First Citizens BancShares Earnings Call: Growth Amidst Caution

First Citizens BancShares, Inc. Class A ((FCNCA)) has held its Q3 earnings call. Read on for the main highlights of the call.

First Citizens BancShares, Inc. recently held its earnings call, revealing a mix of positive growth and cautious outlooks. The company reported robust loan and deposit growth, strategic expansions, and strong capital management. However, the call also highlighted significant charge-offs and a cautious approach to future growth in certain segments, reflecting a balanced yet vigilant stance in the current economic climate.

Strong Loan and Deposit Growth

First Citizens BancShares achieved a commendable 2.5% loan growth over the linked quarter, with deposits increasing by $3.3 billion or 2% sequentially. This marks the seventh consecutive quarter of deposit growth, underscoring the company’s ability to attract and retain customer funds consistently.

SVB Commercial Performance

The company’s SVB Commercial division reported a 10% sequential increase in global fund banking loans. This growth was driven by increased utilization and strong production in the capital call portfolio, indicating robust demand in this segment.

Shareholder Returns

During the quarter, First Citizens returned $900 million to shareholders through share repurchases, bringing the total repurchased since the inception of the plan in July 2024 to $4 billion. This reflects the company’s commitment to delivering value to its shareholders.

Capital and Liquidity Strength

First Citizens maintained strong capital ratios, with a CET1 ratio of 11.65%. This solid capital position supports ongoing growth and strategic initiatives, ensuring the company can navigate future challenges effectively.

Branch Expansion

In a strategic move to expand its market reach, First Citizens announced an agreement to purchase 138 branches from BMO Bank. This acquisition is expected to enhance client offerings and broaden the company’s footprint.

Charge-off Related to First Brands Bankruptcy

The company incurred an $82 million charge-off due to the bankruptcy of First Brands, representing its full exposure to the company. This significant charge-off highlights the risks associated with certain investments.

Increased Net Charge-offs

Net charge-offs increased by $115 million to $234 million for the quarter, driven by stress in certain portfolios. This rise in charge-offs indicates challenges in specific areas of the company’s loan portfolio.

Cautious Outlook for SVB Commercial

Despite recent growth, First Citizens expressed caution regarding future deposit growth and utilization in its SVB Commercial segment due to uncertainties in the innovation economy. This cautious outlook reflects the company’s prudent approach to managing potential risks.

Forward-Looking Guidance

Looking ahead, First Citizens BancShares provided guidance indicating continued robust performance across business segments. The company anticipates loans to be in the range of $143 billion to $146 billion, with a focus on maintaining a strong capital and liquidity position. Net interest income is expected to remain stable in the fourth quarter compared to the third quarter, with full-year guidance tightened to a range of $6.74 billion to $6.84 billion. The company remains committed to disciplined expense management while investing in scalable growth and operational efficiency.

In summary, First Citizens BancShares’ earnings call painted a picture of strong financial health and strategic growth, tempered by a cautious outlook in certain areas. The company’s robust loan and deposit growth, alongside strategic expansions and shareholder returns, highlight its solid performance. However, increased charge-offs and a cautious approach to future growth underscore the challenges and uncertainties that lie ahead.