First Citizens BancShares reported earnings for the third quarter ended September 30, 2023.
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For the third quarter, adjusted net income available to common stockholders was $813 million, or $55.92 per diluted common share, a $48 million increase from $765 million, or $52.60 per diluted common share, in the second quarter of 2023.
Net interest income totaled $1.99 billion, up from $1.96 billion in the second quarter.
The $29 million increase in net interest income was due to a $157 million increase in interest income, partially offset by a $128 million increase in interest expense.
The increase in interest income of $157 million was due to increases of $73 million for interest on loans, $60 million for interest on investment securities, and $24 million for interest on interest earning deposits at banks.
The increase in interest on loans was attributable to an increase in loan accretion of $32 million, primarily related to the Acquisition, a higher yield, and loan growth in both the General Bank and Commercial Bank.
The increase in interest income on investment securities was a result of a higher average balance and a higher yield.
The increase in interest income on interest-earning deposits at banks was due to a higher yield.
The $128 million increase in interest expense was due to a $194 million increase in interest expense on deposits from growth in the Direct Bank and a higher rate paid, partially offset by a $66 million decrease in borrowing costs from a lower average balance and rate paid.
Net interest margin was 4.07%, a decrease of 3 basis points compared to the second quarter.
The yield on interest-earning assets was 6.36%, an increase of 18 basis points over the second quarter.
The increase in yield on interest-earning assets was primarily due to a 22 basis points increase in the yield on loans.
The increase was mostly related to variable rate loan resets and the previously discussed increase in accretion on acquired loans.
The increase in the yield on interest-earning assets was partially offset by a 20 basis points increase in the rate paid on interest-bearing liabilities.
Noninterest income totaled $615 million compared to $658 million in the second quarter.
The decrease was mainly related to a $43 million lower adjustment to the gain on acquisition as we further refined our estimates for the fair value of net assets acquired and liabilities assumed in the Acquisition.
Additionally, the $12 million realized loss from the sale of the municipal bond portfolio acquired in the Acquisition was offset by increases of $10 million in rental income on operating lease equipment and $2 million in fee income and other service charges.
Adjusted noninterest income totaled $468 million compared to $462 million in the second quarter, an increase of $6 million.
The previously discussed increases from rental income on operating lease equipment and fee income and other service charges were partially offset by slight declines of $2 million in wealth management services, $2 million in merchant services, and $2 million in mortgage income.
Noninterest expense totaled $1.42 billion compared to $1.57 billion in the second quarter, a decrease of $156 million.
The decline was largely related to a reduction of $84 million in acquisition-related expenses.
Adjusted noninterest expense totaled $1.13 billion compared to $1.20 billion in the second quarter, a decrease of $70 million.
The decreases in noninterest expense and adjusted noninterest expense were primarily due to declines of $48 million in salaries and benefits, $16 million in equipment expense, $16 million in marketing expense, and $9 million in professional fees.
The declines were partially offset by an increase of $14 million in FDIC insurance expense. ■