• Adjusted Earnings Per Share (EPS): $45.10
• Return on Equity (ROE): 11.51%
• Return on Assets (ROA): 1.14%
• Adjusted Efficiency Ratio: 57%
• Net Interest Margin (NIM): 3.32%
• NIM excluding Accretion: 3.16%
• Loan Growth: $1.5 billion or 1.1% sequentially
• Deposit Growth: $3.7 billion or 2.4% sequentially
• Share Repurchase: 6.44% of Class A common stock
• Common Equity Tier 1 (CET1) Capital Ratio: 12.99%
• Allowance Ratio: 1.2%
• Net Charge-Off Ratio: Expected 40 to 50 basis points in Q1 2025
• Adjusted Noninterest Income: Increased 9% sequentially
• Adjusted Noninterest Expense: Increased 3.1% sequentially
• Effective Tax Rate: Estimated 25% to 26% for 2025

• Warning! GuruFocus has detected 3 Warning Sign with FCNCA.

Release Date: January 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Citizens BancShares Inc (NASDAQ:FCNCA) reported strong fourth-quarter results with adjusted earnings per share of $45.10, exceeding expectations.
• The company achieved loan and deposit growth across all operating segments, indicating robust business performance.
• SVB had a successful quarter with improvements in VC investment activity, contributing to loan and deposit growth.
• The company repurchased an additional 3.5% of its Class A common stock, enhancing shareholder value.
• First Citizens BancShares Inc (NASDAQ:FCNCA) maintained strong capital and liquidity positions, supporting balance sheet growth and strategic initiatives.

Negative Points

• Headline net interest income declined from the third quarter due to lower yields on loans and overnight investments.
• The company experienced a sequential contraction in net interest margin (NIM) by 21 basis points.
• Adjusted noninterest expense increased by 3.1% sequentially, driven by higher personnel and technology costs.
• Net charge-offs increased slightly, with higher losses in the commercial finance business due to idiosyncratic losses.
• The company anticipates continued stress in certain portfolios, including investor-dependent and office sectors, which may impact credit quality.

Q & A Highlights

Q: Could you walk us through the assumptions on the low and high end of the $6.6 billion to $7 billion range for net interest income in 2025? A: Our baseline forecast is anchored to two rate cuts, but the range contemplates anywhere between zero and four. The exact value for net interest income will depend on the magnitude and timing of those rate cuts. We expect headline net interest income to be up low single digits, with ex-accretion net interest income up low to mid-single digits, pegging towards two rate cuts in the last half of the year. - Craig Nix, CFO

Q: Are there any cost or revenue synergies from the SVB acquisition assumed in the 2025 guidance? A: We have achieved the cost synergies estimate laid out at the beginning of the acquisition and do not anticipate any material impact from further expense synergies on SVB in the guidance. - Craig Nix, CFO

Q: Can you provide more color on the total client fund growth in SVB during the fourth quarter? A: The $75 billion invested in the fourth quarter included large deals, with a third of the total from three very large financings. We are pleased with the growth, which signals continued execution. However, we remain cautious about growth expectations for SVB due to the mixed investment environment. - Unidentified Company Representative

Q: What are your latest thoughts on M&A, given First Citizens' historical acquisitiveness? A: We are not projecting any material M&A activity in 2025, but we remain opportunistic. - Frank Holding, CEO

Q: Where do you see the biggest upside potential and downside risk to the 2025 guidance? A: Upside potential includes higher rates for longer, which would benefit net interest income. Downside risks include a slowing economy that could negatively impact loan and deposit growth. - Craig Nix, CFO

Q: Will the expenses associated with Category 3 readiness be reflected in the 2025 expense run rate? A: Yes, the expenses for Category 3 readiness are reflected in our run rate for expenses. - Craig Nix, CFO

Q: Is the loss share agreement expected to work itself to zero this year? A: The spread between our capital ratios with and without loss share is expected to shrink to around 10 basis points, working out to a zero impact on capital throughout the remainder of the year. - Craig Nix, CFO

Q: How are you thinking about the sustainable ROE power of the bank over the medium term? A: Our goal is to improve operational efficiency over time, simplifying processes to meet regulatory expectations and improve customer experience. While rates impact our current efficiency ratio, our long-term goal is to operate in the mid-50s range. - Craig Nix, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.