FCNC.A: Net Interest Income And Credit Trends Will Shape Future Return Range

Analysts have modestly reduced their average price target on First Citizens BancShares to about $2,000 from roughly $2,150, citing resilient but range bound return expectations, a tempered net interest income outlook amid anticipated rate cuts, and incremental credit risk from specific borrower exposure, even as revenue growth and profitability assumptions edge higher.

Analyst Commentary

Sell side views on First Citizens BancShares reflect a mix of confidence in underlying fundamentals and caution around forward earnings power, leading to tighter, but still elevated, valuation expectations.

Bullish Takeaways

• Bullish analysts highlight that Q3 performance and guidance suggest resilient, if range bound, returns, supporting the view that the stock can still justify a premium multiple versus most regional peers.
• Improving momentum in global fund banking loan utilization and continued deposit inflows from deepening client relationships are seen as key growth levers that can sustain balance sheet expansion and fee opportunities over the medium term.
• Clearer direction on net interest income and credit trends, especially during a period of market stress, reinforces confidence in management execution and reduces perceived earnings risk for long term holders.
• JPMorgan, while trimming its price target, still expects solid loan and deposit growth and sees potential for net interest margin expansion relative to other small and mid cap banks, underpinning an Overweight stance tied to above peer earnings growth.

Bearish Takeaways

• Bearish analysts are increasingly focused on net interest income headwinds from prospective rate cuts. They view the asset sensitive balance sheet as a constraint on upside to earnings and valuation in a lower rate environment.
• The recent bankruptcy of a large auto parts supplier and the associated unsecured exposure are cited as evidence that idiosyncratic credit risks could incrementally pressure future earnings and justify more conservative multiple assumptions.
• Reduction in forward EPS forecasts, particularly for FY25 and FY26, reflects concern that a flatter yield curve and multiple rate cuts could compress net interest margins by around 20 basis points, limiting near term operating leverage.
• With price targets reduced across the Street, some bearish analysts argue that the risk reward is now more balanced and that shares may trade in a narrower range until there is greater visibility on the rate path and credit cycle.

What’s in the News

• Completed a $600 million share repurchase of 329,937 shares, representing 2.52 percent of outstanding stock, under the buyback announced July 25, 2025 (company filing).
• Reported a significant rise in net charge offs to $234 million, or 0.65 percent of average loans, for the third quarter of 2025, up from $119 million, or 0.33 percent, in the prior quarter (earnings release).
• Tightened full year 2025 net interest income guidance to a range of $6.74 billion to $6.84 billion, reflecting a less favorable rate outlook and lower loan accretion versus 2024 (corporate guidance).
• The board declared a quarterly common stock dividend of $2.10 per share, payable December 15, 2025, to shareholders of record as of November 28, 2025 (company announcement).
• First Citizens Bank Equipment Finance entered a new vendor finance agreement with Dynapac North America to provide leasing and lending solutions for road construction equipment across Dynapac’s dealer network (client announcement).

Valuation Changes

• Fair value has risen slightly, moving from approximately $2,166 to about $2,182 per share, reflecting a modestly higher intrinsic value estimate.
• The discount rate has fallen slightly, from about 8.73 percent to roughly 8.56 percent, implying a marginally lower required return on equity.
• Revenue growth assumptions have increased modestly, from around 2.63 percent to approximately 3.04 percent, signaling a slightly stronger top-line outlook.
• Net profit margin expectations are essentially unchanged but edged higher, from about 23.25 percent to roughly 23.26 percent, indicating stable profitability assumptions.
• Future P/E has declined slightly, from roughly 12.46x to about 12.33x, suggesting a minor compression in the forward valuation multiple.