First Citizens BancShares (FCNCA)

Regional banking company First Citizens BancShares (NASDAQGS:FCNC.A) announced better-than-expected revenue in Q3 CY2025, but sales were flat year on year at $2.43 billion. Its non-GAAP profit of $44.62 per share was 7.5% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1898 and a significant expansion through its 2023 acquisition of Silicon Valley Bank, First Citizens BancShares (NASDAQGS:FCNC.A) is a bank holding company that provides financial services to individuals and businesses through its First-Citizens Bank & Trust Company subsidiary.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

First Citizens BancShares competes with other regional and national banks including Truist Financial (NYSE:TFC), PNC Financial Services (NYSE:PNC), and U.S. Bancorp (NYSE:USB), while its Silicon Valley Bank division competes with specialized financial institutions serving the innovation sector such as JPMorgan Chase (NYSE:JPM) and Bridge Bank.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Thankfully, First Citizens BancShares’s 40.5% annualized revenue growth over the last five years was incredible. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. First Citizens BancShares’s annualized revenue growth of 6.9% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, First Citizens BancShares’s $2.43 billion of revenue was flat year on year but beat Wall Street’s estimates by 2.1%.

Net interest income made up 70.7% of the company’s total revenue during the last five years, meaning lending operations are First Citizens BancShares’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last five years, First Citizens BancShares’s efficiency ratio has swelled by 2.3 percentage points, going from 63.5% to 63.1%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

First Citizens BancShares’s efficiency ratio came in at 61.3% this quarter, falling short of analysts’ expectations by 248.4 basis points (100 basis points = 1 percentage point). This result was 1.8 percentage points worse than the same quarter last year.

For the next 12 months, Wall Street expects First Citizens BancShares to rein in some of its expenses as it anticipates an efficiency ratio of 60%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

First Citizens BancShares’s full-year EPS grew at an astounding 33.6% compounded annual growth rate over the last four years, better than the broader banking sector.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

First Citizens BancShares’s astounding 7.3% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.

In Q3, First Citizens BancShares reported adjusted EPS of $44.62, down from $45.87 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 7.5%. Over the next 12 months, Wall Street expects First Citizens BancShares’s full-year EPS of $172.29 to grow 3.5%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

First Citizens BancShares’s TBVPS grew at an incredible 36.7% annual clip over the last five years. TBVPS growth has recently decelerated to 12.1% annual growth over the last two years (from $1,297 to $1,629 per share).

Over the next 12 months, Consensus estimates call for First Citizens BancShares’s TBVPS to grow by 5.6% to $1,720, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, First Citizens BancShares has averaged a Tier 1 capital ratio of 12.9%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, First Citizens BancShares has averaged an ROE of 24.5%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows First Citizens BancShares has a strong competitive moat.

It was encouraging to see First Citizens BancShares beat analysts’ revenue expectations this quarter. We were also happy its net interest income narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $1,744 immediately after reporting.

Updated: December 4, 2025 at 11:39 PM EST

Are you wondering whether to buy First Citizens BancShares or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

First Citizens BancShares has a few positive attributes, but it doesn’t top our wishlist. To kick things off, its revenue growth was exceptional over the last five years. And while First Citizens BancShares’s declining net interest margin shows its loan book is becoming less profitable, its net interest income growth was exceptional over the last five years.

First Citizens BancShares’s P/B ratio based on the next 12 months is 1.1x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $2,170 on the company (compared to the current share price of $1,960).