First Citizens Bancshares, Inc (NC) - Ordinary Shares - Class A

Strong profitability momentum (good): NII and NIM continued to expand - Q2’26 net income: $83.9M / $0.87 diluted EPS, up from $60.2M / $0.61 in Q1’26. - Net interest margin (NIM) expanded again for the 9th consecutive quarter: 3.48% (Q2’26) vs 3.43% (Q1’26) and 3.32% (Q2’25). - Loan yield: 5.62%, up +2 bps QoQ; deposit costs declined -3 bps QoQ (funding cost down -4 bps QoQ). - Net interest income: $202.2M, +0.7% QoQ (also benefited from an extra accrual day; offset by lower average earning assets after the April branch/deposit sale). - Surprising/important nuance: despite the loan balance decline, the *pricing/margin* picture remains improving.

But the balance sheet shrank more than expected (bad/challenge): payoffs pulling future growth forward - Loans decreased $447M QoQ (more than expected), driven by accelerated payoffs. - Payoff activity was concentrated in credits with limited relationship value, including: - Criticized loan payoffs - Secondary market activity - Divested/out-of-market markets - Management explicitly expects continued accelerated payoff pressure through the rest of 2026, creating variability in near-term loan balance growth even as “relationship growth” remains good. - Outlook implication: earning assets are expected to be lower near-term with “bottoming” dynamics tied to average earning assets in Q3.

Deposits were down, but mix improved (mixed): relationship-focused deposit strategy - Total deposits: $21.4B, down $441.7M QoQ (half+ of the impact from sale of $244M of deposits in a Nebraska branch transaction). - Noninterest-bearing balances increased YoY when adjusted for sold deposits (management highlight: improving deposit mix). - Funding cost direction remains positive: overall deposit cost improved, but the company admitted near-term deposit balance pressure, especially from higher-cost categories exiting. - Investor takeaway: the company is prioritizing core relationship and lower-cost funding, even at the expense of near-term balance growth.