Holdings keep grips on bankling company.

• Author: Breznick, Alan
• Position: Money Matters

On paper, Raleigh-based First Citizens BancShares Inc. (Nasdaq: FCNCA) is a publicly held company. But the bank holding company has long been the preserve of a very private family -- the Holdings of Raleigh and Smithfield.

R.P. Holding went to work as a cashier for what was then the Bank of Smithfield in 1918. Within two decades, he was boss. His sons succeeded him as the bank's top executives. Today, the Holdings directly control about 65% of the voting shares. Three of them -- Lewis, Frank and Frank Jr. -- are officers of the company, which has $11.8 billion in assets.

Since First Citizens doesn't need to preen for the market by pumping up quarterly profits, it doesn't skimp on bricks and mortar, as many banks do. Its main banking subsidiaries -- Raleigh-based First Citizens Bank and Georgia-based Atlantic States Bank -- have nearly 400 branches between them. That gives them a third as many as Winston-Salem-based BB&T, though their parent has only a sixth of BB&T's assets.

Partly as a result, noninterest expenses are 60% of total revenue, compared with 46% for BB&T. Higher expenses translate to lower returns. Return on equity was 10.3% in 2001, compared with 16.8% for the same period for BB&T. But the numbers say First Citizens is also a more conservative lender than BB&T. At the end of 2001, only 0.28% of its loans were...