First Citizens Reports Adjusted Earnings of $55.37 per Share, Authorizes $1.2 Billion Buyback
Key Facts
First Citizens BancShares reported third-quarter 2026 results on October 23, and its chairman and chief executive said the period's performance "exceeded our expectations." Adjusted earnings were $55.37 per share, above the Zacks consensus estimate of $46.61, for an earnings surprise of 18.79%. Net income, by contrast, was $606 million, compared with $672 million in the second quarter. Net income available to common shareholders was $577 million, or $51.23 per share under accounting standards, down $63 million from the prior quarter. The board also announced a program authorizing the repurchase of up to $1.2 billion of Class A shares during 2027.
The year-over-year comparison showed improved adjusted profitability: adjusted earnings per share rose from $44.62 in the third quarter of 2025 to $55.37 in the current period. Adjusted return on equity increased to 12.24% from 10.62% a year earlier, while adjusted return on assets was 1.08%, compared with 1.01%. The quarter-over-quarter picture was less consistent, however, as net income declined from the second quarter despite adjusted earnings exceeding analyst estimates. This reflects the different measures used to present performance: the comparison with the Zacks estimate concerns adjusted earnings per share, while net income and net income available to shareholders compare actual results between the two quarters. The company's official release did not cite analyst estimates; the estimate comparison is based on Zacks.
Net interest income rose to $1.70 billion in the third quarter, up $43 million from the prior quarter. Loan interest income increased $88 million, supported by higher average balances and yields, while interest income on investment securities rose $26 million as average balances and yields increased. In contrast, interest expense on interest-bearing deposits climbed $90 million, driven by higher average balances and rates paid. Borrowing expenses fell $19 million, mainly because of an additional repayment of the asset purchase agreement. The company said quarterly growth in net interest income was "supported by balance sheet growth."
Higher funding costs weighed on the net interest margin, which was 3.07%, down 3 basis points from the second quarter. The rate paid on interest-bearing liabilities rose to 3.01%, an increase of 6 basis points over the same period. Loans and leases totaled $157.19 billion on September 30, up $6.16 billion, or 4.1%, from June 30. Commercial banking accounted for $5.48 billion of loan growth, concentrated primarily in fund finance. Deposits totaled $185.26 billion at the end of September, an increase of $11.84 billion, or 6.8%, from the end of June.
The bank's acquisition of BMO branches contributed to deposit growth during the quarter. On September 4, it completed the purchase of 138 branches in the Midwest, Great Plains and West. The acquisition included about $4.9 billion in deposits and $650 million in loans. The company said the quarterly increase in deposits included about $4.86 billion assumed in the branch acquisition. It also said in its results presentation that it expects deposit growth in 2026 to exceed loan growth, supporting early repayment of the asset purchase agreement. This expansion places growth in the funding and loan base in the context of the balance sheet growth the company cited as a driver of higher net interest income.
Asset quality indicators improved from the end of the second quarter. Nonaccrual loans fell to $1.37 billion, or 0.87% of total loans, on September 30, from $1.45 billion, or 0.96%, on June 30. Net charge-offs declined to $103 million, equivalent to 0.27% of average loans, compared with $108 million and 0.29% in the prior quarter. On returning capital, the chief executive said the company returned $600 million to shareholders through share repurchases during the quarter. The company also repaid an additional $8.0 billion of the asset purchase agreement, while the new buyback program does not require the bank to make a minimum amount of purchases.
The board authorized the repurchase of up to $1.2 billion of Class A shares in 2027, according to the company's filing with the U.S. Securities and Exchange Commission. The authorization sets a ceiling on permitted purchases but does not require the company to buy a minimum number of shares. The company forecast fourth-quarter net interest income of between $1.70 billion and $1.77 billion, and full-year 2026 net interest income of between $6.68 billion and $6.75 billion. It also set a range of $158 billion to $161 billion for loans and leases at the end of the fourth quarter, and $189 billion to $192 billion for deposits. The results call was held on October 23 at 9 a.m. Eastern time, while the company's shares rose 8.56% in trading that day after the results announcement, according to Investing.com coverage attributed to Reuters.