First Citizens BancShares, Inc. Reports Quarterly Results for the Quarter Ended March 31, 2025

Recent Events

Debt Issuances In March 2025, the Parent Company issued $500 million in 5.231% Fixed-to-Floating Rate Senior Notes due 2031 and $750 million in 6.254% Fixed-to-Fixed Rate Subordinated Notes due 2040.

Termination of the Shared-Loss Agreement with the FDIC In April 2025, the bank and the FDIC terminated the Shared-Loss Agreement, which had required the bank to report on and share losses on certain acquired assets. The bank determined the likelihood of reaching the $5 billion loss threshold was remote, and terminating the agreement eliminated reporting responsibilities.

Share Repurchase Program In July 2024, the Board authorized a $3.5 billion share repurchase plan through 2025. In the first quarter of 2025, the bank repurchased 302,683 shares for $613 million, representing 2.38% of Class A common shares outstanding.

Changes to Reportable Segments The bank updated its segment reporting, transferring certain components between the SVB Commercial, Commercial Bank, and General Bank segments and modifying the expense allocation methodology.

Recent Economic, Industry and Regulatory Developments The Federal Reserve maintained interest rates in early 2025 due to continued inflation pressure. The Trump administration’s trade policies have created uncertainty and volatility in global markets.

Financial Performance Summary

The bank’s net income for the first quarter of 2025 was $483 million, down 31% from the prior quarter. Earnings per diluted share were $34.47, down from $49.21.

Key Highlights:

• Net interest income (NII) decreased 3% to $1.66 billion due to lower yields on interest-earning assets and a shift in the asset mix.
• Net interest margin (NIM) decreased 6 basis points to 3.26%, or 3.12% excluding purchase accounting accretion.
• Noninterest income decreased 9% to $635 million, mainly due to declines in other noninterest income, fair value adjustments, and gains on sales.
• Noninterest expense decreased 2% to $1.49 billion, driven by lower acquisition-related costs and other expenses, partially offset by higher personnel costs.
• Provision for credit losses was $154 million, relatively flat compared to the prior quarter.
• Income tax expense increased $132 million to $168 million, primarily due to a change in the state tax rate applied.
• Return on average assets decreased to 0.87% from 1.25% in the prior quarter.

Balance Sheet Highlights

• Loans and leases grew 1% to $141.36 billion, with increases in commercial and SVB loans offsetting a decline in consumer loans.
• Investment securities increased 1% to $44.32 billion, as purchases of short-duration securities offset paydowns and sales.
• Deposits grew 3% to $159.33 billion, driven by growth in the Direct Bank, Branch Network, and SVB Commercial segment.
• Borrowings increased 4% to $38.41 billion, primarily due to the current quarter debt issuances.
• The bank remained well-capitalized, with a total risk-based capital ratio of 15.23%.

Funding, Liquidity and Capital Overview

Deposits Deposits represent 81% of the bank’s total funding. Uninsured deposits were $58.06 billion or 36% of total deposits at quarter-end.

The Direct Bank had $44.17 billion or 27.7% of total deposits, primarily in savings accounts. SVB Commercial segment deposits were $37.02 billion or 23.2% of the total.

Liquidity Position The bank had $62.79 billion in high-quality liquid assets, including $23.77 billion in cash and $39.02 billion in securities. It also had $16.54 billion in unused FHLB borrowing capacity and $5.61 billion with the Federal Reserve.

Investment Securities Duration The investment securities portfolio had an average duration of 2.7 years, with the available-for-sale portfolio at 2.3 years and the held-to-maturity portfolio at 4.3 years.

Capital Position The bank remained well-capitalized, with a total risk-based capital ratio of 15.23%, a Tier 1 risk-based capital ratio of 13.35%, a common equity Tier 1 ratio of 12.81%, and a Tier 1 leverage ratio of 9.75%.

Results of Operations

Net Interest Income and Net Interest Margin NII decreased 3% to $1.66 billion, and NIM decreased 6 basis points to 3.26% (3.12% excluding purchase accounting accretion). The declines were due to lower yields on interest-earning assets, a shift in the asset mix, and higher interest-bearing deposits, partially offset by lower deposit costs.

Noninterest Income Noninterest income decreased 9% to $635 million, primarily due to:

• $36 million decline in other noninterest income from fair value changes in customer derivatives and a write-down of a held-for-sale asset
• $15 million decrease in the fair value adjustment on marketable equity securities
• $6 million lower gain on sale of leasing equipment
• $3 million decline in factoring commissions

Noninterest Expense Noninterest expense decreased 2% to $1.49 billion, driven by:

• $20 million lower acquisition-related expenses
• $32 million decrease in other noninterest expense, including lower non-income taxes and donations Partially offset by:
• $17 million increase in personnel costs from merit raises, staff additions, and higher benefits

Income Taxes Income tax expense increased $132 million to $168 million, primarily due to a change in the state tax rate applied in the prior quarter.

Results by Segment

General Bank Net income decreased $33 million to $253 million, driven by higher personnel costs, partially offset by higher NII. Deposits grew $1.35 billion, mainly in money market accounts.

Commercial Bank Net income decreased $45 million to $43 million, due to lower noninterest income, NII, and higher personnel costs. Loans grew $733 million, primarily in TMT and healthcare.

SVB Commercial Net income decreased $15 million to $166 million, mainly from lower NII, partially offset by lower noninterest expense and provision for credit losses. Deposits grew $496 million.

Rail Net income decreased $9 million to $22 million, driven by lower gains on equipment sales and net rental income. The rail fleet utilization rate was 97.0%.

Balance Sheet Analysis

Interest-Earning Assets

• Interest-earning deposits at banks increased 16% to $24.69 billion as the bank grew customer deposits and issued debt.
• Investment securities increased 1% to $44.32 billion, with purchases of short-duration securities offsetting paydowns and sales.
• Loans and leases grew 1% to $141.36 billion, with increases in commercial and SVB loans.

Deposits Total deposits grew 3% to $159.33 billion, driven by growth in the Direct Bank, Branch Network, and SVB Commercial segment, partially offset by a decline in the Commercial Bank segment.

Borrowings Total borrowings increased 4% to $38.41 billion, primarily due to the current quarter debt issuances.

Allowance for Loan and Lease Losses (ALLL) The ALLL increased $4 million to $1.68 billion, or 1.19% of total loans, due to modest deterioration in the macroeconomic forecast and loan growth, partially offset by a shift in the loan portfolio mix.

Risk Management

The bank has a moderate risk appetite and a comprehensive risk management framework overseen by the Board’s Risk Committee. Key risks monitored include credit, market, capital, liquidity, operational, compliance, and strategic risks.

The bank’s ALLL methodology incorporates macroeconomic scenario forecasts, with the ALLL estimate ranging from $1.42 billion under the upside scenario to $2.17 billion under the downside scenario. Management determined an ALLL of $1.68 billion was appropriate at quarter-end.

Conclusion

In the first quarter of 2025, BancShares reported a 31% decline in net income compared to the prior quarter, driven by lower net interest income, noninterest income, and higher income tax expense. However, the bank maintained a strong balance sheet, with growth in loans, deposits, and capital ratios. The bank continues to focus on prudent risk management as it navigates the evolving economic and regulatory environment.