First Citizens Bancshares, Inc. · NASDAQ:FCNCA
First Citizens Bancshares — Q2 2024 Earnings Presentation
52 slides from First Citizens Bancshares's earnings presentation, Jul 25, 2024
Slide 1: Second Quarter 2024 Earnings Conference Call
First Citizens BancShares, Inc. Second Quarter 2024 Earnings Conference Call July 25, 2024
Slide 2: Agenda
2 Agenda Pages Section I – Second Quarter Overview & Strategic Priorities 5–8 Section II – Second Quarter 2024 Financial Results 9 – 26 Financial Highlights 10 – 11 Earnings Highlights 12 Net interest income, margin and betas 13 – 15 Noninterest income and expense 16 – 17 Balance Sheet Highlights 18
Slide 3: Important Notices
3 Important Notices Forward Looking Statements This presentation 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, asset quality, future performance, and other str
Slide 4: Glossary of Abbreviations and Acronyms
4 Glossary of Abbreviations and Acronyms The following is a list of certain abbreviations and acronyms used throughout this document. AFS – Available for Sale HQLS – High Quality Liquid Securities AI – Artificial intelligence HTM – Held to Maturity ALLL – Allowance for Loan and Lease Losses IBD – In
Slide 5: Second Quarter Overview & Strategic Priorities
Second Quarter Overview & Strategic Priorities Section I
Slide 6: Second Quarter 2024 Snapshot
6 Second Quarter 2024 Snapshot First Citizens is a top 20 U.S. financial institution that provides a diverse set of offerings to retail, commercial and innovation economy clients. Key Accomplishments: Financial Highlights: ■ Financial results remained solid driven by strong NIM, Adjusted EPS (1) con
Slide 7: Loan & Deposit Trends
7 Loan & Deposit Trends Continue to prudently grow loan balances while executing on deposit gathering strategies. Loans ($ in billions) General Bank Commercial Bank SVB Commercial $32.1 $44.1 $65.2 $31.7 $62.8 $63.7 $30.9 $41.9 $42.0 $61.0 $30.2 $39.5 $39.8 $59.7 $29.2 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23
Slide 8: Strategic Priorities
8 Strategic Priorities First Citizens Strategic Priorities Risk Management Client-Focused Operational Regulatory Talent & Culture Business Model Efficiency Readiness • Maximize growth • Attract, retain and • Execute on SVB • Support regulatory opportunities in our develop associates integration to o
Slide 9: Second Quarter 2024 Financial Results
Second Quarter 2024 Financial Results Section II
Slide 10: 2Q24 Financial Results - Takeaways
10 2Q24 Financial Results - Takeaways Approved a share repurchase plan in July Loans grew at an annualized rate of 11.8% 2024 for the repurchase of up to $3.5 billion in during the quarter. Growth was strong across all 1 Class A common shares with repurchases 5 segments with SVB Commercial continuin
Slide 11: Financial Highlights
11 Financial Highlights 2Q24 1Q24 2Q23 Reported Adjusted Reported Adjusted Reported Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) EPS $ 47.54 $ 50.87 $ 49.26 $ 52.92 $ 45.87 $ 52.60 ROE 13.13 % 14.05 % 13.97 % 15.01 % 14.35 % 16.46 % ROTCE (non-GAAP) 13.53 14.48 14.42 15.50 14.91 17.10 ROA 1.30 1.39 1.3
Slide 12: Quarterly Earnings Highlights
12 Quarterly Earnings Highlights ($ in millions) Increase (decrease) Reported 2Q24 vs. 1Q24 2Q24 vs. 2Q23 2Q24 1Q24 2Q23 $ % $ % Net interest income $ 1,821 $ 1,817 $ 1,961 $ 4 0.2 % $ (140) (7.2)% Noninterest income 639 627 658 12 1.8 (19) (3.0) Net revenue 2,460 2,444 2,619 16 0.7 (159) (6.1) Noni
Slide 13: Net interest income and margin
13 Net interest income and margin ($ in millions) $4 million & (-3 bps) $1,961 $1,990 $1,911 $1,817 $1,821 4.11% 4.07% 3.86% 3.67% 3.64% 2Q23 3Q23 4Q23 1Q24 2Q24 NII NIM Highlights 2Q24 vs 1Q24 2Q24 vs 2Q23 Net interest income increased by $4 million due to a $46 million increase in interest Net int
Slide 14: NIM Rollforward
14 NIM Rollforward 1Q24 to 2Q24 (-3 bps) 0.06% 0.05% 0.03% 3.67% 0.08% 3.64% (0.14)% (0.04)% (0.04)% (0.03)% 1Q24 Loan volume Investment Loan yield Investment FFS volume Deposit rate Loan Deposit 2Q24 volume yield accretion volume 2Q23 to 2Q24 (-47 bps) 0.06% 0.05% 0.15% 0.22% 0.27% 4.11% (0.54)% (0
Slide 15: Historical and Forecasted Cumulative Deposit Beta
15 Historical and Forecasted Cumulative Deposit Beta Up Cycle Down Cycle Terminal beta 63% 63% 61% 58% 53% 46% 45% 46% 47% 42% 37% 31% 33% 30% 23% 23% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Actual cumulative beta Actual cumulative beta IBD Forecast cumulative beta Forecast cumulative beta IBD Total
Slide 16: Noninterest income
16 Noninterest income ($ in millions) $658 $639 $196 - $615 $543 $627 $55 total $12 $147 - notable total $171 $149 $160 $141 $135 items notable items $88 - total $462 $468 $455 $478 $479 notable items $(83) 2Q23 3Q23 4Q23 1Q24 2Q24 (1) (2) Adjusted (Non-GAAP) Notable items Gain on acquisition Highli
Slide 17: Noninterest expense
17 Noninterest expense ($ in millions) $1,572 $1,492 $1,416 $1,376 $1,386 $370 $284 $357 $222 $218 $1,202 $1,132 $1,135 $1,154 $1,168 2Q23 3Q23 4Q23 1Q24 2Q24 (1) Adjusted (Non-GAAP) Notable items Highlights 2Q24 vs 1Q24 2Q24 vs 2Q23 Noninterest expense increased by $10 million. Noninterest expense
Slide 18: Balance Sheet Highlights
18 Balance Sheet Highlights ($ in millions, except per share data) Increase (decrease) 2Q24 vs 1Q24 (1) 2Q24 vs 2Q23 (1) SELECT PERIOD END BALANCES 2Q24 1Q24 2Q23 $ % $ % Interest-earning deposits at banks $ 25,361 $ 30,792 $ 37,846 $ (5,431) (70.9)% $ (12,485) (33.0)% Investment securities 37,666 3
Slide 19: Loans and Leases
19 Loans and Leases ($ in millions, period end balances) $139,341 Highlights $133,015 $133,202 $133,302 $135,370 $41,968 2Q24 vs 1Q24 $44,130 $41,906 $39,511 $39,846 • Total loans increased $4.0 billion or by 11.8% annualized. The increase in loans was driven by a $2.1 billion (21.4% annualized) inc
Slide 20: 2Q24 Loans and Leases Composition
20 2Q24 Loans and Leases Composition ($ in billions, period end balances) Class Segment Commercial Bank: Commercial Finance ($17.8) 2% Real Estate Finance ($6.1) 9% 13% Commercial mortgage ($36.3) 26% Equipment Finance ($5.7) 30% 5% Commercial and industrial ($32.7) 18% 4% Commercial Services - Fact
Slide 21: Deposits
21 Deposits ($ in millions, period end balances) Highlights $149,609 $151,079 $146,233 $145,854 2Q24 vs. 1Q24 $141,164 • Total deposits increased $1.5 billion (4.0% annualized) driven by a $1.9 billion $40,016 increase in the SVB Commercial segment $39,276 $39,799 due to slight improvement in the ma
Slide 22: 2Q24 Deposit Composition
22 2Q24 Deposit Composition (period end balances, $ in billions, except average account size) Type Segment General Bank: Branch Network, Wealth & Other ($63.9) Money market & savings ($72.0) 1% 10% Community Association Banking ($7.6) 26% 16% Commercial Bank: Noninterest-bearing demand ($40.0) 42% C
Slide 23: Funding Mix
23 Funding Mix ($ in millions) Period End Balances Increase (decrease) 2Q24 vs. 2Q24 vs. 2Q24 1Q24 4Q23 3Q23 2Q23 1Q24 2Q23 Total deposits $ 151,079 80.1 % $ 149,609 79.9 % $ 145,854 79.5 % $ 146,233 79.5 % $ 141,164 77.9 % $ 1,470 $ 9,915 Securities sold under customer repurchase agreements 386 0.2
Slide 24: Credit Quality Trends and Allowance
24 Credit Quality Trends and Allowance ($ in millions) Net charge-offs & NCO ratio Provision for credit losses $176 $177 $249 $157 $132 $192 $103 $151 0.53% 0.53% 0.47% 0.38% $95 0.31% $64 0.39% 0.45% 0.47% 0.31% 0.35% 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23 3Q23 4Q23 1Q24 2Q24 NCO $ QTD NCO ratio YTD NCO rat
Slide 25: Allowance for loan and lease losses
25 Allowance for loan and lease losses ($ in millions) 1Q24 to 2Q24 $1,737 $35 $1,700 $(40) $(16) $(8) $(8) 1Q24 Portfolio mix Specific reserves Credit quality Economic Loan volume 2Q24 outlook Highlights ALLL Coverage 4.2x 2Q24 vs 1Q24 3.2x • ALLL decreased $37 million compared to the linked quarte
Slide 26: Capital
26 Capital Risk-based capital ratios Capital ratio rollforward Risk-Based Capital Tier 1 15.84% 15.64% 15.75% 15.66% 15.45% 14.00% 13.83% 13.94% 14.00% 13.87% Total Tier 1 CET1 Leverage December 31, 2023 15.75% 13.94% 13.36% 9.83% Net income 0.90% 0.90% 0.90% 0.64% Change in risk-weighted/average as
Slide 27: Financial Outlook
Financial Outlook Section III
Slide 28: Key Earnings Estimate Assumptions
28 Key Earnings Estimate Assumptions Metric 2Q24 3Q24 - Projected FY24 - Projected Loans and leases - EOP $139.3 billion $142 billion - $144 billion $143 billion - $146 billion Deposits - EOP $151.1 billion $152 billion - $154 billion $153 billion - $155 billion One to three 25 bps cuts in 2024; Int
Slide 29: Appendix
A First Citizens BancShares’ Appendix Section IV
Slide 30: BancShares Balance Sheets (unaudited)
30 BancShares Balance Sheets (unaudited) ($ in millions) Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 ASSETS Cash and due from banks $ 764 $ 698 $ 908 $ 791 $ 917 Interest-earning deposits at banks 25,361 30,792 33,609 36,704 37,846 Securities purchased under agreements to resell
Slide 31: BancShares Income Statements (unaudited)
31 BancShares Income Statements (unaudited) ($ in millions) 2Q24 1Q24 4Q23 3Q23 2Q23 INTEREST INCOME Interest and fees on loans $ 2,422 $ 2,354 $ 2,391 $ 2,426 $ 2,353 Interest on investment securities 330 282 241 180 120 Interest on deposits at banks 378 448 485 504 480 Total interest income 3,130
Slide 32: Noninterest income
32 Noninterest income ($ in millions) 2Q24 Change vs 1Q24 2Q24 1Q24 4Q23 3Q23 2Q23 $ % Rental income on operating lease equipment $ 259 $ 255 $ 252 $ 248 $ 238 $ 4 1.4 % Fee income and other service charges 77 75 80 71 70 2 2.2 Client investment fees 54 50 51 52 52 4 7.8 Wealth management services 5
Slide 33: Noninterest expense
33 Noninterest expense ($ in millions) 2Q24 Change vs 1Q24 2Q24 1Q24 4Q23 3Q23 2Q23 $ % Depreciation on operating lease equipment $ 98 $ 96 $ 96 $ 95 $ 91 $ 2 1.2 % Maintenance and other operating lease expenses 60 45 59 51 56 15 35.9 Salaries and benefits 745 744 714 727 775 1 0.2 Net occupancy exp
Slide 34: Loan Portfolios in Focus
34 Loan Portfolios in Focus ($ in billions, as of June 30, 2024) CRE Portfolio Composition Balance % of total loans Total Loans Multi-Family $ 5.5 4.0 % Medical Office 3.6 2.6 General Office 2.7 1.9 Commercial Bank 0.9 0.7 Other 1.8 1.2 Industrial / Warehouse 3.3 2.4 Retail 1.9 1.4 Hotel / Motel 0.8
Slide 35: General Office CRE Portfolio
35 General Office CRE Portfolio (as of June 30, 2024) Geographic Diversification General Office Other CA Top 5 MSAs ($ in millions) Portfolio Metrics 21% 22% Los Angeles $ 371 % of total loans 1.9 % Total New York $ 161 WA 4% General Phoenix $ 154 % of CRE loans 12.3 % TX Office 4% $2.7 B NY NC / SC
Slide 36: SVB Investor Dependent Portfolio
36 SVB Investor Dependent Portfolio (as of June 30, 2024) Portfolio Characteristics Portfolio Metrics • Early Stage - Loans to development-stage innovation companies Early Stage Growth Stage with $0-5 million in revenues. Historically, SVB’s highest risk portfolio which experienced an average ~6% NC
Slide 37: Estimated Liquidity Available for Uninsured Deposits
37 Estimated Liquidity Available for Uninsured Deposits ($ in millions) June 30, 2024 March 31, 2024 June 30, 2023 Liquid assets: Available cash $ 24,480 $ 30,027 $ 37,152 High quality liquid securities 32,427 29,304 16,269 Total liquid assets (a) $ 56,907 $ 59,331 $ 53,421 Contingent liquidity: FDI
Slide 38: Debt Securities Overview
38 Debt Securities Overview ($ in millions, period end balances) 2Q24 (1) Duration in Carrying value (2) % of Portfolio Yield (3) years AFS Portfolio U.S. Treasury $ 11,751 32 % 4.33 % 1.0 Government agency 97 — 5.04 0.3 Commercial mortgage-backed securities 2,727 7 4.20 2.3 Residential mortgage-bac
Slide 39: Average Balances and Yields
39 Average Balances and Yields ($ in millions) Change vs. 2Q24 1Q24 2Q23 1Q24 2Q23 Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Avg. Income / Yield / Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate Lo
Slide 40: Commercial Bank Segment
40 Commercial Bank Segment ($ in millions) Increase (decrease) 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Income Statement 2Q24 1Q24 2Q23 $ % $ % Net interest income $ 279 $ 270 $ 258 $ 9 3.5 % $ 21 8.6 % Noninterest income 131 136 137 (5) (4.0) (6) (5.2) Net revenue 410 406 395 4 1.0 15 3.8 Noninterest expense 22
Slide 41: General Bank Segment
41 General Bank Segment ($ in millions) Increase (decrease) 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Income Statement 2Q24 1Q24 2Q23 $ % $ % Net interest income $ 738 $ 691 $ 659 $ 47 6.8 % $ 79 11.9 % Noninterest income 152 145 135 7 4.6 17 12.7 Net revenue 890 836 794 54 6.5 96 12.1 Noninterest expense 497 520
Slide 42: SVB Commercial Segment
42 SVB Commercial Segment ($ in millions) Increase (decrease) 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Income Statement 2Q24 1Q24 2Q23 $ % $ % Net interest income $ 577 $ 546 $ 554 $ 31 5.7 % $ 23 4.1 % Noninterest income 139 137 145 2 0.7 (6) (5.1) Net revenue 716 683 699 33 4.8 17 2.4 Noninterest expense 387 3
Slide 43: Rail Segment
43 Rail Segment ($ in millions) Increase (decrease) 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Income Statement 2Q24 1Q24 2Q23 $ % $ % Rental income on operating leases $ 201 $ 198 $ 180 $ 3 1.7 % $ 21 12.1 % Less: depreciation on operating lease equipment 51 50 47 1 1.7 4 7.0 Less: maintenance and other operating
Slide 44: Corporate
44 Corporate ($ in millions) Increase (decrease) 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Income Statement 2Q24 1Q24 2Q23 $ % $ % Net interest income $ 272 $ 353 $ 523 $ (81) (23.0)% $ (251) (48.0)% Noninterest income 14 7 63 7 120.0 (49) (76.7) Net revenue 286 360 586 (74) (20.6) (300) (51.2) Noninterest expens
Slide 45: Purchase accounting marks
45 Purchase accounting marks ($ in millions) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Loans and leases (including off balance sheet exposure) (1) Beginning balance - unamortized fair value mark $ (2,005) $ (2,173) $ (2,378) $ (2,731) $ (2,944) Additions - Acqui
Slide 46: Non-GAAP Reconciliations
Non-GAAP Reconciliations Section V
Slide 47: Notable Items
47 Notable Items (1) ($ in millions, except per share data) 2Q24 1Q24 4Q23 3Q23 2Q23 (2) Rental income on operating lease equipment $ (158) $ (141) $ (155) $ (146) $ (147) Fair value adjustment on marketable equity securities, net 2 4 (9) 12 10 Bank-owned life insurance — — (2) 1 — Gain (loss) on sa
Slide 48: Non-GAAP Reconciliations
48 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 2Q24 1Q24 2Q23 Net income and EPS Net income (GAAP) a $ 707 731 682 Preferred stock dividends 16 15 15 Net income available to common stockholders (GAAP) b 691 716 667 Total notable items, after inc
Slide 49: Non-GAAP Reconciliations
49 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 2Q24 1Q24 2Q23 PPNR Net income (GAAP) a $ 707 731 682 Plus: provision for credit losses 95 64 151 Plus: income tax expense 272 273 214 PPNR (non-GAAP) l $ 1,074 1,068 1,047 Impact of notable items (1) 58 73 174 Adjusted PPNR (non-G
Slide 50: Non-GAAP Reconciliations
50 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 2Q24 1Q24 2Q23 ROE and ROTCE Annualized net income available to common stockholders s = b annualized $ 2,779 2,880 2,675 Annualized adjusted net income available to common stockholders t = e annualized $ 2,974 3,094 3,067 Average s
Slide 51: Non-GAAP Reconciliations
51 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 2Q24 1Q24 2Q23 Book value and tangible book value per common share Common shares outstanding at period end bb 14,529,735 14,529,735 14,520,034 Book value per share x/bb $ 1,487.00 1,443.03 1,300.93
Slide 52: Non-GAAP Reconciliations
52 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 2Q24 1Q24 2Q23 PPNR: Commercial Bank Segment Segment net income (GAAP) $ 123 122 16 Plus: provision for credit losses 22 14 169 Plus: income tax expense 44 42 11 PPNR (non-GAAP) $ 189 178 196 PPNR: General Bank Segment Segment net
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