Earnings Announcement: First Citizens Bancshares Reports Robust Q3 Results, Plans Stock Buybacks

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Earnings Announcement: First Citizens Bancshares Reports Robust Q3 Results, Plans Stock Buybacks

First Citizens Bancshares (FCNCA) demonstrated strong financial performance in the third quarter of 2024. CEO Frank Holding and CFO Craig Nix reported an adjusted earnings per share of 45.87₺ and a resilient net interest margin of 3.53%. Despite a slight increase in deposits and a decrease in loans, the bank projects an optimistic outlook for the future, announcing plans to maintain a solid capital ratio and continue share repurchases.

Key Highlights:

  • First Citizens Bancshares announced an adjusted earnings per share of 45.87₺ for the third quarter of 2024.
  • The bank's net interest margin remained resilient at 3.53% despite declining accrual income.
  • Deposits marginally increased by 0.3%, while loans decreased by 646 million₺, primarily due to a reduction in the Global Fund Banking portfolio.
  • Approximately 350,000 Class A common shares worth about 700 million₺ were repurchased during the quarter.
  • CET1 capital ratio was declared at 13.24%, with a target of maintaining it between 10.5% and 11% by the end of 2025.
  • For the fourth quarter of 2024, flat to low single-digit loan growth is projected, with year-end loans expected to range from 138 billion₺ to 140 billion₺ and deposits from 150 billion₺ to 153 billion₺.
  • Net interest income is projected to decrease to between 7.1 billion₺ and 7.2 billion₺ for the entire year due to potential Fed rate cuts.

Company Outlook:

  • Flat to low single-digit loan growth is expected in the fourth quarter of 2024, influenced by business and commercial loans.
  • Deposit growth is projected to range from 150 billion₺ to 153 billion₺, with slight declines expected in the fourth quarter.
  • High credit losses are anticipated throughout 2025, particularly in commercial real estate and investor-dependent portfolios.
  • Adjusted non-interest income and expenses for the whole year are projected to be between 1.89 billion₺ to 1.91 billion₺ and 4.76 billion₺ to 4.79 billion₺, respectively.
  • The effective tax rate is expected to be between 27% and 28% for both the fourth quarter and the entire year.

Concerns:

  • The loan portfolio decreased by 646 million₺, with significant reductions in the Global Fund Banking portfolio.
  • Net interest income is expected to decline due to recent Fed rate cuts.
  • High credit losses are projected throughout 2025.

Positive Aspects:

  • Strong net interest margin of 3.53% despite declines in accrual income.
  • Positive customer acquisition trends with stable deposits reflecting a 54 million₺ increase.
  • Management's optimism regarding the investment climate and significant uninvested capital in the venture space.

Challenges:

  • The net charge-off rate increased to 42 basis points, with most charge-offs concentrated in the general office portfolio.

Q&A Highlights:

  • Management discussed the potential impacts of rate cuts on net interest income and margin.
  • Plans to present a new capital plan in the first quarter of 2025, which may lead to additional share repurchase authorization.
  • The company holds excess liquidity of between 7 billion₺ and 10 billion₺, with flexibility for repositioning.

First Citizens Bancshares remains confident in its strategic initiatives, including cautious growth through operational performance and share repurchases. Management remains optimistic despite economic challenges, focusing on capital allocation and maintaining a strong balance sheet. With significant uninvested capital in the investment space and a stable deposit base, the bank is poised to navigate the current economic environment and capitalize on future market recoveries. Investors are encouraged to seek further information as the bank continues to execute its financial strategy.

InvestingPro Insights:

First Citizens Bancshares (FCNCA) continues to display financial resilience, as evidenced by its recent performance and InvestingPro data. The company's market capitalization is 27.42 billion₺, reflecting its significant presence in the banking sector. With a P/E ratio of 10.42, FCNCA appears to be trading at a relatively attractive valuation compared to industry peers.

InvestingPro data reveals that FCNCA reported an impressive revenue growth of 44.74% over the past twelve months, aligning with its reported strong financial performance. This growth trend supports management's optimistic outlook and strategic initiatives.

One of the InvestingPro Tips highlights that FCNCA has increased dividends for eight consecutive years, demonstrating a commitment to shareholder returns. This is further reinforced by a remarkable 118.67% dividend growth over the past twelve months, although the current dividend yield remains modest at 0.35%.

Another pertinent InvestingPro Tip shows FCNCA has maintained dividend payments for 39 consecutive years, signaling long-term financial stability. This consistency aligns well with the bank's reported strong capital ratio and ongoing share repurchase program.

It's important to note that InvestingPro offers 10 additional tips for FCNCA, providing investors with a comprehensive perspective on the company's financial health and market position.

The InvestingPro Fair Value estimate for FCNCA is 2,503.97₺, indicating potential upside from the previous closing price of 2,082.60₺. This valuation, coupled with the company’s strong performance and strategic outlook, may be intriguing for investors assessing the stock’s future prospects.

Despite the strong recent performance, according to InvestingPro Tips, 7 analysts have revised their earnings estimates downward for the upcoming period. This trend may relate to the expected decline in net interest income due to potential Fed rate cuts, as noted in the company's outlook.

These forecasts from InvestingPro, complementing the detailed financial report, provide investors with additional context when evaluating First Citizens Bancshares' market position and future potential.