GlobeNewswire Inc | Jan 26, 2022 06:30AM EST

January 26, 2022

RALEIGH, N.C., Jan. 26, 2022 (GLOBE NEWSWIRE) -- First Citizens BancShares, Inc. (BancShares) (Nasdaq: FCNCA) reported earnings for the fourth quarter and year ended December 31, 2021. Key results are presented below:

FOURTH QUARTER RESULTS Q4 2021 Q4 2020 Q4 Q4 Q4 Q4 Q4 Q4 Q4 2021 Q4 2020 2021 2020 2021 2020 2021 2020Net income (in Net income Net Return on Return on averagemillions) per share interest average equity margin assets$123.3 $138.1 $12.09 $13.59 2.58% 3.02% 0.84% 1.11% 10.96% 14.02% YEAR-TO-DATE (?YTD?) RESULTS 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020Net income (in Net income Net Return on Return on averagemillions) per share interest average equity margin assets$547.5 $491.7 $53.88 $47.50 2.66% 3.17% 1.00% 1.07% 12.84% 12.96%

FOURTH QUARTER HIGHLIGHTS Net income was $123.3 million for the fourth quarter of 2021, a decrease of $14.8 million or 10.7%, compared to the same quarterNet income in 2020. Net income per common share was $12.09 for the fourth quarter of 2021, compared to $13.59 per share for the same quarter in 2020. Return on Return on average assets for the fourth quarter of 2021 wasaverage 0.84%, down from 1.11% for the comparable quarter in 2020. Returnassets and on average equity for the fourth quarter of 2021 was 10.96%, downequity from 14.02% for the comparable quarter in 2020. Net Net interest income was $357.4 million for the fourth quarter ofinterest 2021, a decrease of $1.3 million or 0.4%, compared to the sameincome and quarter in 2020 but was up $10.5 million or 3.0% compared to thenet third quarter of 2021. The taxable-equivalent net interest margininterest (?NIM?) was 2.58% for the fourth quarter of 2021, down 44 basismargin points from 3.02% for the comparable quarter in 2020 and down 3 basis points from 2.61% in the third quarter of 2021. The provision for credit losses was a net benefit of $5.1 millionProvision during the fourth quarter of 2021, compared to a $5.4 millionfor credit expense during the same quarter in 2020. The allowance for creditlosses losses (?ACL?) was $178.5 million at December 31, 2021, compared to $224.3 million at December 31, 2020, representing 0.55% and 0.68% of loans, respectively. Noninterest income was $114.3 million for the fourth quarter ofOperating 2021, a decrease of $12.5 million or 9.9%, compared to the sameperformance quarter in 2020. Noninterest expense was $323.2 million for the fourth quarter of 2021, an increase of $17.8 million or 5.8%, compared to the same quarter in 2020. Total loans were $32.4 billion, a decrease of $420.5 million or 1.3%, since December 31, 2020. Excluding loans originated under the Small Business Administration Paycheck Protection ProgramLoans and (?SBA-PPP?), total loans increased $1.5 billion, or by 4.9%,credit since December 31, 2020. Total loans decreased $144.7 million, orquality by 1.8% on an annualized basis, compared to September 30, 2021. Excluding SBA-PPP loans, total loans increased $448.4 million, or by 5.7% annualized in the fourth quarter of 2021. The net charge-off ratio was -0.01% for the fourth quarter of 2021 compared to 0.06% for the same quarter in 2020. Total deposits grew to $51.4 billion, an increase of $8.0 billionDeposits or 18.4%, since December 31, 2020, driven by organic growth. Deposits increased $1.3 billion, or by 10.6% on an annualized basis, compared to September 30, 2021. BancShares remained well-capitalized with a total risk-basedCapital capital ratio of 14.35%, a Tier 1 risk-based capital ratio of 12.47%, a Common Equity Tier 1 ratio of 11.50% and a Tier 1 leverage ratio of 7.59%.

MERGER WITH CIT GROUP, INC.

On January 3, 2022, BancShares completed its previously announced merger with CIT Group, Inc. (CIT) creating a top 20 U.S. financial institution (based on assets) and the largest family-controlled bank in the nation.

The close of the First Citizens and CIT merger marked a transformational milestone in our companys history and the true start of our integration efforts, said Frank B. Holding Jr., First Citizens chairman and chief executive officer. Were officially one stronger and better team, with complementary strengths positioned to give our customers greater access to a broader range of products and services. Were creating a bank with more ways to fulfill our Forever First promise to customers and prospects one that helps more people and supports our communities across the nation.

CIT, CIT Bank and OneWest Bank are currently operating as divisions of First Citizens Bank, and these customers are able to continue to bank as they normally do. For now, these customers are being served through their current branches, websites, mobile apps, bankers and advisors. Over the coming months, a series of conversions to First Citizens systems and operations will take place.

The fourth quarter and full year results included in this earnings release do not include financial results of CIT. Limited financial information on CITs results for the quarter and year ended December 31, 2021 will be included in our fourth quarter 2021 earnings presentation.

NET INTEREST INCOME & NET INTEREST MARGIN

Net interest income was $357.4 million for the fourth quarter of 2021, a decrease of $1.3 million or 0.4% compared to the same quarter in 2020. This was primarily due to a decline in the yield on loans and a decrease in interest and fee income on SBA-PPP loans, largely offset by organic loan growth, higher investment and overnight balances and yields, as well as lower rates on interest-bearing deposits. SBA-PPP loans contributed $26.5 million in interest and fee income for the fourth quarter of 2021 compared to $42.2 million for the same quarter in 2020. Net interest income increased $10.5 million compared to the linked quarter due primarily to higher SBA-PPP interest and fee income and increased loan (excluding SBA-PPP loans) and investment balances. This increase was partially offset by declines in loan and investment yields. SBA-PPP loans contributed $20.0 million in interest and fee income during the third quarter of 2021.

The taxable-equivalent NIM was 2.58% during the fourth quarter of 2021, a decrease of 44 basis points from 3.02% for the comparable quarter in 2020. The margin decline was primarily due to changes in earning asset mix driven by excess liquidity and higher balances in overnight investments, a decline in the yield on loans and lower income on SBA-PPP loans. These declines were partially offset by lower rates paid on interest-bearing deposits and higher investment yields. The taxable-equivalent NIM declined 3 basis points from 2.61% for the linked quarter primarily due to changes in earning asset mix and lower investment yields, partially offset by an increase in SBA-PPP income.

Net interest income was $1.39 billion for the twelve months ended December 31, 2021, an increase of $2.2 million or 0.2% compared to the same period in 2020. While total net interest income in both periods was materially unchanged, there were components that varied period over period. The items positively impacting net interest income included increased loan, investment and overnight balances, as well as lower deposit rates and an increase in SBA-PPP income. These increases were largely offset by a decline in the yield on interest-earning assets. SBA-PPP loans contributed $104.6 million in interest and fee income for the twelve months ended December 31, 2021, compared to $90.1 million for the same period in 2020.

The taxable-equivalent NIM was 2.66% for the twelve months ended December 31, 2021, a decrease of 51 basis points from 3.17% 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 increased income from SBA-PPP loans.

PROVISION FOR CREDIT LOSSES

Provision for credit losses was a net benefit of $5.1 million for the fourth quarter of 2021 compared to $5.4 million in expense for the same quarter in 2020. The fourth quarter of 2021 was favorably impacted by a $4.7 million reserve release driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors. Total net recoveries for the fourth quarter of 2021 were $0.4 million compared to net charge-offs of $5.0 million for the comparable quarter in 2020. The net charge-off ratio was (0.01%) for the fourth quarter of 2021 compared to 0.06% for the same quarter in 2020.

Provision for credit losses was a benefit of $36.8 million for the twelve months ended December 31, 2021, compared to $58.4 million in expense for the same period in 2020. Provision for credit losses for the twelve months ended December 31, 2021, was favorably impacted by a $45.8 million reserve release driven primarily by improvement in macroeconomic factors, continued strong credit performance and low net charge-offs. The comparable period in 2020 included a $35.9 million reserve build related to uncertainties surrounding COVID-19. Net charge-offs for the twelve months ended December 31, 2021, were $9.0 million, a decrease from $22.4 million for the comparable period in 2020 due to a lower volume of charge-offs and higher recoveries. The net charge-off ratio was 0.03% for the twelve months ended December 31, 2021, compared to 0.07% for the same period in 2020.

NONINTEREST INCOME

Noninterest income was $114.3 million for the fourth quarter of 2021, a decrease of $12.5 million or 9.9%, compared to $126.8 million for the same quarter in 2020. Contributing to the decline was a $15.9 million reduction in fair market value adjustments on marketable equity securities, a $6.0 million decrease in mortgage income due to reductions in gain on sale and production volume driven by higher mortgage rates and increased competition and a $5.3 million decline in realized gains on available for sale securities. These declines were partially offset by a $5.3 million increase in wealth management services due to growth in assets under management resulting in higher advisory and transaction fees, a $3.6 million increase in service charges on deposit accounts, a $2.6 million increase in cardholder services, net, and a $1.2 million increase in both merchant services, net and other service charges and fees. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $111.2 million for the fourth quarter of 2021, an increase of $8.6 million or 8.4% compared to $102.6 million for the same quarter in 2020.

Noninterest income was $508.0 million for the twelve months ended December 31, 2021, an increase of $31.3 million or 6.6% compared to $476.8 million for the same period in 2020. The primary drivers of the increase were a $26.0 million increase in wealth management services due to growth in assets under management resulting in higher advisory and transaction fees, a $12.4 million increase in cardholder services, net, a $9.0 million increase in merchant services, net, a $7.1 million increase in service charges on deposit accounts, a $5.0 million increase in other service charges and fees and a $4.7 million favorable change in fair market value adjustments on marketable equity securities. These increases were partially offset by a $27.1 million decrease in realized gains on available for sale securities due to lower sales volume and a $9.1 million decline in mortgage income due to reductions in gain on sale and production volume driven by higher mortgage rates and increased competition. Excluding fair market value adjustments on marketable equity securities and realized gains on available for sale securities, noninterest income was $440.8 million for the twelve months ended December 31, 2021, an increase of $53.7 million or 13.9%, compared to $387.1 million for the same period in 2020.

NONINTEREST EXPENSE

Noninterest expense was $323.2 million for the fourth quarter of 2021, an increase of $17.8 million or 5.8%, compared to the same quarter in 2020. The primary driver of the increase was a $9.9 million increase in salaries and wages driven by annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel cost. Additionally contributing to the increase was a $4.5 million increase in merger-related expenses related to the merger with CIT and a $3.7 million increase in processing fees paid to third parties driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes.

Noninterest expense was $1.2 billion for the twelve months ended December 31, 2021, an increase of $44.8 million or 3.8% compared to the same period in 2020. The most significant driver of the increase was a $33.2 million increase in salaries and wages due primarily to annual merit increases, increases in revenue-driven incentives, and an increase in temporary personnel costs. Also contributing to the higher expense was an $15.0 million increase in processing fees paid to third parties driven by our continued investments in digital and technology to support revenue-generating businesses and improve internal processes, and a $12.0 million increase in merger-related expense associated with the CIT merger. These increases were partially offset by a $15.6 million decrease in other expense due largely attributable to a decline in pension expense and amortization of core deposit intangibles, as well as an $8.2 million decrease in collection and foreclosure-related expenses.

INCOME TAXES

Income tax expense totaled $30.3 million and $36.6 million for the fourth quarter of 2021 and 2020, respectively, representing effective tax rates of 19.7% and 21.0% for the respective periods. Income tax expense totaled $154.2 million and $126.2 million for the year ended 2021 and 2020, respectively, representing effective tax rates of 22.0% and 20.4% for the respective periods.

In 2021 and 2020 BancShares utilized an allowable alternative for computing its federal income tax liability. The allowable alternative provides BancShares the ability to use the federal income tax rate for certain current year deductible amounts related to prior year FDIC-assisted acquisitions that was applicable when these amounts were originally subjected to tax. Without this alternative, the effective tax rates for 2021 would be materially unchanged and the annual effective tax rate for the fourth quarter and year ended 2020 would have been approximately 23.0% and 22.7% respectively.

LOANS AND DEPOSITS

At December31, 2021, loans totaled $32.4 billion, a decrease of $420.5 million or 1.3% since December 31, 2020. SBA-PPP loans totaled $493.8 million as of December 31, 2021, compared to $2.4 billion as of December 31, 2020. Excluding SBA-PPP loans, total loans increased $1.5 billion, or by 4.9% since December 31, 2020. Total loans decreased $144.7 million, or by 1.8% on an annualized basis compared to September 30, 2021. Excluding SBA-PPP loans, total loans increased $448.4 million, or by 5.7% on an annualized basis during the fourth quarter of 2021.

At December31, 2021, deposits totaled $51.4 billion, an increase of $8.0 billion or 18.4%, since December 31, 2020, driven by organic growth. Deposits increased $1.3 billion, or by 10.6% on an annualized basis since September 30, 2021.

ALLOWANCE FOR CREDIT LOSSES (ACL)

The ACL was $178.5 million at December31, 2021, compared to $224.3 million at December 31, 2020, a decrease of $45.8 million. The ACL as a percentage of total loans and leases was 0.55% at December31, 2021, compared to 0.68% at December31, 2020. The reduction was primarily due to a $45.8 million reserve release for the twelve months ended December 31, 2021, driven primarily by continued strong credit performance, low net charge-offs and improvement in macroeconomic factors.

NONPERFORMING ASSETS

Nonperforming assets, including nonaccrual loans and other real estate owned, were $159.6 million or 0.49% of total loans and other real estate owned at December31, 2021, compared to $242.4 million or 0.74% at December 31, 2020.

CAPITAL TRANSACTIONS

During the fourth quarter of 2021 and in the fourth quarter of 2020, BancShares did not repurchase any shares of Class A common stock. For the twelve months ended December 31, 2021, BancShares did not repurchase any shares of Class A common stock compared to repurchases of 813,090 shares of Class A common stock for $333.8 million at an average cost per share of $410.48 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

BancShares will host a conference call to discuss the company's financial results on Wednesday. January 26, 2022, at 9 a.m. Eastern time.

To access this call, dial:

Domestic: 833-654-8257International: 602-585-9869Conference ID: 1049136

The fourth quarter 2021 earnings presentation and this news release are available on the companys website at www.firstcitizens.com/investor-relations.

After the conference call, you may access a replay of the call through February 10, 2022, by dialing 855-859-2056 (domestic) or 404-537-3406 (international) with conference ID 1049136.

ABOUT FIRST CITIZENS BANCSHARES

BancShares is the financial holding company for First-Citizens Bank & Trust Company (First Citizens Bank) which 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. 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. Industry specialists bring a depth of expertise that helps businesses and individuals meet their specific goals at every stage of their financial journey. First Citizens Bank brings together personal service and powerful tools to help customers do more with their money and make more of their future. 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, general competitive, economic, political, 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.

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, 2020, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021, and its other filings with the Securities and Exchange Commission (the SEC), and in CITs Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as amended on Form 10-K/A, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021, and its other filings with the SEC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, unaudited) December 31, December 31, 2021 2020Assets Cash and due from banks $ 337,814 $ 362,048 Overnight investments 9,114,660 4,347,336 Investment in marketable equity securities(cost of $72,894 at December31, 2021 and 97,528 91,680 $84,837 at December31, 2020)Investment securities available for sale (costof $9,215,219 at December31, 2021 and 9,203,427 7,014,243 $6,911,965 at December31, 2020)Investment securities held to maturity (fairvalue of $3,759,650 at December31, 2021 and 3,809,453 2,816,982 $2,838,499 at December31, 2020)Loans held for sale 98,741 124,837 Loans and leases 32,371,522 32,791,975 Allowance for credit losses (178,493 ) (224,314 )Net loans and leases 32,193,029 32,567,661 Premises and equipment 1,233,418 1,251,283 Other real estate owned 39,328 50,890 Income earned not collected 134,237 145,694 Goodwill 346,064 350,298 Other intangible assets 43,085 50,775 Other assets 1,657,356 783,953 Total assets $ 58,308,140 $ 49,957,680 Liabilities Deposits: Noninterest-bearing $ 21,404,808 $ 18,014,029 Interest-bearing 30,001,286 25,417,580 Total deposits 51,406,094 43,431,609 Securities sold under customer repurchase 589,101 641,487 agreementsFederal Home Loan Bank borrowings 644,659 655,175 Subordinated debt 477,564 504,518 Other borrowings 72,155 88,470 FDIC shared-loss payable ? 15,601 Other liabilities 381,326 391,552 Total liabilities 53,570,899 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 December31, 2021 andDecember31, 2020)Class B - $1 par value (2,000,000 sharesauthorized; 1,005,185 shares issued and 1,005 1,005 outstanding at December31, 2021 andDecember31, 2020)Preferred stock - $0.01 par value (10,000,000shares authorized; 345,000 shares issued andoutstanding at December31, 2021 and 339,937 339,937 December31, 2020; $1,000 per share liquiditypreference)Retained earnings 4,377,712 3,867,252 Accumulated other comprehensive income 9,776 12,263 Total shareholders? equity 4,737,241 4,229,268 Total liabilities and shareholders? equity $ 58,308,140 $ 49,957,680

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three months ended Twelve months ended(Dollars in September December Decemberthousands, except December 31, 30, 31, December 31, 31,per share data, 2021 2021 2020 2021 2020unaudited)Interest income Loans and leases $ 328,288 $ 319,214 $ 344,691 $ 1,294,813 $ 1,332,720Investmentsecurities interest 39,670 39,246 31,166 145,200 144,459and dividend incomeOvernight 4,049 3,395 1,019 10,997 6,847investmentsTotal interest 372,007 361,855 376,876 1,451,010 1,484,026incomeInterest expense Deposits 7,832 8,073 11,057 33,240 66,635Securities soldunder customer 260 358 374 1,312 1,610repurchaseagreementsFederal Home Loan 2,110 2,114 2,151 8,410 9,763Bank borrowingsSubordinated debt 4,166 4,174 4,291 16,709 16,074Other borrowings 237 249 287 1,005 1,775Total interest 14,605 14,968 18,160 60,676 95,857expenseNet interest income 357,402 346,887 358,716 1,390,334 1,388,169Provision (credit) (5,138 ) (1,120 ) 5,403 (36,835 ) 58,352for credit lossesNet interest incomeafter provision for 362,540 348,007 353,313 1,427,169 1,329,817credit lossesNoninterest income Wealth management 32,902 31,935 27,624 128,788 102,776servicesService charges on 26,479 24,858 22,886 94,756 87,662deposit accountsCardholder 21,374 22,879 18,788 86,684 74,291services, netOther service 9,270 9,205 8,082 35,923 30,911charges and feesMerchant services, 7,282 8,409 6,108 33,140 24,122netMortgage income 5,482 6,106 11,451 30,508 39,592Insurance 3,854 4,000 4,091 15,556 14,544commissionsATM income 1,468 1,481 1,404 6,002 5,758Marketable equitysecurities gains, 3,066 8,082 18,934 34,081 29,395netRealized gains oninvestmentsecurities ? 3,350 5,281 33,119 60,253available for sale,netOther 3,082 2,639 2,116 9,445 7,446Total noninterest 114,259 122,944 126,765 508,002 476,750incomeNoninterest expense Salaries and wages 160,774 160,947 150,835 623,194 590,020Employee benefits 32,490 32,146 31,581 135,659 132,244Occupancy expense 29,897 29,101 32,143 117,180 117,169Equipment expense 30,237 30,229 29,481 119,171 115,535Processing feespaid to third 16,041 15,602 12,306 59,743 44,791partiesFDIC insurance 3,871 3,661 3,337 14,132 12,701expenseCollection andforeclosure-related 2,235 836 3,487 5,442 13,658expensesMerger-related 9,862 7,013 5,342 29,463 17,450expensesOther 37,781 33,283 36,861 129,526 145,117Total noninterest 323,188 312,818 305,373 1,233,510 1,188,685expenseIncome before 153,611 158,133 174,705 701,661 617,882income taxesIncome taxes 30,329 34,060 36,621 154,202 126,159Net income $ 123,282 $ 124,073 $ 138,084 $ 547,459 $ 491,723Preferred stock 4,636 4,636 4,636 18,544 14,062dividendsNet incomeavailable to common $ 118,646 $ 119,437 $ 133,448 $ 528,915 $ 477,661shareholdersWeighted averagecommon shares 9,816,405 9,816,405 9,816,405 9,816,405 10,056,654outstandingEarnings per common $ 12.09 $ 12.17 $ 13.59 $ 53.88 $ 47.50shareDividends declared 0.47 0.47 0.47 1.88 1.67per common share

SELECTED QUARTERLY RATIOS

Three months ended December 31, September 30, December 31, 2021 2021 2020SELECTED RATIOS ^(1) Book value per share at $ 447.95 $ 432.07 $ 396.21 period-endAnnualized return on average 0.84 % 0.88 % 1.11 %assetsAnnualized return on average 10.96 11.29 14.02 equityTotal risk-based capital 14.35 14.30 13.81 ratioTier 1 risk-based capital 12.47 12.32 11.63 ratioCommon equity Tier 1 ratio 11.50 11.34 10.61 Tier 1 leverage capital 7.59 7.68 7.86 ratio^(1) Capital ratios are preliminary

.

ALLOWANCE FOR CREDIT LOSSES AND ASSET QUALITY DISCLOSURES

Three months ended(Dollars in December 31, 2021 September 30, December 31,thousands, unaudited) 2021 2020ALLOWANCE FOR CREDIT LOSSES ^(1) ACL at beginning of $ 183,194 $ 189,094 $ 223,936 periodProvision for credit (5,138 ) (1,120 ) 5,403 lossesNet charge-offs of loans and leases:Charge-offs (8,258 ) (11,074 ) (9,848 )Recoveries 8,695 6,293 4,823 Net charge-offs of 437 (4,781 ) (5,025 )loans and leasesACL at end of period $ 178,493 $ 183,193 $ 224,314 ACL at end of period allocated to:PCD $ 14,802 $ 18,438 $ 23,987 Non-PCD 163,691 164,756 200,327 ACL at end of period $ 178,493 $ 183,194 $ 224,314 Reserve for unfunded $ 11,815 $ 11,472 $ 12,814 commitmentsSELECTED LOAN DATA Average loans and leases:PCD $ 356,997 $ 384,673 $ 479,302 Non-PCD 32,030,717 32,222,960 32,374,204 Loans and leases at period-end:PCD 337,624 373,255 462,882 Non-PCD 32,033,898 32,142,934 32,329,093 RISK ELEMENTS Nonaccrual loans and $ 120,306 $ 163,775 $ 191,483 leasesOther real estate 39,328 40,649 50,890 ownedTotal nonperforming $ 159,634 $ 204,424 $ 242,373 assetsAccruing loans andleases 90 days or $ 6,925 $ 5,614 $ 5,862 more past dueRATIOS Net charge-offs(annualized) to (0.01) 0.06 % 0.06 %average loans and %leasesACL to total loans and leases^(2):PCD 4.38 4.94 5.18 Non-PCD 0.51 0.51 0.62 Total 0.55 0.56 0.68 Ratio of totalnonperforming assetsto total loans, 0.49 0.63 0.74 leases and other realestate owned

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

(2) Loans originated in relation to the SBA-PPP do not have a recorded ACL. As of December31, 2021, the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans was 0.52% while the ratio of ACL to total loans excluding SBA-PPP loans was 0.56%. 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 December 31, 2021 September 30, 2021 December 31, 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) $ 32,488,033 $ 328,781 3.98 % $ 32,707,591 $ 319,738 3.85 % $ 32,964,390 $ 345,300 4.12 %Investment securities:U.S. Treasury 560,737 1,401 0.99 ? ? ? 526,072 250 0.19 Government agency 832,821 1,381 0.66 824,499 2,076 1.01 695,757 1,574 0.90 Mortgage-backed 9,300,971 28,597 1.23 9,164,180 29,056 1.27 7,981,834 21,130 1.06 securitiesCorporate bonds 620,341 7,782 5.02 597,386 7,610 5.10 591,780 7,657 5.18 Other investments 109,233 563 2.04 121,454 544 1.78 93,681 600 2.55 Total investment 11,424,103 39,724 1.39 10,707,519 39,286 1.47 9,889,124 31,211 1.26 securitiesOvernight investments 10,689,674 4,050 0.15 8,956,055 3,395 0.15 4,069,309 1,019 0.10 Totalinterest-earning $ 54,601,810 $ 372,555 2.69 $ 52,371,165 $ 362,419 2.73 $ 46,922,823 $ 377,530 3.17 assetsCash and due from 336,715 364,593 325,890 banksPremises and 1,239,037 1,239,111 1,262,831 equipmentAllowance for credit (183,810 ) (189,885 ) (225,339 ) lossesOther real estate 41,673 40,786 50,949 ownedOther assets 2,080,518 2,096,588 1,220,649 Total assets $ 58,115,943 $ 55,922,358 $ 49,557,803 INTEREST-BEARING LIABILITIESInterest-bearing deposits:Checking with $ 11,993,935 $ 1,382 0.05 % $ 11,323,503 $ 1,350 0.05 % $ 9,688,744 $ 1,533 0.06 %interestSavings 4,140,161 324 0.03 3,979,389 342 0.03 3,230,625 306 0.04 Money market accounts 10,357,923 2,223 0.09 9,866,327 2,357 0.09 8,529,816 3,242 0.15 Time deposits 2,517,265 3,903 0.62 2,599,006 4,024 0.61 3,017,044 5,976 0.79 Totalinterest-bearing 29,009,284 7,832 0.11 27,768,225 8,073 0.12 24,466,229 11,057 0.18 depositsSecurities sold undercustomer repurchase 650,123 260 0.16 672,114 358 0.21 684,311 374 0.22 agreementsOther short-term ? ? ? ? ? ? ? ? ? borrowingsLong-term borrowings 1,217,099 6,513 2.12 1,222,452 6,537 2.12 1,250,682 6,729 2.13 Totalinterest-bearing 30,876,506 $ 14,605 0.19 29,662,791 $ 14,968 0.20 26,401,222 $ 18,160 0.27 liabilitiesDemand deposits 22,229,233 21,338,862 18,657,083 Other liabilities 377,286 384,113 373,403 Shareholders' equity 4,632,918 4,536,592 4,126,095 Total liabilities and $ 58,115,943 $ 55,922,358 $ 49,557,803 shareholders' equityInterest rate spread 2.50 % 2.53 % 2.90 %Net interest incomeand net yield on $ 357,950 2.58 % $ 347,451 2.61 % $ 359,370 3.02 %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 December31, 2021 and September30, 2021, and 3.4% for the three months ended December31, 2020. The taxable-equivalent adjustment was $548 thousand, $564 thousand, and $654 thousand for the three months ended December31, 2021, September30, 2021, and December31, 2020, respectively.

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