Citizens Financial (CFG) 17 Jan 232022 Q4 Earnings call transcript

Good morning, everyone, and welcome to the Citizens Financial Group Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Keeley, and I'll be your operator today. [Operator Instructions] As a reminder, this event is being recorded.

Now, I'll turn the call over to Kristin Silberberg, Executive Vice President, Investor Relations. Kristin, you may begin.

Keeley. you, Thank and everyone, for us. joining Good thank morning, you

results. and Van provide Banking; Saun; First, full overview this are CFO, and Bruce here Chairman our year and of quarter will morning, Don and McCree, of Commercial CEO, John to our provide fourth Coughlin, color. Head Brendan Head of Banking, Consumer an also Woods, additional

be on the fourth We and full will located referencing presentation, presentation After website. our quarter to our be questions. Relations will earnings Investor take happy we year

Our will risks of from X your today to cause include comments for are forward-looking Page materially subject and our the statements, presentation. to expectations. differ may outlined on which These are uncertainties that review results

We are referencing financial also non-GAAP measures.

Page So appendix. it's X in the presentation important the reconciliations and to the review on results of our GAAP

that, hand will to Bruce. you, I With over

full Thanks, joining for quarter financial we everyone. XXXX. delivered Kristin. for with uncertain well environment through our in an call the and morning, And fourth the Okay. We're pleased positioned to performance year Thanks the navigate we feel good today. and

our offense balance continuing strong same we robust risk disciplined with to a appetite. and initiatives. growth time, position are playing play prudent We At highly in defense the investments sheet continue credit with

out We medium-term. trajectory are focused growth building sustainable a on prudent, over the

and briefly John comment details. financial take headlines on let I'll the you through the

our operating given this million was was the XX%. was to Sequential was reflecting return X.X% common points $XXX growth equity relatively at tangible our were XX%. auto performance our stable $X.XX, was was impact in with sequential on remained For impact. solid sequential Deposits portfolio. the NII a of ex X% growth, quarter, Growth X% our EPS LDR and X loans efficiency stable underlying growth, Leading the ratio was X% reduction of our basis and expansion X% and NIM X.X%. XX.X% sequential PPNR leverage and

quarter, allowance for A credit sequentially. metrics in pro about maintained fees good. day X.XX%. compares expenses into of a credit diversity were of number QX with We the challenging forma pushed environment, results remain Our and levels stable We X% and X showed losses X.XX% given and resilience expected. which businesses CECL mortgage of loans, to fee boosted down M&A than softer our

restarted of ended QX, $XXX XX% repurchase our share We our CETX buying a of activity ratio targeted top million the and year in at stock with the we range. of

deposit guide, $X.XX as full appendix For benefit included of of and we exceeded captured The beginning presentation. of our base. year XX.X% strengthened handily we underlying year XXXX, of the rising in the delivered EPS results our of the and ROTCE we rates which

getting we inflation year, for by book the continued to run respect and auto XXXX, two and to economic close a by below to growth loan hikes in partially billion. We QX. assume off QX of X% $X our With project moderate cut X% early slowdown in our guidance rate Fed growth, for a offset

capital X.X% X.X% expense FDIC year, markets we the as roughly core X%. of rises a Overall, in of solid in acquisition to expense impacts over ex discipline of X% fees to the kind fees gradually the NII see NIM growth and growth with growth solid rebound to year, over course

of with $XXX today loans. basis to impact. expense million rate about X XX the should to XX charge-offs is X.X% We which and Credit range to we our expect our ACL program, announced and to net XX% that targets point TOP manageable of in benefits X.XX% in build run be

X.X% high ratio range. of forecast a near end strong repurchase We stock our our amount to growth loan modest of expect for profitability, acquisitions with to meaningful and expectation the XX% given limited CETX

put Capital of to our return repurchase plus dividends via TOP investors yield and capital XXX% shareholders return to XX%. should approach

execution of continue and a So in all year journey positioned bank. our in XXXX and all top-performing well feel towards delivery very stakeholders are in by XXXX, to we Citizens for all, becoming we a strong

We the are continue the progress our We've to good deposit make and enterprise. consumer, in and reaping base our benefits. transformed across executing strategic on initiatives commercial

interest XXXX. protect to against We've adjusted lower hedging our through rates

Given our of from and the in for We've as ROTCE businesses we Exciting we to have positive to our market rate plenty are environment, more stayed the moving our of upside improvement We've XX%. times fee in XX% medium-term to Citizens. operating to conditions over leverage. target raising on XX% time, normal a captured improve. XX% still focused benefit

delivering XXXX. it for and over you I'd like new rising know to in a to that, in end again can my thanking the effort with turn we the on colleagues John. year. to We our occasion I'll great And by remarks count

good of benefit Thanks, for Bruce, Big backdrop NII picture, macro notably, volatility year with everyone. well of against balance and was acquisitions closed XXXX a in strong rate HSBC we morning, our significant with ISBC. and NIM, higher We delivery interest strategic and of position and Most were and our and managed. the captured Citizens sheet rates strong the the uncertainty of environment. initiatives

While the and from we were normalize, over are wealth time, capitalize arising in Mortgage markets. growth when our fee excited should to potential revenues our prospects capital we the on impacted positioned volumes particularly across businesses for markets and investments. margins are very by well upside environment, the recover

are on loan business our managing capital focusing relationship allocating deeper where we can and XXXX portfolio, We beyond. actively into drive

ROTCE. $XXX full of X, maintain to delivering in the good and discipline, X.X% excess operating TOP through benefit underlying generating expense run for million continue rate positive leverage of XX.X% pre-tax year We year

for me you referencing X. Let results, headlines the the Slide give financial

million underlying EPS fourth income and $X.XX. reported $XXX quarter, we of net of the For

quarter and was Net a X% X was expansion our XX.X%. interest income portfolio. up reduction to underlying Our with the points planned for margin linked relatively basis given of loans ROTCE quarter stable auto in X.X%

modest was stable loans linked resilience challenging We at LDR in a and driven down a are but IRP capital our by ended CDA grew XX%. was markets up in some quarter, fees DDA a X%, and environment, deposits M&A, auto impact Fees quarter Period saw this linked linked and fees We a showed improvement more mortgage excluding X% business. X% underwriting in stable our offset and average up FX broadly than by in quarter. runoff. drop

Overall, stable of were underlying linked Expenses quarter, linked positive efficiency delivered operating broadly and leverage we quarter. to underlying X% XX.X%. improved ratio our

X Our with were NCOs up good, points, XX credit metrics of basis quarter. points linked basis

$XXX this and credit We recorded million reserve build $XX provision a of for of million quarter. losses a

ratio the stands adoption CECL of ACL X.XX% pro forma from at and points our ratio. third above X quarter up end Our basis the approximately day XX X.XX%, at coverage

linked is share quarter. X% per value book tangible Our up

was further fourth higher up results. up basis margin quarter X, net Slide the net related The interest income X I'll details margin. On to of interest was interest provide net Next, X% points. given X.X%

Fed well the With cumulative can outpace yields walk on end at reflecting the sheet. the funds funding you costs, left-hand continues our see has healthy sensitivity As controlled the basis of side in bottom XX% interest-bearing of asset beta through slide, quarter. balance our points XXX to increasing on of NIM the the been increase since deposit end the asset XXXX, of fourth a

rates. X. headwinds These from with in and We Moving an improvement despite FX posted higher market results derivatives fee and lower quarter volatility continued partly on capital linked down markets solid offset and mortgage fees. X% fees, were to fairly stable, by Slide

through quarter. markets. the Market volatility capital continued on Focusing

underwriting M&A fees up. However, picked and advisory

strength were M&A volumes. in were Mortgage higher including see pushed continued environment to QX. We continue softer production to our the into several weigh good fees pipeline, deals as that rate on

and capacity, industry moderating pressure We quarter. size volumes on operating reducing fees wealth results Servicing time. over the stable. solid and have Card for which were of posted benefit margins seen should the fees

Slide were quarter. well On linked X, stable controlled, expenses broadly

of efficiency X rate year. by of TOP over pre-tax benefits end the $XXX the Our program run delivered million

excited are in few to new announce TOP cover and program, of X I'll our We the a slides. launch that

quarter and X% draws runoff On broadly slower asset-backed loans growth reflecting Slide financing line in in average reflecting growth linked X, up CRE, ex paydowns. but were primarily auto in and period-end with demand X% commercial, and stable

quarter commercial are economy. to adjusting as as over chain and in have moderate this inventories a pressures utilization reflect easing clients lower bit inflation softer a and of We seen continue supply anticipation the CapEx as well

in Average which an relationships in bring growth planned down returns. retail risk-adjusted X% given better loans up runoff deeper and are and equity, slightly, home ex for opportunity mortgage but auto,

average XX, money how deposits, up term were $X.X accounts up rate Citizens from optimizing X.X% market deposits are We in we X% this coming good primarily Slide growth billion about Savings. deposits feel On with Overall, or banking deposit and Access were linked deposits stable. and were environment. quarter, broadly costs consumer banking commercial

were deposit points, costs XX XX% with our up a beta, consistent Our to cumulative which translates basis expectations. broadly interest-bearing

and achieved to as profile overall we growth to to including We FHLB a continue our strong position we began deposit our increased liquidity in the strong through We attract with cycle our reduced durable mix quarter, improvements invest cash and will remains customer end. this and $X.X significant at our capabilities our and advances billion capabilities. Overall by funding quarter base rate deposit optimize deposit and liquidity deposits.

improved LDR XX.X%. period-end Our slightly to

points largely loans the loans, We saw points, Moving is X total still in given an basis third credit X historical good XX portfolios. from low are linked relative quarter, results to the basis this across Nonperforming quarter basis XX a were commercial, points in levels. to of up points CRE. basis increase retail which commercial on Slide XX. up charge-offs Net again quarter, and

Retail remain consumers to continue gauge vary. favorable to closely monitor to how to continue delinquencies indicators the we but leading levels historical

while personal has percentage has inflation essentially levels pre-pandemic service debt stabilized income consumer remains returned income disposable strong, to has confidence Although of as disposable eased. a as

I'll of Slide drivers XX, through allowance Turning quarter. to this walk the the

million an While allowance risk metrics we take our economic $XX growing the increased into are good, our to credit account current slowdown. of by

at quarter. the stands those office reserve return is The higher to inflation, and of and higher from ratio current and coverage third prices a lower risk recession including contemplates asset overall which on the moderate stress increase a interest subject to trends. certain chain issues, incorporates portfolios, Our expectations of from rates level added supply X.XX%, risk modest

stress, we Back are on CRE have our carefully loan the very CRE these information provided some additional early of Slide portfolio. the portfolio watching pressures, about in for particular, appendix, Given in XX we signs office.

exposed and total the $X.X tenant not a much which life which are relates Our of office holding lower has of About includes while multifamily office as coverage. areas. in credit to X% CRE $X.X for sciences includes remaining back-to-office are X.XX% suburban portfolio billion requirement. elevated roughly located portfolio allowance billion office about properties, portfolio general portfolio the is the of $X coverage billion producing office reserve coverage is The allowance to and the XX% a segment general XX% adverse trends. The we for income

Moving excellent balance strength. to Slide sheet maintained XX. We

quarter, the top which range. to the X.X%. equity increased up and in dividends. XX%, returned to ratio our share at tangible book was common CETX value shareholders total is improved through Our share Tangible to million We of the and ratio end per a X% repurchases of $XXX

our to Our outlook, repurchases. strong in earnings us return to capital share continue capital through puts a combined additional position to with shareholders position,

gears the a the outperformance drive Shifting Starting to have cover we years. some bit. few we'll unique Slide of XX, on opportunities over next

to areas We where we be have have and in very right we prioritizing have potential that the win. disciplined big a tried think to

four opportunities. got we've Consumer, big in So

First Metro. push York New is our into

are in our conversions in the putting marketing, We against doing investing the people market best brand well opportunity. and technology

weekend, and on the and product strides conversion leverage forward power we branches recent retail making success commercial sales is New by our the as client rates of York around HSBC some encouraged our in small network. are We of our ISBC market. and customer and President's full the look model the customer-focused highest across line-up wins further we just acquisition and the to some corner with The early in business full driving

XX will appendix. Slide XX You more details see on and in the

year in Importantly, end run expect by of expense we the to synergies we net our middle the about $XXX capture year. the of as planned the and achieved XX% of investors' of million the rest rate of

expect We that in integration costs initial our also continue the below estimates. to will come

led Citizens with existing a advice. We've These opportunity customer number we our with help CitizensPlus should initiatives wealth. exciting Private really financial and penetrate the business as planning the us towards base. launched to orient Client of Moving

platform XX, on our moved we to that and where we a Slide national a customers few another great the deposits been years. we bank On have opportunity the experience cloud-based expansion to focused last platform, focus serve with a We've market our on build our digital that offer that can is has for area other mass nationwide adding affluent digital to segment. complete capabilities a product so young are on

many us to serve way. is have our might innovative deposit And is for been XXX in customers. reduced an Citizens that is we had innovations And home by drastically we the Pay, up to our innovative lending new a running ago, distinctive have national fast and ramp advanced Where powered creating have comprehensive originations significant really year allows about which We've partners, where only should platform vision have attracted industry-leading serve room. versus we time. ways area that which equity business. our or to a analytics example, build built in very relationship line by also enabled we a an digital a process, before, customers business,

and We've on out Moving to great right we in larger Slide some all serve and organically. gaps. XX bankers hired around the to companies. brought product coverage the are regions the we country focused built other on filled capital capabilities, and Acquisitions verticals M&A and Commercial high-growth and We Bank the advisory capabilities us industry XX. market debt

coverage We equity with product very Bottom the share with positioned have a to capital. private full drive also a are have to line, strong aligned support fee revenues. attractive and significant we well market and set ourselves sponsor opportunities

XX. Slide to Moving

We are our launch program. the to announce latest excited TOP of

important offense businesses And pre-tax we forward efficiencies benefits pools We've been benefits it as between of our TOP launched to find initiatives XX-XX the about of acquisitions, customers end XXXX, pre-tax then $XXX Citizens and to success effectively million program that XXXX. realize is serve a initiatives. X executed on goal so of run since end our with $XXX benefit an our revenue key new of strategic TOP remember rate with has the efficiency achieving effort those with about at run and we've our X to can Even push IPO we million revenue-oriented continuous of a that rate a exit reinvest back split approximately of into better. and our and by

an to of cut the I'll for slowdown basis curve economic XX basis XX. fourth the expected two Slide of quarter. through point contemplates Moving and before hikes walk the Fed end full the forward XX outlook view point year, which December an in

NII We and X.X% towards to rise to of XX%, for expect we quarter the our growth, solid NIM approximately fourth gradually up project XXXX. XX%

in provide the to across and of XXXX. X.X% In overall Our floor XXXX fourth NIM gradual point of decline hedge the the position curve, from basis we've down transition billion done expected is a protection. through a fourth quarter commencing about $X QX quarter, we took in forward-starting actions to positions the to to so And even in far rate swaps of more XXXX. active rebalance XXXX January XXX of distribution

a our You'll position in the XX. find of Slide summary hedge appendix on

moderate average X%. loans X% up to expect growth loan with We

billion risk-adjusted portfolio auto we returns. products are the We spot shift $X attractive towards targeting about as runoff with more of

expect We be average up earning X%. total X% assets to to

with growth to the X% building with over year-end course capital side, a be to average up the deposit reaching deposit X% expected to a the year. at rebound X% deposit see the On decline These spot we X% are deposit high of and betas X% XXs. cumulative markets

about investors expected is or positive you of If expense full XXX adjust basis if leverage. be points of roughly we we up and the increase. to to the effect X.X% acquisitions to about FDIC drive operating as XXX expect, HSBC year unfolds the points to Noninterest should the able year be X% for basis premium and X%

originations, to will portfolio ACL fares. how X.X% we and expect ratio Given economy trends to upon current the the rise X.XX% macro our depending that level,

with ratio to end We XX%, our X.X% XXX%. our approaching target our range of expect to at the ratio CETX land payout target of upper even

XXXX. ROTCE in All high of teens a this for the translates into

day payouts with provide Note seasonally is guide revenues weak the impacting seasonality On QX us that on impact and expenses. the for taxes for and impacting Slide we compensation count QX. XX,

to Moving Slide XX.

key our have we ROTCE to XX%. and mentioned, our Bruce further to to operating deliver continuing The the the to against our raise achieving As desired ready priorities IPO, completely the XX% positive bar, performance well executing target the ROTCE transformed franchise we leverage. of targets, improvement since are is and lifting

and look continue efforts in lending will be returns. deep continue relationship we a deposit sheet recovery on medium our we balance growth risk-adjusted balance to loan we to should out to and focus As over term, optimization the maximize see --

positioned we to bit, down we the put expect a even on through We NII from rates grow meaningfully. well come have to benefit are fees And portfolio. swap if protection the

shareholders us You amount to our meaningful should to of Credit repurchase on expect XX%. timeframe, economy our expect stable would range projected within X.X% as remain this continue and to our returning we payout capital of focus strengthens. of through our XX%. to stay a program target is we on targeting And ratio disciplined to a expenses. be dividend CETX Over to to XX% the

Slide delivered strong have environment, outlook backdrop a To we dynamic for positive XXXX. quarter sum XX, against a we a up, and of the

We an capital, XXXX to appetite loan moving for and NIM in we liquidity in making credit the forward and over of position. taken medium with that being the respect and funding our investments outperformance believe executing business actions with important same uncertainty are term. our and our prudent We've our we growth. we ready protect will the deliver are to and risk economic slowdown a sustainable At are time, strategy against growth strong

to it back hand over Bruce. I'll that, With

John. up Thank we why you, Q&A? for don't open And Okay. operator, it

the [Operator Siefers line of Piper Sandler. Instructions] Your first from question comes Scott of

quarter I just you're It continuing hedges was are to sounds the quarter in do intend position of last you far. how upon guys sort you and year-to-date hoping how how expand and since to might like so of please those changed the you on rebalanced fourth so some thinking yourself?

the last appears sheet outlook way bit asset below for quarter big on start X%. We're picture, go this sensitivity ahead given the balance playing off. that was around XXXX. to I'll little the be mean just out in the quarter we I a Yes, and --

asset we're as -- taken down. So seen you've as we've time, over sensitivity our

sensitivity driven the short We remain elevated end curve, of is are -- the which by asset throughout most of that expect XXXX. to really we

And and into in beyond. just repositioning of rate had as a we that and of some looking protection swaps result, the XXXX spot-starting down XXXX that we're place into forward-starting in swaps out at active

and push out that rather looking in protection in in on 'XX down all basically the objective XQ. that into 'XX periods and So of basically doing out protection the holding than to to that in looking rate were smoothed done fourth that we here bit we're to of early down a we've quarter, rate little more main That's 'XX. what and get the

And then interest more corridor that you points out around that low of XXX if to a will, see with end, to XXX. by protect broadly, we're XXXX, margin, net the at -- looking that at were we're in if rates floor corridor, you'll basis fall trying

that from cycles. XXX narrow XXX see over is you than maybe corridor being seen you in us would So to that something have more time past

So that's the main objective.

I our then the months of that, twice a seven And they add curve the the forward stop. in would most moves pause points view cut. or would as macro up couple Scott, would Fed they'll times or to And six basis XX and typically, just in that likely move is they maybe for then before

and very cut it maybe if late there's early so the next likely And year. could a it be happening, happens year in

So protection of that's a guided that out why by view, pushing bit. that we're kind downside

know, see rebound that how need thought It year year. had capital progresses, question. fairly just then to mentioned expectation the a of the guide? will on the main just two as following fee to improved Bruce, the the through like separate quarter looks drivers you fees Maybe And or markets please? guide you an I a for hit first meaningfully Terrific.

Sure.

done the year. volatility money finger the We've moving of is on So past. equity had you business. there, strong it still this created from fact there of to the the really, of I and Scott, the been because been markets is But private the uncertainty inability the because the hasn't think higher, pipelines that an just because your actually capital financing really or Fed that's the in to put way it's get some deals work

to that in macro likely kind is so as you the nearing of the as think And going rates. forecast I peak -- destination Fed terms of back

to will that volatility more get the think markets, financing delivered, and markets, I see starts our start business clocked a less loosen of and to see you'll the transactions. pipeline into of is kind we'll to and lot up print the start

the our capital So this just million reference, were markets $XX quarters to at most by of $XXX revenues year, million.

of you back double go XXXX, quarter roughly fourth that of million level. to If fees, the we so $XXX had

thought great we coming on this in that So of We've news But a good generation. market. team. the great sectors overall we'd focus still much have revenue got the we have year stronger is into levels a right the

to And market so conditions that think you'll see as see start I rev we up improve. the

optimistic. a We've stability made of we see that, markets, get wealth Beyond that we've should start from the in to the again, I'm quite investments a tailwind And if business. the lot investments made. also some plus you of there, in that asset kind

So it feel in keep fourth confident about of is out. did so starting then thinking see say people coming I and lower, and think to out But any quarter. I the the it the that. business you're go exit business. And washed can't mortgage I'd

year, the you'll on as Fed again, reaching And volumes stability margins the think see linked the and we expand, and go some will to through to rates. so tick-up back I start destination

I'm the say to So pass those would to things. want big the Don, anything you here. be else...? do horn happy

Yes.

quarter, cap I'll think last remind just a I investment you've people, middle I again, said this it pretty are on bank. market covered we markets. much

equity is dependent all So cash. who need watch do on of long, $X with day of reasonably our very we're a heavy are a pipelines doubles and content strong transactions billion that not with and these singles private financing. We giant

be will there transactions. So

don't regular a going lot to of transactions, transactions. get you way you're get If restructuring

of There's cat. minority different the capital. ways So lot to there's skin a

ahead So we're coming in of the what's optimistic year. about us relatively

anything…? Brandon, Yes.

ATM see spring hopeful projecting bit slow that year, as nailed you markets the when we come they're and really should think I it's and as a the bright steady, coiled long progress, well. I'd we're I'd primacy back. us to continue of deposit pretty our fees that's equity giving in also the But a that for all investments bit other quality, say spot of that's there, some of stable, health say and also vendor on and the made growth. a continued well into both such a restructure debt customer engagement the relations through some is franchise and boost hit we translating too. and the records

that So should of a steady area continued and slow be progress.

other a will the On in the bit the of of pressure we're little there Most run but to on charges, that's run continue still be that's sort side, overdraft the income -- service and near in rate. of rate.

being we're of good sort soon. away real the headwind us, that for is So move near a we'll bottom, which from

comes Your of next D.A. Winter Davidson. with question the Peter line from

to is on increase you your most was color in was just wanted that little more that give real the ask office can estate. of outlook I loans on was mentioned a what I just And credit. wondering, office? for nonperforming bit if commercial John, you related?

Yes. Maybe I'll just coverage levels. about talk the

around when sciences, very seen you may of you in an multifamily coverage But that as from coverage to and carve credit we of tenant basis our high-quality life broadly, materials out standpoint lease is segment, Just and stuff XXX get points. have office really healthy our allowance some the have general the you X%. in where around CRE

reserves a some that So in with the seeing that there should space. that are putting there -- are away trends to headwind back-to-office are we telling we deal some us are trends be that some

around coverage good X%. got you of healthy So

nonaccrual, I seeing even -- would more broadly, into nonaccrual We are overall will typically into some of are that tick the our goes space. though XX%. that around that say pre-LTVs

got distinguish actual you so non-accruals for content. from to loss And

commensurate allowance content we're stop see with just we even I'll And feel away, there And the that we though loss in book. some like so the that's putting and…

do Don, you want to Hey, add?

portfolio, for very I'll who's it's we that and sponsor CRE just a we who's largely the investors of general, the with, high-quality foremost, group which do and say business first institutional. investor, in and the are have but office

And are you think do are urban. what will MSAs we is where and than suburban you? Second better in

As in we to comments, suburban. said heavily we're the weighted

every the office with portfolio. a So where sponsor-contributed single restructured equity. them We lot year already restructure one we're through the going in sponsors. property the of this We'll

comfortable be of the around kind coverage we'll now, we're are got. restructuring portfolio. like in But the what So we active we've ratios where but of the with right we contours

Got versus it changed the updated follow-up, X.XX And it. just the you about in can of as of just margin prior Is towards outlook? deposit guidance higher a talk the then guidance X.XX? just what beta

Yes. that. the the ahead of mean speed the broadly, I'll overall the we're what the of comments, get expect think looking given and go impact majority and more migration the I changes really into mix you we I pace rate cover on XXXX just and it's and -- as really at. two of deposit most is that

our relatively cost we're we well as the So -- of but see really low and that migration that migration that only our the across deposits manifests industry. itself in two ways. cost within seeing It's the platform DDA not amount of as

of nevertheless, rest So of and we going to the the hasten market from that trends would seeing throughout in curve in 'XX, what that that rate quarter add the and perspective, outlook I DDA, of marking to there we're see with being just to respect kind prior portfolio fourth the to with of the transformed the low the in we embedded course. pandemic, is had what's that back a -- majority compared -- would platform of outside DDA the a would deposit be percentages have XXs that in

bit sitting or DDA. sitting our to the portfolio still [XX%] you add from little savings, in of in quarter, is versus deposit end And where low a you deposit the That's and space, which up low we're sort But low-cost about we nevertheless, of increase When fourth mid- the consumer pre-pandemic. more very you to are forward our the to are still pandemic. is a high from franchise we in down XX% where high other XXs with That's end up today, categories. CRE prior but cost, consumer the quality. XXs we in of and in expect significant fast in DDA at to the year the

been So deposit this of a has the franchise. multi-multiyear transformation

what the think we're X.XX. just with is to in we of which of we terms calibrating majority I X.XX saw XXXX, expect the So what from in basically decline

think book I to front-book, the driver also as seeing how we're and the on going perspective, quickly could a at are well. that it what's being rising, add rates longer originations And from contribute. curve a well. that time just with you back-book you in as look take front When

the And also then to is the guess, that inversion the something I of is front-book, headwind -- rates speed but is the curve pretty a only is I'll only make -- last not rising, speed the back-book. not of point of yield

seeing end back-book And positive to across just nevertheless, a tailwind. that's basis front-book, quarter. that's as driver fixed and still thought a into net rate not last is by Just rising over We're a we XXXX much businesses, margins to front-book, with interest securities quite going be our back-book point of positive XXX time. tailwind it as lending with

Usdin Jefferies. next Your the of with Ken from question comes line

X.XX, your you of Bruce we're of I'm and low us, seeing how what out, you're looking loan expecting? just might day you impact what understand terms at you're that about your the can growth in and ahead in your letting be do the heard year-end. now book of CECL run loan the Wondering, you're impact just earlier auto comments adjusted us versus help endpoint the in slower that slowing help comments wondering X.XX deals that about growth X.XX if for X X.XXs ACL given terms

to for what's start. that is Sure. could looking past the quarters what John, of come downgraded. forward economic I'd are keep Fed stress any been continued growth of you given has pick segments kind there push But the the the and that several can I'll to done has we've the higher say and particular under macro forecast as portfolio up.

So that I leading projecting of today economists there's are like year. read I think XX% forecast a -- over the this for

So been that building the account. taking reason gradually into is that we've just

cards where up at and you'll we have but think of information that kind get point, less XXXX, don't I some in you we sit uncertainty, the more and turned today. see

point whatever done we've course, is. and the if loan Ken, basis where X.XX experience point, dynamics that be plays and to forward build that your At that? you what So likely some is, can add then could to want that go degree recessionary is don't quarter the you'll mitigating get have a the know and into to I -- to prudent is couple of view depending what course get those then release continue up the that, slower to seen you'll to ACL John, I to you points of anyway, may charge-off into the some some it's then you Clearly, the are like on impact a will those growth reserves X.XX range. think been, like, but have looking the

mean I the that. for recession we've mild-to-moderate just of add I'll the. Yes. a last couple built into quarters, had

are built at recession we that And our decline moderate models would point. GDP this our peak-to-trough into a have so be That X.X%.

was. value the that in think outlook you really a of the have changes be as impact as expectation the would what quite I seen not may on second 'XX collateral there as the were half much much recession

et the about think increasing you cetera, and prices, expected. used when house decline So car of amount we've been prices

So auto low models both you've declines sort built and got over for house and prices period. into mid-teens kind prices to the the our now of of foreseeable

And we've having of so that's been just last the really recoveries not losses, over that's really in lot a portfolio year the or a driving -- of lot and so.

lower XQ our in think that in built our saw you then 'XX. may might will -- outlook an our that and that's But you into you important have you XXXX. for item XXXX and so saw recoveries terms And forecast of loss the -- loss see for that's some I

Got it.

follow-up point. Okay. And just the capital one on quick

You're as yet to obviously nice wondering buyback going the just buyback. in you $X.XX the in thinking how increased that third the think of line the be we up quarter. in dividend versus forward, dividend with you mix earnings well implies I'm nearing the about moving that would step the you're within moved incremental XXX% Should up also a about potential context?

that opportunity as we is cadence our update the to where broadly I'd Yes. profile. what say on post-CCAR, here return basically do take a year, capital every we we're

you a medium a medium-term We've payout. RWAs. be a policy outlook term, in that to and to But look more be whether of change at for we saw a because looking 'XX is there the dividend and year that going dividend dividend in should the of take outlook update buyback our of some earnings we're at CCAR. the in after return Over And XX% outlook. this XX% updated

Yes. that, with And environment, being we the are lending clearly, cautious that of Ken, just I in would the appetite. add to uncertainty the terms of in of kind risk

in our interested years. haven't valuations existing full we acquisition the also some a think additional I prior of still integration lot capital And that, at that have creates on so acquisitions think whole seen in itself, attractive plate we've and we're we that's in front. I versus of and had what

operating modest appropriate recession to is levels I think than teens here. opportunity. plus modest than combination right high returning chance so acquisition in historical, of uncertainty the that of course high for historical more and I And more action given with loan the activity the it's the And creates very at ROTCE capital returns growth shareholders think the profitability

we year, like expect the like also shareholders. course return and to XXX% So to capital that you of get would the dividend we'd could the of to close during raise to

next of line comes John the from with Evercore. Your Pancari question

on overall you at get you decline? the to with the overall spot X% quarters On reasonable give look year-over-year through little a dynamics, decline. in a deposit us I X% coming is that magnitude know to you flows? to think as more that the Can maybe expect how you you XXXX progress trends to Maybe help spot us expect color of X% declines to deposit deposit X% here

sure. I'll there. Yes, think... in I I jump mean

Brendan. You Don to maybe start can and have and it then pass just

mean, some well Sure. from as and mentioned good. as perspective deposit lower before, overall, I is But from DDA pre-pandemic. cost to the migration seeing as broadly, superior That mix I I Yes. our of levels. sounds think a we're compared Yes. improved

cost deposits part that spot-to-spot 'XX. higher of lines the runoff X% around of of I'd in That's think of bit, it tick of some the DDA the money say get of as story. by XX% you I down along to the well declined -- markets and to 'XX that's into so be probably going XX% the end a maybe the will X% year. to something part we're such savings end to call or the XQ, in

a so mix I'd improved just... you get say softening some, And to I'll you throughout And with that little bit up 'XX. again, but as pre-pandemics, of end mix compared

add I surge I would group. not did in say that much many our take we just deposit -- would as add is to that peer in as I'd

be deposit tends to a base, have We stable. consumer-tilted more which

seen deposits monitoring more than it surge be And And we carefully. actually initially we expected. that quite have been sticky so we've

out. we're I is think have side that commercial move where of take money terms deposits. there you'd search of protected on we didn't probably bank money relatively see a treasurers the slight lot other in to runoff because some besides But again, more alternatives where a deposits in

here Don, could you maybe, So comment Brendan? or

Yes.

the specialty then business back in us around our and strengthening market treasury had said DDA transformed little in I our really We ESG, actually would of we've with were the higher services we year-to-year. -- of deposit the think our carbon spot and nice is prior back the than year. base our with than both offsets less it a John this have stability deposits business, end two deposits got off comments, I that the services inflow ended X% little thought down gives we we're now just years. But to green some we've really we because offerings, we treasury more of going so to think than our at deposit year had in a

good that So we about projection. feel pretty

around and we're environment sheet who a standpoint credit new really and and balance managing the moving generating transactions in we're and we're returns the the balance shyness the uncertainty, sheet. off positive off given -- from most BSO really And the we're general, aren't franchise avoiding clients just the

really a bit we the deposits of us terms side gives a that grows. we're it go don't chase need in relatively because modestly of So to it keeping how dynamic little loan

deposit the We in too pretty Yes. thing. peer of be us has deposits, our of retention far really of say mentioned, sort I'd on controlling banks the benchmarking been of we're at consumer performing as indications redundant the positive. so lot deposits to interest-bearing Without is but the midway costs confident a look as quartile being in broadly a we're to the all And through which going John are is mix, for good cycle. It's data, of quite top cycle. and what stable terms that low-cost in well story

we household manage and mass above. ago, customer is XX% to and in point, disciplined well, now primacy, lot driven stay improvements to by were we're affluent years mix mass got improvements, it and it's we've a our health XX% growth, but of So base been five above of Bruce's affluent shift

quality the So good. has been quite

what bottom to at stimulus front, our of the two essentially is the seeing paycheck. On customer is base we're the paycheck deciles

So rearview that stimulus already has is the burned and off in mirror.

more stimulus check. remains us the tends that the with actual customers, to So that's stimulus be whether with affluent

out balance that's as COVID actually we're burn see not cetera. that stated natural of et et cetera, rotate is not the which much seeing interest-bearing, given So and parking interest We're that to for traveling, mortgage that not during rate. starting happened payments off low-cost making as into deposits

investments years interest-bearing deposits Access Citizens were whether turnaround be tight. where a that on some having our Client at us that been all products, so Private fence introduction analytics, with new of where time made to all as off CitizensPlus may it the signs indications better, well with All want core the we've we last be Group bit from which dramatically managing worst, for is in line peers, a up well. we where we're see were really track in rate franchise, manage and the to in that as but far doing we discipline we really we're maintain we is So have outperforming big the ago. And to in six levers cycle five, right big to and and

better LTV? the front, separately estate then be read, deals you a estate. real overall refinancing a on LTV have know origination? I you LTVs happen that may deals the impacting Okay. mentioned the you particularly And Great. refreshed of that helpful. participation, commercial we're on to sponsors your LTV, the know with on commercial sponsor certain real hearing office but out I That's so XX% that exiting do then have front. Is lot And refreshed that's or stated

Yes. in office office overall CRE the LTVs book. not -- XX% of was the the The terms

We're good. are So the by still property refreshing we property. think those pretty

gone one working And portfolio. kind yet, really but We working equity quarter-by-quarter this what that's the drove we're done with of of the and the either the the was the through refresh sponsors real NPL or maturing adjust the It quarter. and on value maturities on haven't out, refinance a deal. of inject total book entirety to estate

Okay.

Sorry.

XX% that origination? it side? is office is Or So on the at a number refresh

all It's throughout origination.

line of next Deutsche with question the from Matt Bank. O'Connor comes Your

Stein] [Megan medium-term so above the on XX% On to X.X% that's regulatory capital, the CETX behalf target range, O'Connor. well is Matt of This minimum.

it really a You've lot, built and ISBC going line reserves is well. like the seems conversion of time

guess my solid road I much capital successful down the given hold question deal line? integration So reserves I is, time so and

would I to liking of part strong Yes. say is have of the balance sheet. it philosophy just a

strong a ratio. is XX% to X.X% think I so And

we we've and kind I executing a strategy, our we're gain of more confidence stakeholders XX% time good have that and over as up. And the seen that been had think of target You've sliding well. XX.X%, we've originally a -- profitability goes to we that down

wouldn't me some we in at surprise down to point manage where range. start that it So

closer it side that range to time XXXX, be of that think in actually little bit? us, front move move thought a skinny down. the we step at can we given provide down this that still start make down sense X.X% that's makes back to point, And of or could will need and point, end think around dynamics leverage. the potential that maybe we at think and that at that say, target I we're looking to today, So of once of wouldn't at all I sense. to manage we that end I we range bottom do XX% range the XXXX top a other that get recession to then to But to the the more of

just question And second -- Okay. a just on loans. is

strong billion other for areas in this off loan of the coming are runoff So expectations offset your XXXX growth What a auto year. $X other XXXX? categories in will

historical opportunities within we below the But And XXXX, can imply space is you look Yes. chime there and into our when should I'll see start something C&I. others in. and go in think mind keep be. is would well very, to levels we still I think strong where I commercial in always ahead very out and mean, utilization I

And of year, so And financing you of the possibly CapEx part inventories later as commercial. provides you one into of that's drivers. and which some recovery in see actually across M&A, the lots We the in and get opportunities investments, opportunities. really see main

When like you home and card a as that looking at we place get and into a consumer, being place that we're contribute well. Citizens equity Pay would

year-over-year shareholders. RWA that a and that risk-adjusted that and loans So up stable some taking to with that being point been back that would to giving lower to wraps back otherwise the categories against around returns other and have deployed auto

the Your next from of Manan Morgan question Stanley. with Gosalia line comes

on up follow the to NIM line wanted of just I questioning.

to you think also what you from also you the floor on the DDA of X.X%. mentioned fact a that Is I curve the and that function X.XX% down migration brought and for the NIM be variable there the the cuts forward any rates the swaps. Is guess out funding X.X% that I would to that Or the of side? pushed changes Fed sooner? mostly biggest cost number, on number,

two together. and I'll to It's tethered Yes, think But flip Bruce. numbers start are John. the I

tightened good move commensurately seen floor your we've is bottom range. if X.XX% news also that is So that going way, is of the now to X.XX%, the in a is, side to be then The lower.

was to previously, down X.XX%, X.XX% X.XX%. So it

it X.XX% to So X.XX%. points now basis XX was and it's

it's So basis points. XX

certainly, DDA -- down also more then movement the on dynamic. book on I the yield curve book some on from front the migration, focused think been has been the but impact back migration, has low-cost answer the John's other and So we initial anyway, of

can you that watching. are out things those we're So the But John, from there.

point modeled we add, I'd sheet balance would the still to into X.XX% asset that decline the that's say there's lot basis go assumptions what assuming and what out that et XXX terms And thing get with you haven't a in what the only that of to that and cetera. is I'd net margin. -- mix a in we to given remember, we're interest position, really of of Yes. that are seeing X.XX%. be, down closed we the just respect would that that gradual we decline And in XXXX you're constructed sensitive

look in views the balance So what's down the when based of as the on mix continue be rates, is hedging Fed... in to updated at and as likely as move around sheet ways of to activities context we against protection that the well what see X.XX% lock to could you on

It's a dynamic very process.

going see where be. So the we day rates forward and look to are

and our market played focused what get in we'll you view well be of that. own continue can valuations our far, so see think have to the stay assured, really we quite can we We And the I hand on. We are. hedge

in that. of from and just And appreciate expense come the course unpack then there drivers on maybe separately, million the you of the $XXX the some base the over pre-tax those I Can program. benefits of the out can quickly year? how

of form so fourth 'XX. in mind, one build the did and in rate we say it a the tend a of keep throughout these million benefit one run them. to thing that But 'XX same to will year-end get $XXX that. X. you each will the dynamic quarter Yes, that rate for I'll the TOP to when I'd cover run mind that the hand, keep gets we with Mostly programs to on generate contribute and go is

TOP a comes X that there's year in. full of So effect

the when as given in is any an so are what of year. almost contribution estimate programs the similarly use sized, can And you reasonably that

a from hitting And contribution 'XX. X plus 'XX effective combined in-year hitting X so and TOP of full million the you have $XXX TOP maybe the year effect

approach our in branch as careful to really what trying to really the that that's area big fit is costs And so And 'XX. just the is which the network. of we optimize well years cost you've about on, contributing being continue areas to organizational is which management, traditional over and third-party focus respect vendor as with the for an ensuring that we're drivers purpose that got been accomplish

traditional more are those So areas.

at center places cloud agile have looking from the The recent in to technology from a continue approach delivery to towards our XXXX. working We're include waterfall model been contribute away data that initiatives that's to well. maturing to of a it. we're and exit Agile more initiatives as looking other We're looking migrate well. and very are as we forward deliver internal within part we're sort we're our It's But strategic that lot and that program TOP excited of the 'XX contributing and against X applications, there's who of to year. are, in next-gen a next about built

from next the Juneja Vivek with Our line question JPMorgan. comes of

folks. you for questions of couple A

deposit Firstly, high to to betas that the XXs. you the expect get

the on should your color how in to rates that, we have rate and quarter, the expectation year of change fourth in pace early going given up? the QX? Given get in after we expect for that, the that and hikes should not Any especially of on been pace it, you

I growth. cumulative and of mean we'll That growth is Yes. the QX. cumulative I out. an not terms I you'll mean see there expectation I in get betas over-the-year think begin think moderate flatten in to in the

big You the cycle. jumps in have the early

get we So our XX. the to back began to And go beta the the fourth is quarter, you cumulative X%. was cumulative and then beta way of quarter 'XX, second

have got -- and another you've for 'XX X is So points just XX we're in then in 'XX you'll and points. looking

and -- it increase will this over So time.

first quarter to and gradually... XX You in the will get won't

to lag. with tend a replace reprice Deposit

the a betas. little So bit pauses, pressure of still Fed even after on see you those upward

right. That's

and the after is then okay. Bruce, Fed done? little is of would But that probably does But the further that, mean, -- I just bulk on a it early increase after

it outlook. I'd the say trickle-in XH to our built into XH, majority that's continues in in and and

second thinking you're would of X% much forecast in or full your what's 'XX your from would of How Okay. you markets Different that question, versus how 'XX. to income, Fee least comes a markets? from capital one. year expect at much come X% growth guide about that capital in

and I and wealth well. drivers, of from had big mean, Yes, you about as markets, Brendan there's a think Brendan it. heard back you from the I card part fees capital big to

three are those So big the ones.

really mortgage potentially well. rebounding see as You

of little rebounding. bit A

big may pushed mentioned part from M&A we into and in would it of have underwriting XQ. from fourth from markets as a deals XQ just perspective quarter, saw some advisory, capital But we the come the

outlook. business underwriting capital to itself. going really over the which, capital has out markets. to the and way, really loan diversify the support our tend business, and just 'XX become overall a mean capital that's So it broadening the markets I of in a good Those good markets diversified part comes growth advisory, syndications. from M&A by years, of businesses a really fee very But yes, chunk

And queue. There with that, it Mr. Van are in turn Saun to no for I'll further closing over questions remarks.

Okay. Great.

again, dialing everyone, thanks for a great today. and So Have in support. your interest appreciate day. certainly We

Thank you. your and today's That participation, conference. may Thank disconnect. does for conclude now you you