Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Citizens BancShares Fourth Quarter and Year End 2022 Earnings Conference Call. At this time, all participants are in 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.

to host like call, this now Ms. would introduce of the conference I Vice Relations. of Hart, President Deanna Senior Investor

You may begin.

Deanna Hart

quarter outlook. is Thank will Nix, you. Chairman well for our fourth as us on you and provide for call. Good morning, Frank results Financial financial everyone, an First and Chief Executive our Citizens update Holding, introduce Chief pleasure who to my thank Officer, joining earnings and our It as Bank’s Craig Officer,

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

During find is materials. these Page referencing be on X on you our the Web agenda we can presentation which site. will today’s our of investor call, An presentation, for

of our we’ll presentation, questions. happily the Following completion take

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

also reference the presentation. financial We will measures non-GAAP in

the Reconciliations of against directly of most GAAP are these found X Section the measures in comparable measures presentation.

does is by earnings not Citizens for of parties. nor not First accuracy responsible teleconference guarantee the Finally, third edit provided and our transcripts

I’ll With over to turn it that, Frank.

Frank Holding

for you to for us update and to you Thank then over make you, about fourth Deanna, financial then highlight and our all year I'll everyone. outlook today. our results priorities. And And Craig and joining I'll it We good of the morning quarter to XXXX comments turn XXXX. the appreciate Nix the strategic some on

great XXXX was year First on for Starting X, Citizens. a Page

controlled general strong lines financial growth We we were in the with well completion and performance to both banks. achieving addition marked low the growth, pleased robust of losses credit by line of the In and business, commercial of loan delivered top our expenses. merger, solid our results

slight deposits deposits growth driven tightening, the accounts in decline for we year challenging a a by experienced quantitative modest year. checking during non-interest only in despite And unprecedented and

is integration $XXX revenues operations. and focused we're cost now track achieve our creating savings leverage merger our Our And We goal. positive substantially remain by to operating million complete. on growing optimizing on

quarter, our A share fourth repurchase approximately be and plan plan completed XX% common X accretive third target, the to This announced levels, share to our early repurchasing the we shareholders in and the our per shares. exceeding capital During X.X return to optimize while CET a plan Class million to allowed capital earnings expected in quarter, to excess us is we XXXX.

Our capital ability we of this position resume have relative remains the that year. our to And to profile. in the will second believe buybacks strong share half risk we

a our fourth are rising year-over-year solid in interest expenses This revenue. in over XX% XX.X% the income with controlled growth increase pre-provision drove non-interest with margin prior From a profitability finished growth drove standpoint, well increase financial line guidance quarter right net strong with our income year. and in a rates combined net interest year. full loan results Strong pleased for and the and we growth and

the XX to environment. competitive did Earning were The hikes rising margin we entered pace a rate basis asset quarter. yields by deposit fourth challenging pressure costs increased to points. begin despite and able we as on of manage And put

grown been through we've several through and we've them. cycles During tenure my at always prospered tightening and First Citizens,

higher operating rental lease our income to provided by on lines income, fee momentum income lease growth in net our rates. support of our and non-interest rail portfolio at positive as increased assets, revenue Looking saw led business utilization producing continued from

and challenging card such in growth market environment saw as also wealth. areas wealth for a despite We

deposit expense in OD announced help we charges the this charges charge service OD NSF, But place some and income. service of offset in strong commercial XXXX took to that reducing inflationary growth NSF maintain that ratio, well we certain prudent impact. had of to in an we Despite an forward. we've headwinds, of in the leverage our elimination for resulted full remember as to second You'll the which annualized discipline half moving maintain improvement the expect XXs which in efficiency operating low basis mid year, on as positive

with general within year verticals we and the commercial saw pleased growth business end bank the X.X% growth billion, and over XXXX. We're loans the increasing with We in total or bank loans and in $X.X by saw industry capital. XXXX in

below quality fourth well seeing we While of quarter, strong the based historic loan credit experienced broad we loans in charge-offs Overall, our and signs not non-accrual stress net remains an remained portfolio. norms. in in increase are

banking. X, Page our And many core of producers highlight our we're revenue in strategic growth. add Now business, core business forward. our Investing priorities competitive our continue and to verticals expand including network, achieve of industry our in to profitable and share. few with branch moving going quickly I'll organic market of market pleased to capital, wealth, capabilities turning these to businesses a the We're middle areas in to momentum lines remain the enhance and

in and deposit focus includes the growth. is relationship. addition to on key strategy A core focus foundation our our on full capital banking relationships, deposit making long-term Optimize to which loans

component cost a is significant deposits, goal of earning go-to-market assets and fund strategy. low with stable this our to remains Our

capital our to number of internal growth, is But terms strategy extent attractive redeploy one repurchases to into excess it have allocation, our the priority capital at is focus on after customers. prices. funding share we In our

proactive to in A focus continued our to retention. on growth. We're acquisition talent talent and continue support going to adding be

our and segments addition financial our focused services and focus remain to products we will associates, customers in make across sure talent our on meet that all on aligning their we're our In ways to needs.

distributing will to help XXXX, variety a business have into broadly, the move synergies more to on of revenue a as capabilities products. have access clients lines create we As our across wider which we as work we firm continue of will additional

as boost our to company Capitalize on a operating to the combined merger leverage. benefits integration of shifting operating from

line believe opportunity and will and synergies we the continue there are to we on recognized While build have savings an upon cost revenue processes in goals, our as focus to assess date. we further going capitalize on efficiency to opportunities. and And efficiency is to we're achieve to continue we optimization to

Manage new risk risk framework. to strong ensure meet of committed effectively. out We're will financial requirements compliance. large management capabilities the regulatory execute we institutions build our the and we to to continue XXXX, on In and regulatory

the progress heightened intently We regulatory focused the standards, on great be comply year, we will our to needed to hard capabilities planning In upon we readiness satisfy plans. executing and worked have regulatory made the and to ultimately develop on these with coming standards.

we are XXXX To conclude, to broader acknowledge positioned and while capital positions, relationships the and economy, certain customer build we and solid continue our to liquidity well grow balance concerns profitably. enter in sheet with

delivering the so focused model We regardless to and committed large communities. want to and conditions. on our in hard a across us at solid of results successful to and associates financial our client-focused to shareholders, customers I for time supporting market same our our company make working transformation thank will remain the the institution

to I'll Craig that, Nix. with over turn And it

Craig Nix

Thank and everyone. you, good Frank, morning,

common common of the deck, net stockholders X share. per fourth Page or to $XX.XX to was income GAAP $XXX million, Turning quarter

And million. policies, were prompted assets liquid long-term us decision as life charge accretion. this by in allows high quarter in from liquidity resulting quality of receive surrender, to $X.X exit and liquid higher yields we a to it proceeds $XX market the GAAP us tax Favorable capital of impacted Our results in exit strategic resulting to asset. invest fourth this conditions at insurance minimum billion bank-owned

PPNR First the look Citizens periods historical stockholders line NIM $XXX call. we an basis. common and On income on BancShares deeper million, are page the results. annualized ratios standalone if of provided the was on guidance an share, offer moment for the I'll company EPS, an of adjusted into in was during the our per ROA net ROA, combined EPS at common third or and periods. a that XXXX efficiency X.XX%. with this dive trends charge-off on in quarter XX.XX% ROTC ROE shown our $XX.XX presented we to little and components basis, a a Comparable were underlying these and as as produced ROE yielding net XXXX ROA,

X The CIT notable XX results provide section at of On results. at page and Page All were for and reported results And periods table the income XX derive the commentary. notable section top the adjusted the quarter-to-date included The the income those page of XX. summarizes adjusted of the showing condensed as XX, X, the commentary middle from on if table statements historical presented. two XXXX to impact at reported results supplements for year-to-date items. GAAP top for GAAP pages bottom the is merged adjusted Page and our of Page on we FCB are presented the results income statements items Commentary results during net results. the GAAP the the and bottom. at highlight discusses and part the in with represents adjusted

million in notable and the depreciation I operating mentioned maintenance BOLI million the the XXX included to $XX charge quarter expense equipment fourth $XX related merger-related items and and most of income, significant expense tax for just non-interest in lease in surrender, The reclassification expenses. on million non-interest the

in pre-provision the quarter provision quarter, Page losses available third shareholders the million and linked the was slightly XXX increase XXX now XXX for was credit an to to and down of during million million income lower common year. prior the due fourth XX, revenue. the The quarter fourth Focusing adjusted net in for from quarter, on net from decrease in

reserves and for by economic slightly partially to all over an provision deterioration increase expense. charge-offs, $XXX The XX.X% change outlook, million offset in the the net. increase higher or net on provision to in in million due in in growth partially a increase evaluated quarter loan net portfolio was only primarily due ago loans PPNR, build by a offset individually continued comparable $XXX was increase The impairment, year

to respect XX year-to-date detail periods. items with quarterly Page and for the notable provides relevant

impact had During these EPS. of the net $X.XX GAAP adjustments adding to fourth quarter, a

income $XXX quarter by quarter, $X the XX, Turning million. interest to Page over net for the totaled million linked up

As quarter income costs deposit we fourth increase net interest our growth and in decelerate. rising an balances guidance, deposit caused anticipated interest-bearing to in

Our cumulative in expectations. from with during our XX% deposit quarter, to increased line beta the X%

expense increased $XXX provided increased balances. deposit for higher year-to-date An due the earning by to of and $XXX to million costs periods loan assets. higher bottom comparable on linked Interest is income slide Interest interest-bearing and and the growth a at the due reference. analysis over the quarter funding of yield quarter million your

Turning was a ago. fourth from XX, X from third net basis quarter, the basis to and a XX X.XX% increased the points year the in points by decline interest quarter Page margin fourth

of pace in of linked key in increase share August, the that the points that the quarter. which components the more early X discuss quarter. would tied the net which repurchase hike cash, it note program I is margin reduced our felt the in continued earning Before negative foregone to yield quarter, the this had during of given we basis quarter, to the decline the on the began margin assets important in fully with from essentially margin was have past Fed the to rate a impact this This fourth impact

repricing, to deposits the While on more up occurred was deposits. slight from margin. a the benefit had quarter, with drag for repricing negative going yield Combined caught deposit the the on on during amidst quarter, earning it assets competition continued slightly than which

this the reduction a non-interest-bearing in to also quarter contributed deposits slight Additionally, during decline.

these sheet our half weather will are forward, of while in continue the we back rate Moving to asset off enable level headwinds interest from XXXX. us yields, favorably, increasing the believe balance benefit expected to we costs deposit to to as of expect strength

left quarters albeit side Turning to XX, graph indicate on than asset be sensitive, due we to cash the page less balances. continue the Page prior hand reduced of to the line slightly

market to We to benefit interest the management time take measured our to sheet lower position rates interest and providing a rates. to have balance and interest same against at while will from some approach downside higher continue risk rate protection

The increase will over and a loan asset which portfolio, would our the increase represents main quarter. betas cash modest XXX X.X%. basis strong unchanged variable prior position income drivers by from We sensitivity points deposit the rates interest are XXX deposit by in driven basis base. XX% a of of by points our total expected rate our estimate And it core net months, ramp our X.X% loans, XX next shock that

betas. Page to on provide XX, we deposit actual additional information some our Turning expected and

accounts. with bearing deposit exhibit network our exhibit betas. savings money network, lower exhibit representative deposits the deposits deposits of terms of finally, money moderate XX% Direct income exhibit XX% In representative of time and of branch checking savings and approximately deposits market, betas. of market of XX% betas higher our base, Branch deposit And CDs moderate of interest and and to The Bank betas. lower about total shown non-interest deposits XX% accounts exhibit XX% slide betas are on that higher total and

beta projection our quarter line Our was last through the XX%, cumulative with fourth was in which quarter.

We XX% of rate first to expect to by the cumulative increase from as quarter continue recent catch up the to beta end deposits increases.

Over cumulative beta forecast cycle, we will our approximately the hiking interest rate be XX%.

mentioned we as times earlier, to However, in Frank Fed with are unprecedented tightening. respect

through the beta our to whether whether loan of impact on expected, Our as fruition environment the be and deposits. will grow rate the for current cycle ultimately forecast the continue deposit dependent portfolio to we come competitive

for GAAP is on for in the year-over-year the $XXX income. we Page Adjusted to XX, same the income to linked increased the non-interest I quarters bars million blue from will income show focus as adjusted non-interest my periods. five non-interest past adjusted million. for and the $X comments Non-interest periods. by shown quarter comparable income Turning linked

While by we the that's rates, was maintenance significant, driven revenue from total continued maintenance net and depreciation, gross lease lower and on expenses. did as higher net, improvement see in income rental strong $X utilization of million operating change and assets lease a and well as higher depreciation not

more operating quarter with idiosyncratic, can expense be Maintenance more leases favorable. on this

coming do However, to we higher it quarters. expect in move the

quarter and higher fee had driver equipment of reasons income offset smaller saw changes for by and increased discussed increases service commissions, Our being the quarter. other just XX in income lease across several higher spread similar quarter. adjusted year fee other partially with on was million charges deposit generating on for non-interest improved income cardholder lines Non-interest insurance income income linked service a These another line items. accounts, And and charges. in great operating business we the the largest rental up over decline I were prior also factoring

we a costs my The and included the $XX is efforts the Non-interest balances. XX, linked shown primary adjusted show periods. for increase quarter comments drivers $X the over to the linked Turning bars the five expense and Direct marketing quarters to increase Page focus I'll to maintain attract million for same And past as year-over-year adjusting. in on due million periods. deposit Bank of the for GAAP the comparable in non-interest expense in new blue

episodic by primarily increased of costs ratio to $X mid Net of efficiency repairs nature primarily occupancy due to costs in inflation. range expense were and in attributable million. utilities increased XX.XX% The $X by our that Personnel million, XXs. target to adjusted remains were low up

continue helping would beyond, continued expense While maintain of digits feel X% our headwinds. growth otherwise for make XXXX than low the range to single expense and management the is we recognition a that to will in be X% inflation we in given cost save priority

changes quarter balance as adjusted key ago. our stable outlines aside won't covering with XX time I've income prior and pages the XX the relatively moment Page sheet from significant on component the operating just subsequent leases I to Page other composition, explained expense and rental non-interest a to spend shows highlights income debt. which compared cover and of ratios. remained these income

or our to Page had good X.X% on Turning annualized team quarter, billion linked reduced was loan deliver $X prepayments for basis, an over or as we to loans annualized to of for increasing an XX, by XX.X% with driven due Loan growth the basis. our by by branch the $X quarter another continued rate customers growth which and grew we by from benefit network, on interest the higher primarily the environment. quarter billion,

loans prepayment primarily growth annualized we growth $XXX XX.X% but ARM grew or network, in by our sheet. was up was and commercial The balance slowing branch basis. in to the which business loans. an was million, due on the on kept Mortgage concentrated Within production loans, rates,

pipelines to environment. given continue mortgage our We right flow see naturally the

purchases by approximate offset factoring decline last bank million for which by $XXX the loan And fourth an growth and in quarter refinance loans. quarter driven quarter, year. during in $XXX million of in funded the XX/XX to lower third balances the purchase by to split mark. XX% following commercial capital $XXX high declined volume mortgage business seasonal million our fourth due during loans Total quarter, approximately declined versus This the was of the decline partially expected primarily was compared

and million; billion On increased X.X% a loans business X.X branch and 'XX increases grew by in increases grew healthcare by $XXX verticals by estate about primarily these finance decline in the were and which in of loans. year-over-year basis, was over strong in by led real by billion, channel X.X X.X due commercial billion capital by growth million TMT, all or billion grew XXX bank, up industry to the and offset network, X mortgage

we and would work back quarterly following as spread the and results, performance year As of the merger, recognize that across teams lines both business. to on like resulting well these for have our I full look the hard sales strong our for as efforts excellent execution many the

Page type reference. by XX our shows and composition for segment loan

in through market X.X offset XX, Direct and time driver growth Bank. Page basis accounts savings or to $X.X on linked to main deposits. deposits interest-bearing decrease portion deposits the Turning delivered in increase of growth billion, by A quarter. by a partially billion is increases X.X% a an The deposits our of was large increased the due from money this in annualized

our the do increase worked deposit XXXX to in leverage from to we support to in balances help continued you'll remember this to help growth As loan have fund Bank We loan diligently Direct anticipate our previous channel call, growth. growth.

branch reduce added us in few network, traditional costs borrowings than it channel past to While this the expensive FHLB higher have the quarters. more will to we is compared enable

to in guidance. rate competitive our stay rates points, to during basis yield impact on raise XX But by of hike assets. the with with deposits our caught quarter Fed need Our increased is representative with our line cost the up points of quickly peers. earning funding the XX The has increase basis of cost from our to and our

well data XXXX. controlled end XXX was the funds deposit by at since cumulative Our the despite XX% of basis points Fed rate increasing

quarter, of as lower in to in pace its costs the While in 'XX continued increases we them expect mid first moderate expect to flatten begins the reduces Fed and deposit then increases we rates.

deposit on our composition have segment we efforts, your included by XX. and type For Page

Turning sheet XX% by funding over of our be to to representing continues XX, base. Page funded predominantly deposits, balance our

borrowings last quarterly just spoke features and to the moment As a to the deposit in I the increase concentration mentioned ago. approximately this billion those you'll We deposit I quarter, metrics growth the FHLB believe to by continue balances borrowings will as our had first initiated which continue we reflective we call of note is quarter. X.X decreased flatten quarter, non-deposit

we well though points build provision to Continuing credit due credit strong historic losses quality XX quarter. charge-offs. to our continues beat a small be see Provision $XX levels loans a you'll higher Page by even see and guidance. increased in uptick million and a net in did an net in increase The ratio XX, that remains to charge-off and the below charge-off non-accrual that basis million during for increase $X

portfolio from last our ratio driven the The quarter, to in increased non-accrual of bank and pre-pandemic specifically but in commercial bottom general related segment. real occupied office page, of level primarily estate increase the non-accruals by quarter X.XX%. to loan was XXXX non-owner the more the of Moving fourth X.XX% this remains below exposure commercial X.XX% the quarter

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our baseline This and estimates quarter, in which interest allowance the elevated real environment economy, meaningful levels. values, the continued reflected reduction estate all a rate slowdown in of impacted

incorporate we adjusted the aligned more more to begun we quarter risks. our see that weighting scenario forecast now As downside baseline given baseline our our have to this now closely recessionary scenario, reserves

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a The expectation our of fourth the third operating ACL increased million, total by totaling build $XXX with in $XX are X.X% mild We did million have or for now XXXX. the in over company loans. a recession reserve quarter quarter, net and the

offset to by a quarter with reserve to during X.X years fourth provided charge-off approximately ACL portfolio were due an reserve average outlook loans, a the for impacts macroeconomic a loans, shift slightly a on Our with years. build X.X rates. was in quarter. related evaluated negative partially increase a specific reserves lower to of the more net negative of coverage net than life quarter as in the mix growth These prior as well weighted quarter The the in portfolios decline on individually

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Okay.

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on quarter, X% during we in actively the the deposit fourth an to the by and some the experienced quarters Moving steps rate over to balance annualized fourth attrition Direct we took successfully higher in curb of deposits, third at quarter of grew price and second led the Bank.

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with results pleased full are our fourth in we quarter year closing, and In XXXX.

grow remain ability in commitments. we on his confident As comments, to profitably Frank deliver mentioned our our in and

of a talented to mix, management and business positions, culture. strong associates, positioned are diverse focused scenarios customers, economic in We and capital our liquidity on range broad risk given our our perform our well

portion the will it for With to over that, operator instructions Q&A the the for turn of I call.

Operator

[Operator Instructions].

Our question comes today from first KBW. Gailey from Brady

Your line is open.

Brady Gailey

Thank you. guys. Good morning,

Frank Holding

Good morning.

Brady Gailey

with loans. more I the us So to can And you in us that total that office First end or lot non-performing a loan the legacy increase tell your one loans, you give Was loans? a the color? just Was portfolio what of just or Can that year? two little is or size CIT? wanted the start the at legacy Citizens of CRE was of

Craig Nix

on to that. concentrated a Marisa, was going loans. Marisa color you the on in large little I'm all give are line? let It

Marisa Harney

bank. bank, a portfolio as of increase strong Class estate in morning. general much Good The a office seeing handful is bank a The a typically CIT And less close are community estate larger office occupied in split the as bank or handful commercial tenant. B few can. am. -- commercial real any couple drill that It's is portfolio. The office non-accruals names, portfolio, billion, was X.X specifically deterioration loans credit the I about legacy very than in it very a not overall names; based. more equally large to bank that non-owner so down of I commercial grade granular our in general investor real portfolio, It's between have billion. X.X the the investment general and

And is bridge. team B And the in of X.X office relatively short move reserves. portfolio the it that we're impairments. is where broad evaluate specific a non-accrual, we feel portfolio mentioned, job It's of means that terms It's credit we've assets So in in closely. is, those terms determining And in That obviously into tenured. geographies. watching need Craig commercial repositioned four things comfortable billion. about Class and office. it's obviously our it based as done in we But centered as special

originating are not We office. new that business in

Brady Gailey

and commercial Okay. to And billion, bank X.X office All the to general CRE bank? that's right, billion total that's helpful. than just very clear, X.X be the the the

Marisa Harney

And B commercial the correct. that X.X Class office that as the the is bank we've portfolio referring I been said, That's to. has

Brady Gailey

XXXX the still slide to what Or not the quarter, it a be year? just know this you per provision earnings tell year, is to to was gave the the guidance guidance. XX the this for Is time. share? that guys All then last I quarter next a specific some and know specifically the question share. EPS guided Okay. $XXX to was $XX That right. I next on just And uncertainty hard given could in deck expectation of for line to be 'XX XXX

Craig Nix

that Brady, towards end range. would I that range that we the relevant is say lower would guide still of

Brady Gailey

finally then the You this me, Okay. is before And buyback begin any of share there back money. where year? making guys are half scenario the for good could

is have half back the that scenario any have buybacks there than excess Like come the capital. clearly earlier of You 'XX?

Craig Nix

Brady, not really.

the is but quarter. process head first ongoing, to in comes Our really capital a planning

we of So capital and share repurchase submission plan the that with our will regulators plan. our align that capital our actions to and

So plan. ultimate it's dictates really timing the that of the share timing repurchase

the the So of half we prior anticipate to starting year. do that not second

Brady Gailey

for Okay. guys. color, the All Thanks right, great.

Frank Holding

you. Thank

Operator

Sandler. turn Scouten Piper now to Stephen We from

line Your open. is

Stephen Scouten

just difficulty a that that question kind following and you the up to any from foresee repurchase maybe everyone. had structure Would there Maybe size changes your any and on share any to year? that, changes incremental perspective regulatory who from authorization of procedural request the request last Thanks, of been need you regulatory repurchase changes? given would

Frank Holding

not or we And the approval same at go expecting the year, changes that. assessing way that all that we're any in so the Stephen, did of process any through. in we're last also changes we'll it no

Stephen Scouten

will Okay. CCAR submission? first your And when be

Tom Eklund

XXXX, being rule in than Category regulatory believe the subject starting participate asked at discretion of be we Stephen, we will are X our this the is unless so Tom Eklund. will plan be to CCAR bank in the And obviously It's capital to that. submission a We our sooner -- we XXXX. bodies. first believe

Stephen Scouten

that's sounds like, the book from that you. Okay, higher? your that the Thank you comments guess, but you It move that interest second think book faster I as guidance, of Craig, back Is than encouraged in got a your phenomenon back the maybe of to due And main hear kind repricing potentially loans, thinking it. lead I'm to deposits? That's about your especially net surprised then of higher, that would that margin helpful. quarter. little can

Craig Nix

That is absolutely correct. But I would say modestly higher.

Stephen Scouten

of of loan us perspective costs seeing from current your how can yields idea maybe then give deposit a And Okay, in terms that to today compares new incremental spread an you're and margin? what great. you and

Craig Nix

new we’re the Right of are on new now, range. markets the between our coming deposits on, coming just X%. money loan we various marginal XXX there, look The our you savings you loans and if that X.X% consider when books have at the deposits that out yields cost in are

have you Tom, to spreads points. like So to basis so are around XXX do you'd XXX anything [ph], that? spreads add

Tom Eklund

No.

market I think pay that's as curve I rates shifts both behaves, the accurate. sort suppose. attention to hikes and also of we how Fed Obviously, and the close shift

Craig Nix

But remains in yield of a the challenge. dynamic, that curve inversion the

Tom Eklund

Absolutely.

Stephen Scouten

definitely. Yes,

industry-wide especially that that acquisition well. non-interest-bearing away I in in pressure particular on think been this the digits maybe single customer where lead as just said And plans last deposit for non-interest-bearing of that the mid to otherwise terms know thing that's just growth. Okay. note shift there you one the I grow maybe me from is could Anything you is that, to mix most think seeing or quarter, we've would deposits? because negative you

Craig Nix

Yes.

through consistent just strategy the has And at do deposits growing of back loan forecasting I able various deposits, always are anchor strategy, emphasized go-to-market look been as alone we you total if to and a think I that no of deposits. non-interest-bearing remain we've percentage non-interest-bearing rate just mix to to our would cycles.

is feel goal there. We and growth will headwinds quantitative there X% we be acknowledge potential like can that But disintermediation achievable and a tightening reasonable.

Stephen Scouten

all thank appreciate Well, I it. for great. all you the Okay, color.

Tom Eklund

Thank you.

Operator

Foran [Operator Instructions]. Autonomous. Brian We now turn from to

is line Your open.

Brian Foran

Hi.

the EPS of also just I of XXX end maybe on the going you're XX range, focusing fee do potential the or But and able more be the of low uncertainty of and because the higher is nudges tax should provisions I Just back to or math. to that more that to mean, because on the expense rate that is contemplating?

Craig Nix

mid growth low to guidance current have single the digits comparing in we growth. just we guidance, look, the our digits deposit to increased the from single Brian, previous quarter mid gave that to third

growth non-interest low income growth. our flat to changed single have digit We to low single digit from

guidance increased our have to single mid from We growth. mid low digit expense non-interest to single

us the it run incorporate the that at through the XX repurchases us So end, range year. second and lower does it within half leaves XXX the of lower that, that to obviously you on it -- and us up when in the not total puts puts it share of with all just model, that

of I’ll say is So all that moving lot parts. a

Brian Foran

happen 'XX NII? they third or and those fourth basis in cuts Fed -- Fed impacted do And helpful. December guess quarter the affect of not then you're do NII and the really been points so incorporating, all like -- model, XX very the in at I they're That's really cuts have the the do of Fed

Elliot Howard

This at a that that would say one. one very minimal the is the so kind is the so has on one impact. impact Elliot I third But quarter, the certainly back of 'XX year, for the last marginal in Howard. cuts of end very of

Brian Foran

Okay. Thank it you. me. That is for

Frank Holding

Thank you.

Operator

Our Christopher comes from next Scott. Janney from Montgomery Marinac question

open. is line Your

Christopher Marinac

about to wanted of beyond deposit what I morning. ask business Good that Bank? also into much some of of XX%. account spills activity doing with the you're CIT the Thanks. kind How the beta to kind roadmap over and

Frank Holding

to referring catch activity question. commercial you business were account there? business or I the commercial Sorry, -- quite didn't

Christopher Marinac

kind Yes, between it of activity business versus raising was your within discussed as business account deposit as as kind online earlier some of of the interplay opportunities within core just your channel, business well accounts?

Frank Holding

in the we where as highest a channel, The channel. covered see beta, there. the the beta interest variables, higher lower Yes. higher the is Craig of categories, of fixed It's majority sort cost expense obviously but beta direct

the the beta that for sort overall us. of for is driver main really So

Craig Nix

beta. of deposit our XX% Yes, that represents

we branch If of have beta did the that's XX% of a lower and moderate at deposits. you look beta, network, mix

two those are So XX%. around channels

the network it So beta that really out, branch smooth lowers in total.

Tom Eklund

of are out overall, beta experience the really network. gathering of historical driving those say experiencing we're deposit the to sort up. online the channels I'd and Yes. beta similar It's branch that

Christopher Marinac

change that So over constant Craig, that would time? or stay that would XX%,

Craig Nix

You’re talking about XX% of the --

Tom Eklund

of think I deposit the XX% beta?

Craig Nix

but XX%. Yes, -- I significantly. not think it’s

look to be anticipate that the close XX% sort a things of forward. marginally, the point level we where that going maybe you might by Bank two, that If increase is I but going Direct projecting out, we're branch network to percentage to think or at shake

Christopher Marinac

that on thought changing from is what That's what time, helpful. the comfortable just would all you CET be ago? over quarters have bound that you And ratio it. Thank then with? that clarification. And at lower X few may the Got a for you're

Craig Nix

CET of a change quarter, is don't prior anticipate end X% and with we there. consistent low Our X and that's

Christopher Marinac

this you background well. very Thank Okay, the morning. very helpful. all for It’s

Frank Holding

you. Thank

Operator

follow-up Foran have from a Autonomous. question at Brian We

is line open. Your

Brian Foran

Hi.

parts, a couple up Just two guess has on just quick maybe ones of one that. following or but I on capital

sound of bps buyback, quarter, the you does accrete kind absent a So X XX to what about right? CET of that would XX

Craig Nix

You're close. Yes, very that's close.

Brian Foran

the you is what's Just then the Is capital? it the is of range end full remind X said range, And the XX X. is? or to me cycle capital through low target the what

Craig Nix

is CET X. XX for to the X range

Brian Foran

new Okay. And loan then front back to just book, come want I book the pricing. back to

message it's or cost of the lean So portfolio X to terms I yields production. you're new for in above on saying the basis because just didn't know X it's X.X that's of to And existing good, the the funds, takeaway? was or was XXX marginal good, that's message less the because points which

Elliot Howard

Brian, this Elliot is Howard.

I X.X% at view it look would we positive. to think as We X% pricing.

the is in Specifically X%. a little than a branch portfolio less yield that Current on network, we're more fixed. into lot

when at So we've a that. favorable gap look pretty got we

that are fixed win kind the a be of of in of the repricing XXXX. second back Some will half

Brian Foran

piece that's portfolio? So fixed the loan the rate of for just

Elliot Howard

that's I with differential up -- mean prices much down And and pretty right. index. the where the variable moves to pricing variable [indiscernible] rate That's

Brian Foran

half piece the than bit a And fixed just rate the little book? me remind or is more book half the of

Craig Nix

variable. XX% fixed, XX% It’s

Brian Foran

lot I it's banks. bigger but loan bank every a of like to this dynamic, guess relative so has book. Okay, your other a of piece

regional the bit get little funds average a of next got you trailing less And bank. it a bank tailwind back a book, a terms takes you more up so into the has the kind the next year, benefit would? of of bit for than little year, book in a because than typical immediate ratcheting and just front puts of bit in of 'XX Fed more you, But little

Craig Nix

Well said.

Brian Foran

even question. a Yes, statement. like wasn't that making realized I was a I just

was you it That's the Okay. Thank marginal comparing and the book entire I loan helpful you. because cost. thinking are to

very much. clears That it helpful. that's you So up. Thank

Frank Holding

you, Thank Brian.

Operator

to I’m not showing turn remarks. host I'd time. the call this over like any further closing back at for questions our to

Deanna Hart

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

Operator

today's gentlemen, this Thank call. and conference you. Ladies concludes

now You a Have disconnect. may day. wonderful

First Citizens BancShares (FCNCO) 26 Jan 232022 Q4 Earnings call transcript