First Citizens BancShares, Inc. · NASDAQ:FCNCA

First Citizens BancShares — Investor Presentation (January 2024)

29 slides from First Citizens BancShares's investor presentation, Jan 23, 2024

  1. Slide 1: Making Sense

    Making Sense January 23, 2024 Brent Ciliano, SVP Phillip Neuhart, SVP Chief Investment Officer Director of Market and Economic Research

  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: Global Growth Outlook

    Global Growth Outlook World Economic Outlook Consensus Real Economic Growth Estimates 2022 2023 Estimate as of: 2024 Actual Growth Dec-22 Jan-24 Est. Growth World 3.5% 2.1% 3.0% 2.6% United States 1.9% 0.4% 2.4% 1.3% Euro Area 3.3% -0.1% 0.5% 0.5% United Kingdom 4.5% -0.9% 0.5% 0.4% Japan 1.1% 1.3%

  5. Slide 5: The Pace of Economic Activity Is Slowing

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

  6. Slide 6: Federal Reserve Has Hiked Aggressively

    Federal Reserve Has Hiked Aggressively Federal Reserve Historical Tightening Paths 600 Mar/83 550 500 Apr/88 450 Jan/94 400 350 Feb/99 Bps of Hikes 300 Jun/04 250 Dec/15 200 150 Mar/22 100 50 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 6 Month of Cycle Source: Strategas Resear

  7. Slide 7: Federal Reserve's Proxy Rate Measure Is Elevated

    Federal Reserve’s Proxy Rate Measure Is Elevated Fed Funds Rate vs. Proxy Effective Fed Funds Rate 8% 7% Fed Funds Proxy Effective Funds Rate 6% 5% 4% 3% 2% 1% 0% -1% -2% 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Source: Apollo, Bloomberg

  8. Slide 8: Inflation Moderating at a Slower Pace

    Inflation Moderating at a Slower Pace 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 CPI YoY% Core CPI YoY% 8 Source: Strategas

  9. Slide 9: Path of Inflation

    Path of Inflation CPI: Owners' Equivalent Rent & Zillow Rent Index Year-Over-Year Percent Change 8.6% 18% 8.2% CPI Owners' Equivalent Rent 7.8% 16% 7.4% Zillow Rent Index (9-Month Lead, Right Axis) 14% 7.0% 6.6% 12% 6.2% 5.8% 10% 5.4% 8% 5.0% 4.6% 6% 4.2% 3.8% 4% 3.4% 2% 3.0% 2.6% 0% 2.2% 1.8% -2% 9

  10. Slide 10: Path of Inflation

    Path of Inflation Consumer Price Index Year-over-Year Percent Change 8.7% 9% 8.3% 8.0% 8% 7.1% Actual 7% 5.8% 6% Consensus Estimates 5% 4.0% 4% 3.5% 3.2% 2.9% 2.8% 3% 2.5% 2.4% 2.3% 2.3% 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 10 Sou

  11. Slide 11: Labor Market Resilient but Job Gains Slowing

    Labor Market Resilient but Job Gains Slowing US Employees on Nonfarm Payrolls Total MoM Net Change SA Thou 3000 2500 Jun 2020: 2000 +4,565 Last 6M Avg: 1500 +193k 1000 500 0 -500 -1000 Apr 2020: -1500 -20,514 -2000 11 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Source: BLS, Strategas

  12. Slide 12: Unemployment Has Risen But Remains Historically Low

    Unemployment Has Risen But Remains Historically Low Civilian Unemployment Rate 16% Seasonally Adjusted 14% 12% 10% 8% Average = 5.7% 6% 4% 2% 12 60 65 70 75 80 85 90 95 00 05 10 15 20 Source: BLS, Strategas

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

    Wage Growth Has Moderated but Remains Robust US Average Hourly Earnings Year-over-Year Percent Change 9.0% 8.0% 7.0% 6.0% 5.0% 4.1% 4.0% 3.0% 15-Year Average: +3.0% 2.0% 1.0% 0.0% 13 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Source: Bloomberg

  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 10% 6.47% 5% 3.30% 0% -5% -10% 20-Year Average: -15% Goods: +4.32% Services: +4.68% -20% '18 '19 '20 '21 '22 '23 '24 14 Source: Strategas

  15. Slide 15: Market Update

    Market Update

  16. Slide 16: Global Markets Year-to-Date

    Global Markets Year-to-Date Total Return by Asset Class YTD US Equity Returns 30% Q1-Q3 2023 As of 12/31/2023 25% Q4 2023 Value Blend Growth CY 2023 20% Large YTD 2024 (01/19/2024) 10.6% 29.8% 46.6% 15% 10% Mid 5% 12.7% 17.2% 25.9% 0% -5% Small 14.6% 16.9% 18.6% -10% U.S. Equities Intl. Developed Em

  17. Slide 17: Stocks Have Rallied Sharply; Narrow Rally

    Stocks Have Rallied Sharply; Narrow Rally S&P 500 Index 4,900 S&P 500: Year-to-Date 4,700 Through 12/31/2023 4,500 Index: Total Return 4,300 S&P 500 26.3% -10% 4,100 S&P 500 Equal Weighted 13.8% -8% 3,900 Difference 12.5% +33% 3,700 3,500 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Jan-24 17 Source: B

  18. Slide 18: Corporate Earnings

    Corporate Earnings ▪ 2023 estimated growth is 0.5% or Estimated Next 12-Month S&P 500 Operating Margin 18.0% $221 per share 17.0% ▪ 2024 estimated growth is 11.8% or 16.0% $246 per share 15.0% 14.0% ▪ Average growth since 1950 is 7.6% 13.0% '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 18

  19. Slide 19: 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 19 85 88 91 94 97 00 03 06 09 12 15 18 21 Source: Strategas

  20. Slide 20: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 1/19 Bear 3,700 -23.6% Base 4,850 0.2% Bull 5,500 13.6% 20 Source: Bloomberg, FactSet

  21. Slide 21: US Equities During Election Years

    US Equities During Election Years S&P 500 Historical Performance During Presidential Election Years vs. All Years Data Since 1952, Indexed to 100 110 109 All Years Presidential Election Years 108 107 106 105 104 103 102 101 100 99 98 21 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 18

  22. Slide 22: US Treasury Yield Curve Remains Inverted

    US Treasury Yield Curve Remains Inverted US Treasury Yield Curve 5.8% 5.6% As of 12/31/2023 5.4% 5.4% 12/30/2022 5.3% 5.2% 5.2% 5.0% 4.8% 4.8% 4.8% 4.6% 4.7% 4.4% 4.4% 4.3% 4.2% 4.2% 4.1%4.2% 4.2% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 3.9% 3.8% 3.9% 3.9% 3.8% 1 3 6 1 2 3 5 7 10 20 30 22 MM M Yr Yr Yr Y

  23. Slide 23: Credit Spreads Remain Below 2022 Highs

    Credit Spreads Remain Below 2022 Highs US Investment-Grade Fixed Income Option Adjusted Spread in Basis Points 400 350 300 250 200 194 150 131 100 50 0 23 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Source: Bloomberg

  24. Slide 24: 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 12/31/2023 2-Year Treasury 0.73% 4.25% 10-Year Treasury 1.51% 3.88% Aggregate Bond 1.75% 4.53% Intermediate Government/Credit 1.30% 4.37% Municipal Bond 1.11% 3.22% Investment Grade Corporate Bo

  25. Slide 25: Timing Markets Can Prove Costly

    Timing Markets Can Prove Costly Growth of $10,000: S&P 500 Average Annual Total Returns 1992-2021 $250,000 • Nearly half (48%) of the S&P 500 Index’s $208,215 strongest days occurred during a bear market.* $200,000 • Another 28% of the market’s best days took $150,000 place in the first two months o

  26. Slide 26: 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

  27. Slide 27: Staying Invested Matters!

    Staying Invested Matters! S&P 500 Average Annual Return Since 1970: +10.6% First PC S&P 500 Index Ukraine (Crimea) demonstrated Growth of $10,000 Since 1970 crisis First confirmed Three Mile COVID-10 case in Fall of Island nuclear AI wins first Chess Hurricane Katrina U.S. Saigon First mobile Iraq i

  28. Slide 28: 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

  29. Slide 29: Contact 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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