First Citizens BancShares (FCNCA): A Storm Brewing in the Banking Sector

In the volatile world of finance, few things are more dangerous than a banking stock that’s overexposed to risk while underdelivering on growth. First Citizens BancShares (NASDAQ: FCNCA) is flashing warning signs that demand immediate attention. Let’s dig into the numbers—and why this “high-growth” label might be a house of cards.

The Earnings Slump: A Taxing Reality

First Citizens just reported Q1 2025 earnings, and the results are stark. Net income plummeted to $483 million, down 31% from Q4’s $700 million. Even adjusted EPS of $37.79 barely beat estimates by a meager 0.19%, marking a steep slowdown from its Q4 2024 15% earnings surprise. The culprit? A $132 million surge in tax expenses, wiping out gains from loan and deposit growth. This isn’t just a one-time hit—management cited lingering effects from the Silicon Valley Bank (SVB) acquisition, which inflated deferred tax liabilities.

The Debt Tsunami

First Citizens’ balance sheet is a red flag. With a debt-to-equity ratio of 165%, it’s leveraged to the hilt. To put that in context: the average U.S. bank’s ratio is around 100%. This means even a modest rise in interest rates or a dip in loan repayments could trigger a liquidity crisis. And with the Fed’s rate cuts still unproven, the risk here is existential.

Growth? More Like “Growth Hype”

While deposits rose 10.7% annualized, loan growth was tepid—just 3.3% annualized—and skewed toward riskier segments like SVB’s climate tech financing. Meanwhile, the General Bank segment saw loan declines, highlighting internal imbalances. Even the much-touted rail financing division (Rail segment) remains a niche play, contributing minimally to overall revenue.

The Elephant in the Boardroom: Credit Risks

Nonaccrual loans—the ones banks stop counting as income—crept up to $1.21 billion, or 0.85% of total loans. That’s a modest increase, but with the economy slowing, this metric could spike. The allowance for loan losses is a mere 1.19% of loans, leaving little buffer if defaults rise. Remember: banks are only as strong as their loan portfolios.

Analysts Are Panicking—Shouldn’t You?

Zacks downgraded FCNCA to “Sell” after unfavorable earnings revisions, and it’s no wonder. The stock has plunged 16% year-to-date, underperforming the S&P 500’s -8.6% decline. The next earnings call on April 24, 2025, will test if management can stabilize expectations. But with consensus estimates already lowered to $40.62 EPS for Q2, there’s little room for error.

The Bottom Line: Run While You Can

First Citizens is a cautionary tale of overextension. High debt, tax landmines, and tepid loan growth make it vulnerable to even minor economic headwinds. The stock’s underperformance and analyst downgrades aren’t accidents—they’re red flags.

If you’re in this stock, ask yourself: Are you willing to bet on a bank with a debt-to-equity ratio twice the industry average, just to ride a “climate tech” fad? If the answer is “no,” now’s the time to bail.

Final Verdict

FCNCA is a high-risk bet with little upside. With $3.6 billion allocated to buybacks instead of strengthening capital reserves, management is prioritizing shareholders over prudent risk management—a dangerous move in uncertain times. Investors should tread cautiously here. This isn’t a stock to “hold for the long term”—it’s a gamble best left to those willing to lose.

In Cramer’s words: “When the numbers are screaming, you’d better listen!” For FCNCA, the sirens are blaring. Proceed with extreme caution—or better yet, don’t proceed at all.