What Happened?
Shares of regional banking company First Citizens BancShares (NASDAQGS:FCNC.A) fell 8.7% in the morning session after it reported fourth-quarter results which revealed underlying signs of weakness in profitability and future growth.
The bank posted adjusted earnings of $51.27 per share on revenue of $2.44 billion, comfortably ahead of analyst estimates. However, the positive headline numbers were overshadowed by concerns about profitability. The bank's efficiency ratio, a key measure of costs relative to revenue where lower is better, came in at 64.5%, missing analyst expectations and worsening from the prior year. This indicated that the bank's core operations were becoming less profitable. The report also pointed to a weaker outlook, with revenue expected to deteriorate and net interest income projections described as weak for the upcoming year, suggesting future growth could be under pressure.
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What Is The Market Telling Us
First Citizens BancShares’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 5.1% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry.
The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
First Citizens BancShares is down 7.4% since the beginning of the year, and at $1,999 per share, it is trading 10.2% below its 52-week high of $2,225 from January 2025. Investors who bought $1,000 worth of First Citizens BancShares’s shares 5 years ago would now be looking at an investment worth $3,184.
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