On July 25, 2024, First Citizens BancShares Inc (FCNCA, Financial) released its 8-K filing for the second quarter of 2024, reporting earnings per share (EPS) of $47.54, which exceeded the analyst estimate of $41.80. The company also announced a share repurchase plan for up to $3.5 billion of its Class A common shares.
Company Overview
First Citizens BancShares Inc is the bank holding company of First Citizens Bank & Trust Company. Founded as the Bank of Smithfield in North Carolina, the bank has expanded through de novo branching and acquisitions. Operating in nearly half of the continental United States, it principally takes deposits in the Carolinas. The bank's operations have historically been influenced by the Holding family, which holds significant executive and director positions and controls a large percentage of its outstanding stock. First Citizens Bank provides a wide range of retail and commercial banking services, including traditional lending and deposit-taking, as well as trust and wealth management. The main source of revenue is net interest income.
Financial Performance and Challenges
First Citizens BancShares Inc reported net income of $707 million for Q2 2024, a slight decrease from $731 million in Q1 2024. Net income available to common stockholders was $691 million, or $47.54 per diluted common share, down from $716 million, or $49.26 per diluted common share, in the previous quarter. Adjusted net income was $755 million, compared to $784 million in Q1 2024.
Chairman and CEO Frank B. Holding, Jr. commented, “We are pleased with our second quarter financial results, which reflected broad-based loan and deposit growth, strong profitability metrics and continued stabilization of credit. These results reflected the solid performance from all of our business segments and we were encouraged by the continued progress in our SVB Commercial segment, which achieved both loan and deposit growth.”
Financial Achievements
Net interest income for the quarter totaled $1.82 billion, a $4 million increase over Q1 2024. This was driven by a $46 million increase in interest income, partially offset by a $42 million increase in interest expense. The net interest margin was 3.64%, slightly down from 3.67% in the previous quarter.
Income Statement Highlights
Noninterest income totaled $639 million, an increase of $12 million compared to Q1 2024. Noninterest expense was $1.39 billion, up by $10 million from the previous quarter. The provision for credit losses increased to $95 million from $64 million in Q1 2024, primarily due to a $29 million lower benefit for off-balance sheet credit exposure.
Balance Sheet Summary
Loans and leases grew to $139.34 billion, a 2.9% increase from Q1 2024. Deposits totaled $151.08 billion, a 4.0% annualized increase. The allowance for loan and lease losses was $1.70 billion, or 1.22% of total loans, reflecting a reserve release of $37 million for the quarter.
Capital and Liquidity
First Citizens BancShares Inc maintained strong capital ratios, with an estimated total risk-based capital ratio of 15.45% and a Tier 1 leverage ratio of 10.29%. The liquidity position remained robust, with liquid assets totaling $56.91 billion at the end of Q2 2024.
Analysis
Despite missing analyst estimates, First Citizens BancShares Inc demonstrated solid performance in key areas such as loan and deposit growth. The announcement of a $3.5 billion share repurchase plan indicates confidence in the company's financial health and future prospects. However, the increase in provision for credit losses and the slight decline in net income are areas that warrant close monitoring.
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Explore the complete 8-K earnings release (here) from First Citizens BancShares Inc for further details.
