On Thursday, Goldman Sachs initiated coverage on First Citizens Banc Shares, trading on NASDAQ under the ticker FCNCA, with a Buy rating and a price target of $1,950.00, suggesting a 23% upside potential. The investment firm's analysis indicates that First Citizens is poised for robust returns and has the potential for significant capital return to shareholders in the near future.
First Citizens operates as a prominent regional bank, providing a range of services to both commercial and consumer clients through its four main segments: General Bank, Commercial, SVB, and Rail.
Goldman Sachs forecasts that the bank's strategic positioning and above-average loan growth will contribute to stronger net interest income, particularly in a sustained high-interest-rate environment. The bank's focus on cost control, leveraging cost savings, and investment in growth and regulatory compliance are also expected to enhance its profitability.
The bank is noted for its strong capital levels compared to its peers, which could enable it to return over 20% of its market capitalization to its shareholders through a buyback program in the upcoming quarters.
Despite the current elevated credit losses due to several high-risk portfolios, including general office, SVB investor dependent, and equipment lending, Goldman Sachs believes the reserves are adequate and anticipates an improvement in losses over time.
Currently, First Citizens' shares are trading at approximately 8.3 times the estimated 2025 earnings, which is lower than the peer average of 9.1 times, and at 1.2 times the price to tangible book value. Goldman Sachs suggests that successful execution of the bank's strategy could lead to improved returns and a potential re-rating of its market multiple.
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