,048 Overnight investments 7,871,382 4,347,336 Investment in marketable equity securities(cost of $84,297 at June30, 2021 and $84,837 118,540 91,680 at December31, 2020)Investment securities available for sale(cost of $7,335,745 at June30, 2021 and 7,381,083 7,014,243 $6,911,965 at December31, 2020)Investment securities held to maturity (fairvalue of $3,377,085 at June30, 2021 and 3,394,604 2,816,982 $2,838,499 at December31, 2020)Loans held for sale 107,768 124,837 Loans and leases 32,689,652 32,791,975 Allowance for credit losses (189,094 ) (224,314 )Net loans and leases 32,500,558 32,567,661 Premises and equipment 1,237,860 1,251,283 Other real estate owned 43,685 50,890 Income earned not collected 133,043 145,694 Goodwill 350,298 350,298 Other intangible assets 47,439 50,775 Other assets 1,593,694 783,953 Total assets $ 55,175,318 $ 49,957,680 Liabilities Deposits: Noninterest-bearing $ 20,974,111 $ 18,014,029 Interest-bearing 27,436,485 25,417,580 Total deposits 48,410,596 43,431,609 Securities sold under customer repurchase 692,604 641,487 agreementsFederal Home Loan Bank borrowings 646,667 655,175 Subordinated debt 497,290 504,518 Other borrowings 80,531 88,470 FDIC shared-loss payable ? 15,601 Other liabilities 371,140 391,552 Total liabilities 50,698,828 45,728,412 Shareholders? equity Common stock: Class A - $1 par value (16,000,000 sharesauthorized; 8,811,220 shares issued and 8,811 8,811 outstanding at June30, 2021 and December31,2020)Class B - $1 par value (2,000,000 sharesauthorized; 1,005,185 shares issued and 1,005 1,005 outstanding at June30, 2021 and December31,2020)Preferred stock - $0.01 par value (10,000,000shares authorized; 345,000 shares issued and 339,937 339,937 outstanding at June30, 2021 and December31,2020; $1,000 per share liquidity preference)Retained earnings 4,148,857 3,867,252 Accumulated other comprehensive (loss) income (22,120 ) 12,263 Total shareholders? equity 4,476,490 4,229,268 Total liabilities and shareholders? equity $ 55,175,318 $ 49,957,680

CONSOLIDATED STATEMENTS OF INCOME

Three months ended Six months ended June 30, March 31, June 30, June 30, June 30,(Dollars inthousands, except 2021 2021 2020 2021 2020per share data,unaudited)Interest income Loans and leases $ 324,288 $ 323,023 $ 326,099 $ 647,311 $ 651,647 Investmentsecurities interest 35,432 30,852 36,605 66,284 76,098 and dividend incomeOvernight 2,105 1,448 553 3,553 5,071 investmentsTotal interest 361,825 355,323 363,257 717,148 732,816 incomeInterest expense Deposits 8,542 8,793 17,916 17,335 42,110 Securities soldunder customer 356 338 399 694 841 repurchaseagreementsFederal Home Loan 2,099 2,087 2,472 4,186 5,456 Bank borrowingsSubordinated debt 4,181 4,188 4,677 8,369 7,432 Other borrowings 254 265 399 519 1,183 Total interest 15,432 15,671 25,863 31,103 57,022 expenseNet interest income 346,393 339,652 337,394 686,045 675,794 Provision (credit) (19,603 ) (10,974 ) 20,552 (30,577 ) 48,907 for credit lossesNet interest incomeafter provision for 365,996 350,626 316,842 716,622 626,887 credit lossesNoninterest income Wealth management 31,753 32,198 22,371 63,951 48,783 servicesService charges on 21,883 21,536 17,522 43,419 43,935 deposit accountsCardholder 22,471 19,960 17,587 42,431 35,747 services, netMortgage income 5,929 12,991 9,811 18,920 15,035 Merchant services, 8,532 8,917 5,363 17,449 11,251 netOther service 8,959 8,489 7,145 17,448 14,937 charges and feesInsurance 3,704 3,998 3,189 7,702 6,877 commissionsATM income 1,571 1,482 1,395 3,053 2,817 Marketable equitysecurities gains, 11,654 16,011 64,570 27,665 13,162 netRealized gains oninvestmentsecurities 15,830 9,207 13,752 25,037 33,547 available for sale,netOther 1,864 1,860 2,697 3,724 3,322 Total noninterest 134,150 136,649 165,402 270,799 229,413 incomeNoninterest expense Salaries and wages 153,643 147,830 146,633 301,473 291,888 Employee benefits 35,298 35,725 30,364 71,023 68,875 Occupancy expense 28,439 29,743 29,556 58,182 57,036 Equipment expense 28,902 29,803 28,774 58,705 56,624 Processing feespaid to third 14,427 13,673 10,186 28,100 20,558 partiesFDIC insurance 3,382 3,218 3,731 6,600 7,197 expenseCollection andforeclosure-related 173 2,198 3,949 2,371 8,003 expensesMerger-related 5,769 6,819 4,369 12,588 8,601 expensesOther 31,545 26,917 34,117 58,462 72,868 Total noninterest 301,578 295,926 291,679 597,504 591,650 expenseIncome before 198,568 191,349 190,565 389,917 264,650 income taxesIncome taxes 45,780 44,033 36,779 89,813 53,695 Net income $ 152,788 $ 147,316 $ 153,786 $ 300,104 $ 210,955 Preferred stock 4,636 4,636 4,790 9,272 4,790 dividendsNet incomeavailable to common $ 148,152 $ 142,680 $ 148,996 $ 290,832 $ 206,165 shareholdersWeighted averagecommon shares 9,816,405 9,816,405 10,105,520 9,816,405 10,289,320 outstandingEarnings per common $ 15.09 $ 14.53 $ 14.74 $ 29.63 $ 20.04 shareDividends declared 0.47 0.47 0.40 0.94 0.80 per common share

SELECTED QUARTERLY RATIOS

Three months ended June 30, March 31, June 30, 2021 2021 2020SELECTED RATIOS Book value per share at $ 421.39 $ 405.59 $ 367.57 period-endAnnualized return on average 1.13 % 1.16 % 1.36 %assetsAnnualized return on average 14.64 14.70 16.43 equityTotal risk-based capital ratio 14.2 14.1 13.6 Tier 1 risk-based capital ratio 12.1 12.0 11.4 Common equity Tier 1 ratio 11.1 11.0 10.3 Tier 1 leverage capital ratio 7.7 7.8 8.1

ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY DISCLOSURES

Three months ended(Dollars in thousands, June 30, 2021 March 31, June 30, 2020unaudited) 2021ALLOWANCE FOR CREDIT LOSSES ^(1) ACL at beginning of period $ 210,651 $ 224,314 $ 209,259 Provision for credit losses (19,603 ) (10,974 ) 20,552 Net charge-offs of loans and leases:Charge-offs (7,528 ) (8,563 ) (12,064 )Recoveries 5,574 5,874 4,703 Net charge-offs of loans and (1,954 ) (2,689 ) (7,361 )leasesACL at end of period $ 189,094 $ 210,651 $ 222,450 ACL at end of period allocated to:PCD $ 18,740 $ 22,935 $ 26,928 Non-PCD 170,354 187,716 195,522 ACL at end of period $ 189,094 $ 210,651 $ 222,450 Reserve for unfunded $ 11,103 $ 11,571 $ 13,685 commitmentsSELECTED LOAN DATA Average loans and leases: PCD $ 414,183 $ 454,521 $ 546,998 Non-PCD 32,628,109 32,515,793 30,992,001 Loans and leases at period-end: PCD 396,506 432,773 530,651 Non-PCD 32,293,146 32,748,078 31,887,774 RISK ELEMENTS Nonaccrual loans and leases $ 187,464 $ 194,534 $ 197,791 Other real estate owned 43,685 48,512 53,850 Total nonperforming assets $ 231,149 $ 243,046 $ 251,641 Accruing loans and leases 90 $ 3,776 $ 7,377 $ 3,796 days or more past dueRATIOS Net charge-offs (annualized) to 0.02 % 0.03 % 0.09 %average loans and leasesACL to total loans and leases^ (2):PCD 4.73 5.30 5.07 Non-PCD 0.53 0.57 0.61 Total 0.58 0.63 0.69 Ratio of total nonperformingassets to total loans, leases 0.71 0.73 0.77 and other real estate owned

(1) BancShares recorded no ACL on investment securities as of June 30, 2021, December 31, 2020, or June 30, 2020.

(2) Loans originated in relation to the SBA-PPP do not have a recorded ACL. As of June30, 2021, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.56% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.61%. As of December 31, 2020, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.67% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.74%.

AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN

Three months ended June 30, 2021 March 31, 2021 June 30, 2020 Average Yield/ Average Yield/ Average Yield/(Dollars in Balance Interest Rate ^ Balance Interest Rate ^ Balance Interest Rate ^thousands, unaudited) (2) (2) (2)INTEREST-EARNING ASSETSLoans and leases ^(1) $ 33,166,049 $ 324,891 3.89 % $ 33,086,656 $ 323,602 3.92 % $ 31,635,958 $ 326,618 4.10 %Investment securities:U.S. Treasury ? ? ? 383,300 171 0.18 206,575 679 1.32 Government agency 839,614 1,966 0.94 791,293 1,900 0.96 657,405 1,428 0.87 Mortgage-backed 8,968,779 25,273 1.13 7,882,679 20,607 1.05 7,555,947 28,532 1.51 securitiesCorporate bonds 612,516 7,806 5.10 602,883 7,742 5.14 299,250 3,782 5.06 Other investments 113,439 426 1.51 97,495 472 1.96 209,290 2,236 4.30 Total investment 10,534,348 35,471 1.35 9,757,650 30,892 1.27 8,928,467 36,657 1.64 securitiesOvernight investments 7,819,287 2,105 0.11 5,870,973 1,448 0.10 2,231,356 553 0.10 Totalinterest-earning $ 51,519,684 $ 362,467 2.80 $ 48,715,279 $ 355,942 2.93 $ 42,795,781 $ 363,828 3.38 assetsCash and due from 364,303 333,069 404,517 banksPremises and 1,242,700 1,251,542 1,260,566 equipmentAllowance for credit (211,913 ) (224,009 ) (209,973 ) lossesOther real estate 46,074 48,590 55,554 ownedOther assets 1,438,483 1,285,163 1,247,057 Total assets $ 54,399,331 $ 51,409,634 $ 45,553,502 INTEREST-BEARING LIABILITIESInterest-bearing deposits:Checking with $ 10,952,753 $ 1,504 0.06 % $ 10,746,225 $ 1,409 0.05 % $ 8,562,145 $ 1,310 0.06 %interestSavings 3,796,686 326 0.03 3,461,780 299 0.04 2,846,557 312 0.04 Money market accounts 9,581,775 2,634 0.11 9,008,391 2,508 0.11 7,618,883 6,519 0.34 Time deposits 2,672,900 4,078 0.61 2,805,317 4,577 0.66 3,398,979 9,775 1.16 Totalinterest-bearing 27,004,114 8,542 0.13 26,021,713 8,793 0.14 22,426,564 17,916 0.32 depositsSecurities sold undercustomer repurchase 677,451 356 0.21 641,236 338 0.21 659,244 399 0.24 agreementsOther short-term ? ? ? ? ? ? 45,549 248 2.16 borrowingsLong-term borrowings 1,227,755 6,534 2.12 1,235,576 6,540 2.12 1,275,928 7,300 2.26 Totalinterest-bearing 28,909,320 $ 15,432 0.21 27,898,525 $ 15,671 0.23 24,407,285 $ 25,863 0.42 liabilitiesDemand deposits 20,746,989 18,836,485 16,719,851 Other liabilities 344,849 399,420 438,141 Shareholders' equity 4,398,173 4,275,204 3,988,225 Total liabilities and $ 54,399,331 $ 51,409,634 $ 45,553,502 shareholders' equityInterest rate spread 2.59 % 2.70 % 2.96 %Net interest incomeand net yield on $ 347,035 2.68 % $ 340,271 2.80 % $ 337,965 3.14 %interest-earningassets

(1) Loans and leases include PCD and non-PCD loans, nonaccrual loans and loans held for sale.

(2) Yields related to loans, leases and securities exempt from both federal and state income taxes, federal income taxes only, or state income taxes only are stated on a taxable-equivalent basis assuming statutory federal income tax rates of 21.0% for all periods presented, as well as state income tax rates of 3.3% for the three months ended June30, 2021 and March31, 2021, and 3.4% for the three months ended June30, 2020. The taxable-equivalent adjustment was $642 thousand, $619 thousand, and $571 thousand for the three months ended June30, 2021, March31, 2021, and June30, 2020, respectively.

Barbara Thompson Deanna HartContact: Corporate Investor Communications Relations 919-716-2716 919-716-2137