First Citizens BancShares (NASDAQ:FCNCA) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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Summary
First Citizens BancShares Inc (Delaware) reported adjusted earnings per share of $44.86 with a ROE of 10.39% and ROA of 0.97%, despite challenges from lower interest rates.
The company saw strong deposit growth, particularly in tech and healthcare sectors, and utilized broker deposits to strengthen its liquidity position.
Strategic initiatives include expanding commercial solutions, optimizing the brand portfolio, and accelerating capabilities in payments, international banking, and digital assets.
The company returned $900 million to shareholders through share repurchases and prepaid $2.5 billion on its FDIC Promissory Note.
Guidance for 2026 remains optimistic with expected modest growth in loans and deposits, amidst a competitive deposit market and macroeconomic uncertainties.
Management emphasized a disciplined capital return strategy, with ongoing share repurchases and a recalibrated CET1 target range of 10 to 10.5%.
Non-interest expenses were lower than expected, with reductions in professional fees and marketing costs, while maintaining investments in technology.
Credit quality remains stable with a slight increase in non-accrual loans, but no systemic pressure is anticipated across the portfolio.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by and welcome to the First Citizens BancShares Inc (Delaware) First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you need to press Star one on your telephone. If you require operator assistance during the program, please press star then zero. As a reminder, today’s conference is being recorded. I would now like to introduce the host of this conference call, Ms. Deanna Hart, head of Investor Relations. You may begin.
Deanna Hart (Head of Investor Relations)
Good morning and thank you. Welcome to First Citizens BancShares Inc (Delaware) first quarter 2026 earnings call. Joining me on the call today are our Chairman and Chief Executive Officer Frank Holding and Chief Financial Officer Craig Nix. They will provide first quarter business and financial updates referencing our earnings call presentation which you can find on our website. Our comments will include forward looking statements which are subject to risks and uncertainties that may cause actual results to differ materially from expectations. We assume no obligation to update such statements. These risks are outlined on page 33 of the presentation. We will also reference non GAAP financial measures. Reconciliations of these measures against the most directly comparable GAAP measures can be found in section 5 of the presentation. Finally, First Citizens BancShares Inc (Delaware) is not responsible for and does not guarantee the accuracy of earnings transcripts provided by third parties. I will now turn it over to Frank.
Frank Holding (Chairman and Chief Executive Officer)
Thank you Deanna. Good morning and welcome everyone. Thank you for joining us. I’ll start by highlighting our overall performance for the quarter before turning it over to Craig Nix to take you through our financial results and outlook for 2026 in more detail starting on page 5. We were pleased with our first quarter results this morning. We reported adjusted earnings per share of $44.86, representing an adjusted ROE and ROA of 10.39% and 0.97% respectively. While lower rates were a headwind, we saw strong deposit growth, credit quality remained strong and expenses came in below our expectations. Deposit growth accelerated this quarter up by 5.7%, sequentially anchored by increased client activity in tech and healthcare and global fund banking. In addition, deposits grew in the General bank segment and the Direct Bank. This growth was also supplemented by the strategic use of broker deposits to further further bolster our liquidity position. We also achieved solid increases in off balance sheet client funds driven by the tech and healthcare and global fund banking businesses. We continue to optimize our capital stack, returning another $900 million to shareholders through share repurchases. Due to our strong liquidity position, we were able to prepay another $2.5 billion FDIC on our FDIC Promissory Note during the quarter Turning to our announcement this morning, we are expanding our commercial solutions and optimizing our brand portfolio to better serve our clients and drive growth in 2026. We are accelerating our strategic roadmap by expanding capabilities in payments, international banking and digital assets. As part of this growth, we will transition to a united brand structure in the fourth quarter featuring innovation banking and fund banking sub brands under the First Citizens umbrella. Now, brand adjustments always generate questions and we want to be perfectly clear that while names are changing, the client experience is not. Our relationship teams remain the cornerstone of our service, providing the same deep specializations that our clients rely on. This brand alignment simply opens the door to a larger platform of solutions and a more connected network of experts for the future. Despite a complex global backdrop, we continue to operate from a position of strength. Our capital liquidity and risk discipline provide a solid foundation that allows us to focus on what matters most, serving our clients and customers and continuing to drive long term shareholder value. We are confident in our strategy, disciplined in our execution, and very optimistic about the path ahead. I’ll conclude with that and pass it over to Craig Nix to take us through the financial results for the quarter and guidance for the remainder year.
Craig Nix (Chief Financial Officer)
Craig thank you Frank and good morning everyone. I will anchor my comments to page 8 of the presentation. Pages 9 through 27 provide details underlying our first quarter results. In the first quarter we delivered adjusted earnings of $44.86 per share on net income of $560 million. The sequential decline of $6.41 per share largely reflects the impact of lower interest rates on our net interest margin. However, we were pleased that lower non interest expense helped offset a portion of the net interest income decline. In line with our previous guidance, net interest income declined by $101 million with NIM compressing 11 basis points to 3.09%. This decline was primarily driven by a lower earning asset yield following the Fed’s rate cut in late 2025 alongside a shorter day count this quarter. However, these headwinds were moderated through strong organic loan growth, lower funding costs and a reduction in average borrowings. Non interest income was down $9 million from the linked quarter, but in line with our previous guidance, the majority of the decline centered in other non interest income which was down $15 million, largely attributable to a decrease in other investment income, a line item subject to fluctuation on a quarterly basis outside of the decline in other non interest income, our core fee categories performed well. We saw solid growth in deposit fees and lending related capital market fees, though these increases were partially tempered by seasonal declines and factoring commissions. Additionally, while the fed funds rate environment pressured client investment fees, we successfully mitigated that impact through a $3.9 billion increase in average off balance sheet client funds. Adjusted non interest expense was $38 million lower, sequentially outperforming our previous guidance. This reduction reflects a $16 million decline in professional fees as we successfully completed several technology and risk management projects at the end of 2025. Marketing costs also declined by $15 million as we pivoted our funding strategy this quarter to leverage lower cost broker deposits rather than higher cost deposits in the direct bank. While the direct bank remains a critical funding source and we expect marketing expense to normalize in the future, we will remain agile balancing deposit growth with cost efficiency to protect our margins. Finally, we saw a $16 million seasonal normalization and other expenses. These reductions were partially offset by seasonally higher benefits expense due to resets as well as continued deliberate investments in our technology platforms which are essential to scaling our operations and enhancing our client experience. Turning to the balance sheet period, end loans grew $762 million or 0.5% sequentially driven by global fund banking which was up $1 billion on record production of over $6 billion, surpassing the record set just last quarter. With average line utilization also trending higher, we see evidence of higher client demand and and a robust pipeline moving forward. In middle market banking we added $327 million in growth as stable production was bolstered by lower prepayments. While we are pleased with this quarter’s growth, we maintain a guarded outlook given the broader macro environment. General bank loans decreased $591 million primarily reflecting a strategic decision to move $365 million in SBA loans to held for sale. Excluding this balance sheet optimization, the decline was driven by typical first quarter seasonality. On an average loan basis, loans increased $2.2 billion sequentially, led by our global fund banking business. Turning to the right hand side of the balance sheet period, end deposits grew by $9.3 billion or 5.7% sequentially. This growth reflects strong organic growth in our core business segments as well as execution of our balance sheet optimization strategies. Within SVB Commercial, we saw significant momentum and momentum in global fund banking and Tech and Healthcare where deposits grew sequentially by $5.6 billion driven by visible pickup in VC investment and exit activity growth here underscores the strength of our franchise within the innovation economy. While these inflows were encouraging, we remain disciplined in our outlook as a portion of this growth stemmed from large short term deposits. As we’ve noted before, these inflows can be lumpy and we have already observed some anticipated outflows in April. We are managing these balances with a strict focus on liquidity and funding cost optimization in mind. In the general bank deposits grew by $1.1 billion. This was largely driven by successful seasonal campaign within our CAB business and solid growth in our branch network, demonstrating our ability to consistently execute on core deposit gathering initiatives. To support the transition away from the purchase money note and limit impacts to net interest income, we also tactically utilized $1.8 billion in broker deposits. This was a flexible lever for us this quarter as the all in cost was lower than leading rates in the direct bank. As we continue to monitor pricing and tenor to ensure a resilient and cost effective funding mix. On an average basis, deposits also perform well, growing by $2.7 billion or 1.7% sequentially driven primarily by tech and healthcare banking and cab. Finally, off balance sheet momentum was equally strong. SVB commercial client funds rose $8.1 billion to nearly $78 billion while average off balance sheet funds grew by $3.9 billion. Turning to credit provision was $103 million for the quarter, up 46 million from the link quarter. The increase was driven almost entirely by a larger reserve release last quarter which rather than a negative shift in credit quality. In fact the net charge off ratio came in 9 basis points lower than the linked quarter at 30 basis points with net charge offs totaling $111 million. This was favorable to our previous guidance though I’d characterize the beat as a matter of timing on specific resolution efforts, particularly within our general office book rather than a significant change in our overall outlook. While non accrual loans moved slightly higher to 96 basis points, the …
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