First Citizens' Q3 Net Income Dips Amid Rising Credit Loss Provisions

TL;DR

**First Citizens' Q3 earnings are a red flag, with net income dropping and credit loss provisions surging, signaling potential trouble ahead despite share buybacks.**

AI Summary

First Citizens BancShares, Inc. reported a net income of $568 million for the three months ended September 30, 2025, a decrease from $639 million in the same period of 2024. For the nine months ended September 30, 2025, net income was $1,626 million, down from $2,077 million in 2024. Total assets increased to $233,488 million as of September 30, 2025, from $223,720 million at December 31, 2024, driven by a rise in interest-earning deposits at banks to $24,798 million and loans and leases to $144,758 million. Net interest income decreased to $1,734 million for the three months ended September 30, 2025, from $1,796 million in 2024, and to $5,092 million for the nine months, down from $5,434 million. The provision for credit losses significantly increased to $191 million for the quarter, up from $117 million, and to $460 million for the nine months, up from $276 million. Noninterest income saw growth, reaching $699 million for the quarter, up from $650 million, primarily due to higher rental income on operating lease equipment and other noninterest income. Personnel costs increased to $817 million for the quarter, up from $788 million, contributing to a rise in total noninterest expense to $1,491 million from $1,456 million. The company also repurchased 1,098,992 shares of Class A common stock for $2,148 million during the nine months ended September 30, 2025.

Why It Matters

First Citizens' declining net income and increased provision for credit losses signal potential headwinds for investors, suggesting tighter lending conditions or a deteriorating loan portfolio. The significant share repurchases, totaling $2,148 million, could be a positive for existing shareholders by boosting EPS, but the overall financial performance indicates a challenging environment. For employees, the increased personnel costs suggest continued investment in human capital, while customers might face stricter lending criteria. In the competitive banking landscape, these results could impact First Citizens' ability to compete on loan offerings and deposit rates, potentially ceding ground to more robust competitors.

Risk Assessment

Risk Level: medium — The provision for credit losses increased significantly to $191 million for the three months ended September 30, 2025, from $117 million in the prior year, and to $460 million for the nine months, up from $276 million. This substantial increase suggests a heightened risk of loan defaults or a more conservative outlook on credit quality, directly impacting profitability and indicating potential asset quality deterioration.

Analyst Insight

Investors should closely monitor First Citizens' future credit loss provisions and net interest margin trends. Consider re-evaluating exposure given the increased credit risk and declining profitability, potentially reducing positions or seeking more stable banking sector investments.

Financial Highlights

debt To Equity

1.85

revenue

$1,734M

operating Margin

N/A

total Assets

$233,488M

total Debt

$38,675M

net Income

$568M

eps

$N/A

gross Margin

N/A

cash Position

$874M

revenue Growth

-3.5%

Revenue Breakdown

Key Numbers

• $568M — Net Income (Q3 2025) (Decreased from $639M in Q3 2024)
• $1,626M — Net Income (9M 2025) (Decreased from $2,077M in 9M 2024)
• $233,488M — Total Assets (Sep 30, 2025) (Increased from $223,720M at Dec 31, 2024)
• $1,734M — Net Interest Income (Q3 2025) (Decreased from $1,796M in Q3 2024)
• $191M — Provision for Credit Losses (Q3 2025) (Increased from $117M in Q3 2024)
• $460M — Provision for Credit Losses (9M 2025) (Increased from $276M in 9M 2024)
• $699M — Total Noninterest Income (Q3 2025) (Increased from $650M in Q3 2024)
• $1,491M — Total Noninterest Expense (Q3 2025) (Increased from $1,456M in Q3 2024)
• 1,098,992 — Class A Common Stock Repurchased (9M 2025) (Costing $2,148M)
• $144,758M — Loans and Leases (Sep 30, 2025) (Increased from $140,221M at Dec 31, 2024)

Key Players & Entities

• First Citizens BancShares, Inc. (company) — Registrant and financial holding company
• First-Citizens Bank & Trust Company (company) — Banking subsidiary of BancShares
• Silicon Valley Bank (company) — Bank whose components were transferred to Commercial Bank segment
• Federal Deposit Insurance Corporation (regulator) — Insurance expense
• $568 million (dollar_amount) — Net income for three months ended September 30, 2025
• $639 million (dollar_amount) — Net income for three months ended September 30, 2024
• $1,626 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $2,077 million (dollar_amount) — Net income for nine months ended September 30, 2024
• $191 million (dollar_amount) — Provision for credit losses for three months ended September 30, 2025
• $2,148 million (dollar_amount) — Cost of repurchased Class A common stock for nine months ended September 30, 2025

FAQ

Risk Factors

• Increased Provision for Credit Losses [high — financial]: The provision for credit losses significantly increased to $191 million for Q3 2025, up from $117 million in Q3 2024, and to $460 million for the nine months, up from $276 million. This indicates a potential deterioration in loan portfolio quality or increased economic uncertainty.
• Decreased Net Interest Income [medium — financial]: Net interest income decreased to $1,734 million for Q3 2025 from $1,796 million in Q3 2024. This decline, coupled with a decrease in total interest income, suggests pressure on the bank's core lending and deposit-taking profitability.
• Rising Personnel Costs [medium — operational]: Personnel costs increased to $817 million for Q3 2025 from $788 million in Q3 2024. This rise contributed to an overall increase in total noninterest expense, impacting the bank's operating efficiency.
• Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact both interest income and interest expense. The decrease in interest income from investment securities and deposits at banks suggests sensitivity to the prevailing rate environment.
• Changes in Segment Reporting [low — regulatory]: The company updated its segment reporting in Q1 2025, recasting prior periods to conform. While not a new risk, ongoing changes in reporting can sometimes obscure underlying performance trends or create temporary confusion for investors.

Industry Context

The banking industry is currently navigating a complex environment characterized by fluctuating interest rates, increased regulatory scrutiny, and evolving customer expectations. Competition remains intense, with traditional banks facing pressure from both fintech challengers and larger, more diversified financial institutions. Deposit growth is a key focus, as banks seek to manage funding costs while supporting loan demand.

Regulatory Implications

First Citizens BancShares operates within a highly regulated industry. Changes in capital requirements, liquidity rules, and consumer protection laws can significantly impact profitability and operational strategies. The company's recent segment reporting updates suggest an ongoing effort to align with evolving disclosure standards and internal management structures.

What Investors Should Do

1. Monitor the trend in provision for credit losses.
2. Analyze the drivers of noninterest income growth.
3. Evaluate the impact of rising personnel costs on efficiency ratios.
4. Assess the bank's interest rate sensitivity and net interest margin outlook.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the latest financial results, showing decreased net income and increased provision for credit losses.
• 2025-12-31: End of Fiscal Year 2024 — Prior period balance sheet data for comparison, showing lower total assets and deposits.
• 2025-01-01: Beginning of Fiscal Year 2025 — Start of the period for which year-to-date financial information is reported.

Glossary

Provision for credit losses

An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. (An increase in this provision, as seen in Q3 2025, signals potential concerns about the quality of the loan portfolio.)

Net interest income

The difference between the interest income generated by a bank and the interest it pays out on deposits and borrowings. (A key measure of a bank's core profitability; a decrease here is a negative indicator.)

Noninterest income

Revenue generated by a bank from sources other than interest, such as fees, service charges, and trading income. (Growth in noninterest income, as reported, can help offset declines in net interest income.)

Noninterest expense

Costs incurred by a bank that are not related to interest payments, such as salaries, rent, and technology. (An increase in noninterest expense, particularly personnel costs, can reduce overall profitability.)

Allowance for loan and lease losses (ALLL)

A contra-asset account that reduces the carrying value of loans and leases to their estimated net realizable value. (The ALLL is a reserve against potential loan defaults; changes in its balance reflect management's assessment of credit risk.)

Interest-earning deposits at banks

Funds held by the bank in interest-bearing accounts at other financial institutions. (An increase in this asset category suggests the bank is holding more liquid assets, potentially earning interest in a higher rate environment.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, First Citizens BancShares reported a decrease in net income for both the three and nine months ended September 30, 2025. While total assets saw an increase, driven by growth in interest-earning deposits and loans, net interest income declined. A significant concern is the substantial rise in the provision for credit losses, indicating a more cautious outlook on loan performance. Conversely, noninterest income showed positive growth, partially offsetting increased noninterest expenses, which were primarily driven by higher personnel costs.

Key Financial Figures

• $1 — stered Class A Common Stock, Par Value $1 FCNCA Nasdaq Global Select Market Dep

Filing Documents

• fcnca-20250930.htm (10-Q) — 7480KB
• fcnca_ex42xamendmentno1toc.htm (EX-4.2) — 893KB
• fcnca_exx311x3q2025ceocert.htm (EX-31.1) — 10KB
• fcnca_exx312x3q2025cfocert.htm (EX-31.2) — 10KB
• fcnca_exx321x3q2025ceocert.htm (EX-32.1) — 3KB
• fcnca_exx322x3q2025cfocert.htm (EX-32.2) — 3KB
• 0000798941-25-000050.txt ( ) — 30521KB
• fcnca-20250930.xsd (EX-101.SCH) — 89KB
• fcnca-20250930_cal.xml (EX-101.CAL) — 191KB
• fcnca-20250930_def.xml (EX-101.DEF) — 674KB
• fcnca-20250930_lab.xml (EX-101.LAB) — 1060KB
• fcnca-20250930_pre.xml (EX-101.PRE) — 910KB
• fcnca-20250930_htm.xml (XML) — 7767KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 4 Consolidated Balance Sheets (Unaudited) 4 Consolidated Statements of Income (Unaudited) 5 Consolidated Statements of Comprehensive Income (Unaudited) 6 Consolidated Statements of Changes in Stockholders' Equity (Unaudited) 7 Consolidated Statements of Cash Flows (Unaudited) 9 Notes to Unaudited Consolidated Financial Statements 11

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 58

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 112

Controls and Procedures

Item 4. Controls and Procedures 112

—OTHER INFORMATION

PART II—OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 113

Risk Factors

Item 1A. Risk Factors 113

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 114

Other Information

Item 5. Other Information 114

Exhibits

Item 6. Exhibits 115

Signatures

Signatures 116 2 GLOSSARY OF ABBREVIATIONS AND ACRONYMS The following is a list of select abbreviations and acronyms used throughout this document. You may find it helpful to refer back to this table. Acronym Definition Acronym Definition ALLL Allowance for Loan and Lease Losses MSRs Mortgage Servicing Rights AOCI Accumulated Other Comprehensive Income NCCOB North Carolina Office of the Commissioner of Banks ASC Accounting Standards Codification NDFI Nondepository Financial Institution ASU Accounting Standards Update NII Net Interest Income BHC Bank Holding Company NII Sensitivity Net Interest Income Sensitivity bp or bps Basis point(s); 1 bp = 0.01% NIM Net Interest Margin CRA Community Reinvestment Act NPR Notice of Proposed Rulemaking CRE Commercial Real Estate OBBBA One Big Beautiful Bill Act DPA Deferred Purchase Agreement OREO Other Real Estate Owned DTAs Deferred Tax Assets PAA Purchase Accounting Accretion or Amortization ETR Effective Income Tax Rate PAM Proportional Amortization Method EVE Sensitivity Economic Value of Equity Sensitivity PCA Prompt Corrective Action FCB First-Citizens Bank & Trust Company PCD Purchased Credit Deteriorated FDIC Federal Deposit Insurance Corporation PD Probability of Obligor Default Federal Reserve Board of Governors of the Federal Reserve System PPNR Pre-provision net revenue FHLB Federal Home Loan Bank ROU Right of Use FOMC Federal Open Market Committee RWA Risk-weighted assets FRB Federal Reserve Bank SBA Small Business Administration GAAP United States Generally Accepted Accounting Principles SOFR Secured Overnight Financing Rate HPI Home Price Index SRP Share Repurchase Program HQLS High-Quality Liquid Securities SVB Silicon Valley Bank ISDA International Swaps and Derivatives Association SVBB Silicon Valley Bridge Bank, N.A. LGD Loss Given Default TMT Technology Media and Telecommunications LOCOM Lower of Cost or Fair Value UPB Unpaid Principal Balance MD&A Management's Discussion an

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. First Citizens BancShares, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) dollars in millions, except share data September 30, 2025 December 31, 2024 Assets Cash and due from banks $ 874 $ 814 Interest-earning deposits at banks 24,798 21,364 Securities purchased under agreements to resell 83 158 Investment in marketable equity securities (cost of $ 78 at September 30, 2025 and $ 79 at December 31, 2024) 110 101 Investment securities available for sale (cost of $ 35,187 at September 30, 2025 and $ 34,512 at December 31, 2024) 34,963 33,750 Investment securities held to maturity (fair value of $ 8,838 at September 30, 2025 and $ 8,702 at December 31, 2024) 10,051 10,239 Assets held for sale 112 85 Loans and leases 144,758 140,221 Allowance for loan and lease losses ( 1,652 ) ( 1,676 ) Loans and leases, net of allowance for loan and lease losses 143,106 138,545 Operating lease equipment, net 9,446 9,323 Premises and equipment, net 2,283 2,006 Goodwill 346 346 Other intangible assets, net 208 249 Other assets 7,108 6,740 Total assets $ 233,488 $ 223,720 Liabilities Deposits: Noninterest-bearing $ 42,752 $ 38,633 Interest-bearing 120,438 116,596 Total deposits 163,190 155,229 Credit balances of factoring clients 1,326 1,016 Borrowings: Short-term borrowings 423 367 Long-term borrowings 38,252 36,684 Total borrowings 38,675 37,051 Other liabilities 8,311 8,196 Total liabilities 211,502 201,492 Stockholders' equity Preferred stock - $ 0.01 par value ( 20,000,000 shares authorized at September 30, 2025 and December 31, 2024) 881 881 Common stock: Class A - $ 1 par value ( 32,000,000 shares authorized at September 30, 2025 and December 31, 2024; 11,613,444 and 12,712,436 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively) 12 13 Class B - $ 1 par value ( 2,000,000 shares authorized and 1,005,185 shares issued and outstanding at September 30, 2025 and

Financial Statements

Financial Statements In certain instances, amounts reported in the 2024 consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported stockholders' equity or net income. Changes to the Composition of Reportable Segments We updated our segment reporting during the first quarter of 2025 (the "Segment Reporting Updates") as we transferred certain components from the Silicon Valley Bank ("SVB") Commercial and General Bank segments to the Commercial Bank segment and modified our segment expense allocation methodology. The Segment Reporting Updates did not result in the addition or removal of any of our existing segments at December 31, 2024, and the global fund banking and investor dependent loan portfolios, as well as a substantial portion of the cash flow dependent and innovation commercial and industrial ("innovation C&I") loans, remain in the SVB Commercial segment. Segment disclosures for 2024 periods included in this Form 10-Q were recast to conform with the Segment Reporting Updates summarized above. Refer to Note 17—Segment Information for additional information. 11 2025 Loan Class Changes At December 31, 2024, our disclosures for loans and leases and the allowance for loan and lease losses ("ALLL") were aggregated into Commercial, Consumer, and SVB portfolios, each of which consisted of several loan classes as summarized below: The Commercial portfolio consisted of the following loan classes: commercial construction, owner occupied commercial mortgage, non-owner occupied commercial mortgage, commercial and industrial, and leases. The Consumer portfolio consisted of the following loan classes: residential mortgage, revolving mortgage, consumer auto, and consumer other. The SVB portfolio consisted of the following loan classes: global fund banking, investor dependent - early stage, investor dependent - growth stage, and cash flow dependent

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