Why did reported earnings decline year over year even though the company remained profitable and grew noninterest income?

Net income fell 18.6% to $575 million from $707 million in 2Q24. Net interest income dropped $126 million (6.9%), driven by lower interest income on overnight investments (down $122 million), a $74 million decrease in purchase accounting accretion, and lower loan yields. Those declines outweighed a $39 million increase in noninterest income and lower provisions, and noninterest expense rose $114 million (8.3%) on higher personnel costs and Direct Bank marketing.

How significant is the rise in nonaccrual loans?

Nonaccrual loans rose to $1.32 billion, or 0.93% of total loans, from $1.21 billion (0.85%) in the prior quarter. Management attributed the increase mainly to one individually evaluated credit in the SVB Commercial segment. The allowance for loan and lease losses was $1.67 billion (1.18% of loans), down slightly from 1.19%, and covered nonaccrual loans about 1.3 times. Investors should monitor whether this single-credit increase proves isolated.

What are the terms of the new $4.0 billion buyback, and will it affect near-term capital?

The board authorized repurchases of up to $4.0 billion of Class A common stock through 2026. Repurchases can begin only after the current $3.5 billion program (with $611 million remaining at June 30, 2025) is completed. The program is discretionary, may be suspended at any time, and can be executed on the open market or through a Rule 10b5-1 plan. Because the company has substantial capital (CET1 of 12.12%, well above requirements), the program is unlikely to create near-term capital pressure, but actual pace will depend on price, market conditions, and regulatory requirements.

What drove the quarter-over-quarter improvement in credit costs?

Net charge-offs fell $25 million to $119 million (0.33% of average loans) from $144 million, mainly in the SVB Commercial and Commercial Bank segments. The provision for loan and lease losses decreased $37 million to $111 million, aided by an $8 million reserve release compared with a $4 million build in 1Q25, as well as credit improvement and a modest shift in economic scenario weighting.

What is the company's outlook for the rest of 2025?

Management projects full-year 2025 net interest income of $6.68 billion to $6.88 billion, adjusted noninterest income of $1.97 billion to $2.05 billion, and adjusted noninterest expense of $5.10 billion to $5.20 billion. It also expects a net charge-off ratio of 35 to 45 basis points for the full year, with loan balances of $143 billion to $146 billion and deposits of $161 billion to $166 billion by year-end. The guidance assumes zero to two 25 basis point Fed rate cuts in the second half of 2025.

FCNCA 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 25, 2025. Cited figures are marked; the original filing is the authoritative source.

First Citizens BancShares (FCNCA) reported second-quarter 2025 GAAP net income of $575 million^a, or $42.36 per common share, up from $483 million in the first quarter.

Excluding notable items, adjusted EPS was $44.78^b, versus $37.79 in the linked quarter. Results were supported by higher noninterest income, lower credit costs, and stable margins, though net interest income rose only modestly and loans were essentially flat quarter over quarter. Compared with the year-ago quarter, however, reported net income fell 18.6% and net interest income declined 6.9%, as purchase accounting accretion shrank and interest income on overnight investments dropped.

Credit quality improved in the quarter. Net charge-offs were $119 million^c, or 0.33% of average loans, down from 0.41% in the first quarter, and the provision for credit losses fell to $115 million from $154 million. Nonaccrual loans rose to $1.32 billion (0.93% of loans), driven mainly by one individually evaluated credit in the SVB Commercial segment, so investors should watch that line.

Capital remained strong, with a CET1 ratio of 12.12% (preliminary), though it declined from 12.81% as the company repurchased $613 million^d of stock during the quarter. On capital return, the board authorized a new $4.0 billion share repurchase program running through 2026. It will begin only after the current $3.5 billion program announced in July 2024 is completed, and $611 million of capacity remained under that program at quarter-end.

The authorization is discretionary, can be suspended at any time, and is not obligated to any minimum repurchase amount. Management's full-year 2025 guidance projects net interest income of $6.68 billion to $6.88 billion and adjusted noninterest expense of $5.10 billion to $5.20 billion.

02—Key points

Key Highlights

GAAP EPS of $42.36 and adjusted EPS of $44.78 for 2Q25, up from $34.47 and $37.79 in 1Q25, but down from $47.54 and $50.87 in 2Q24.
Net interest margin held at 3.26% quarter over quarter; NIM excluding purchase accounting accretion rose 2 bps to 3.14%, helped by lower deposit costs (cost of deposits fell to 2.27% from 2.32%).
Noninterest income rose $43 million to $678 million (adjusted $513 million, up $34 million), driven by fair value changes in customer derivatives and other non-marketable investments.
Net charge-off ratio improved to 0.33% from 0.41%, and the provision for credit losses dropped to $115 million from $154 million; however, nonaccrual loans increased to $1.32 billion (0.93% of loans) from $1.21 billion.
Loans were essentially flat at $141.27 billion (down $89 million), as a $289 million decline in SVB Commercial offset growth in the General Bank and Commercial Bank; deposits grew $610 million to $159.94 billion, led by the Direct Bank.
Capital remained strong with a CET1 ratio of 12.12% (down from 12.81%) after $613 million of buybacks; liquid assets were $63.62 billion.
New $4.0 billion share repurchase authorization through 2026, to begin after completion of the existing $3.5 billion program announced in July 2024.

03—Questions

Frequently Asked Questions

Why did reported earnings decline year over year even though the company remained profitable and grew noninterest income?
Net income fell 18.6% to $575 million from $707 million in 2Q24. Net interest income dropped $126 million (6.9%), driven by lower interest income on overnight investments (down $122 million), a $74 million decrease in purchase accounting accretion, and lower loan yields. Those declines outweighed a $39 million increase in noninterest income and lower provisions, and noninterest expense rose $114 million (8.3%) on higher personnel costs and Direct Bank marketing.
How significant is the rise in nonaccrual loans?
Nonaccrual loans rose to $1.32 billion, or 0.93% of total loans, from $1.21 billion (0.85%) in the prior quarter. Management attributed the increase mainly to one individually evaluated credit in the SVB Commercial segment. The allowance for loan and lease losses was $1.67 billion (1.18% of loans), down slightly from 1.19%, and covered nonaccrual loans about 1.3 times. Investors should monitor whether this single-credit increase proves isolated.
What are the terms of the new $4.0 billion buyback, and will it affect near-term capital?
The board authorized repurchases of up to $4.0 billion of Class A common stock through 2026. Repurchases can begin only after the current $3.5 billion program (with $611 million remaining at June 30, 2025) is completed. The program is discretionary, may be suspended at any time, and can be executed on the open market or through a Rule 10b5-1 plan. Because the company has substantial capital (CET1 of 12.12%, well above requirements), the program is unlikely to create near-term capital pressure, but actual pace will depend on price, market conditions, and regulatory requirements.
What drove the quarter-over-quarter improvement in credit costs?
Net charge-offs fell $25 million to $119 million (0.33% of average loans) from $144 million, mainly in the SVB Commercial and Commercial Bank segments. The provision for loan and lease losses decreased $37 million to $111 million, aided by an $8 million reserve release compared with a $4 million build in 1Q25, as well as credit improvement and a modest shift in economic scenario weighting.
What is the company's outlook for the rest of 2025?
Management projects full-year 2025 net interest income of $6.68 billion to $6.88 billion, adjusted noninterest income of $1.97 billion to $2.05 billion, and adjusted noninterest expense of $5.10 billion to $5.20 billion. It also expects a net charge-off ratio of 35 to 45 basis points for the full year, with loan balances of $143 billion to $146 billion and deposits of $161 billion to $166 billion by year-end. The guidance assumes zero to two 25 basis point Fed rate cuts in the second half of 2025.

04—Continue

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