FCNCA Q3 Deep Dive: Deposit Growth and Platform Expansion Amid Expense Pressures

Regional banking company First Citizens BancShares (NASDAQGS:FCNC.A) announced better-than-expected revenue in Q3 CY2025, but sales were flat year on year at $2.43 billion. Its non-GAAP profit of $44.62 per share was 7.5% above analysts’ consensus estimates.

Is now the time to buy FCNCA? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

First Citizens BancShares delivered third quarter results that modestly exceeded Wall Street’s revenue and non-GAAP profit expectations, while sales remained flat compared to the prior year. Management attributed stable performance to net interest income growth, disciplined expense management, and continued deposit inflows, particularly from the SVB Commercial division. CEO Frank Holding cited a seventh consecutive quarter of deposit growth and highlighted strong loan production in Global Fund Banking. CFO Craig Nix noted that, despite a one-off charge-off related to the First Brands bankruptcy, credit quality remained within anticipated ranges and the overall loan portfolio showed resilience. The management team emphasized ongoing efforts to maintain capital strength and operational efficiency through automation and platform integration.

Looking ahead, management sees both opportunities and uncertainties shaping First Citizens’ outlook for the remainder of the year and into 2026. Executives remain focused on deepening client relationships, investing in technology, and optimizing the balance sheet, while acknowledging macroeconomic risks and competitive pressures in lending and deposits. CFO Craig Nix stated, “We continue to monitor the environment and how it could impact our performance,” pointing to anticipated challenges from potential interest rate cuts and expense pressures related to regulatory compliance and technology investments. Management also highlighted the upcoming BMO branch acquisition as a key initiative to expand market reach and improve funding mix, though its impact will not be felt until mid-2026.

Key Insights from Management’s Remarks

Management attributed third quarter outcomes to solid deposit retention, targeted loan growth in key segments, and measured expense control, while noting the impact of a significant credit event and ongoing strategic investments.

• SVB Commercial loan growth: The SVB Commercial segment drove strong sequential loan growth, primarily through increased utilization and production in Global Fund Banking. Management emphasized that capital call portfolio activity remains a positive driver, though borrowing levels can be volatile quarter-to-quarter.
• Deposit inflows and mix: Deposits increased for the seventh straight quarter, with inflows coming from both SVB Commercial and General Bank segments. Notably, noninterest-bearing deposits remained stable at 26%, supporting funding cost management as interest rates fluctuated.
• Credit event impact: An $82 million charge-off tied to the First Brands bankruptcy weighed on credit metrics but was described as isolated. Management stated that the remainder of the supply chain finance portfolio is well diversified and regularly reviewed for risk.
• Expense discipline amid investments: Adjusted noninterest expense was flat sequentially, coming in at the low end of guidance. However, management highlighted ongoing investments in automation, technology, and regulatory readiness, which are expected to drive expense growth in the near term.
• Branch network expansion: The announced agreement to acquire 138 BMO Bank branches will extend First Citizens’ national footprint and is intended to improve deposit funding and balance sheet flexibility, although the deal’s closing and integration are not expected until mid-2026.

Drivers of Future Performance

First Citizens’ outlook is shaped by macroeconomic uncertainty, regulatory-driven expense pressures, and the strategic push to expand client relationships and digital capabilities.

• Interest rate and lending environment: Management expects loan growth to continue, especially in commercial and wealth segments, but forecasts some pullback in Global Fund Banking utilization due to market volatility. Rate cuts could put downward pressure on net interest margin, while increased competition may affect loan pricing and deposit costs.
• Expense growth and regulatory compliance: Investments in technology, automation, and Category 3 regulatory readiness will drive operating expenses higher in the near term. Management stated that expense growth should moderate after major projects conclude, but some costs will persist as the organization scales.
• Market expansion and integration: The upcoming BMO branch acquisition is expected to enhance deposit funding and reduce asset sensitivity over time. Management also anticipates that a stronger branch network and improved digital offerings will support organic growth, though the full benefit will be realized gradually post-integration.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the impact of interest rate changes and competition on loan and deposit growth, (2) progress on integrating newly acquired BMO branches and the resulting shift in funding mix, and (3) evidence that technology and operational investments are translating into improved efficiency and client experience. Developments in regulatory compliance and credit quality trends will also be important markers.

First Citizens BancShares currently trades at $1,756, in line with $1,744 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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