First Citizens BancShares(US:FCNCA)2022-07-29 04:43Financial Data and Key Metrics Changes - The company reported a GAAP net income of $255 million, or $14.86 per share, with adjusted net income of $287 million, or $16.86 per share, yielding an annualized ROE of 11.9% and an ROA of 1.07% [35][36] - Pre-provision net revenue (PPNR) grew by 17.1% over the linked quarter and by 38.5% year-over-year, with positive operating leverage of 6.9% and 12.8% for the linked and comparable quarters respectively [30][31] - Net interest income increased by 7.9% over the linked quarter and by 14.4% year-over-year, with net interest margin expanding by 31 basis points from 2.73% to 3.04% [31][40] Business Line Data and Key Metrics Changes - The Commercial Bank saw strong performance with loan growth at an annualized rate of 8.4%, driven by business and commercial loans [62] - The General Bank experienced an annualized loan growth rate of 18.4%, primarily from the branch network [61] - The leasing organization, Business Capital, reported strong originations and portfolio performance, despite economic uncertainty [18] Market Data and Key Metrics Changes - Total loans increased by $2.2 billion over the linked quarter, or by 13.5% on an annualized basis, exceeding mid-single-digit guidance [61] - Deposits declined by $2.3 billion, or 9.9% on an annualized basis, primarily due to a reduction in interest-bearing deposits [65] - Noninterest-bearing deposits grew by $747 million, or an 11.6% annualized rate, attributed to strong client relationships [66] Company Strategy and Development Direction - The company is focused on optimizing processes and operations post-merger, with a target of achieving $250 million in cost savings by the end of 2023 [11][12] - A share repurchase program was approved, allowing the company to repurchase up to 1.5 million shares, representing approximately 9.4% of total common shares outstanding [9] - The company aims to enhance its capabilities across various business lines to recognize revenue synergies as a combined entity [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's direction despite economic uncertainties, noting that customer portfolios are performing well [8] - The outlook for loan growth is expected to moderate in the third quarter, with a forecast of mid-single-digit growth due to rising interest rates [72] - Management remains confident in credit quality, with net charge-offs projected to return to pre-pandemic levels [75] Other Important Information - The company completed the merger integration with CIT Group and is now focusing on optimizing operations [10] - The efficiency ratio improved to 57.55%, indicating strong net revenue growth and recognition of merger cost savings [58] - The company expects to continue facing inflationary pressures, particularly in wages and professional services, but aims to offset these through cost savings [59] Q&A Session Summary Question: When does the company expect to begin the share repurchase plan? - The company plans to start the share repurchase program on August 1 [82] Question: What led to the change in deposit guidance to a low to mid single-digit decline? - The deposit runoff in the second quarter was slightly above projections, influenced by seasonal factors and higher cost deposits [83][84] Question: How did loan growth perform across legacy markets versus new markets? - Loan growth was strong across the board, with significant contributions from commercial and business loans, as well as the branch network [86]