First Citizens BancShares Off To A Good Start With Its Transformative Acquisition

For several years now, investors owning the shares of banks undertaking large mergers have had to wait a while to see the benefits, as the market has taken a “wait and see” approach that has meant underperformance relative to benchmarks until the synergies start showing up. So far, First Citizens Bancshares’ (NASDAQ:FCNCA) (“First Citizens”) merger with CIT is working out well, and the stock has been outperforming on good core operating profits, with early evidence of cost synergies and above-average lending growth.

Up about 15% since my last update, First Citizens has outperformed the regional banking sector by close to 15%, as well as outperforming other commercial-driven growth banks like East West Bancorp (EWBC), Pinnacle Financial (PNFP), Signature (SBNY), or SVB Financial (SIVB). I have some concerns about a weaker macroeconomic environment in 2023 and higher deposit costs, but I’m still expecting high single-digit normalized core growth from this bank, and that continues to support an attractive return in a still-out-of-favor sector.

 

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First Citizens BancShares Off To A Good Start With Its Transformative Acquisition