First Citizens BancShares, Inc. (NASDAQ:FCNCA) Q1 2023 Earnings Call Transcript May 10, 2023

First Citizens BancShares, Inc. misses on earnings expectations. Reported EPS is $20.09 EPS, expectations were $20.17.

Operator: Ladies and gentlemen, thank you for standing by and welcome to the First Citizens BancShares First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce the host of this conference call, Ms. Deanna Hart, Senior Vice President of Investor Relations. You may begin.

Deanna Hart: Good morning, everyone. Thank you for joining our first quarter earnings call. Our Chairman and Chief Executive Officer, Frank Holding; our President, Peter Bristow; and our Chief Financial Officer, Craig Nix will provide an update on the FCB acquisition, our first quarter and 2023 outlook. During the call, we will be referencing our investor presentation which you can find on our website. Our comments will include forward-looking statements, which are subject to risks and uncertainties that may cause our results to differ materially from expectations. We assume no obligation to update such statements. These risks are outlined for your review on Page 3. We will also be referencing non-GAAP financial measures. Reconciliations of these measures against the most directly comparable GAAP measures are found in Section 8 of the presentation.

First Citizens is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by a third party. I will now turn it over to Frank.

Frank Holding: Thank you, Deanna, and good morning, everyone. Starting on Page 5. We announced another quarter of solid financial results. As you know, we’re our TBV focus company and we’re pleased that the acquisition of SVB resulted in 112% TBV accretion on the acquisition date and 106% after the CECL adjustments. This transaction meaningfully boosted our capital base providing us with an even more solid foundation to continue growing profitably while delivering long-term value to our shareholders. Since the acquisition, we have had meaningful engagement with key SVB leaders and clients reinforcing that FCB and SVB have commonalities that guide us including deep commitments to our clients and people and to the communities we serve.

The CIT merger included many unique businesses and we have successfully integrated those into our business model. So we are confident with this recent experience that we’ll be able to — they will enable us to incorporate SVB as well. We’ve long believed that direct communications with our clients and associates are essential. And to that end, I’d like to briefly touch on some recent departures that have been reported. As with any combination of discounts, some level of associate turnover in deposit and client churn is expected. However, we are confident that SVB has one of the deepest and most experienced benches of any financial institution serving the innovation economy. And we’re committed to maintaining and growing SVB’s market by leveraging this deep seeded talent and strength as we move forward.

Importantly, the combined organization is very well-positioned financially and is operating from a position of strength, in addition to significant TBV accretion, our liquidity remains strong driven by our conservative asset-liability management, and was enhanced by this transaction with the creation of on-balance sheet funding and access to significant contingency funding. Turning to legacy First Citizens performance. We delivered another quarter of deposit and loan growth as positive momentum continued across all lines of business. The strong quality loan growth we’ve experienced this quarter in tandem with the positive asset repricing that we experienced throughout 2022 helped generate favorable operating leverage year-over-year. We, like most companies, faced some economic headwinds including the increasing possibility of recession, however, we have not seen meaningful increases of stress in our credit portfolio.

Overall, we remain encouraged by the resiliency of our clients in the face of elevated inflation and rising interest rates and we look forward to continuing to support them. Turning to Page 6. We remain focused on the long-term sustainable shareholder value driven by our core strategic priorities which haven’t changed other than the addition of a new strategic priority related to the acquisition of SVB. Long-term benefits can be achieved by harnessing SVB’s legacy businesses and leveraging these to attract and retain new clients to our franchise. SVB continues to support its clients day in and day out. In fact, several clients recently announced new deals with SVB, that are supporting the growth of their businesses. In addition, SVB’s premium line division currently has all-time high loan outstandings, SVB’s Community Development Finance Group closed its largest-ever affordable housing facility and this week is celebrating the grand opening as the lead construction lender of new housing in San Francisco for formally unhoused military veterans.

To successfully integrate SVB, we are focused on the following: the first, running SVB as SVB to maintain a competitive advantage it has in the innovation economy, while at the same time, infusing the cost discipline and risk management that is defined First Citizens for 125 years; secondly, continuing our high-touch approach, demonstrating the legacy SVB clients that we’re committed to helping their businesses succeed; third, embracing our SVB colleagues to create synergies, then enhance our client relationships and further drive the innovation of our products and services; and lastly, continue to articulate our vision with SVB associates to proactively retain key revenue-generating employees and the staff to support them. While we are clearly in the early days of SVB acquisition, we already have begun to integrate our teams and we continue to actively prioritize our efforts to support SVB and its clients.

As a combined team, we remain committed to our long-term strategic focus, our relationship client-focused model, delivering solid results while operating with strong liquidity, and capital positions, and effectively managing risk within our defined risk appetite. I would like to close my comments by recognizing all our associates at FCB and SVB for coming together over the past month to move us forward as a combined company. We still have work to do, but your hard work provides us the real opportunity to unlock the strategic and financial value of this partnership. And I’ll turn it over now to our President, Peter Bristow to further discuss areas of focus on the SVB acquisition. Peter?

Peter Bristow: Thank you, Frank, and good morning, everyone. On Page 8, I want to touch on the potential growth opportunities the SVB combination unlocks for First Citizens. With the addition of approximately $100 million in total assets, SVB adds meaningful financial scale to First Citizens. While we did experience some level of deposit outflows since the acquisition day, about half of which was expected on day one. We have begun to see some signs of stabilization. This acquisition builds on First Citizens’ solid foundation by adding significant scale, geographic diversity, exceptional talent, and most importantly valuable solutions for clients throughout their financial life cycle. First, the addition of SVB meaningfully advances our presence in the innovation and technology sectors.

SVB’s historic leadership position in these sectors and serves First Citizens is better positioned to serve venture-backed companies and tech start-ups in our backyard and across the nation. Second, it opens new business opportunities while driving incremental topline growth. By leveraging the existing offerings of First Citizens and SVB, we can better serve our combined client base. Third SVB Private has enormous potential to accelerate the growth of our wealth business, adding new digital capabilities, talent, and solutions to our already-growing franchise. Fourth, SVB increases our presence in attractive, high-growth markets on the West Coast and in the Northeast, positioning us to capture new clients while diversifying our footprint. Finally, as Frank mentioned, this acquisition is compelling financially both immediately and in the long term.

On Page 9 we dive deeper into the entities we acquired, the SVB Commercial and Private banks. The Commercial arm of SVB is the banking leader in the innovation economy with a powerful network of relationships across entrepreneurs, investors, and influencers. Their focus on technology, life sciences, and healthcare and Global Fund Banking combined with their best-in-class model for delivering to those clients truly sets them apart from the rest of the industry. SVB provides tailored commercial banking solutions to clients at every life stage from start-up and early-stage companies to venture-backed growth companies on up to large corporate entities. These solutions include business banking, treasury services, card, digital banking, FX, liquidity management, and venture debt through the various stages as well as a comprehensive package of banking products to support venture capital and PE fund clients.

SVB Private is an established wealth advisory franchise with private banking solutions tailored to the needs of innovation clients. SVB serves these clients both professionally and personally. SVB’s private wealth capabilities include lending solutions to address equity compensation, concentrated stock positions, and non-liquid assets. SVB Private also works with premium line producers to provide working capital and vendor loans. I’m not going to cover Page 10 in detail, but we have included it for your reference to provide a snapshot of all of First Citizens Bank business segments along with on and off-balance sheet financial data as of March 31, 2023. Turning to Page 11. While we are in the early stages, our integration efforts are underway.

Our approach is to seek out the best minds and most experienced people who can develop our go-forward business model. We are formalizing integration plans that we will share in the future. Meanwhile, we are diligently working to address our immediate priorities and goals which include: first, maintaining our position as a key partner in the innovation economy. We are committed to continuing to help innovators enterprises and investors move bold ideas forward. Despite the recent turmoil, we believe there are long-term secular tailwinds supporting the technology and healthcare sectors that will continue to drive future growth. Second, supporting clients and working to regain trust. Our goal is to maintain seamless functionality that SVB clients are accustomed to and have come to expect.

We have already met with many key clients to hold initial discussions around the transition and reinforce our commitment to them. We plan to continue that communication and ensure that feedback can be received quickly and effectively to address. Third, retaining key revenue generating talent and staff to support them. One of the most important priorities has been the retention of key SVB talent. We have provided a budget for a meaningful amount of retention to retain this key talent. As Frank mentioned, we have had some attrition since this acquisition date. However, we have been pleased that our succession plans, internal talent pools, and external recruiting resources have allowed us to backfill key positions. On Page 12, we showed the composition of our loan portfolio at quarter end including the impact of the SVB acquisition.

The transaction provides diversification across our loan portfolio. In this way, legacy SVB’s commercially focused portfolio complements First Citizens’ client strategy by bringing on strong private equity and venture capital relationships. Moving to Page 13. We provide an overview of the legacy SVB credit portfolios and they are divided into risk categories. The acquired portfolio has a low loss history which aligns well with First Citizens’ credit culture and risk management strategy. As you can see, approximately 70% of SVB loans fall into the low-credit risk portfolios, including Global Fund Banking and the Private Bank. We will continue to manage these portfolios prudently and effectively while maintaining consistent and strong underwriting standards.

The efforts already executed by the legacy SVB team in this area have positioned the bank well from a credit quality standpoint. On Page 14, we show our deposit composition at quarter-end, including the impact of the SVB acquisition. One of the most immediate benefits of the shift in deposit mix at 62% of SVB deposits are noninterest-bearing, bringing the consolidated noninterest-bearing ratio to 39% up 11% from what we reported in the fourth quarter. Further, the transaction provides a more geographically diverse deposit base, which we believe will help position us to compete in the current deposit rate environment by growing our core deposit base. We continue to focus on client outreach and I believe that some of the legacy SVB clients will move business that left back to us as depositors realizes their deposits are safe with First Citizens.

In the meantime, we’ve successfully been leveraging our nationwide digital direct bank to quickly add balances to competitive product offerings. I will now turn it over to Craig Nix to discuss the preliminary purchase accounting and our first quarter financial results. Craig?

Craig Nix: Thank you, Peter, and good morning, everyone. Page 17 provides a view of the acquired balance sheet prior and post purchase accounting impacts. After preliminary purchase accounting, we acquired approximately $107 billion in assets comprised of $35 billion in cash and $71 billion in loans. We have seen $56 billion in deposits and $35 billion in borrowings. The FDIC received a value appreciation instrument payable in cash of up to $500 million. On March 28, FDIC exercised its option and in April, we pay the FDIC $500 million. Page 18 shows that the acquisition resulted in significant TBV accretion. Starting with the standalone First Citizens tangible book value of $590 per share. Estimated Day 1 accretion was 112% or an increase of $9.6 billion to $1,250 per share.

After the impacts of CDI and Day 2 CECL, estimated accretion was 106% or an increase of $9.1 billion to $1,214 per share assuming fully phased-in acquisition cost estimated at $650 million, TBV accretion was 100%. Continuing to Page 19, pre-tax purchase accounting adjustments for $2.8 billion. The most significant adjustment included a 3.9% credit and liquidity mark on loans. After consideration of other adjustments, including $253 million for commitments to lend and $230 million for CDI, the asset discount of $16.45 billion is reduced to $13.6 billion. After recognizing the $500 million paid to the FDIC, we recognized an after-tax gain of $9.8 billion on the acquisition. Our current estimate for the PCD ACL gross up is $200 million and our Day 2 CECL non-PCD provision, it’s $462 million.

In addition to Day 2 provision, we recorded $254 million in provision expense for commitments to lend, bringing the after-tax of Day 2 provision expense to $536 million. On Page 20, we present the estimated impact of preliminary purchase accounting marks on EPS, NIM, and income statement line items. Please note that the fair value adjustments presented exclude fair value adjustments that will not impact future earnings. The impact of the fair market value adjustments is estimated to be accretive to 2023 EPS by $28.95 and to 2023 NIM by 36 basis points. The Day 2 CECL adjustments for non-PCD loans and reserve for unfunded commitments will have a negative impact on estimated 2023 EPS of $26.97. Page 21 shows that of the $71.3 billion in loans acquired approximately $2.5 billion were determined to be PCD loans.

After recording the ACL on PCD loans totaling $200 million, we estimate $2.6 billion of interest income accretion to be recognized over the remaining lives of the loans. The ACL ratio on the acquired SVB loans is 1%, resulting in a combined ACL of $1.6 billion or 1.16% of total loans at March 31, 2023. Next on Page 22, it was especially important to us that post-acquisition, we maintained a fortress balance sheet mark by strong liquidity. So it’s on and off balance sheet managed with a low-risk appetite with respect to our investment portfolio, maintaining strong credit quality, and provide appropriate ACL coverage. All capital ratios are above our current target operating ranges, the CET1 at 12.53% when adjusting the CET1 ratio for AOCI unrealized losses on our securities portfolio, it drops to 12.1% and then further adding unrealized losses on the HTM portfolio, it drops to 11.4%.

Both of these proforma ratios remain above regulatory well-capitalized limits and our internal target ranges. We have strong on and off-balance sheet liquidity positions totaling $51.4 billion in cash and high-quality liquid securities and $79.5 billion in contingent sources. Total liquidity covered uninsured deposits by 198% as of March 31 and by 219% as of April 30. Although net charge-offs increased in the first quarter, credit performance was strong and we remain well reserved. Now turning to first quarter results, I’m going to anchor my comments to the takeaways on Page 24. In the interest of time, I will not cover pages 25 to 41 in detail but have included them for your reference. We posted another quarter of strong reported and adjusted financial results, reported net income for the quarter was obviously boosted by a gain on acquisition but we were pleased with adjusted net income as well.

Adjusted year-over-year PPNR increased by 35%, about 21% without the first quarter impact of SVB. Linked quarter net interest income grew and margin expanded by 5 basis points to 3.41%. Noninterest income held up well increasing over the linked quarter with and without SVB contribution. Our efficiency ratio improved on a year-over-year basis but was up slightly from the linked quarter due to higher seasonal personnel costs and the industry-wide increase in FDIC assessment rate. Overall, we feel good about where we are on expenses. Legacy FCB, loan, and deposit growth was strong during the quarter. Annualized loan and deposit growth was 7.7% and 6.3% respectively. Moving to credit, even though we are seeing an uptick in net charge-offs towards more historic levels, we are pleased with our credit quality and the strength of our clients outside of the general office and small ticket leasing — equipment leasing, we have not seen new areas of stress in the portfolio.

Our nonaccrual ratio declined by 26 basis points with the SVB acquisition and 5 basis points without it. As I mentioned earlier, our capital position remains strong. We are experiencing a burn down of AOCI losses as our securities portfolio matures and rates have come off recent highs. Starting on Page 43, I will highlight our financial areas of focus. First, we are focused on maintaining a solid base of core deposits to fund our balance sheet. General Bank deposits total $86 billion over 60% of our total deposit base consisting primarily by branch network and our nationwide Direct Bank. 80% of these deposits are insured are collateralized and the average account size is $36,000. The deposit noted below the General Bank and our commercial bank from legacy CIT and represents a much smaller portion of our total funding.

Corporate segment deposits consist primarily of brokered deposits. SVB deposits of $49.3 billion represented 35% of our deposit base and have an average size of $360,000, 14% of these deposits are insured. Putting it all together 53% of our deposits were insured at March 31, 2023. Continuing to Page 44, we shared weekly deposit trends post-acquisition. On the FCB side, deposits have grown by $2.6 billion primarily in the Direct Bank. On the SVB side, after seeing initial outflows of $7 billion and a $5 billion outflow that was expected at the acquisition date related to a sweep repos product coming back online, deposit balances have begun to stabilize. We are monitoring deposit outflows at SVB closely and we’ll continue to use our Direct Bank to offset future outflows of deposits at SVB.

Page 45 shows that as of March 31 and April 30, liquidity covered our uninsured deposits by approximately two times. On Pages 46 and 47, we highlight our total CRE exposure which was under 12% of total loans at quarter-end. General office loans totaled $2.8 billion or 2.1% of total loans. Page 47 includes information on the general office portfolio which is well-diversified geographically with limited exposure to some of the hardest-hit markets including San Francisco, Chicago, and New York. As we shared on our last call, of the $2.8 billion in general office loans, our largest area of concern is in our commercial bank with general office loans, totaling $1.3 billion or less than 1% of total loans. This portfolio consists of Class B reposition and bridge loans and is where we are seeing deterioration in the past dues for the criticized assets and charge-offs.

We are carrying an ACL on these loans of 5.23% versus an ACL on the overall general office portfolio of 2.67%. The general office loans in the Commercial Bank were originated with strong loan-to-values in the 60% to 65% range. We acknowledge that current market conditions could bring these higher depending on the location and specific property. As these loans approach maturity, we are working with our clients on an individual basis to assess potential concerns and ensure we are addressing them quickly. So while we expect some additional downward migration in this portfolio, we do believe the issues are manageable. Most of the remaining general office exposure is in the General Bank, this portfolio is much more granular in nature with a smaller average loan size, and we have to date, not seeing deterioration.

To close the loop on this, we are not originating new loans in this space and are diversifying to other performing property types. On Pages 48 and 49, our investment portfolio strategy is to purchase stable cash flow and securities with act as a source of liquidity and do not take on significant duration risk. This is evidenced by the short duration of our portfolio of approximately 4.2 years. And importantly, extending into only 4.3 years and an up 100 basis points rate shock. 95% of the portfolio is directly or indirectly guaranteed by the U.S. government. Turning to Page 50. We expect to receive 22% of our investment portfolio cash flows over the next seven quarters. Over that same time horizon, we expect a 39% burndown of our investment portfolio-related AOCI losses.

On Page 51, our interest rate sensitivity increased during the quarter due to the SVB acquisition. The primary drivers for the fixed rate Purchase Money Note increasing liability duration while variable rate loans and cash acquired shortened asset duration. We are prioritizing the management of liquidity risk and are keeping a larger cash balance as a percentage of assets due to the current uncertainty in the banking environment. The main drivers of our asset sensitivity are our variable rate loan portfolio, which represents approximately 65% of total loans and our cash position of $38 million equating to 20% of earning assets as of March 31, 2023. On Page 52, we provide information on our actual and expected deposit betas. 58% of our deposits exhibit lower betas and 42% exhibit moderate to higher betas.

Our cumulative beta through the first quarter was 23% in line with our projection last quarter, we expect cumulative beta to increase to 28% by the end of the second quarter and deposits continue to catch up from recent rate increases. Over the interest rate hiking cycle, we forecast our cumulative beta will be in the 30% to 35% range. Turning to Page 54, I’ll conclude with our outlook for the remainder of 2023. While we believe that our projections are achievable and reasonable as we prepared our outlook, we noted several sources of uncertainty surrounding it. Number one, we are a little over a month into the acquisition of SVB. So we still have a lot to digest there. Number two, we assume any recessionary impact will be mild. Number three, the impact of policy changes, including the path of the Fed funds rate and the pace of quantitative easing could impact our projections.

And four, the impact of competition and client behavior could drive our deposit betas higher. The first column on the page list our first quarter 2023 results. The numbers for noninterest income and expenses are adjusted for notable items. Column two provides our guidance for the second quarter of 2023 and column three for the full year. On loans, we expect a low single-digit percentage decline in the second quarter as pay down and the Global Fund Banking business from slowed market activity are offset by annualized low to mid-single-digit percentage growth in legacy FCB. We expect the same trend to continue through year-end with the legacy FCB portfolio moderating to approximately $60 billion and legacy FCB achieving mid-single-digit percentage growth.

For deposits, we expect a low to mid-single-digit percentage decline in the second quarter, while we are encouraged by the stabilization of SVB deposits since the first week of April, we are projecting an $8 billion decline through the end of the year. With lower absolute levels of funding in the marketplace, we anticipate that SVB clients will continue to experience some level of cash burn. We are expecting that to be offset by $10 billion in growth in our Direct Bank. With respect to SVB deposits and loans, we have engaged in an expansive calling effort to reach out to over 30,000 clients. While it is early, we are seeing initial positive results in the first clients we have contacted. We are cautiously optimistic that we will not see the level of loan or deposit runoff included in our projection.

But this will depend on the extent to which clients return for the absolute funding in the marketplace returns. If this happens, we feel there could be upside to our projection. Our interest rate forecast follows the implied forward curve. We forecasted the Fed funds rate has peaked at the 5% to 5.25% range. From there, we anticipate 325 basis points rate cuts in the back half of the year. The SVB acquisition will be accretive, not only to net interest income given the sizable balance sheet but also to net interest margin. We expect an estimated purchase accounting impact to net interest income of $604 million in an accretive impact of NIM of 36 basis points in 2023. While we are not providing 2024 guidance at this time, we do expect the pace of appreciation to moderate in 2024 as detailed previously in the purchase accounting slides.

If rate cuts materialize on the back half of the year, we do anticipate net interest income declining from current levels. We anticipate full cycle beta to be 31% up from our previous estimate of 30 — 25% due primarily to decline in noninterest-bearing deposits as well as volume increases in the more expensive Direct Bank channel. We expect second quarter annualized net charge-offs to be in the 35 basis points to 45 basis points range. The uptick is primarily related to a $45 million charge-off in the SVB portfolio that was fully reserved for a Day 1 purchase accounting. We view that charge-off as idiosyncratic in nature. Absent that charge-off, we would expect net charge-offs to be in the mid-20s annualized. For the full year 2023, we expect net charge-offs in the 25 basis points to 35 point — basis points range.

On an adjusted basis, we expect $430 million to $460 million in noninterest income in the second quarter. We expect legacy SVB to generate close to $130 million to $150 million per quarter on an apples-to-apples basis of the SVB businesses that were acquired. This was closer to $300 million per quarter in 2022. So we are expecting the run rate to be slightly less than half of that given client attrition, especially in some of the off-balance sheet suite products. With respect to legacy First Citizens, we still have momentum in our wealth, merchant, card, and rail businesses. While maintenance expenses are expected to increase in rail, utilization is almost 98% and in the past two quarters renewal rates have been at or above 130% of the previous quarter’s rate.

Noninterest expense projections do not include expected acquisition expenses related to SVB estimated at $650 million with 50% recognized over the remainder of 2023 and the other half in 2024. We expect noninterest expense in the range of $1.25 billion to $1.3 billion in the second quarter. The SVB pre-merger annual run rate was approximately $2.6 billion for $650 million per quarter. We anticipate 25% to 30% cost synergies to be in the run rate by the end of 2024, equating to $650 million to $780 million. Most of the synergies will be driven by consolidation of redundant or duplicate back office processes in systems as we do remain focused on supporting the existing frontline of business and their clients. On an FCB standalone basis, we expect expenses to be down low single-digit percentage points compared to the first quarter due to elevated seasonal benefits, partially offset by merit increases as well as heightened marketing expenses related to the digital bank.

We expect to maintain an efficiency ratio in the mid-50s with upside to the low-50s if rates remain higher for longer. If rates begin to decline as forecasted, we feel comfortable in our ability to maintain it in the mid-50s as decreases in net interest income are offset by recognition of cost synergies. And finally, we expect our corporate tax rate to be in the 26.5% to 27% range, an increase from the previous range of 24.5% to 25%. As our revenue distribution is more heavily weighted to higher tax jurisdictions such as California and our pre-existing tax benefits are spread amongst a larger pre-tax income base. Page 55 shows our EPS forecast for 2023 and significant EPS accretion from the SVB acquisition. The forecast does not include the impact of acquisition expenses.

It assumes that 50% to 60% of the cost synergies are in the run rate by the end of 2023. Starting from the left side of the page, we began with FCB’s estimated standalone 2023 EPS range of $85 to $90 per share. Moving to the gray bar on the right, the impact of the base combination with SVB prior to cost synergy as $21 — $27 to $31 per share bringing the range for the base combination EPS to $112 to $121 per share. Continuing to the right, cost synergies in 2023 are estimated to add another $9 to $11 of EPS. Note that if we were to assume estimated fully phased-in cost synergies in this projection that would be accretive to EPS by $33 to $39 per share. The next two gray boxes to the right side of the purchase accounting impacts are accretive to EPS by $31 per share and the amortization of CDI reduces that impact by $2 per share.

Actual results could differ materially, particularly with respect to accretion depending on loan prepayments. The $31 per share since loans pay pay-off based on contractual maturities. Thus we ended with an estimated range for EPS between $150 and $161 per share, representing 67% to 89% accretion with fully phased-in cost synergies accretion would be between 93% and 122%. Note that the EPS will includes estimated SVB operating results from the acquisition date through December 31, 2023. And with that, I will turn it back over to Frank for closing comments.

Frank Holding: Well, now we’ve thrown a lot at you today. But, I’d like to sort of end with some takeaways, call it, sort of headlines of all the material that we’ve thrown at you this morning. First of all, the SVB acquisition was a home run financially in terms of immediate TBV accretion and future EPS accretion. Secondly, our fortress balance sheet enabled us to do the SVB deal and we intend to maintain their post-acquisition. Also, SVB clients should take great comfort in our safety and stability and we’re hopeful that the recent reduction in runoff and deposit runoff is a sign of their confidence in us. Next, we are committed to SVB strategic approach to the technology and innovation sector and believe that it represents the opportunity for significant upside for First Citizens shareholders.

And finally, moving forward, we are positioned to perform well in a broad range of economic scenarios given our capital and liquidity positions, talented associates, focused on our clients and increasingly diverse business mix, and our strong risk management culture. And with that, I will turn it over to the Operator for instructions for the question-and-answer portion of the call.

Q&A Session

Operator: [Operator Instructions] The first question comes from the line of Stephen Scouten with Piper Sandler. You may proceed.

Operator: Thank you. Mr. Scouten. The next question comes from Brady Gailey with KBW. You may now proceed.

Operator: Thank you, Mr. Gailey. The next question comes from the line of Kevin Fitzsimmons with DA Davidson. You may now proceed.

Operator: Thank you, Mr. Fitzsimmons. The next question comes from the line of Christopher Marinac with Janney Montgomery Scott. You may now proceed.

Operator: Thank you. Mr. Marinac. The next question comes from the line of Brody Preston with UBS. You may now proceed.

Operator: Thank you, Mr. Preston. I’m not showing any further questions at this time. I’d like to turn the call back over to our host, Deanna Hart for any closing remarks.

Deanna Hart: Thank you, everyone, for participating in our call today. We appreciate your ongoing interest in our Company and if you have any further questions or need additional information, please feel free to reach out to the Investor Relations team.

Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect. Have a wonderful day.