Banking Relationships and Acquisitions

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.

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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