First Citizens Completes BMO Branch Deal, Improves Funding Mix

The Tip Desk · October 23, 2026 · 4 min read

Deposits rose 6.8% to $185.26 billion as the bank assumed 138 BMO branches and $4.9 billion of deposits, while it prepaid $8.00 billion of the Purchase Money Note.

First Citizens Bancshares (FCNCA), a top-20 U.S. financial institution with more than $225 billion in assets, completed its acquisition of 138 branches from BMO Bank N.A. on September 4, 2026, assuming about $4.9 billion in deposits and $650 million in loans across the Midwest, Great Plains and West.

The deal was the visible piece of a quarter in which the bank accelerated both loan and deposit growth and used the resulting liquidity to shrink the FDIC Purchase Money Note. Chairman and CEO Frank B. Holding, Jr. said third-quarter performance exceeded the company’s expectations, citing top-line growth, loan and deposit expansion, resilient credit and expense discipline.

Deposits increased $11.84 billion, or 6.8%, to $185.26 billion at September 30, 2026, from June 30. Average deposit growth was 4.7%. General Bank deposits rose $5.66 billion, largely from about $4.86 billion assumed in the BMO deal. Corporate deposits increased $4.71 billion, including $3.21 billion in Direct Bank and $1.32 billion in brokered deposits. Commercial Bank deposits rose $1.46 billion. Noninterest-bearing deposits fell $73 million to 22.9% of the total from 24.5%. The cost of average total deposits was 2.16%.

Loans and leases grew $6.16 billion, or 4.1%, to $157.19 billion. Average loan growth was 2.9%. Commercial Bank added $5.48 billion, mainly in Fund Banking. General Bank loan growth of $633 million was largely from the BMO loans.

Net interest income rose $43 million to $1.70 billion from the second quarter. Excluding purchase accounting accretion, net interest income was $1.66 billion. Interest income on loans increased $88 million on a higher average balance and yield, and interest income on investment securities rose $26 million. Interest expense on borrowings fell $19 million after an $8.00 billion Purchase Money Note repayment. Interest expense on interest-bearing deposits increased $90 million on higher balances and rates in Direct Bank and brokered deposits.

Net interest margin compressed 3 basis points to 3.07% after a 1 basis point expansion in the prior quarter. Excluding PAA, NIM was 2.99%. The yield on average interest-earning assets rose 2 basis points to 5.36%. The rate paid on average interest-bearing liabilities rose 6 basis points to 3.01%.

Borrowings fell $7.72 billion to $24.47 billion after the $8.00 billion of note payments, partly offset by $400 million of senior unsecured notes. The Purchase Money Note stood at $20.45 billion at September 30, 2026, down from $35.85 billion a year earlier. Deposits were 88.3% of total funding versus 84.3% at June 30. The company said it prepaid another $1.5 billion in October, bringing July-to-October payments to $9.5 billion.

The provision for credit losses was $55 million, versus a $10 million benefit in the second quarter. The loan-loss provision was $50 million as the reserve release narrowed to $48 million from $74 million. Net charge-offs were $103 million, or 0.27% of average loans, versus 0.29%. Nonaccrual loans were $1.37 billion, or 0.87% of loans. The allowance for loan and lease losses was $1.44 billion, or 0.91% of loans.

Noninterest income declined $42 million to $734 million. Adjusted noninterest income was $575 million. Other noninterest income fell $42 million on a $37 million sequential drop in equity-warrant fair value and a $12 million lower tax-credit gain. Lending-related fees rose $10 million, client investment fees $9 million and operating-lease rental income $8 million. The loss on extinguishment of debt increased $12 million on the larger note payments.

Noninterest expense rose $22 million to $1.57 billion. Adjusted noninterest expense was $1.36 billion. Other expense increased $19 million, including software impairment. Acquisition-related expenses rose $10 million on the BMO close. Third-party processing fees increased $12 million. Equipment expense fell $8 million, professional fees $8 million and marketing $5 million. The adjusted efficiency ratio was 59.59%.

Net income was $606 million. Net income available to common stockholders was $577 million, or $51.23 a share. Adjusted net income available to common stockholders was $623 million, or $55.37 a share.

The company issued $300 million of Series F preferred stock, repurchased 278,828 Class A shares for $600 million and paid a $2.10 dividend. Common equity Tier 1 capital was 10.24%. The board authorized a new $1.2 billion repurchase plan through 2027. Capacity remaining under the 2025 plan was $711 million.