JPMorgan Downgrades First Citizens BancShares (FCNCA) to Underweight

JPMorgan analyst Anthony Elian downgraded First Citizens BancShares (NASDAQ: FCNCA) from Neutral to Underweight with a price target of $2,200.00 (from $2,300.00).

The analyst comments: “We are downgrading FCNCA shares to Underweight. While we had a positive bias on the shares heading into earnings, tied to our view that First Citizens should see a near-term NII benefit from a higher rate backdrop, this played out as we had expected with the company modestly improving its FY26 NII outlook. Combining this with (1) 3Q26 core EPS of $55.37 coming in 20% above consensus and (2) management pointing to a 4Q27 NIM and NII outlook that were each ahead of consensus, we were not surprised to see FCNCA outperform. What did surprise us, however, was the magnitude of the outperformance in the shares on Friday with FCNCA +8.2% vs. KRX about flat. While we have no issue with achieving the company’s 4Q26 NIM and NII outlooks supported by the ongoing higher rate backdrop, as we look to 4Q27, we barely achieve the low end of the company’s NIM and NII outlooks which we will address shortly. Putting numbers behind this, the 4Q27 outlook calls for GAAP NIM of “mid-3.20%” and GAAP NII of “up mid-to high-single-digits % y/y” although our updated forecast calls for ~3.10% and ~5%, respectively. Let us unpack our thoughts. With First Citizens still having ~ $20B of the FDIC note on its balance sheet, which is currently a positive contributor to NII (First Citizens receives the fed funds rate and pays 3.50%), as the company expects to fully repay this note by YE27, this funding will need to be replaced with more expensive sources coming on to the balance sheet all while the company is still expected to see decent loan growth, which will likely further pressure funding costs higher."

For an analyst ratings summary and ratings history on First Citizens BancShares click here. For more ratings news on First Citizens BancShares click here.

Shares of First Citizens BancShares closed at $2375.84 yesterday.

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