• Adjusted Earnings Per Share: $45.87
• Net Interest Margin: 3.53%, excluding accretion income 3.33%
• Share Repurchase: 350,000 shares for approximately $700 million
• Return on Equity (ROE): 11.94%
• Return on Assets (ROA): 1.2%
• Efficiency Ratio: 50%
• Net Charge-Off Ratio: 42 basis points
• Allowance Ratio: 1.21%
• Loan Portfolio: Decreased by $646 million sequentially
• Deposit Growth: Increased by $495 million, 0.3% sequentially
• CET1 Capital Ratio: 13.24%
• Full Year Net Interest Income Guidance: $7.1 billion to $7.2 billion
• Full Year Adjusted Noninterest Income Guidance: $1.89 billion to $1.91 billion
• Full Year Adjusted Noninterest Expense Guidance: $4.764 billion to $4.79 billion
• Tax Rate Guidance: 27% to 28%

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

Release Date: October 24, 2024

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 financial results with adjusted earnings per share of $45.87.
• The company maintained a resilient net interest margin despite declines in accretion income.
• There was continued deposit growth, with commercial balances up modestly over the prior quarter.
• The company successfully repurchased over 350,000 shares of Class A common stock, totaling approximately $700 million.
• Capital and liquidity positions remained strong, providing a source of strength for the company.

Negative Points

• Loans declined during the quarter, primarily due to a reduction in the Global Fund Banking portfolio.
• Net charge-offs increased modestly, with concentrations in the general office investor-dependent and small-ticket leasing portfolios.
• Adjusted noninterest income was down modestly, driven by changes in the fair value of customer derivative positions.
• Adjusted noninterest expenses increased by approximately 5%, primarily due to higher personnel costs and professional fees.
• The company anticipates continued stress in the commercial real estate and investor-dependent portfolios, with elevated losses expected into 2025.

Q & A Highlights

Q: Referring to the SVB decline in the quarter, what are your thoughts on the next couple of quarters regarding loan growth as rates go down? A: Craig Nix, CFO, explained that as the market recovers, loans and deposits in SVB are expected to grow. Lower rates could be a catalyst for growth, and the decline was mainly due to payoffs towards the end of the quarter. Average loan balances were higher than the previous quarter, indicating no structural issues.

Q: Can you comment on the pace of client additions in the SVB business during the third quarter? A: Mark, an unidentified company representative, noted that while he didn't have specific statistics, new client acquisition continued positively despite the downturn in target markets. Clients are returning, and the company remains encouraged by this trend.

Q: Regarding the net interest income guide, how should we think about accretion income going forward? A: Craig Nix, CFO, stated that accretion income is expected to continue declining as shorter-term loans pay off. The contribution from accretion will decrease, with the fourth quarter expected to see around $90 million in accretion income.

Q: Could you clarify the split between floating and variable rate loans? A: Craig Nix, CFO, mentioned that the total loan portfolio is approximately 64% variable and 36% fixed. The majority of loans are tied to market rates like SOFR.

Q: How do you see deposit flows picking up as we move into 2025? A: An unidentified company representative highlighted that a substantial amount of capital is waiting to be invested, and recent rate cuts could help unstack the market. While the exact timing is uncertain, the company remains well-positioned for when investment activity picks up.

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