Why did earnings per share look strong when net interest margin declined?

Earnings were supported by a lower provision for credit losses ($54 million versus $191 million in Q3), including an $86 million reserve release, and by higher adjusted noninterest income of $529 million. Net interest income and margin declined modestly, so the earnings improvement came mainly from credit costs and fee income rather than core lending spread.

How much of the reported results is affected by non-GAAP adjustments?

Notable items, including acquisition-related expenses, intangible amortization, operating lease depreciation and maintenance costs, and fair value marks, were a net drag on reported figures. Adjusted net income was $648 million versus GAAP net income of $580 million, a $68 million after-tax difference. Investors should review both GAAP and adjusted measures, since the adjustments are recurring in nature for some items.

What is the outlook for deposits and funding?

Management projects period-end deposits of $164–$167 billion in 1Q26 and $181–$186 billion for full-year 2026, a significant increase that partly reflects the planned BMO branch acquisition. Deposit costs have fallen (cost of total deposits 2.09% versus 2.25%), but noninterest-bearing deposits continue to decline, which could pressure funding costs if rates stay lower.

Is the capital position still strong after share buybacks and the BMO deal?

Capital ratios remain well above regulatory requirements, with total risk-based capital of 13.71% and a CET1 ratio of 11.15%, though the CET1 ratio fell 50 basis points in the quarter. The company still has $2.8 billion remaining under its 2025 repurchase plan, and buybacks will compete with capital needs for the BMO acquisition, which management expects to close in the second half of 2026.

FCNCA 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed January 23, 2026. Cited figures are marked; the original filing is the authoritative source.

First Citizens BancShares (FCNCA) reported fourth-quarter 2025 GAAP net income of $580 million^a ($45.81 per common share), up from $568 million in the third quarter, while adjusted net income (excluding notable items) rose to $648 million, or $51.27 per share, versus $44.62 in the linked quarter.

Results were supported by a $59 million^b provision for loan losses that benefited from an $86 million reserve release, lower net charge-offs of 0.39% of average loans (down from 0.65%), and strong fee income. Adjusted ROE was 11.93% and adjusted ROA 1.10%. Offsetting these positives, net interest income fell $12 million to $1.72 billion and net interest margin compressed 6 basis points to 3.20% as yields on assets declined faster than funding costs, and reported noninterest expense rose 5.5% on higher personnel, technology, and marketing costs.

Balance sheet activity was mixed. Loans grew 2.2% to $147.9 billion^c, led by Global Fund Banking within the Commercial Bank segment. Deposits declined 1.0% to $161.6 billion, driven by seasonal outflows and migration of Global Fund Banking balances into off-balance-sheet client funds, which rose $2.6 billion.

Management used investment securities to repay $2.5 billion^d of the FDIC Purchase Money Note, reducing borrowings by $2.7 billion. Capital remained strong, with a CET1 ratio of 11.15% (preliminary), though it declined from 11.65% after $900 million of share repurchases in the quarter and a $500 million preferred stock issuance added to Tier 1 capital. The company also reaffirmed its pending acquisition of 138 branches from BMO Bank, with about $5.7 billion of deposits and $1.1 billion of loans, expected to close in the second half of 2026.

For 2026, management projects net interest income of $6.5 billion to $6.9 billion, adjusted noninterest income of $2.1 billion to $2.2 billion, adjusted noninterest expense of $5.37 billion to $5.46 billion, and a net charge-off ratio of 35 to 45 basis points. Investors will likely focus on whether NIM stabilizes as rate cuts progress, the durability of credit quality following the reserve release, and how the BMO acquisition and expense growth affect returns.

02—Key points

Key Highlights

Q4 2025 GAAP EPS of $45.81 and adjusted EPS of $51.27, up from $44.62 adjusted in Q3 2025; GAAP net income of $580 million.
Adjusted ROE of 11.93% and adjusted ROA of 1.10%, both ahead of the prior quarter.
Net charge-offs fell to 0.39% of average loans from 0.65%, and the provision dropped to $54 million from $191 million, helped by an $86 million reserve release.
Net interest margin declined to 3.20% from 3.26%, and net interest income fell $12 million to $1.72 billion amid lower loan and deposit yields.
Loans rose 2.2% to $147.9 billion on Global Fund Banking growth, while deposits fell 1.0% to $161.6 billion; noninterest-bearing deposits declined to 25.2% of total deposits.
Repaid $2.5 billion of the FDIC Purchase Money Note and repurchased $900 million of Class A stock; CET1 ratio of 11.15% (preliminary) remains well above requirements.
2026 guidance calls for net interest income of $6.5–$6.9 billion and adjusted noninterest expense of $5.37–$5.46 billion; the BMO branch acquisition is expected to close in 2H 2026.

03—Questions

Frequently Asked Questions

Why did earnings per share look strong when net interest margin declined?
Earnings were supported by a lower provision for credit losses ($54 million versus $191 million in Q3), including an $86 million reserve release, and by higher adjusted noninterest income of $529 million. Net interest income and margin declined modestly, so the earnings improvement came mainly from credit costs and fee income rather than core lending spread.
How much of the reported results is affected by non-GAAP adjustments?
Notable items, including acquisition-related expenses, intangible amortization, operating lease depreciation and maintenance costs, and fair value marks, were a net drag on reported figures. Adjusted net income was $648 million versus GAAP net income of $580 million, a $68 million after-tax difference. Investors should review both GAAP and adjusted measures, since the adjustments are recurring in nature for some items.
What is the outlook for deposits and funding?
Management projects period-end deposits of $164–$167 billion in 1Q26 and $181–$186 billion for full-year 2026, a significant increase that partly reflects the planned BMO branch acquisition. Deposit costs have fallen (cost of total deposits 2.09% versus 2.25%), but noninterest-bearing deposits continue to decline, which could pressure funding costs if rates stay lower.
Is the capital position still strong after share buybacks and the BMO deal?
Capital ratios remain well above regulatory requirements, with total risk-based capital of 13.71% and a CET1 ratio of 11.15%, though the CET1 ratio fell 50 basis points in the quarter. The company still has $2.8 billion remaining under its 2025 repurchase plan, and buybacks will compete with capital needs for the BMO acquisition, which management expects to close in the second half of 2026.

04—Continue

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