FIRST CITIZENS BANCSHARES INC /DE/ Q1 FY2025 earnings call

• Financial results aligned with guidance, adjusted EPS $37.79. - Loan growth $1.1 billion, concentrated in commercial bank and SVB commercial. - Deposit growth strong, direct bank and branch network. - Net charge-offs 41 basis points, low end of guidance. - Terminated loss share agreement with FDIC. - Returned $613 million to shareholders via share repurchases, total repurchases $2.3 billion. - Adjusted noninterest income declined due to fair value changes and held-for-sale asset write-down, partially offset by wealth management income. - Adjusted noninterest expense increased slightly due to personnel and marketing expenses, partially offset by other noninterest expense decline.

First Citizens BancShares, Inc. reported solid financial results for the first quarter. Loans grew $1.1 billion or by 0.8% sequentially, concentrated in the commercial bank and SVB commercial segments. Commercial bank loans grew by $733 million, driven by tech, media, telecom, health care verticals and factoring. SVB commercial loans grew by $440 million. Deposits were up $4.1 billion or about 2.6% sequentially, strong in direct bank and general bank. Net charge-offs declined to 41 basis points, low end of guidance range. Adjusted earnings per share were $37.79. Adjusted ROE was 9.64% and ROA was 0.95%, adjusted efficiency ratio was 59.6%. Headline NIM was 3.26%, NIM ex accretion was 3.12%.

• Second quarter loans expected in $142 to $144 billion range, driven by commercial bank and SVB commercial. Full year loans $144 to $147 billion. - Second quarter deposits expected in $158 to $161 billion range, full year raised to $163 to $168 billion. - Second quarter headline net interest income relatively stable, full year headline net interest income guidance lowered to $6.55 to $6.95 billion. - Second quarter net charge-offs expected 40 to 50 basis points, full year net charge-off guidance 35 to 45 basis points. - Adjusted noninterest income second quarter $480 to $510 million, full year $1.95 to $2.05 billion. - Adjusted noninterest expense second quarter flat to modestly up, full year $5.05 to $5.2 billion. - Tax rate expected 25% to 26% for second quarter and full year.

• Macro-economic environment uncertainty, tariff announcements and market volatility impact unknown. - Credit risk in certain portfolios like commercial real estate, investor-dependent, with potential impacts from tariffs, inflation, interest rate cuts not fully determinable yet. - Uncertainty in economic outlook affecting business lines and clients.

Q: Chris McGratty asked about the buyback and how to reach the 10.5% to 11% CET1 ratio over the next nine months.

A: Craig Nix said it assumes completing ongoing repurchase and implementing another plan in the back half of 2025.

Q: Christopher Marinac asked about the FDIC and impact on balance sheet, buybacks, earnings and margin sensitivity.

A: Craig Nix said no indication of paying off purchase money note in 2025, and the company is asset sensitive.

Q: Anthony Elian asked about total client fund growth in SVB and credit quality related to tariffs.

A: Mark said encouraged by execution so far, and Andrew Giangrave mentioned focusing on textile, footwear, retail, auto, equipment finance, innovation portfolios.

Q: Brian Foran asked about normalized return potential of the franchise.

A: Craig Nix said focused on ROE and tangible book value, expecting over 10% TBV growth over long term.

Q: Ben Gurlinger asked about appetite for partnerships or acquisitions given economic volatility.

A: Craig Nix said M&A remains part of growth strategy.

Q: Nicholas Holowko asked about nondeposit funding and growth opportunities.

A: Craig Nix said focusing on core deposits, and growth is broad-based in various sectors.