First Citizens BancShares, Inc. Q3 FY2025 earnings call

Key Earnings Metrics

• Net interest income grew, NIM was stable, and adjusted noninterest expense was at the low end of guidance range. Adjusted earnings per share $44.62, adjusted ROE 10.62%, adjusted ROA 1.01%.

Balance Sheet

• Loans increased 2.5% sequentially, led by Global Fund Banking in SVB Commercial. Deposits up $3.3 billion, 7th consecutive quarter of deposit growth.

Strategic Initiatives

• Announced agreement to purchase 138 branches from BMO Bank. Progress on strategic initiatives including platform integration, digital and operational improvements, and capital and liquidity resilience.

During the third quarter, key earnings metrics were solid with net interest income growth, stable NIM, and adjusted noninterest expense at the low end of guidance range. Adjusted earnings per share were $44.62, adjusted ROE was 10.62%, and adjusted ROA was 1.01%. Loans increased by $3.5 billion or 2.5% sequentially, led by Global Fund Banking within the SVB Commercial segment. Deposits were up by $3.3 billion or 2% sequentially, marking the 7th consecutive quarter of deposit growth. SVB Commercial was the largest contributor to deposit growth, with Global Fund Banking loans increasing $2.9 billion, and quarter-end loan balances at their highest since acquisition in that business.

Fourth Quarter Outlook

• Loans expected to be in $143 billion to $146 billion range. Deposits expected in $161 billion to $165 billion range.
• Headline net interest income guidance tightened to $6.74 billion to $6.84 billion from prior range.
• Fourth quarter net charge-offs expected 35 to 45 basis points, full year 43 to 47 basis points.
• Adjusted noninterest income Q4 $480 million to $510 million, full year $1.99 billion to $2.02 billion. Adjusted noninterest expense Q4 modestly up, full year $5.12 billion to $5.16 billion.

• Macro and geopolitical uncertainties. - Potential impact of tariffs on credit risk. - Volatility in client derivative positions. - Need to monitor innovation economy and exit activity for SVB Commercial.

Q: Chris McGratty asked about NII guide and when NII bottoms.

A: Craig Nix responded that both headline NII and ex-accretion NII and headline NIM and ex accretion NIM with trough in the first quarter of '26, and repayment of purchase money note would impact NIM.

Q: Bernard Von Gizycki asked about First Brands charge-off monitoring and M&A appetite.

A: Andrew Giangrave said the supply chain portfolio is diversified, and Craig Nix stated no specific M&A plans beyond BMO but M&A remains a growth strategy.

Q: Casey Haire asked about loan growth, expenses, and Category 3 prep expense relief.

A: Marc Einerman and Elliot Howard discussed loan growth nuances, Elliot Howard talked about Q4 expense wildcards, and Craig Nix said Category 3 prep expense relief is medium term.

Q: Anthony Elian asked about total client funds and credit policies.

A: Marc Einerman spoke about client funds caution and Andrew Giangrave mentioned regular review of credit policies.

Q: Steven Alexopoulos asked about ROTCE and share repurchases.

A: Craig Nix said share repurchase pace is methodical within $600M-$900M range.

Q: Brian Foran asked about 2026 NII and AI trends.

A: Craig Nix gave directional color on 2026 NII, and Marc Einerman spoke about AI trends benefiting SVB in venture investment areas.

Q: Samuel Varga asked about SVB 2026 growth and credit nonaccruals.

A: Marc Einerman said growth could be from new client acquisition and utilization, and Andrew Giangrave provided color on credit nonaccruals migration.

Q: Christopher Marinac asked about fraud detection evolution.

A: Greg Smith mentioned investment in AI and algorithms for fraud detection.

Q: Christopher Marinac asked about branch acquisition and rate risk.

A: Craig Nix and Tom Eklund discussed branch acquisition's impact on deposit funding and rate risk.