This is Matt Reustle and today we are breaking down First Citizens Bank. I’m joined by investors with plenty of experience investing in banks – Bill Nygren and Alex Fitch of Oakmark.
First Citizens is a bank with 125 years of history but they don’t operate like the bulge bracket Wall Street Banks. They don’t even host quarterly conference calls. They have a playbook and they execute it, and their recent acquisition of Silicon Valley Bank fell into that playbook. In this conversation, Bill and Alex offer a really unique macro and micro view on bank investing and what stands out about First Citizens. Please enjoy this breakdown of First Citizens Bank.
Show Notes
(00:00:00) – Introduction
(00:02:47) – (First question) – A primer on investing in banks
(00:09:27) – The appeal of First Citizens Bank
(00:15:18) – How they leverage acquisitions, including FDIC auctions, for a competitive edge
(00:21:42) – How their risk management and protective measures foster resilience and growth
(00:26:22) – The significant impact of prioritizing relationship-based and specialized lending
(00:28:51) – Why they adjust risk parameters during the integration with other banks
(00:30:38) – How they leverage loyal customers and low costs to achieve strong profitability
(00:33:21) – Rapid fund movement during the SVB event raises market change concerns
(00:36:58) – Overview of bank investment opportunities
(00:42:48) – The key drivers of their business model
(00:47:43) – Rebuilding relationships with former depositors to retain SVB deposits
(00:51:23) – Their emphasis on relationships and strategic acquisitions
(00:53:30) – How the regulatory framework plays a key role in de-risking the banking system
(00:57:00) – The key risks for First Citizens moving forward
(00:58:39) – Why volatile interest rate changes impacted banks
(01:00:08) – Lessons learned from studying First Citizens