First Citizens Bancshares, Inc. · NASDAQ:FCNCA

First Citizens Bancshares — Investor Presentation (February 2025)

30 slides from First Citizens Bancshares's investor presentation, Feb 27, 2025

  1. Slide 1: Monthly Market Update

    Brent Ciliano, SVP Chief Investment Officer Monthly Market Update Blake Taylor, VP February 27, 2025 Market and Economic Research Analyst

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

    What are we going to cover? 1. Economic Update: Growth Outlook | Inflation & Interest Rates | Labor Market & Consumer Spending 2. Market Update: Equity Markets | Investment Timing | Fixed Income

  3. Slide 3: Economic Update

    Economic Update Growth Outlook | Inflation & Interest Rates | Labor Market and Consumer Spending

  4. Slide 4: Pulse Check: The US Economy Today

    Pulse Check: The US Economy Today Forecast for 2025 Median Professional Consensus Economic Activity Labor Market Labor Market Recession Risk GDP Growth (2025) New Jobs per Month Unemployment Rate Probability, next 12 months +1.8% +2.3% +121k +130k 4.4% 4.2% 30% +23% Forecast from Latest projection F

  5. Slide 5: Forecasters Expect Growth to Stay at or Above the Trend Pace

    Forecasters Expect Growth to Stay at or Above the Trend Pace US Real GDP Growth and Forecasts GDP growth Potential growth rate 3.5% 3.0% Consensus forecast 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2023 2024 2025 2026 Source: Bloomberg, Federal Reserve, Congressional Bu

  6. Slide 6: The Manufacturing Sector Has Improved, but Services May Be Slowing

    The Manufacturing Sector Has Improved, but Services May Be Slowing ISM Manufacturing and Services Indices > 50 indicates expansion 70 ISM Manufacturing ISM Services 65 60 55 50 45 40 Flash PMI estimates, February 2025 35 30 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Bloomberg. 6

  7. Slide 7: Inflation Is No Longer Moving Closer to the 2% Target

    Inflation Is No Longer Moving Closer to the 2% Target Inflation: Consumer Price Index 12 Year-over-year 3-month annualized rate 10 8 Highest 3-month annualized inflation since Nov. 2022 6 4 2 2% target 0 -2 -4 -6 2018 2019 2020 2021 2022 2023 2024 2025 Source: Bloomberg. 7

  8. Slide 8: Markets Expect Inflation to Run Above 2% for the Foreseeable Future

    Markets Expect Inflation to Run Above 2% for the Foreseeable Future US 5-Year Breakeven Inflation Rate 4.0 Next 5 years (e.g. 2025-2029) Federal Reserve's 2% Target 3.5 3.0 Avg: +2.5% 2.5 2.0 1.5 Avg: +1.7% 1.0 Consumer 5-10 year exp. inflation: 2016 - 2019 avg: 2.5% 0.5 2021 - 2025 avg: 3.0% 0.0 20

  9. Slide 9: Markets See the Fed Cutting Rates by About 0.50% This Year

    Markets See the Fed Cutting Rates by About 0.50% This Year Federal Funds Rate and Market-Implied Path 6% Today: 5% 4.4% End-2025: 3.8% 4% 3% 2% 1% 0% 2020 2021 2022 2023 2024 2025 2026 Source: Bloomberg, First Citizens Wealth. Data as of 2/25/2025. 9

  10. Slide 10: Payroll Job Growth Has Picked Back Up Above the Breakeven Rate

    Payroll Job Growth Has Picked Back Up Above the Breakeven Rate 800 Payroll Job Growth Thousands, three-month moving average 700 600 500 400 Estimated 300 breakeven rate 200 100 0 Feb '21 Aug '21 Feb '22 Aug '22 Feb '23 Aug '23 Feb '24 Aug '24 Source: Department of Labor, Bloomberg, Federal Reserve B

  11. Slide 11: Government Job Cuts: Quantifying the Situation

    Government Job Cuts: Quantifying the Situation Executive Summary US Federal Government Employment Total fed. employment (millions of employees, right axis) • 160 million total workers on US 3.0% Share of total US payroll employment (left axis) 3.2 mln payrolls 3.1 mln • 3 million federal government

  12. Slide 12: Greater Interest Expense Is Projected to Crowd Out Government Spending

    Greater Interest Expense Is Projected to Crowd Out Government Spending 35% US Federal Government Spending 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 Discretiona

  13. Slide 13: The Unemployment Rate Has Moved Up…Can It Hold Steady Near 4%?

    The Unemployment Rate Has Moved Up…Can It Hold Steady Near 4%? US Unemployment Rate Apr. 2020: 11% Percent 14.8% 10% 9% 8% Average since 1960: 5.9% 7% 6% 5% Jan. 2025: 4.0% 4% 3% 1960 1970 1980 1990 2000 2010 2020 Source: Department of Labor, Bloomberg. 13

  14. Slide 14: Consumer Expenditures Are Holding Up, Still Led by Services Spending

    Consumer Expenditures Are Holding Up, Still Led by Services Spending Personal Consumption Expenditures 50% Percent change, year over year 40% Services 20-year average: Goods Services: 4.9% 30% Goods: 4.2% 20% 10% +6.7% 0% +3.5% -10% -20% 2018 2019 2020 2021 2022 2023 2024 Source: Department of Comme

  15. Slide 15: Low-Income Household Spending Has Not Grown for Over Three Years

    Low-Income Household Spending Has Not Grown for Over Three Years Inflation-Adjusted Growth in Retail Spending by Household Income July 2021 = 0 15% 10% 5% 0% -5% -10% Low Income Middle Income High Income -15% 2018 2019 2020 2021 2022 2023 2024 Note: Data are adjusted for inflation and seasonality. L

  16. Slide 16: Market Update

    Market Update Equity Markets | Investment Timing | Fixed Income

  17. Slide 17: Current Bull Market Run

    Current Bull Market Run S&P 500 Index 6500 6000 5500 5000 4500 4000 Total return since 10/13/2022: +69% 3500 Jan '22 Apr '22 Jul '22 Oct '22 Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul '24 Oct '24 Jan '25 Source: Bloomberg. 17

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

    Global Markets Year-to-Date Total Market Returns 2025 YTD US Equity Returns As of 2/24/2025 As of 02/24/2025 YTD 2025 CY 2024 Value Blend Growth US Equities 1.7% 23.8% Large 5.8% 2.0% -0.4% Intl. Developed 8.3% 4.4% Equities Emerging Market Mid 5.8% 8.0% 1.4% 1.5% 1.8% Equities Aggregate Fixed 1.6%

  19. Slide 19: S&P 500 Breadth Worsened in Q4 but Has Improved Modestly This Year

    S&P 500 Breadth Worsened in Q4 but Has Improved Modestly This Year S&P 500 Index Index level, left axis 6500 Percent of members above 200-day moving average, right axis 100% 90% 6000 80% 5500 70% 60% 5000 50% 4500 40% 4000 30% 20% 3500 10% 3000 0% Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul

  20. Slide 20: Stocks Outside the Top 10 Are Less Expensive

    Stocks Outside the Top 10 Are Less Expensive Cap. Weight Price-to-Forward Earnings Top 10 45x Top 11-500 40x 35x 30x 25x 20x 15x 10x 5x 2000 2004 2008 2012 2016 2020 2024 Source: Trivariate Research. 20

  21. Slide 21: Corporate Earnings

    Corporate Earnings Estimated Next 12-Month S&P 500 Operating Margin ▪ 2024 estimated growth is 9.5% 18% 17.4% ▪ Q4 2024: 16.9% 17% 16% ▪ 2025 estimated growth is 12.7% 15% ▪ 2026 estimated growth is 13.9% 14% 13% ▪ Average growth since 1950 is 7.6% 2012 2014 2016 2018 2020 2022 2024 Source: FactSet,

  22. Slide 22: Big Tech Capex Spending Is on the Rise

    Big Tech Capex Spending Is on the Rise Dollar-Weighted Capex-to-Sales of Magnificent 7 16% 14% 2025 projection 12% 10% 8% 6% 4% 2% 0% 2000 2005 2010 2015 2020 2025 Source: Trivariate Research. 22

  23. Slide 23: The New Administration Has Floated the Steepest Tariffs in 100 Years

    The New Administration Has Floated the Steepest Tariffs in 100 Years US Weighted Average Effective Tariff Rate 70% 60% 50% 40% 30% Range of possibilities 20% 10% 0% Source: Yale Budget Lab, Historical Statistics of the United States, Bureau of Economic Analysis. 23

  24. Slide 24: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 2/25/25 Bear 4,600 -23.1% Base 6,400 7.0% Bull 6,900 15.4% Source: Bloomberg, FactSet, First Citizens Wealth. 24

  25. Slide 25: The S&P 500 Often Delivers Positive Returns After Significant Drawdowns

    The S&P 500 Often Delivers Positive Returns After Significant Drawdowns S&P 500 Calendar Year Return vs. Largest Intra-Year Decline 40% 38% 33% 32% 31% 30% 29% 29% 29% 30% 26% 25% 23% 21% 22% 22% 20% 16% 16% 18% 15% 14% 10% 11% 12% 10% 8% 5% 5% 2% 1% 1% 1% 0% -3% -3% -3% -4% -3% -10% -5% -6% -5% -6%

  26. Slide 26: Market Timing, Anyone?

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

  27. Slide 27: The US Treasury Curve: Continued Rates Volatility

    The US Treasury Curve: Continued Rates Volatility US Treasury Yield Curve 5.2% 5.1% 5.0% 5.0% 4.9% 4.8% 4.7% 4.8% 4.9% 4.6% 4.6% 4.6% 4.5% 4.3 4.3% 4.6% % 4.4% 4.4% 4.3% 4.3% 4.6% 4.2% 4.2% 4.3% 4.1% 4.1% 4.1% 4.3% 4.2% 4.3% 4.2% 4.0% 4.0% 4.0% 3.9% 3.8% 3.6% As of 3.6% 3.5% 3.6% 3.4% Latest date -

  28. Slide 28: Bond Yields Have Had a Long Journey

    Bond Yields Have Had a Long Journey US 10-Year Treasury Yield Q4 '23: 6% Fed signals its Q2-Q3 '23: intention to cut Stronger data, interest rates higher inflation, 5% "higher for longer" 2H '22: 4% 2H 2019: Adjusting to Fed lowers rates tighter policy with three 3% 0.25% cuts 2021: March '23: Reope

  29. Slide 29: Yield-to-Worst Is a Relatively Good Approximation of Total Return

    Yield-to-Worst Is a Relatively Good Approximation of Total Return Aggregate Bond Index Return 200% Percent Capture of Yield-to-Worst 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% 1995 1999 2003 2007 2011 2015 2019 2023 Source: Bloomberg, First Citizens Wealth. Data as of 2024:Q3. 29

  30. Slide 30: 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

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