First Citizens gearing up for 'robust' share repurchase plan

Raleigh, N.C.-based First Citizens BancShares Inc. hopes to deploy a chunk of the excess cash it is sitting on into a "robust" share repurchase plan, Chairman and CEO Frank Holding Jr. said on the company's first-quarter earnings call.

The company reported a common equity Tier 1 capital ratio of 11.34% at March 31. While the company originally wanted to maintain strong capital levels after closing its recent merger with CIT Group Inc., "early success" in deal integration makes a share repurchase plan more prudent, Holding said.

"[A] robust stock repurchase plan is warranted," Holding said on the call.

Equity analysts agree that buybacks are imperative for First Citizens. In a first-take note on the company's results, Piper Sandler analyst Stephen Scouten wrote that resuming share repurchases is "key" to near-term upside for First Citizens' shares. First Citizens stock price was up 5.53% at 10:53 a.m. ET.

CFO Craig Nix declined to give details on the size of a potential repurchase plan, but he disclosed that every $1 billion of repurchases at the company's last market close stock price would be about 10% accretive to earnings per share. The company's stock price closed at $620.12 on April 27.

"We believe that could be a powerful strategy for our EPS accretion moving forward," he said.

The company has not yet submitted a share repurchase plan for regulatory approval, but it is engaging with regulators on the topic, Nix said. "We're not just sitting on our hands with that. But it does take around a month for approval. So that process will be in hand during this quarter and very soon," he added.

In addition to share repurchases in the second half of the year, First Citizens plans to leverage some capital into organic growth, Holding said. The company expects mid-single digit loan growth for the year, though the economic environment could impact that outlook, Nix noted.

"We do feel positive about the prospects for further loan growth," he said. "However, we do acknowledge that uncertainty around the external environment, especially with regard to economic and geopolitical risks, could cause actual growth rate to deviate from our expectations."

First Citizens plans to continue to proactively add bankers in wealth and middle-market banking and in large metropolitan areas to support loan growth, he said.