First Citizens Bancshares, Inc. · NASDAQ:FCNCA

First Citizens Bancshares — Investor Presentation (October 2024)

28 slides from First Citizens Bancshares's investor presentation, Oct 29, 2024

  1. Slide 1: Monthly Market Update

    Brent Ciliano, SVP Chief Investment Officer Monthly Market Update Phillip Neuhart, SVP Director of Market and Recorded on October 29, 2024 Economic Research

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

    What are we going to cover? 1. Economic Update: Interest Rates | Inflation | Labor Market 2. Market Update: Equity Markets | Fixed Income | Potential Headwinds

  3. Slide 3: Economic Update

    Economic Update Interest Rates | Inflation | Labor Market

  4. Slide 4: US and Global Economic Growth Have Been Revised Up Considerably

    US and Global Economic Growth Have Been Revised Up Considerably GDP Growth and Consensus Forecasts Source: Bloomberg. Data as of 10/28/2024. 4

  5. Slide 5: Expectations for US Growth This Year Became Rosier Over the Second Half

    Expectations for US Growth This Year Became Rosier Over the Second Half 3.0% 2024 GDP Growth (Year-Over-Year Percent Change) Median Professional Forecast 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Mar 2022 Jul 2022 Nov 2022 Mar 2023 Jul 2023 Nov 2023 Mar 2024 Jul 2024 Source: Bloomberg. Data as of 10/28/2024. 5

  6. Slide 6: Monetary Policy Appears Increasingly Restrictive as Inflation Falls

    Monetary Policy Appears Increasingly Restrictive as Inflation Falls Trend Inflation vs. Federal Funds Rate 8% Inflation Federal funds rate 7% Fed's 2% inflation target 6% 5% 4% 3% 2% 1% 0% -1% -2% 2000 2004 2008 2012 2016 2020 2024 Source: Bloomberg, First Citizens Wealth. Data through Sept. 2024. 6

  7. Slide 7: Markets Expect The Fed Will Cut Rates by About 2.0% in Total by Dec. 2025

    Markets Expect The Fed Will Cut Rates by About 2.0% in Total by Dec. 2025 6% Federal Funds Rate 5.38% 4.88% 5% Market-implied policy rates -2 4.40% cuts 4.06% 4% -4 3.78% 3.62% 3.52% cuts -5.5 cuts -6.5 -7 -7.5 3% cuts cuts cuts 2% 1% 0% Before Today End-2024 March 2025 June 2025 Sept. 2025 End-2025

  8. Slide 8: Many Consumers Expect Inflation Will Settle at 3% or Higher

    Many Consumers Expect Inflation Will Settle at 3% or Higher Share of Consumers Expecting Prices to Rise by 3% or More (3mma) 80 In next 12 months 75 In next 5 years 70 65 60 55 50 45 40 35 30 2008 2010 2012 2014 2016 2018 2020 2022 2024 Source: University of Michigan, First Citizens Wealth. Data thr

  9. Slide 9: Equity Market Performance After Rate Cuts Depends on Economic Outcome

    Equity Market Performance After Rate Cuts Depends on Economic Outcome Average S&P 500 Return From Date of First Rate Cut, Since 1979 30% Economic recession did not follow rate cut** 25% Economic recession followed rate cut* 20% 15% 10% 5% 0% -5% -10% 0 20 40 60 80 100 120 140 160 180 200 220 240 260

  10. Slide 10: New Payroll Job Growth Is Slowing Roughly to Trend Pace

    New Payroll Job Growth Is Slowing Roughly to Trend Pace Payroll Job Growth 800 Thousands, three-month moving average 700 600 500 400 300 Estimated breakeven 200 rate 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 Bank of

  11. Slide 11: The Unemployment Rate Has Moved Up Despite Decent Job Growth

    The Unemployment Rate Has Moved Up Despite Decent Job Growth US Unemployment Rate Apr. 2020: 11% Percent 14.8% 10% 9% 8% Average since 1960: 5.9% 7% 6% 5% Sept. 2024: 4.1% 4% 3% 1960 1970 1980 1990 2000 2010 2020 Source: Department of Labor, Bloomberg. Data through Sept. 2024. 11

  12. Slide 12: Consumers See Jobs as Harder to Get Despite Low Unemployment

    Consumers See Jobs as Harder to Get Despite Low Unemployment US Unemployment and Job Availability 80% 12% Unemployment Rate Net Share of Consumers Reporting Jobs Are Hard to Get 60% 10% 40% 8% 20% 0% 6% -20% 4% -40% 2% -60% 1990 1994 1998 2002 2006 2010 2014 2018 2022 Source: Conference Board, Depar

  13. Slide 13: Consumer Expenditures Are Holding Up, Led by Services Spending

    Consumer Expenditures Are Holding Up, 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% 6.3% 0% 1.1% -10% -20% 2018 2019 2020 2021 2022 2023 2024 Source: Department of Commerce, Blo

  14. Slide 14: Consumer Delinquencies Are on the Rise

    Consumer Delinquencies Are on the Rise Consumers Reporting Likely to Miss a Debt Payment in Next Three Months 16% 15% 14% 13% 12% 11% 10% 9% 8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Federal Reserve Bank of New York, Bloomberg. Data through Sept. 2024. 14

  15. Slide 15: Consumers Have Not Been This Pessimistic on Housing Since the 1980s

    Consumers Have Not Been This Pessimistic on Housing Since the 1980s Consumer Sentiment Index: Conditions for Buying a House 200 180 160 140 120 100 80 60 40 20 0 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 Source: University of Michigan, Bloomberg. Data through Oct. 2024. 15

  16. Slide 16: Housing Supply Has Increased From Its Abnormal Lows

    Housing Supply Has Increased From Its Abnormal Lows Existing Home Sales 14 Months Supply Available 12 10 8 6 4 2 0 2000 2004 2008 2012 2016 2020 2024 Source: NAR, Bloomberg. Data through Sept. 2024. 16

  17. Slide 17: Market Update

    Market Update Equity Markets | Fixed Income | Potential Headwinds

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

    Global Markets Year-to-Date YTD US Equity Returns As of 10/25/2024 Total Return by Asset Class Value Blend Growth 25% YTD 2024 (10/25/2024) Large 20% 17.6% 24.7% 28.8% 15% Mid 10% 14.3% 14.8% 16.2% 5% Small 0% 7.7% 10.1% 12.6% U.S. Equities Intl. Developed Emerging Market Aggregate Fixed Municipal B

  19. Slide 19: Large-Cap Outperformance Has Faded Since July

    Large-Cap Outperformance Has Faded Since July 160 S&P 500 Performance Total Return Since July 1 Index: Jan. 1, 2023 = 100 +51% 150 Market cap weighted Magnificent Seven 5.0% Equal weighted 140 S&P 500 Market-Cap Weighted 6.8% 130 +26% S&P 500 Equal Weighted 8.9% 120 S&P 500 Midcap 400 6.5% 110 S&P 5

  20. Slide 20: Small Cap Relative Valuation

    Small Cap Relative Valuation Russell 2000 - S&P 500 Prices/Sales Spread 0 Turns -0.2 -0.4 -0.6 -0.8 -1 -1.2 -1.4 -1.6 -1.8 2000 2004 2008 2012 2016 2020 2024 Source: Bloomberg. Data through 10/22/2024. 20

  21. Slide 21: Corporate Earnings

    Corporate Earnings Estimated Next 12-Month S&P 500 Operating Margin ▪ 2024 estimated growth is 9.3% 18% 17.3% 17% ▪ 2025 estimated growth is 15.2% 16% 15% ▪ Average growth since 1950 is 7.6% 14% 13% 2012 2014 2016 2018 2020 2022 2024 Source: FactSet, Bloomberg, Strategas. Data as of 10/25/2024. 21

  22. Slide 22: S&P Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 10/25/24 Bear 4,500 -22.5% Base 6,200 6.7% Bull 6,700 15.4% Source: Bloomberg, FactSet, First Citizens Wealth. 22

  23. Slide 23: US Treasury Curve Remains Inverted but Has Shifted Lower Since April

    US Treasury Curve Remains Inverted but Has Shifted Lower Since April US Treasury Yield Curve 5.6% 5.4% As of Latest date - Oct. 25 5.4% 2024 low - Sept. 16 5.4% 5.2% 5.4% 2024 high - Apr. 25 5.2% 5.0% 4.9% 5.0% 4.9% 4.7% 4.7% 4.8% 4.8%4.7% 4.9% 4.9% 4.6% 4.6% 4.6% 4.5% 4.6% 4.5% 4.7% 4.4% 4.3% 4.2%

  24. Slide 24: Small Businesses Are Paying a Hefty Premium for Credit

    Small Businesses Are Paying a Hefty Premium for Credit Borrowing Rate Above for Short-Term Loans 11% Spread Above 2-year US Treasury Yield 10% High yield corporate Small business borrowing rate 9% 8% 7% 6% 5% 4% 3% 2% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bloomberg, NFIB, First C

  25. Slide 25: The Election Looks Like a Close Call, and Divided Government Is Possible

    The Election Looks Like a Close Call, and Divided Government Is Possible Probability of Winning Presidential Election as Probability of Election Outcomes as Implied by Prediction Markets Implied by Prediction Markets 50% 70% As of Democrat Republican 45% Sept. 1 65% 40% 35% 60% 30% Election Day 55%

  26. Slide 26: S&P Performance Does Not Appear to Depend on Partisan Control

    S&P Performance Does Not Appear to Depend on Partisan Control Partisan Control, Average Calendar Year S&P Performance 15.7% (1872-2023, Excl. 2001-02) 16% 14% 12% 10% 8.4% 7.5% 7.1% 8% 6.8% 6% 4.8% 4% 2% 0.9% 0% President: D President: D President: R President: R President: D President: D President:

  27. Slide 27: 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

  28. Slide 28: Authors

    Authors Important Disclosures This material is for informational purposes only and is not intended to be an offer, specific investment strategy, Brent Ciliano, CFA | SVP, Chief Investment Officer recommendation, or solicitation to purchase or sell any security or insurance product, and should not be

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