Q2 2024 Earnings Summary
Reported on Feb 18, 2025 (Before Market Open)
Pre-Earnings Price$1862.27Last close (Jul 24, 2024)
Post-Earnings Price$1900.00Open (Jul 25, 2024)
Price Change
$37.73(+2.03%)
- First Citizens (FCNCA) announced a $3.5 billion share repurchase plan, aiming to manage their adjusted CET1 ratio down to the 10.5% range by the end of 2025, which could enhance shareholder value. They also intend to front-load the buybacks given the current stock valuation and may consider further repurchases if capital accretion continues to outpace organic growth. , ,
- The company is proactively managing its interest rate risk by reducing asset sensitivity through moving cash into short-duration securities and adding interest rate hedges, aiming to mitigate the impact from future Fed rate cuts and maintain stable net interest income. They have reduced asset sensitivity from around 20% to approximately 10%-12%, closer to pre-SVB levels. ,
- Loan-to-deposit ratio improved from 99% to 92%, showing progress towards their mid-80s target range over the next 3.5 years. This improvement could strengthen their balance sheet and funding stability, particularly as they continue to grow deposits in their SVB segment and the General Bank.
- Net Interest Income (NII) could decline under certain rate cut scenarios, which may negatively impact profitability. Specifically, with three rate cuts this year and four next year, NII is projected to be down mid-single digits from the fourth quarter 2024 exit to the fourth quarter 2025 exit. ( )
- Loan-to-deposit ratio increased to 92%, up from 90%, potentially signaling funding risks if deposit growth doesn't keep pace with loan growth. The company acknowledges that SVB deposits can be transitory, adding uncertainty to their funding base. ( )
- Credit losses are expected to remain elevated in certain portfolios, including investor dependent, general office, and equipment finance. The company anticipates third quarter net charge-offs in the 35 to 45 basis point range, cautioning that large exposures could lead to unexpected deterioration. ( )
Research analysts covering FIRST CITIZENS BANCSHARES INC /DE/.