FCNCA - Earnings call transcript Q1 2022 | First Citizens BancShares, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Citizens BancShares First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce the host of this conference call, Ms. President Relations. Vice Senior Hart, of Investor Deanna

You may begin.

Deanna Hart

introduce you us first Officer, today morning, pleasure XXXX everyone, Financial review Frank joining Craig thank and to my as is BancShares Good Holding, to as Chief our for First Nix. results. It Chairman well our and financial Chief Executive quarter Officer, Citizens

During can find you the presentation investor which call, they our will our be website. referencing on

today in who several have available other of attendance to with the pleased team us in our also are participate We of call, are needed. our to members portion leadership question-and-answer if

the materials, take to Following our of may completion formal we’ll be have. you questions presentation happy any

the aware, are on XXXX, quarter you combined January As X, for first company. closed CIT the merger with and Group are we results

of indicate legacy are Given are historical combined for this have included historical our to for There combined comparison basis. on purposes. First merger presentation we when on numbers the Citizens results, the standalone periods a numbers or within the footnotes magnitude

As may these forward-looking subject outlined uncertainties obligation We update statements, no and presentation risks to These page to risks a which that will include assume during for presentation. our our materially from you are results to differ expectations. of reminder, are on X statements. cause today’s comments the

GAAP will reference available in comparable We measures appendix. against directly non-GAAP the measures are presentation. financial measures in also most Reconciliations of the these the

nor does to transcripts edit over that, and Finally, hand provided With for parties. guarantee accuracy First third I’ll of Frank. Citizens not is earnings by not the our teleconference responsible it

Frank Holding

today. joining appreciate We all morning, you you, Thank good Deanna, and us everyone. of

results are pleased quarter this morning. to We solid announce first

good we’re a focused on timely prospects and with successful moving about our quarter, very and continue forward. the CIT during and We remain progress integration excited ensuring to made

he expand. when outlook, interest to net margin on we touch continue financial covers to our expect will Craig As

progress continued we loan and good about by momentum Our shape, large, for And target. feel business prospects we save lines as income our fee customers, growth. generating in as cost the expect of good on further in our are so well

page to presentation. investor Turning the X of

to we point comprised acquisitions, pleased for value ensure continue integration to timely office working customers are hard leaders belts, the We to the and for dedicated exactly of expected of with management focused remain ensuring in successful and associates. is and to execution-oriented merger are Leveraging where we And time. shareholders. at integrations integration deal we this under multiple I’m say, our a be conversions realized our and employees, their customers on

are meeting teams line. on us our coordinated focused of are and ensuring All time our integration

As and managed we’ve lifting said rail, other of over has be finance sequenced will a few long diverse that be integration Instead a cleanly some units as of better next months. integration slated replatforming businesses, that the before of in can case, typically which group is unique or is CIT this weekend, and large the experiencing are risk diverse a structure a CIT. integrate, we converting business a merger because -- bank is and and which mid-July, like which individually the West, will shifting the but One groups and in or factoring, like of will include also lines conversions, include manages over and for managed commercial way it

progress milestones. to for are to dedication, making their on Turning associates integration our ensure to all our we want work page X. that I of sacrifice hard thank and

by the our run and of will rate with cost progress pleased the be in that this million saves expect are year. We of end $XXX our million target on $XXX

leading faster revenue to net than As leverage and revenue expenses, pace grew at earnings Craig during first core soon growth. operating will achieved cover, we strong the pre-provision net positive a quarter, as

income interest the at integration investments redeploying results to on progress continue in boost on look producing progress and quarter. and to margin. forward excess higher merger We liquidity into and will loans second rates strong We -- net focus making to further

over there, remain Before excited our it macroeconomic Craig, like geopolitical I issues, some despite out given uncertainty about turn very I’d and and that optimistic to we growth the of to prospects. say

shifting already to and already throughout are the merger revenue expense from focus to from We value many synergistic integration we’re and in on working the execution fruit. bearing and bank, that’s the CIT hard areas capture side, the

focus, to our risk We profile, as and CIT. of merged we business now are our relationships, perform our we our given well-positioned given well -- are appetite focus the and enhanced perform are well-positioned diversity to well, with earnings on segments our long-term

then, provide financial at will closer for line the Craig Now, we’ll our questions. look And a open quarter results. Craig?

Craig Nix

X. Thank morning, page everyone. good and you, on Starting Frank,

may expect, you to noise have in purchase merger-related due results our and accounting them some first As items. quarter

I not just noise Frank as what to will While my the in cover described today, first I comments from detract do quarter results. want solid

by Core growing strong So, deposits billion year-end deposit The growth was annualized network with in I’m portfolio going noninterest-bearing to quarter. to of branch strong the due in an growth and the grew rate positives, mortgages. growth several with since $X.X begin XX%. highlighting loan residential

over income. continued in points SBA-PPP In interest purchase was excess investment the points. cash we entry loan at basis securities to organic expansion to linked-quarter, margin decline expanded accounting. XX of Only overcoming addition Net by into X in redeploy attributable basis margin attractive a to growth, the points

Noninterest cost generate revenues fee in that quarters quarter leverage savings Net will comparable the year. to mentioned, than confident to our target. at well-controlled. And and linked momentum wealth, producing prior positive Frank are in operating the the a grew business. in faster relative of pace continued achieve expenses, as during income resulting the rail, card, we we positive expense and lines was We merchant

by net over comments, quality a as basis result, quarter going well with We X% second the revenue year. points. of merger remained share ended over by Credit finally, net increased X during a linked strong capital a quarter pre-provision on repurchases ratio As XX% strong comparable track. the his supporting of a is the standpoint, charge-off year is resumption half from And the quarter the integration in and covered and liquidity ago. of and Frank the

touch the income shown On net or million $XX.XX are EPS, gains GAAP expenses of per a charge-off periods and this and adjusted for as report with was XX.XX% little losses prior ROE debt $XXX as Citizens ROE and on on consolidated of page on basis and X, income basis, standalone as quarter. the account that results. companies items. our the and ROA during per dive or annualized we well notable items XX.XX% reporting basis net ROA a noncore and associated annualized produced that ROA as into nonrecurring million yielding for happy share, we presented First of underlying deeper of a sale $XX.XX to after-tax note mergers, am I and ROE are trends Turning and the for look for page on Comparable are providing With an an an on ratio share, I if highlights as to other Please these the periods. basis. supplemental were NIM an moment yielding X.XX%. an at GAAP our to financial that, an results historical I’ll of X%. of will the BancShares adjusted such gains net $XXX in components extinguishment

at the reported day and drive adjusted the million to X the $XXX CECL impact provision representing net gain, of notable income and at page notable significant The the results and with those bottom $XXX the summarizes one our section The statements in associated merger. middle provide results the were are reported XX, earnings merger-related page expenses million FCB results. estimated items the we Turning XX notable adjusted from for on net one GAAP the a diluted most results during the income purchase $XXX Page bargain the statements, top million supplementing and their the in detailed merged per presented income items. provides quarter if historical of Both share. notable income affecting the along the two CIT to showing impact items the as listing were CIT periods presented. with of items

the I the the a in $XX million quarter the million year focus losses, periods by driven credit to comparable increase operating ago net and over The at and XX. bottom the the revenue $XX increased in available benefit page lower the income to by adjusted quarter only increase $XXX were will prior during credit million, increase the by linked-quarter on income net for an was partially million offset decline quarter to net for in net Net ago. XX% decline or by in in leverage. revenue, from over Pre-provision being in the X% the due from common The Now, a both linked-quarter was results increases due in same of year shareholders offset fourth benefit the for $XXX positive losses. compared by up a partially The pre-provision pre-provision down or revenue. preferred is $XXX to year. million dividend, decline of an quarter first the

removing expense, up added neutral noninterest we was As estimated noninterest items, due on detail adjusted After the to and I mentioned, here I will GAAP gain. effect is million maintenance, CECL noninterest the rental income core page noninterest impact, of by most our expense $XXX was ones to to of the same $XXX to $XXX net X to operating expense relate downward that of was reduce adjustments income out these basis, also notable CIT. reported pretax merger provides To million, income on income adjustments income adjusted by which reduced and or by depreciation will EPS. net income. reported net XX downward bargain million. and an GAAP purchase The mostly noninterest summary, call revenue, leases on net reported day $X.XX will by pre-provision and In significant GAAP adjusted report get these the pretax amount. with adjusted

the major as $XX the $XXX period Now, The place upcoming XX, expense, if the on the page $XX presented. impacting the in totaled with as of price million touch higher amortization the with billion time quarter, the representing pages X took $XX drivers redemption rates. million February were and our a income $XX basis a mature. interest declined consolidated merger in decrease interest attributable of on related on interest compared interest million million a $XX decline are by in in the or in interest premium million $XX million X% income. decline to Of expense $XX was offset interest the driven million million. The noted linked-quarter. by accounting, trends the continue deposits operating lower to deposits decline of million otherwise, with expense cost Net debt remaining starting Unless on quarter trends deposit increase borrowings for by financial The $X of increase to during $XX and the results. the I’ll purchase during historical expense, deposit in CIT reductions points to

loan increase liquidity investment debt. million basis-point the the on $XX reinvestment balance. of a we increase time lower expect pressure prepayments partially $XX which million hikes, factors of CIT term. will on and was to offset organic lower redeem was due in and and negatively continue short to by MBS contributing average were that $X remaining billion yield help will that to to due in income and brokered were we in into Fed interest of up as impacted legacy and of costs These While declines a XX deposits for by alleviate yield redeploy count. the on excess increase points $X decrease rising to million SBA-PPP positive interest begin deposits, Interest the asset to million portfolio. investment CDs, higher and accretion increase and long-term to of in decrease impacts securities, linked-quarter the purchase Interest the basis to improved accounting. mature, mix income was we day rate accounted including let investments XX compared due rates higher price growth earning will a the The rates given some $X.X to

yields reasons of described net by by $XX interest increased basis prior lower impacted to interest increased and linked-quarter, and loan due XX Net interest with points. count, income in impact the income interest XXXX over relative quarter income the was by margin up higher similar the PPP million a the accretion negatively was interest portfolio income yields million interest accretion, earning exception and that and quarter The flat XXXX. to loans earning comparable Net asset day increased comparable for with investment improved was Excluding mix quarter. asset in the for SBA-PPP income essentially ex the $XX mix.

both XX, and prior and the year expansion we drivers the the Purchase by linked to quarters, Turning accounting XX X highlight from basis XX respectively. of margin points. was quarters page points to comparable accretive basis

Excluding quarter. The net by increased to basis the quarter impact purchase comparable the from accounting, the due margin linked XX the the linked interest by was and impact quarter points increase of from combination X the impact yield improved SBA-PPP themes lower of asset outpacing increase. quarter comparable negative of earning the and Similar the mix, and all for of exist costs, investment higher income. funding for deposit lower

and $X.X in a deposit as billion. more declined earning effect decline the average had accretive asset pronounced However, mix was by rates more loans negative

faster income expense growth to pace, interest expect of ahead increase, look interest we over quarters. net will a to to the leading increase income we As the remainder at while that expect coming in we XXXX, interest

the faster net funding them, to continued cost expect yields leading asset addition, a at than margin. will of expansion of In we increase the thus earning pace interest

line Turning the that the side XX. page be asset we to page to indicates The left-hand on graph sensitive. continue of

While operating ranges. we excess we to in liquidity, been continue reducing above operate have liquidity with normal opportunistic

deposit rate to will higher estimate interest take to at the should to ramp in protection, income future. increase sheet management approach position that basis-point our a to market fall the and X.X% continue We at XXX X.X% net risk interest time, same and XXX have shock and by balance downside basis-point providing by rates in rates a measured would from while risk We benefit a rates interest XX interest XX% main between aligned The blended core represents XX%, over deposit these rising historical deposit the position drivers Currently, betas deposit environment. cash betas, which by in the below loan of our and experience our our rate portfolio, of variable total and are improvement is expectations. well base. model are loans, beta which rate our strong months. driven XX% We next modest a with

higher the income quarter income primarily X by last income first was was income noninterest over bargain The XX. and operating million million about Core operating in The by the in and Noninterest gross at on part the leases expense XX.X% end higher renewal million when an was card leases, linked-quarter operating will to leases quarter, and fleet Moving offset fleet capital GAAP due shown $XXX maintenance depreciation increased of depreciation -- well income, decline expected reported reset to the that due position, came rates utilization connection fleet from mortgage was less income fleet activity totaled income, an led increase in in purchase between refinance operating due accounting $XXX XXXX first higher Rail a CIT million being given cars income core on the reported on merchant volume. on page the on million income in in wealth here of maintenance all as moving million $XX the during to mortgage and income impacted forward, requiring the the liquidity the $XXX to and comparable and income to primarily increased the on costs. quarter, purchase first consumer and noninterest sale of seasonal partially was offset XX, and as new in legacy rate in Higher on leases, sale is gain quarter, higher mortgages. income with million management Mortgage to deposits our on leases in by card factoring cost and commissions margins, by due On recorded less or less $XXX charges rail by been on $XXX of by after X.X% Core on from due linked-quarter leases and page merger, assets. rail and service in to merchant, utilization, $XX on The increase higher operating the increased prominent net by latter quarter, during the mortgage on which the year. rental decline elevated in operating demand and legacy over up increase rates to primarily difference expense. rental be partially costs. rental consumer rental gain leases improvement income the interest rental X% year-end. declines CIT reduced negatively Higher extinguishment, to maintenance income pressure which has have as reduced rail noninterest noninterest on net and a $XXX transportation is maintenance noninterest rental higher linked-quarter, over on the half lower net slide the of gains compared amount. sale increase an income, lower partially fleet XXXX and noninterest million estimated increased for and same our driven lower income. of the by debt on off on rail gain declined decline the due strategy offset gains a environment.

Turning and we remainder income-producing lines to and business. rail, our of wealthy merchant the of momentum continued expect in card XXXX,

opportunities offerings our to it we that noninterest deposits will this the earlier offset service high fees, a policy are year, we broadening While we decline increase product lost on OD changes anticipate add relationships to we the income percentage customers. single-digit will announced income by value respect customer OD for year-over-year. looking NSF in as adjusted With fee from enact charges for through NSF

quarter, that Core the and and exception expense related Core growth salary over by driven $XX intangible to increase expenses million X costs, increased noninterest including increase the consulting amortization. the million in by merger-related lower merger-related and was in merger Turning first legacy were control, costs. of reversal expense also salaries linked-quarter million all expense quarter and increase from noninterest million reasons The incentives, our the outpaced over higher linked-quarter quarter focus fees in increase million efficiency and increase saves. marketing resulting noninterest higher expenses result year by was a by expenses core during an linked-quarter was higher a offset comparable with the due expense the growth. stated $XX totaled legal $XXX of to related and revenue-based good increased a and ratio here over The Noninterest for a deal-related last seasonally asset expense The net lower $XXX benefit our quarter, in call, change $XX offset origination driven linked-quarter million, continued is The combination was during combination $XXX to primarily comparable costs XX.XX% XX. million and partially FICA to of payment $XX as higher deferred primarily the and personnel loan of partially the factors, expense. and lower $XXX million news $XXX million core the million XXX(k) The decline termination the improved cost expense in retention processing offset of same respectively. to by on third-party due a expense over increase page plans. the performance $XXX costs. by personnel of to by severance revenue

and We year. exclusive the million merger growth do especially are to to inflation, we of contract range neutralize expect, closer natural another as of pressure, be we base, will professional to will costs. out $XXX this the the noninterest Looking however, feeling forward, are wage saves relates of for expense cost able it that service as mid-single-digit our remove pressures to help it cost

low-single-digit in expense expect percentage a noninterest adjusted We year-over-year. increase

most during good our our quarters, merger-related the expense positive the subsequent quarter tied on absolute the moderate cost with of and to still forward, expenses of of the I net year, about rate could for provides pages. will of in expenses We of with feel terms the quarter Page efficiency highlights estimate with coming the close. one next continued year. the In the year XX ratio and level being timing improvement the high key first in $XXX expected initiatives, to sheet significant revenue on balance we and ratios. merger the impact remainder components increases watermark moving the savings million of into balance of of cover merger with efforts continuing continued sheet the see

are So, share won’t page, half and time to repurchases levels I you’ll maintaining spend we during during other we of share plan which leverage growth second than note capital to organic repurchases healthy that the into post and merger, -- on this see strong, year. the that

or decline, by Turning If purchase million loan page $XXX annualized by over the loans to impact loans on an an SBA-PPP or annualized linked-quarter X.X% basis. $XXX basis. remove increased on X.X% of total XX. the million by accounting Total we and increased

which organic feel the growth and overcome Given X%, production necessary the rates by prepayment had business runoff. the was an in the overall the loan to we continue these of integration, enabled growth to commercial, was rate and loan in This loans. led network, growth annualized bankers growth encouraging quarter, client is we consumer the during due quarter lower even speeds with additional we decline interest we seasonal to and branch results. down typically in compelling growth The growth led loan mortgage first opportunity. rate where in is experience we on markets focus a at as on Elsewhere, pleased outreach as mortgage adding for are there production loans high-performing for the merger higher focus efforts grew by as both, quarter

billion SBA-PPP purchase SBA-PPP system by finance pressure the space. to loans which rising $X.X pricing, new refinance net the are competitors decreases reduction in in finance $X.X of Last, in On environment loans year-over-year to On to basis, the for real abundant and are borrowing declined and liquidity learn keeps in rate some accounting. on the billion in willing lower excluding at to estate continue or impact loans, downside, spreads. we a prompting the see declines accounted due apprehension estate loans, real in X.X% inflation

million purchase in finance X.X% to the and decline PPP neutralize the real in the previously the loans. was as accounting, the reduction So, network virtually was or flat declines growth mentioned in $X.X branch impact of estate able

prospects As We a further percentage full forward, do for feel growth. we loan look anticipate for in mid-single-digit year the about increase we positive loans the ‘XX.

However, we acknowledge that around with to environment, the could do economic geopolitical cause our rate regard actual external to expectations. from risks uncertainty deviate especially growth and

deposits experienced deposit of change to XX. growing an $XXX The a growth Moving increase checking $XXX rate page a We to accounts, strong quarter-over-quarter $XXX net by annualized increase other noninterest-bearing XX% decline during million. $X.X This deposits, accounts. in was offset almost million decrease the interest-bearing quarter annualized offset drivers by a or with time the million representing in X% were in million partially main $XXX about growth. interest-bearing of deposits due approximately in billion

and X basis quarter, linked-quarter record the by continues deposits Fed quarter, of rate the system evolve continued the down of liquidity on sheet. the the deleveraging to in interest XXXX for the outlook we our points XX guarded from remain to the levels growth last rate quarter basis environment impacts first points points absolute in basis Despite as the deposit noninterest-bearing and balance deposit continued the in that cost during Our at XX first year. fact declined from

higher offsetting replacing to deposits, cost decline the time As growth continued account, in expect -- higher our core we deposits cost optimize with by in lower funding deposits continue transaction we mix checking accounts. by placing cost

Moving to page XX.

continues Continuing predominantly continues to funding core sheet be the XX, to XX% base over very deposits credit of be total Our to page quality by balance deposits, strong. end our at of the funded the quarter. representing

after the the provision. million $XX X increased of end declined ratio at to combination a from quarter. from ACL end negative to of The points points at excluding the basis of which provision the While day remains linked-quarter, net scenarios, X in year the basis last CECL X.XX low, charge-off macroeconomic it in resulted X.XX from improved ratio first the quarter, X with the during

XX. was million of Turning combined the at to The page XXXX. ACL end $XXX

This day provision on a to individually of impairment The at the $XXX X acquisition, million out in X in the March to loans $XXX million, and non-PCD $XXX loans was in an increase a for specific million was macroeconomic CIT’s released increase of certain related established in in CIT’s million the estimated PCD year-end reserve bringing million. or acquisition cleared in estimated reported we of for ACL. As $XX date of and ACL changes in in $XX ACL of The estimation values. result the date, of we total improvement evaluated $XXX to the a specifically loans. used estate the release date. million $XXX million ACL day resulted real combined the X.XX% loans of which acquisition down scenarios for resulted Subsequent allowance, reserves, we reserves an of primarily on around

we The saw the quarter. in impaired improvement net charge-offs XX.X loans ACL on certain annualized reserves during at specific Additionally, times. covered the quarter-end

Turning to page XX.

our ratios in position above or the with capital of strong, remains target all Our ranges. end upper

leverage earnings, impact risk-weighted from increased February assets ratio ratio, in the further growth average asset the during strong quarter which was capital and growth redemption ratio accounting total leverage was As first capital by on partially risk-based of the CETX XX.XX% ratio the quarter, The and slightly the merger impact, completed to offset ratio XX.XX%. to After of due dividend payments. for accretive to our was risk-based Tier XXth. our the our end to our X debt and was the attributable dilutive total

value from acquisition. the XX% Our the per grew tangible to by CIT during quarter, book $XXX.XX value created share driven the by

will discussing by conclude XX, financial page outlook. to our I Turning

rein tighter current inflation On remain inflation, two economy second fiscal low monetary remains the assumptions that numbers tries U.S. our relevant this Ukraine these first assumes growth significantly at actuals does growth the to for income income and that in items. the crisis Let in and are quarter noninterest percentage year me full unemployment the The most line issues COVID column the full This to while by currently and outlook that page year. quarter doesn’t move other in rate be third becomes includes policy ‘XX From supply for well QX to not list fiscal and GDP expect here Column up and the preface first Fed my wane, declines, to X levels. relatively the our growth elevated, for XXXX. economy, as XX, sheet comments provides continues or columns columns that U.S. range items adjusted resolved, taxes to notable or adjusted continues loan for and we at arrive geopolitical the chain balance derail perform in expense. as metric for growth the and the core perspective, year a ‘XX mid-single-digit both and are measures.

While in mid- branch based growth feel upon we we continue some network, our competitive in pressures to portfolio to the in estate the accelerated do foresee prepayments high-single-digit continued real landscape. finance

in We wealth, will support middle market proactively continue bankers growth. large add our and loan branch to areas banking network to metro

will volumes and funds of on CIT anticipate compete opportunities as lending the in that continued rate credit high large our legacy cultures opportunities will the space We loan the FCB afford integrated. to cost become favorably us and also sending our referrals collaboration help more increase of teams commercial and

up pick growth over expect levels lower continue optimize robust to each of checking are On legacy activity seek cost and deposits, cost we years we CIT the understanding by company’s higher and funding First gain as core past capabilities. seeing accounts. the to referral do of with two replacing We not already FCB Citizens as accounts products more legacy

slightly to our had consequently, expect we expect strong down branch network growth first the in be in quarter, seasonal deposits quarter. business second in do While we we the CAB and outflows and

year, the expect percentage we low-single-digit flat On growth. to

continue to if account, upside we in that exceed noninterest-bearing our we guidance. see However, could

Our growth continue demand base, optimization market off. expectation run rate of at is that percentage accounts and deposit higher-priced will will but by offset a continued the money funding be mid-single-digit CDs growth highlighting

pre-pandemic Citizens return For a to net CIT. charge-offs, levels First expect non-stress we and gradual both for

any net increase rates full to The losses second our of net think to and expect and the in of our in to result may for returning historic due our more not range XX we We Rather, stress year. is points to in apparent charge-offs portfolios. XX the XX projection impact levels. in rising points XX basis inflation quarter charge-off the basis the in

income, as percentage maintenance compared we expected income on compared On net to mid-single-digits be the basis, expect impact quarter a percentage increases down rates to year more to levels. assets. asset a earning in expect increase yields the second in the the QX in mid-teens and costs of continued the funding From of earning For interest rate first range cost operating increases return we expect growth renewal perspective, on slightly full as noninterest core quarter low- normal to we growth. leases to outpace

rental continued on year, the income. the led in From second benefits leases merchant seasonal recognition quarter by net operating noninterest first negative well impact continued we as the the growth compared For in to wealth, be by standpoint, flat the single-digit a saves. and decline to expect core of card income cost as are upper a we growth extend merger as expect merit quarter to annual increases of offset slightly expense

by our to it in be our million and for are the associates to call that, digits. rate this percentage operator our our the the In rate $XXX by single turn cost quarter by to back expect project and year, over currently year. growth run expense XXXX, in to $XXX now results be million we we is Q&A. rate quarter. savings cost in noninterest make On run estimate low will a the $XXX the the quarter in I we closing, the fourth saves From happen. first in to that run put hard standpoint, very be pleased With fourth In we expect with million of work

Operator

Gailey. [Operator come first your from question Instructions] Brady And will

Brady Gailey

as So, you the buyback, approach the that about in we which those the size engaged you you’ve about this back how X% guys the think I the clearly excess size, half we in do Each when a done years, it have year, buyback lot buyback, could have of mean, know in And historically, think I be? repurchased what capital. and in guys have been you then you reengage signaled XXXX. XXXX I of like you’ll company. of of of when is

this and think on year the the about of thoughts be of buyback what size next any how back So, at you half the could year?

Frank Holding

Holding. and context I’m is this little this Brady, to Frank for going a Craig give I’m going specifically. sort question, it of let some more answer to

stable about and stock Simply, metrics And success second and capital prudent, greater around line felt in feel robust and early repurchase Given you proving But feel for our merger to is with Craig, half the efforts early safety size, and of a, want our that repurchase is prudent experience our that? in do levels about but expand I’ll solid on out year, along sight half this were with demonstrating safety warranted. as very of success integration it’s strong having in you again, as a, here. want stock we having a integration plan integration good soundness metrics. in the to discussed soundness deep I’ll we of strong and robust the our plans remain it confident talk systems, before. we describe we in we’ve second anything, describe plan a as it projections

Craig Nix

sure, out And where we say put $X.X take the CETX capital quarter in that the And would range, target. And the our we that year, the then, sort of of target would sit end capital of target the CETX which let’s terms to Excess speak around in of Yes, that around billion. this range. XX%. of be in billion. if the sort Frank. That I’ll of end approximately be would middle $X.X at we to

not -- EPS. indication the every when for exact the the closed, just out the repurchase, where every is if But there $X of should about accretive that market you price on EPS, stock put amount plan. we I’m excess targets based that we some telegraphing our billion was is it XX% will for capital. request give to repurchase assume So, we

we be a could is So, we -- but we believe not that forward. into accretion have our any EPS that and forecast, modeled our of believe moving -- a powerful for strategy

Brady Gailey

are start moving there And to more the excess continuing reinvestment that about bond CIT mean, do with that long are then run I bond funding, you this your just do guys up, excess now portfolio want with -- aggressively you end seen rates how to thinking the point? liquidity? the to think all given deploy you we’ve at rates to higher, off your more of this bond nicely leave plan rates some into the what the curve about are what’s expensive putting liquidity or higher? Like,

Craig Nix

XX% let we I’ll world, here. -- can to If in Eklund to a wand, of speak Tom, I missed sort anything, in are investment think end in this. investments range asset the stuff, around overnight to high XX% then from on to the that portfolio overnight mix in liquidity. loans a think like Tom would earning I if But magic perfect have with range XX%. now, of investment we I and step X% wave XX% see the our to excess a with X% Right we just we

income accretive current points. the to not the liquidity terms with be if see into We’re loan able by about our it which XX yield but absolute portfolio, were be excess we in to liquidity, projections. curve, of of portfolio then redeployed between like on the want basis to to million that simply built will investment put, offset because current $XXX is And $XX million, interest XX margin to we’d we value into redeploy the of net excess where that and

miss but there? a of capacity high-quality against sheet we the keep Tom, here given boost our we we loans, anything restricted to So, in balance some redeploy than K. reserve I have in we have projections to in do on we assets think earnings we are that deposits, deal do liquidity can the great mind, for liquid stress believe how liquidity further our tests have and much I should all did

Tom Eklund

you think the Craig. really there, well I hit No, points

So, no me. further comments from

Brady Gailey

color. give then, was quick first of the fees of yield income realized you all just quarter? in spread good if the can. I more And PPP That’s amount that one the in accretable one, amount and Can Great. that us were

Craig Nix

of I with you can if you the just impact accounting, purchase give bear me.

net could quarter, basis interest you was points. accounting purchase if impact if as on income, $XX or In that, help the -- here it doing first just I’m you well. million While the XX around pretax aggregate

points strip XX. of and margin XX basis you So if the would X.XX%, X.XX%. been have if increased, we our been that would that instead X were you And out -- to actual back standpoint, XX have have would margin we from -- by was a strip and increased

was impact. of And of gives side. interest side, on you the So, the don’t on a income think Elliot, there accounting tremendous just that amount fee that I purchase net income magnitude some the

Elliot Howard

SBA-PPP, million the income Brady. For of quarter, in had we $X.X the first

Craig Nix

interest talking income… was that -- you’re So, but

Elliot Howard

Yes.

me Let exact you back to -- get on we’ll split… the Brady,

Craig Nix

some points been I’ll XX exclude in and for comparable But perspective our the have both accounting would points XX just went up When just periods. the basis margin -- up for you linked. margin, for quarter, basis for headline the PPP, purchase they XX both,

We So, noise that improving accounting is indicates stripped income interest of net what while adjustments. that lot there, and a nicely. in there’s is out purchase core for PPP

Elliot Howard

fee Brady, $X was in only portion QX the Yes. And million.

Craig Nix

does lot on a of have and purchase results. we time -- on a accounting, not impact huge accounting spent Purchase really it

Operator

Your with Sandler. next Scouten question will Piper come from Stephen

Stephen Scouten

on share said wanted the I repurchase. you something regarding to Craig, follow up

will what I you targeting think you’re not said you request.

So, insights the a been looks the regulators? any have is of you that on on from repurchase if to timing get yet correct, hasn’t request approval that what of to from what submitted fact be kind them indicative And plan? like or that’s approval do your process would

Craig Nix

month approval. our Yes. does so We it definitely with not are sitting just that. around a engaging take regulators, and for But we’re hands our with on

quarter, will process get be soon. hand that this very in -- So, and during will

Stephen Scouten

so credit rates about the how forth? Can to careful a Thank book and then, you. all the issues that whatnot. changes helpful. economic in And your are and and factors today modeling potential some relative if weightings market you Okay. qualitative you will you then, is or of how in very had or earn any view determining CIT banks on guys discounting That’s legacy the including your waiting color marks? higher probably your around give and is and maybe however you’re you kind I guess, towards CECL of CECL And recession Moody’s kind guys scenarios any looking money your recent

Craig Nix

We’re CIT And credit really stress market and a bend quality feeling Credit job portfolio. is quality did to credits term. are sort good on of CIT Those about really really resisting the scenarios. good underwritten to strong. pressure of

So just we’re in it. good really general, feeling about

went back quarter terms end -- feel we you if of first the and to our feel reserve we look the compared currently, back quarter if were what is And like are conservative. I fourth frankly, the And ACL, the at did we the X.XX% level. In we of just our good. the you the of where ‘XX really really -- ‘XX, X consider at of where was company charge-off was the would it now -- end net ‘XX and And as is ACL in it combined. at XX. X.XX% we pre-pandemic and was been fourth ratio combined The what companies of which the would of is have quarter

X% had X So, coverage we coverage, we -- have now XX% coverage whereas times pre-pandemic.

Officer, much Credit that nonaccruals. Chief our on, cover focuses Harney allowance does Marisa that how thing Another is

that. classified Criticized most times along for But and covered indicate if losses. view conservative spectrum indicators down. you to slightly line, loans that times that loans up. prudent on And that? know you’re We’re are to X.XX see Nonaccrual total if apparent flat near-term would any want add I our a are on don’t don’t now past loans versus have XX-day, I that stress dues allowance in would are And down. loan we the and Marisa, loans to X.XX XX-day portfolio the then. change

Marisa Harney

Well, pre-pandemic absolutely XXXX." from well. than we look competitive since context "Oh, of at. some about, indicated, think I XXXX. the our of No, very, of performing as but pricing, their is levels people what since credit not a in Yes. lot what has said CIT best terms a very very improved And our Craig portfolios to, perspective, approach loan indicators been our that in lot balanced of are everything suggesting just it’s frankly, is that has even that talk as The levels. of are, Craig legacy pre-pandemic, terms which I improved are a quality at market, not A if in asset to terms testament underwriting of to, true. is better But, quality a some back

me reiterate from gives So, I anything specific time. sector at near Craig I on a perspective said. this perspective transactional or concern don’t that a horizon what the see from

obviously all the We’re said, indicators underwrite we to watching stress going forward. macroeconomic as scenarios. Craig And

So, all well. is

Craig Nix

those lot little One economic our bit the thing highly say sure severe I The a that forecast. a by would disclaim of just ACL on Moody’s to it. you of we make is SX CECL And saw influenced what improved pretty we this moderate. terms the unemployment the while of in that that price due all the where factors quarter fact and to had reversal of in macroeconomic scenario the home CRE index, was price baseline stayed severe index,

With the news could today, that quarter. with the next change print today,

negative see we building some could back. to to see provision, we not see pressure, might pressure. but reserves start we Obviously, have pressure So,

really give way to I its terms that. qualification would that quality. one that’s the credit all But the and it’s performing good So, feeling we’re portfolio, about of in

Stephen Scouten

I it. you growth. for me. just to are mean, liquidity I guys the helpful. for you And -- Very Got keep thinking thing last incremental want How about said know loan you then,

presenting potentially do much theoretically and greater in with securities geopolitical think is than increase, else today. book do events How securities the -- can But in at some where the less spreads risk rates that you book relative about the obtain with as to about the about book loan dynamic? good you point continue feel begin You how that everything think you risk?

Craig Nix

priority obviously, is is of to maximize value the to to ourselves time, and market put there want left to whatever our liquidity. Well, money, portfolio The over excess is rise. as sort at the investment same try to want And we the we to that hits in liquidity. protect TBV from to first lend yield. But lend rates

to volatility rate to Mae securities respect reduce the see duration. is And buying with residential a we’re so, do sponsored And Ginnie environment. government-backed with generally the shorter or trying what rising you’ll in mortgage-backed in there securities us portfolio,

XX-year but or securities to mortgages, back they just we’re seasoned So, -- back XX-year that be have mortgages. about -- be might either either we about buy buying those going securities are

peer. So, is bit a the duration probably than shorter of our portfolio

are detail, and cash longer are well, pick we predictable with up a don’t sense consider but now, hit flows, we rate now. discussing lot go further increase. out securities now Tom doing and move to it some bullet that. of know could reinvested give a defined, for that have And flows. cash makes longer flows We we’re let cycle think I believe but we more going this look yield we there, But discussions doing about to like in We little cash locked would right point are more to flows. others likely I’ll as this with as more your into cash

cycle. are just -- here, beginning Given up we rate that from at rates heading the of we’re the

the but needs I’ll to of that to if anything investment strategy, sort about else Tom anything say say -- if it. like amplify that’s let So, he’d he

Tom Eklund

No.

there. currently. past of think mortgages sort stable first gone through I gotten of and think buying Craig points We mean, that at hit certain of cycles refi sort sort cash increase most have through the of in believe rate really, I I season front-end boom. the we’re and looking flows that in the decrease

on the further we’ll we’re get curve, look duration rolling As out and down focused out additional as flows currently looking cash issue some of to that currently, it. add cash -- we’re new mortgages have when much behind maybe to Craig’s would that move locked for sure exposure happen. XX-year don’t we our optionality we thing. defined duration, more point, there And flows buying as But

Stephen Scouten

guys, Thanks, progress that’s And made. been congrats already all Great. all the on for color. the

Craig Nix

Thank you.

Operator

from Marinac. question Your will Christopher next come

Christopher Marinac

country Frank Citizens well changes within First perhaps ask to you’ve And regions the about last are wanted then, seen of also months? performing two any are that that behavior the any customer I the weaker? and in of footprint

Frank Holding

Holding. part across growth serve in don’t no that areas, of that the no This of country. are more any probably but -- or spots We’ve have weakness strong markets stronger the we some we a than more areas weakness. robust suburban than noted rural any metropolitan particular generally, see guess, country. the the Frank weak larger others. really we We see. Certainly, There are see is I are some

Christopher Marinac

the And being able rates question That’s increase just Great. loan Craig, to as this raised a March helpful. about then, expected Fed and in then quick has again, quarter.

Craig Nix

what stabilized see than loans sort are loan this our sheets now rate rates, rolling I higher yield quarter. is are off. think Loan of And the you’ll right

start to our investment loan naturally So yield. a we’re same to And is going for pickup thing in the yield. our see portfolio true

Frank Holding

add to bit going to I’m a Chris, that. little

versus that because realize the markets national all metrics we of there outside chose that into, expand growth basically that household income Carolinas, and to the household have of were averages. and You income the had they we population growth greater that stronger

So, I choose equally don’t but those to we is either. performing that didn’t whole equally, want the markets U.S. say

Operator

you, I further at to I’m to any the this call like not closing for Thank time. host remarks. our speakers. questions any would turn showing over back

Deanna Hart

hope I a questions any information, has out. day. our our participating you, and Thank please need additional And call in you, in for We everyone company. today. you free interest everyone, thank your reach appreciate if great have feel to further or

Operator

gentlemen, today’s and Ladies this concludes conference call.

may now Have a disconnect. day. You wonderful

First Citizens BancShares (FCNCO) 28 Apr 222022 Q1 Earnings call transcript