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Founded in the 1800s, First Citizens BancShares is one of the largest commercial banks in the United States. First Citizens BancShares is the holding company for First-Citizens Bank &amp; Trust Company, which offers retail and commercial banking services to individuals, small businesses, and larger companies in the United States and internationally. Since purchasing Silicon Valley Bank in 2023, First Citizens has offered financial services to startups and technology firms through a division called Silicon Valley Commercial.

Q2 2025

Q1 2025

Q4 2024

First Citizens BancShares (FCNC.A): Company Profile, Stock Price, News, Rankings

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First Citizens BancShares

first citizens bancshares

Ladies and gentlemen, thank you for standing by, and welcome to the First Citizens Bank Shares 4th Quarter 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode.

After the speakers' presentation, there will be

a question and answer session. As a reminder, today's conference is being recorded. I would now like to introduce the host of this conference call, Ms. Diana Hall, Head of Investor Relations. You may begin.

Good morning, and welcome to First Citizens' 4th quarter earnings call. Joining me on the call today are our Chairman and Chief Executive Officer, Frank Holding and our Chief Financial Officer, Craig Nicks. They will provide 4th quarter business and financial updates referencing our earnings call presentation, which you can find on our website. Our comments today will include forward looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from expectations. We assume no obligation to update such statements.

These risks are outlined on page 3 of the presentation. We will also reference non GAAP financial measures. Reconciliations of these measures against the most directly comparable GAAP measures can be found in section 5 of the presentation. Finally, First Citizens is not responsible for and does not edit nor guarantee the accuracy of earnings transcripts provided by 3rd parties. I will now turn it over to Frank.

Thank you, Deanna. Good morning, everyone, and welcome to our call. I'll provide brief comments on our Q4 results as well as our 2025 strategic priorities before turning it over to Craig to review our performance in more detail and discuss the outlook for 2025. Starting on Page 6, we delivered another quarter of strong results, return metrics with adjusted earnings per share of $45.10 coming in above our expectations on higher core PPNR than anticipated. We remain encouraged by the performance across all our operating segments with each of them achieving loan and deposit growth during the quarter.

As Craig will discuss later, I do want to highlight that SVB had a great quarter as VC Investment activity saw modest improvements. 4th quarter loans were up over the Q3 and the Q4 of last year despite the ongoing muted pace of investment for most of the year. Deposits were also up with total client funds registering solid annualized and actual percentage growth in the Q4 and for the full year, respectively. As we approach 2 years combined with SVB, we remain pleased with the stability of the franchise and particularly the competitive advantage we have in the innovation economy and in fund banking. Capital and liquidity remained strong during the quarter, providing us with capacity for balance sheet growth while continuing to optimize our capital position through share repurchases.

During the Q4, we repurchased an additional 3.5% of our Class A common stock, bringing total repurchases since the inception of the repurchase plan to 6.44%. In early January, we announced the appointment of Matt Snow to our Board of Directors. Matt is a distinguished leader and an executive with more than 30 years financial services experience and most recently served as Chairman of the Governing Board of Florvus Mazars, a top 10 U. S. Accounting firm.

We are excited to add him to our team and know he will provide invaluable insights, which will help us continue to successfully navigate the landscape for large financial institutions. Finally, in the wake of the recent wildfires and hurricanes, our thoughts continue to be with our affected associates, clients and communities across the West Coast and the Southeast. Following the tragic loss of life and widespread destruction of property, we are committed to continued support of those impacted, and we assure them that we that they have our support now and in the days, months and years to come. Turning to Page 7. I want to highlight our strategic areas of focus this year.

We have added significant scale to our organization over the past few years while increasing our footprint and client base and expanding our products and services to support them. This transformation of our company has not changed our commitment to our clients, associates and communities that helped us build the foundation upon which we sit today. We remain steadfast in our long term approach, our client our relationship focus on clients and customers and our commitment to strong risk management, all of which you will see pull through in our 2025 strategic priorities. I will now discuss each of these briefly. First, with respect to our customers and clients, CIT and SVB introduced us to new strategic markets with expanded products and services, allowing us to help our customers and clients achieve their goals at every stage of their personal, business and entrepreneurial journeys.

In 2025, we will continue to expand these new capabilities throughout the organization, which will enhance our ability to provide seamless relationship management across our lines of business. 2nd, developing our associates and adding talent to support growth remain important priorities. Our ability to attract, retain and develop associates is critical to our success and ensuring we have the right talent in place to support our growth remains critical. 3rd, operational efficiency remains a priority. The significant growth of our company over the past 3 years comes with a corresponding increase in technical and operating complexity.

To position the company for long term growth, we seek to simplify our operating environment and streamline our technology platforms to enable us to capitalize on the scale. 4th, balance sheet management will be focused on optimizing our liquidity and capital positions to support continued profitable growth. We will continue to focus on a funding remix to core deposits to support asset growth in our lines of business. Additionally, we plan to continue our share repurchase plan with the goal of optimizing our capital. Finally, prudent risk management will remain a guiding principle across all our strategic efforts, and we will continue to invest in our capabilities as we approach Category 3 regulatory status.

To conclude, I'm pleased that 2024 financial with our 2024 financial performance exceeded our expectations, And we're excited about the opportunities that lay ahead for us in 2025. I'm confident that we remain well positioned to generate long term sustainable value for our clients, communities and shareholders. I'll turn it over to Craig now to review our financial results in more detail. Craig?

Thank you, Frank. Appreciate everyone joining us today. I will anchor my comments to the Q4 key takeaways outlined on Page 9. Pages 10 through 27 provide more details underlying our results. Our 4th quarter return metrics and efficiency continued to compare favorably to our peer group with ROE and ROA adjusted for notable items of 11.51% and 1.14%, respectively, and an adjusted efficiency ratio of 57%.

Headline NIM was 3.32 percent, and NIM ex accretion was 3.16%. Aligned with our guidance, headline net interest income was down from the 3rd quarter as the impact of lower yields on loans and overnight investments and lower accretion income more than offset higher investment securities income and lower deposit costs. Headline NIM contracted sequentially by 21 basis points and excluding accretion by 17 basis points. 17 basis points decline was driven primarily by the negative impact of Fed rate cuts during the last 4 months of the year on our earning asset yield, which was only partially offset by lower funding costs. Adjusted noninterest income increased 9% sequentially, beating our top line guidance.

We continue to see solid traction in the rail business with 13 consecutive quarters of positive repricing trends and another quarter of strong utilization rates. We also benefited from strong performance in our Commercial and SVB Commercial segments driven by increased deal flow, which led to higher international and lending related syndication fees. We also had positive impacts from fair value changes in customer derivative positions and other nonmarketable investments driven by changes in the rate environment. Adjusted noninterest expense came in slightly above our guidance range, increasing sequentially by 3.1 percent driven by higher personnel, amortization and other expense. Increased personnel costs were driven in part by net staff additions as we continue to build out our technology and risk organizations to support strategic projects and scale for future growth.

The increase was also due to higher incentive compensation and related benefit expenses driven by the strong revenue year for the bank. Equipment expense increased due to several technology projects coming online, which drove higher amortization and software licensing costs. As Frank noted in our strategic priorities, we are making investments in our infrastructure to support scalability and future growth, which have impacted our operating expenses in recent periods. Other expense increased during the quarter, driven by a number of miscellaneous items, with the most significant including higher state related non income taxes due to our increasing asset size as well as charitable donations provided to support relief efforts for the recent hurricanes and other smaller increases in various operating expenses. While these expenses were expected, they pulled through at a slightly elevated level in the Q4 given accelerated hiring and increased project spend.

We will continue to make investments to help us scale effectively and to support both organic and strategic growth opportunities. Moving to credit, non accrual loans decreased sequentially. And while net charge offs were up slightly by 4 basis points over the Q3, they were aligned with our expectations. Consistent with previous quarters, net charge offs were mostly concentrated in the general office, investor dependent and small ticket leasing portfolios, but we did experience higher losses in our commercial finance business due to some idiosyncratic losses within our industry verticals. We continue to take a disciplined measured approach to proactively reviewing our portfolios for additional stress and maintaining vigilance on credit will remain a priority.

We believe our credit losses are well contained and see no emerging problems in other portfolios outside of those previously discussed. The allowance ratio decreased by 1 basis point to 1.2%. We feel good about our reserve coverage as well as the coverage on the portfolios experiencing stress. Moving to the balance sheet, we experienced broad based loan growth across our operating segments, ending the quarter up $1,500,000,000 or by 1.1 percent sequentially. General bank loans grew by $676,000,000 attributable to continued strong performance in business and commercial loans while commercial bank loans were up $508,000,000 with growth concentrated in our industry verticals.

SVB commercial loans grew by $342,000,000 driven by Global Fund Banking as draws in new fundings outpaced paydowns and payoffs. Our team remains well positioned to serve new and existing clients, booking more than $5,000,000,000 in new business during the Q4. While the Tech and Health Care business was down sequentially, it was in line with our expectations as the macro environment continues to be a drag on originations. Turning to the right hand side of the balance sheet. Deposits were up $3,700,000,000 or about 2.4 percent sequentially and exceeded our guidance as we experienced strong growth across our operating segments.

The direct bank was the largest contributor to the increase, growing by $1,600,000,000 We were measured in bringing down our rates during the quarter to ensure balanced stability and to attract new clients given a shift in strategy for one of our SVB commercial deposit products. This high yielding deposit product will be shifting to an off balance sheet product in the Q1 and is expected to lower total deposits in this channel on balance sheet by $2,500,000,000 While this will result in an absolute reduction in on balance sheet SVB commercial deposits, the funds will increase off balance sheet client funds and is expected to have a limited impact on total client fund balances in the segment. This is one step we have taken as we work to optimize our balance sheet to enhance liquidity and reduce total deposit interest expense. In the general bank, we experienced growth of $893,000,000 as we continue to maintain strong client relationships and grow deposits organically. We expect future deposit growth in the general bank to continue given our client first focus and deeply rooted relationship banking model.

As Frank highlighted earlier, SVB had a good quarter in terms of deposits, achieving sequential actual and average growth of $692,000,000 $1,200,000,000 respectively. Additionally, total client funds, which include off balance sheet accounts, were up over the Q3 on a period on both a period end and average basis, increasing by $5,300,000,000 $3,900,000,000 respectively. Our tech and health care team was the largest contributor to the total client fund growth as higher VC investment and better market valuations acted as a tailwind for increased inflows for both existing and new clients. Moving to capital, Frank mentioned that we continue to make progress on our share repurchase plan. As of close of business on January 22, we repurchased 6.44 percent of Class A common shares or 6% of total common shares outstanding for a total price of $1,800,000,000 This represents just over 50 percent of our Board approved $3,500,000,000 repurchase.

The CET1 capital ratio decreased by 25 basis points sequentially, ending the quarter at 12.99 percent. Along with the impact of share repurchases, this was driven by a continued decline in the benefit provided by the shared loss agreement, which added approximately 66 basis points to the ratio this quarter, down 7 basis points from the 3rd quarter. CET1, excluding the benefits of the shared loss agreement, decreased 18 basis points sequentially as risk weighted asset growth and the impact from share repurchases outpaced earnings growth. We intend to manage CET1 ex loss share towards the 10.5% to 11% range by the end of 2025, which is the level it was following the acquisition of SVB. We intend to accomplish this through regular share repurchases in 2025 as we continue to assess capital needs, considering loan growth, earnings trajectories and the economic and regulatory environments.

I will close on Page 29 with our Q1 and full year 2025 outlook. We anticipate loans in the $140,000,000,000 to $142,000,000,000 range in the Q1, driven in part by growth in the Commercial Banking segment, primarily coming from our industry verticals. We also expect SVB Commercial will benefit from growth in the Global Fund Banking business, thanks to the strong pipeline it maintains, but we do remain cautious on the absolute level of growth. Looking at the full year, we expect loans in the $144,000,000,000 to $147,000,000,000 range driven by anticipated growth in SVB Commercial and the commercial bank industry verticals. We expect that SVB Commercial growth will be more concentrated in the back half of the year as the Fed's monetary easing cycle begins to take effect and we see the benefit of higher VC investment activity as well as better capital markets activity.

For the full year, in the general bank, we expect continued mid single digit percentage growth in business and commercial loans in the branch network. We do look to move pockets of our residential and consumer production off balance sheet to create additional liquidity while generating supplemental noninterest income. We expect deposits to be in the $154,000,000,000 to $157,000,000,000 range in the Q1. We expect overall growth in the general bank as deposit gathering remains a top priority. Additionally, in the general bank, we are projecting growth in our HOA business given our national market share position.

There is a lot of consolidation in this industry, and we tend to be on the favorable side of it as our large customers continue to acquire smaller HOAs that may not be clients. We expect that growth in the general bank will be partially offset by a decline in SVB Commercial as we intentionally shift the higher yielding deposit product that I mentioned earlier off balance sheet in the Q1. For the full year, we anticipate deposits in the $162,000,000,000 to $167,000,000,000 range. Growth in deposits will be driven primarily by the general and direct banks. In the general bank, we will continue to benefit from our branch network leveraging new products and initiatives to deepen client relationships.

We will also continue to focus on increasing our customer base by building deposits through proactive sales associate outreach, centralized marketing campaigns and increased community connectivity. We will continue to leverage the direct bank to drive growth in insured core deposits. While it is a higher cost product, we anticipate benefiting from falling interest rates and believe it will provide us with the strategic agility to pursue our balance sheet optimization efforts. Our interest rate forecast covers a range of 0 to 4 25 basis points rate cuts, with the effective Fed funds rate range declining from 4.25 to 4.50 currently to as low as 3.25 to 3.50 by the end of the year. While our baseline forecast follows the implied curve, applied forward curve, which includes 2 rate cuts, we believe there's the possibility that declining inflation could lead to additional cuts.

However, given stubborn inflationary metrics and recent hawkish positions by the Fed, we recognize these cuts may also not occur. Therefore, we believe it is prudent to provide a range of expectations for the year. We expect Q1 headline net interest income to be relatively stable compared to the 4th quarter as lower deposit costs are offset by lower accretion and interest on earning assets. Our guidance does include the planned impact of share repurchase activity for 2025 under our current share repurchase plan. For the full year, we expect headline net interest income to be in the range of $6,600,000,000 to $7,000,000,000 reflecting the impact of the 50 basis points rate cuts that occurred in the Q4 as well as any potential additional rate cuts in 2025.

In either case, as expected, we project that loan accretion will be down by over $200,000,000 for the year. On credit losses, we anticipate 1st quarter net charge offs relatively in line with the Q4. While we anticipate continued stress in the investor dependent and office portfolios, we do believe Equipment Finance is beginning to normalize, and we are seeing signs of improvement and trending toward longer term expectations for this portfolio. In commercial real estate, rate cuts could ease some of the pressure on borrowers in the general office sector and over the long term help to reduce stress in this portfolio. However, we do believe losses remain elevated in 2025 even as market disruption may lessen as more companies begin to reinstate office attendance requirements.

We also anticipate continued stress in the investor dependent portfolio throughout 2025. While the Fed cycle is a welcome change, the catalyst for buyers to become more acquisitive and for public investors to have an improved appetite for IPOs remain elusive. And while later stage companies in the portfolio are less dependent on fresh capital, higher interest rates and challenging macro conditions continue to impact operating performance. Encouragingly, we did see a $31,000,000,000 uptick in VC investment in the 4th quarter compared to the 3rd quarter. However, we remain guarded on the overall outlook as there were a number of outsized deals in these totals.

And when large deals are removed, the 4th quarter total is aligned with the 2024 quarterly average. Continued improvement here will be facilitated by higher fundraising environment driven by both M and A and IPOs. With respect to the net charge off ratio, we do have a couple larger deals that we expect to pull through as losses in the Q1. Therefore, the net charge off ratio could be more elevated in the Q1 in the range of 40 to 50 basis points. However, we expect full year the full year net charge off ratio to be aligned with longer term expectations in the 35 to 45 basis points range.

We will continue to refine these estimates as the year progresses, but at this juncture, we are not seeing any signs of material concern. Moving to adjusted non interest income, we expect a sequential decrease in the Q1 to the $475,000,000 to $500,000,000 range mainly due to the Q4 exceeding our expectations. We saw strong net operating lease income in part due to lower maintenance expense, which can be lumpy quarter to quarter. Also, we expect typical slight seasonal declines for the Q1 in areas such as card, merchant, factoring, mortgage and capital market fees. We expect full year adjusted noninterest income up slightly into the $1,950,000,000 to $2,050,000,000 range.

This growth is driven by our rail outlook, which includes our balanced railcar portfolio and strategic exploration ladder, which we expect will continue to support positive repricing throughout 2025. We also expect continued momentum in our Wealth business as we increase our assets under management as well as higher international and lending related fees given the healthy fundamentals supporting these businesses. Moving to adjusted noninterest expense. We expect the Q1 to be flat to modestly up compared to the Q4, in part driven by seasonal benefit increases, offset by lower other noninterest expense categories that were elevated at year end as previously discussed. We continue to invest in risk and technology capabilities and are working to better optimize our platforms.

As a result, we are seeing higher third party processing fees and expect higher equipment expense due to amortization as projects are placed into service. We feel our continued investments in technology and risk will help us build towards Category 3 expectations as well as creating a foundation for effective and scalable growth into the future. Additionally, we expect increasing marketing expenses in the direct bank as we try to hold on to and grow deposits in this channel. Looking at the full year, we anticipate adjusted non interest expense to increase into the 5.05 to $5,200,000,000 range as equipment expense, 3rd party processing fees and marketing expense from the investments I previously mentioned take effect Exercising disciplined expense management while making opportunistic investments is a top priority for us giving headwinds to net interest income from lower rates. We expect continued spend into 2025 as we further enhance our risk management framework, modernize our technology capabilities and consolidate our platforms to improve client experience and better enhance collaboration across our business units.

Our adjusted efficiency ratio is expected to remain in the upper 50% range in 2025 as the impact of the Fed rate cut cycle puts downward pressure on net interest margin, and we continue to make investments into areas that will help us scale to Category 3 status when we cross that threshold. Longer term, our goal is to operate with an efficiency ratio in the mid-50s. Finally, we are lowering our estimated effective tax rate by approximately 1 percent to 25% to 26% for both the Q1 and full year 2025, which is exclusive of any discrete items. The lower Q4 2024 and estimated 2025 tax rates were primarily the result of a lower apportionment rate than estimated on the assets acquired from SVB, which occurred upon filing our first combined state tax returns. To conclude, in 2024, we delivered peer leading returns to our shareholders and maintained strong capital and liquidity positions, all while increasing our capabilities as a large financial institution.

enter 2025, I'm excited about the opportunities we have to drive continued long term value for our shareholders. I will now turn it over to the operator for instructions for the question and answer portion of the call. Thank you.

Thank Our first question comes from Bernard Vrondiske from Deutsche Bank. Bernard, your line is open. Please go ahead.

Hey, guys. Good morning. Just on the 2025 outlook, the range of the $6,600,000,000 to $7,000,000,000 for net interest income, could you just walk us through the assumptions on the low and then the high end of the range? Just anything you can provide there?

Sure. So our net our baseline forecast is anchored to 2 rate cuts, but the range contemplates anywhere between 4. And obviously, the exact absolute value or number for net interest income and for margin will be dependent upon the magnitude timing of those rate cuts. But if I just if we want to talk about just the trajectory for the Q1 of 'twenty five compared to the 4th, we expect headline and ex accretion net interest income to be anywhere from up to down 1% sequentially. So a lot of movement, fairly stable For the exit in the Q4 of 'twenty five, anchoring to 2 rate cuts, we expect headline net interest income to be up low single digits.

Ex accretion, net interest income to be up low to mid single digits. And we expect headline NIM in the low-320s, ex accretion NIM in the low-3.10s. So that range that you referenced does contemplate between 0 and 4. The numbers that I just mentioned really, we're really pegging towards the we're pegging towards the 2 rate cuts in the last half of the year.

Okay, great. Thanks for that color. And just my one follow-up. I think on last quarter's call, Greg, I think you've noted, there could be some additional acquisition related synergies from SIBB. Just wondering what that could entail and if there are any cost or revenue synergies assumed in the 2025 guide?

We they're not material or significant. We've achieved the cost synergies estimate that we laid out at the beginning of the acquisition. So don't anticipate any material impact from further expense synergies on SVB in the guidance.

Okay, great. Thanks for taking my questions.

The next question comes from Anthony Eleon from JPMorgan.

Hi, everyone. I was wondering if you could provide more color on the total client fund growth you saw in SVB in the 4th quarter. I know a good portion of the $75,000,000,000 in venture capital investment you had on Slide 22 came from large late stage deals that Craig you highlighted. But I think early stage was flat sequentially. I'm just curious how much of those larger deals contributed to the total client fund growth you saw in 4Q?

And if you think the growth in total client funds can persist even with a higher for longer rate outlook?

Mark, would you like to take that question?

Happy to take that question, yes. So as already noted on the call, the roughly $75,000,000,000 invested in the 4th quarter did have a chunk of very large deals in it, roughly a third of that total, were 3 very large financings. And then I want to say $1,000,000,000 plus rounds, we're almost half of the total. So as Craig mentioned earlier, for the part of the fundraising or the investment rather that we tend to capture more of is in that sub-one billion dollars range. And so with that for context with venture investment of the sub-one billion dollars roughly flat quarter over quarter, We are pleased with the growth.

I think it signals that we're continuing to execute well. We also saw less lower level of cash burn in the quarter relative to Q3, which also helped a bit. And so going into 2025, I think our expectations, as Craig already mentioned, we are cautious about growth expectations for SVB given the continued mixed environment for investment, IPOs, etcetera, interest rates weighing on all of it perhaps at least until the second half of the year. And so I'll end by saying that our expectations for TCF growth is captured in the forward guidance Greg mentioned earlier.

Great. Thank you, Mark. And then my follow-up maybe for Frank. I want to get your latest thoughts on M and A just given First Citizens has been historically acquisitive, right? You're getting close to the Category 3 threshold and the regulatory backdrop with the new administration will likely be more favorable for all banks.

Thank you. We are not projecting any material M and A activity in 2025, but we're an opportunistic crowd. So but we are not making any projections in that area.

The next question comes from Chris McGratty from KBW. Chris, your line is open. Please go ahead.

Great. Thanks. Frank or Craig, if you look at the guide and I guess take rates out of it for a moment, where do you think the biggest upside potential is to the guide and also the biggest downside risk?

Well, upside would be rates higher for longer. If we're on the zero end of that range, that's the biggest one given that net interest income is over 80% of net revenues. So that certainly would be an upside. Upside could be if our net charge offs fall to the lower end of the range, which would imply less provisioning next year. Downside risk could be if the economy slows, negatively impacting both loan and deposit growth.

That could certainly be on the downside. Those are the major ones that come to mind. Tom or Elliot, anything else that comes to your mind on upside or downside?

Thank you for that. And then in terms of category 3 readiness, Craig, I mean, within the guide for expenses this year,

you think do you think this gets you most of the way there? Or do you think 2026 is again kind of a little bit of an overinvest year?

I think it does. I think the expenses associated with Category 3 Readiness are reflected in our run rate for expenses.

Next question comes from Christopher Marinac from Janney Montgomery Scott. Christopher, your line is open. Please go ahead.

Thanks. Good morning. Craig, I want to go back to the buyback comments you made and the impact of the lost share agreement. Is that lost share agreement going to work itself to 0 this year? Or is that going to take longer into 26?

The spread between the our capital ratios with and without loss share is going to shrink to around 10 basis points. And it was 66 basis points this quarter. So yes, it's working out to a 0 impact on capital throughout the remainder of the year.

Great. And is the buyback a goal for 2025? Or would the reduction closer to 11 or less take longer than this year, do you think?

Assuming that managing to the 10.5% to 11% range, we contemplate that we actually institute another share repurchase plan in the second half of this year. The current one would be completed over the next 2 to 3 quarters. So we're in the midst of our capital plan now. And depending on projected earnings trajectories and the results of the stress testing, we would contemplate another plan in the second half of the year. Tom, you want to talk about anything?

No. I mean I The repurchases? No, I think you hit it. I mean, earnings accretion will still be strong and outpace RWA growth. And we'll continue to work our capital ratios down is really the plan over the coming quarters.

Great. Thank you for that background. And just a quick one on credit. Beyond the information you gave us about the SVB criticized, any other general trends on criticized and classified for the general bank?

No, nothing material. Again, I think credit is well contained. Andy, would you like to elaborate on any of that? Or is that pretty much where you see it?

No, I agree. I think, no discernible trends. Obviously, we've seen a slight uptick, but obviously, seen a slight uptick, but nothing of concern.

Great. Thank you all very much. Appreciate the information.

Next question is from Nick Hulico from UBS. Nick, your line is open. Please go ahead.

Hi, good morning. Good morning. Just coming back to the expense outlook for the year. As you're thinking about the investments you're making on the regulatory readiness front and sounds like it's those expenses are built into the run rate at this point. But would potential changes to the regulatory backdrop change about change how you're thinking about those investments over the next couple of years?

We recognize that prioritization of regulatory policy initiatives could change. But we are remaining steadfast in our goal to become to meet regulatory expectations for Category 3, Category 4, Category 3. So we do not see significant changes, regulatorily, at least in the near term, and certainly, where we would be focused going into 2025, 2026.

Got it. And then you noted, your goal for operating with an adjusted efficiency ratio in the mid-50s versus the upper 50 range for 2025. And you laid out your strategic priorities for the year, including focus on improving operational efficiency and optimizing the balance sheet. So as you think about the progress that you're making on those fronts, do you have a view on how you're thinking about the sustainable ROTCE power of the bank over the medium term?

I mean, yes, I think in the short term, we've obviously quadrupled in size over the last 3 years. So with that comes significant investment in both technology and our risk management capabilities. Our goal with the operational efficiency is to over time improve our processes, simplify our processes so that we are better able to meet regulatory expectations and also improve our customer experience. So that's not something that will happen in the short term. Obviously, rates have a lot to do with us operating right now in that upper 50s range.

So rate help would certainly be the case. But our goal through operational efficiency would be over the long term to operate in the mid-50s.

I'm not showing any further questions at this time. So I'd like to turn the call back over to our host, Ms. Diana for any closing remarks.

Thank you, and thanks, everyone, for joining our earnings call today. We appreciate your ongoing interest in our company. And if you have further questions or need additional information, please feel free to reach out to the Investor Relations team through our website. We hope you have a great rest of your day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Have a wonderful day.

First Citizens BancShares Q4 2024 Earnings Call Transcript | Fortune

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First Citizens BancShares (FCNC.A) Q4 2024 Earnings Call Transcript

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