Key Takeaways
- First Citizens BancShares stock jumped 8% after third-quarter adjusted EPS of $55.37 beat estimates and its board approved a new $1.2 billion buyback for 2027.
- Adjusted EPS fell from $57.09 in the second quarter because of higher credit provisions. But loans grew 4.1%, deposits grew 6.8%, and the bank repaid another $8 billion of its FDIC note.
- Buybacks have retired nearly 24% of the company’s common shares since July 2024. That’s why adjusted EPS rose 24% from a year ago while adjusted net income rose 9%.
- The CET1 ratio fell to 10.24% from 10.77% in one quarter, and management expects net charge-offs to rise in the fourth quarter.
First Citizens BancShares (FCNCA) is up 8% today after its third-quarter results beat estimates and its board approved a new buyback of up to $1.2 billion of Class A shares through 2027.
The interesting part? Earnings per share actually fell from the second quarter.
A beat with a dip
Adjusted EPS came in at $55.37, well ahead of what analysts expected, but down from $57.09 last quarter.
That drop came from credit: a $55 million provision this quarter, after a $10 million benefit last quarter. Adjusted pre-provision net revenue rose 2.5% to $919 million.
Underneath, the bank had a strong quarter:
- Loans grew 4.1% to $157.2 billion, mostly in Fund Banking’s capital call lines, which the bank says carry a much lower loss rate than its other loans.
- Deposits grew 6.8% to $185.3 billion, and $4.9 billion of that came from 138 branches it bought from BMO.
- Net interest margin slipped just 3 basis points to 3.07%.
All while First Citizens repaid another $8 billion of the Purchase Money Note it issued to the FDIC in its 2023 deal for Silicon Valley Bank.
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The buyback is the real engine
Buybacks have been shrinking the share count since mid-2024…
And they haven’t slowed. First Citizens has bought back nearly 24% of its common shares since July 2024, including $600 million worth in the third quarter. The new $1.2 billion plan could retire roughly 5% more at today’s price.
That’s why adjusted EPS rose 24% from a year ago, while adjusted net income to common shareholders rose 9%.
What’s next
Paying off the FDIC note also helps. First Citizens repaid $1.5 billion more in October and expects to pay off the rest by the end of 2027, mostly with deposit growth.
Nothing in this quarter argues for lower estimates. Management’s fourth-quarter guidance calls for net interest income of $1.70 billion to $1.77 billion, at or above the third quarter’s.
The risk is capital. The CET1 ratio fell to 10.24% from 10.77% in one quarter, and buybacks alone took 0.33 points off it.
My take: First Citizens is replacing its FDIC debt with deposits and handing the savings to shareholders, and today’s jump looks earned. Of course, management expects net charge-offs to rise to 0.30% to 0.35% of loans in the fourth quarter, from 0.27%, so credit is the number to watch.
So what is First Citizens stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
