First Citizens Bank: The Bank Buyers - [Business Breakdowns, EP.114]

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. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (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