First Citizens Bancshares, Inc. · NASDAQ:FCNCA
First Citizens Bancshares — Q1 2024 Earnings Presentation
56 slides from First Citizens Bancshares's earnings presentation, Apr 25, 2024
Slide 1: First Quarter 2024 Earnings Conference Call
First Citizens BancShares, Inc. First Quarter 2024 Earnings Conference Call April 25, 2024
Slide 2: Agenda
2 Agenda Pages Section I – First Quarter Overview & Strategic Priorities 5 – 12 Section II – First Quarter 2024 Financial Results 13 – 33 Financial Highlights 14 – 15 Earnings Highlights 16 Net interest income, margin and betas 17 – 19 Noninterest income and expense 20 – 21 Balance Sheet Highlights
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. ACH – Automated clearing house HQLS – High Quality Liquid Securities AFS – Available for Sale HTM – Held to Maturity AI – Artificial intelligence IBD – Interest beari
Slide 5: First Quarter Overview & Strategic Priorities
First Quarter Overview & Strategic Priorities Section I
Slide 6: First Quarter 2024 Snapshot
6 First 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: ■ Solid financial results driven by strong net revenue, Adjusted EPS (1) contr
Slide 7: One Year After the Acquisition, SVB Remains Critical to the Innovation Economy
7 One Year After the Acquisition, SVB Remains Critical to the Innovation Economy State of the SVB Today Innovation Market (1) Against a backdrop of slowing deployments and diminishing LP interest, VC fundraising last year hit Our Clients its lowest level since 2017: • Fund managers closed $53 B in 2
Slide 8: SVB Balances Continue to Show Stabilization
8 SVB Balances Continue to Show Stabilization 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 Loans & leases $66 B $59 B $57 B $55 B $55 B Deposits $49 B $41 B $40 B $38 B $38 B Off balance sheet $84 B $70 B $60 B $58 B $59 B client funds Private bank AUM $14 B $11 B $9 B $8 B $8 B SVB BRAND CLIENT FUNDS L
Slide 9: Continued Progress on SVB Integration Initiatives
9 Continued Progress on SVB Integration Initiatives Integration Priorities 1 Maintain & grow Continue 2 to build Retain key talent 3 Maintain sound risk market position as trust with client and optimize the management an important partner base & defend workforce to drive practices in the innovation
Slide 10: First Citizens Wealth Alignment and Rebrand
10 First Citizens Wealth Alignment and Rebrand New leadership structure and combined branding has been developed to integrate SVB Private into our Wealth organization to improve coordination and enhance our commitment to creating a premier private banking & wealth business. • The wealth business has
Slide 11: Awards and Recognitions
11 Awards and Recognitions We are propelled by our long-term approach and our deep-rooted dedication to providing superior financial services to our customers. • Forbes annually compiles its ranking of the nation’s best banks based on its analysis of 10 key metrics measuring growth, credit quality a
Slide 12: Strategic Priorities
12 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
Slide 13: First Quarter 2024 Financial Results
First Quarter 2024 Financial Results Section II
Slide 14: 1Q24 Financial Results - Takeaways
14 1Q24 Financial Results - Takeaways Deposits grew $3.8 billion from the linked PPNR exceeded expectations on strong net 1 revenue and controlled expenses. 5 quarter due to growth in the General Bank segment and in the Direct Bank. While the pace of IPOs remains muted, While NII and NIM declined du
Slide 15: Financial Highlights
15 Financial Highlights 1Q24 4Q23 1Q23 Reported Adjusted Reported Adjusted Reported Adjusted (Non-GAAP) (Non-GAAP) (Non-GAAP) EPS $ 49.26 $ 52.92 $ 34.33 $ 46.58 $ 653.64 $ 20.09 ROE 13.97 % 15.01 % 9.97 % 13.53 % 367.47 % 11.30 % ROTCE 14.42 15.50 10.32 14.00 386.69 11.89 ROA 1.36 1.46 0.95 1.28 33
Slide 16: Quarterly Earnings Highlights
16 Quarterly Earnings Highlights ($ in millions) Increase (decrease) Reported 1Q24 vs. 4Q23 1Q24 vs. 1Q23 1Q24 4Q23 1Q23 $ % $ % Net interest income $ 1,817 $ 1,911 $ 850 $ (94) (4.9)% $ 967 113.8 % Noninterest income 627 543 10,259 84 15.5 (9,632) (93.9) Net revenue 2,444 2,454 11,109 (10) (0.4) (8
Slide 17: Net interest income and margin
17 Net interest income and margin ($ in millions) $(94) million & (-19 bps) $1,961 $1,990 $1,911 $1,817 $850 4.11% 4.07% 3.86% 3.67% 3.41% 1Q23 2Q23 3Q23 4Q23 1Q24 NII NIM Highlights 1Q24 vs 4Q23 1Q24 vs 1Q23 Net interest income decreased by $94 million due to a $61 million increase in interest Net
Slide 18: NIM Rollforward
18 NIM Rollforward 4Q23 to 1Q24 (-19 bps) 0.02% 0.03% 3.86% (0.09)% (0.07)% 3.67% (0.05)% (0.03)% 4Q23 Loan yield Investment yield Deposit rate Purchase Earning asset Deposit volume 1Q24 accounting mix 1Q23 to 1Q24 (+26 bps) 0.18% 0.13% 0.05% 0.78% 0.22% 3.41% 3.67% (0.92)% (0.18)% 1Q23 Loan yield I
Slide 19: Historical and Forecasted Cumulative Deposit Beta
19 Historical and Forecasted Cumulative Deposit Beta Up Cycle Down Cycle Terminal beta 61% 61% 58% 53% 46% 45% 46% 42% 37% 31% 30% 27% 23% 18% 19% 14% 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 Actual cumulative beta Actual cumulative beta IBD Forecast cumulative beta Forecast cumulative beta IBD Total
Slide 20: Noninterest income
20 Noninterest income ($ in millions) $10,259 $9,950 - $658 $543 $627 total $196 - $615 $147 - $9,824 $55 $12 total notable total $141 $135 notable $171 $149 items notable items items $126 $88 - total $462 $468 $455 notable $478 $309 items $(83) 1Q23 2Q23 3Q23 4Q23 1Q24 Adjusted (Non-GAAP) (1) Notab
Slide 21: Noninterest expense
21 Noninterest expense ($ in millions) $1,572 $1,492 $1,416 $1,376 $370 $284 $357 $222 $855 $178 $1,202 $1,132 $1,135 $1,154 $677 1Q23 2Q23 3Q23 4Q23 1Q24 (1) Adjusted (Non-GAAP) Notable items Highlights 1Q24 vs 4Q23 1Q24 vs 1Q23 Noninterest expense decreased by $116 million. Noninterest expense inc
Slide 22: Balance Sheet Highlights
22 Balance Sheet Highlights ($ in millions, except per share data) Increase (decrease) 1Q24 vs 4Q23 (1) 1Q24 vs 1Q23 (1) SELECT PERIOD END BALANCES 1Q24 4Q23 1Q23 $ % $ % Interest-earning deposits at banks $ 30,792 $ 33,609 $ 38,522 $ (2,817) (33.7)% $ (7,730) (20.1)% Investment securities 35,044 29
Slide 23: Loans and Leases
23 Loans and Leases ($ in millions, period end balances) $138,288 Highlights $133,015 $133,202 $133,302 $135,370 $51,702 1Q24 vs 4Q23 $44,130 $41,906 $39,511 $39,846 • Total loans increased $2.1 billion or by 6.2% annualized. The increase in loans was driven primarily by a $900 million (5.8% annuali
Slide 24: 1Q24 Loans and Leases Composition
24 1Q24 Loans and Leases Composition ($ in billions, period end balances) Class Segment Commercial Bank: Commercial Finance ($17.5) Real Estate Finance ($6.2) 2% 10% Commercial mortgage ($35.4) 13% Equipment Finance ($5.6) 26% Commercial and industrial ($32.2) 30% 5% Commercial Services - Factoring
Slide 25: Deposits
25 Deposits ($ in millions, period end balances) Highlights $149,609 $146,233 $145,854 1Q24 vs. 4Q23 $140,050 $141,164 • Total deposits increased $3.8 billion (10.4% annualized) driven by a $2.4 billion $39,276 (14.2% annualized) increase in the $43,141 $39,799 General Bank due to strong growth in t
Slide 26: 1Q24 Deposit Composition
26 1Q24 Deposit Composition (period end balances, $ in billions, except average account size) Type Segment General Bank: Branch Network, Wealth & Other ($63.5) Money market & savings ($69.1) 1% 12% Community Association Banking ($7.7) 27% Commercial Bank: Noninterest-bearing demand ($39.3) 16% 42% C
Slide 27: Funding Mix
27 Funding Mix ($ in millions) Period End Balances Increase (decrease) 1Q24 vs. 1Q24 vs. 1Q24 4Q23 3Q23 2Q23 1Q23 4Q23 1Q23 Total deposits $ 149,609 79.9 % $ 145,854 79.5 % $ 146,233 79.5 % $ 141,164 77.9 % $ 140,050 75.2 % $ 3,755 $ 9,559 Securities sold under customer repurchase agreements 395 0.2
Slide 28: Credit Quality Trends and Allowance
28 Credit Quality Trends and Allowance ($ in millions) Net charge-offs & NCO ratio Adjusted provision for credit losses (1) $176 $177 $249 $157 $195 0.53% 0.53% $103 $152 0.47% 0.27% 0.31% $50 $63 $64 0.27% 0.39% 0.45% 0.47% 0.31% 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24 NCO $ QTD NCO ratio
Slide 29: Allowance for loan and lease losses
29 Allowance for loan and lease losses ($ in millions) 4Q23 to 1Q24 $1,747 $13 $9 $1,737 $(21) $(6) $(5) 4Q23 Economic Portfolio mix Specific reserves Loan volume Credit quality 1Q24 outlook Highlights ALLL Coverage 4.4x 4.2x 1Q24 vs 4Q23 • ALLL decreased $10 million compared to the linked quarter.
Slide 30: Loan Portfolios in Focus
30 Loan Portfolios in Focus ($ in billions, as of March 31, 2024) CRE Portfolio Composition Balance % of total loans Total Loans Multi-Family $ 5.3 3.9 % Medical Office 3.4 2.6 General Office 2.8 2.0 Commercial Bank 1.0 0.7 Other 1.8 1.3 Industrial / Warehouse 3.1 2.3 Retail 2.0 1.5 Hotel/Motel 0.8
Slide 31: General Office CRE Portfolio
31 General Office CRE Portfolio (as of March 31, 2024) Geographic Diversification General Office Other CA Top 5 MSAs ($ in millions) Portfolio Metrics 20% 22% Los Angeles $ 376 % of total loans 2.0 % TX Total Phoenix $ 162 4% General WA New York $ 162 % of CRE loans 13.0 % 4% Office NY $2.8 B NC / S
Slide 32: SVB Investor Dependent Portfolio
32 SVB Investor Dependent Portfolio (as of March 31, 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 33: Capital
33 Capital Risk-based capital ratios Capital ratio rollforward Risk-Based Capital Tier 1 15.84% 15.64% 15.75% 15.66% 14.86% 14.00% 13.94% 14.00% Total Tier 1 CET1 Leverage 13.13% 13.83% December 31, 2023 15.75% 13.94% 13.36% 9.83% Net income 0.47% 0.47% 0.47% 0.33% Change in risk-weighted/average as
Slide 34: Financial Outlook
Financial Outlook Section III
Slide 35: Key Earnings Estimate Assumptions
35 Key Earnings Estimate Assumptions Metric 1Q24 2Q24 - Projected FY24 - Projected Loans and leases - EOP $135.4 billion $134 billion - $136 billion $139 billion - $143 billion Deposits - EOP $149.6 billion $148 billion - $151 billion $152 billion - $156 billion Three interest rate cuts in 2024;, Fe
Slide 36: Appendix
A First Citizens BancShares’ Appendix Section IV
Slide 37: BancShares Balance Sheets (unaudited)
37 BancShares Balance Sheets (unaudited) ($ in millions) Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 ASSETS Cash and due from banks $ 698 $ 908 $ 791 $ 917 $ 1,598 Interest-earning deposits at banks 30,792 33,609 36,704 37,846 38,522 Securities purchased under agreements to rese
Slide 38: BancShares Income Statements (unaudited)
38 BancShares Income Statements (unaudited) ($ in millions) 1Q24 4Q23 3Q23 2Q23 1Q23 INTEREST INCOME Interest and fees on loans $ 2,354 $ 2,391 $ 2,426 $ 2,353 $ 1,017 Interest on investment securities 282 241 180 120 107 Interest on deposits at banks 448 485 504 480 87 Total interest income 3,084 3
Slide 39: Noninterest income
39 Noninterest income ($ in millions) 1Q24 Change vs 4Q23 1Q24 4Q23 3Q23 2Q23 1Q23 $ % Rental income on operating lease equipment $ 255 $ 252 $ 248 $ 238 $ 233 $ 3 0.9 % Fee income and other service charges 75 80 71 70 47 (5) (5.0) Client investment fees 50 51 52 52 2 (1) (1.9) Wealth management ser
Slide 40: Noninterest expense
40 Noninterest expense ($ in millions) 1Q24 Change vs 4Q23 $ % 1Q24 4Q23 3Q23 2Q23 1Q23 Depreciation on operating lease equipment $ 96 $ 96 $ 95 $ 91 $ 89 $ — 0.6 % Maintenance and other operating lease expenses 45 59 51 56 56 (14) (24.7) Salaries and benefits 744 714 727 775 420 30 4.1 Net occupanc
Slide 41: Estimated Liquidity Available for Uninsured Deposits
41 Estimated Liquidity Available for Uninsured Deposits ($ in millions) March 31, 2024 December 31, 2023 March 31, 2023 Liquid assets: Available cash $ 30,027 $ 32,693 $ 37,670 High quality liquid securities 29,304 24,591 13,745 Total liquid assets (a) $ 59,331 $ 57,284 $ 51,415 Contingent liquidity
Slide 42: Debt Securities Overview
42 Debt Securities Overview ($ in millions, period end balances) (1) 1Q24 (1) Carrying value (2) % of Portfolio Yield (3) Duration in years AFS Portfolio U.S. Treasury $ 11,836 34 % 4.37 % 1.0 Government agency 107 — 5.28 0.3 Commercial mortgage-backed securities 2,361 7 4.11 2.2 Residential mortgag
Slide 43: Average Balances and Yields
43 Average Balances and Yields ($ in millions) Change vs. 1Q24 4Q23 1Q23 4Q23 1Q23 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 44: Commercial Bank Segment
44 Commercial Bank Segment ($ in millions) Increase (decrease) 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Income Statement 1Q24 4Q23 1Q23 $ % $ % Net interest income $ 270 $ 271 $ 238 $ (1) —% $ 32 13 % Noninterest income 136 139 143 (3) (2) (7) (5) Net revenue 406 410 381 (4) (1) 25 7 Noninterest expense 228 208
Slide 45: General Bank Segment
45 General Bank Segment ($ in millions) Increase (decrease) 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Income Statement 1Q24 4Q23 1Q23 $ % $ % Net interest income $ 691 $ 692 $ 549 $ (1) —% $ 142 26 % Noninterest income 145 137 118 8 6 27 23 Net revenue 836 829 667 7 1 169 25 Noninterest expense 520 490 398 30 6 1
Slide 46: SVB Commercial Segment
46 SVB Commercial Segment ($ in millions) Increase (decrease) (1) 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Income Statement 1Q24 4Q23 (1) 1Q23 $ % $ % Net interest income $ 546 $ 519 $ 37 $ 27 5% $ 509 nm Noninterest income 137 135 9 2 2 128 nm Net revenue 683 654 46 29 4 637 nm Noninterest expense 384 384 23 —
Slide 47: Rail Segment
47 Rail Segment ($ in millions) Increase (decrease) 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Income Statement 1Q24 4Q23 1Q23 $ % $ % Rental income on operating leases $ 198 $ 195 $ 176 $ 3 2% $ 22 13 % Less: depreciation on operating lease equipment 50 49 46 1 1 4 7 Less: maintenance and other operating lease ex
Slide 48: Corporate
48 Corporate ($ in millions) Increase (decrease) 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Income Statement 1Q24 4Q23 1Q23 $ % $ % Net interest income $ 353 $ 471 $ 54 $ (118) (25)% $ 299 549 % Noninterest income 7 (65) 9,812 72 (110) (9,805) (100) Net revenue 360 406 9,866 (46) (11) (9,506) (96) Noninterest expe
Slide 49: Purchase accounting marks
49 Purchase accounting marks ($ in millions) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Loans and leases (including off balance sheet exposure) (1) Beginning balance - unamortized fair value mark $ (2,173) $ (2,378) $ (2,731) $ (2,944) $ (137) Additions - Acquis
Slide 50: Non-GAAP Reconciliations
Non-GAAP Reconciliations Section V
Slide 51: Notable Items
51 Notable Items (1) ($ in millions, except per share data) 1Q24 4Q23 1Q23 (2) Rental income on operating lease equipment $ (141) $ (155) $ (145) Realized loss on sale of investment securities available for sale, net — — 14 Fair value adjustment on marketable equity securities, net 4 (9) 9 Gain on s
Slide 52: Non-GAAP Reconciliations
52 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 1Q24 4Q23 1Q23 Net income and EPS Net income (GAAP) a $ 731 514 9,518 Preferred stock dividends 15 15 14 Net income available to common stockholders (GAAP) b 716 499 9,504 Total notable items, after
Slide 53: Non-GAAP Reconciliations
53 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 1Q24 4Q23 1Q23 PPNR Net income (GAAP) a $ 731 514 9,518 Plus: provision for credit losses 64 249 783 Plus: income tax expense 273 199 (47) PPNR (non-GAAP) l $ 1,068 962 10,254 Impact of notable items (1) 73 269 (9,772) Adjusted PPN
Slide 54: Non-GAAP Reconciliations
54 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 1Q24 4Q23 1Q23 ROE and ROTCE Annualized net income available to common stockholders s = b annualized $ 2,880 1,980 38,543 Annualized adjusted net income available to common stockholders t = e annualized $ 3,094 2,687 1,185 Average
Slide 55: Non-GAAP Reconciliations
55 Non-GAAP Reconciliations ($ in millions, except share and per share data) Non-GAAP Reconciliations 1Q24 4Q23 1Q23 Book value and tangible book value per common share Common shares outstanding at period end bb 14,529,735 14,520,118 14,519,993 Book value per share x/bb $ 1,443.03 1,403.12 1,262.76
Slide 56: Non-GAAP Reconciliations
56 Non-GAAP Reconciliations ($ in millions) Non-GAAP Reconciliations 1Q24 4Q23 1Q23 PPNR: Commercial Bank Segment Segment net income (GAAP) $ 122 24 88 Plus: provision for credit losses 14 164 53 Plus: income tax expense 42 14 30 PPNR (non-GAAP) $ 178 202 171 PPNR: General Bank Segment Segment net i
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