First Citizens Bancshares, Inc. · NASDAQ:FCNCA
First Citizens Bancshares — Q3 2024 Earnings Presentation
53 slides from First Citizens Bancshares's earnings presentation, Oct 24, 2024
Slide 1: First Citizens BancShares Third Quarter 2024 Earnings Conference Call
First Citizens BancShares, Inc. Third Quarter 2024 Earnings Conference Call October 24, 2024
Slide 2: Agenda
2 Agenda Pages Section I – Third Quarter Overview & Strategic Priorities 5–7 Section II – Third Quarter 2024 Financial Results 8 – 26 Financial Highlights 9 – 10 Earnings Highlights 11 Net interest income, margin and betas 12 – 14 Noninterest income and expense 15 – 16 Balance Sheet Highlights 17 Lo
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 ID – Investor Dependent ALLL – Allowance for Loan and Lease Losses LFI – Large Financial Institution AOCI – Accumulated Other Comprehensive I
Slide 5: Third Quarter Overview & Strategic Priorities
Third Quarter Overview & Strategic Priorities Section I
Slide 6: Third Quarter 2024 Snapshot
6 Third Quarter 2024 Snapshot Key Highlights: Financial Results: ■ Repurchased $700 million in Class A common shares Adjusted EPS (1) (2.61% of Class A common) during 3Q24. $45.87 ■ While loans declined during the quarter due to higher Adjusted ROE / ROA (1) repayments and lower draw activity in Glo
Slide 7: 2024 Strategic Priorities
7 2024 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
Slide 8: Third Quarter 2024 Financial Results
Third Quarter 2024 Financial Results Section II
Slide 9: 3Q24 Financial Results - Takeaways
9 3Q24 Financial Results - Takeaways Continued to maintain strong CET1 ratio while Credit quality remained stable, with no 1 returning capital to stockholders through our 5 emerging problems outside of pressure points share repurchase plan. previously disclosed. Loans contracted during the quarter d
Slide 10: Financial Highlights
10 Financial Highlights 3Q24 2Q24 3Q23 Reported Adjusted Reported Adjusted Reported Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) EPS $ 43.42 $ 45.87 $ 47.54 $ 50.87 $ 50.67 $ 55.92 ROE 11.30 % 11.94 % 13.13 % 14.05 % 15.20 % 16.77 % ROTCE (non-GAAP) 11.63 12.29 13.53 14.48 15.76 17.39 ROA 1.15 1.22 1.3
Slide 11: Quarterly Earnings Highlights
11 Quarterly Earnings Highlights ($ in millions) Increase (decrease) Reported 3Q24 vs. 2Q24 3Q24 vs. 3Q23 3Q24 2Q24 3Q23 $ % $ % Net interest income $ 1,796 $ 1,821 $ 1,990 $ (25) (1.3)% $ (194) (9.7)% Noninterest income 650 639 615 11 1.8 35 5.7 Net revenue 2,446 2,460 2,605 (14) (0.6) (159) (6.1)
Slide 12: Net interest income and margin
12 Net interest income and margin ($ in millions) $(25) million & (-11 bps) bps) $14 million & (-3 $1,990 $1,911 $1,817 $1,821 $1,796 $1,721 $1,717 $1,658 $1,681 $1,695 4.07% 3.86% 3.67% 3.64% 3.53% 3.52% 3.47% 3.35% 3.36% 3.33% 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 4Q23 1Q24 2Q24 3Q24 (1) (1) NII NIM NII,
Slide 13: NIM Rollforward
13 NIM Rollforward 2Q24 to 3Q24 (-11 bps) 3.64% 0.03% 0.02% 3.53% (0.08)% (0.06)% (0.02)% 2Q24 Investment volume Loan volume PAA FFS volume Deposit volume 3Q24 3Q23 to 3Q24 (-54 bps) 0.15% 0.04% 0.01% 0.16% 4.07% (0.35)% 3.53% (0.29)% (0.15)% (0.11)% 3Q23 Loan yield Investment Debt volume Debt rate
Slide 14: Historical and Forecasted Cumulative Deposit Beta
14 Historical and Forecasted Cumulative Deposit Beta Up Cycle Down Cycle Terminal beta 63% 64% 61% 58% 53% 46% 45% 46% 47% 42% 37% 33% 31% 30% 23% 23% 16% 12% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 - Jul/Aug 3Q24 - Sep 4Q24 Actual cumulative beta Actual cumulative beta IBD Forecast cumulative beta Forec
Slide 15: Noninterest income
15 Noninterest income ($ in millions) $543 $627 $639 $650 $615 $147 - $12 total notable $171 $149 $160 $176 $135 items $88 - total $478 $479 $474 $468 $455 notable items $(83) 3Q23 4Q23 1Q24 2Q24 3Q24 (1) (2) Adjusted (Non-GAAP) Notable items Gain on acquisition Highlights 3Q24 vs 2Q24 3Q24 vs 3Q23
Slide 16: Noninterest expense
16 Noninterest expense ($ in millions) $1,492 $1,456 $1,416 $1,376 $1,386 $357 $227 $284 $222 $218 $1,132 $1,135 $1,154 $1,168 $1,229 3Q23 4Q23 1Q24 2Q24 3Q24 (1) Adjusted (Non-GAAP) Notable items Highlights 3Q24 vs 2Q24 3Q24 vs 3Q23 Noninterest expense increased by $70 million. Noninterest expense
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights ($ in millions, except per share data) Increase (decrease) 3Q24 vs 2Q24 (1) 3Q24 vs 3Q23 (1) SELECT PERIOD END BALANCES 3Q24 2Q24 3Q23 $ % $ % Interest-earning deposits at banks $ 25,640 $ 25,361 $ 36,704 $ 279 4.4 % $ (11,064) (30.1)% Investment securities 38,663 37,666
Slide 18: Loans and Leases
18 Loans and Leases ($ in millions, period end balances) $139,341 $138,695 Highlights $133,202 $133,302 $135,370 $41,968 $39,852 3Q24 vs 2Q24 $41,906 $39,511 $39,846 • Total loans decreased $646 million or by 0.5% sequentially, driven by a $2.1 billion decline in SVB Commercial, partially offset by
Slide 19: 3Q24 Loans and Leases Composition
19 3Q24 Loans and Leases Composition ($ in billions, period end balances) Class Segment Commercial Bank: Commercial Finance ($16.4) Real Estate Finance ($6.2) 2% 9% 12% Equipment Finance ($5.8) Commercial mortgage ($37.4) 27% 4% 29% Commercial Services - Factoring ($2.7) Commercial and industrial ($
Slide 20: Deposits
20 Deposits ($ in millions, period end balances) Highlights $149,609 $151,079 $151,574 $146,233 $145,854 3Q24 vs. 2Q24 • Total deposits increased $495 million or by 0.3% sequentially, driven by a $40,016 $39,396 $690 million increase in the General Bank $39,276 $39,799 due to growth in the Branch Ne
Slide 21: 3Q24 Deposit Composition
21 3Q24 Deposit Composition (period end balances, $ in billions, except average account size) Type Segment General Bank: Branch Network, Wealth & Other ($64.8) Money market & savings ($74.8) 9% 1% Community Association Banking ($7.4) 26% 15% Commercial Bank: Noninterest-bearing demand ($39.4) 43% Co
Slide 22: Funding Mix
22 Funding Mix ($ in millions) Period End Balances Increase (decrease) 3Q24 vs. 3Q24 vs. 3Q24 2Q24 1Q24 4Q23 3Q23 2Q24 3Q23 Total deposits $ 151,574 80.3 % $ 151,079 80.1 % $ 149,609 79.9 % $ 145,854 79.5 % $ 146,233 79.5 % $ 495 $ 5,341 Securities sold under customer repurchase agreements 391 0.2 3
Slide 23: Credit Quality Trends and Allowance
23 Credit Quality Trends and Allowance ($ in millions) Net charge-offs & NCO ratio Provision for credit losses $176 $177 $249 $145 $132 $192 $103 0.53% 0.53% 0.42% $117 0.38% $95 0.31% $64 0.45% 0.47% 0.31% 0.35% 0.37% 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 4Q23 1Q24 2Q24 3Q24 NCO $ QTD NCO ratio YTD NCO rat
Slide 24: Allowance for loan and lease losses
24 Allowance for loan and lease losses ($ in millions) 2Q24 to 3Q24 $1,700 $19 $14 $1,678 $(43) $(9) $(3) 2Q24 Credit quality Loan volume Portfolio change Economic Specific reserves 3Q24 outlook Highlights ALLL Coverage 4.2x 3Q24 vs 2Q24 3.2x • ALLL decreased $22 million compared to the linked quart
Slide 25: Capital
25 Capital Risk-based capital ratios Capital ratio rollforward Risk-Based Capital Tier 1 15.64% 15.75% 15.66% 15.45% 15.36% 13.83% 13.94% 14.00% 13.87% 13.78% Total Tier 1 CET1 Leverage December 31, 2023 15.75% 13.94% 13.36% 9.83% Net income 1.29% 1.29% 1.29% 0.93% Change in risk-weighted/average as
Slide 26: Share Repurchase Plan Update
26 Share Repurchase Plan Update In July 2024, we announced a plan to repurchase up to $3.5 billion of Class A common shares. We have completed 28% of the repurchase plan through 10/22/24 Highlights ($ in millions) • We have repurchased 3.61% of Class A $3,500 common shares and 3.36% of total common
Slide 27: Financial Outlook
Financial Outlook Section III
Slide 28: Key Earnings Estimate Assumptions
28 Key Earnings Estimate Assumptions Metric 3Q24 4Q24 - Projected FY24 - Projected Loans and leases - EOP $138.7 billion $138 billion - $140 billion $138 billion - $140 billion Deposits - EOP $151.6 billion $150 billion - $153 billion $150 billion - $153 billion Interest rates Zero to three 25 bps c
Slide 29: Appendix
A First Citizens BancShares’ Appendix Section IV
Slide 30: BancShares Balance Sheets (unaudited)
30 BancShares Balance Sheets (unaudited) ($ in millions) Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 ASSETS Cash and due from banks $ 862 $ 764 $ 698 $ 908 $ 791 Interest-earning deposits at banks 25,640 25,361 30,792 33,609 36,704 Securities purchased under agreements to resell
Slide 31: BancShares Income Statements (unaudited)
31 BancShares Income Statements (unaudited) ($ in millions) 3Q24 2Q24 1Q24 4Q23 3Q23 INTEREST INCOME Interest and fees on loans $ 2,430 $ 2,422 $ 2,354 $ 2,391 $ 2,426 Interest on investment securities 358 330 282 241 180 Interest on deposits at banks 350 378 448 485 504 Total interest income 3,138
Slide 32: Noninterest income
32 Noninterest income ($ in millions) 3Q24 Change vs 2Q24 3Q24 2Q24 1Q24 4Q23 3Q23 $ % Rental income on operating lease equipment $ 262 $ 259 $ 255 $ 252 $ 248 $ 3 1.3 % Fee income and other service charges 81 77 75 80 71 4 6.5 Client investment fees 55 54 50 51 52 1 1.2 Wealth management services 5
Slide 33: Noninterest expense
33 Noninterest expense ($ in millions) 3Q24 Change vs 2Q24 3Q24 2Q24 1Q24 4Q23 3Q23 $ % Depreciation on operating lease equipment $ 99 $ 98 $ 96 $ 96 $ 95 $ 1 1.0 % Maintenance and other operating lease expenses 59 60 45 59 51 (1) (1.9) Salaries and benefits 788 745 744 714 727 43 5.6 Net occupancy
Slide 34: Loan Portfolios in Focus
34 Loan Portfolios in Focus ($ in billions, as of September 30, 2024) CRE Portfolio Composition % of total Balance loans Total Loans Multi-Family $ 5.7 4.1 % Medical Office 3.7 2.7 General Office 2.5 1.8 Commercial Bank 0.8 0.6 Other 1.7 1.2 Industrial / Warehouse 3.5 2.6 Retail 2.0 1.4 Hotel/Motel
Slide 35: General Office CRE Portfolio
35 General Office CRE Portfolio (as of September 30, 2024) Geographic Diversification General Office CA Top 5 MSAs Portfolio Metrics ($ in millions) Other 20% 28% Los Angeles $ 327 % of total loans 1.8 % Total Phoenix $ 143 General % of CRE loans 11.2 % Boston $ 129 Office TX $2.5 B NC / SC San Fran
Slide 36: SVB Investor Dependent Portfolio
36 SVB Investor Dependent Portfolio (as of September 30, 2024) Portfolio Characteristics Portfolio Metrics • Early Stage - Loans to development-stage innovation companies Early Stage Growth Stage with $0-5 million in revenues. Historically, SVB’s highest risk portfolio which experienced an average ~
Slide 37: Estimated Liquidity Available for Uninsured Deposits
37 Estimated Liquidity Available for Uninsured Deposits ($ in millions) September 30, 2024 June 30, 2024 September 30, 2023 Liquid assets: Available cash $ 24,705 $ 24,480 $ 35,896 High quality liquid securities 33,654 32,427 21,123 Total liquid assets (a) $ 58,359 $ 56,907 $ 57,019 Contingent liqui
Slide 38: Debt Securities Overview
38 Debt Securities Overview ($ in millions, period end balances) (1) 3Q24 (1) Duration in Carrying value (2) % of Portfolio Yield (3) years AFS Portfolio U.S. Treasury $ 11,817 31 % 4.33 % 0.9 Government agency 85 — 5.01 0.3 Commercial mortgage-backed securities 2,778 7 4.24 2.3 Residential mortgage
Slide 39: Average Balances and Yields
39 Average Balances and Yields ($ in millions) Change vs. 3Q24 2Q24 3Q23 2Q24 3Q23 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) 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Income Statement 3Q24 2Q24 3Q23 $ % $ % Net interest income $ 274 $ 279 $ 249 $ (5) (2.0)% $ 25 10.1 % Noninterest income 133 131 139 2 1.6 (6) (4.3) Net revenue 407 410 388 (3) (0.7) 19 4.9 Noninterest expens
Slide 41: General Bank Segment
41 General Bank Segment ($ in millions) Increase (decrease) 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Income Statement 3Q24 2Q24 3Q23 $ % $ % Net interest income $ 768 $ 738 $ 681 $ 30 4.1 % $ 87 12.9 % Noninterest income 149 152 135 (3) (2.2) 14 9.3 Net revenue 917 890 816 27 3.0 101 12.4 Noninterest expense 517
Slide 42: SVB Commercial Segment
42 SVB Commercial Segment ($ in millions) Increase (decrease) 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Income Statement 3Q24 2Q24 3Q23 $ % $ % Net interest income $ 583 $ 577 $ 537 $ 6 1.2 % $ 46 8.6 % Noninterest income 139 139 141 — — (2) (0.6) Net revenue 722 716 678 6 0.8 44 6.5 Noninterest expense 393 387 4
Slide 43: Rail Segment
43 Rail Segment ($ in millions) Increase (decrease) 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Income Statement 3Q24 2Q24 3Q23 $ % $ % Rental income on operating leases $ 205 $ 201 $ 190 $ 4 1.6 % $ 15 7.9 % Less: depreciation on operating lease equipment 52 51 49 1 2.5 3 6.4 Less: maintenance and other operating
Slide 44: Corporate
44 Corporate ($ in millions) Increase (decrease) 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Income Statement 3Q24 2Q24 3Q23 $ % $ % Net interest income $ 219 $ 272 $ 563 $ (53) (19.6)% $ (344) (61.2)% Noninterest income 22 14 6 8 50.5 16 314.6 Net revenue 241 286 569 (45) (15.7) (328) (57.6) Noninterest expense 18
Slide 45: Purchase accounting marks
45 Purchase accounting marks ($ in millions) September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Loans and leases (including off balance sheet exposure) (1) Beginning balance - unamortized fair value mark $ (1,857) $ (2,005) $ (2,173) $ (2,378) $ (2,731) Other 4 3 5
Slide 46: Non-GAAP Reconciliations
Non-GAAP Reconciliations Section V
Slide 47: Notable Items
47 Notable Items (1) ($ in millions, except per share data) 3Q24 2Q24 1Q24 4Q23 3Q23 (2) Rental income on operating lease equipment $ (158) $ (158) $ (141) $ (155) $ (146) Realized (gain) loss on sale of investment securities, net (4) — — — 12 Fair value adjustment on marketable equity securities, n
Slide 48: Non-GAAP Reconciliations
48 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 3Q24 2Q24 3Q23 Net income and EPS Net income (GAAP) a $ 639 707 752 Preferred stock dividends 15 16 15 Net income available to common stockholders (GAAP) b 624 691 737 Total notable items, after inc
Slide 49: Non-GAAP Reconciliations
49 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 3Q24 2Q24 3Q23 PPNR Net income (GAAP) a $ 639 707 752 Plus: provision for credit losses 117 95 192 Plus: income tax expense 234 272 245 PPNR (non-GAAP) l $ 990 1,074 1,189 Impact of notable items (1) 51 58 137 Adjusted PPNR (non-GA
Slide 50: Non-GAAP Reconciliations
50 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 3Q24 2Q24 3Q23 ROE and ROTCE Annualized net income available to common stockholders s = b annualized $ 2,483 2,779 2,923 Annualized adjusted net income available to common stockholders t = e annualized $ 2,623 2,974 3,225 Average s
Slide 51: Non-GAAP Reconciliations
51 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 3Q24 2Q24 3Q23 Book value and tangible book value per common share Common shares outstanding at period end bb 14,179,208 14,529,735 14,520,103 Book value per share x/bb $ 1,547.81 1,487.00 1,343.52
Slide 52: Non-GAAP Reconciliations
52 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 3Q24 2Q24 3Q23 PPNR: Commercial Bank Segment Segment net income (GAAP) $ 110 123 37 Plus: provision for credit losses 29 22 132 Plus: income tax expense 41 44 14 PPNR (non-GAAP) $ 180 189 183 PPNR: General Bank Segment Segment net
Slide 53: Non-GAAP Reconciliations
53 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 3Q24 2Q24 1Q24 4Q23 3Q23 Net interest income & Net interest margin Net interest income (GAAP) cc $ 1,796 1,821 1,817 1,911 1,990 Loan PAA income dd 107 145 163 198 275 Other PAA (expense) income ee (6) (5) (4) (4) (6) Total PAA ff
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