First Citizens Bancshares (FCNCA) turned stronger credit quality, higher mortgage income and lower foreclosure costs into a 17% gain in profits last quarter.

The Raleigh, N.C., company reported second-quarter earnings of $43.9 million, or $4.56 a share, compared with $37.6 million a year earlier.

Much of the quarter's gains stemmed from a lower provision for loan and lease losses. Provisions fell 55%, to $13.2 million. First Citizens also reduced expectations of credit losses tied to six failed banks it acquired between 2009 and 2011.

Stronger mortgage revenues boosted noninterest income 13%, to $65 million. Recoveries on acquired assets and higher merchant income also drove the increase.

A decline in net interest income, which fell 16.7% to $1.8 million, partially offset First Citizens' profits. Lower asset yields contributed to the decline.

Noninterest expenses dipped 3% to $188.6 million, compared with $194.8 million. The decline reflects a significant reduction in foreclosure expenses.

Chargeoffs at the $21.3 million-asset company tumbled 70%, reflecting improvements in credit quality. They fell from $29.2 million to $8.8 million.

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