FIRST CITIZENS BANCSHARES, INC. 
Management's discussion and analysis ("MD&A") of earnings and related financial
data are presented to assist in understanding the financial condition and
results of operations of First Citizens BancShares, Inc. and its subsidiaries
("BancShares"). This discussion and analysis should be read in conjunction with
the unaudited consolidated financial statements and related notes presented
within this Quarterly Report on Form 10-Q along with our financial statements
and related MD&A of financial condition and results of operations included in
our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020
Annual Report"). Intercompany accounts and transactions have been eliminated.
Although certain amounts for prior years have been reclassified to conform to
statement presentations for 2021, the reclassifications had no effect on
shareholders' equity or net income as previously reported. Unless otherwise
noted, the terms "we," "us" and "BancShares" refer to the consolidated financial
position and consolidated results of operations for BancShares.
EXECUTIVE OVERVIEW
BancShares conducts its banking operations through its wholly-owned subsidiary
First-Citizens Bank & Trust Company ("FCB"), a state-chartered bank organized
under the laws of the state of North Carolina .
BancShares' earnings and cash flows are primarily derived from our commercial
and retail banking activities. We gather deposits from retail and commercial
customers and also secure funding through various non-deposit sources. We invest
the liquidity generated from these funding sources in interest-earning assets,
including loans and leases, investment securities and overnight investments. We
also invest in bank premises, hardware, software, furniture and equipment used
to conduct our commercial and retail banking business. We provide treasury
services products, cardholder and merchant services, wealth management services
and various other products and services typically offered by commercial banks.
The fees and service charges generated from these products and services are
primary sources of noninterest income which is an essential component of our
total revenue.
We are focused on expanding our position in legacy and target markets through
organic growth and strategic acquisitions. We believe our franchise is
positioned for continued growth as a result of our client centric banking
principles, disciplined lending standards, and our people.
Refer to our 2020 Annual Report for further discussion of our strategy.
RECENT ECONOMIC AND INDUSTRY DEVELOPMENTS
During the first quarter of 2020, a novel strain of coronavirus ("COVID-19")
spread throughout the world, causing significant disruptions to the domestic and
global economies. In response to the outbreak, governments imposed restrictions
resulting in business shutdowns, regional quarantines, disruptions of supply
chains, changes in consumer behavior and overall economic instability. Although
vaccines for COVID-19 have been made available to the general public in the
United States and many places around the world, vaccination rates vary and
effectiveness may decrease over time. We cannot predict how widely utilized the
vaccines and boosters will be or whether and for how long they will be effective
in preventing the spread of COVID-19 (including its variants).
Although we cannot predict when or if normal economic activity and business
operations will resume, we observed general declines in the level of economic
uncertainty and stabilization of macroeconomic forecasts during the first three
quarters of 2021. The US experienced an uptick in the number of new cases during
the third quarter of 2021. We are unable to predict whether these trends will
continue and how this will affect the overall economy at the current time.
However, we remain vigilant in our review and monitoring efforts around the
duration and severity of the COVID-19 pandemic (including any of its variants)
and its effects on the overall economy and our financial results.
During the third quarter of 2021, the Federal Reserve's Federal Open Market
Committee ("FOMC") maintained the federal funds rate at a target range of 0.00%
to 0.25%. The FOMC acknowledged the economy's accelerating recovery from the
COVID-19 pandemic, but maintained that the recovery is incomplete and economic
risks remain. The FOMC expects to maintain this target range, but rate hikes are
expected in late 2022 or early 2023. Further, the committee suggested that they
will begin tapering asset purchases, potentially as early as the fourth quarter
of 2021 if economic progress continues as expected.
In response to the COVID-19 pandemic, the Small Business Administration Paycheck
Protection Program ("SBA-PPP") was established through the Coronavirus Aid
Relief and Economic Security Act (the "CARES Act") and the Consolidated
Appropriations Act 2021 to direct aid via loans to small businesses impacted by
the COVID-19 pandemic.
We completed the first round of SBA-PPP funding in the second half 2020 and the
second round of funding during the second quarter of 2021. As of September 30,
2021 , there were $1.1 billion SBA-PPP loans outstanding with remaining net
deferred fees of $39.4 million .
With respect to the first round of SBA-PPP, we began accepting and processing
applications for forgiveness during the third quarter of 2020. As of September
30, 2021 , we have received approximately 98% of forgiveness decisions from the
SBA to date, representing over $3.1 billion in forgiveness payments.
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With respect to the second round of SBA-PPP, we began accepting and processing
applications for forgiveness during the third quarter of 2021. As of September
30, 2021 , we have received approximately 14% of forgiveness decisions from the
SBA, representing over $175 million in forgiveness payments.
Table 1
SBA-PPP LOAN FORGIVENESS STATUS
(Dollars in thousands)
Round 1 Round 2
Status $ of Loans % of Round Total $ of Loans % of Round Total
Total Funded $ 3,199,897 100.0 % $ 1,223,797 100.0 %
Payments Received 3,121,746 97.6 175,660 14.4
Total Remaining $ 78,151 2.4 % $ 1,048,137 85.6 %
Through September 30, 2021 , over 99% of all COVID-19-related loan extensions
have begun repayment. Delinquency trends among loans entering repayment are in
line with the remainder of the portfolio, and we have not seen significant
declines in overall credit quality.
SIGNIFICANT EVENTS IN 2021
On October 15, 2020 , BancShares and CIT Group Inc., a Delaware corporation
("CIT"), entered into an Agreement and Plan of Merger (the "Merger Agreement")
by and among BancShares, FCB, FC Merger Subsidiary IX, Inc. , a direct, wholly
owned subsidiary of FCB ("Merger Sub"), and CIT, the parent company of CIT Bank,
N.A ., a national banking association ("CIT Bank "). Pursuant to the terms and
subject to the conditions set forth in the Merger Agreement, Merger Sub will
merge with and into CIT, with CIT as the surviving entity (the "First-Step
Merger"), and as soon as reasonably practicable following the effective time of
the First-Step Merger, CIT will merge with and into FCB, with FCB as the
surviving entity (together with the First-Step Merger, the "Mergers"). The
Merger Agreement further provides that immediately following the consummation of
the Mergers, CIT Bank will merge with and into FCB, with FCB as the surviving
bank (together with the Mergers, the "Transaction").
The Merger Agreement was unanimously approved by the Board of Directors of each
of BancShares and CIT. 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").
On September 30, 2021 , the parties entered into an amendment to the merger
agreement pursuant to which the parties mutually agreed to extend until March 1,
2022 the date after which either party may elect to terminate the merger
agreement if the merger has not yet been completed. Completion of the proposed
merger remains subject to approval from the Board of Governors of the Federal
Reserve System and both parties are committed to continuing to seek such
approval. The parties have responded to all questions issued by the Staff of the
Federal Reserve Board , and the Staff has informed us that they do not have
further questions at this time. The parties have been informed that the
application is presently at the Governor level, but the Board of Governors has
not provided a time frame for its decision on the application. Closing is
expected to occur as soon as practicable following receipt of such approval and
the satisfaction or waiver of other customary closing conditions.
Upon the terms and subject to the conditions set forth in the Merger Agreement,
at the effective time of the First-Step Merger (the "Effective Time"), each
share of CIT common stock, par value $0.01 per share, issued and outstanding
immediately prior to the Effective Time ("CIT Common Stock"), except for certain
shares of CIT Common Stock owned by CIT or BancShares, will be converted into
the right to receive 0.06200 shares of BancShares Class A common stock, par
value $1.00 per share. Holders of CIT Common Stock will receive cash in lieu of
fractional shares.
In addition, at the Effective Time, each share of Fixed-to-Floating Rate
Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share,
of CIT and 5.625% Non-Cumulative Perpetual Preferred Stock, Series B, par value
$0.01 per share, of CIT issued and outstanding will automatically be converted
into the right to receive one share of a newly created series of preferred
stock, Series B, of BancShares and one share of a newly created series of
preferred stock, Series C, of BancShares, respectively.
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The Merger Agreement requires that, effective as of the Effective Time, the
Boards of Directors of the combined company and the combined bank will consist
of 14 directors, (i) 11 of whom will be members of the current Board of
Directors of BancShares, and (ii) three of whom will be selected from among the
current Board of Directors of CIT and will include as one of those three Ellen
R. Alemany , Chairwoman and Chief Executive Officer of CIT. We intend to appoint
Michael A. Carpenter and Vice Admiral John R. Ryan , USN (Ret.), as the two other
members from CIT's current Board of Directors who will join the Boards of
Directors of the combined company and the combined bank.
FINANCIAL PERFORMANCE SUMMARY
Third Quarter Highlights
•Net income for the third quarter of 2021 was $124.1 million , a decrease of
$18.6 million , or 13.0% compared to the same quarter in 2020. Net income
available to common shareholders totaled $119.4 million for the third quarter of
2021. Net income per common share decreased $1.86 , or 13.3%, to $12.17 in the
third quarter of 2021, from $14.03 per share during the comparable quarter in
2020.
•Return on average assets for the third quarter of 2021 was 0.88%, down from
1.18% in the third quarter of 2020. Return on average equity for the third
quarter of 2021 was 11.29%, down from 14.93% during the comparable quarter of
2020.
•Net interest income was $346.9 million for the third quarter of 2021, a
decrease of $6.8 million , or 1.9% compared to the same quarter in 2020, but was
relatively stable compared to the second quarter of 2021. The taxable-equivalent
net interest margin ("NIM") was 2.61% for the third quarter of 2021, a decrease
of 45 basis points from 3.06% for the third quarter in 2020 and a decrease of 7
basis points from 2.68% from the second quarter of 2021.
•Provision for credit losses was a benefit of $1.1 million for the third quarter
of 2021 compared to an expense of $4.0 million for the same quarter in 2020. The
net charge-off ratio was 0.06% for the third quarter of 2021, up from 0.02% for
the second quarter of 2021 and 0.03% for the third quarter of 2020.
•Noninterest income was $122.9 million for the third quarter of 2021, an
increase of $2.4 million , or 2.0%, compared to $120.6 million for the same
quarter of 2020.
•Noninterest expense was $312.8 million for the third quarter of 2021, an
increase of $21.2 million , or by 7.3% compared to the same quarter of 2020.
•The allowance for credit losses was $183.2 million at September 30, 2021 ,
compared to $189.1 million at June 30, 2021 . The $5.9 million change was due
primarily to a reserve release for the three months ended September 30, 2021
driven by continued strong credit performance, low net charge-offs, and
improvement in macroeconomic factors.
•Total loans were $32.5 billion as of September 30, 2021 , a decrease of $173.5
million , or by 2.1% on an annualized basis, since June 30, 2021 . Excluding loans
originated under the SBA-PPP, total loans increased $437.4 million , or by 5.6%
on an annualized basis, since June 30, 2021 .
•Total deposits grew to $50.1 billion , an increase of $1.7 billion , or by 13.6%
on an annualized basis, since June 30, 2021 .
•At September 30, 2021 , BancShares remained "well-capitalized" as defined by
regulatory standards with a total risk-based capital ratio of 14.3%, a Tier 1
risk-based capital of 12.3%, a common equity Tier 1 ratio of 11.3% and a
leverage ratio of 7.7%.
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Year to Date Highlights
•Net income for the nine months ended September 30, 2021 totaled $424.2 million ,
an increase of $70.5 million , or 19.9% compared to the same period in 2020. Net
income available to common shareholders totaled $410.3 million . Earnings per
share increased $7.83 , or 23.1%, to $41.79 for the nine months ended September
30, 2021 , from $33.96 during the comparable period in 2020.
•Return on average assets for the nine months ended September 30, 2021 was
1.05%, consistent with the same period in 2020. Return on average equity for the
nine months ended September 30, 2021 was 13.50%, up 91 basis points compared to
the same period in 2020.
•Net interest income for the nine months ended September 30, 2021 , was $1.0
billion , an increase of $3.5 million , or 0.3% compared to the same period of
2020. The taxable-equivalent NIM was 2.69% for the nine months ended September
30, 2021 , a decrease of 54 basis points from 3.23% during the comparable period
of 2020.
•Provision for credit losses was a benefit of $31.7 million for the nine months
ended September 30, 2021 , compared to $52.9 million in expense for the same
period in 2020. The net charge-off ratio was 0.04% for the nine months ended
September 30, 2021 , a 3 basis point decrease compared to the same period of
2020.
•Noninterest income was $393.7 million for the nine months ended September 30,
2021 , an increase of $43.8 million , or 12.5%, compared to $350.0 million for the
same quarter of 2020.
•Noninterest expense was $910.3 million for the nine months ended September 30
2021 , an increase of $27.0 million or by 3.1% compared to the same quarter of
2020.
•The allowance for credit losses was $183.2 million at September 30, 2021 ,
compared to $224.3 million at December 31, 2020 . The $41.1 million change was
due primarily to a reserve release for the nine months ended September 30, 2021
driven by continued strong credit performance, low net charge-offs, and
improvement in macroeconomic factors.
•Total loans were $32.5 billion , a decrease of $275.8 million since December 31,
2020 . Excluding SBA-PPP loans, total loans increased $1.0 billion , or by 4.6% on
an annualized basis, since December 31, 2020 .
•Total deposits grew to $50.1 billion , an increase of $6.6 billion since
December 31, 2020 or by 20.4% on an annualized basis.
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Table 2
SELECTED QUARTERLY DATA
2021 2020
Third Second First Fourth Third Nine months ended September 30
(Dollars in thousands, except share data) Quarter Quarter Quarter Quarter Quarter 2021 2020
SUMMARY OF OPERATIONS
Interest income $ 361,855 $
361,825
$ 1,079,003 $ 1,107,150 Interest expense 14,968 15,432 15,671 18,160 20,675 46,071 77,697 Net interest income 346,887 346,393 339,652 358,716 353,659 1,032,932 1,029,453 Provision (credit) for credit losses (1,120) (19,603) (10,974) 5,403 4,042 (31,697) 52,949 Net interest income after provision for credit losses 348,007 365,996 350,626 353,313 349,617 1,064,629 976,504 Noninterest income 122,944 134,150 136,649 126,765 120,572 393,743 349,985 Noninterest expense 312,818 301,578 295,926 305,373 291,662 910,322 883,312 Income before income taxes 158,133 198,568 191,349 174,705 178,527 548,050 443,177 Income taxes 34,060 45,780 44,033 36,621 35,843 123,873 89,538 Net income 124,073 152,788 147,316 138,084 142,684 424,177 353,639 Net income available to common shareholders$ 119,437 $
148,152
$ 410,269 $ 344,213 Net interest income, taxable equivalent$ 347,451 $ 347,035 $ 340,271 $ 359,370 $ 354,256 $ 1,034,758 $ 1,031,395 PER COMMON SHARE DATA Net income$ 12.17 $ 15.09 $ 14.53 $ 13.59 $ 14.03 $ 41.79$ 33.96 Cash dividends on common shares 0.47 0.47 0.47 0.47 0.40 1.41 1.20 Market price at period end (Class A) 843.17 832.74 835.77 574.27 318.78 843.17 318.78 Book value per share at period-end 432.07 421.39 405.59 396.21 380.43 432.07 380.43 SELECTED QUARTERLY AVERAGE BALANCES Total assets$ 55,922,358 $
54,399,331
$ 44,834,045 Investment securities 10,707,519 10,534,348 9,757,650 9,889,124 9,930,197 10,336,652 8,774,840 Loans and leases (1) 32,707,591 33,166,049 33,086,656 32,964,390 32,694,996 32,985,376 31,148,683 Interest-earning assets 52,371,165 51,519,684 48,715,279 46,922,823 45,617,376 50,882,100 42,151,861 Deposits 49,107,087 47,751,103 44,858,198 43,123,312 41,905,844 47,254,360 38,612,836 Interest-bearing liabilities 29,662,791 28,909,320 27,898,525 26,401,222 25,591,707 28,830,007 24,388,339 Securities sold under customer repurchase agreements 672,114 677,451 641,236 684,311 710,237 663,713 614,920 Other short-term borrowings - - - - - - 67,522 Long-term borrowings 1,222,452 1,227,755 1,235,576 1,250,682 1,256,331 1,228,546 1,164,475 Common shareholders' equity 4,196,655 4,058,236 3,935,267 3,786,158 3,679,138 4,063,386 3,651,132 Shareholders' equity$ 4,536,592 $
4,398,173
$ 4,403,323 $ 3,896,645 Common shares outstanding 9,816,405 9,816,405 9,816,405 9,816,405 9,836,629 9,816,405 10,137,321 SELECTED QUARTER-END BALANCES Total assets$ 56,901,977 $
55,175,318
$ 48,666,873 Investment securities 10,875,354 10,894,227 10,222,107 9,922,905 9,860,594 10,875,354 9,860,594 Loans and leases 32,516,189 32,689,652 33,180,851 32,791,975 32,845,144 32,516,189 32,845,144 Deposits 50,065,762 48,410,596 47,330,997 43,431,609 42,250,606 50,065,762 42,250,606 Securities sold under customer repurchase agreements 663,575 692,604 680,705 641,487 693,889 663,575 693,889 Other short-term borrowings - - - - - - - Long-term borrowings 1,219,229 1,224,488 1,230,326 1,248,163 1,252,016 1,219,229 1,252,016 Shareholders' equity$ 4,581,295 $
4,476,490
$ 4,581,295 $ 4,074,414 Common shares outstanding 9,816,405 9,816,405 9,816,405 9,816,405 9,816,405 9,816,405 9,816,405 SELECTED RATIOS AND OTHER DATA Return on average assets (annualized) 0.88 % 1.13 % 1.16 % 1.11 % 1.18 % 1.05 % 1.05 % Return on average common shareholders' equity (annualized) 11.29 14.64 14.70 14.02 14.93 13.50 12.59 Net yield on interest-earning assets (taxable equivalent) 2.61 2.68 2.80 3.02 3.06 2.69 3.23 Net charge-offs to average loans and leases (annualized) 0.06 0.02 0.03 0.06 0.03 0.04 0.07 Allowance for credit losses to total loans and leases(2): PCD 4.94 4.73 5.30 5.18 5.07 4.94 5.07 Non-PCD 0.51 0.53 0.57 0.62 0.61 0.51 0.61 Total 0.56 0.58 0.63 0.68 0.68 0.56 0.68 Ratio of total nonperforming assets to total loans, leases and other real estate owned 0.63 0.71 0.73 0.74 0.73 0.63 0.73 Total risk-based capital ratio 14.30 14.15 14.14 13.81 13.70 14.30 13.70 Tier 1 risk-based capital ratio 12.32 12.13 12.02 11.63 11.48 12.32 11.48 Common equity Tier 1 ratio 11.34 11.14 11.00 10.61 10.43 11.34 10.43 Tier 1 leverage capital ratio 7.68 7.67 7.84 7.86 7.80 7.68 7.80 Dividend payout ratio 3.86 3.11 3.23 3.46 2.85 3.37 3.53 Average loans and leases to average deposits 66.60 69.46 73.76 76.44 78.02 69.80 80.67 (1) Average loan and lease balances include PCD loans, non-PCD loans and leases, loans held for sale and nonaccrual loans and leases. (2) Loans originated in relation to the SBA-PPP ($1.7 billion as ofSeptember 30, 2021 ) do not have a recorded ACL. As ofSeptember 30, 2021 , the ratio of ACL to total Non-PCD loans excluding SBA-PPP loans is 0.53%, while the ratio of ACL to total loans excluding SBA-PPP loans is 0.58%. 39 -------------------------------------------------------------------------------- Table of Contents BUSINESS COMBINATIONS CIT Group Inc. OnOctober 15, 2020 , BancShares and CIT, entered into the Merger Agreement by and among BancShares, FCB, the Merger Sub, and CIT, the parent company ofCIT Bank . Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub and CIT will ultimately merge with and into FCB, with FCB as the surviving entity. The Merger Agreement further provides that immediately following the consummation of the Mergers,CIT Bank will merge with and into FCB, with FCB as the surviving bank. The Merger Agreement was unanimously approved by the Board of Directors of each of BancShares and CIT. The transaction has been approved by the shareholders of both companies and has received regulatory approval from theNorth Carolina Commissioner of Banks and theFDIC . OnSeptember 30, 2021 , the parties entered into an amendment to the merger agreement pursuant to which the parties mutually agreed to extend untilMarch 1, 2022 the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed. Completion of the proposed merger remains subject to approval from theBoard of Governors of theFederal Reserve System and both parties are committed to continuing to seek such approval. The parties have responded to all questions issued by the Staff of theFederal Reserve Board , and the Staff has informed us that they do not have further questions at this time. The parties have been informed that the application is presently at the Governor level, but theBoard of Governors has not provided a time frame for its decision on the application. Closing is expected to occur as soon as practicable following receipt of such approval and the satisfaction or waiver of other customary closing conditions. Federal Deposit Insurance Corporation Assisted Transactions BancShares completed fourteenFDIC -assisted transactions between 2009 and 2017. Nine of the fourteenFDIC -assisted transactions included shared-loss agreements which, for their terms, protected us from a substantial portion of the credit and asset quality risk we would otherwise have incurred. For certainFDIC -assisted transactions, the shared-loss agreement included a provision related to a payment owed to theFDIC at the termination of the agreement. As ofSeptember 30, 2021 , these agreements have been satisfied following a$16.1 million payment made to theFDIC for the final active agreement during the first quarter of 2021. 40 -------------------------------------------------------------------------------- Table of Contents Table 3 CONSOLIDATED QUARTER-TO-DATE AVERAGE TAXABLE-EQUIVALENT BALANCE SHEETS Three months ended September 30 2021 2020 Interest Interest Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate Assets Loans and leases$ 32,707,591 $ 319,738 3.85 %$ 32,694,996 $ 336,934 4.06 % Investment securities: U.S. Treasury - - - 695,419 497 0.28 Government agency 824,499 2,076 1.01 587,377 1,335 0.91 Mortgage-backed securities 9,164,180 29,056 1.27 8,047,247 28,236 1.40 Corporate bonds 597,386 7,610 5.10 489,602 6,433 5.26 Other investments 121,454 544 1.78 110,552 739 2.66 Total investment securities 10,707,519 39,286 1.47 9,930,197 37,240 1.50 Overnight investments 8,956,055 3,395 0.15 2,992,183 757 0.10 Total interest-earning assets 52,371,165 362,419 2.73 45,617,376 374,931 3.24 Cash and due from banks 364,593 349,079 Premises and equipment 1,239,111 1,261,864 Allowance for credit losses (189,885) (222,793) Other real estate owned 40,786 52,716 Other assets 2,096,588 1,203,913 Total assets$ 55,922,358 $ 48,262,155 Liabilities Interest-bearing deposits: Checking with interest$ 11,323,503 $ 1,350 0.05 %$ 9,239,838 $ 1,369 0.06 % Savings 3,979,389 342 0.03 3,070,619 314 0.04 Money market accounts 9,866,327 2,357 0.09 8,108,832 3,634 0.18 Time deposits 2,599,006 4,024 0.61 3,205,850 8,151 1.01 Total interest-bearing deposits 27,768,225 8,073 0.12 23,625,139 13,468
0.23
Securities sold under customer repurchase agreements 672,114 358 0.21 710,237 395 0.22 Other short-term borrowings - - - - - - Long-term borrowings 1,222,452 6,537 2.09 1,256,331 6,812 2.15 Total interest-bearing liabilities 29,662,791 14,968 0.20 25,591,707 20,675
0.32
Noninterest-bearing deposits 21,338,862 18,280,705 Other liabilities 384,113 370,668 Shareholders' equity 4,536,592 4,019,075 Total liabilities and shareholders' equity$ 55,922,358 $ 48,262,155 Interest rate spread 2.53 % 2.92 % Net interest income and net yield on interest-earning assets$ 347,451 2.61 %$ 354,256 3.06 % Loans and leases include PCD loans, non-PCD loans, nonaccrual loans and loans held for sale. 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 a statutory federal income tax rate of 21.0%, as well as a blended state income tax rate of 3.3% and 3.4%, for the three months endedSeptember 30, 2021 and 2020, respectively. The taxable-equivalent adjustment was$564 thousand and$597 thousand for the three months endedSeptember 30, 2021 and 2020, respectively. 41 -------------------------------------------------------------------------------- Table of Contents Table 4 CONSOLIDATED YEAR-TO-DATE AVERAGE TAXABLE-EQUIVALENT BALANCE SHEETS Nine months ended September 30 2021 2020 Interest Interest Average Income/ Yield/ Average Income/ Yield/ (Dollars in thousands) Balance Expense Rate Balance Expense Rate Assets Loans and leases$ 32,985,376 $ 968,231 3.89 %$ 31,148,683 $ 989,708 4.20 % Investment securities: U.S. Treasury 126,363 172 0.18 401,666 2,853 0.95 Government agency 818,591 5,942 0.97 655,097 6,883 1.40 Mortgage-backed securities 8,676,573 74,936 1.15 7,224,224 87,475 1.61 Corporate bonds 604,241 23,158 5.11 332,029 12,692 5.10 Other investments 110,884 1,442 1.74 161,824 3,653 3.02 Total investment securities 10,336,652 105,650 1.36 8,774,840 113,556
1.73
Overnight investments 7,560,072 6,948 0.12 2,228,338 5,828
0.35
Total interest-earning assets 50,882,100 1,080,829 2.81 42,151,861 1,109,092 3.48 Cash and due from banks 354,104 351,334 Premises and equipment 1,244,405 1,258,147 Allowance for credit losses (208,477) (206,737) Other real estate owned 45,122 53,871 Other assets 1,609,717 1,225,569 Total assets$ 53,926,971 $ 44,834,045 Liabilities Interest-bearing deposits: Checking with interest$ 11,009,608 $ 4,263 0.05 %$ 8,665,758 $ 4,380 0.07 % Savings 3,747,847 966 0.03 2,837,867 911 0.04 Money market accounts 9,488,641 7,500 0.11 7,583,359 19,262 0.34 Time deposits 2,691,652 12,679 0.63 3,454,438 31,025 1.20 Total interest-bearing deposits 26,937,748 25,408 0.13 22,541,422 55,578
0.33
Securities sold under customer repurchase agreements 663,713 1,052 0.21 614,920 1,236 0.27 Other short-term borrowings - - - 67,522 1,052 2.05 Long-term borrowings 1,228,546 19,611 2.10 1,164,475 19,831 2.24 Total interest-bearing liabilities 28,830,007 46,071 0.21 24,388,339 77,697 0.42 Noninterest-bearing deposits 20,316,612 16,071,414 Other liabilities 377,029 477,647 Shareholders' equity 4,403,323 3,896,645 Total liabilities and shareholders' equity$ 53,926,971 $ 44,834,045 Interest rate spread 2.60 % 3.06 % Net interest income and net yield on interest-earning assets$ 1,034,758 2.69 %$ 1,031,395
3.23 %
Loans and leases include PCD loans, non-PCD loans, nonaccrual loans and loans held for sale. 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 a statutory federal income tax rate of 21.0%, as well as a blended state income tax rate of 3.3% and 3.4%, for the nine months endedSeptember 30, 2021 and 2020, respectively. The taxable-equivalent adjustment was$1.8 million and$1.9 million for the nine months endedSeptember 30, 2021 and 2020, respectively. 42
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