First Citizens hopeful of SVB growth post Fed rate cuts
Market uncertainty weighed heavily on SVB operations
First Citizens Bank is hopeful that its acquisition of Silicon Valley Bank will yield glittering results — when the Federal Reserve finishes lowering interest rates.
Raleigh, N.C.-based First Citizens acquired SVB in March 2023 after the Santa Clara, Calif.-based SVB suffered a run during the mini-banking crisis.
“We expect that SVB commercial growth will be more concentrated in the back half of the year as the Fed’s monetary easing cycle begins to take effect, and we expect the benefit of higher VC investment and capital markets activity,” Chief Financial Officer Craig Nix said during Citizens’ first-quarter earnings call today.
SVB’s commercial banking arm reported loan origination of $37.8 billion in the quarter, up 2% year over year, according to First Citizen’s earnings report.
Venture capital deals, which are a big driver of SVB’s revenue, were up YoY in the U.S. market with $91 billion invested during the quarter, up 145% YoY.
“We expect SVB commercial to benefit from the growth in the global funds banking business, thanks to the strong pipeline it maintains,” Nix said.
THE BIG PICTURE: Like other FIs, $221 billion First Citizens has sounded alarms about macroeconomics affecting operations.
“The overall level of growth [of the bank] will be dependent upon the final tariff policies implemented and the macroeconomic environment,” Nix said.
Jamie Dimon, chief executive of JPMorgan, sounded similar alarms, saying during the bank’s Q1 earnings on April 11 that “in light of the significantly elevated risks and uncertainties at the time, we increased the probability weightings associated with the downside scenarios.”
BY THE NUMBERS: During Q1, First Citizens also reported:
- Revenue of $2.3 billion, down 6% YoY;
- Net income of $483 million, down 16% YoY; and
- An efficiency ratio of 59.62%, compared with 50.29% in Q1 2024.
MARKET REACTION: Shares of First Citizens Bank (NYSE: FCNCA) were up 1.58% from market open to $1,800 as of market close today. First Citizens has a market capitalization of $23 billion.
