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First-Citizens Bank & Trust Company Announces Termination of its FDIC Loss Share Agreements

Thursday, July 21, 2016

Congratulations First-Citizens Bank & Trust Company!

Congratulations to First Citizens BancShares, Inc (Nasdaq: FCNCA) & First-Citizens Bank & Trust Company (First Citizens) of Raleigh, North Carolina for successfully terminating their FDIC loss share agreements on five failed bank receiverships: Temecula Valley Bank, Sun American Bank, Williamsburg First National Bank, Atlantic Bank & Trust and Colorado Capital Bank.

Under the terms of the June 14 agreement, First Citizens Bank made a net payment of $20.1 million to the FDIC as consideration for early termination of the loss share agreements. The early termination resulted in a one-time after-tax charge of approximately $2.2 million during the second quarter of 2016. As a result of entering the termination agreement, assets that were covered by the loss share agreements, including loans of $46.3 million and other real estate owned of $8.2 million at March 31, 2016, will be reclassified as non-covered at June 30, 2016. 

In conjunction with the early termination, First Citizens Bank adjusted its clawback liabilities under the two remaining loss share agreements with clawback provisions to conform to the methodology used to determine the net termination payment. The change in estimate to First Citizens Bank’s clawback liabilities will be applied prospectively and the current expectation of the impact of the change in estimate is a one-time after tax benefit of approximately $10.9 million.

DD&F served as an advisor to First Citizens in successfully terminating their shared loss agreements with the FDIC and would like to congratulate all of the First Citizens team. We wish you continued success! For First-Citizens’ press release, click here.

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