Interest fee

First Citizens Bancshares reduces overdraft fees to $10

First Citizens Bancshares Raleigh, North Carolina will join the ranks of banks that are reducing fees for customers who overdraw their accounts.

The $111 billion asset firm plans to eliminate insufficient funds fees altogether and cut its overdraft fee from $36 to $10, chairman and chief executive Frank Holding said during the discussion on Wednesday. of First Citizens’ fourth quarter results with analysts. The new overdraft policy, which is expected to take effect around the middle of the year, is expected to reduce the bank’s service fee revenue by about 35% to 40%, or $35 million to $40 million annually.

Executives cited competitive pressure as the reason for the overdraft change and said the company will eventually aim to make up for the shortfall by expanding its wealth management and payments businesses.

The changes made by First Citizens mirror those made by state rival Bank of America, which said earlier this month that it was reduce overdraft fees from $35 to $10 and eliminating the NSF charge. Capital One Financial, Financial Regions and a number of other major regional banks have also adopted more user-friendly overdraft policies in recent months.

“We believe these changes are necessary to remain competitive in today’s market,” Holding said.

First Citizens completed its acquisition of CIT Group on January 3. This agreement, first announced fall 2020, added about $53 billion in assets to the company’s balance sheet. Executives said they would provide financial forecasts for the combined company in early March.

First Citizens reported net income of $123.3 million in the fourth quarter, approximately 11% lower than the comparable quarter of 2020. Earnings per share totaled $12.09, up $1.20 than the average estimate of analysts polled by FactSet Research Systems.

Net interest income decreased slightly to $357.4 million, and net interest margin contracted 44 basis points to 2.58%.

Non-interest revenue fell nearly 10% to $114.3 million due to lower mortgage bank revenue, lower fair market value adjustments to securities tradable equity stakes and a decline in realized gains on the securities.

Credit quality was strong in the fourth quarter. First Citizens released $4.7 million from its loan loss provision and recovered approximately $400,000, resulting in a net profit of $5.1 million. Its net charge rate decreased from 0.06% compared to the fourth quarter of 2020 to 0.01% at the end of 2021.