First Citizens BancShares, Inc. · NASDAQ:FCNCA

First Citizens BancShares — Investor Presentation (June 2024)

32 slides from First Citizens BancShares's investor presentation, Jun 27, 2024

  1. Slide 1: Monthly Market Update

    Brent Ciliano, SVP Chief Investment Officer Monthly Market Update Phillip Neuhart, SVP Director of Market and Recorded on June 27, 2024 Economic Research

  2. Slide 2: What are we going to cover?

    What are we going to cover? 1. Economic update: Interest Rates | Inflation | Labor Market 2. Market update: Equity Markets | Fixed Income | Potential Headwinds

  3. Slide 3: Economic Update

    Economic Update Interest Rates | Inflation | Labor Market

  4. Slide 4: The Global Growth Outlook Has Been Revised Up

    The Global Growth Outlook Has Been Revised Up World Economic Outlook Consensus Real Economic Growth Estimates 2023 2024 Estimate as of: Actual Growth Dec-23 Jun-24 World 3.2% 2.6% 3.0% United States 2.5% 1.3% 2.3% Euro Area 0.5% 0.5% 0.7% United Kingdom 0.1% 0.3% 0.7% Japan 1.9% 0.8% 0.3% China 5.2%

  5. Slide 5: The Outlook for the US Economy Remains Upbeat

    The Outlook for the US Economy Remains Upbeat 3.0 2024 GDP Growth (Year-Over-Year Percent Change) Median Professional Forecast 2.5 2.0 1.5 1.0 0.5 0.0 Mar 2022 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Source: Bloomberg 5

  6. Slide 6: Forecasters Expect Policy Rates to Stay Elevated vs. Recent History

    Forecasters Expect Policy Rates to Stay Elevated vs. Recent History Central Bank Policy Rate and Consensus Forecasts 8 US Federal Reserve 7 Bank of England European Central Bank 6 5 4 3 2 1 0 2000 2005 2010 2015 2020 2025 Source: Bloomberg 6

  7. Slide 7: The Fed Has Kept Monetary Policy on Hold for a Substantial Period

    The Fed Has Kept Monetary Policy on Hold for a Substantial Period 20 Months From Last Fed Rate Hike to First Rate Cut 18 16 14 Market pricing: 12 14 months 10 8 6 Current: 11 months 4 2 0 1980 1981 1984 1989 1995 1997- 2000- 2006- 2019 2024 1998 2001 2007 Source: Apollo, Bloomberg 7

  8. Slide 8: Financial Conditions Are Still Very Loose

    Financial Conditions Are Still Very Loose Bloomberg Financial Conditions Index 2.0 Negative Value Indicates Tighter Financial Conditions 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Source: Bloomberg 8

  9. Slide 9: Inflation Has Budged in the Wrong Direction This Year

    Inflation Has Budged in the Wrong Direction This Year Average Annualized Inflation Rates Overweighting Recent Months 12% PCE Core PCE CPI Core CPI 10% Fed's 2% Target 8% 6% 4% 2% 0% -2% -4% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bank Policy Institute, Bloomberg 9

  10. Slide 10: Job Growth Has Been Strong, But Unemployment Has Moved Up

    Job Growth Has Been Strong, But Unemployment Has Moved Up US Unemployment Rate 04/2020: 11 Percent 14.8% 10 9 8 7 6 5 05/2024: 4.0% 4 3 1960 1970 1980 1990 2000 2010 2020 Source: Department of Labor, Bloomberg 10

  11. Slide 11: Consumer Expenditures Are Still Holding Up

    Consumer Expenditures Are Still Holding Up Personal Consumption Expenditures (SAAR, $) % Change - Year to Year 25% Goods PCE Y/Y Chg 20% Services PCE Y/Y Chg 15% Goods Spending +43% in 4/21 10% 6.99% 5% 0% 1.99% -5% -10% 20-Year Average: -15% Goods: +4.23% Services: +4.70% -20% '18 '19 '20 '21 '22 '

  12. Slide 12: Revolving Credit Rates Have Surged, and Delinquencies Are Up

    Revolving Credit Rates Have Surged, and Delinquencies Are Up US Credit Card Delinquency and Interest Rates 25% Commercial bank credit card interest rate 30-day delinquency rate 20% 15% 10% 5% 0% 2006 2009 2012 2015 2018 2021 2024 Source: Federal Reserve, Bloomberg 12

  13. Slide 13: The Supply of Existing Homes Has Rebounded From Its Lows

    The Supply of Existing Homes Has Rebounded From Its Lows Months Supply of Existing Homes For Sale Millions of Units 14 12 10 8 6 4 2 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 Source: Bloomberg 13

  14. Slide 14: Market Update

    Market Update Equity Markets | Fixed Income | Potential Headwinds

  15. Slide 15: Global Markets Year-to-Date

    Global Markets Year-to-Date YTD US Equity Returns Total Return by Asset Class 14% YTD 2024 (06/24/2024) As of 06/24/2024 12% Value Blend Growth 10% Large 8% 9.0% 16.6% 21.3% 6% 4% Mid 5.4% 5.6% 6.2% 2% 0% Small -2% U.S. Equities Intl. Developed Emerging Market Aggregate Fixed Municipal Bonds -1.7% 0

  16. Slide 16: Stocks Have Rallied Sharply

    Stocks Have Rallied Sharply S&P 500 Index 5,500 5,300 5,100 4,900 4,700 4,500 4,300 +32% 4,100 3,900 3,700 +52% 3,500 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Jan-24 May-24 Source: Bloomberg 16

  17. Slide 17: Large-cap Stocks Have Outperformed by a Significant Margin

    Large-cap Stocks Have Outperformed by a Significant Margin 150 S&P 500 Performance Index: Jan. 1, 2023 = 100 +42% 140 Market cap weighted Equal weighted 130 120 +17% 110 100 90 Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024 Jul 2024 Source: Bloomberg 17

  18. Slide 18: Market Valuation Below Extremes but Above Average

    Market Valuation Below Extremes but Above Average S&P 500 Next Twelve Months Price-to-Earnings Ratio 28X 24X 20X +1 Standard Deviation Average 16X 12X -1 Standard Deviation 8X 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Source: Bloomberg 18

  19. Slide 19: P/E Ratios Suggest There is Room For Broadening

    P/E Ratios Suggest There is Room For Broadening Cap. Weight Price-to-Forward Earnings Through End-May 2024 45x Top 10 Top 11-500 40x 35x 30x 25x 20x 15x 10x 5x 2000 2004 2008 2012 2016 2020 2024 Source: Trivariate Research 19

  20. Slide 20: 25% of Companies Have Greater Than 60% Gross Margin

    25% of Companies Have Greater Than 60% Gross Margin Percent of Top 3000 US Equities with Gross Margin >60% 27% E x-Financials and Real Estate Th rough End-May 2024 25% 23% 21% 19% 17% 15% 1999 2002 2005 2008 2011 2014 2017 2020 2023 Source: Trivariate Research 20

  21. Slide 21: Valuation Closely Related to Gross Margin

    Valuation Closely Related to Gross Margin Median EV-to-Forecast Sales by Gross Margin Decile 5.0x Top 3000 US Equities with Revenue >$100m 4.5x Through End-May, 2024 4.0x 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x High 2 3 4 5 6 7 8 9 Low Gross Gross Margin Margin Source: Trivariate Research 21

  22. Slide 22: Corporate Earnings

    Corporate Earnings 18% Estimated Next 12-Month S&P 500 Operating Margin ▪ 2024 estimated growth is 11.3% 17% ▪ 2025 estimated growth is 14.4% 16% 15% ▪ Average growth since 1950 is 7.6% 14% 13% 2012 2014 2016 2018 2020 2022 2024 Source: FactSet – 6/21/2024, Bloomberg, Strategas 22

  23. Slide 23: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 6/24/24 Bear 4,000 -26.8% Base 5,500 0.7% Bull 6,000 9.9% Source: Bloomberg, FactSet 23

  24. Slide 24: US Treasury Yield Curve Remains Inverted

    US Treasury Yield Curve Remains Inverted US Treasury Yield Curve 5.8% 5.6% As of 6/24/2024 5.4% 5.3% 12/29/2023 5.4% 5.3% 5.3% 5.3% 5.2% 5.2% 5.1% 5.0% 4.8% 4.8% 4.7% 4.6% 4.5% 4.5% 4.4% 4.2% 4.3% 4.4% 4.2% 4.2% 4.2% 4.2% 4.0% 4.0% 4.0% 3.9% 3.9% 3.8% 3.8% 1 3 6 1 2 3 5 7 10 20 30 MM M Yr Yr Yr Yr Y

  25. Slide 25: Bond Yields Remain Elevated Versus Recent History

    Bond Yields Remain Elevated Versus Recent History US Fixed Income Indices Yield-to-Worst Index 12/31/2021 6/24/2024 2-Year Treasury 0.73% 4.72% 10-Year Treasury 1.51% 4.23% Aggregate Bond 1.75% 4.90% Intermediate Government/Credit 1.30% 4.75% Municipal Bond 1.11% 3.66% Investment Grade Corporate Bon

  26. Slide 26: Household Debt Has Improved, But Government Debt Is at Historic Highs

    Household Debt Has Improved, But Government Debt Is at Historic Highs 120 United States Debt by Sector Percent of GDP 100 Households and Nonprofits Nonfinancial Business Federal Government 80 60 40 20 0 Source: Federal Reserve 26

  27. Slide 27: Interest Costs Are Becoming Increasingly Burdensome and Will Rise Higher

    Interest Costs Are Becoming Increasingly Burdensome and Will Rise Higher 7 Federal Outlays (% of GDP) Defense Medicare 6 Social Security Net Interest 5 4 3 2 1 0 1995 2000 2005 2010 2015 2020 2025 Source: Bloomberg 27

  28. Slide 28: The Bulk of Federal Outlays Is Mandatory Spending and Net Interest

    The Bulk of Federal Outlays Is Mandatory Spending and Net Interest US Federal Government Spending 35 Percent of GDP, Projections from Congressional Budget Office 30 Non-discretionary Net Interest Mandatory (e.g. Soc. Sec., Medicare) Discretionary Defense Projections 25 Non-defense 20 15 10 5 0 1964

  29. Slide 29: Treasury Auction Sizes Have Been Growing

    Treasury Auction Sizes Have Been Growing Monthly Treasury Issuance by Maturity 500 (Billions of dollars) 450 2-year 3-year 5-year 7-year 10-year 20-year 30-year 400 350 300 250 200 150 100 50 0 2018 2019 2020 2021 2022 2023 2024 Source: Bloomberg 29

  30. Slide 30: Partisan Strategies Require Staying Uninvested For Long Periods

    Partisan Strategies Require Staying Uninvested For Long Periods Growth of $10,000 Invested in the S&P 500 Since 1953 2,000,000 1,795,194 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 215,364 200,000 83,356 0 Invested Only During Invested Only During Invested All Years Rep

  31. Slide 31: Stay Informed with Our Latest Releases

    Stay Informed with Our Latest Releases In Brief | A look at the week ahead in under two minutes every Monday morning Q&A Videos | Monthly conversations covering 2-3 of the top questions we’re hearing from clients Market updates | Monthly interactive discussions with in- depth analysis of markets and

  32. Slide 32: Authors and Important Disclosures

    Making Sense liJ FirstCitizensWealthTM Authors Important Disclosures Phillip Neuhart | SVP, Director of Market & This material is for informational purposes only and is not intended to be an offer, specific investment strategy, recommendation, or solicitation to purchase or sell any security or insu

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