First Citizens BancShares, Inc. · NASDAQ:FCNCA

First Citizens BancShares — Investor Presentation (April 2024)

34 slides from First Citizens BancShares's investor presentation, Apr 24, 2024

  1. Slide 1: Market Update, April 24, 2024

    Brent Ciliano, SVP Phillip Neuhart, SVP Chief Investment Officer Director of Market and Economic Research April 24, 2024

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

    What are we going to cover? 1 Economic Update 2 Market Update 2

  3. Slide 3: Economic Update

    Economic Update

  4. Slide 4: The Outlook for the US Economy Has Improved Substantially

    The Outlook for the US Economy Has Improved Substantially 3.0 2024 GDP Growth (Year-Over-Year Percent Change) 2.5 Median Professional Forecast 2.0 1.5 1.0 0.5 0.0 Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 2023 2024 2024 4 Source: Bloomberg

  5. Slide 5: Economic Activity Is Increasing

    Economic Activity Is Increasing ISM Indices (50+=Increasing) 70 ISM Manufacturing 65 ISM Services 60 55 50 45 40 5 17 18 19 20 21 22 23 24 Source: Strategas, Bloomberg

  6. Slide 6: Federal Reserve Has Hiked Aggressively

    Federal Reserve Has Hiked Aggressively Federal Reserve Historical Tightening Paths 600 Mar/83 2024 Fed Funds Futures Pricing*: 550 500 Apr/88 • First Cut: September (65%) 450 400 Jan/94 • Total 2024 25 bps Cuts: 1-2 • 2024 Year-End Rate: 4.95% 350 Feb/99 Bps of Hikes 300 Jun/04 250 Dec/15 200 150 Ma

  7. Slide 7: Financial Conditions Have Loosened

    Financial Conditions Have Loosened Bloomberg Financial Conditions Index Negative Value Indicates Tighter Financial Conditions 1.5 Conditions Loosening 1.0 0.5 First Fed Hike Conditions Have Loosened Materially 0.0 -0.5 -1.0 Conditions Tightening -1.5 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24

  8. Slide 8: Inflation Remains Stubbornly Elevated

    Inflation Remains Stubbornly Elevated Consumer Price Index Year-Over-Year Percent Change 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 8 CPI YoY% Core CPI YoY% Source: Strategas, Bloomberg

  9. Slide 9: Small Businesses Plan to Increase Prices

    Small Businesses Plan to Increase Prices Small Business Pricing Plans vs CPI Inflation 60% Businesses Planning to Raise Prices in Next Three Months (Net Percent) 10% Consumer Price Index (Year-Over-Year Percent Change) 50% 8% 40% 6% 30% 4% 20% 2% 10% 0% 0% -2% -10% -4% 1990 1995 2000 2005 2010 2015

  10. Slide 10: “Common Man CPI” Exceeds Wage Inflation

    “Common Man CPI” Exceeds Wage Inflation Consumer Prices: Staple vs. Discretionary Categories 125 Index, Dec. 2020=100 Staples: Food, energy, housing, +21% 120 clothing, utilities, insurance, and other necessities +15% 115 +14% 110 105 Staples Discretionary Wages (ECI) 100 2021 2022 2023 2024 10 Sour

  11. Slide 11: Path of Inflation

    Path of Inflation Consumer Price Index Year-over-Year Percent Change 9% 8.7% 8.3% 8.0% 8% 7.1% 7% 5.8% 6% Actual Consensus Estimates 5% 4.0% 4% 3.5% 3.2% 3.3% 3.3% 3.0% 2.9% 3% 2.6% 2.4% 2% 1% 0% Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q1 '25 Q2 '25 11 Sou

  12. Slide 12: The Labor Market Is Resilient

    The Labor Market Is Resilient US Employees on Nonfarm Payrolls Total MoM Net Change SA Thou 3000 2500 Jun 2020: +4,615 2000 Last 6M Avg: 1500 +244 1000 500 0 -500 -1000 Apr 2020: -1500 -20,477 -2000 Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22 Jul-22 Dec-22 May-23 Oct-23 Mar-24 12 Source: BLS, Stratega

  13. Slide 13: Wage Growth Has Moderated but Remains Firm

    Wage Growth Has Moderated but Remains Firm 8 Nominal Wage Growth Tracker Year-Over-Year Percent Change 7 6.7% 6 5 4.7% 4 15-year average: 3.4% 3 2 1 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 13 Source: Federal Reserve Bank of Atlanta

  14. Slide 14: Consumer Expenditures

    Consumer Expenditures 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% 6.93% 5% 0.84% 0% -5% -10% 20-Year Average: -15% Goods: +4.26% Services: +4.69% -20% '18 '19 '20 '21 '22 '23 '24 14 Source: Str

  15. Slide 15: Commercial Real Estate

    Commercial Real Estate U.S. Major Metro Areas Office Vacancy Rate Commercial Bank CRE Loan Delinquencies 20% (Year-Over-Year Growth, NSA, EOP) 180% 19.6% 18% 125% 16% 75% 70% 14% 15% 12% -40% '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 '00 '02 '05 '07 '10 '12 '15 '17 '20 '22 15 Source: Strategas

  16. Slide 16: Commercial Real Estate

    Commercial Real Estate Small Bank Percentage of Total Commercial Real Estate Loans 70% Small Banks = Outside Top 25 65% 60% 55% 50% 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 16 Source: Bloomberg

  17. Slide 17: Market Update

    Market Update

  18. Slide 18: Global Markets Year-to-Date

    Global Markets Year-to-Date Total Return by Asset Class 5% YTD US Equity Returns As of 04/19/2024 4% Value Blend Growth YTD 2024 (04/19/2024) 3% Large 2% 5.1% 5.1% 5.0% 1% 0% Mid -1% 1.6% 1.5% 1.4% -2% Small -3% -4.3% -3.5% -2.7% -4% U.S. Equities Intl. Developed Emerging Market Aggregate Fixed Muni

  19. Slide 19: Stocks Have Rallied Sharply; Rally Broadening Recently

    Stocks Have Rallied Sharply; Rally Broadening Recently S&P 500: Year-to-Date Through 4/19/24 S&P 500 Index 5,500 Index: Total Return 5,300 S&P 500 4.6% 5,100 S&P 500 Equal Weighted 1.2% 4,900 4,700 Difference 3.4% 4,500 4,300 S&P 500: 2/2/24 +21% 4,100 Through 4/19/24 3,900 +39% Index: Total Return

  20. Slide 20: Intra-Year Selloffs Average 15%

    Intra-Year Selloffs Average 15% S&P 500 Calendar Year Return vs. Largest Intra-Year Decline 40% 38% 33% 32% 30% 31% 29% 29% 29% 30% 26% 26% 23% 22% 21% 20% 16% 16% 18% 15% 14% 11% 12% 10% 10% 8% 5% 5% 5% 2% 1% 1% 0% -3% -3% -3% -4% -10% -5% -6% -5% -6% -7% -5% -5% -8% -7% -9% -7% -7% -7% -7% -11% -1

  21. Slide 21: Rare Consecutive 10%+ Quarters Can Precede Further Gains

    Rare Consecutive 10%+ Quarters Can Precede Further Gains S&P 500 Quarterly Return 20% Following Consecutive Quarters with S&P500 Return >10% 15% 10% 5% 0% ? -5% -10% -15% 1929 1935 1936 1936 1943 1955 1959 1975 1986 2009 2011 2012 2024 Q1 Q4 Q1 Q2 Q2 Q1 Q1 Q3 Q2 Q4 Q1 Q2 Q2 21 Source: Trivariate Res

  22. Slide 22: Top-Heavy Market? … Not Necessarily

    Top-Heavy Market? … Not Necessarily Top 10 Weight in Top 500 US Equities 35% • The largest-company share of S&P 500 30% market cap is at an all-time high. 25% • However, gains over the last 6 months have been broad based across size and sector. 20% • 22 out of 25 industry groups had a 15% positive t

  23. Slide 23: 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 16X Average 12X -1 Standard Deviation 8X 23 85 88 91 94 97 00 03 06 09 12 15 18 21 24 Source: Strategas

  24. Slide 24: Room for Broadening

    Room for Broadening Cap. Weight Price-to-Forward Earnings 45x Through End-March 2024 40x Top 10 35x Top 11-500 30x 25x 20x 15x 10x 5x 24 2000 2004 2008 2012 2016 2020 2024 Source: Trivariate Research

  25. Slide 25: Magnificent 7 Sector Weight Exceeds Its Income Contribution

    Magnificent 7 Sector Weight Exceeds Its Income Contribution S&P 500 Net Income Weight vs. Sector Weight (Mag 7 is its own sector and is excluded from the others) 35% Income Weight Sector Weight 30% 29% 25% 22% 20% 18% 15% 13% 12% 12% 11% 10% 9% 9% 9% 7% 8% 7% 6% 5% 4% 5% 3% 3% 3% 2% 2% 2% 2% 2% 0% C

  26. Slide 26: Presidential Cycle: S&P 500 Returns

    Presidential Cycle: S&P 500 Returns Presidential Cycle Avg S&P 500 Returns: ReElected Vs. New President (CY 1937-2022) 23% 20.1% ReElected 18% New 13% 12.1% 11.8% 9.5% 8% 7.0% 4.3% 3% -2% -0.7% -0.1% Year 1 Year 2 Year 3 Year 4 26 Source: Strategas, *1965-1968 (Johnson) treated as cycle of first-tim

  27. Slide 27: Corporate Earnings

    Corporate Earnings ▪ 2024 estimated growth is 10.7% or Estimated Next 12-Month S&P 500 Operating Margin $243 per share 18.0% 17.0% ▪ 2025 estimated growth is 13.8% or 16.0% $277 per share 15.0% ▪ Average growth since 1950 is 7.6% 14.0% 13.0% '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 27

  28. Slide 28: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 4/23/24 Bear 4,000 -21.1% Base 5,500 8.5% Bull 6,000 18.3% 28 Source: Bloomberg, FactSet

  29. Slide 29: US Treasury Yield Curve Remains Inverted

    US Treasury Yield Curve Remains Inverted US Treasury Yield Curve 5.8% 5.6% As of 5.4% 4/19/2024 5.4% 5.4% 12/29/2023 5.4% 5.4% 5.3% 5.2% 5.2% 5.2% 5.0% 5.0% 4.8% 4.8% 4.8% 4.8% 4.7% 4.7% 4.7% 4.6% 4.6% 4.4% 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

  30. Slide 30: The Treasury Yield Curve Has Been Inverted for 21 Months

    The Treasury Yield Curve Has Been Inverted for 21 Months 400 Yield Curve Inversion 1200 300 1100 200 1000 100 900 0 800 -100 700 -200 Consecutive Trading Days Yield Curve Has Been Inverted 600 -300 2s/10s Treasury Yield Spread (basis points) 500 -400 400 -500 300 -600 200 -700 100 -800 0 1977 1982 1

  31. Slide 31: 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 4/19/2024 2-Year Treasury 0.73% 4.99% 10-Year Treasury 1.51% 4.62% Aggregate Bond 1.75% 5.27% Intermediate Government/Credit 1.30% 5.11% Municipal Bond 1.11% 3.71% Investment Grade Corporate Bon

  32. Slide 32: Market Timing, Anyone?

    Market Timing, Anyone? Percent Capture of Perfect Timing with $12,000 Annual Contribution 1980-2023 YTD Perfect Timing Portfolio Value: $10,516,789 100% 100% 92% 90% 87% 80% 76% 70% 60% 50% 40% 30% 20% 10% 5% 5% 5% 5% 0% Perfect Timing (Yearly Low) Worst Timing (Yearly High) First Day of Year Monthl

  33. Slide 33: 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 MarketWebinars updates –(Monthly) Monthly interactive discussions with in-depth analysi

  34. Slide 34: Contact details and disclosures

    Brent Ciliano, CFA | SVP, Chief Investment Officer Capital Management Group | First Citizens Bank 8510 Colonnade Center Drive| Raleigh, NC 27615 Brent.Ciliano@firstcitizens.com | 919.716.2650 Phillip Neuhart | SVP, Director of Market & Economic Research Capital Management Group | First Citizens Bank

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