First Citizens beats earnings estimates as credit quality improves
North Carolina lender returns $900M to shareholders and maintains strong buyback capacity
First Citizens BancShares delivered a stronger-than-expected fourth-quarter performance, with earnings per share surging past analyst estimates as the North Carolina-based lender returned $900 million to shareholders through repurchases.
The bank reported earnings of $51.27 per share for the fourth quarter of 2025, comfortably beating the consensus estimate of $41.49 by 23.6%. Revenue climbed to $2.44 billion, exceeding projections of $2.22 billion and marking a 10% improvement over expectations, according to the company's SEC filing.
The earnings surprise comes after analysts had been forecasting a year-over-year decline in profits from the $45.10 per share reported in the fourth quarter of 2024. The strong performance helped propel the stock upward after weeks of underperformance—shares had trailed regional banking peers by 500 basis points in the month leading up to the earnings release.
Perhaps most encouraging for investors was the improvement in credit quality. Net charge-offs fell to 0.39% from 0.65% in the prior quarter, indicating reduced loan losses at a time when many banks are watching credit metrics closely. The decline in charge-offs signals that borrowers are continuing to meet their payment obligations despite concerns about economic uncertainty.
First Citizens returned substantial capital to shareholders during the quarter, repurchasing $900 million of its own stock. The company retains significant flexibility to continue returning capital, with $2.81 billion remaining in authorized buyback capacity. The aggressive repurchase program stands in contrast to many regional banks that have grown more conservative with capital returns following last year's banking sector volatility.
"We delivered solid return metrics... We are excited about our prospects for 2026," the company's chief executive said in the earnings announcement, striking an optimistic tone about the coming year.
The quarterly results provide a boost for a bank that has been navigating a mixed reception from analysts heading into earnings. Earlier this month, Goldman Sachs downgraded First Citizens to "Neutral" from "Buy," setting a price target of $2,300 and citing concerns about the stock's premium valuation and anticipated operating performance lag. However, UBS maintained a "Buy" rating and increased its price target to $2,500 from $2,250, expressing confidence in the mid-cap bank sector. Barclays similarly raised its target to $2,456 from $2,190 while maintaining an "Equal-Weight" rating.
First Citizens closed at $2,203.53 on January 22, ahead of the earnings release, giving the bank a market capitalization of approximately $27.9 billion. The stock has gained about 3.2% in January, rising from an opening price of $2,136.43 on the first trading day of the year.
The bank's performance arrives during what analysts describe as a "neutral yet resilient" period for regional banking stocks. Morningstar's 2026 outlook anticipates stable economic growth and generally sound asset quality across the sector, with potential benefits from regulatory easing and a steeper yield curve that could help maintain net interest margins. However, a federal proposal to cap credit card interest rates could pose headwinds for larger banks.
First Citizens, which has grown through strategic acquisitions including its purchase of Silicon Valley Bridge Bank last year, continues to position itself as a consolidator in the fragmented regional banking market. The company's strong capital position and remaining buyback capacity provide flexibility for potential acquisitions or additional shareholder returns as the sector navigates the evolving interest rate environment.
With the fourth-quarter surprise, First Citizens faces a potentially pivotal moment in 2026. Investors will be watching whether the earnings momentum can continue and whether management deploys the remaining $2.81 billion in buyback authorization to support the stock, particularly given recent analyst concerns about valuation levels.