First Citizens Bancshares, Inc. · NASDAQ:FCNCA
First Citizens Bancshares — Q3 2022 Earnings Presentation
56 slides from First Citizens Bancshares's earnings presentation, Oct 27, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
First Citizens BancShares, Inc. Third Quarter 2022 Earnings Conference Call October 27, 2022
Slide 2: Agenda
2 Agenda Page(s) Section I – Third Quarter 2022 Overview 4–6 Section II – Third Quarter 2022 Financial Results 7 – 27 Financial Highlights 8 Earnings Highlights 9 – 10 Notable Items 11 Net interest income and margin 12 – 14 Deposit Betas 15 Noninterest income and expense 16 – 18 Balance Sheet Highli
Slide 3: Important Notices
3 Important Notices Forward Looking Statements This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of First Citizens BancSha
Slide 4: Third Quarter 2022 Overview
Third Quarter 2022 Overview Section I
Slide 5: Key Take-Aways - Third Quarter 2022
5 Key Take-Aways - Third Quarter 2022 Will complete the repurchase of 1.5 million Provision build during the quarter due to 1 Class A common shares during 4Q22, closing out 6 deterioration in CECL macroeconomic forecasts the Share Repurchase Plan approved in July 2022. and loan growth. Continued foc
Slide 6: Share Repurchase Plan Update
6 Share Repurchase Plan Update Announced the plan to repurchase 1.5 million shares in July 2022. We have completed 98.5% of the Repurchase Plan as of October 25, 2022. Highlights (450,217) ◦ FCB has repurchased 9.85% of Class A common shares and 9.23% of total common shares as of October 25, 2022. 1
Slide 7: Third Quarter 2022 Financial Results
Third Quarter 2022 Financial Results Section II
Slide 8: Financial Highlights
8 Financial Highlights Quarter-to-date Year-to-date Sep 22 Jun 22 Sep 21 Sep 22 Sep 21 Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) (Non-GAAP) EPS (1) $ 19.25 $ 20.77 $ 14.86 $ 16.86 $ 12.17 $ 12.04 $ 50.70 $ 56
Slide 9: Quarter-to-Date Earnings Highlights
9 Quarter-to-Date Earnings Highlights ($ in millions) Increase (decrease) Reported QTD 2Q22 3Q21 Highlights 3Q22 2Q22 3Q21 $ % $ % Net interest income $ 795 $ 700 $ 604 $ 95 13.6 % $ 191 31.6 % • Note: The commentary below relates to the “Adjusted” Noninterest income 433 424 432 9 2.1 1 0.2 income s
Slide 10: Year-to-Date Earnings Highlights
10 Year-to-Date Earnings Highlights ($ in millions) YTD Sept Increase (decrease) Highlights Reported 2022 2021 YTD 21 - YTD 22 $ % • Note: The commentary below relates to the “Adjusted” income statements. Net interest income $ 2,144 $ 1,822 $ 322 17.7 % Noninterest income 1,707 1,477 230 15.6 YTD 22
Slide 11: Notable Items
11 Notable Items ($ in millions) 3Q22 2Q22 3Q21 YTD 22 YTD 21 Rental income on operating leases $ (139) $ (136) $ (136) $ (399) $ (410) Realized gain on sale of investment securities available for sale, net — — (14) — (147) Fair value adjustment on marketable equity securities, net 2 6 (3) 5 (31) Ga
Slide 12: Net interest income and margin (NIM)
12 Net interest income and margin (NIM) n & 50 b ps m il li o ($ in millions) $322 $2,144 li on & 36 bps $1,822 $95 mil $795 $700 $619 $649 $604 3.40% 3.04% 2.73% 2.53% 2.56% 3.06% 2.56% 3Q21 4Q21 1Q22 2Q22 3Q22 YTD Sept 21 YTD Sept 22 Highlights 3Q22 vs 2Q22 3Q22 vs 3Q21 YTD September 2022 vs YTD S
Slide 13: NIM Rollforward
13 NIM Rollforward 2Q22 to 3Q22 (+ 36 bps) 0.09% 0.05% 0.11% 0.36% 3.40% (0.16)% (0.07)% 3.04% (0.02)% 2Q22 Loan yield Loan growth Yield on Purchase Deposit rate Debt Overnight 3Q22 investments & accounting volume/rate volume overnight 3Q21 to 3Q22 (+ 87 bps) 0.05% 0.03% 0.09% 0.19% 3.40% 0.20% (0.1
Slide 14: Net interest income and margin rate sensitivity
14 Net interest income and margin rate sensitivity 3Q22 Interest Rate Sensitivity Highlights 12.0% • BancShares continues to have an asset sensitive 9.0% 6.8% interest rate risk profile. 6.0% • The projected increase in net interest income over 3.4% the next 12 months is 3.4% for an immediate 100 3.
Slide 15: Deposit Betas
15 Deposit Betas Deposit Beta Performance and Estimates Highlights 3Q22 - 4Q22 - Actual Estimated Cumulative Fed Funds increase 300 bps 425 bps • Expect 4Q22 quarterly deposit beta to accelerate to 34%, + 8% on a cumulative basis. Fed Funds target range (quarter end) 3.00 to 3.25% 4.25 to 4.50% • We
Slide 16: Noninterest income
16 Noninterest income ($ in millions) ase $1,308 0% incre Core: 2 $1,067 $726 $457 Core: $335 16% increase $446 $296 $324 $288 $303 $313 $294 $59 $5 $6 $851 $55 $732 $241 $265 $280 $283 $288 3Q21 4Q21 1Q22 2Q22 3Q22 YTD Sept 21 YTD Sept 22 Highlights 3Q22 vs 2Q22 3Q22 vs 3Q21 YTD September 2022 vs Y
Slide 17: Noninterest expense
17 Noninterest expense ($ in millions) $1,916 $1,705 $201 $45 $686 $609 $621 $580 $567 $114 $43 $44 $17 $18 $1,660 $1,715 $563 $549 $572 $566 $577 66.58% 64.97% 57.25% 62.51% 61.57% 57.55% 53.32% 3Q21 4Q21 1Q22 2Q22 3Q22 YTD Sept 21 YTD Sept 22 Highlights 3Q22 vs 2Q22 3Q22 vs 3Q21 YTD September 2022
Slide 18: 3Q22 Noninterest income and expense composition
18 3Q22 Noninterest income and expense composition ($ in millions) Core noninterest income (Non-GAAP) Core noninterest expense (Non-GAAP) Rental income on operating leases, net ($80) Personnel ($351) Fee income and other service charges ($44) 4% 5% 7% 17% 28% Other income - core ($40) Occupancy & eq
Slide 19: Balance Sheet Highlights
19 Balance Sheet Highlights ($ in millions, expect per share data) Increase (decrease) 3Q22 vs 2Q22 3Q22 vs 3Q21 SELECT BALANCES (1) 3Q22 2Q22 3Q21 $ % $ % Interest-earning deposits at banks $ 6,172 $ 6,476 $ 14,304 $ (304) (18.6)% $ (8,132) (56.8)% Investment securities 18,841 19,136 16,438 (295) (
Slide 20: Loans and Leases HFI
20 Loans and Leases HFI ($ in millions) Highlights $69,790 $67,735 $65,977 $65,211 $65,524 3Q22 vs 2Q22 • Loans grew $2.1 billion, or by 12.0% on an annualized $16,830 basis. $16,258 $15,405 $15,132 $15,423 • Growth was driven primarily by our branch network, Commercial Finance, Business Capital and
Slide 21: 3Q22 Loans and Leases HFI Composition
21 3Q22 Loans and Leases HFI Composition ($ in billions) Type Segment Commercial Banking: 3% 3% 2% 4% Commercial Finance ($16.9) 3% Commercial & industrial ($24.3) 4% 13% 24% Owner-occupied commercial mortgage ($14.0) Real Estate Finance ($6.0) 35% 14% Residential mortgage ($12.9) Business Capital (
Slide 22: Deposits
22 Deposits ($ in millions) Highlights 3Q22 vs. 2Q22 $90,320 $90,777 $91,597 • Total deposits decreased $1.8 billion, or by 7.9% on an $89,329 $87,553 annualized basis. • Interest-bearing deposits decreased $1.8 billion, primarily due to a $2.9 billion decline in money market deposits, $24,912 $24,6
Slide 23: 3Q22 Deposit Composition
23 3Q22 Deposit Composition ($ in billions) Type Segment General Banking: 4% 2% 10% Money market & savings ($36.5) 8% Branch Network, Wealth & Other ($61.4) Direct Bank ($13.9) 18% 42% Noninterest-bearing demand ($26.6) 16% Community Association Banking ($7.4) Commercial Banking and Corporate: Check
Slide 24: Funding Mix
24 Funding Mix ($ in millions) QTD Change Linked Prior Year 3Q22 2Q22 1Q22 4Q21 3Q21 Quarter Quarter Total deposits $ 87,553 91.3 % $ 89,329 95.2 % $ 91,597 96.5 % $ 90,777 93.8 % $ 90,320 93.6 % $ (1,776) $ (2,767) Securities sold under customer repurchase agreements 578 0.6 646 0.7 616 0.6 589 0.6
Slide 25: ACL and Credit Quality Trends
25 ACL and Credit Quality Trends ($ in millions) Net charge-offs (NCO) & NCO ratio Provision (benefit) for credit losses $30 $100 $60 $25 $50 $42 $22 $20 $18 $15 $0 $15 $(50) $10 $7 $7 0.13% $(49) 0.09% 0.10% $(70) $5 $(100) $(79) 0.04% 0.04% $0 (1) 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22
Slide 26: Allowance for credit losses (ACL)
26 Allowance for credit losses (ACL) ($ in millions) 2Q22 to 3Q22 $42 $882 $850 $20 $(18) $(7) $(5) 2Q22 Net charge-offs Portfolio mix Credit quality Loan growth Economic 3Q22 scenario Highlights ACL / Net charge-offs 35.1x 3Q22 vs 2Q22 32.4x • Total ACL increased $32 million compared to the linked
Slide 27: Capital
27 Capital Risk-based capital ratios Capital ratio rollforward Risk-Based Capital Tier 1 Total Tier 1 CET1 Leverage December 31, 2021 14.35% 12.47% 11.50% 7.59% 14.30% 14.35% 14.47% 14.46% 13.46% CIT acquisition - net (0.04)% (0.26)% (0.36)% 1.50% 12.32% 12.47% 12.39% 12.37% Pro forma combined - Jan
Slide 28: Financial Outlook
Financial Outlook Section III
Slide 29: Key Earnings Estimate Assumptions
29 Key Earnings Estimate Assumptions 3Q22 - Adjusted Metric 4Q22 - Projected FY22 - Projected FY23 - Projected baseline Mid to high-single digit % Mid-single digit % Loans $69.8 billion annualized growth $70.5 - $71.0 billion annualized growth Mid-single digit % Low to mid-single digit % Deposits $8
Slide 30: Appendix
Appendix Section IV we First Citizens BancShares
Slide 31: BancShares Balance Sheets (unaudited)
31 BancShares Balance Sheets (unaudited) ($ in millions) 3Q22 2Q22 1Q22 4Q21 3Q21 BancShares BancShares BancShares BancShares BancShares ASSETS Cash and due from banks $ 481 $ 583 $ 523 $ 338 $ 337 Interest-earning deposits at banks 6,172 6,476 9,285 9,115 9,875 Investments in marketable equity secu
Slide 32: BancShares Income Statements (unaudited)
32 BancShares Income Statements (unaudited) ($ in millions) 3Q22 2Q22 1Q22 4Q21 3Q21 YTD22 YTD21 BancShares BancShares BancShares BancShares BancShares BancShares BancShares INTEREST INCOME Interest and fees on loans $ 785 $ 655 $ 621 $ 328 $ 320 $ 2,061 $ 967 Interest on investment securities 90 89
Slide 33: BancShares Financial Ratios (unaudited)
33 (1) BancShares Financial Ratios (unaudited) 4Q21 3Q21 YTD21 BancShares BancShares BancShares ROA 0.84 % 0.88 % 1.05 % PPNR ROA 1.01 % 1.11 % 1.28 % NIM 2.58 % 2.61 % 2.69 % Net charge-off ratio (0.01)% 0.06 % 0.04 % Efficiency ratio 66.31 % 66.09 % 64.69 % Tangible capital to tangible assets (2)
Slide 34: BancShares and Combined Balance Sheets (unaudited)
34 BancShares and Combined Balance Sheets (unaudited) ($ in millions) 3Q22 2Q22 1Q22 4Q21 3Q21 BancShares BancShares BancShares Combined Combined Assets Cash and due from banks $ 481 $ 583 $ 523 $ 479 $ 507 Interest-earning deposits at banks 6,172 6,476 9,285 11,989 14,304 Securities purchased under
Slide 35: BancShares and Combined Income Statements - QTD (unaudited)
35 BancShares and Combined Income Statements - QTD (unaudited) ($ in millions) 3Q22 2Q22 1Q22 4Q21 3Q21 BancShares BancShares BancShares Combined Combined INTEREST INCOME Interest and fees on loans $ 785 $ 655 $ 621 $ 668 $ 662 Interest on investment securities 90 89 83 60 54 Interest on deposits at
Slide 36: BancShares and Combined Income Statements - YTD (unaudited)
36 BancShares and Combined Income Statements - YTD (unaudited) ($ in millions) YTD 22 YTD 21 BancShares Combined INTEREST INCOME Interest and fees on loans $ 2,061 $ 2,029 Interest on investment securities 262 156 Interest on deposits at banks 50 12 Total interest income 2,373 2,197 INTEREST EXPENSE
Slide 37: Noninterest income
37 Noninterest income ($ in millions) 3Q22 Change vs Quarter-to-date 2Q22 3Q21 3Q22 2Q22 1Q22 4Q21 3Q21 $ % $ % BancShares BancShares BancShares Combined Combined Rental income on operating leases $ 219 $ 213 $ 208 $ 204 $ 186 $ 6 2.7 % $ 33 17.6 % Fee income and other service charges 44 39 35 39 37
Slide 38: Noninterest expense
38 Noninterest expense ($ in millions) 3Q22 Change vs Quarter-to-date 2Q22 3Q21 3Q22 2Q22 1Q22 4Q21 3Q21 $ % $ % BancShares BancShares BancShares Combined Combined Depreciation on operating lease equipment $ 87 $ 89 $ 81 $ 88 $ 85 $ (2) (2.4)% $ 2 2.2 % Maintenance and other operating lease expenses
Slide 39: Debt Securities Overview
39 Debt Securities Overview (1) 3Q22 (1) Duration Carrying Value (2) % of Portfolio Yield (3) (Years) ($ in millions) AFS Portfolio U.S. Treasury $ 1,900 10 % 1.04 % 2.3 Government agency 173 1 2.93 0.4 Commerical mortgage-backed securities 1,673 9 2.56 2.4 Residential mortgage-backed securities 4,7
Slide 40: Average Balances and Yields
40 Average Balances and Yields ($ in millions) Change vs. 3Q22 2Q22 3Q21 2Q22 3Q21 Income / Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Avg. Yield / Avg. Income / Yield / Expens Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Rate Balance Expense Rate e L
Slide 41: Commercial Banking Segment
41 Commercial Banking Segment Highlights (Actual balances; $ in millions) 3Q22 2Q22 • The Commercial Banking segment had strong loan Income Statement growth during the third quarter as balances increased $803 million or 11.7% annualized. This increase was Net interest income $ 230 $ 203 driven prima
Slide 42: General Banking Segment
42 General Banking Segment Highlights (Actual balances; $ in millions) 3Q22 2Q22 Income Statement • The General Banking segment had strong loan growth over the prior quarter (12.2% annualized) Net interest income $ 495 $ 468 driven primarily by business & commercial loan Noninterest income 118 126 g
Slide 43: Rail Segment
43 Rail Segment Highlights (Actual balances ; $ in millions) 3Q22 2Q22 Income Statement • Fleet utilization remained flat at 96.2% in 3Q22 compared to the linked quarter but up 5.0% from the Rental income on operating leases $ 165 $ 160 prior year quarter. Utilization remains at the highest Deprecia
Slide 44: Preliminary purchase accounting marks
44 Preliminary purchase accounting marks ($ in millions) September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Loans and leases (1) Beginning balance - unamortized fair value $ (146) $ (145) $ (40) $ (65) Additions - Merger with CIT Group Inc. — — (388) — PCD “gross up” — — 284 — Accreti
Slide 45: Credit Ratings
45 Credit Ratings S&P Moody’s Fitch Rating agency focus • Solid business profile, strong franchise and diversified First Citizens business model. BBB Baa2 BBB BancShares, Inc. • Historically conservative risk appetite with low credit losses over time. First-Citizens Bank BBB+ Baa2 BBB & Trust Compan
Slide 46: Non-GAAP Reconciliations
Non-GAAP Reconciliations Section V
Slide 47: Combined Balance Sheets (unaudited)
47 Combined Balance Sheets (unaudited) ($ in millions) 4Q21 3Q21 BancShares Combined BancShares Combined (GAAP) CIT (Non-GAAP) (GAAP) CIT (Non-GAAP) Assets Cash and due from banks $ 338 $ 141 $ 479 $ 337 $ 170 $ 507 Interest-earning deposits at banks 9,115 2,874 11,989 9,875 $ 4,429 14,304 Securitie
Slide 48: Combined Income Statements - QTD (unaudited)
48 Combined Income Statements - QTD (unaudited) ($ in millions) 4Q21 3Q21 BancShares Combined BancShares Combined (GAAP) CIT (Non-GAAP) (GAAP) CIT (Non-GAAP) INTEREST INCOME Interest and fees on loans $ 328 $ 340 $ 668 $ 320 $ 342 $ 662 Interest on investment securities 39 21 60 40 14 54 Interest on
Slide 49: Combined Income Statements - YTD (unaudited)
49 Combined Income Statements - YTD (unaudited) ($ in millions) YTD 9/30/21 BancShares Combined (GAAP) CIT (Non-GAAP) INTEREST INCOME Interest and fees on loans $ 967 $ 1,062 $ 2,029 Interest on investment securities 106 50 156 Interest on deposits at banks 7 5 12 Total interest income 1,080 1,117 2
Slide 50: Non-GAAP Reconciliations (BancShares Metrics)
50 Non-GAAP Reconciliations (BancShares Metrics) ($ in millions, except share and per share data) BancShares BancShares BancShares BancShares BancShares BancShares BancShares QTD QTD QTD QTD QTD YTD YTD Non-GAAP Reconciliations 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021 N
Slide 51: Non-GAAP Reconciliations (BancShares Metrics)
51 Non-GAAP Reconciliations (BancShares Metrics) ($ in millions, except share and per share data) BancShares BancShares BancShares BancShares BancShares BancShares BancShares QTD QTD QTD QTD QTD YTD YTD Non-GAAP Reconciliations 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021 P
Slide 52: Non-GAAP Reconciliations (BancShares Metrics)
52 Non-GAAP Reconciliations (BancShares Metrics) ($ in millions, except share and per share data) BancShares BancShares BancShares BancShares BancShares BancShares BancShares QTD QTD QTD QTD QTD YTD YTD Non-GAAP Reconciliations 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021 R
Slide 53: Non-GAAP Reconciliations (BancShares Metrics)
53 Non-GAAP Reconciliations (BancShares Metrics) ($ in millions, except share and per share data) BancShares BancShares BancShares BancShares BancShares BancShares BancShares QTD QTD QTD QTD QTD YTD YTD Non-GAAP Reconciliations 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 9/30/2022 9/30/2021 B
Slide 54: Non-GAAP Reconciliations (Combined Metrics)
54 Non-GAAP Reconciliations (Combined Metrics) ($ in millions, except share and per share data) Combined Combined Combined QTD QTD YTD Non-GAAP Reconciliations 12/31/2021 9/30/2021 9/30/2021 Net income and EPS Net income (GAAP) a $ 342 300 1,130 Preferred stock dividends 17 8 32 Net income available
Slide 55: Non-GAAP Reconciliations (Combined Metrics)
55 Non-GAAP Reconciliations (Combined Metrics) ($ in millions, except share and per share data) Combined Combined Combined QTD QTD YTD Non-GAAP Reconciliations 12/31/2021 9/30/2021 9/30/2021 PPNR Net income (GAAP) a $ 342 300 1,130 Plus: Provision (benefit) for credit losses (79) (70) (294) Income t
Slide 56: Non-GAAP Reconciliations (Combined Metrics)
56 Non-GAAP Reconciliations (Combined Metrics) ($ in millions, except share and per share data) Combined Combined Combined QTD QTD YTD Non-GAAP Reconciliations 12/31/2021 9/30/2021 9/30/2021 Efficiency ratio Net interest income cc $ 619 604 1,822 Efficiency ratio (GAAP) j / (h + cc) 65.40 % 69.27 %
First Citizens BancShares — Q3 2022 Earnings Presentation on 6ix