First Citizens BancShares, Inc. · NASDAQ:FCNCA

First Citizens BancShares — Investor Presentation (July 2024)

30 slides from First Citizens BancShares's investor presentation, Jul 30, 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 July 30, 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. Election Year Current Environment | Historical Perspective

  3. Slide 3: Economic Update

    Economic Update Interest Rates | Inflation | Labor Market

  4. Slide 4: The Global Growth Outlook Has Been Revised Up

    The Global Growth Outlook Has Been Revised Up World Economic Outlook Consensus Real Economic Growth Estimates 2023 2024 Estimate as of: Actual Growth Dec-23 Jul-24 World 3.3% 2.6% 3.0% United States 2.5% 1.3% 2.3% Euro Area 0.5% 0.5% 0.7% United Kingdom 0.1% 0.3% 0.8% Japan 1.9% 0.8% 0.2% China 5.2%

  5. Slide 5: The Outlook for the US Economy Remains Upbeat

    The Outlook for the US Economy 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 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Source: Bloomberg 5

  6. Slide 6: Inflation Has Improved in Recent Months

    Inflation Has Improved in Recent Months Average Annualized Inflation Rates Overweighting Recent Months 12% PCE Core PCE CPI Core CPI 10% Fed's 2% Target 8% 6% 4% 2% 0% -2% -4% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Department of Labor, Department of Commerce, Bloomberg, Bank Polic

  7. Slide 7: Market Inflation Expectations Are Settling Modestly Above 2%

    Market Inflation Expectations Are Settling Modestly Above 2% Breakeven Inflation Rates 4.0 Next 5 years (e.g. 2024-2029) Federal Reserve's 2% Target 3.5 Average, 2016-2019 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 Note: Breakeven inflation rate is calculated by subtrac

  8. Slide 8: After Volatile Swings, Markets Expect 2-3 Interest-Rate Cuts This Year

    After Volatile Swings, Markets Expect 2-3 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% 5.1% 1 rate cut 4.9% 2 rate cuts 4.7% 3 rate cuts 4.5% 4 rate cuts 4.3% 4.1% 5 rate cuts 3.9% 6 rate cuts 3.7% 7 rate cuts 3.5%

  9. Slide 9: The Unemployment Rate Has Moved Up Despite Strong Job Growth

    The Unemployment Rate Has Moved Up Despite Strong Job Growth US Unemployment Rate 04/2020: 11% Percent 14.8% 10% 9% 8% Average since 1960: 5.9% 7% 6% 5% June 2024: 4.1% 4% 3% 1960 1970 1980 1990 2000 2010 2020 Source: Department of Labor, Bloomberg 9

  10. Slide 10: 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 25% 20% Goods Spending: 15% +43% in 4/21 10% 6.8% 5% 1.5% 0% -5% -10% 20-Year Average: Services: +4.7% -15% Goods: +4.2% -20% 2018 2019 2020 2021 2022 2023 2024 Source: Dep

  11. Slide 11: Revolving Credit Rates Have Surged, and Delinquencies Are Up

    Revolving Credit Rates Have Surged, and Delinquencies Are Up US Credit Card Delinquency and Interest Rates 25% Commercial bank credit card interest rate 30-day delinquency rate 20% 15% 10% 5% 0% 2006 2009 2012 2015 2018 2021 2024 Source: Federal Reserve, Bloomberg 11

  12. Slide 12: Economic Tailwinds and Headwinds

    Economic Tailwinds and Headwinds Tailwinds Headwinds • Service sector employment and • Elevated interest rates with spending incoming maturity wall • Corporate earnings • Softer consumer spending and increased CC delinquencies • Disinflationary trend • Interest-rate cuts from the Fed • Waning fiscal

  13. Slide 13: Market Update

    Market Update Equity Markets | Fixed Income | Potential Headwinds

  14. Slide 14: Global Markets Year-to-Date

    Global Markets Year-to-Date YTD US Equity Returns Total Return by Asset Class 14% As of 07/25/2024 YTD 2024 (07/25/2024) Value Blend Growth 12% L arge 10% 10.6% 15.2% 17.6% 8% 6% Mid 8.1% 7.5% 5.4% 4% 2% Small 0% 9.7% 10.5% 11.4% U.S. Equities Intl. Developed Emerging Market Aggregate Fixed Municipa

  15. Slide 15: Stocks Have Rallied Sharply

    Stocks Have Rallied Sharply S&P 500 Index 6,000 5,500 5,000 4,500 +31% 4,000 +51% 3,500 Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Jan-24 May-24 Source: Bloomberg 15

  16. Slide 16: Large-cap Stocks Have Outperformed by a Significant Margin

    Large-cap Stocks Have Outperformed by a Significant Margin 160 S&P 500 Performance Index: Jan. 1, 2023 = 100 150 +41% Market cap weighted Equal weighted 140 130 +18% 120 110 100 90 Jan 2023 Apr 2023 Jul 2023 Oct 2023 Jan 2024 Apr 2024 Jul 2024 Source: Bloomberg 16

  17. Slide 17: Rate-Sensitive Small-Cap Stocks Have Surged Recently

    Rate-Sensitive Small-Cap Stocks Have Surged Recently Russell 2000 Index vs. 2-year Treasury Yield 2-year Treasury note yield (left axis) 5.4% Russell 2000 index (right axis) 2300 5.2% 2200 5.0% 2100 4.8% 2000 4.6% 1900 4.4% 1800 4.2% 1700 4.0% 1600 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Source: Bloomber

  18. Slide 18: 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 Average 16X 12X -1 Standard Deviation 8X 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Source: Bloomberg, Strategas 18

  19. Slide 19: 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 40x 35x 30x 25x 20x 15x 10x 5x 2000 2004 2008 2012 2016 2020 2024 Source: Trivariate Research 19

  20. Slide 20: Corporate Earnings

    Corporate Earnings Estimated Next 12-Month S&P 500 Operating Margin ▪ 2024 estimated growth is 10.9% 18% 17.3% 17% ▪ 2025 estimated growth is 14.8% 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 7/26/2024. 20

  21. Slide 21: 25% of Companies Have Greater Than 60% Gross Margin

    25% of Companies Have Greater Than 60% Gross Margin Percent of Top 3000 US Equities with Gross Margin >60% 27% Ex-Financials and Real Estate Through End-June 2024 25% 23% 21% 19% 17% 15% 1999 2002 2005 2008 2011 2014 2017 2020 2023 Source: Trivariate Research 21

  22. Slide 22: S&P 500 Price Target

    S&P 500 Price Target Next Twelve-Month S&P 500 Price Target Percent Change from NTM Price Level 7/29/24 Bear 4,400 -19.5% Base 5,900 7.9% Bull 6,500 18.9% Source: Bloomberg, FactSet 22

  23. Slide 23: US Treasury Yield Curve Remains Inverted

    US Treasury Yield Curve Remains Inverted US Treasury Yield Curve 5.8% 5.6% As of 7/25/2024 5.4% 5.4% 12/29/2023 5.4% 5.3% 5.3% 5.2% 5.2% 5.2% 5.0% 4.8% 4.8% 4.8% 4.6% 4.6% 4.4% 4.5% 4.4% 4.2% 4.2% 4.2% 4.2% 4.2% 4.1% 4.2% 4.0% 4.0% 4.0% 3.9% 3.9% 3.8% 3.8% 1 3 6 1 2 3 5 7 10 20 30 MM M Yr Yr Yr Yr Y

  24. Slide 24: Bond Yields Remain Elevated Versus Recent History

    Bond Yields Remain Elevated Versus Recent History US Fixed Income Indices Yield-to-Worst Index 12/31/2021 7/25/2024 2-Year Treasury 0.73% 4.43% 10-Year Treasury 1.51% 4.24% Aggregate Bond 1.75% 4.82% Intermediate Government/Credit 1.30% 4.60% Municipal Bond 1.11% 3.58% Investment Grade Corporate Bon

  25. Slide 25: Election Year

    Election Year Current Environment | Historical Perspective

  26. Slide 26: The Political Environment Has Changed Substantially in Recent Weeks

    The Political Environment Has Changed Substantially in Recent Weeks Prediction Market-Implied Probability of Winning Presidential Election Pres. Trump Pres. Biden Presidential assassination withdraws from debate attempt 2024 election Latest June 1, 2024 June 27, 2024 July 13, 2024 July 21, 2024 July

  27. Slide 27: Presidential Cycle: S&P 500 Returns

    Presidential Cycle: S&P 500 Returns S&P 500 Total Return In Election Years With Incumbent President Running For Re-Election 40% 33.9% 35% 32.4% Avg Return Since 1944 30% = +15.8% 23.8% 23.1% 25% 19.8% 19.0% 20% 18.4% 16.5% 16.0% 15% 10.9% 10% 6.6% 7.7% 5.5% 6.3% 5% 0% -5% -10% -8.2% -9.8% -15% '32 '

  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) 16% 14% 12% 10% 8.4% 8% 7.5% 7.1% 6.8% 6% 4.8% 4% 2% 0.9% 0% President: D President: D President: R President: R President: D President: D President:

  29. Slide 29: 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

  30. Slide 30: Authors and Important Disclosures

    Making Sense liJ FirstCitizensWealthTM Authors Important Disclosures Phillip Neuhart | SVP, Director of Market & This material is for informational purposes only and is not intended to be an offer, specific investment strategy, recommendation, or solicitation to purchase or sell any security or insu

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