10-QPeriod: Q3 FY2024

FIRST CITIZENS BANCSHARES INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2024

Filed November 7, 2024For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. /DE/ (FCNCA) reported a solid financial performance for the nine months ended September 30, 2024, with net income available to common stockholders reaching $2.03 billion. While net income significantly decreased compared to the same period in the prior year ($10.91 billion), this was largely attributed to a substantial gain on acquisition in the prior year related to the SVBB acquisition. The bank demonstrated loan growth across its segments, with total loans and leases reaching $138.70 billion, up 4% year-to-date. Deposits also grew to $151.57 billion, up 4% year-to-date, indicating continued customer confidence. The bank maintained strong capital ratios, well exceeding regulatory requirements, and a healthy liquidity position with $58.36 billion in high-quality liquid assets. However, the bank experienced an increase in noninterest expense in the current quarter and year-to-date, driven by higher salaries, benefits, and professional fees, partly due to investments in technology and regulatory compliance. Net interest income saw a slight decrease quarter-over-quarter but an increase year-over-date, with a slight compression in net interest margin compared to the prior year, influenced by higher deposit costs and lower purchase accounting accretion. The allowance for loan and lease losses remained robust, though the provision for credit losses saw an increase in the current quarter, partly due to an estimated reserve for Hurricane Helene. Investors should monitor the impact of ongoing investments in technology and compliance on future expenses, as well as the evolving interest rate environment on net interest margin.

Financial Highlights

36 data points
Beta

Revenue

$2.45B

Net Income

$639.00M

26.1% Net Margin

EPS (Diluted)

$43.42

Total Assets

$220.57B

Cash & Equivalents

$862.00M

Free Cash Flow

$885.00M

Financial Statements
Beta
Revenue$2.45B
Net Income$639.00M
EPS (Basic)$43.42
EPS (Diluted)$43.42
Shares Outstanding (Basic)14.38M
Shares Outstanding (Diluted)14.38M

Key Highlights

  • 1Net income available to common stockholders for the nine months ended September 30, 2024, was $2.03 billion, a decrease from $10.91 billion in the prior year, primarily due to a large acquisition gain in the prior year.
  • 2Total loans and leases increased by 4% year-to-date to $138.70 billion as of September 30, 2024, reflecting growth across business segments.
  • 3Total deposits grew by 4% year-to-date to $151.57 billion as of September 30, 2024, indicating stable funding sources.
  • 4Net interest margin (NIM) was 3.53% for the quarter, a decrease from 3.64% in the linked quarter and 4.07% in the prior year quarter, impacted by higher deposit costs and lower purchase accounting accretion.
  • 5Provision for credit losses increased by 24% quarter-over-quarter to $117 million, partly due to an estimated $20 million reserve for Hurricane Helene.
  • 6Noninterest expense increased by 5% quarter-over-quarter to $1.46 billion, driven by higher salaries, benefits, and professional fees.
  • 7The company maintained strong capital adequacy ratios, with Common Equity Tier 1 at 13.24% as of September 30, 2024, significantly exceeding regulatory requirements.

Frequently Asked Questions

Net income available to common stockholders decreased significantly to $2.03 billion for the first nine months of 2024 from $10.91 billion in the same period of 2023. This reduction was primarily driven by a large gain on acquisition recorded in the prior year from the SVBB acquisition, which did not recur in the current period. While net interest income increased year-over-year, it was partially offset by higher interest expenses and a lower net interest margin.

The bank experienced loan growth across all segments, with total loans and leases increasing by 4% year-to-date to $138.70 billion. Deposits also saw a 4% year-to-date increase, reaching $151.57 billion. This growth suggests a stable funding base and continued demand for lending, although a slight sequential decrease in SVB Commercial loans was noted due to repayment activity outpacing new originations.

Noninterest expense increased both quarter-over-quarter and year-to-date. Key drivers include higher salaries and benefits, professional fees related to technology projects and regulatory compliance enhancements, and increased FDIC insurance expenses. The bank is investing in its infrastructure, which is contributing to higher operating costs.

The bank maintained a robust allowance for loan and lease losses, although the provision for credit losses increased in the current quarter. This increase was partly due to an estimated $20 million reserve related to the impact of Hurricane Helene. Nonaccrual loans also saw an increase, particularly in commercial and SVB loan portfolios, but the ALLL to loans ratio remained at a manageable 1.21%.