First Citizens BancShares Ends FDIC Loss-Sharing Pact

First Citizens BancShares Inc. (NASDAQ:FCNCA), a $21.7 billion market cap banking institution currently trading at attractive valuations according to InvestingPro analysis, has terminated a significant agreement with the Federal Deposit Insurance Corporation (FDIC). The company, headquartered in Raleigh, North Carolina, announced the early termination of its loss-sharing agreement related to its acquisition of certain assets and liabilities of Silicon Valley Bridge Bank, N.A. Despite recent market volatility that has led to a 15% decline in share price over the past week, InvestingPro data shows the company maintains a "GOOD" financial health score, supported by strong revenue growth of 22.7% in the last twelve months.

On Monday, First Citizens BancShares' subsidiary, First-Citizens Bank & Trust Company (FCB), signed a Termination Agreement with the FDIC, effectively ending the shared-loss agreement from March 27, 2023. This agreement initially covered approximately $60 billion in loans and stipulated FDIC compensation for losses up to $5 billion at 0% and 50% of losses exceeding that amount.

The decision to end the agreement was influenced by FCB's assessment that the probability of incurring the $5 billion threshold in losses within the five-year period was remote. Additionally, the termination will relieve FCB from its reporting responsibilities under the shared-loss agreement.

As of the termination date, there are no outstanding payments or obligations between FCB and the FDIC under the shared-loss agreement. However, FCB will continue to honor the remaining provisions of its related debt agreements with the FDIC, including a $35.99 billion Purchase Money Note, which bears a fixed interest rate of 3.50% per annum and matures in March 2028. With a P/E ratio of 8.38 and substantial net income of $2.7 billion, InvestingPro analysis suggests the stock may be undervalued at current levels. Subscribers can access 13 additional ProTips and a comprehensive Pro Research Report for deeper insights into the company's financial position.

First Citizens BancShares' move to conclude this agreement with the FDIC reflects the company's financial strategy and its ongoing management of assets and liabilities post-acquisition. This news is based on the press release statement and the details outlined in the SEC filing.

In other recent news, First Citizens BancShares announced the issuance of $1.25 billion in new debt securities, aimed at strengthening its capital structure. The offering includes $500 million in senior notes due 2031 and $750 million in subordinated notes due 2040. Piper Sandler recently upgraded First Citizens BancShares from Neutral to Overweight, setting a price target of $2,250, citing potential strategic responses to recent share price performance. Meanwhile, DA Davidson maintained a Neutral rating with a price target of $2,400, noting potential benefits from asset sensitivity and capital return, but also cautioning about rising operational expenses. Truist Securities increased its price target for the company to $2,384 while maintaining a Hold rating, reflecting expectations for higher net interest income and lower net charge-off rates. Piper Sandler also adjusted its price target to $2,250, retaining a Neutral rating after the company's fourth-quarter results exceeded expectations. These developments highlight the varied analyst perspectives on First Citizens BancShares, reflecting both optimism and caution regarding its financial outlook.

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