First Citizens BancShares, Inc. · NASDAQ:FCNCA

First Citizens BancShares — Investor Presentation (August 2024)

32 slides from First Citizens BancShares's investor presentation, Aug 29, 2024

  1. Slide 1: Monthly Market Update

    Brent Ciliano, SVP Chief Investment Officer Monthly Market Update Phillip Neuhart, SVP Director of Market and Recorded on August 29, 2024 Economic Research

  2. Slide 2: What are we going to cover?

    What are we going to cover? 1. Economic Update: Interest Rates | Inflation | Labor Market 2. Market Update: Equity Markets | Fixed Income | Potential Headwinds

  3. Slide 3: Economic Update

    Economic Update Interest Rates | Inflation | Labor Market

  4. Slide 4: The Economic Outlook Remains Upbeat

    The Economic Outlook Remains Upbeat 3.0 2024 GDP Growth (Year-Over-Year Percent Change) Median Professional Forecast 2.5 2.0 1.5 1.0 0.5 0.0 Mar 2022 Jul 2022 Nov 2022 Mar 2023 Jul 2023 Nov 2023 Mar 2024 Jul 2024 Source: Bloomberg 4

  5. Slide 5: Company Worries About Inflation and Recession Have Abated

    Company Worries About Inflation and Recession Have Abated Uses of Word "Inflation" and "Recession" in Corporate Earnings Call Transcripts by Month 2500 Recession (left axis) 700 Inflation (right axis) 600 2000 500 1500 400 1000 300 200 500 100 0 0 Dec 2019 Jul 2020 Feb 2021 Sep 2021 Apr 2022 Nov 202

  6. Slide 6: Small Business Outlook Has Improved Modestly, but Uncertainty Is Up

    Small Business Outlook Has Improved Modestly, but Uncertainty Is Up Small Business Owner Sentiment 120 Optimism index 110 Uncertainty index 100 90 80 70 60 50 40 30 20 2000 2003 2006 2009 2012 2015 2018 2021 2024 Source: NFIB, Bloomberg 6

  7. Slide 7: Monthly Inflation Rates, While Volatile, Have Fallen Sharply Recently

    Monthly Inflation Rates, While Volatile, Have Fallen Sharply Recently Consumer Price Index Inflation Rate 12% Headline CPI (year-on-year) Core CPI (year-on-year) 10% Headline CPI (last three months) 8% Core CPI (last three months) 6% 4% 2% 0% -2% -4% -6% 2018 2019 2020 2021 2022 2023 2024 Source: De

  8. Slide 8: After Volatile Swings, Markets Expect ~4 Interest-Rate Cuts This Year

    After Volatile Swings, Markets Expect ~4 Interest-Rate Cuts This Year Market-Implied Federal Funds Rate in December 2024 5.5% Current policy rate: 5.375% 0 rate cuts 5.3% 1 rate cut 5.1% 4.9% 2 rate cuts 4.7% 3 rate cuts 4.5% 4 rate cuts 4.3% 5 rate cuts 4.1% 6 rate cuts 3.9% 3.7% 7 rate cuts 3.5% A

  9. Slide 9: Equity Market Performance After Rate Cuts Depends on Economic Outcome

    Equity Market Performance After Rate Cuts Depends on Economic Outcome Average S&P 500 Return From Date of First Rate Cut, Since 1979 30% Economic recession did not follow rate cut** 25% Economic recession followed rate cut* 20% 15% 10% 5% 0% -5% -10% 0 20 40 60 80 100 120 140 160 180 200 220 240 260

  10. Slide 10: The Unemployment Rate Has Moved Up Despite Decent Job Growth

    The Unemployment Rate Has Moved Up Despite Decent Job Growth US Unemployment Rate 04/2020: 11% Percent 14.8% 10% 9% 8% Average since 1960: 5.9% 7% 6% July 2024: 5% 4.3% 4% 3% 1960 1970 1980 1990 2000 2010 2020 Source: Department of Labor, Bloomberg 10

  11. Slide 11: New Payroll Job Growth Is Slowing Roughly to Trend Pace

    New Payroll Job Growth Is Slowing Roughly to Trend Pace Payroll Job Growth 800 Thousands, Three-month moving average 700 600 500 400 300 Estimated breakeven 200 rate 100 0 Jan '21 Jul '21 Jan '22 Jul '22 Jan '23 Jul '23 Jan '24 Jul '24 Source: Department of Labor, Bloomberg, Federal Reserve Bank of

  12. Slide 12: Alternative Measure of Job Openings Shows Normalizing Labor Market

    Alternative Measure of Job Openings Shows Normalizing Labor Market Indeed Job Postings Index 180 7-day moving average, Index (Feb. 2020 = 100) 160 140 120 100 80 60 40 Feb '20 Aug '20 Feb '21 Aug '21 Feb '22 Aug '22 Feb '23 Aug '23 Feb '24 Aug '24 Source: Indeed Hiring Lab, Bloomberg 12

  13. Slide 13: Consumer Expenditures Are Holding Up, Led by Services Spending

    Consumer Expenditures Are Holding Up, Led by Services Spending Personal Consumption Expenditures Percent change, year-over-year Source: Department of Commerce, Strategas 13

  14. Slide 14: Consumer Expenditures Are Still Biased Toward Goods Spending

    Consumer Expenditures Are Still Biased Toward Goods Spending Personal Consumption Expenditures Share of Total Consumer Spending 40% Goods Services 70% 38% 68% 36% 66% 34% 64% 32% 62% 30% 60% 2012 2016 2020 2024 Source: Department of Commerce, Strategas 14

  15. Slide 15: Housing Affordability Is At Record Lows Since the 1980s

    Housing Affordability Is At Record Lows Since the 1980s Housing Affordability Index Household income relative to income required to quality for conventional loan 250 Median homebuyer Median renter, first-time homebuyer 200 150 100 50 0 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 Source: Nation

  16. Slide 16: The Recent Slide in Mortgage Rates Likely Boosted New Applications

    The Recent Slide in Mortgage Rates Likely Boosted New Applications US Mortgage Rates and New Applications 8.5 30-year mortage rate 270 Mortgage applications index 8.0 250 7.5 230 7.0 210 6.5 190 6.0 170 5.5 150 Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul '24 Source: MBA, Bloomberg 16

  17. Slide 17: Economic Tailwinds and Headwinds

    Economic Tailwinds and Headwinds Tailwinds Headwinds • Service sector spending • Softening labor demand • Corporate earnings • Waning fiscal stimulus effect • Disinflationary trend • Residential and Commercial Real • Interest-rate cuts from the Fed Estate • Government debt and deficits • Job gains a

  18. Slide 18: Market Update

    Market Update Equity Markets | Fixed Income | Potential Headwinds

  19. Slide 19: Global Markets Year-to-Date

    Global Markets Year-to-Date YTD US Equity Returns Total Return by Asset Class As of 08/23/2024 20% YTD 2024 (08/23/2024) Value Blend Growth 18% Large 16% 14.4% 14.4% 20.4% 23.8% 14% 12% 10% 8% Mid 12.2% 12.2% 11.8% 10.0% 6% 4% 2% Small 0% U.S. Equities Intl. Developed Emerging Market Aggregate Fixed

  20. Slide 20: Stocks Have Rallied Sharply

    Stocks Have Rallied Sharply S&P 500 Index 6,000 5,500 5,000 4,500 +37% 4,000 +57% 3,500 Jan 2022 Jul 2022 Jan 2023 Jul 2023 Jan 2024 Jul 2024 Source: Bloomberg 20

  21. Slide 21: Large-Cap Outperformance Has Faded Since July

    Large-Cap Outperformance Has Faded Since July 160 S&P 500 Performance 110 S&P 500 Performance Index: Jan. 1, 2023 = 100 +47% 108 Index: July 1, 2024 = 100 150 Market cap weighted Market cap weighted +7% Equal weighted 106 Equal weighted 140 104 +3% 130 +23% 102 120 100 110 98 100 96 90 94 Jan 2023 A

  22. Slide 22: Market Valuation Below Extremes but Above Average

    Market Valuation Below Extremes but Above Average S&P 500 Next Twelve Months Price-to-Earnings Ratio 28X 24X 20X +1 Standard Deviation 16X Average 12X -1 Standard Deviation 8X 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Source: Bloomberg, Strategas 22

  23. Slide 23: P/E Ratios Suggest There is Room For Broadening

    P/E Ratios Suggest There is Room For Broadening Cap. Weight Price-to-Forward Earnings Top 10 45x Top 11-500 45x 40x 40x 35x 35x 30x 30x 25x 25x 20x 20x 15x 15x 10x 10x 5x 5x 2000 2004 2008 2012 2016 2020 2024 Source: Trivariate Research 23

  24. Slide 24: Corporate Earnings

    Corporate Earnings Estimated Next 12-Month S&P 500 Operating Margin ▪ 2024 estimated growth is 10.1% 18% 17.3% 17% ▪ 2025 estimated growth is 15.3% 16% 15% ▪ Average growth since 1950 is 7.6% 14% 13% 2012 2014 2016 2018 2020 2022 2024 Source: FactSet, Bloomberg, Strategas. Data as of 8/16/2024. 24

  25. Slide 25: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 8/23/24 Bear 4,400 -21.8% Base 5,900 4.9% Bull 6,500 15.5% Source: Bloomberg, FactSet 25

  26. Slide 26: US Treasury Curve Remains Inverted but Has Shifted Lower Since April

    US Treasury Curve Remains Inverted but Has Shifted Lower Since April US Treasury Yield Curve 5.8% 5.6% As of 5.4% 8/23/2024 5.4% 5.4% 5.4% 5.4%5.30% 4/25/2024 (recent high) 2023 year end 5.2% 5.13% 5.3% 5.2% 5.2% 5.0% 4.89% 5.0% 4.9% 4.9% 4.8% 4.7% 4.7% 4.8% 4.8% 4.7% 4.6% 4.37% 4.4% 4.2% 4.18% 4.2%

  27. Slide 27: Bond Yields Have Moved Meaningfully Lower Since April

    Bond Yields Have Moved Meaningfully Lower Since April US Fixed Income Indices Yield-to-Worst Index 4/30/2024* 8/20/2024 Difference 2-Year Treasury 5.0% 3.9% -1.1% 10-Year Treasury 4.7% 3.8% -0.9% Aggregate Bond 5.3% 4.4% -0.9% Intermediate Government/Credit 5.1% 4.2% -1.0% Municipal Bond 3.8% 3.5% -

  28. Slide 28: S&P Performance Does Not Appear to Depend on Partisan Control

    S&P Performance Does Not Appear to Depend on Partisan Control Partisan Control, Average Calendar Year S&P Performance 15.7% (1872-2023, Excl. 2001-02) 8.4% 7.5% 7.1% 6.8% 4.8% 0.9% President: D President: D President: R President: R President: D President: D President: R Senate: D Senate: R Senate:

  29. Slide 29: S&P 500 Returns Typically Rebound Following 8% Drawdowns

    S&P 500 Returns Typically Rebound Following 8% Drawdowns Median Returns After S&P 500 Drawdowns of at Least 8% Since 1950 12.8% 5.6% 3.0% 1.2% 1-Month 3-Month 6-Month 12-Month Source: Bloomberg, First Citizens Wealth 29

  30. Slide 30: Buy the Dip?

    Buy the Dip? S&P 500 Returns Since 1950 Positive of... After a drawdown of… Timeframe Median Return Occurrences 6-Month +5.3% 67% -5% 12-Month 12-Month +12.1% 76% 6-Month +5.6% 68% -10% 12-Month 12-Month +12.8% 79% 6-Month +7.0% 76% -20% 12-Month 12-Month +12.7% 87% Source: Bloomberg, First Citizens

  31. Slide 31: Stay Informed with Our Latest Releases

    Stay Informed with Our Latest Releases In Brief | A look at the week ahead in under two minutes every Monday morning Q&A Videos | Monthly conversations covering 2-3 of the top questions we’re hearing from clients Market updates | Monthly interactive discussions with in- depth analysis of markets and

  32. Slide 32: Authors and Important Disclosures

    Authors Important Disclosures This material is for informational purposes only and is not intended to be an offer, specific investment strategy, Brent Ciliano, CFA | SVP, Chief Investment Officer recommendation, or solicitation to purchase or sell any security or insurance product, and should not be

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