First Citizens BancShares delivered solid Q2 2024 results with revenue of $3.707 billion and net income of $707 million, translating to a net income margin of 19.1% and earnings per share (GAAP) of $47.54. The quarter featured meaningful loan growth (approximately $4 billion QoQ; ~11.8% annualized) led by the Global Fund Banking/Capital Call lending within the SVB commercial segment, alongside broad-based expansion in the General Bank and Commercial Bank. Deposit dynamics were constructive, with core deposits growing and the company leveraging its nationwide direct bank to grow funding while allowing higher-cost broker deposits and some time deposits to roll off in a measured fashion.
The bank’s profitability was supported by a modest NIM expansion on a headline basis, though normalized (ex accretion) NIM stood at about 3.36% as excess accretion decelerated. Management highlighted a plan to return capital via a $3.5 billion share repurchase program and surfaced a strategic objective to reduce adjusted CET-1 to roughly 10.5% by the end of 2025, providing a clear framework for capital deployment. The combination of robust loan growth, a strengthening deposit base, and ongoing cost-savings from the SVB integration underpin the earnings trajectory, even as the bank acknowledges potential pressure from a lower-for-longer rate environment and CRE/venture exposures.
Key near-term catalysts include accretive loan originations, continued core deposit growth through the direct bank, and the execution of acquisition synergies. The main risks revolve around ongoing rate cuts and their impact on NII, CRE concentration pressures (notably general office), and the evolving funding mix post-SVB, alongside the broader volatility in the innovation economy. Overall, FCNCB presents a constructive earnings and capital story with meaningful upside optionality from capital returns and balance sheet growth, balanced against risk factors that warrant close monitoring.