Ladies and gentlemen, thank you for standing by, and welcome to the First Citizens BancShares Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to introduce your host for this conference call, Ms. Deanna Hart, Senior Vice President of Investor Relations. You may begin.

Good morning, everyone. Welcome to our second quarter earnings call. Our Chairman and Chief Executive Officer, Frank Holding; President, Peter Bristow; and Chief Financial Officer, Craig Nix, will provide second quarter business and financial updates today. During the call, we will reference our investor presentation, which you can find on our website. Our comments will include forward-looking statements, which are subject to risks and uncertainties and that may cause our results to differ materially from expectations. We assume no obligation to update such statements. These risks are outlined for you on Page 3. We will also reference non-GAAP financial measures. Reconciliations of these measures against the most directly comparable GAAP measures are found in Section 5 of the presentation. Finally, First Citizens is not responsible for and does not edit nor guarantee the accuracy of earnings transcripts provided by third parties. I will now turn it over to Frank.

Thank you, Deanna, and good morning, everyone. Before we get into second quarter results, I'd like to start by saying that the SVB acquisition is going very well, and we are pleased with our progress integrating SVB's clients and associates into First Citizens. I'm also pleased to announce that we've appointed Marc Cadieux, a 30-year veteran of SVB as President of SVB's Commercial Banking business. Based in the San Francisco Bay Area, Marc leads a team of more than 1,000 experienced and talented bankers nationwide who are dedicated to the innovation economy. And we are fortunate to have Marc as a part of the First Citizens senior leadership team. Starting on Page 5. We've announced another quarter of solid financial results which were amplified by the SVB acquisition. We reported adjusted earnings per share of $52.60, exceeding our expectations. We delivered top quartile return metrics, generating an adjusted return on equity of 16.5% and return on assets of 1.5%. Our net interest margin expanded 69 basis points to 4.1%, and our adjusted efficiency ratio came in below 50% for this quarter. Deposits continue to be a huge focus for us, generated for us growing by 3.2% on an annualized basis. In addition to deposit growth, our commercial and general bank segments posted solid loan growth. We finished the second quarter with a CET1 ratio of 13.4%. Since year-end, we've accreted 228 basis points of capital from the SVB acquisition and 69 basis points from retained earnings. While we continue to build capital to support clients and drive organic growth, our goal is to operate with efficient levels of capital defined by our target ranges. At the present time, we are operating over the top end of our target ranges for all of our risk-based capital ratios. However, we will continue to pause share repurchases this year as we focus on SVB integration and get more clarity around the impacts of the new proposed capital rules. As for pending regulation, we are tracking the potential new requirements to ensure operational readiness. As part of this work, we've established a team whose mandate is to develop plans to expedite implementation once final rules are established. Thanks to these proactive actions and our strong risk management framework, we are well positioned to manage through any changes and address them exponentially or expediently, excuse me. In addition to capital, our liquidity position remains strong and stable, driven by our focus on core deposit gathering and a conservatively managed investment portfolio. We also remain focused on managing credit prudently. While we experienced an increase in net charge-offs this quarter, the majority of the increase related to the SVB portfolio that were anticipated and reserved for in day 1 acquisition accounting. We remain encouraged by the resiliency of our clients in the face of elevated inflation and rising interest rates and we look forward to continuing to supporting them. Turning to Page 6. We continue to make progress on SVB integration efforts and are excited by the early signs of collaboration and partnership we are seeing among our teams. Since we acquired SVB on March 27, our focus has been on stabilizing the business and as Peter Bristow will discuss shortly, we've made excellent progress on this front. We continue to focus on providing consistent and high-touch service to our clients and getting back to what SVB does best, lending to the innovation economy and bringing its participants together. Internally, we've been hyper focused on retaining SVB talent. An important step was in the naming of the SVB leadership team and ensuring that they have the tools to provide associates support and reiterate our commitment to the innovation economy. Externally, our stabilization efforts focused on client outreach. Our associates have dedicated countless hours to communicating to clients that they continue to expect what made SVB special to remain, including the high level of service, specialization, ability to anticipate challenges and the resources to provide meaningful solutions. This outreach has paid off as we've seen continued deposit stabilization in the SVB portfolio since April. Currently, we're moving forward with the remaining pillars of our integration process, and let me quickly run through these with you. First, we continue to advance our strategic assessment work. Having completed an initial round of strategic assessments led by the business lines, we are now leveraging those insights to identify strategic initiatives and key integration activities. In doing so, we're ensuring that the key processes and practices that have been instrumental to SVB's differentiated offering remain in place. These strategic assessments also inform our integration efforts, which we continue to make progress on. As a part of this work, we're developing and executing on detailed integration plans that prioritize maintaining SVB's unique leadership role and ongoing support for the innovation economy. And finally, we are ensuring regulatory readiness through our large bank program. After the CIT merger, we established a large bank program oversight team as centralized functions within our risk -- as a centralized function within our risk management organization. This team provides dedicated oversight of the work needed to meet heightened regulatory expectations and ensure sound business practice for large financial institutions. Post SVB, this team is working to identify potential gaps and implementing plans to remediate them. Turning to Page 7. We remain focused on executing against our core strategic priorities, which are the building blocks for long-term sustainable value generation and are at the core of everything we do. As a result, I'm confident that we are well positioned to support our clients and customers, grow our balance sheet profitably and deliver strong results. Before I turn it over to Peter, I want to thank all of our associates for their hard work and unwavering commitment to our shareholders, clients, customers and communities, and I'm proud of what we've accomplished and will accomplish moving forward. Now I'll turn it over to Peter Bristow to provide an SVB business update. Peter?

Thank you, Frank, and good morning, everyone. Turning to Page 8, I want to reiterate what Frank said. I'm incredibly proud of the progress we have made in integrating SVB and reestablishing it as an undisputed leader in the innovation economy. Our team has done tremendous work on that front. I won't cover all the details outlined on this slide as many of the points echo comments Frank just made. But I do want to provide concrete examples on the progress we are making. Our bankers have reached out to a considerable number of clients over the past few months, and we are encouraged by the success we are seeing in reestablishing relationships with the clients who left in March. To support this effort, we've initiated a comprehensive outreach campaign to touch each of our approximately 30,000 clients. We've also embarked on a major print web campaign including full pages in the Wall Street Journal and New York Times to reinforce to our clients that we're fully committed to the innovation economy and ready to serve their needs with tailored product offerings. I want to highlight some numbers that demonstrate the success we've seen so far. We have approximately 1,500 clients whose funds dipped below 10% of their March 8 amount who have recommitted and now have some portion of their funds back at SVB. We also now have over 90% of our core borrowers, either meeting deposit requirements or working in good faith with us to meet them. These sales efforts have been noticeable on the balance sheet. Our deposits have largely remained steady since the end of April, maintaining in the $40 billion to $41 billion range despite the limited fundraising activity in the broader venture capital market and our clients' ongoing cash burn. And while our loan balances have declined, this is primarily related to the short-term nature of our global funds banking portfolio, which is down given reduced broader market activity as well as the lagged effect of being out of the market for a few months in early 2023. We are encouraged by the robust pipelines in this business, and we are back in the market for new production. While we see challenges in the broader market for the remainder of 2023, as venture capital investment is below the levels of the past few years. We are well poised to capture client funds once investment levels begin to increase likely in late 2024 and into 2025. Despite competitors who are actively entering the innovation space, competitive advantages, including our long-standing client relationships and our breadth and depth of offerings continue to differentiate us. Importantly, we are hearing positive client feedback around our reinforcement of SVB stability now backed by the strength of First Citizens and our unique tailored offering that our clients have come to know and love. Clients are eager to learn more about the vision for the First Citizens and SVB partnership. We also remain excited about the opportunities that SVB products and services provide for our legacy First Citizens clients and we believe there are opportunities to expand deposit and suite products to our CIT commercial clients. Complementing our early success in the SVB integration are our team's efforts in the broader commercial banking business. where strong momentum continued in the second quarter. The lending portfolio led by industry verticals in our Commercial Finance Group grew by $901 million to $13.8 billion with strong performance across the portfolio, including healthcare, tech media and telecom, energy and maritime, just to name a few. We were also pleased to welcome Jim Hudak back as the President of the Commercial Finance Group. Jim brings more than 20 years as a commercial finance executive including overseeing CIT's commercial finance business for over a decade. We are confident his leadership, insights and expertise will be invaluable as we continue to grow our commercial portfolio. We also continue to see strong performance in our middle market banking organization as we explore attractive market opportunities. And our rail business delivered another strong quarter with utilization remaining above 98%. And finally, on the wealth side, we are planning to leverage SVB's strong wealth footprint in the Northeast and California to expand our wealth coverage, building on our strong business and commercial relationships in Southern California and expanding services for our existing legacy CIT clients in the Northeast. On Page 9, we show the deposit and loan trends for the SVB segment starting on March 27 through June 30. Notably, we have not seen material declines in legacy SVB deposits since our first quarter disclosure using April 30 data. This is in spite of venture investment remaining subdued and more aligned with 2018/2019 levels. The stabilization that we've seen in our deposit balances is a testament to the client outreach and effort the team has put in to reassure them that despite the turmoil in March, SVB is not going anywhere and is more secure than ever. It also demonstrates that SVB's unique value proposition remains attractive to clients. Moving on to loans. As we noted on our first quarter call, we anticipated a drag on loan growth given more subdued lending activity in the innovation economy. The primary driver of the decline in our loans this quarter was a $6.8 billion reduction in Global Fund Banking, which was expected. Global Fund Banking has historically been one of the primary drivers of growth at SVB. However, starting in 2022 with what has been called the great reset, the pace of venture capital activity slowed considerably. Consequently, these venture capital firms are investing less, which reduces their needs to use our capital co-lending facilities. Now midway through 2023, private equity and venture capital investors faced a dynamic environment because of various macroeconomic factors, many of which are carryovers from 2022. Some such as inflation and a depressed public market appear to be resolving. Others, however, are persistent, such as high interest rates and low initial public offering activity. These challenges are having a direct impact on the private market investment landscape, resulting in a difficult exit environment, lower fundraising numbers and fewer deals. Nevertheless, we are continuing to focus on the areas we can control and believe that the rest will follow. We continue to focus on client engagement as we remain patient and continue to be there for our clients. And we believe in the fullness of time, we will successfully win back additional deposits and loans as clients restore faith and trust in the business and of course, us. Turning to Page 10. We provide additional information on SVB trends in terms of assets, all balance sheet client funds and assets under management. I won't spend much time on this today, but I wanted to provide this to you for reference. In closing, it's clear that there are a lot of opportunities for the combined company. I want to echo Frank's appreciation for all of our associates. Your continued dedication has put us in a strong position to continue growing the business, enhancing relationships and delivering best-in-class solutions and services to our clients. With that, I'll turn it over to Craig Nix.

Thank you, Peter, and thank all of you for joining us today. On Page 12, we summarize high level themes from our second quarter results. The power of the SVB combination was on full display during the quarter with return metrics exceeding our expectations. Meanwhile, the adjusted efficiency ratio significantly improved to sub-50%, thanks to strong net interest income growth and better-than-expected recognition of cost synergies. From an asset quality standpoint, overall credit performance continued to normalize, with net charge-offs increasing to 47 basis points, with most of the sequential increase related to SVB charge-offs that were expected and reserved for as of the merger date. Our exposure to office-related commercial real estate is limited, and our overall credit metrics remain resilient. Moving to the balance sheet, while loans declined sequentially due to an expected decline that Peter mentioned in Global Banking -- Global Fund Banking portfolio, the General and Commercial Bank segments grew loans at annualized rate of 12.6% and 10.5%, respectively. Our commercial and business clients continue to be resilient in the face of economic headwind. Deposits grew sequentially at an annualized rate of 3.2%, driven by core deposit growth in the direct bank. As Peter just mentioned, we are pleased to see stabilization in the SVB deposit base during the quarter. And finally, our balance sheet position remains strong. We continue to build capital through solid earnings in turn, supporting our clients to drive organic earning asset growth. As Frank mentioned in his comments, we anticipate operating above our target capital ranges, for the remainder of 2023 as we continue our pause of stock repurchases while we focus on SVB integration and gain clarity on the new proposed capital rules. Turning to Pages 13 and 14. Second quarter GAAP net income to common shareholders was $667 million or $45.87 per share. Our second quarter GAAP results were impacted by the full year impact of the SVB acquisition, a full quarter impact, sorry, as well as $55 million adjustment to the preliminary bargain purchase gain. On an adjusted basis, net income to common shareholders was $765 million or $52.60 per share yielding an annualized ROE of 16.46% and ROA of 1.49%. On Page 14, we provide 2 condensed income statements. The table at the top of the page represents our reported GAAP results and the table at the bottom supplements those results showing net income adjusted for notable items. The section in the middle of the page summarizes the impact of notable items to drive the adjusted results from the reported results. Page 15 provides detail with respect to notable items for the relevant quarterly and year-to-date periods. During the second quarter, these adjustments had the net impact of adding $6.73 to GAAP EPS. Turning to Page 16. Net interest income of $1.96 billion increased by $1.1 billion over the linked quarter, mostly due to the impact of the SVB acquisition. Net interest margin increased by 69 basis points due to the full quarter impact of accretion from the SVB combination, a higher yield on earning assets, partially offset by an increase in deposit costs. Our loan yield increased by 149 basis points, 64 basis points of which was related to accretion income. Meanwhile, deposit costs increased by 44 basis points, representing a cycle-to-date beta of 30%. Page 17 provides a roll forward of net interest margin from the sequential quarter and from the same quarter in the prior year for your reference. Moving to Page 18. We remained asset sensitive during the quarter, with a negative 100 basis points ramp in rates negatively impacting net interest income by 5.7%. We continue to prioritize liquidity risk management by intentionally keeping a larger cash balance due to the current macroeconomic environment. However, we have begun to put some of the excess cash to work in short duration U.S. treasuries to soften some of the asset sensitivity. On Page 19, we provide information on our actual and expected deposit betas. 54% of our deposits exhibit lower betas with the remainder exhibited moderate to higher betas. Our cumulative beta through the second quarter was 30%, which was higher than our previous forecast, driven by changes to interest rate environment as rates have stayed higher for longer. Given this and the competitive environment for deposits, we expect our cumulative beta to increase to 36% by the end of the third quarter as deposit costs catch up from recent rate increases, and we raise additional deposits in our more rate-sensitive direct bank channel. Over the interest rate hiking cycle, we forecast our cumulative beta will be approximately 39%, up 5% from our previous estimate, which is due in part to rates higher for longer as well as increasing our balances in the higher-cost direct bank to reduce our wholesale funding reliance. On Page 20, adjusted noninterest income increased by $153 million over the linked quarter due to the impact of the SVB acquisition and continued momentum in our legacy fee-generating business lines such as rail and card. The impact of SVB included a $50 million increase in client investment fees, earnings for managing off-balance sheet client funds and a $28 million increase in international fees related to customer foreign currency transactions. In addition, other service charges increased $22 million primarily due to unused line of credit fees in the SVB segment. Service charges on deposits and cardholder services income both increased $20 million from higher volume associated with the full quarter impact of the acquisition. These increases were partially offset by small declines in other noninterest income spread across several smaller line items and a decrease in BOLI income given our strategic early surrender of BOLI policies in the fourth quarter of 2022. On Page 21, adjusted noninterest expense totaled $1.2 billion, a $525 million increase over the linked quarter, representing the full quarter impact of the SVB acquisition. Our adjusted efficiency ratio showed significant improvement during the quarter, dropping from 57.55% to 49.65%. For your reference, Page 22 outlines our adjusted noninterest income and expense composition for the second quarter. Page 23 shows balance sheet highlights and key ratios. I'm not going to cover this in detail, but I would like to direct your attention to the fact that we drove TBV per share growth of $39 per share during the quarter while increasing our liquidity position by $8.5 billion. Turning to Page 24. Loans declined by $7.4 billion in the SVB segment, which drove down our total loan balances compared to the linked quarter. As Peter mentioned, our Global Fund Banking portfolio experienced elevated draws at the end of March and as a result, we anticipate a higher level of paydowns during the second quarter. Approximately 50% of the $7.4 billion decline was related to elevated draw repayments. The challenges facing the venture capital industry are having a direct impact on the private market investment landscape, resulting in a difficult exit environment, lower fundraising numbers and fewer deals. New draws on existing lines are muted in April and May, given uncertainty in the industry post March events. However, we did see commitment activity for existing clients pick up in the month of June, as Peter mentioned. Despite industry headwinds, our legacy First Citizens portfolio continued to experience solid growth, including $1.4 billion or 12.6% annualized percent growth in the General Bank and $749 million or 10.5% annualized growth in the commercial bank. Page 25 shows our loan composition by type and segment for your reference. Page 26 shows the deposits increased by $1.1 billion or 3.2% on an annualized basis from the linked quarter. We experienced $10.4 billion in growth in the direct bank, partially offset by a decline in SVB deposits. We have worked diligently to leverage the direct bank channel to increase balances to help fund loan growth in the general and commercial bank segments and to support legacy SVB. We do anticipate continued deposit growth in the direct bank through the end of 2023, albeit at a slower pace. While this channel is higher cost compared to the traditional branch network, enabled us to reduce more expensive FHLB borrowings by approximately $6.1 billion during the second quarter. Importantly, while SVB deposits declined $8.4 billion sequentially, the majority of this occurred in April. As Peter noted, we have worked to stabilize the franchise by performing outreach to key innovation economy partners and detailed market analysis to understand misconception so we can more quickly and effectively address them. We have also worked hard to keep client-facing team members and see and in front of our clients. As a result of these efforts, we have not seen a material change in deposit balances since we last reported, with SVB deposits remaining approximately $41 billion as of June 30. Our cost of deposits increased by 44 basis points during the quarter to 1.68%. The increase is representative of the impacts from the Fed rate hikes and our need to raise rates to stay competitive with our peers. The deposit composition by type, segment and insured uninsured breakdown are shown on Page 27. On Page 28, our balance sheet continues to be funded predominantly by deposits. We made progress this quarter rightsizing this as deposits increased to 78% of total funding, up from 75% last quarter. The FHLB borrowings we initiated in previous quarters had call features and we decreased those borrowings by approximately $6 billion this quarter, which is reflective of the deposit growth I just spoke to. Over the medium to long term, we plan to continue to drive the non-deposit concentration metrics lower by focusing on core deposit growth. On Page 29, credit quality metrics continued to normalize. Net charge-offs totaled $157 million or 47 basis points for the quarter, up from $50 million or 27 basis points in the first quarter. The increase in charge-offs were primarily the result of $97 million in net charge-offs in the SVB segment, $85 million of which were reserved for at the acquisition date. In the general and Commercial Bank segments, net charge-offs were fairly consistent with prior quarters with most occurring in the large office real estate and small ticket equipment leasing portfolio. We guided to a net charge-off range of 35 to 45 basis points on our last call as we identified a few large innovation credits that would be and were charged off during the quarter. While we do expect some continued stress in the innovation portfolio, given the depressed levels of market funding, we don't expect quarterly charge-offs to remain at these levels. However, some of these loans are large and the charge-offs can be lumpy. Moving to the bottom of the page, the nonaccrual loan ratio increased 10 basis points from the sequential quarter to 0.7%. The increase was primarily concentrated in real estate finance within the Commercial Bank segment. This is where our largest general office exposure is, which continues to be impacted by remote work dynamics, elevated interest rates, vacancy rates, lease rates, capital requirements and near-term maturities. Our allowance ratio increased by 7 basis points to 1.23% during the quarter. Page 30 provides a roll forward of our ACL from the linked quarter. The largest driver of the increase in the ACL was deterioration in macroeconomic forecasts related to declining CRE index values in both the baseline and downside scenarios. Other factors such as portfolio mix and credit quality also contributed to increases in reserves but on a much smaller scale. These increases were partially offset by lower loan balances in the SVB segment and adjustments to fair value discounts on loans acquired from SVB. As depicted on the bottom left-hand corner, the ACL provides 2.6x coverage of annualized quarterly net charge-offs and covered nonaccrual loans 1.8x. On Pages 31 and 32, we highlight our total nonowner-occupied CRE exposure which was 12.8% of total loans at quarter end with general office loans totaling $2.8 billion or 2.1% of total loans. Page 32 includes information on the general office portfolio, which is well diversified geographically with limited exposure to some of the hardest hit markets including San Francisco, Chicago and New York, which on a combined basis totaled $403 million or 14% of the total general office portfolio. As we shared on our last call of the $2.8 billion in general office loans, the most significant credit risk is in our commercial bank, which had general office loans totaling $1.1 billion at the end of the quarter representing less than 1% of total loans. This portfolio consists primarily of Class B repositioned and bridge loans and is where we have seen deterioration in past dues, criticized assets and charge-offs. We are carrying an ACL on those loans of 9.02% compared to an ACL on the overall general office portfolio of 4.44%. Reserves on both of these portfolios increased over the prior quarter due to increased specific reserves as well as deterioration in the CECL macro forecast. Most of the remaining general office exposure is in the general bank. This portfolio is more granular in nature from the smaller average loan size and some level of guarantor support or strong credit tenants under long-term leases. We have not seen material deterioration in this portfolio to date. On Page 33, our capital position remains strong with all ratios above or in the upper end of our target ranges. At the end of the second quarter, our CET1 ratio was 13.38%, and our total risk-based capital ratio was 15.84%. The 85 basis points increase in our CET1 ratio was primarily the result of continued net income growth. Before I discuss our outlook, Page 34 demonstrates that we continue to operate with a strong balance sheet and solid capital, liquidity and credit quality positions. I'll conclude with our 2023 outlook on Page 36. The second column lists our second quarter 2023 results for each metric. The numbers for noninterest income and expense are adjusted for notable items. Column 3 provides our guidance for the third quarter of 2023 and column 4 for the full year. Moving to loans. We expect that loans will remain essentially flat to the second quarter in the balances. We anticipate further declines in the global fund banking business from lower levels of venture capital investments, lower capital deployment and higher interest rates as well as the lagged impact of being out of the market for the early months of 2023. We do see flat to modest declines in our tech and life sciences business as market activity continues to be depressed. As a result, we expect SVB loan balances to be in the mid-$50 billion range by year-end down from $59 billion at the end of the second quarter. The declines in GFB will be largely offset by mid-single-digit percentage growth in the general commercial banking segment as we expect continued momentum in our branch network, industry verticals, middle market and equipment finance lines of business. Moving to deposits. We expect a low single-digit percentage decline. While we're encouraged by the stabilization of SVB deposits since April, we anticipate that SVB clients will continue to experience a level of cash burn that exceeds funds sourced from fundraising. It's worth noting that we expect broader market VC funding to remain subdued in the range of $30 billion to $40 billion per quarter for the remainder of 2023, which is significantly down from prior years. Consequently, we're projecting a $4 billion to $6 billion decline in the SVB deposit book through the end of the year. That said, we are laser-focused on actively partnering with our existing portfolio of clients and the SVB team is working diligently to obtain and win back balances, which we believe will partially offset some of this natural runoff. We are expecting the SVB decline to be partially offset by a $3 billion increase in direct bank deposits. Moving to interest rates. Our forecast follows the implied forward curve. We forecast that the Fed funds rate has peaked at 5.5%. From there, we anticipate the effective rate will remain unchanged for the rest of 2023 and into the beginning months of 2024. On to net interest income. While we expect the absolute level of margin and net interest income to remain elevated, we do expect them to begin to decline in the coming quarters compared to the second quarter. This will occur as the pace of accretion moderates, and we see continued pressure on deposit pricing. Accretion income had an approximate 50 basis point impact on our margin in the second quarter and absent the impact of accelerated loan repayments and due to the recognition of accretion on shorter duration loans, we expect this to moderate to the 30 to 35 basis points range in the coming quarters. The impact of lower accretion and higher deposit costs were partially -- will be partially offset by higher loan and investment yields. We anticipate our full-cycle beta increasing to 35% to 40%, up from our previous estimate of 30% to 35%, which is due to rates higher for longer, leading to increased competitive pressure on deposits as well as the sizable increase in our direct bank from what was close to $19 billion at the end of the first quarter to an expected mid-$30 billion range by year-end. We project net interest income in the third quarter in the range of $1.8 billion to $1.9 billion. At the same time, we are raising full year net interest income to a range of $6.4 billion to $6.6 billion reflecting strong second quarter results as well as the margin dynamics I previously mentioned. On the net charge-offs, we expect third quarter annualized and full year net charge-offs to be in the 35 to 45 basis points range. Despite most of the portfolio performing well, we expect to see charge-offs concentrated in the commercial bank, general office real estate and small equipment leasing spaces. While we do expect some continued losses in the innovation portfolio, given the depressed levels of market funding, we don't expect the quarterly level of charge-offs to remain at second quarter levels. We expect SVB net charge-offs in the range of 30 to 40 basis points in the coming quarters. Given the size of the credits in both the legacy CIT and SVB portfolios, charging off 1 or 2 more large credit than anticipated can have a sizable impact on the overall quarterly net charge-off ratio and can ultimately take us to the higher end of our 35 to 45 basis points range. On to noninterest income. On an adjusted basis, we expect $420 million to $450 million in noninterest income in the third quarter. We were reassured on the level of SVB-related noninterest income in the second quarter and see this total contribution settling in at approximately $140 million to $150 million per quarter or roughly $560 million to $600 million on an annual basis. On an apples-to-apples basis of the SVB businesses that were acquired, this is closer to $300 million per quarter in 2022. So we are expecting the run rate to be slightly less than half of that given client attrition especially in some of the off-balance sheet suite products. With respect to legacy First Citizens, we still have momentum in our wealth and rail businesses. While maintenance expenses are expected to increase in rail, utilization increased to over 98%. And for the past 3 quarters, renewal rates have been at or above 120% of the previous quarter's rate. Moving to noninterest expense. We do not include expected acquisition expenses related to SVB estimated at $650 million with approximately 60% recognized in '23 and the remainder in '24. So approximately $380 million this year. For the remainder of 2023, we anticipate adjusted noninterest expense will move lower to the $1.15 billion to $1.2 billion range per quarter as we further recognize cost saves. We do expect a onetime $30 million FDIC assessment to be recognized in the third quarter. This expense will be considered notable and is not included in our adjusted noninterest income forecast -- expense forecast, sorry. We made meaningful progress on our path to achieving cost saves in the range of $650 million to $780 million by the end of '24 and pushed slightly ahead of the schedule this quarter primarily due to efficiency reductions in the back office. At this juncture, we expect to have taken over $400 million out of the expense run rate by the end of 2023, putting us slightly above 50% of the high end of our cost synergies estimate. As a reminder, most of the synergies will be driven by consolidation of redundant or duplicate back-office processes and systems as we remain focused on supporting the existing front lines of business and their clients. Moving forward, we expect to maintain our efficiency ratio in the low 50s, slightly higher than the second quarter as lower margin was partially offset by continued recognition of cost saves. On the income taxes, we expect our corporate tax rate to be in the 26.5% to 27.5% range, in line with our previous update as our revenue distribution is heavily weighted to higher tax jurisdictions such as California and New York, and our pre-existing tax benefits are spread amongst a higher -- amongst a larger pretax income base. As for 2023 EPS, we previously guided to an adjusted range of $150 to $161 per share. The range was derived from GAAP earnings but subtracted out the after-tax onetime impacts of the SVB acquisition including the preliminary bargain purchase gain, the day 2 CECL adjustment and estimated SVB-related acquisition expenses. Based upon our updated forecast, we would guide to a new adjusted range of $156 to $167 per share. The change from prior guidance is primarily related to higher net interest income projection given the absolute rate environment, partially offset by higher provision expense. Expenses are also slightly favorable to our previous forecast as we put slightly ahead on merger synergies. This forecast excludes the preliminary bargain purchase gain, the day 2 CECL impact and the expected $30 million FDIC assessment as well as approximately $380 million of expected acquisition expenses in 2023. To conclude, we are excited about our future prospects and believe that we are well positioned to continue delivering long-term value to our shareholders, clients, customers, associates and communities. With that, I will turn it over to the operator for instructions for the question-and-answer portion of the call.

[Operator Instructions] Our first question today comes from Brady Gailey from KBW.

I wanted to start with the share buyback. I understand the reasons why the buyback doesn't make sense for you guys for the back half of this year. But when do you feel like you'll have the clarity you needed to more seriously consider a share buyback? It doesn't sound like that will be until next year in 2024.

That's a correct assumption. We will be submitting a capital plan next year, and we will consider the potential impacts of these regulatory changes on our capital ratios. But we'll certainly be considering a share repurchase plan in that capital plan. But we would not resume repurchases in '23. We would anticipate all things go well that will resume in '24.

Okay. And then I know we've talked about the lower risk weighting from the loss share assets from Silicon Valley being a benefit the common equity Tier 1 of about 200 basis points. How fast do you expect to see that? Like are we talking a matter of quarters? Or is this a longer-term matter of years where we see that slow increase in risk-weighted assets?

Yes. Brady, we are burning those over a 3-year period, which really approximates the life of the loans that are subject to loss share. So in our capital projections, we had it burning off straight line over 3 years.

Okay. And just lastly for me, accretable yield was around $240 million in the second quarter. So a fairly large amount. How do you expect that to trend for the next few quarters?

We're expecting it to drop to $160 million range in the third quarter and the $150 million range in the fourth.

Our next question today comes from Stephen Scouten, Piper Sandler.

Yes. I guess I missed a little bit of your response there, Craig, on the share repurchase. I guess my follow-up to that or question would be, is that kind of an internal decision as you evaluate those capital -- the new capital requirements? Or was there any sort of regulatory pushback on the desire to do a repurchase here in '23?

Yes, it was an internal decision.

Got it. Okay. And then on the -- got it -- no, no, that's great. And on the large bank team that you guys have implemented in trying to find these gaps and so forth, has there been anything material identified to date that you can speak to? Or is that still pretty early stages as they look to identifying these gaps or planning remediation?

Yes. We really don't have any significant gaps. We have identified gaps, but they're not things that we can't overcome. So I think we are well on our way to meeting the requirements of the category 4 bank, and our risk management program meets the expectation for a large bank program and it is prepared to expand it to include the SVB businesses. So we feel like we're in really good shape there.

Okay, great. And then really last thing for me is just if I look at the -- and the noninterest revenue guide within the slide deck, it implies a little bit of downside, I guess, from here, are there any specific categories where you expect to see some declines in the back half of the year? Or what's kind of embedded within that guidance there?

Well, if you look at just the PPR in general, as you start with net interest income, it's really the impact of that lower accretion going forward. So the headline margin will decline, although ex accretion, we still are seeing some within earning assets. So that's the most significant factor. We are guiding slightly down from the second quarter on noninterest income, and that's really FX fees and down due to lower global fund banking business and some off-balance sheet decline -- management fees for declines in off-balance sheet funds managed. Those 2 things are pretty much the factor there, lower PPNR. But we're really pleased where that's going to -- where we're going to turn out from a PPNR standpoint and a net income standpoint in the next 2 quarters.

Our next question today comes from Kevin Fitzsimmons from D.A. Davidson.

I'm just curious, as you look longer term, obviously, the loan-to-deposit ratio got impacted by the deal. So now not appearing from a top level is quite as liquid as it once was. But how do you -- what do you aspire for that ratio to be longer term? How do you see it trending? Do you see it trending down into the 80s? Or are you very comfortable with it, where it is right here?

We don't really believe that a loan-to-deposit ratio of 95% higher is sustainable. So where we would target that would be sort of in the mid-80s, if I had to put a number on it. When you look at sort of our earnings asset mix we like where the percentage of loans is to earning assets. So it's really focusing in on the right-hand side of the balance sheet and replacing borrowings to core deposit growth. So that would be our goal. But right now, loans sitting at around 69% of earning assets is right where we like it. In fact, we get to be 70% to 74%. In conjunction though with an 85% loan-to-deposit ratio.

Got it. And I apologize if I missed this before, but the mix shift that's going on the deposits, it looked like noninterest-bearing obviously came down at a good clip and probably a lot of that is due to SVB. Where do you -- where and when do you see that settling that percentage of noninterest-bearing?

Well, on the rate cycle turns, I think you're right. I mean, we entered the quarter 39% noninterest-bearing, we exited at 32%. I mean ultimately, in normal business cycle, we like to see our noninterest-bearing around 40%. So where it was coming into this transaction is a good spot for us. And then beyond that, we like to see core checking around 65%, which includes now accounts and noninterest bearing. And right now, we're around 50%, and that's totally due to the rate environment. So we see that optimizing as the interest rate environment moderates going forward.

Got it. And 1 last one for me. What is the rough percentage of the direct bank right now of total deposits? And do you have any upper limit on what you want that to be? Or do you view that as just -- if that's better than borrowing, you're willing to take that up with no upper limit.

It's around 20% of our deposit base, the branch network remains overwhelmingly largest concentration around 40%. We do see those deposits as core. Obviously, they're a little bit more expensive, but they are at the margin, less expensive than FHLB borrowings. So -- and 91% of those deposits are insured. So we view those as core deposits, but acknowledge they're more expensive than branch network deposits.

Right. And I guess as the rate environment evolves maybe over time, those would get replaced in a different rate environment by branch-based deposits, this sounds reasonable?

That sounds reasonable.

Our next question is from Brian Foran from Autonomous Research.

Maybe on that loan-to-deposit point, I mean, what would be like a rough time line to get back to the mid-80s in your mind or a range? Are we talking multiple quarters or multiple years or somewhere in between?

Yes. It's multiple years and it sort of tethered to this note with the FDIC. So I would put it out 3 to 4 years to get that ratio into that range.

Okay. And then I know it's too early for 2024 outlooks and guidance. But just when you think about the 4Q NII, I think everything ties out to about $1.8 billion reported and $1.65 billion ex accretable yield, if I got all your comments right. Is that $1.65 billion kind of a base to work off of in your mind? Or are there still obvious puts or takes? I guess is that like a stabilized run rate that then maybe you could sustain or grow off of in your mind? Or is there still some pressure to think about in the first half of '24.

Well, in '24, if you look at the forward curve, there's 5 rate cuts projected next year, given our asset sensitivity, we would have both declining net interest income in absolute dollars and in margin if that was to occur, although I think our margin will be very respectable compared to peers even in that environment. But I would work off of the $1.8 billion to $1.9 base and then consider what 5 rate cuts might do on the back half of '24.

Our next question is from Christopher Marinac from Janney Montgomery Scott.

I wanted to follow back up, Craig and team on the liquidity. If you look at the liquidity information you've given us, would you already be kind of at the full LCR if that's imposed on the new capital guidelines?

Yes, I think we would exceed it.

Okay. That's what I thought. I just wanted to verify that. Great. And then is there anything that you are doing or have done here in the last several months about sort of retaining staff? Is there anything kind of different that you've implemented now that you've had a full quarter to integrate SVB?

Are you speaking with respect to SVB or just in general?

Really SVB.

We have retention and severance payments promised in terms of our merger costs that I just mentioned. So we do have retention. Peter, I think you're doing -- I think we're doing a great job keeping our revenue producing bankers in place. So all of that sort of accrued and ends up in the run rate. So like we're doing really well with retention.

Great. Okay. And then just final thing for me is, did the unfunded commitment reserve change at all? Or was that stable in the quarter?

It was fairly stable. It declined like $12 million to $15 million range.

[Operator Instructions] Our next question is from Brody Preston from UBS.

I think I'm last, which is good because I am with a handful of questions. wanted to ask if you have to go through CCAR in 2024 and how much more in expenses do you think you need to build for the enhanced regulation?

The expenses are baked in. We have the resources, although we're constantly hiring talent. So the numbers we talk about in terms of run rate include heightened expenses to meet the regulatory standards.

Okay. And do you have to go through CCAR in '24?

So '24, we have to submit a capital plan to the Fed. So we're subject to the capital plan rules. '25, we become CCAR -- a CCAR bank, but given our category 4 size, we will not submit CCAR until 2026.

Got it. On the loss share agreement, do you have a dollar amount on the estimated like total amount covered by the loss share? And then for the $97 million NCOs, do you recover any of that from the loss share?

It's -- Robert's telling me, it's $64 billion.

Around $64 billion.

The first loss tranche is $5 billion and we don't anticipate losses nearing that. So we don't anticipate reimbursements from the FDIC for charge offs.

Got it. And what drove the extra $52 million of NCOs from SVB above the $45 million that you ID'd last quarter? Like was that even on the cusp of being okay, but you decided to move on from something?

In terms of our charge-offs, yes.

Yes, yes. Just the additional -- you called out $97 million of SVB related NCOs. Last quarter, you had flagged $45 million specifically in the deck. I was just wondering what drove you to move on from the other $52 million.

We didn't decompose the $11 million delta. So the SVB charge offs were $96 million, we reserved for $85 million. The other $11 million would be in the general reserve.

Yes. I was talking more to the -- you had called out $45 million specifically that you had reserved for last quarter that was planning on being charged off, but you charged off $85 million that you had reserved for this quarter. I was just wondering what the -- like if there was any reason for that.

$45 million was a large single charge-off. But we had $85 million reserved against the -- the $97 million that charged off during the quarter.

Got it. Okay. And then just on the SVB deposit base, the noninterest-bearing levels, I was wondering how those have how those changed since May you gave the [331] but the overall deposit balances were flattish since May. So I just wanted more insight on the mix since that May 5 date that you gave in the last quarter's deck.

Are you talking SVB?

Yes, specific to SVB.

The noninterest -- so I don't have that information sitting in front of me. But in terms of noninterest-bearing, we started at $35 billion on SVB. And at the end of the quarter, we were at $21 billion.

Got it. Okay. Do you even have the overall spot. Do you have the spot interest-bearing deposit costs at quarter end, Craig?

I'm looking it up. Well right now. We were -- our cost of deposits at the end of the second quarter was 1.68%.

I just -- I also wanted to ask on the off-balance sheet client funds. What drove the decline from the $79 billion that you had in April? And I guess how did that trend through June and now through July? And then also the fee rate looks a little bit lower than legacy SVB was. So I wanted to better understand what was driving that.

The balances we included in the presentation, so I'm flipping to those, off-balance sheet client funds came in at $88 billion, and ended the quarter at $70 billion.

Yes. I was just wondering if you had any insight as to what drove them lower from the April level.

This is Peter. Again, this is sort of what I talked about, the overall sort of reflection of what's going on in the space in terms of venture capital investment. You're not seeing a lot of inflows there. We are -- the fact that we have the [60 or 70] of off balance sheet has been fairly consistent -- and I think it's a really good reflection of the fact that a lot of those clients are still here and still choosing us for their business. They're just moving more off balance sheet as opposed to end of the bank. So to me, it's a sign of strength.

Got it. Okay. And I just had 2 last ones. The previous guide on the -- when I kind of moved -- when I kind of took what your EPS guide was last quarter and then backed out the moving parts. You kind of indicated that you expected a [650-ish] core provision for the year. Is that still a good level to be thinking about for core provision, excluding the day 2 CECL.

Did you say 650?

Yes. That's what I kind of backed into.

I think it's about [400] for the year.

For the year. Okay. Cool. And then the last 1 was, Craig, you guys -- it's such a small portion of the loan portfolio now, that Class B office that you inherited from CIT. I think the $1.1 billion is what's for the commercial bank. And so it's less than 1% of loans. We saw another large bank in Capital One, just kind of move on from their Class B and C office portfolio and put it in held for sale. It took a big charge off on it this quarter. Is there any thought around doing something similar and just saying like it's a credit overhang, and we don't really want to deal with it. We've got plenty of capital, plenty of reserves. Let's just move on from it.

Yes. We don't have any plan to do that.

This is all the questions we have today. I'd like to turn the call back to your host, Deanna Hart for any in closing remarks.

Thank you, everyone, for joining us today on our quarterly earnings call. We appreciate your ongoing interest in our company. And if you have further questions or need additional information, please feel free to reach out to the Investor Relations team. We hope you have a great day.

Thank you, everyone, for joining today's call. You may now disconnect your lines, and have a lovely day.