Is First Citizens BancShares ($FCNCA) Quietly Engineering a Banking Empire No One Saw Coming?

If the Fed lowers the interest rates on the short end:

1. But long end remains but no recession: NIM looks better and demand for loans increases. Loan growth is greater.
2. But long end comes down due to demand: NIM remains the same.
3. Recession and: Demand for loans fall.

I think scenario 3 is possible.

But is there a possibility where NIM goes down and demand improves? I am not sure about that. But hypothetically if FCNCA’s loan book is $137B, their NIM can go down from 3.5% to 3.1%, a loss of 0.4%. That roughly translate to about 548 million in interest income. If they grow their loan book by 7%, the increase in interest in come is 297 million. Their loan book will need to grow by 14% to make up for that loss in interest income. In the early years of 2014, they have a loan growth target of 6.5% p.a. if you look at the figures, both rates are possible given what they can do.

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