FCNCA - Growing Economic Fears Hitting First Citizens Bancshares Hard

2025-03-14 09:34:09 ET

Summary

• First Citizens Bancshares (FCNCA) faces challenges due to its commercial focus and rate sensitivity, with weaker loan demand and lower rates both threatening 2025/26 expectations.
• First Citizens has seen above-average spread compression, but fee-based income has been growing well and credit costs appear to be under control.
• Economic uncertainty and potential recession risks lead me to more conservative estimates for 2025-2027, including likely year-over-year contraction in pre-provision profits in 2025.
• First Citizens should be able to grow core earnings at a long-term rate around 4%, supporting a meaningfully higher share price, but there is elevated near-term macro risk.

For a bank that has been generally hitting its marks, the performance of First Citizens Bancshares ( FCNCA ) ( OTCPK:FCNCB ) has been particularly disappointing. While the shares had been doing okay relative to bank indexes since my last update for a little while, and the company has performed well relative to expectations, the shares have weakened sharply since February of this year on growing concerns about the economy....

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