What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-25 · 223 added, 145 removed, 247 unchanged (60% of the section changed)

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FCB opened in 1898 as the Bank of Smithfield in Smithfield, North Carolina, and later changed its name to First-Citizens Bank & Trust Company.

As of December 31, 2021, BancShares has expanded through de novo branching and acquisitions and operates in 19 states, providing a broad range of financial services to individuals, businesses and professionals.

BancShares has expanded through de novo branching and acquisitions and as of December 31, 2022, operates 550 branches in 22 states, predominantly located in the Southeast, Mid-Atlantic, Midwest, and Western United States, providing a broad range of financial services to individuals, businesses and professionals.

At December 31, 2022, BancShares had total consolidated assets of $109.3 billion.

On January 3, 2022, BancShares completed its largest acquisition to date with the merger with CIT Group Inc.

(“CIT”) and its subsidiary CIT Bank, N.A., a national banking association (“CIT Bank”).

CIT had consolidated total assets of approximately $53.2 billion at December 31, 2021.

The merger with CIT (the “CIT Merger”) is described further in the “Business Combinations” discussion below and the “Business Combinations” section of Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K.

Throughout its history, the operations of BancShares have been significantly influenced by descendants of Robert P.

Holding, who came to control FCB during the 1920s.

Holding’s children and grandchildren have served as members of the Board of Directors (the “Board”), as chief executive officers and in other executive management positions and, since BancShares’ formation in 1986, have remained shareholders owning a large percentage of its common stock.

Holding’s children and grandchildren have served as members of the Board of Directors (the “Board”), as chief executive officers and in other executive management positions and, since BancShares’ formation in 1986, have remained stockholders owning a large percentage of its common stock.

The Chairman of the Board and Chief Executive Officer, Frank B.

Holding, Jr., is the grandson of Robert P.

Hope Holding Bryant, Vice Chairman of BancShares, is Robert P.

Hope Holding Bryant, Vice Chairwoman of BancShares, is Robert P.

Holding’s granddaughter.

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and Hope Holding Bryant.

BancShares seeks to meet the financial needs of both individuals and commercial entities in its market areas through a wide range of retail and commercial banking services.

Loan services include various types of commercial, business and consumer lending.

Deposit services include checking, savings, money market and time deposit accounts.

Our subsidiaries also provide mortgage lending, a full-service trust department, wealth management services for businesses and individuals, and other activities incidental to commercial banking.

FCB’s wholly owned subsidiaries, First Citizens Investor Services, Inc.

BancShares provides financial services for a wide range of consumer and commercial clients.

This includes retail and mortgage banking, wealth management, commercial and middle market banking, factoring and leasing.

In addition to our banking operations, we provide various investment products and services through FCB’s wholly owned subsidiaries, First Citizens Investor Services, Inc.

(“FCIS”) and First Citizens Asset Management, Inc.

(“FCAM”), provide various investment products and services.

As a registered broker-dealer, FCIS provides a full range of investment products, including annuities, discount brokerage services and third-party mutual funds.

As registered investment advisors, FCIS and FCAM provide investment management services and advice.

As a result of BancShares’ merger with CIT and CIT Bank (the “CIT Merger”), BancShares acquired a registered broker-dealer, registered investment adviser, a wide range of commercial lending, leasing, and deposit products, as well as ancillary services and products, that spans several industries, including aerospace and defense, communication, power and energy, entertainment, gaming, healthcare, industrials, maritime, rail, real estate, restaurants, retail, services and technology.

In addition, BancShares now provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in several industries, including apparel, textile, furniture, home furnishings and consumer electronics.

BancShares delivers products and services to its customers through an extensive branch network as well as digital banking, telephone banking and various ATM networks.

Services offered at most offices include the taking of deposits, the cashing of checks and providing for individual and commercial cash needs.

Business customers may conduct banking transactions through the use of remote image technology.

As a result of BancShares’ merger (the “CIT Merger”) with CIT Group Inc.

(“CIT”) and its subsidiary CIT Bank, N.A., a national banking association (“CIT Bank”), BancShares acquired a registered broker-dealer, registered investment adviser, a wide range of commercial lending, leasing, and deposit products, as well as ancillary services and products, that span various industries.

BancShares now also provides commercial factoring, receivables management and secured financing services to businesses (generally manufacturers or importers of goods) that operate in various industries, including apparel, textile, furniture, home furnishings and consumer electronics.

In addition, BancShares owns a fleet of railcars and locomotives that are leased to railroads and shippers.

BancShares delivers products and services to its customers through an extensive branch network and additionally operates a nationwide digital bank.

Services offered at most branches include accepting deposits, cashing checks and providing for consumer and commercial cash needs.

Consumer and business customers may also conduct banking transactions through various digital channels.

Statistical information regarding our business activities is found in Item 7.

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BancShares pursues growth through strategic mergers and acquisitions to enhance organizational value, strengthen its presence in existing markets, as well as expand its footprint in new markets.

In 2020, BancShares completed the acquisition of Community Financial Holding Company, Inc.

for total cash consideration of $2.3 million.

On January 3, 2022, BancShares closed the CIT Merger.

Pursuant to the terms and subject to the conditions set forth in the Agreement and Plan of Merger (as amended, the “Merger Agreement”) by and among the Parent Company, FCB, FC Merger Subsidiary IX, Inc., a direct, wholly owned subsidiary of FCB (“Merger Sub”), and CIT, CIT and CIT Bank have merged into FCB.

Immediately prior to and in connection with the effectiveness of such mergers, BancShares acquired from CIT its registered broker-dealer, CIT Capital Securities, LLC, and certain other nonbank subsidiaries of CIT that hold noncontrolling equity investments.

These entities are nonbank subsidiaries of the Parent Company.

As a result of the consummation of the CIT Merger, FCB is now a top 20 U.S.

On January 3, 2022 (the “Merger Date”), BancShares completed its largest acquisition to date with the merger with CIT and CIT Bank.

CIT had consolidated total assets of approximately $53.2 billion at December 31, 2021.

The merger with CIT is described further in the “Business Combinations” discussion below and the “Business Combinations” section of Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8.

Notes to Consolidated Financial Statements, Note 2 — Business Combinations included in this Annual Report on Form 10-K.

As a result of the CIT Merger, FCB is now a top 20 U.S.

bank based on asset size with more than $100 billion in total assets.

BancShares believes that the CIT Merger allowed for the combination of organizations with complementary strengths, with FCB’s robust retail franchise and full suite of banking products with CIT’s strong market position in nationwide commercial lending and direct digital banking.

The combined banking organization intends to leverage the capabilities of both legacy banks to serve a broader spectrum of businesses and individuals, while offering convenience, scale and value.

Additional information relating to business combinations is set forth in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the caption “Business Combinations,” and Item 8.

Notes to Consolidated Financial Statements, Note B, Business Combinations and Note W, Subsequent Events, in this Annual Report on Form 10-K.

As of December 31, 2021, we managed our business and reported our financial results as a single segment.

Due to the CIT Merger, we intend to begin reporting multiple segments in our Quarterly Report on Form 10-Q for the three months ended March 31, 2022.

As summarized below, BancShares plans to report financial results in three operating segments:

General Banking, Commercial Banking, and Rail, and a non-operating segment, Corporate.

We also intend to conform prior period comparisons to any new segment presentation.

Based on the planned approach for segment disclosures to be implemented during the first quarter of 2022, the substantial majority of BancShares’ operations for historical periods prior to the CIT Merger will be reflected in the General Banking segment.

BancShares believes that the CIT Merger allowed for the combination of organizations with complementary strengths, combining FCB’s robust retail franchise and full suite of banking products with CIT’s strong market position in nationwide commercial lending and direct digital banking.

The combined banking organization leverages the capabilities of both legacy banks to serve a broader spectrum of businesses and individuals, while offering convenience, scale and value.

Business Segments

As of December 31, 2021, BancShares managed its business and reported its financial results as a single segment.

BancShares began reporting multiple segments during the first quarter of 2022 and now reports General Banking, Commercial Banking, Rail, and Corporate segments.

BancShares conformed the comparative prior periods presented to reflect the new segments.

The substantial majority of BancShares’ operations for historical periods prior to completion of the CIT Merger are included in the General Banking segment.

The Commercial Banking and Rail segments primarily relate to operations acquired in the CIT Merger.

Reportable segments are discussed further in the “Results by Business Segments” section of Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8.

Notes to Consolidated Financial Statements, Note 23 — Business Segment Information.

SEGMENT MARKETS AND SERVICES

General Banking • Delivers services to individuals and businesses through an extensive branch network, digital banking, telephone banking and various ATM networks, including a full suite of deposit products, loans (primarily residential mortgages and commercial loans), and various fee-based services.

General Banking • Delivers services to individuals and businesses through an extensive branch network and various digital channels, including a full suite of deposit products, loans (primarily business/commercial loans and residential mortgages), and various fee-based services.

• Provides a variety of wealth management products and services to individuals and institutional clients, including brokerage, investment advisory, and trust services.

• Also provides deposit, cash management and lending to homeowner associations and property management companies.

Commercial Banking • Provides lending, leasing and other financial and advisory services, primarily to small and middle-market companies across select industries.

• Provides deposit, cash management and lending to homeowner associations and property management companies.

Commercial Banking • Provides lending, leasing, capital markets and other financial and advisory services, primarily to small and middle-market companies across a variety of industries.

• Provides asset-based lending, factoring, receivables management products and supply chain financing.

Rail • Rail provides equipment leasing and secured financing to railroads and shippers.

Corporate • Earning assets primarily include investment securities and interest-bearing cash.

Rail • Provides equipment leasing and secured financing to railroads and shippers.

Corporate • Earning assets primarily include investment securities and interest-earning deposits at banks.

• Certain items are not allocated to operating segments and are included in Corporate.

Some of the more significant and recurring items that are not allocated to operating segments include interest income on investment securities, income on bank owned life insurance (“BOLI”), a portion of interest expense primarily related to corporate funding costs, mark-to-market adjustments on equity securities and foreign currency hedges, restructuring charges, intangible assets amortization expenses, as well as certain unallocated interest income and other costs.

Some of the more significant and recurring items that are not allocated to operating segments include interest income on investment securities, income on bank owned life insurance (“BOLI”), a portion of interest expense primarily related to brokered deposits and corporate funding costs, mark-to-market adjustments on equity securities and foreign currency hedges, merger-related expenses, intangible assets amortization expenses, as well as certain unallocated interest income and other costs.

General Banking

Our General Banking segment delivers products and services to consumers and businesses through our extensive network of branches and various digital channels.

We offer a full suite of deposit products, loans, cash management, wealth, payments and various other fee-based services.

We offer conforming and jumbo residential mortgage loans throughout the United States which are primarily originated through branches and retail referrals, employee referrals, internet leads, direct marketing and a correspondent lending channel.

The General Banking segment also includes our nationwide digital banking, which is largely comprised of the internet banking platform we acquired in the CIT Merger (the “Direct Bank”), that delivers deposit products to consumers.

We additionally have a dedicated business line that supports deposit, cash management and lending to homeowner associations and property management companies nationwide.

Our General Banking segment is the primary deposit gathering business of FCB.

Revenue is generated from interest earned on loans and from fees for banking and advisory services.

We source our consumer and business/commercial lending business through our branch network and industry referrals, as well as direct digital marketing efforts.

We periodically purchase loans on a whole-loan basis.

We source our Small Business Administration (“SBA”) loans through a network of SBA originators.

We also make community development investments and loans that support the construction of affordable housing in our communities in line with our CRA initiatives.

Commercial Banking

Our Commercial Banking segment provides a range of lending, leasing, capital markets, asset management and other financial and advisory services primarily to small and middle market companies in a wide range of industries including aerospace and defense, communication, power and energy, entertainment, gaming, healthcare, industrials, maritime, real estate, restaurants, retail, services and technology.

Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment and/or intangibles, and are often used for working capital, plant expansion, acquisitions or recapitalizations.

These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans.

We provide senior secured loans to developers and other commercial real estate professionals.

Additionally, we provide small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process.

We provide factoring, receivable management, and secured financing to businesses that operate in several industries, including apparel, textile, furniture, home furnishings and consumer electronics.

Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods by our clients to their customers (generally retailers) that have been factored (i.e., sold or assigned to the factor).

A client is the counterparty on any factoring, financing, or receivables purchasing agreement to sell trade receivables to us, and generally is a manufacturer or importer of goods.

A customer is the account debtor and obligor on trade accounts receivable that have been factored with and assigned to the factor.

Revenue is generated from interest earned on loans, rent on equipment leased, fees and other revenue from lending and leasing activities, banking services, and capital markets transactions, along with commissions earned on factoring and related activities.

We source our commercial lending business primarily through direct marketing to borrowers, lessees, manufacturers, vendors and distributors, and through referral sources and other intermediaries.

We may periodically buy participations or syndications of loans and lines of credit and purchase loans on a whole-loan basis.

Rail offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America.

Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement;

tank cars for energy products and chemicals;

gondolas for coal, steel coil and mill service products;

open-top hopper cars for coal and aggregates;

boxcars for paper and auto parts;

and centerbeams and flat cars for lumber.

Revenue is generated primarily from rent on equipment leased.

The financial services industry is highly competitive.

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Competition is based on a number of factors including, among others, customer service, quality and range of products and services offered, price, reputation, interest rates on loans and deposits and customer convenience.

As of December 31, 2021, FCB’s primary deposit markets are North Carolina and South Carolina, which represent approximately 50.8% and 22.7%, respectively, of total FCB deposits.

FCB’s deposit market share in North Carolina and South Carolina was 4.9% and 9.3%, respectively, as of June 30, 2021, which makes FCB the fourth largest bank in both North Carolina and South Carolina based on the Federal Deposit Insurance Corporation (“FDIC”) Deposit Market Share Report.

The three banks larger than FCB based on deposits in North Carolina and South Carolina as of June 30, 2021 include Bank of America, Truist Bank and Wells Fargo.

These banks collectively controlled 74.2% and 45.4% of North Carolina and South Carolina deposits, respectively as of June 30, 2021.

Subsequent to the CIT Merger, the branches that were previously owned and controlled by CIT Bank are now owned and controlled by FCB.

As of January 3, 2022, FCB had 609 total domestic offices, which included 227 in North Carolina, 126 in South Carolina and 86 in California.

On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy, encouraging the U.S.

Attorney General along with the federal banking agencies, to review the current framework for merger oversight practices under the Bank Holding Company Act of 1956, as amended (“BHCA”) and the Bank Merger Act.

As of December 31, 2021, FCB’s primary deposit markets were North Carolina and South Carolina, which represented approximately 50.8% and 22.7%, respectively, of total FCB deposits.

Deposits (based on branch location) as of December 31, 2022, in North Carolina and South Carolina represented approximately 39.7%, and 13.3%, respectively, of total deposits.

FCB’s deposit market share as of June 30, 2022 in North Carolina and South Carolina was 7.3% and 9.3%, respectively, which makes FCB the fourth largest bank in both North Carolina and South Carolina based on the Federal Deposit Insurance Corporation (“FDIC”) Deposit Market Share Report.

The three banks larger than FCB based on deposits in North Carolina and South Carolina were Bank of America, Truist Bank and Wells Fargo.

These banks collectively controlled 72.5% and 44.2% of North Carolina and South Carolina deposits, respectively.

Additionally, the CIT Merger added deposits that were primarily related to the Digital Bank of $16.47 billion or 18.4% of total FCB deposits as of December 31, 2022.

As of December 31, 2022, FCB had 582 total domestic branches and offices, which included 219 in North Carolina, 126 in South Carolina and 68 in California.

On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy (the “Executive Order”), which encouraged the federal banking agencies, to review the current framework for merger oversight practices under the Bank Holding Company Act of 1956, as amended (“BHCA”) and the Bank Merger Act.

The Executive Order has received significant public support from members of Congress as well as from members of the board of the FDIC and Federal Reserve and the Acting Comptroller of the Currency.

The review is ongoing by the agencies, and no formal changes have been announced.

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Geographic Locations

As of December 31, 2021, BancShares operated a total of 529 branches which includes branches in Arizona, California, Colorado, Florida, Georgia, Kansas, Maryland, Missouri, North Carolina, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin and West Virginia.

The CIT Merger added approximately 80 branches, which are primarily located in Southern California, to our branch network.

As of December 31, 2022, BancShares operated branches in Arizona, California, Colorado, Florida, Georgia, Hawaii, Kansas, Maryland, Missouri, North Carolina, Nebraska, New Mexico, Nevada, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin and West Virginia.

Human Capital

As of December 31, 2022, BancShares employed approximately 10,375 full-time staff and approximately 309 part-time staff for a total of 10,684 employees.

Women and ethnically diverse associates make up approximately 67% and 28% of total employees, respectively, and our Executive Leadership Team includes two women.

After the CIT Merger, BancShares’ has approximately 10,300 total employees and our Executive Leadership Team expanded to three women.

Women and ethnically diverse associates make up approximately 61% and 33% of total employees, respectively, and our Executive Leadership Team includes three women.

Our ability to attract, retain and develop associates who align with our purpose is key to our success.

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Key human capital initiatives include scaling and developing talent, enhancing performance management and coaching, and accelerating inclusion, equity and diversity initiatives.

The retention and integration of key CIT employees will be a significant initiative.

The retention and integration of key CIT employees has been a significant initiative.

The Board monitors these initiatives and associated risks primarily through its Risk Committee.

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In addition to salaries, compensation and benefit programs include a 401(k) plan with employer matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off and other employee assistance programs.

COVID-19 Pandemic

The health and wellness of our employees is also critical to our success.

In an effort to keep our employees safe during the COVID-19 pandemic, we implemented a number of health-related measures, including protocols governing the use of face masks and hand sanitizer, a flexible work-from-home policy, enhanced cleaning procedures at our corporate and branch offices, social-distancing protocols and limitations on in-person meeting and other gatherings.

Regulatory Considerations

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Certain subsidiaries of the Parent Company and FCB are subject to regulation, supervision, and examination by the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), state regulatory agencies, and other regulatory authorities as “regulated entities.” FCB’s insurance activities are subject to licensing and regulation by state insurance regulatory agencies.

In general, numerous statutes and regulations also apply to and restrict the activities of BancShares, including limitations on the ability to pay dividends, capital requirements, reserve requirements, deposit insurance requirements and restrictions on

transactions with related persons and entities controlled by related persons.

The impact of these statutes and regulations is discussed below and in the accompanying consolidated financial statements.

As a result of the consummation of the CIT Merger, BancShares has over $100 billion in total consolidated assets, and is expected to be subject to certain enhanced prudential standards and enhanced oversight under the applicable transition provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) by the Federal Reserve Board (“Federal Reserve” or “FRB”), and the FDIC with respect to FCB.

As BancShares continues to grow, BancShares and FCB could become subject to additional regulatory requirements, based on the tailored regulatory framework applicable to banking organizations with $100 billion or more in total assets, and adopted by the federal banking agencies pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”).

BancShares has over $100 billion in total consolidated assets, and is now subject to certain enhanced prudential standards and enhanced oversight under the applicable transition provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) by the Federal Reserve Board (“Federal Reserve” or “FRB”), and the FDIC with respect to FCB.

As BancShares continues to grow, BancShares will become subject to additional regulatory requirements, based on the tailored regulatory framework applicable to banking organizations with $100 billion or more in total assets, and adopted by the federal banking agencies pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “EGRRCPA”).

In connection with the CIT Merger, FCB established as a wholly-owned subsidiary, FC International, Inc.

(“FC International”), which is a corporation chartered by the Federal Reserve pursuant to Section 25A of the Federal Reserve Act (“Edge Act”) and the Federal Reserve’s Regulation K.

Edge Act corporations are international banking organizations that are authorized to engage in international banking and foreign financial transactions.

Edge Act corporations are international banking organizations that are authorized to engage in international banking and foreign financial transactions, and the U.S.

activities of such corporations are generally limited to those that are incidental to their foreign operations.

FCB established FC International for the purpose of holding the equity interests in the foreign nonbank subsidiaries (“foreign companies”) that FCB acquired in the CIT Merger.

Certain of the foreign companies are in the process of being wound-down or dissolved.

Certain of the foreign companies have been, or are in the process of being, wound-down or dissolved.

The other foreign companies acquired by FCB support the railcar leasing business acquired from CIT in Canada and Mexico.

FC International is subject to supervision and regulation by the Federal Reserve, including examination, reporting, capital, and Bank Secrecy Act of 1970 (“BSA”) and anti-money laundering (“AML”) requirements, pursuant to the Edge Act and the Federal Reserve’s Regulation K.

FC International’s home office is the same as the home office the Parent Company and FCB.

FC International will not have a physical presence outside of the United States and therefore BancShares is evaluating whether FC International will be subject to any regulatory requirements with respect to its direct ownership of the equity interests of the foreign companies.

Dodd-Frank Act .

The Dodd-Frank Act, enacted in 2010, significantly restructured the financial services regulatory environment;

imposed significant regulatory and compliance changes;

increased capital, leverage and liquidity requirements;

imposed significant regulatory and compliance changes on the financial services industry;

increased capital, leverage and liquidity requirements for banking organizations;

and expanded the scope of oversight responsibility of certain federal agencies through the creation of new oversight bodies.

For example, the Dodd-Frank Act established the Consumer Financial Protection Bureau (“CFPB”) with broad powers to supervise and enforce consumer financial protection laws.

For example, the Dodd-Frank Act established the Consumer Financial Protection Bureau (“CFPB”) with broad powers to supervise and enforce federal consumer financial protection laws.

Enacted in 2018, the EGRRCPA, while largely preserving the fundamental elements of the post-Dodd-Frank Act regulatory framework, modified certain requirements of the Dodd-Frank Act as they applied to regional and community banking organizations.

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The Dodd-Frank Act mandated the applicability of enhanced prudential standards (including enhanced liquidity and capital requirements, enterprise-wide risk management requirements, concentration limits, resolution plans and credit exposure report requirements, etc.) and enhanced supervision of bank holding companies with $50 billion or more in assets.

The EGRRCPA raised the asset threshold for mandatory applicability of enhanced prudential standards to $250 billion or more in total consolidated assets, and gives the Federal Reserve Board the discretion to apply any enhanced prudential standards to banking organizations with $100 billion or more in total assets on a tailored basis based on asset size and other risk-related factors to prevent or mitigate risks to the financial stability of the United States or to promote the safety and soundness of a bank holding company.

In November 2019, the Federal Reserve Board, along with the FDIC and the Office of the Comptroller of the Currency (the “OCC”), adopted a framework for tailoring the applicability of enhanced prudential standards for banking organizations with $100 billion or more in assets (the “Tailoring Rules”).

The EGRRCPA raised the asset threshold for mandatory applicability of enhanced prudential standards to $250 billion or more in total consolidated assets, and gives the FRB the discretion to apply any enhanced prudential standards to banking organizations with $100 billion or more in total assets on a tailored basis based on asset size and other risk-related factors to prevent or mitigate risks to the financial stability of the United States or to promote the safety and soundness of a bank holding company.

In November 2019, the FRB, along with the FDIC and the Office of the Comptroller of the Currency (the “OCC”), adopted a framework for tailoring the applicability of enhanced prudential standards for banking organizations with $100 billion or more in assets (the “Tailoring Rules”).

The Tailoring Rules are further discussed below.

Total assets are calculated based on a trailing four-quarter average.

BancShares first became subject to the enhanced prudential standards in connection with the CIT Merger, and now BancShares is treated as a Category IV banking organization under the Tailoring Rules, as further discussed below.

• Capital Planning and Stress Testing.

The Dodd-Frank Act mandated stress tests be developed and performed by banking organizations with $10 billion or more in total assets to ensure financial institutions have sufficient capital to absorb losses and support operations during multiple economic and bank scenarios.

The EGRRCPA gave immediate relief from Dodd-Frank Act and company-run stress testing for banking organizations with less than $250 billion in total consolidated assets.

Therefore, BancShares is not subject to Dodd-Frank Act company-run stress testing until such time that it has $250 billion or more in total assets.

Notwithstanding these amendments to the stress testing requirements, the federal banking agencies indicated, through inter-agency guidance, the capital planning and risk management practices of institutions with total assets less than $250 billion would continue to be reviewed through the regular supervisory process, including through the Federal Reserve’s Comprehensive Capital Analysis and Review (“CCAR”) for banking organizations with $100 billion or more in total assets.

As a result of the consummation of the CIT Merger, BancShares has over $100 billion in total consolidated assets, and we expect to be subject to supervisory stress testing by the Federal Reserve under the CCAR process as a Category IV banking organization in accordance with the applicable transition provisions.

The Dodd-Frank Act mandated company-run stress tests be performed by banking organizations with $10 billion or more in total assets to ensure financial institutions have sufficient capital to absorb losses and support operations during multiple economic and bank scenarios.

The EGRRCPA gave immediate relief from the Dodd-Frank Act and company-run stress testing for banking organizations with less than $250 billion in total consolidated assets.

Therefore, BancShares is not subject to Dodd-Frank Act company-run stress testing (“DFAST”) until such time that it has $250 billion or more in total assets, based on a trailing four-quarter average.

Notwithstanding these amendments to the stress testing requirements, bank holding companies with $100 billion or more in total consolidated assets are subject to supervisory stress testing by the FRB under the Federal Reserve’s Comprehensive Capital Analysis and Review (“CCAR”).

BancShares has over $100 billion in total consolidated assets, and we are subject to biennial supervisory stress testing by the Federal Reserve under the CCAR process as a Category IV banking organization in accordance with the applicable transition provisions.

BancShares, as a Category IV banking organization, is also required to develop, maintain, and submit an annual capital plan to the Federal Reserve.

BancShares has made substantial progress in developing policies, programs, and systems designed to comply with capital planning and stress testing requirements.

• Resolution Planning.

Under the Dodd-Frank Act, as amended by the EGRRCPA, bank holding companies with $250 billion or more in total consolidated assets are required to develop and maintain resolution plans (commonly referred to as “Living Wills”) to support the orderly resolution of large banking organizations.

Under the regulations promulgated by the FRB and FDIC implementing the Living Wills requirement, currently only Category I, II, and III banking organizations are required to submit resolution plans.

Therefore, BancShares as a Category IV banking organization is not required to submit a resolution plan under the Living Wills requirement.

As further discussed below, FCB is required to submit a resolution plan under the FDIC’s resolution plan requirement for insured depository institutions (“IDIs”) with $50 billion or more in total consolidated assets under its covered insured depository institution rule (“CIDI Rule”).

• The Volcker Rule .

The Volcker Rule was promulgated to implement provisions of the Dodd-Frank Act.

It prohibits banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds.

It generally prohibits banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds, subject to certain exemptions.

The EGRRCPA exempted many financial institutions with total consolidated assets of less than $10 billion from the Volcker Rule, but it continues to apply to BancShares.

However, the Volcker Rule does not significantly impact our operations as we do not have any significant engagement in the businesses it prohibits.

However, the Volcker Rule does not significantly impact our operations as we do not have any significant engagement in such prohibited businesses.

• Ability-to-Repay and Qualified Mortgage Rule .

Creditors are required to comply with mortgage reform provisions prohibiting the origination of any residential mortgages that do not meet rigorous Qualified Mortgage standards or Ability-to-Repay standards.

All mortgage loans originated by FCB meet Ability-to-Repay standards and a substantial majority also meet Qualified Mortgage standards.

The EGRRCPA impact on the original Ability-to-Repay and Qualified Mortgage standards is only applicable to banks with less than $10 billion in total consolidated assets.

Creditors are required to comply with mortgage reform provisions prohibiting the origination of any residential mortgages that do not meet rigorous Qualified Mortgage (“QM”) standards or Ability-to-Repay (“ATR”) standards.

All mortgage loans originated by FCB meet ATR standards and a substantial majority also meet QM standards.

The EGRRCPA impact on the original ATR and QM standards is only applicable to banks with less than $10 billion in total consolidated assets.

• Reciprocal Deposits are not treated as Brokered Deposits.

Section 29 of the Federal Deposit Insurance Act (the “FDI Act”) and the FDIC’s implementing regulations limit the ability of an insured depository institution to accept brokered deposits unless the institution is well-capitalized under the prompt corrective action under the FDI Act, or the insured depository institution is adequately capitalized and obtains a waiver from the FDIC.

Insured depository institutions that are less than well-capitalized are not able to accept brokered deposits, and are subject to restrictions on the interest rates paid on deposits.

Section 29 of the Federal Deposit Insurance Act (the “FDI Act”) and the FDIC’s implementing regulations limit the ability of an IDI to accept brokered deposits unless the institution is well-capitalized under the Prompt Corrective Action (the “PCA”) under the FDI Act, or the IDI is adequately capitalized and obtains a waiver from the FDIC.

IDIs that are less than well-capitalized are not able to accept brokered deposits, and are subject to restrictions on the interest rates paid on deposits.

In addition, deposits that are considered “brokered” are subject to higher deposit assessments.

EGRRCPA amended the FDI Act to add a limited exception under which insured depository institutions that are well-capitalized or adequately capitalized and meet certain other criteria are able to exempt from treatment as “brokered” deposits up to $5 billion or 20 percent of the institution’s total liabilities in reciprocal deposits (defined generally as deposits received by a depository institution through a deposit placement network with the same maturity and in the same aggregate amount as deposits placed by the depository institution in other network institutions).

EGRRCPA amended the FDI Act to add a limited exception under which IDIs that are well-capitalized or adequately capitalized and meet certain other criteria are able to exempt from treatment as “brokered” deposits up to $5 billion or 20 percent of the institution’s total liabilities in reciprocal deposits (defined generally as deposits received by a depository institution through a deposit placement network with the same maturity and in the same aggregate amount as deposits placed by the depository institution in other network institutions).

In addition, in December 2020, the FDIC amended its regulations governing “brokered deposits” to clarify and modernize this regulatory framework.

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(3) the establishment of a more transparent application process for entities that seek to rely upon the “primary purpose” exception but do not qualify for one of the identified exceptions for business relationships deemed to satisfy the “primary purpose” exception;

and (4) the clarification that third parties that have an exclusive deposit-placement arrangement with one insured depository institution are not considered a “deposit broker.” The final rule became effective April 1, 2021, with full compliance required by January 1, 2022.

and (4) the clarification that third parties that have an exclusive deposit-placement arrangement with one IDI are not considered a “deposit broker.” The final rule became effective April 1, 2021, with full compliance required by January 1, 2022.

First Citizens BancShares, Inc.

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Enhanced Prudential Standards and Enhanced Supervision .

A bank holding company with total consolidated assets of $250 billion or more is subject to enhanced prudential standards under the Dodd-Frank Act, as amended by EGRRCPA.

A bank holding company with $100 billion or more in assets, but less than $250 billion in assets is subject to certain enhanced prudential standards based on the Tailoring Rules.

A bank holding company with total consolidated assets of $250 billion or more is subject to enhanced prudential standards under the Dodd-Frank Act, as amended by EGRRCPA, with the requirements tailored based on risk-based factors identified by the federal banking agencies.

Consistent with the authority of the FRB under the Dodd-Frank Act, a bank holding company with $100 billion or more in assets, but less than $250 billion in assets is subject to certain enhanced prudential standards as implemented by the Tailoring Rules.

Under the Tailoring Rules, banking organizations are grouped into four categories, based on asset size, off-balance sheet exposure, nonbank assets, weighted short-term wholesale funding, and cross-jurisdictional activities.

Category I banking organizations (i.e., large banks that have been designated as global systemically important banks) are subject to the most stringent enhanced prudential requirements, and Category IV banking organizations (i.e., between $100 billion and $250 billion in total consolidated assets, and less than $75 billion in nonbank assets, off-balance sheet exposure, cross-jurisdictional activities, and weighted short-term wholesale funding) are subject to the least stringent requirements.

As a result of the CIT Merger, BancShares has total consolidated assets in excess of $100 billion and therefore, expects to be required to comply with certain enhanced prudential standards applicable to Category IV banking organizations, subject to the applicable transition periods.

In planning for the CIT Merger, BancShares developed policies, programs, and systems designed to meet such enhanced prudential standards, including annual capital plan submissions and supervisory stress testing by the Federal Reserve under CCAR, enhanced enterprise-wide risk management requirements, and enhanced liquidity management requirements, including liquidity stress tests and liquidity buffer requirements.

Category I banking organizations (i.e., U.S.

GSIBs) are subject to the most stringent enhanced prudential requirements, and Category IV banking organizations (i.e., between $100 billion and $250 billion in total consolidated assets, and less than $75 billion in nonbank assets, off-balance sheet exposure, cross-jurisdictional activities, and weighted short-term wholesale funding) are subject to the least stringent requirements.

BancShares has between $100 billion and $250 billion in total consolidated assets and therefore, is required to comply with certain enhanced prudential standards applicable to Category IV banking organizations, subject to the applicable transition periods.

BancShares has developed policies, programs, and systems designed to meet such enhanced prudential standards, including annual capital plan submissions and supervisory stress testing by the Federal Reserve under CCAR, enhanced enterprise-wide risk management requirements, and enhanced liquidity management requirements, including liquidity stress tests and liquidity buffer requirements.

In the event BancShares’ assets grow to meet or exceed the thresholds for the asset size or other risk-based factors, BancShares will be subject to other enhanced prudential standards on a tailored basis.

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Acquisitions.

A bank holding company must obtain approval from the Federal Reserve prior to directly or indirectly acquiring ownership or control of 5% of the voting shares or substantially all of the assets of another bank holding company or bank or prior to merging or consolidating with another bank holding company.

The Parent Company is subject to various laws that may require regulatory approval for acquisitions.

For example, under the BHCA, a bank holding company must obtain approval from the Federal Reserve prior to directly or indirectly acquiring ownership or control of 5% of the voting shares or substantially all of the assets of another bank holding company or bank or prior to merging or consolidating with another bank holding company.

The BHCA and other federal laws enumerate the factors the Federal Reserve must consider when reviewing the merger of bank holding companies, the acquisition of banks or the acquisition of voting securities of a bank or bank holding company.

These factors include the competitive effects of the proposal in the relevant geographic markets;

the financial and managerial resources and future prospects of the companies and banks involved in the transaction;

the effect of the transaction on the financial stability of the United States;

the organizations' compliance with anti-money laundering laws and regulations;

the convenience and needs of the communities to be served;

and the records of performance under the Community Reinvestment Act of 1977 of the IDI involved in the transaction.

Status Requirements.

To maintain financial holding company status, a financial holding company and all of its depository institution subsidiaries must be well-capitalized and well-managed.

To maintain FHC status, a FHC and all of its depository institution subsidiaries must be well-capitalized and well-managed.

A depository institution subsidiary is considered to be well-capitalized if it satisfies the requirements for this status under applicable Federal Reserve capital requirements.

A depository institution subsidiary is considered well managed if it received a composite rating and management rating of at least “satisfactory” in its most recent examination.

If a financial holding company ceases to meet these capital and management requirements, the Federal Reserve may impose limitations or conditions on the conduct of its activities.

As a Category IV banking organization, BancShares will transition from the Federal Reserve’s RFI rating system to the rating system for large financial institutions (“LFI”), referred to as the LFI rating system.

Under the LFI rating system, the FRB assigns ratings based on three supervisory components:

(i) capital planning and positions, (ii) liquidity risk management and positions, and (iii) governance and controls.

The LFI rating system scale differs from the RFI rating system scale.

The LFI rating system has a four-category, non-numeric rating scale with no single composite rating or scoring.

The four rating categories are “Broadly Meets Expectations,” “Conditionally Meets Expectations,” “Deficient-1” and “Deficient-2.” A banking organization must receive at least “Conditionally Meets Expectations” for each of the component ratings to be considered “well managed.” If a FHC ceases to meet these capital and management requirements, the Federal Reserve may impose limitations or conditions on the conduct of its activities.

Capital Requirements.

The Federal Reserve imposes certain capital requirements on bank holding companies under the BHCA, including a minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted assets.

These requirements are described below under “Subsidiary Bank - FCB.” As of December 31, 2021, the total risk-based capital, Tier 1 risk-based capital, common equity Tier 1 risk based capital, and Tier 1 leverage ratios (collectively “Regulatory Capital Ratios”) of BancShares were 14.35%, 12.47% 11.50%, and 7.59%, respectively, and each capital ratio listed above exceeded the applicable Basel III (as defined below) minimums and the well-capitalized thresholds as further addressed under “Shareholders’ Equity and Capital Adequacy” in Item 7.

The Federal Reserve imposes certain capital requirements on bank holding companies under the BHCA, including a minimum leverage ratio and minimum ratios of “qualifying” capital to risk-weighted assets.

The metrics utilized to measure regulatory capital include the Tier 1 leverage ratio and the total, Tier 1, and common equity Tier 1 risk based capital ratios (collectively, the “Regulatory Capital Ratios”).

Federal banking agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening previous capital requirements for banking organizations.

Basel III became effective for BancShares on January 1, 2015 and the associated capital conservation buffers of 2.5% were fully phased in by January 1, 2019.

The capital conservation buffer is designed to absorb losses during periods of economic stress.

Additionally, federal banking agencies have developed PCA well-capitalized thresholds for Regulatory Capital Ratios.

The following table includes the Basel III requirements and PCA well-capitalized thresholds for the Regulatory Capital Ratios.

Basel III Minimums Basel III Conservation Buffers Basel III Requirements PCA Well-Capitalized Thresholds

Regulatory Capital Ratios

Total risk-based capital 8.00 % 2.50 % 10.50 % 10.00 %

Tier 1 risk-based capital 6.00 2.50 8.50 8.00

Common equity Tier 1 4.50 2.50 7.00 6.50

Tier 1 leverage 4.00 — 4.00 5.00

Failure to meet regulatory capital requirements may result in certain actions by federal banking agencies that could have a direct material effect on the consolidated financial statements of BancShares and constraints on capital distributions and discretionary executive compensation.

As of December 31, 2022, the Regulatory Capital Ratios of BancShares exceeded the applicable Basel III requirements and the well-capitalized thresholds as further addressed under “Stockholders’ Equity and Capital Adequacy” in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Subject to its capital requirements and certain other restrictions, the Parent Company is able to borrow money to make capital contributions to FCB and such loans may be repaid from dividends paid by FCB to the Parent Company.

As a result of the CIT Merger, BancShares expects to be a Category IV banking organization and expects to be required to submit an annual capital plan to the Federal Reserve in accordance with the applicable transition provisions.

BancShares will also be subject to biennial supervisory stress testing under the Federal Reserve’s CCAR process, and the stress capital buffer calculated by the Federal Reserve under CCAR will replace the static 2.5% percent component of our capital conservation buffer.

The CCAR supervisory stress tests are distinct from Dodd-Frank Act company-run stress testing (“DFAST”), and BancShares will not be subject to DFAST requirements until it has $250 billion or more in total consolidated assets, pursuant to the EGRRCPA.

As a result of the CIT Merger, BancShares will be subject to the Federal Reserve’s stress capital buffer (“SCB”) requirement, which is set through CCAR stress testing.

On January 19, 2021, the Federal Reserve finalized regulatory amendments related to the SCB requirements for Category IV banking organizations to be consistent with the Tailoring Rules.

The SCB reflects losses under the severely adverse scenario of the CCAR supervisory stress tests.

The Federal Reserve calculates a SCB as the greater of (i) the difference between the firm’s starting and minimum projected Common Equity Tier 1 (“CET1”) Risk-Based Capital Ratio under the severely adverse scenario in the supervisory stress test, plus the sum of dollar amount of the firm’s planned common stock dividends for each of the fourth through seventh quarters of the planning horizon as a percentage of risk-weighted assets, or (ii) 2.5 percent.

The SCB calculated by the Federal Reserve replaces the static 2.5 percent capital conservation buffer required by Basel III.

As noted above, the CCAR supervisory stress tests are distinct from DFAST, and BancShares will not be subject to DFAST requirements until it has $250 billion or more in total consolidated assets, pursuant to the EGRRCPA.

Source of Strength .

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There are a number of obligations and restrictions imposed on bank holding companies and their subsidiary banks by law and regulatory policy that are designed to minimize potential loss to the depositors of such depository institutions and to the FDIC insurance fund in the event of a depository institution default.

As noted above, BancShares expects to be a Category IV banking organization and expects to be subject to enhanced prudential standards and enhanced supervision under the Tailoring Rules subject to the applicable transition periods.

As noted above, BancShares became a Category IV banking organization and is subject to enhanced prudential standards and enhanced supervision under the Tailoring Rules subject to the applicable transition periods.

Limits on Dividends and Other Payments .

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Revenues of the Parent Company primarily result from dividends received from FCB.

There are various legal limitations applicable to the payment of dividends by FCB to the Parent Company and to the payment of dividends by the Parent Company to its shareholders.

There are various legal limitations applicable to the payment of dividends by FCB to the Parent Company and to the payment of dividends by the Parent Company to its stockholders.

The payment of dividends by FCB or the Parent Company may be limited by certain factors, such as requirements to maintain capital above regulatory guidelines.

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The payment of dividends, depending on the financial condition of FCB or the Parent Company, could be deemed to constitute such an unsafe or unsound practice.

BancShares expects to be a Category IV banking organization and expects to be required to submit a capital plan annually to the Federal Reserve in accordance with the applicable transition provisions.

BancShares became a Category IV banking organization and is required to submit a capital plan annually to the Federal Reserve in accordance with the applicable transition provisions.

The annual capital plan will include planned capital distributions over a specified forecasting horizon.

BancShares expects to be subject to biennial supervisory capital stress testing under the Federal Reserve’s CCAR process.

The stress capital buffer would replace the static 2.5% component of the capital conservation buffer with a capital buffer that is based on supervisory stress test results and the Parent Company’s planned capital distributions.

BancShares is subject to biennial supervisory capital stress testing under the Federal Reserve’s CCAR process.

The SCB would replace the static 2.5% component of the capital conservation buffer with a capital buffer that is based on supervisory stress test results and the Parent Company’s planned capital distributions.

As discussed above, BancShares’ SCB would be calculated as the greater of (i) the difference between BancShares’ starting and minimum projected CET1 capital ratios under the severely adverse scenario in the supervisory stress test plus four quarters of planned common stock dividends as a percentage of risk-weighted assets and (ii) 2.5 percent.

BancShares’ supervisory stress testing results under CCAR could impact the ability of the Parent Company to declare dividends or make other capital distributions, including common share repurchases.

Additionally, under the FDI Act, insured depository institutions, such as FCB, are prohibited from making capital distributions, including the payment of dividends, if, after making such distributions, the institution would become “undercapitalized” as such

term is used in the statute.

Additionally, under the FDI Act, IDIs, such as FCB, are prohibited from making capital distributions, including the payment of dividends, if, after making such distributions, the institution would become “undercapitalized” as such term is used in the statute.

Additionally, under Basel III capital guidelines, banking institutions with a Regulatory Capital Ratio above the Basel III minimum, but below the Basel III requirement will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

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The Parent Company’s non-bank subsidiaries pay dividends to the Parent Company periodically on a non-regulated basis.

Crypto-Asset Related Activities .

On August 16, 2022, the FRB released supervisory guidance (“SR 22-6”) encouraging all banking organizations supervised by the agency to notify its lead supervisory point of contact at the Federal Reserve prior to engaging in any crypto-asset related activity.

Prior to engaging in any such activities, the banking organization is expected to ensure that the activities are legally permissible under relevant state and federal laws, and ensure that the banking organization has adequate systems, risk management, and controls to ensure that the activities are conducted in a safe and sound manner consistent with applicable laws, including consumer protection laws.

On April 7, 2022, the FDIC issued a financial institution letter also requiring its supervised institutions to provide notice and obtain supervisory feedback prior to engaging in any crypto-related activities.

BancShares does not engage in any such activities.

Subsidiary Bank - FCB

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Deposit obligations are insured by the FDIC to the maximum legal limits.

As a subsidiary of a Category IV banking organization, we expect FCB will be subject to enhanced prudential standards for insured depository subsidiaries under the FDIC’s regulations in accordance with the applicable transition provisions.

As an IDI with $100 billion or more in total consolidated assets, FCB is subject to certain additional requirements under the FDIC’s regulations (e.g., Resolution Plans under the CIDI Rule, additional reporting in the Call Report using FFIEC Form 031 rather than Form 041).

FCB is also subject to enforcement, supervisory and examination authorities of the CFPB.

FDIC Deposit Insurance Assessment Rates.

As an IDI, FCB is required to pay the FDIC premiums for deposit insurance.

On October 18, 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules by 2 points, beginning in the first quarterly assessment period of 2023.

This price increase will be instituted to account for extraordinary growth in insured deposits during the first and second quarters of 2020 which caused the Depositors Insurance Fund (“DIF”) reserve ratio to decline below the statutory minimum of 1.35%.

The increased assessment rate schedules will remain in effect until the reserve ratio meets or exceeds 2 percent, absent further action by the FDIC.

Capital Requirements.

Federal banking agencies approved regulatory capital guidelines (“Basel III”) aimed at strengthening previous capital requirements for banking organizations.

Basel III became effective for BancShares on January 1, 2015 and the associated capital conservation buffers of 2.5% were fully phased in by January 1, 2019.

The capital conservation buffer is designed to absorb losses during periods of economic stress.

Additionally, federal banking agencies have developed Prompt Corrective Action (“PCA”) thresholds for regulatory capital ratios.

The following table includes the Basel III requirements and PCA well-capitalized thresholds for the Regulatory Capital Ratios.

Basel III Minimums Basel III Conservation Buffers Basel III Requirements PCA Well-Capitalized Thresholds

Regulatory Capital Ratios

Total risk-based capital 8.00 % 2.50 % 10.50 % 10.00 %

Tier 1 risk-based capital 6.00 2.50 8.50 8.00

Common equity Tier 1 4.50 2.50 7.00 6.50

Tier 1 leverage 4.00 — 4.00 5.00

Failure to meet regulatory capital requirements may result in certain actions by regulators that could have a direct material effect on FCB’s consolidated financial statements.

As of December 31, 2021, FCB exceeded the applicable Basel III requirements and the well-capitalized thresholds as further addressed under “Shareholders’ Equity and Capital Adequacy” in Item 7.

The Basel III and PCA well-capitalized thresholds for the Regulatory Capital Ratios are described above in the Parent Company “Capital Requirements” discussion.

Failure to meet regulatory capital requirements may result in certain actions by federal banking agencies that could have a direct material effect on the consolidated financial statements of FCB.

As of December 31, 2022, the Regulatory Capital Ratios of FCB exceeded the applicable Basel III requirements and the well-capitalized thresholds as further addressed under “Stockholders’ Equity and Capital Adequacy” in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Covered Insured Depository Institution Contingency Planning Requirements .

Under the FDIC’s “covered insured depository institution” rule (the “CIDI Rule”), an insured depository institution with $50 billion or more in total assets is required to submit periodically to the FDIC a contingency plan for the resolution of the institution in the event of its failure (“Resolution Plan”).

Under the FDIC’s CIDI Rule, an IDI with $50 billion or more in total assets is required to submit periodically to the FDIC a contingency plan for the resolution of the institution in the event of its failure (“Resolution Plan”).

The FDIC requires the Resolution Plan to ensure that the FDIC, as receiver, would be able to resolve the institution pursuant to the receivership provisions of the FDI Act.

In April 2019, the FDIC issued an advance notice of proposed rule making to amend the CIDI Rule, and suspended the requirement to submit Resolution Plans until further notice.

In January 2021, the FDIC announced that it would resume Resolution Plan requirements for insured depository institutions with $100 billion in assets.

In April 2019, the FDIC issued an advance notice of proposed rulemaking to amend the CIDI Rule, and suspended the requirement to submit Resolution Plans until further notice.

In January 2021, the FDIC announced that it would resume Resolution Plan requirements for IDIs with $100 billion in assets.

On June 25, 2021, the FDIC issued a policy statement, describing a new framework for the implementation of the CIDI Rule.

The FDIC has stated that it will provide covered insured depository institutions with 12 months advance notice prior to the submission deadline of its Resolution Plan.

The FDIC has stated that it will provide covered IDIs with 12 months advance notice prior to the submission deadline of its Resolution Plan.

FCB has not previously submitted a Resolution Plan under the CIDI Rule.

As an insured depository institution with more than $100 billion in total assets, FCB will be expected to submit its first Resolution Plan under the CIDI Rule once notified by the FDIC.

FCB has been informed by the FDIC that it will be required to submit its first Resolution Plan under the CIDI Rule once notified by the FDIC.

Transactions with Affiliates .

Pursuant to Sections 23A and 23B of the Federal Reserve Act, Regulation W and Regulation O, the authority of FCB to engage in transactions with related parties or “affiliates” or to make loans to insiders is limited.

Loan transactions with an affiliate generally must be collateralized and certain transactions between FCB and its affiliates, including the sale of assets, the payment of money or the provision of services, must be on terms and conditions that are substantially the

same, or at least as favorable to FCB, as those prevailing for comparable nonaffiliated transactions.

In addition, FCB generally may not purchase securities issued or underwritten by affiliates.

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FCB is subject to the requirements of the Community Reinvestment Act of 1977 (“CRA”).

The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities, including low-and-moderate-income neighborhoods.

The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of the local communities, including low- and moderate-income (“LMI”) neighborhoods.

If FCB receives a rating from the Federal Reserve of less than “satisfactory” under the CRA, restrictions would be imposed on our operating activities.

In addition, in order for a financial holding company, like the Parent Company, to commence any new activity permitted by the BHCA or to acquire any company engaged in any new activity permitted by the BHCA, each insured depository institution subsidiary of the financial holding company must have received a rating of at least “satisfactory” in its most recent examination under the CRA.

In addition, in order for a FHC, like the Parent Company, to commence any new activity permitted by the BHCA or to acquire any company engaged in any new activity permitted by the BHCA, each IDI subsidiary of the FHC must have received a rating of at least “satisfactory” in its most recent examination under the CRA.

FCB currently has a “satisfactory” CRA rating.

On May 5, 2022, the FRB, FDIC, and OCC issued a joint notice of proposed rulemaking to revise the regulations implementing the CRA.

Under the proposal, the agencies would evaluate bank performance across the varied activities they conduct and communities in which they operate, and tailor CRA evaluations and data collection to bank size and type.

Further, the agencies would also emphasize smaller value loans and investments that can have high impact and be more responsive to the needs of LMI communities, and would update CRA assessment areas to include activities associated with online and mobile banking, branchless banking, and hybrid models.

Additionally, the proposal would adopt a metrics-based approach to CRA evaluations of retail lending and community development financing, including public benchmarks, and clarify eligible CRA activities, such as affordable housing, that are focused on LMI, underserved, and rural communities.

As part of the CIT Merger, BancShares adopted a community benefit plan, developed in collaboration with representatives of community reinvestment organizations, for the combined bank.

Under the Community Benefit Plan, FCB will invest $16 billion in the communities served by FCB, including $2.5 billion in home purchase mortgage loans focusing on low- and moderate-income and minority borrowers in majority-minority (“MM”) geographies and $5 million in discounts or subsidies on home purchase and home improvement loans to borrowers in MM census tracts in the combined bank’s footprint in California.

Under the Community Benefit Plan, FCB will invest $16 billion in the communities served by FCB, including $2.5 billion in home purchase mortgage loans focusing on LMI and minority borrowers in majority-minority (“MM”) geographies and $5 million in discounts or subsidies on home purchase and home improvement loans to borrowers in MM census tracts in the combined bank’s footprint in California.

Anti-Money Laundering and the United States Department of the Treasury’s Office of Foreign Asset Control (“OFAC”) Regulation .

Governmental policy in recent years has been aimed at combating money laundering and terrorist financing.

The BSA and subsequent laws and regulations require financial institutions to take steps to prevent the use of their systems to facilitate the flow of illegal or illicit money or terrorist funds.

The BSA and subsequent laws and regulations require financial institutions to take steps to prevent the use of their systems to facilitate the flow of illegal or illicit money or terrorist funds and to report certain activity to the government.

The USA PATRIOT Act of 2001 (“Patriot Act”) significantly expanded AML and financial transparency laws and regulations by imposing new compliance and due diligence obligations, including standards for verifying customer identification at account opening and maintaining expanded records, as well as rules promoting cooperation among financial institutions, regulators and law enforcement entities in identifying persons who may be involved in terrorism or money laundering.

These rules were expanded to require new customer due diligence and beneficial ownership requirements in 2018.

An institution subject to the BSA, such as FCB, must additionally provide AML training to employees, designate an AML compliance officer and annually audit the AML program to assess its effectiveness.

An institution subject to the BSA, such as FCB (and FC International), in addition to maintaining a written BSA/AML compliance program, must also provide AML training to employees, designate an AML compliance officer and annually audit the AML program to assess its effectiveness.

The United States has imposed economic sanctions on transactions with certain designated foreign countries, nationals and others.

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Many of the amendments require the Treasury Department and FinCEN to promulgate rules.

On December 8, 2021, FinCEN issued proposed regulations that would implement the amendments with respect to beneficial ownership.

On September 29, 2022, FinCEN issued final regulations implementing the amendments with respect to beneficial ownership.

Consumer Laws and Regulations .

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and (8) credit history.

Alternatively, the mortgage lender can originate Qualified Mortgages (“QMs”), which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay (“ATR”) requirements.

Alternatively, the mortgage lender can originate QMs, which are entitled to a presumption that the creditor making the loan satisfied the ATR requirements.

In general, a QM is a mortgage loan without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years.

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Additionally, the CFPB has the authority to take supervisory and enforcement action against banks and other financial services companies under the agency’s jurisdiction that fail to comply with federal consumer financial laws.

As an insured depository institution with total assets of more than $10 billion, FCB is subject to the CFPB’s supervisory and enforcement authorities.

As an IDI with total assets of more than $10 billion, FCB is subject to the CFPB’s supervisory and enforcement authorities.

The Dodd-Frank Act also permits states to adopt stricter consumer protection laws and state attorneys general to enforce consumer protection rules issued by the CFPB.

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The federal financial regulatory agencies, including the FDIC and states attorneys general, also have become increasingly active in this area with respect to institutions over which they have jurisdiction.

Pursuant to the Dodd-Frank Act, the FDIC has backup enforcement authority over a depository institution holding company, such as the Parent Company, if the conduct or threatened conduct of such holding company poses a risk to the Depositors Insurance Fund (“DIF”), although such authority may not be used if the holding company is generally in sound condition and does not pose a foreseeable and material risk to the DIF.

Pursuant to the Dodd-Frank Act, the FDIC has backup enforcement authority over a depository institution holding company, such as the Parent Company, if the conduct or threatened conduct of such holding company poses a risk to the DIF, although such authority may not be used if the holding company is generally in sound condition and does not pose a foreseeable and material risk to the DIF.

The Dodd-Frank Act may have a material impact on BancShares’ operations, particularly through increased compliance costs resulting from possible future consumer and fair lending regulations.

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The CCPA contains several exemptions, including for information that is collected, processed, sold or disclosed pursuant to the GLBA.

In November 2020, voters in the State of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and supplements the CCPA by creating the California Privacy Protection Agency, a watchdog privacy agency to be appointed shortly after the CPRA’s enactment.

In November 2020, voters in the State of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and supplements the CCPA by creating the California Privacy Protection Agency, a watchdog privacy agency with the authority to issue regulations and guidance and to enforce the CCPA.

The CPRA also modifies the CCPA by expanding both the scope of businesses covered by the law and certain rights relating to personal information and its use, collection, and disclosure by covered businesses.

The California Privacy Protection Agency has issued proposed rules which would implement the CPRA but has not yet made them final or stated when final rules are likely to be enacted.

Similar laws have and may be adopted by other states where BancShares does business.

For instance, on October 25, 2022, the New York State Department of Financial Services issued a proposed rule that would, among other things, amend its cybersecurity regulation to create new tiers of regulated entities with tailored regulatory requirements, establish enhanced governance requirements, and require additional cybersecurity controls.

In addition, multiple other states, Congress and regulators outside the United States are considering similar laws or regulations which could create new individual privacy rights and impose increased obligations on companies handling personal data.

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Banks’ service providers are required under the Cybersecurity Rule to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.

The Cybersecurity Rule will take effect on April 1, 2022 and banks and their service providers must be in compliance with the requirements by May 1, 2022.

We are actively working on updating processes to ensure compliance.

The Cybersecurity Rule took effect on April 1, 2022 and banks and their service providers were required to be in compliance with the rule by May 1, 2022.

Federal banking agencies, including the FDIC, have adopted guidelines for establishing information security standards and cybersecurity programs for implementing safeguards under the supervision of the board of directors.

These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.

In October 2016, the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cybersecurity risk-management and resilience standards that would apply to large and interconnected banking organizations and to services provided by third parties to these firms.

If adopted, these enhanced standards will apply to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more, which includes the Parent Company and FCB.

Climate-Related Regulation and Risk Management.

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On December 16, 2021, the OCC issued proposed principles for climate-related financial risk management for national banks with more than $100 billion in total assets.

The OCC has also indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.

The federal banking agencies, either independently or on an interagency basis, are expected to adopt a more formal climate risk management framework for larger banking organizations in the coming months.

On March 30, 2022 and December 2, 2022, the FDIC and FRB issued their own proposed principles, respectively, for climate risk management by larger banking organizations.

The regulators have also indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.

The FRB, as the last agency to issue proposed guidance, indicated that it will work with the other two agencies in issuing any final guidance.

The proposed principles in the guidance would cover the following areas:

strategic planning;

policies, procedures, and limits;

data, risk measurement and reporting;

risk management;

and scenario analysis.

The proposed guidance would also suggest how climate-related financial risks can be addressed in specific prudential risk areas including liquidity, credit, other financial risks, operational, legal and compliance, and other non-financial risks.

If adopted as final guidance, BancShares as a banking organization with $100 billion or more in total assets will be expected to implement the principles under the guidance to demonstrate to the FRB (and the FDIC) that BancShares and FCB are operating in a safe and sound manner.

In addition, states in which we conduct business have taken, or are considering taking, similar actions on climate-related financial risks.

Compensation .

Our compensation practices are subject to oversight by the Federal Reserve and, with respect to some of our subsidiaries, by other financial regulatory agencies.

The federal banking regulators have issued joint guidance on executive compensation designed to ensure that the incentive compensation policies of banking organizations take into account risk factors and are consistent with the safety and soundness of the organization.

The guidance also provides that supervisory findings with respect to incentive compensation will be incorporated into the organization’s supervisory ratings, which can affect its ability to make acquisitions or other corporate decisions.

The guidance further provides that the regulators may pursue enforcement actions against a banking organization if its incentive compensation and related risk management, control or governance processes pose a risk to the organization’s safe and sound practices.

In addition, the Dodd-Frank Act requires the federal banking regulators and the SEC to issue regulations requiring covered financial institutions to prohibit incentive compensation arrangements that encourage inappropriate risks by providing compensation that is excessive or that could lead to material financial loss to the institution.

In October 2022, the SEC adopted final rules implementing the incentive-based compensation recovery (“clawback”) provisions of the Dodd-Frank Act.

The final rules direct stock exchanges to require listed companies to implement clawback policies to recover incentive-based compensation from current or former executive officers in the event of certain financial restatements and to disclose their clawback policies and their actions under those policies.

It is anticipated that most registrants will have until late 2023 or early 2024 to adopt and implement or adjust their policies as applicable.

Other Regulated Subsidiaries

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The Parent Company does not have its own separate Internet website.

However, FCB’s website ( www.firstcitizens.com ) includes a hyperlink to the SEC website where the public may obtain copies of BancShares’ Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, free of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

However, on FCB’s investor relations website ( www.ir.firstcitizens.com ), we make available BancShares’ Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, free of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.

Interested parties may also directly access the SEC’s website ( www.sec.gov ), which contains reports, proxy and information statements and other information electronically filed by BancShares.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business