FT : First Citizens makes huge gain on Silicon Valley Bank deal

First Citizens makes huge gain on Silicon Valley Bank deal
Windfall makes bank the second-most profitable lender in the US

First Citizens Bank, the US lender that acquired much of Silicon Valley Bank following its collapse, reported a more than 30-fold increase in profits for the first three months of 2023, benefiting from its purchase of the failed California-based lender.

For the first quarter, First Citizens said on Wednesday that net income totalled $9.5bn, or $653.64 a share, up from $264mn, or $16.70 a share, in the same period last year, due to a $9.8bn gain from its deal for SVB.

The windfall made First Citizens the second-most profitable bank in the US during the quarter, just behind JPMorgan Chase that earned $12.6bn.

Adjusted for this gain, First Citizens’ net income was $306mn, unchanged from a year earlier and ahead of forecasts for $292.8mn, according to data compiled by Bloomberg.

In March, First Citizens acquired the failed bank’s $72bn loan portfolio at a roughly 20 per cent discount and assumed $56bn in deposits. It also entered into a loss-sharing agreement with the Federal Deposit Insurance Corporation for commercial loans made by SVB.

The deal doubled First Citizens’ assets to more than $200bn, taking it from the US’s 30th largest bank into the top 20.

Profits in the US banking sector reached a record of roughly $80bn in the first quarter, up 33 per cent from a year ago, driven largely by the banking turmoil as well as higher rates. About half of the increase in the industry’s aggregate profits came from one-time gains recorded by First Citizens and Flagstar, which bought Signature Bank.

One of the challenges for North Carolina-based First Citizens has been to convince SVB’s roster of clients that an east coast bank will be able to provide the same sort of support to the tech and life science industries.

Chief executive Frank Holding said in a statement that the bank had “made strides to integrate our two companies, including meaningful engagement with key Silicon Valley Bank leaders and clients” since closing the deal in March.

Shares in First Citizens, which are up 44 per cent year to date, were up 4 per cent in pre-market trade.

>>> US Research Calls

Research Calls

  • Upgrades:
    • Alcon (ALC) upgraded to Outperform from Neutral at Robert W. Baird; tgt raised to $90
    • Celsius (CELH) upgraded to Buy from Neutral at BofA Securities; tgt raised to $125
    • CIBC (CM) upgraded to Buy from Hold at Canaccord Genuity
    • Exact Sciences (EXAS) upgraded to Buy from Hold at Craig Hallum; tgt raised to $85
    • Hain Celestial (HAIN) upgraded to Neutral from Underweight at Piper Sandler; tgt lowered to $16
    • Halozyme Therapeutics (HALO) upgraded to Overweight from Neutral at Piper Sandler; tgt $46
    • InterDigital (IDCC) upgraded to Buy from Neutral at BofA Securities; tgt raised to $105
    • LegalZoom.com (LZ) upgraded to Market Perform from Underperform at MoffettNathanson; tgt $12
    • MasterBrand (MBC) upgraded to Buy from Hold at Loop Capital; tgt raised to $13
    • Nektar Therapeutics (NKTR) upgraded to Hold from Underperform at Jefferies; tgt lowered to $1
    • Quotient (QUOT) upgraded to Buy from Hold at Craig Hallum; tgt raised to $4.50
    • Tabula Rasa HealthCare (TRHC) upgraded to Outperform from Market Perform at SVB Securities; tgt raised to $10
    • VTEX (VTEX) upgraded to Outperform from Market Perform at Itau BBA; tgt $6
    • Y-mAbs Therapeutics (YMAB) upgraded to Outperform from Neutral at Wedbush; tgt raised to $13
  • Downgrades:
    • AdaptHealth (AHCO) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $11.30
    • AdaptHealth (AHCO) downgraded to Hold from Buy at Stifel; tgt lowered to $11
    • Amplitude (AMPL) downgraded to Mkt Perform from Outperform at William Blair
    • Amplitude (AMPL) downgraded to Neutral from Overweight at Piper Sandler; tgt lowered to $9
    • Amplitude (AMPL) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Amyris (AMRS) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $1.25
    • Anheuser-Busch InBev (BUD) downgraded to Hold from Buy at HSBC Securities
    • Azenta (AZTA) downgraded to Sector Weight from Overweight at KeyBanc Capital Markets
    • Bentley Systems (BSY) downgraded to Neutral from Buy at Rosenblatt; tgt raised to $47
    • Dutch Bros (BROS) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $33
    • Dutch Bros (BROS) downgraded to Neutral from Overweight at JP Morgan; tgt lowered to $32
    • Expensify (EXFY) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt lowered to $8.50
    • Health Catalyst (HCAT) downgraded to Mkt Perform from Outperform at Raymond James
    • Health Catalyst (HCAT) downgraded to Neutral from Buy at Guggenheim
    • Innovative Industrial Properties (IIPR) downgraded to Hold from Buy at Craig Hallum; tgt lowered to $80
    • Lumentum (LITE) downgraded to Equal Weight from Overweight at Barclays; tgt lowered to $40
    • Nikola Corporation (NKLA) downgraded to Market Perform from Outperform at TD Cowen; tgt lowered to $1
    • PayPal (PYPL) downgraded to Hold from Buy at Edward Jones
    • Prometheus Biosciences (RXDX) downgraded to Hold from Buy at Jefferies; tgt raised to $200
    • Sealed Air (SEE) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $48
    • Southern Copper (SCCO) downgraded to Sell from Neutral at Goldman; tgt raised to $66
  • Others:
    • 10x Genomics (TXG) initiated with an Overweight at Barclays; tgt $65
    • Antero Midstream (AM) initiated with a Buy at UBS; tgt $14
    • Bankwell Financial Group (BWFG) initiated with an Outperform at Hovde Group; tgt $26
    • Braze (BRZE) initiated with an Overweight at Wells Fargo; tgt $34
    • Cutera (CUTR) resumed with an Underweight at Piper Sandler; tgt $14
    • Exelixis (EXEL) assumed with an Overweight at Piper Sandler; tgt $28
    • GitLab (GTLB) initiated with a Neutral at DA Davidson; tgt $30
    • Hess Midstream Partners (HESM) initiated with a Buy at UBS; tgt $37
    • JFrog (FROG) initiated with a Buy at DA Davidson; tgt $25
    • Oculis Holding AG (OCS) initiated with a Buy at Pareto; tgt $23
    • Pacific Biosciences (PACB) initiated with an Equal Weight at Barclays; tgt $14
    • Voyager Therapeutics (VYGR) initiated with a Buy at Truist; tgt $18

>>> US Gapping down

Gapping down
In reaction to earnings/guidance:

  • AMPL -19.3%, TWLO -16.4%, CUTR -15.8% (also CFO steps down; also announces agreements with Pura Vida and RTW), ABNB -14.1% (also authorizes new $2.5 bln share repurchase program), RETA -13.6%, COHR -13%, NVTA -12.4%, HCAT -12.1%, JXN -10.8%, RVNC -8.8%, TTGT -8.8%, BROS -8.5%, SILK -8%, BBAI -7.1% (also names new COO), HRB -6.9%, AFRM -6.8%, ZIP -6.6% (also authorizes new $100 mln share repurchase program), ARRY -6.6%, MQ -6.5%, NVEI -6.5%, STR -6.4%, EVCM -6%, TEVA -6%, EBS -5.9%, ACDC -5.7%, PTRA -5.5%, ICHR -5.4%, GPRO -5%, EXFY -4.8%, CEVA -4.8%, MODG -4.7%, BLNK -4.3%, GDRX -4.3%, VRDN -4.2%, FA -4%, AGL -3.9%, SPCE -3.9%, ORA -3.8%, RXT -3.7%, CAMT -3.5%, IRBT -3.3%, CLNE -3.2%, VERX -3.2%, WTI -3.1%, SPHR -2.9%, LAZR -2.8%, EGY -2.7%, EOLS -2.2%, LNC -2.2%, MASI -1.8%, MRTX -1.7%, OXY -1.6%, HRT -1.5%, BEAM -1.5%, ESE -1.3%, BE -1.3%, TSM -1.2% (April sales), EXK -1.2%

Other news:

  • IAS -13.7% (prices secondary offering of 10.0 mln shares of common stock at $15.00 per share)
  • SILK -8% (files mixed shelf securities offering)
  • STR -6.4% (lowers dividend)
  • RUM -6% (Tucker Carlson Twitter deal)
  • BLUE -3.1% (files $350 mln mixed shelf securities offering)
  • APAM -2% (reports April AUM)
  • NEXT -2% (files for 5,835,277 share offering by selling shareholders)
  • BGNE -1.4% (files mixed shelf securities offering; also stock offering by selling shareholders)
  • FOXA -1.4% (Tucker Carlson Twitter deal)
  • WTFC -1.4% (files mixed shelf securities offering)
  • AB -1% (reports April AUM)
  • WPM -0.9% (renewed its at-the-market equity program)

Analyst comments:

  • SCCO -2.8% (downgraded to Sell from Neutral at Goldman)
  • BUD -1.5% (downgraded to Hold from Buy at HSBC Securities)
  • SEE -0.8% (downgraded to Equal-Weight from Overweight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to earnings/guidance:

  • UPST +37.4%, LZ +13.8%, CARG +11.2%, CELH +10.6%, FLYW +10%, TBLA +8.8%, SYNH +8.8%, MNKD +8.2%, IAC +8.1%, EXAS +8%, RIVN +7.7% (also files mixed shelf securities offering), EVRI +7.7%, WWW +7%, NABL +7%, KIND +6.8%, RNG +6.6%, LPSN +6.4%, GH +6.3%, LI +6.3%, GO +6.1%, COMP +6.1%, ALC +5.6%, PUBM +5.6%, LNW +5.3%, AKAM +5.2% (also announces 3% workforce reduction), TOST +5.1%, VVV +5%, SUPN +4.8%, PRIM +4.5%, XMTR +4.4%, ZD +3.9%, NTRA +3.7%, DUOL +3.5%, BAM +3.5%, EA +3.3%, MODN +3.3%, SHCR +3.3%, HALO +3.2%, OSCR +3.1%, VVX +3.1%, VTLE +2.9%, DAR +2.9%, QTWO +2.7%, NHI +2.6%, MIDD +2.6%, OLO +2.5%, CLBT +2.2%, CTOS +2.1%, PETQ +2%, AGTI +2%, DIOD +2%, LPRO +2%, KGC +1.9%, CE +1.8%, CDRE +1.8%, TM +1.7%, IOVA +1.6%, ONL +1.6%, DIBS +1.4%, BCO +1.4%, APPN +1.1%, TWNK +1.1% (also authorizes new $150 mln share repurchase program), XENE +1.1%, LFST +1.1%, VZIO +1%

Other news:

  • CTIC +84% (to be acquired by Sobi for $9.10 per share)
  • SYNH +8.8% (confirms acquisition by consortium including Elliott Investment Management for $43/share)
  • PLX +7.9% (Chiesi Global Rare Diseases and PLX announce the FDA has approved ELFABRIO (pegunigalsidase alfa-iwxj) for the treatment of adult patients with Fabry disease)
  • BEN +4% (reports April AUM)
  • TBPH +2.8% (FDA grants orphan drug designation for Ampreloxetine)
  • BWEN +1.3% (Sends Letter to Shareholders Clarifying Attempts by WM Argyle to Mislead Shareholders)
  • W +1.2% (announces the pricing of $600 mln aggregate principal amount of 3.50% convertible senior notes due 2028 in a private offering)
  • ALVO +1% (enters into commercialization agreement with Polifarma for proposed biosimilar to Eylea)

Analyst comments:

  • IDCC +3.1% (upgraded to Buy from Neutral at BofA Securities)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • CTIC +84.2%, UPST +32.6%, PLX +16.8%, SYNH +12%, CARG +11.2%, CELH +10.5%, FLYW +10%, RNG +9.7%, IAC +9%, LZ +8.6%, LPSN +8.3%, EXAS +8.2%, VZIO +7.1%, KIND +6.8%, RIVN +6.3%, GH +6.3%, GO +6.1%, LI +6.1%, ALC +5.8%, TOST +5.4%, LNW +5.3%, LPRO +5%, HALO +5%, AKAM +4.8%, SUPN +4.8%, MNKD +4.7%, PRIM +4.5%, BEN +4%, ZD +3.9%, EVRI +3.8%, NTRA +3.7%, PETQ +3.4%, EDR +3.3%, MODN +3.3%, VVX +3.1%, VTLE +2.9%, DAR +2.9%, RKLB +2.8%, TBPH +2.8%, QTWO +2.7%, NHI +2.6%, OLO +2.5%, CTOS +2.1%, AGTI +2%, HLI +2%, DIOD +2%, EA +2%, CE +1.9%, CDRE +1.8%, ONL +1.6%, DUOL +1.6%, BWEN +1.3%, CAMT +1.2%, APPN +1.1%, TWNK +1.1%, XENE +1.1%, LFST +1.1%, ALVO +1%, IOVA +1%, IVZ +0.9%, KGC +0.9%, ANGI +0.8%, RMBL +0.7%
  • Gapping down:
    • AMPL -18.7%, CUTR -17.4%, TWLO -16.6%, JXN -14.6%, ABNB -13.9%, IAS -12.9%, NVTA -12.4%, COHR -12.2%, TTGT -10%, RVNC -9.2%, SILK -9.1%, HRB -8.3%, AFRM -8.1%, BROS -7.6%, EBS -6.9%, ZIP -6.6%, RUM -6.5%, STR -6.4%, GDRX -6.4%, EVCM -6%, MODG -5.6%, ARRY -5.6%, CLNE -5.5%, ICHR -5.4%, MQ -5.2%, BLUE -4.7%, BBAI -4.7%, WTI -4.7%, EXFY -4.3%, VRDN -4.2%, FA -4%, AGL -3.9%, RXT -3.7%, EOLS -3.4%, SPCE -3.4%, OSCR -3.4%, ORA -3.2%, LTHM -3.1%, LAZR -2.8%, IRBT -2.3%, LNC -2.2%, HCAT -2.1%, APAM -2%, NEXT -2%, VTEX -1.9%, MASI -1.8%, RPD -1.7%, MRTX -1.7%, OXY -1.6%, BLNK -1.5%, HRT -1.5%, FOXA -1.4%, TSM -1.4%, BGNE -1.3%, ESE -1.3%, AB -1%, EGY -1%

>>> Europe : Brokers Upgrades & Downgrades - 10th of May 2023 V2(+)

>>> Up
* AIB Group Raised to Add at AlphaValue/Baader
* Alcon Raised to Outperform at Baird; PT 80.24 Swiss francs
* Bakkafrost Raised to Buy at Fearnley; PT 820 kroner (+)
* Cambi Raised to Buy at DNB Markets; PT 12 kroner
* FinecoBank Raised to Neutral at Mediobanca SpA; PT 13 euros
* Grifols Raised to Buy at Alantra Equities; PT 12.92 euros
* Grifols ADRs Raised to Buy at Alantra Equities; PT $14.21
* Orkla Raised to Buy at SEB Equities; PT 91 kroner
* Orkla Raised to Buy at Carnegie; PT 95 kroner (+)
* SBB Raised to Buy at Arctic Securities; PT 10 kronor
* Stora Enso Raised to Outperform at Davy; PT 14 euros (+)

>>> Down
* AB InBev Cut to Hold at HSBC; PT 66 euros
* Eezy Cut to Reduce at Inderes; PT 3.70 euros
* Geberit Cut to Hold at Stifel; PT 530 Swiss francs
* Idorsia Cut to Reduce at Baader Helvea; PT 8.40 Swiss francs
* INWIT Cut to Neutral at Mediobanca SpA; PT 13 euros
* Neinor Cut to Neutral at Oddo BHF; PT 10 euros (+)
* Nikola Cut to Market Perform at Cowen; PT $1

>>> Initiation
* Gubra Rated New Buy at SEB Equities; PT 145 kroner

>>> Call
* Ahold 1Q Beat Estimates Despite Belgium Strikes: Bernstein (+)
* Credit Agricole Earnings Decent with Stronger Capital : KBW (+)
* Idorsia Cut to Reduce at Baader Helvea After Weak Start to Year
* Pictet Says Don’t Rush Back to Stocks as Cash Yields are High
* TUI Ebit in Line, Summer Bookings Encouraging, Jefferies Says (+)