Banks
First Citizens' Fund Banking loans climb to $43.2 billion as it sets a $1.2 billion buyback for 2027
Third-quarter profit fell to $606 million as provisions rose, while the lender repaid another $8 billion of its purchase money note and kept its full-year guidance ranges.
HedgeWeekly News Desk ·
First Citizens BancShares reported third-quarter net income of $606 million on Friday, down from $672 million in the second quarter, or $51.23 a share against $55.52. Its board approved a plan to buy back up to $1.2 billion of Class A shares in 2027, after the bank spent $600 million repurchasing 278,828 shares during the quarter. Adjusted earnings were $55.37 a share.
Loans and leases rose 4.1% from the end of June to $157.19 billion and deposits grew 6.8% to $185.26 billion, helped by about $4.9 billion of deposits from 138 BMO branches it took over on September 4. Net interest income rose $43 million to $1.70 billion, though the net interest margin slipped 3 basis points to 3.07%. The bank booked a $55 million provision for credit losses after a $10 million benefit in the prior quarter, while net charge-offs eased to 0.27% of average loans from 0.29%. Its common equity Tier 1 ratio was 10.24%.
Growth was led by Fund Banking. Period-end loans in that business reached $43.2 billion, up $11.8 billion, or 37.8%, from a year earlier, and the Commercial Bank segment's $5.48 billion of loan growth in the quarter was mainly concentrated there. Fund Banking now makes up about 27% of the bank's total loans.
For investors, the other number to track is the purchase money note. First Citizens repaid $8.0 billion in the quarter and another $1.5 billion in October, leaving a balance of about $20.5 billion at the end of September. It expects to prepay $3.5 billion to $4.0 billion a quarter and clear the note by the end of 2027, ahead of its March 2028 maturity, mainly by growing deposits faster than loans. For the fourth quarter it guided to period-end loans of $158 billion to $161 billion and deposits of $189 billion to $192 billion, with $711 million still left under its current buyback plan.