First Citizens BancShares, Inc. Q3 FY2025 earnings call

• Strong earnings metrics with net interest income growth, stable NIM, and adjusted noninterest expense at the low end of guidance. • Loans saw 2.5% sequential growth across segments, led by SVB Commercial's Global Fund Banking. • Deposits up $3.3 billion or 2% sequentially, marking 7th consecutive quarter of deposit growth. • Returned $900 million to shareholders through share repurchases. • Announced agreement to purchase 138 branches from BMO Bank, aiming to expand into new markets. • Focus on deepening client relationships, optimizing balance sheet, and investing in franchise for scalable growth, including platform integration and digital/operational improvements. • Maintained strong capital and liquidity positions.

Key earnings metrics were solid with adjusted earnings per share of $44.62, adjusted ROE of 10.62% and adjusted ROA of 1.01%. Loans increased by $3.5 billion or 2.5% sequentially, led by Global Fund Banking within the SVB Commercial segment. Deposits grew by $3.3 billion or 2% sequentially, with notable inflows from SVB Commercial and General Bank segments. Net interest income grew, NIM was stable, and adjusted noninterest expense was at the low end of the guidance range.

• Fourth quarter loans expected in the $143 billion to $146 billion range, with Global Fund Banking expected to have lower utilization. • Deposits expected in the $161 billion to $165 billion range, with growth in General Bank offset by outflows in SVB Commercial. • Headline net interest income guidance tightened to $6.74 billion to $6.84 billion for full year 2025. • Fourth quarter net charge-offs expected in the 35 to 45 basis points range, full year range increased to 43 to 47 basis points. • Adjusted noninterest income for fourth quarter expected in $480 million to $510 million range, full year range $1.99 billion to $2.02 billion. • Adjusted noninterest expense for fourth quarter modestly up, full year range $5.12 billion to $5.16 billion. • Tax rate expected in 25% to 26% range.

• Macro and geopolitical uncertainties that could impact results. • Potential impact of tariffs on credit risk. • Volatility in loan outstandings in Global Fund Banking. • Lumpiness in adjusted noninterest income due to changing rate environment.

Q: On the NII guide, can you explain the cut and when NII bottoms?

A: If two rate cuts occur, NII and NIM trough in Q1 2026. Repayment of purchase money note could positively impact NIM.

Q: Any additional monitoring on the First Brands charge-off portfolio?

A: Supply chain portfolio is $300 million across 24 borrowers, no concentration like First Brands, and we're comfortable with the remainder.

Q: Thoughts on M&A beyond BMO?

A: No specific M&A plans outside BMO, but M&A remains a growth strategy, focusing on accretive deals.

Q: Color on loan growth guide and expense wildcards?

A: Loan growth in Global Fund Banking has volatility due to client draws/repayments. Fourth quarter expenses have seasonal factors like client entertainment and travel, with Category 3 prep expense medium-term.

Q: AI boom impact on SVB?

A: AI is benefiting sectors we bank, driving investment, but mega AI rounds aren't a major factor for us.

Q: Update on nonaccruals and credit mitigation?

A: Nonaccruals driven by a few larger credits, criticized and classified assets down, and credit remains stable overall.