Business Context and Reporting Period
Company: First Citizens BancShares, Inc. (FCNCA)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: BancShares operates as a bank holding company with its primary subsidiary, First-Citizens Bank & Trust Company (FCB). The company operates through three reportable segments: General Bank, Commercial Bank, and Rail. As of December 31, 2025, total consolidated assets were $229.70 billion. The company is a Category IV banking organization under the Federal Reserve's Tailoring Rules.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net Income | $2.21 billion | $2.78 billion | (21%) |
| Diluted EPS | $165.24 | $189.41 | (13%) |
| Net Interest Income (NII) | $6.81 billion | $7.14 billion | (5%) |
| Net Interest Margin (NIM) | 3.25% | 3.54% | (29 bps) |
| Noninterest Income | $2.73 billion | $2.62 billion | +4% |
| Noninterest Expense | $6.06 billion | $5.74 billion | +6% |
| Provision for Credit Losses | $514 million | $431 million | +19% |
| Total Assets | $229.70 billion | $223.72 billion | +3% |
| Total Loans & Leases | $147.93 billion | $140.22 billion | +6% |
| Total Deposits | $161.58 billion | $155.23 billion | +4% |
| Return on Average Assets (ROAA) | 0.96% | 1.26% | (30 bps) |
Capital and Liquidity
- Common Equity Tier 1 (CET1) Ratio: 11.15% (2025) vs. 12.99% (2024).
- Total Risk-Based Capital Ratio: 13.71% (2025) vs. 15.04% (2024).
- Tier 1 Leverage Ratio: 9.29% (2025) vs. 9.90% (2024).
- Liquidity: High-quality liquid assets totaled $56.01 billion (24.4% of total assets). Uninsured deposits represented 38.3% of total deposits.
Material Changes vs. Prior Period
- Decline in Net Income: Net income decreased by $571 million (21%) primarily due to lower Net Interest Income (NII), higher noninterest expense, and a higher provision for credit losses. This was partially offset by higher noninterest income and lower income tax expense.
- Net Interest Margin Compression: NIM decreased 29 basis points to 3.25%, driven by lower yields on loans and interest-earning deposits at banks, and lower purchase accounting accretion (PAA). PAA decreased by $230 million to $251 million.
- Provision for Credit Losses: Increased by $83 million to $514 million. This included a $530 million provision for loan and lease losses, driven by a $100 million increase in net charge-offs. A significant portion of the charge-offs ($82 million) related to a single supply chain finance client.
- Expense Growth: Noninterest expense rose $321 million (6%), led by increases in personnel costs ($216 million), marketing ($66 million), and equipment expenses ($51 million). Acquisition-related expenses decreased by $69 million.
- Balance Sheet Growth: Loans and leases grew $7.71 billion (6%), primarily in the Commercial Bank segment (Global Fund Banking, TMT, and Healthcare). Deposits grew $6.35 billion (4%), with significant growth in the Corporate segment (Direct Bank).
Guidance, Outlook, and Risks
Management Commentary and Outlook
- Strategic Priorities: Focus on client focus, talent and culture, operational efficiency, and balance sheet optimization.
- Share Repurchases: The Board authorized a $4.0 billion share repurchase program (2025 SRP) in July 2025. As of December 31, 2025, $2.81 billion remained available. The company repurchased approximately $3.03 billion of Class A common stock in 2025.
- Dividends: Quarterly dividends on Class A and Class B common stock were $2.10 per share in Q4 2025. A dividend of $2.10 per share was declared for Q1 2026.
- Debt Management: The company made a $2.49 billion partial prepayment of the FDIC Purchase Money Note in December 2025 and additional prepayments in early 2026. New debt issuances in 2025 totaled $1.85 billion.
Risks and Contingencies
- Acquisition Risks: Pending acquisition of 138 branches from BMO Bank N.A. (expected to close H2 2026) involves integration risks and regulatory scrutiny.
- Credit Concentrations: Significant exposure to Non-Depository Financial Institutions (NDFIs), which comprised 31.8% of commercial loans ($38.42 billion). Capital call lines represent 85% of the NDFI portfolio.
- Commercial Real Estate (CRE): CRE loans totaled $23.78 billion. General office loans (1.35% of total loans) showed negative credit quality trends.
- Regulatory Environment: Subject to enhanced prudential standards as a Category IV bank. Potential changes in capital requirements (Basel III Endgame) and liquidity rules (LCR/NSFR) if asset thresholds are crossed.
- Legal Proceedings: Management estimates an aggregate range of reasonably possible losses of up to $25 million in excess of established reserves for pending litigation.
Investor Verification Checklist
- Verify NDFI Exposure: Confirm the credit quality and loss rates of the $38.4 billion NDFI portfolio, particularly the $31.8 billion in capital call lines, given the concentration risk.
- Monitor Purchase Money Note: Track the remaining balance of the FDIC Purchase Money Note ($33.39 billion at year-end) and the company's strategy for further prepayments or refinancing at maturity in 2028.
- Assess CRE Office Portfolio: Review specific metrics for the general office CRE portfolio, which has shown higher delinquency and nonaccrual rates compared to other CRE sectors.
- Review BMO Acquisition Progress: Monitor regulatory approval status and integration plans for the pending BMO branch acquisition.
- Check Capital Ratios: Verify that CET1 and Total Risk-Based Capital ratios remain well above the Basel III minimums and PCA "well capitalized" thresholds, noting the impact of the terminated FDIC Shared-Loss Agreement on 2024 comparative ratios.