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FIRST CITIZENS BANCSHARES INC /DE/ (FCNCA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid profitability amid rate-cut headwinds: diluted EPS of $49.21 and adjusted diluted EPS of $45.10; headline NIM compressed to 3.32% (ex-PAA 3.16%) as asset yields fell faster than deposit costs .
  • Broad-based balance sheet growth: Loans +$1.5B QoQ to $140.2B and deposits +$3.7B QoQ to $155.2B; SVB Commercial contributed loan and deposit gains alongside stronger off-balance sheet client funds .
  • Credit remained contained: net charge-off ratio rose modestly to 0.46% (mostly investor-dependent and office exposures) while nonaccruals fell to 0.84% of loans; ALLL steady at 1.20% .
  • Management reiterated 2025 priorities: optimize balance sheet, invest in risk/technology to reach Category 3 readiness, and continue share repurchases (6.44% of Class A repurchased since inception; $1.8B through 1/21/25) .
  • Catalysts: continued buyback execution, SVB client funds momentum, and rail leasing repricing strength; risks: additional rate cuts pressuring NIM/NII and persistent stress in investor-dependent/office portfolios .

What Went Well and What Went Wrong

What Went Well

  • SVB momentum: “SVB had a great quarter as VC investment activity saw modest improvements,” with loans up, deposits up, and total client funds increasing $5.3B QoQ on both period-end and average bases .
  • Rail leasing performance: adjusted net rental income rose (+$11M QoQ) amid strong utilization (97.6%) and favorable repricing (renewals +28% vs expiring rates) .
  • Deposit growth and funding remix: deposits +$3.7B QoQ with lower average cost (2.46% vs 2.64% in Q3) and stable funding mix (≈81% deposits); management actively shifted a high-yielding SVB deposit product off-balance sheet in Q1’25 to optimize liquidity and deposit interest expense .

What Went Wrong

  • Margin pressure: headline NIM fell 21 bps QoQ to 3.32% (ex-PAA down 17 bps to 3.16%) on Fed rate cuts’ negative impact to earning asset yields and lower accretion income .
  • Higher operating costs: adjusted noninterest expense rose 3.1% QoQ, driven by personnel, equipment (technology projects), and other noninterest expense (state non-income taxes and hurricane-related donations) .
  • Credit normalization in selected portfolios: net charge-offs increased to 0.46% (0.42% in Q3) driven by investor-dependent exposures; provision for credit losses rose to $155M (from $117M) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Interest Income ($MM)$1,821 $1,796 $1,709
Noninterest Income ($MM)$639 $650 $699
Net Revenue ($MM)$2,460 (NII+Noninterest) $2,446 $2,408
Adjusted Noninterest Income ($MM)$479 $474 $516
Adjusted Noninterest Expense ($MM)$1,168 $1,229 $1,268
Provision for Credit Losses ($MM)$95 $117 $155
Net Income ($MM)$707 $639 $700
Diluted EPS ($)$34.33 $43.42 $49.21
Adjusted Diluted EPS ($)$50.87 $45.87 $45.10
Headline NIM (%)3.64 3.53 3.32
NIM ex-PAA (%)3.33 3.33 3.16
Net Charge-off Ratio (%)0.38 0.42 0.46
Adjusted Efficiency Ratio (%)n/a54.15 56.98

Segment and Balance KPIs

KPIQ2 2024Q3 2024Q4 2024
Loans & Leases EOP ($B)$139.34 $138.70 $140.22
Deposits EOP ($B)$151.08 $151.57 $155.23
Noninterest-bearing Deposits (% of total)26.5% 26.0% 24.89%
Cost of Deposits (%)2.61 2.64 2.46
CET1 Ratio (%)13.33 13.24 12.99
Allowance for Loan & Lease Losses (% of loans)1.22 1.21 1.20
Nonaccrual Loans (% of loans)0.82 0.90 0.84

Q4 Segment Loan Composition (EOP)

Segment/ClassBalance ($B)
General Bank (total)$66.77
Commercial Bank (total)$33.26
SVB Commercial (total)$40.19
Commercial Mortgage$38.07
Commercial & Industrial$33.68
Global Fund Banking$27.90
Innovation Lending$12.30
1–4 Family Residential$25.69

Dividend Actions

  • Declared common dividend of $1.95/share payable March 17, 2025 (record Feb 28, 2025), alongside preferred dividends (Series A/B/C) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loans & Leases (EOP)Q4 2024$138–$140B (full-year ending range) Actual $140.2B Achieved upper end
Deposits (EOP)Q4 2024$150–$153B (full-year ending range) Actual $155.2B Above guide
Headline NII ($B)FY 2024$7.1–$7.2 (revised slightly lower) Actual $7.143 In range
Headline NII ($B)FY 2025n/a$6.6–$7.0 New guide
Loans (EOP)Q1 2025n/a$140–$142B New guide
Deposits (EOP)Q1 2025n/a$154–$157B New guide
Net Charge-offs (annualized)Q1 2025n/a40–50 bps (elevated on a couple larger deals) New guide
Adjusted Noninterest Income ($MM)Q1 2025n/a$475–$500 New guide
Adjusted Noninterest Expense ($MM)Q1 2025n/a$1,270–$1,300 New guide
Effective Tax Rate (%)FY 202527–28 (prior years) 25–26 (lower apportionment) Lowered

Notes: Management emphasized rate path scenarios for NII and NIM, with baseline assuming two cuts in H2’25 and sensitivity ranges spanning 0–4 cuts in 2025 .

Earnings Call Themes & Trends

TopicQ2 2024 (Prev Mentions)Q3 2024 (Prev Mentions)Q4 2024 (Current Period)Trend
Rate sensitivity/NIMBegan mitigating asset sensitivity; moved ~$5B to short-duration securities; ex-PAA NIM +1 bp QoQ Accretion decline; guided ranges across multi-cut scenarios; trough NII/NIM expected H2’25 Headline NIM −21 bps QoQ; ex-PAA −17 bps; 2025 NII guided $6.6–$7.0B Continued pressure from rate cuts
SVB franchiseLoans/deposits up; first QoQ client funds increase since 2021 Period-end loans down (GFB payoffs); average balances up; deposits flat to modestly up Loans +$342MM; deposits +$692MM; TCF +$5.3B; cautious 1H’25; off-balance product shift Gradual improvement; optimizing balance sheet
Rail leasingMaintenance normalized; repricing favorable Added railcars; solid repricing/utilization Utilization 97.6%; renewals +28%; adj rental income +$11MM QoQ Strong & consistent tailwind
Regulatory readinessBuilding LFI/Category 3 capabilities and risk framework Elevated spend in personnel/pro fees for risk builds Category 3 readiness in current run-rate; 2025 spend embedded Investment phase continues
Share repurchasesAuthorized $3.5B plan; target CET1 ex-SLA ~10.5% by end-2025 Executed ~$700MM in Q3; plan front-loaded Repurchased $963MM in Q4; total ~$1.8B; may institute new plan in H2’25 Ongoing capital optimization
CreditStabilizing; NCOs 0.38% NCOs 0.42%; stress in office/investor-dependent NCOs 0.46%; elevated in investor-dependent; office losses remain elevated in 2025 Elevated but contained

Management Commentary

  • “Adjusted earnings per share of $45.10 coming in above our expectations on higher core PPNR than anticipated…each [segment] achieving loan and deposit growth during the quarter.” — Frank Holding .
  • “Our 2025 strategic priorities…simplify our operating environment and streamline our technology platforms…optimize our liquidity and capital positions…continue our share repurchase plan…invest in capabilities as we approach Category 3 regulatory status.” — Frank Holding .
  • “Headline NIM was 3.32% and NIM ex accretion was 3.16%.…Adjusted noninterest income increased 9% sequentially, beating our top line guidance.” — Craig Nix .
  • “Total client funds…increasing by $5.3 billion and $3.9 billion, respectively.…Tech and Healthcare team was the largest contributor…higher VC investment and better market valuations acted as a tailwind.” — Craig Nix .
  • “As of close of business on January 22, we repurchased 6.44% of Class A common shares…$1.8 billion…We intend to manage CET1 ex loss share towards the 10.5% to 11% range by the end of 2025.” — Craig Nix .

Q&A Highlights

  • NII/NIM sensitivity: Baseline assumes two rate cuts in H2’25; headline NII guided to be roughly flat in Q1’25 QoQ; ranges consider 0–4 cuts for 2025 .
  • SVB client funds: Q4 total client funds growth aided by large deals but sub-$1B investment activity was flat; lower cash burn supported balances; cautious outlook until mid/late-2025 .
  • M&A appetite: Opportunistic but no material activity projected for 2025 .
  • Category 3 readiness expenses: Already reflected in 2025 run-rate; investments continue in risk/technology .
  • Loss share and buybacks: SLA capital benefit expected to shrink to ~10 bps; current plan completes over next 2–3 quarters, potential new repurchase plan in H2’25 .
  • Deposit betas: Terminal down-cycle betas expected to mirror up-cycle over time; cumulative deposit beta dynamics discussed .

Estimates Context

  • S&P Global consensus estimates were unavailable at time of analysis due to data access limitations; as a result, explicit beat/miss versus Street consensus cannot be quantified here. Results should be evaluated against management’s guidance and prior-quarter trajectory.
  • Notable internal “beat”: adjusted noninterest income rose 9% QoQ, exceeding top-line expectations, driven by rail rental income, higher international fees, and favorable derivative/nonmarketable investment valuation changes .

Key Takeaways for Investors

  • Deposit and client funds traction offsets NIM headwinds: QoQ deposit growth and SVB client funds momentum are constructive for liquidity and funding costs as rates decline .
  • Margin compression likely persists near term; hedging and securities purchases help mitigate asset sensitivity but rate paths remain the primary driver of NII/NIM in 2025 .
  • Rail leasing provides durable earnings ballast via repricing/utilization, supporting noninterest income and partially diversifying away from rate-driven NII variability .
  • Credit risk is concentrated and manageable: investor-dependent and office exposures continue to normalize; elevated but contained losses are embedded in guidance, with allowance coverage steady .
  • Capital deployment remains shareholder-friendly: with buybacks already at ~$1.8B and CET1 ex-SLA targeted at ~10.5–11% by end-2025, expect continued capital optimization subject to stress tests and growth .
  • 2025 outlook centers on operational efficiency and Category 3 readiness: sustained investments in tech/risk elevate near-term expenses but position the bank for scale and regulatory compliance .
  • Watch catalysts: Off-balance sheet product remix at SVB (reducing deposit interest expense), potential Fed cuts trajectory, VC/IPO market thaw supporting SVB growth in H2’25 .

Citations: Q4 press release ; Q4 8-K exhibits (investor presentation and financial supplement) –; Q4 call transcript –; Q3 press release/call – –; Q2 press release/call – –; Dividend press release .