First Citizens Bancshares, Inc. · NASDAQ:FCNCA
First Citizens Bancshares — Q1 2022 Earnings Presentation
43 slides from First Citizens Bancshares's earnings presentation, Apr 28, 2022
Slide 1: First Quarter 2022 Earnings Conference Call
First Citizens BancShares, Inc. First Quarter 2022 Earnings Conference Call April 28, 2022
Slide 2: Agenda
2 Agenda Page(s) Section I – Merger Integration Update 4–6 Section II – First Quarter 2022 Financial Results 7 – 23 1Q22 Take-aways 8 1Q22 Financial Highlights 9 – 11 Net interest income and margin 12 – 14 Noninterest income and expense 15 – 16 Balance Sheet Highlights 17 Loans and Leases HFI 18 Dep
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: Merger Integration Update
Merger Integration Update Section I
Slide 5: Merger Integration is on Track
5 Merger Integration is on Track We are committed to successful execution of our integration plan to deliver a timely and smooth transition for our customers and associates. ▪ Announced key role to lead the development, execution and oversight of the Large Bank Program efforts. Integration ▪ Establi
Slide 6: Key Messages
6 Key Messages 1 Integration efforts are on track and anticipate finalizing CIT merger conversions by 2H23. Merger cost savings are on track and are anticipated to be fully realized by the end of 2 2023. Net interest income expansion and positive operating leverage contributed to first quarter 3 pro
Slide 7: First Quarter 2022 Financial Results
First Quarter 2022 Financial Results Section II
Slide 8: 1Q22 Take-aways
8 1Q22 Take-aways Noninterest expense was well-controlled, 1 Strong core deposit growth. 6 and we expect to achieve our cost savings target. Loan growth in first quarter of merger Generated positive operating leverage and 2 driven by growth in the branch network. 7 grew pre-provision net revenue. Re
Slide 9: 1Q22 Financial Highlights
9 1Q22 Financial Highlights 1Q22 4Q21 1Q21 Current Quarter Linked Quarter Same Quarter – Prior Year Reported Adjusted Reported Adjusted Reported Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) EPS (1) $ 16.70% $ 18.95% $ 12.09% $ 12.82% $ 14.53% $ 13.36% ROE (1) 11.18% 12.67% 10.96% 11.63% 14.70% 13.51% R
Slide 10: 1Q22 Earnings Highlights
10 1Q22 Earnings Highlights Increase (decrease) Reported 4Q21 1Q21 Highlights ($ in millions) 1Q22 4Q21 1Q21 $ % $ % Net interest income $ 649 $ 619 $ 607 $ 30 5% $ 42 7% Note: The commentary below relates to the “Adjusted” income Noninterest income 850 464 561 386 83% 289 52% statement. The differe
Slide 11: Notable items affecting 1Q22, 4Q21 and 1Q21 results
11 Notable items affecting 1Q22, 4Q21 and 1Q21 results 1Q22 4Q21 1Q21 (1) Diluted EPS ($ in millions, except per share data) Pre-tax After-tax impact Pre-tax After-tax Pre-tax After-tax Depreciation on operating lease equipment $ (81) $ (61) $ (3.87) $ (88) $ (66) $ (85) $ (63) Maintenance and other
Slide 12: Net interest income and margin (NIM)
12 Net interest income and margin (NIM) ($ in millions) $700 $649 $607 $611 $603 $619 $600 $500 2.73% $400 2.58% 2.56% 2.56% $300 2.53% $200 $100 $0 2.00% 1Q21 2Q21 3Q21 4Q21 1Q22 Net interest income NIM Highlights 1Q22 vs. 4Q21 1Q22 vs. 1Q21 ▪ Net interest income increased by $30 million due to a $
Slide 13: NIM rollforward – drivers of margin expansion
13 NIM rollforward – drivers of margin expansion ($ in millions) 4Q21 to 1Q22 (0.07%) 4Q21 Debt Preliminary Earning Investment Deposit SBA-PPP 1Q22 redemption purchase asset mix yield rate accounting 1Q21 to 1Q22 0.04% (0.09%) (0.11%) 1Q21 Deposit rate Debt volume Loan yield Preliminary Investment S
Slide 14: Net interest income and margin rate sensitivity
14 Net interest income and margin rate sensitivity 1Q22 interest rate sensitivity 14.0% 12.2% Highlights 11.0% 6.1% ▪ BancShares continues to have an asset sensitive interest rate 8.0% risk profile. 5.0% 5.1% ▪ The projected increase in net interest income over the next 12 1.6% months is 6.1% for an
Slide 15: Noninterest income
15 Noninterest income ($ in millions) 1Q22 core noninterest income composition: Core: Rental income on operating leases, $726 15% increase net ($84) 10% Other income - core ($38) Core: 10% 30% 6% increase $446 $424 Wealth ($35) $346 $324 $180 $299 $94 $60 Cardholder and merchant, net ($35) $54 12% $
Slide 16: Noninterest expense
16 Noninterest expense ($ in millions) 1Q22 core noninterest expense composition: $686 4% Personnel ($352) $583 $114 $570 $555 $569 $19 17% $22 $11 $17 Occupancy & equipment ($101) $548 $544 $564 $552 $572 18% Other expenses - core ($95) 61% 64.39% 63.04% 66.51% 62.51% 61.57% Third-party processing
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights Increase (decrease) Increase (decrease) 1Q22 1Q22 vs. 4Q21 1Q22 vs. 1Q21 (Actual balances; $ in millions, expect for per share data) Actual $ %) $ %) Interest-earning deposits at banks $9,285 ($2,705) (22.6%) ($3,495) (27.4%) Investment securities 19,469 (238) (1.2%) 4,43
Slide 18: Loans and Leases HFI
18 Loans and Leases HFI 1Q22 loan composition by: Type ($ in millions, unless otherwise indicated) Commercial & industrial ($22.4 B) $80 ,000 3% 3% $68,139 3% $66,401 $65,977 $65,211 $65,524 $70 ,000 Owner occupied commercial 4% mortgage ($13.6 B) $16,537 $60 ,000 $16,249 $16,159 $15,961 $15,423 Res
Slide 19: Deposits
19 Deposits ($ in millions, unless otherwise indicated) 1Q22 deposit composition by: 100 ,000 $89,682 $90,303 $90,764 $91,597 $89,356 90,0 00 Type $25,898 80,0 00 10% Money market & savings ($39.8 B) $23,852 $24,491 $24,895 $24,677 70,0 00 60,0 00 18% Noninterest-bearing demand ($25.9 B) 50,0 00 44%
Slide 20: Funding Mix
20 Funding Mix ($ in millions) Summary $ Change vs. 1Q22 4Q21 3Q21 2Q21 1Q21 4Q21 1Q21 Total deposits $91,597 96.5% $90,764 93.7% $90,303 93.6% $89,682 93.6% $89,356 93.0% $833 $2,241 Securities sold under customer repurchase agreements 616 0.6% 589 0.6% 664 0.7% 693 0.7% 681 0.7% 27 (65) FHLB advan
Slide 21: Quarterly Credit Quality Trends
21 Quarterly Credit Quality Trends ($ in millions) Net charge-offs (NCO) & NCO ratio Provision (benefit) for credit losses $30 $500 $464 $28 $400 $25 $300 $20 $513 $16 $200 $15 $15 $100 0.17% $10 $10 $9 $0 0.09% 0.09% $5 0.06% ($49) 0.05% ($100) ($70) ($78) ($94) ($130) $0 ($200) 1Q21 2Q21 3Q21 4Q21
Slide 22: Allowance for credit losses (ACL)
22 Allowance for credit losses (ACL) ($ in millions) 4Q21 to 1Q22 ACL $7 ($15) 4Q21 Day 1 CIT Day 1 PCD Day 2 non-PCD Net charge- Portfolio & Economic 1Q22 ACL reversal gross up – provision – CIT offs model scenario CIT merger merger changes ACL / Net charge-offs Highlights 30 24.5x 27.2x 1Q22 vs. 4
Slide 23: Capital
23 Capital 16.00% Trending risk-based capital ratios Capital ratio rollforward Risk-Based Capital Tier 1 14.00% 14.14% 14.15% 14.30% 14.35% 14.46% Total Tier 1 CET1 Leverage 12.00% 12.02% 12.32% 12.47% 12.39% December 31, 2021 14.35% 12.47% 11.50% 7.59% 12.13% CIT acquisition - net (1) -0.04% -0.27%
Slide 24: Financial Outlook
Financial Outlook Section III
Slide 25: Key Earnings Estimate Assumptions
25 Key Earnings Estimate Assumptions 1Q22 – adjusted FY21– adjusted Metric 2Q22 FY22 baseline baseline Loans $65.5 billion Mid-single digit % growth $65.2 billion Mid-single digit % growth Flat to low-single digit % Flat to slightly negative growth, as core deposits Deposits $91.6 billion % growth o
Slide 26: Appendix
Appendix Section IV A First Citizens BancShares
Slide 27: Balance Sheet (unaudited)
27 Balance Sheet (unaudited) 1Q22 4Q21 1Q21 FCB/CIT FCB/CIT $s in millions Reported FCB GAAP CIT GAAP Reclass Combined FCB GAAP CIT GAAP Reclass Combined Assets Cash and due from banks $ 523 $ 338 $ 142 $ - $ 480 $ 410 $ 158 $ - $ 568 Interest-earning deposits at banks 9,285 9,115 2,875 - 11,990 7,5
Slide 28: Balance Sheet (unaudited)
28 Balance Sheet (unaudited) 1Q22 3Q21 2Q21 FCB/CIT FCB/CIT $s in millions Reported FCB GAAP CIT GAAP Reclass Combined FCB GAAP CIT GAAP Reclass Combined Assets Cash and due from banks $ 523 $ 338 $ 170 $ - $ 508 $ 395 $ 147 $ - $ 542 Interest-earning deposits at banks 9,285 9,875 4,429 - 14,304 7,8
Slide 29: Income Statement (unaudited)
29 Income Statement (unaudited) 1Q22 4Q21 1Q21 FCB/CIT FCB/CIT $s in millions Reported FCB GAAP CIT GAAP Reclass Combined FCB GAAP CIT GAAP Reclass Combined Interest income Interest and fees on loans $ 621 $ 328 $ 341 $ - $ 669 $ 323 $ 364 $ - $ 687 Interest on investment securities 83 40 20 - 60 31
Slide 30: Income Statement (unaudited)
30 Income Statement (unaudited) 1Q22 3Q21 2Q21 FCB/CIT FCB/CIT $s in millions Reported FCB GAAP CIT GAAP Reclass Combined FCB GAAP CIT GAAP Reclass Combined Interest income Interest and fees on loans $ 621 $ 319 $ 342 $ - $ 661 $ 324 $ 356 $ - $ 680 Interest on investment securities 83 39 16 - 55 35
Slide 31: Debt Securities Overview
31 Debt Securities Overview (1) 1Q22 Duration ($ in millions) Carrying Value (2) % of Porfolio Yield (3) (Yrs) AFS portfolio U.S. Treasury securities $ 1,931 10% 2.8 0.96% Government agency securities 206 1 0.7 2.79 Residential mortgage-backed securities 5,052 26 4.4 1.51 Commerical mortgage-backed
Slide 32: Quarterly Average Balances and Yields
32 Quarterly Average Balances and Yields Change vs. 1Q22 4Q21 1Q21 4Q21 1Q21 Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / ($ in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expen
Slide 33: Noninterest income
33 Noninterest income 1Q22 Change vs. Quarter to date 4Q21 1Q21 $s in millions 1Q22 4Q21 3Q21 2Q21 1Q21 $ % $ % Rental income on operating leases 208 204 186 188 195 4 2.0% 13 6.7% Fee income and other revenue 33 37 35 38 30 (4) (10.8%) 3 10.0% Wealth management services 35 33 32 32 32 2 6.1% 3 9.4%
Slide 34: Noninterest expense
34 Noninterest expense 1Q22 Change vs. Quarter to date 4Q21 1Q21 $s in millions 1Q22 4Q21 3Q21 2Q21 1Q21 $ % $ % Depreciation on operating lease equipment 81 88 85 83 85 (7) (8.0%) (4) (4.7%) Maintenance and other operating lease expenses 43 52 51 55 52 (9) (17.3%) (9) (17.3%) Salaries and benefits
Slide 35: Commercial Banking Segment
35 Commercial Banking Segment (Actual balances; $ in millions) 1Q22 Highlights Income Statement Net interest income $ 207 ▪ While total loans were relatively flat from the linked quarter as repayment levels remain elevated across the industry, Noninterest income 112 pipelines continue to build in al
Slide 36: General Banking Segment
36 General Banking Segment (Actual balances; $ in millions) 1Q22 Highlights Income Statement ▪ The Branch Network has seen strong balance sheet growth Net interest income $ 437 when adjusted for the impact of SBA-PPP loan forgiveness Noninterest income 123 ($2.6 billion reduction from the same quart
Slide 37: Rail Segment
37 Rail Segment (Actual balances; $ in millions) 1Q22 Highlights Income Statement ▪ Net revenue on operating leases is increasing, as fleet Rental income on operating leases $ 159 utilization increased to 95.5%, up 2.4% from the linked quarter Depreciation on operating lease equipment 41 and represe
Slide 38: Preliminary Purchase Accounting Marks
38 Preliminary Purchase Accounting Marks December 31, $s in millions March 31, 2022 2021 Loans and leases (1) Beginning balance - unamortized fair value mark $ (40) $ (65) Additions - Merger with CIT Group Inc. (388) - PCD "gross up" 284 Accretion (1) 25 Ending Balance $ (145) $ (40) Core deposits a
Slide 39: Credit Ratings
39 Credit Ratings S&P Moody’s Fitch Key takeaways - ratings progression First Citizens ✓ Successful execution of CIT merger, reducing BBB Baa2 BBB integration and execution risks. BancShares, Inc. ✓ Recognized sustained improvement to the First-Citizens Bank & profitability and combined funding prof
Slide 40: Non-GAAP Reconciliations
40 Non-GAAP Reconciliations (Prior periods are legacy BancShares standalone) ($ in millions, except per share data) 1Q22 4Q21 1Q21 Net income (GAAP measure) $ 271 $ 123 $ 147 Less: Preferred dividends 7 5 5 Net income available to common stockholders (GAAP measure) a 264 118 142 Plus: Total tax-effe
Slide 41: Non-GAAP Reconciliations
41 Non-GAAP Reconciliations (Prior periods include CIT) ($ in millions) 1Q22 4Q21 3Q21 2Q21 1Q21 Total noninterest income (GAAP measure) $ 850 $ 464 $ 435 $ 484 $ 561 Less: Depreciation and maintenance on operating leases 124 140 136 138 137 Subtotal $ 726 $ 324 $ 299 $ 346 $ 424 Less: Other notable
Slide 42: Non-GAAP Reconciliations
42 Non-GAAP Reconciliations (Periods are (Prior periods BancShares only) include CIT) ($ in millions) 1Q22 4Q21 1Q21 4Q21 1Q21 Total stockholders' equity (GAAP measure) a $ 10,570 $ 4,737 $ 4,322 $ 11,041 $ 10,137 Less: Preferred stock 881 340 340 865 865 Common stockholders' equity (non-GAAP measur
Slide 43: Non-GAAP Reconciliations
43 Non-GAAP Reconciliations 1Q22 Commercial General Banking ($ in millions) Banking Segment Segment Net income (GAAP measure) $ 122 $ 127 Plus: Provision for income taxes 41 40 Plus: Provision (benefit) for credit losses (35) (16) Pre-provision net revenue (non-GAAP measure) $ 128 $ 151 Rail Segment
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