Adjusted earnings of $55.37 a share were well above estimates, though down from the second quarter. Loans grew $6.2 billion, deposits $11.8 billion, and the bank authorized another $1.2 billion of buybacks.
First Citizens BancShares' quarter was strong against forecasts and softer against its own recent past. Investors focused on the first comparison.
Adjusted earnings were $55.37 a share, compared with $57.09 in the second quarter and well above the $46.18 analysts expected. On a reported basis, net income available to common shareholders was $577 million, or $51.23 a share, compared with $55.52 in the second quarter and $43.08 a year earlier. Total net income was $606 million.
"Third quarter performance exceeded our expectations, fueled by strong, high quality top-line growth, accelerated loan and deposit growth, highly resilient credit quality, and expense discipline," Chairman and Chief Executive Frank B. Holding, Jr. said.
The balance sheet grew
Net interest income rose $43 million from the second quarter to $1.70 billion. The net interest margin narrowed 3 basis points to 3.07%.
Loans and leases climbed $6.16 billion in the quarter to $157.19 billion. Deposits rose $11.84 billion to $185.26 billion, including about $4.86 billion assumed with 138 branches acquired from BMO. Revenue was about $2.43 billion, against estimates of about $2.23 billion.
Credit costs explain much of the step down from the second quarter. The bank recorded a $55 million provision for credit losses, against a $10 million benefit in the prior quarter.
The efficiency ratio, which measures costs as a share of revenue, was 64.7%, above the roughly 61.5% expected, according to StockStory's estimates.
Capital returns
First Citizens bought back about $600 million of stock in the quarter and approved a new authorization of up to $1.2 billion of Class A shares through 2027. It also repaid another $8.0 billion of its purchase money note held by the Federal Deposit Insurance Corp.
The reaction
Shares rose 8.4% to about $2,381 by early afternoon, near their 52-week high, while the SPDR S&P Regional Banking ETF gained only 0.3%. That gap points to a stock-specific response.
Growth or cost
The bullish case is that the branch deal is doing what it was meant to: adding low-cost deposits and funding loan growth, while the buyback signals confidence in capital levels.
The cautious case is that adjusted earnings fell from the second quarter, the margin narrowed, the provision swung to an expense, and the efficiency ratio came in above expectations.
What to watch
Net interest margin and expense trends as the BMO branches are integrated, loan growth in the fourth quarter, and the pace of buybacks under the new authorization.