First Citizens BancShares Off To A Good Start With Its Transformative Acquisition

Stephen Simpson profile picture
Stephen Simpson
18.39K Followers

Summary

  • First Citizens has executed well in these initial quarters after the close of the CIT deal, and 20%-plus sequential pre-provision profit growth compares favorably to its peer/comp group.
  • First Citizens has been delivering better-than-average loan growth and deposit cost leverage, but management is getting a little more cautious on guidance given a weakening macro outlook.
  • I believe First Citizens will leverage its enhanced commercial lending capabilities, good deposit franchise, and merger cost synergy opportunities to generate above-average mid-to-high single-digit core earnings growth.
  • That earnings growth should support a double-digit annualized return from here, while shorter-term ROTCE and EPS-based metrics support a fair value around $960.
First Citizens Bank, Columbia

J. Michael Jones/iStock Editorial via Getty Images

For several years now, investors owning the shares of banks undertaking large mergers have had to wait a while to see the benefits, as the market has taken a “wait and see” approach that has meant underperformance relative to benchmarks until the synergies start

This article was written by

Stephen Simpson profile picture
18.39K Followers
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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