First Citizens BancShares(US:FCNCA)2022-10-27 18:44Financial Data and Key Metrics Changes - GAAP net income for Q3 2022 was $315 million or $19.25 per common share, with an annualized ROE of 12.49% and an ROA of 1.16% [20] - Adjusted net income was $338 million or $20.77 per common share, yielding an annualized ROE of 13.47% and an ROA of 1.24% [20] - Pre-provision net revenue increased by 21.3% over the second quarter, indicating significant margin expansion and solid fee income growth [11][24] - Net interest income totaled $795 million, up 13.6% over the second quarter [28] Business Line Data and Key Metrics Changes - Loans grew at an annualized rate of 12% during the quarter, with broad growth across commercial and general bank segments [15][44] - General Bank loans grew at an annualized rate of 12.8%, primarily in business and commercial loans [45] - Non-interest income increased by 20% compared to the linked quarter, driven by higher capital markets income [35] Market Data and Key Metrics Changes - Total deposits declined by $1.8 billion or 7.9% on an annualized basis from the linked quarter, primarily due to reductions in interest-bearing deposits [50] - Non-interest bearing deposits grew by $11 million since the end of the second quarter, attributed to client relationship development [51] Company Strategy and Development Direction - The company is focused on merger optimization efforts, aiming for $250 million in cost savings [11] - Plans to resume share repurchases in the second half of 2023, contingent on capital plan considerations [19] - The company is committed to growing its deposit base to support loan growth despite rising deposit cost pressures [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory despite economic headwinds and potential recession risks [7] - The outlook for loan growth is expected to moderate to mid to high single-digit percentage points in Q4 2022 and mid-single-digit growth for 2023 [62][49] - Management anticipates net charge-offs to return to pre-pandemic levels, projecting 15 to 25 basis points for Q4 and 20 to 30 basis points for 2023 [65] Other Important Information - The company repurchased 99.4% of the 1.5 million shares authorized for repurchase, representing approximately 10% of Class A common shares [9][10] - The efficiency ratio improved to 53%, reflecting effective expense management despite inflationary pressures [12][39] Q&A Session Summary Question: Buyback plans for the second half of next year - Management indicated that if projections hold, a sizable buyback could be contemplated in the second half of next year [76] Question: Strategic updates on unique CIT businesses - Management expressed satisfaction with the performance of rail factoring and equipment finance, indicating strong industry positions [78] Question: Funding expectations and broker deposits - Management clarified that there is no preference for direct bank deposits over acquired branches; both channels are important [82] Question: Capital planning and CCAR process - Management confirmed that capital planning will consider the CCAR process, which is significant for future share repurchase sizes [86] Question: EPS guidance and reserve builds - Management indicated a mild recession is embedded in the EPS guidance, with expected reserve builds correlating to increased charge-offs [90] Question: Trends in classified and criticized loans - Management reported improving credit quality metrics, with no significant deterioration observed in portfolios [100]