Citizens Financial (CFG) 17 Jan 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to the Citizens Financial Group Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Kaley, and I'll be your operator today. Currently, all participants are in a listen-only mode.

Following the presentation, we will conduct a brief question-and-answer session.

As a reminder, this event is being recorded.

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

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

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

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

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

measures, that, Bruce. reference and the of so important Page to results the will presentation with to I also hand GAAP non-GAAP appendix. it's review on our We And X in the reconciliations financial over

environment It playing play economy proposals morning, significant from this for bank and take moves first strong to offense disciplined Thanks, in year Coast with aggressive Fed's and focus was important and resilient joining the surprisingly market. in in inflation many opportunities navigating and regulators. dynamic the defense while several to on incredible to on was continuing a of advantage XXXX today. good bank subdue West an Kristin, call respects, our everyone, failures, thanks

the really with about starts Defense balance ended risk I sheet the year. good and and how we management, feel

and of AOCI the CETX of X.X%. equity is regionals position among XX.X%. of a with adjusted ratio common ratio X of capital CETX Our tangible for large roughly X% strongest a the

of loan-to-deposit XX%, all-time uninsured X is our best forma Our coverage deposits. and XXX% with an Category liquidity XXX% ratio liquidity at of a LCR of pro position

general CECL Our to is pro ACL are and forma day XXX% XX.X%. at reserves office XXX% ratio X compared at

deep on risk of be focused and relative returns. stronger disciplined appetite in are relationships, to very which terms continue lending deliver We

serving opportunities. a we the loans to several such initiatives are on better important Metro New run the offense, On are tracking business. $X.X Bank build-out, particular, billion team noncore we all to In for well. private our growing pleased driving, These City capital and payments are private York We in Private after launch have soon our off in initiative, bank focus the October. late are using capital see reached our strategy as deposits, and free we

the We markets prior in very by funding lessened. for see pressure has came a and pressure, to the the fourth XX.X% in financials the Hopefully, costs the hike modest last given the Our a over year capital July course our saw pipelines year share and we of with quarter declines Fed to start to a return date. in but we XXXX higher NII XX% bounce are encouraged markets begin to delivered in tone back the underlying sequential of the ROTCE primarily under to continue In some see than through smaller costs. repurchases. full Nonetheless, big the funding we in capital deliver. as dividends shareholders on quarter, fees of

had We the very in cost bank set a modest some to the actions quarters. expense We for QX X took stage XXXX. meaningful growth for only in private

it's in CRE net losses are Office with quality charge-offs, being surprises is Away far. I continues carefully that, doing absorbed track expectations. being actually outlook Credit the our critical this we credit so should reducing a base if protecting strong. reinforce predictable we're legacy you while that, expense are relatively though few managed, from General for normalize X.X%. is So that to by initiatives.

saw in ratio, promising the and we which sign. loans is criticized a a dip QX, In in absolute

the charges initiatives. the given not did we well FDIC associated On our surcharge front, as special the capital related in as cost in to QX buy stock with any

through to be that to the and XXXX. QX in expect in for market We back continue

Turning to our outlook.

on to meaningful up. to from runoff NII that continue news tick expect we returns. which is then XX%, EPS declines with We noncore NIM/NII benefits power modest start swap through and midyear project higher and over exciting The and XX% will to

We over growth are are poised fee course charge-offs will Net the by year. for ACL see but strong capital modestly, the likely led we markets. rise to of releases

mindset. be for to with priorities defense/prudent strong key continue XXXX to will Our operate a offense

feel exciting many Citizens. AI digital, positioned for are for data We outperformance. to have and on. things technology, we exciting that analytics our need We on we time road map well medium-term an our deliver It's

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

performance. benefiting environment, some We deposits a start stable Thanks, levels through delivering sources. were diversified with resilient wholesale sheet peer funding good on demonstrated off Bruce, balance turbulent and on strong top from of everyone. group commentary capital insured strength while consumer morning, I'll and and XXXX. financial based excellent solid near liquidity We

of against Full while $X.XX opportunistically after from bank. was incorporating This out noncore strength which multiyear private private and investment allowed strategic us building year the initiatives included $X.XX X, Slide XX.X% to delivered a the underlying our can these items. ROTCE execute in we bank. that $X.XX, well see drag EPS an you On

the referencing details X Before I highlights discuss fourth Slides the results, and some are X. quarter X, here of

in our income can of portfolio. $X.XX the slide, net quarter continued This and you the of noncore for bank the the the underlying fourth On and impact $XXX start-up from negative $X.XX a $X.XX. generated million EPS of private investment we see includes for

Slide followed the from severance-related included The this FDIC meaningful impact notable items count quarter reduction. attributable special a increase X. had driver expenses We the on by largest and was top significant in elevated head to assessment

was [indiscernible] underlying quarter XX.X%. Our the for

results, dilutive relatively this Our Core increasingly is XX.X%. ROTCE of will a delivered quickly, start-up to legacy but [indiscernible] bank private become the investment underlying solid Currently, accretive.

billion good $X.X the of very about off than year, through end Bank XX% to of which noninterest-bearing. Private The the are of deposits more is start, raising a

bolstering it to with AOCI forward. position run sheet from the balance sizable very quarter. continues off, our and CETX third the X.XX% adjusted While performance of a strong year to ended is drag at portfolio further an our We with removal opt-out noncore up X% X.XX%, XX.X% for coverage currently overall results, going or a the in ACL ratio

the This includes coverage in a for up X.X% robust quarter. office, general XX.X% from prior

quarter, We liquidity planned fourth achieving profile. liquidity during continued to our build the

rose in the forma XXX% Our bank X pro XXX% Category to LCR quarter. from prior

quarter by XX%. from our XX% and $X.X We to $X.X quarter-over-quarter also period-end period-end reduced flood billion, billion borrowings improved our linked LDR to

Private initiatives, the to a Regarding great previously Bank to is mentioned, continues off and start as TOP strategic contribute.

private New we well capital In is York on Metro opportunity. and capitalize poised to addition, the tracking growing are

Next, talk results quarter more through I'll detail. fourth in the

Slide to starting with X net Turning interest and income.

lower partially As reflecting interest-earning offset increase X% by interest expected, NII assets. margin, quarter, linked a in is a net primarily down X% average

build, X% basis decline to see and can combined impact X impact of our due which offset points by liquidity runoff net neutral you was higher X.XX% basis and to NII. level. from the asset noncore to additional walk The the the were benefit to reduced swaps, the higher more costs was which As at NIM the point of than the yields the of of bottom slide, NIM by funding X

slowing Fed modest basis paused, has migration. but increased a points Our the cumulative XX% see as interest-bearing X to continued and we deposit beta deposit

end compared We expect was with deposit trend rates. prior Fed franchise peers. to significant the moderating was the Overall, cycles has to this peers. a well cuts generally beta our continue This experience eventually in until improvement of performed beta higher when our the with our at pack

Slide the an by fees. environment QX. underwriting. and the given a driving bond Equities and in half markets of performance improvement seasonality in with strength lower decline capital were in with the mortgage improvement banking November, the were more fees to The long became improvement its in given although Fees from X. advisory offset capital X% in linked These better record pickup increased improved reads up benefited wealth. outlook several in environment from Moving transactions partially results quarter to the pushed reflects a markets activity in the rates as favorable. M&A quarter nice macro back and

by net fees markets up record high decline production and weigh fees strong. good as servicing with The driven as a was The momentum was lower business the quarter P&L activity rates continue MSR lower. and to in capital on The in AUM deal improved positive modestly, momentum operating delivered mortgage in of hedging pipelines banking QX wealth picking mortgage sales are see higher our are markets We lock volumes. growth. while valuation

the bank expenses, while did XX, we slightly start-up of even Slide quarter, On well impact which linked were including the continued private down investment. on

the into industry-wide and I'll that of special reduction adjust detail a $X.XX including of expense actions few notable totaling of items $XXX namely cost million, XXXX. $XXX increased the Our more $XXX reported expense million, in in our assessment minutes. billion impact base heading taking to discuss million FDIC

environment. growth [indiscernible]. Average were down which the with by to driven and environment. generally On partly and muted modest as loans offset average to approach Slide remain largely are loans, and an along lending X%, was cautious our decline by by demand mortgage commercial continued lower uncertain new quarter of relationships loan in of decline line this noncore equity. driven face commercial exits portfolio are activity this a market This returning selective utilization highly lower home commercial, in in in in XX, runoff Average some clients core down and core M&A loans

and XX. XX Slides on Next,

in municipal lower liquidity fourth financial off been deposits. this in commercial. deposits proactive about by stable BSO the billion deposits We continue was with driven would have value to a of an by increase running institution deposits X.X% offset and $X.X effort this of by quarter. driven effect, The do higher bank, well optimize the approximately cost up deposits broadly Absent private during deposits quarter. linked to the were decline by Period-end commercial on quarter consumer

to Our interest-bearing XX translates basis [indiscernible]. up costs points, which XX% are deposit cumulative

Our XX% higher of deposit insured manage or rate our secured. and in franchise effectively is product to environment. across has highly about deposits and and mix in with XX% us cost efficiently channels consumer allowed the deposits This our diversified

the to although moderate deposits levels, and rates the This With steady, customer on total and higher-cost categories we pre-pandemic migration this to is holding expect below here, of XX% now dependent be continued of from behavior. Fed slightly of the deposits. path of migration saw noninterest-bearing to continue will pace we representing about with

We saw charge-offs XX basis normalization seasonal with along basis on quarter, XX. quarter. and of credit were impacts. continue see to points linked general office X in criticized decline linked saw the we points, that to modest Slide We up Moving retail were stable on charge-offs a were charge-offs pleased to Net portfolio. as portfolio through the work also loans continued we in commercial

losses on credit for allowance Slide XX. the to Turning

X.XX%, from Our overall XX.X%, at the basis quarter, the X from reserve lower adjustments we primarily loss third balances. increased the $XXX which coverage reflecting portfolio coverage quarter stands billion model point ratio made a effect as increase X.X% is which $X.X third for drivers. general to the of We office portfolio from in denominator a to up million, modest represents the

We X% taken charge-offs of already portfolio, loans. in about in million is $XXX have which this

the On an than left that of office much these assumptions downturns. historical some driving in represent we've coverage feel adverse see side assumptions bottom the can reserve worse of the general you level. seen We the key scenario is page,

is we So current feel strong. coverage very the

XX. Moving to Slide

We maintained strength. excellent sheet have balance

regulatory opt-out ratio common our if Slide of improved at on the can removal to ratios the XX.X%. be AOCI you equity year. our the and where been peers top the X.X% increased CETX Also, ratio in and we proposal, consistently XX currently CETX third to of you TCE ratio quartile our quarter. X%. adjust relative peers current in tangible to And in CETX appendix, Our the the under see would to the our have were about end Both for stand

expect quarter. a light special liquidity returned total we maintain We rules in our to levels sheet us fortify of our we that Having Nevertheless, to repurchases banks FDIC our capital paused new uncertainties impact transition macro regulatory exceeded through in the of in plan may assessment. quickly year-end, the We position level that the quarter quarter. resume shareholders of for in and our to against $XXX size. and strong dividends balance capital first any to to million the repurchases fourth fourth target share

across On the you update on initiatives program. our our private ongoing a underway balance we of few the sheet next few including I'll optimization and our have pages, key bank, bank

build-out First, Bank Slide the is on clearly momentum. well gathering the XX, going of Private very and

of billion in Boston quarter, markets we'd our in our like like key more than deposits of attractive that This more Following where presence is raised coast-to-coast New commercial the California. with Florida bankers a a fourth do some like of launch have [indiscernible] from with formal $X.X and places our XX% to roughly clients. York, and

have wealth capabilities few in centers the geographies, We Management a open and are that our plans Clarfeld as banking opportunistically these banking centerpiece Wealth of private to business talent adding and with to we effort. bolster our

XX. Slide to Moving

efforts You really are York in all New well. well of aware our That's going Metro.

meaningful We put there. targets on I equity commercial to are should see are And the our us the for backing as before, work. momentum markets. opportunity capital as translate side, building to we capital hitting starting gets into a in mentioned substantial This private

our has important customers efficiencies then remember Next, to effectively that rate on executed so the end Slide program customers. XXXX. to a We've of top top into X our serve million effort to [indiscernible] to run our X to benefits of XX, of by been new benefits find an focused goal launched we IPO disciplined success on benefit of expenses. of can reinvest million on further businesses from pretax better. TOP It's key we exit achieving end AI those use and efficiency serve and citizen about back a about run program, continue is our continuous pretax since better our And automation new of $XXX of the a the rate at The opportunities XXXX. with we've be

organization we to the as third-party exited the more auto in and the wholesale and opportunities on exited on spend business, year, executing are fourth Last also our well. business mortgage we quarter. We simplify save

facilities. about We at needs we some further rationalizing and we corporate are X.X%, In taken look or base through expense space by XXX back fourth a and are our reduced also the approximately adjusting our have our meaningful office hard actions. of head also quarter, our and count

net at our began in work, investments is our Citizens to X.X% uncertain X.X% March legacy X% to Given targeting expenses offset defense of we priority and the Platanprudent saw expense with to the decrease are challenging we turmoil all macro the growth by in limit top with a this roughly to the underlying XXXX that given being Private X.X% outlook. back the Bank. year in of list in

So both of we sheet balance through optimization efforts. the are sheet reworking sides our balance

the through with strategy attractive loan update on our and our efforts an the on relationship-based optimization provides to XX Slide remix risk-adjusted on returns. lending side focus noncore portfolio a and commercial

our side rundown auto billion the at to relatively where decline were $X.X of of at expected billion portfolio the about consumer you'll On by left page, This the which year is to of purchased the portfolio portfolio comprised see end the we noncore rapid $XX indirect $X.X duration billion of of about end from the and is the shorter loans. remaining XXXX.

lending in runs this loan capital in recaptured growth core in majority the a cash the card to through consumer as to relationship-based primarily used are plan growth portfolio, the and to in support the reduction potential. The And reduction noncore and support RWA down, to offer we equity, relationship paydowns the redeploy wholesale commercial we the In retail private with home bank. greatest of remainder broader through attractive be the mortgage, funding growth organic targeting remaining will in which portfolio. reallocated

lower-return, exiting on relationship also commercial multiproduct side of the right to page, are lending portfolio, with credit-only on the working C&I selective focusing and the we Moving relationships opportunities.

improving our our we the more more profile overall on contours book, the front of our base book, information spreads capital macro are backdrop have changing return included remixing covering the securities deals our while broad book. a appendix, We BSO we portfolio funding, managing environment. of In of how positioning wholesale deposit our and leading the improving our against and managing program also high-quality regulatory the including are

the the you take forward end Fed XXXX by Moving early to Slide X.XX% January of year. outlook, which full XX, and contemplates will year funds our of the I rate curve through a

expect contributing swap that roughly our half X% with book X%. loans We to be to down of about decline to average to X% in and X%, changes NII down

X% of and in with second Private picking to growth course the activity expect growing Bank over the and up X% the year we spot commercial of However, loan half.

we in On costs X.X% X% are cuts beta a the and expect X% growth of anticipated XXs well-controlled -- deposit with rate in side, I'm spot the deposit before to begin to terminal sorry, low May.

be expect impact to range the from We X.XX%. We've average the which expect we trough by the to swap to we exit for rundown. expected year, NII of and offset XXXX, included our expect the XXXX. net Slide margin the interest to X.X% full around In swaps XX, noncore X.XX% expense middle partly noncore and the year the and shows in around higher benefit through year the

You'll NII XXXX find in which our how demonstrates a a of is incorporated which position guide, as is curve realized. beyond appendix in substantial in to the and on XX, the XXXX headwind, Slide the XXXX current tailwinds NII summary forward hedge our reverses

NII is improvement benefits range, the depending XXXX. of million XXXX contribution environment, and is to For by an example, nice X% approximately in swabs a $XXX in from up income market there markets. expected rebound be X% Noninterest expected continued in upon in XXXX capital in meaningful to the led with year-over-year

expenses be to X.X%. X% up to about We expect

the be private bank, down to would this X.X%. Excluding X.X%

of more context. We our have to XXXX showing provided XX a walk on expense Slide components the outlook provide

XX the further basis the are expected for general year to retail. portfolio in [indiscernible] through normalization office continue and work we expect as about points average to

upon the course DSO through expectations the in $XXX quarter over see our of more noncore year. million with releases the course and see depending growth. will portfolio share We over will conditions of the we trends, and in resume remixing macro Given plan the the loan growth, year, range strategy of market we first repurchases sheet balance for and the modest the ACR commercial to likely

CETX to Taking the which still XX.X%, target second expect is range. the the upper sequential account, positive half end to quarter PPNR return leverage ratio operating we second of that at year Putting a year strong all troughing in the we about in into together, the expect to our it XXXX. with of of end with

Slides XX XX. to and Moving

to we mentioned, returns. well are positioned Bruce As attractive deliver

path As we XX% XX% a out to clear the [indiscernible]. a achieve have term, look over we medium to

given We expect our business, with to NII generate tailwind substantial runoff. solid from core returns legacy portfolio swap a

operating positive we deliver to we've few expect the in grow the discipline We with to past meaningfully capabilities years. given investments fees made well and positioned expense are leverage strong our over

expect also We a noncore it a that and tailwind contribution portfolio as of capital runoff meaningful bank as the redeploy private and liquidity. from the from matures the

We capital meaningful a to through to and focus payout repurchase of a appetite our a prudent with will targeting XX%. dividend operate XX% and program amount of continue risk returning on shareholders to

XX, of quarter. on impact payouts range first Over the CETX a ratio due has guidance the uncertainty to for to XX.X%, day on about within medium compensation expenses. we given that term, expect target to as count the than first basis lower XX provide XX% our target Note revenue prior environment. the the On quarter impacts in we seasonal points remain higher impacting continued range as our macro the Slide well taxes

arise. funding capital take results discipline returns of resilience the to the to position and delivered maintained deliver attractive the that to work up, with To that in position forward us advantage strategic the solid the puts as our excellent year medium we strong shareholders liquidity and opportunities bank term. We over position demonstrated a continue and in franchise to quarter, an to strong XXXX wrap this priorities may we with drive and of we ended

allocating improved term. sheet can to and We drive optimize we are relationship we Bruce. and hand that, medium to the are focused I'll where on performance With back continuing business it over balance capital deeper over the

Okay. John. let's Kaley, up Thank it open Q&A. you, for .

D.A. question will line of the Peter Your Winter Instructions] first [Operator come from Davidson. with

on bank some private including drivers loan color thinking line the to guys you what commercial contribution spot growth, in terms from some utilization. the you're that details Can and the of about provide

can the When part we out look in are Loan mentioned. XXXX, and seeing an we the off X mean, expectation is start drivers, I'll I you second will will of the so we those flattening that primarily are early here, up. Yes, utilization just as commercial I be that But add. of then into year out and others half the expect pick driver. think activity

some and expect had DSO we late 'XX 'XX half have in early also the to second We year the that moderate of well. activity in as

to commercial see on a nice going side. So tailwinds of you're number the

relationship drivers. HELOC, things then and And us. the side of are things, are been good the those consistent a for very we nice which on has space gotten then, of course, private late side the with which the mortgage in And business seeing and in some consumer opportunities opportunity start main driver But a loan And to up see we're bank, the of 'XX. that has 'XX. in broadly, going on pick off great to of deposit

So would those I of that say, are seeing poll. big, the components

could what a little you bit talk Brendan, about lending. bank you for Maybe, expect private

on Well, lending and QX a low quick print, that comment relationship. by demonstrating by I the just can be deposits Bank. Obviously, Private strategy strong dislodge strength I deposit diversified to the Sure. and requiring led think and of the wealth interest very necessarily the not start for and would

the and team. to on said in retail rate about that, Having pick the print the really given the XXXX excited lending interest challenged up obviously mortgages the are start by do we're So environment, steam expect we side.

equity ventures. skewed the private heavily and and So by commercial has comfortable space, led start been we're risk more business, and has critical to from which profile in the that and the the to the venture lending with it's dislodge banking really ecosystem of private which lending, relationships appetite personal private equity been

we're a start. good really So to off

book coming at dictates there. have in given first the retail in continue the will loan mortgage equity commercial, venture opportunities time, scale by rate lending. equity more home the the that we curves lending, to half expect balanced suspect forward and environment private year more lending of led the Over lending, and I principally be as to be much

the and We to corporate programs to help partner side into connect lean also banking. equity venture with banking expect private personal of private loan

of start an the time. the on the see to be heavily more it we expect half But side. year, would you'll So corporate first to asset still over diversification weighted

add to side. on commercial the anything Don,

Yes.

if bit about the there. growth a loan at XX% think it's a execution XX% little I of the that where utilization, sprinkled back BSO fourth things you our quarter, look little dampened bond in bit with

So people balances of that's slightly backed carrying that X side. were this when continued of the into higher kind lot went commercial the of the to rates market weeks and on bond them A year. off in the last year,

lots customers of I has right about most we're all-time a lot we more space. XXXX will now. expect I which that low from an So area think those into that at group that capital We're private years. almost basically mean to get of particular clients end equity drive is the active, lines, conversations utilization hearing going excited X for on. they and our that as back get on the call dormant There's the been is of of

So the that's what real driver [indiscernible].

Peter, question? you another Right. . have did

Yes.

Just follow-up, on talked helpful. it's a X%. quick about you to income, just X% fee the But

mention and takes the But on on if fee you the color the You give did for income is pipeline markets. capital side? some could the just puts strong

Yes.

Pipelines of seeing to only incredibly bond up seeing, due out to are think of of We're trends markets equity on And both seasonal not the capital the factors, that's and the pick in get I backdrop. up It's 'XX, drivers lead on strong. in Just also fourth basically we're driver picked of main more be where XQ, kind underwriting, continuation constructive as the into side. some up the in XXXX, you in side quarter again. of of seems is the but a a starting advisory, to M&A in terms pick just that.

QX, are global excellent And in drivers contributions as -- so and 'XX. as see But rest from the -- those and continuing in so we over pipelines some with them out of of well. playing QX the markets solid beginning

private do. if management continuing been don't steady wealth, want wealth and the but all-time on fees. We're continued made to market something the year a to business. get year. growth really in given XXXX in -- of as of know the you the well looking of side. in to a at add going the a adviser might side you But expect leadership key attract out to it's number on QX, Brendan, progression slow as We be really bank I wealth important lot talent. both we strong highs is a on Yes. investment hires And We've

so the And of ecosystem and in with summer, for hired critical the the getting is us. managers market connected that we top wealth bankers

management the platform and the citizen to to in rebranding We're side private connect glove. wealth banking private wealth hand together

really And so and out of steady time, significant into we expect private ecosystem. the growth do wealth banking over connected

with the but the [indiscernible]. pleased good. we're So on more well execute private banking a initiative. we there's momentum, lot Very to come, and hope if we

banking. mortgage on just And

Yes.

a on highlights down mortgage. Production was QX some hit bit. John for So

then modestly, servicing QX a big performance underlying up in over our was Our and was business QX. down and hedge quarter

mortgage I announced exit think outlook the obviously forward, going we as look we business. to wholesale the the of

done mortgage, was were American COVID to back scale an business. really, prior in in trying If you rewind We acquisition, well-timed years. and through and really It Franklin we We've the hindsight. the to we're the well diversify that to the performed under clock incredibly acquisition. exceptionally successfully

the challenged each is for there. And on our suggest The wholesale refi mortgage were necessarily period lot in of side. X only don't lenders boom and look a medium model really we're margins and and the we activity versus peers business outlook term. strong. high We our the of lone, really forward, MSR in the It's of that looked at little a exit concentration time as bit

we business, mortgage to lending. move to we're committed nonrelationship committed retail decided to a mortgage on, being time wholesale it We're and so for relationship And that really correspondent. was

$X the market rates mortgage -- a it, mortgage be, is which So trillion a but to about platform originations we coming XXXX, in despite did expect down, call normalized market.

So offsetting we should servicing bit rates see originations. might And back see down, a the uptick in coming pressure. little with of some business modest

sheet in terms allocating zone we're feel to where making volumes Yes, product of 'XX, customers, offer up balance core to we're as whether to business, margins. higher the And returns we're we sure volatility. QX the the improve retail at bank as sure relationship-based deep make to within think right I best like up range driving to to that going in very well or customers. normal of we expect mortgage it's do So wrap on performance all we're with we're private in that that a executing continue our to and in in

get year tailwind another next terms business. of the that's in you into production into as So

come question with line the Bank. from Next Matt O'Connor will of Deutsche

did Can on guys expense leaning these coming you quarter cuts the And make years? not you've that on you're in bit that. cutting you initiatives prior in and . a during but Obviously, from? had of that they're much do you're where too [indiscernible] the sure terms of kind this bank, private elaborate the How ones you in

think in seeking I'll have start levels been the There's activities very, kind short exercise here. so can some kind if Yes. and I all of in of and the But won't bank, we've we eliminate that of diligent any performers across we make the of your you gone off bottom at little where always that very efficiencies. looking staffing of to caught redistribute sure the kind areas. playbook a run x that through be leaner you and percent work in different

of control important and out audit areas. and the areas carved like risk We some

taking carved are activities. important reductions. the from And investment of that out kind spared areas we were then they So also

mean X.X% we're fighting all to that XXXX. roll-up enter a good shape of relatively kind we and but And think math into total so the comes staff lean number, modest of and as I count, in of

the is that you've X/X a those. help separately, blended other are rate? rate to rate helpful. private you guess, just had And what's of grow I or the from bank, are growth whether have disclosed I That's it's but that promotions, what [indiscernible], think then deposit using them the And stuff you Okay.

Yes.

come seen extremely should really mix at days. that you I when is profile at haven't that, talked early about look think this to attractive accretive look in top and mean, DDA house, We it the I of but operating accounts, that we've low-cost we the it's is

encouraged solid balance our we on sort be other So funding growth our deposit the on franchise we're a expectations of the extremely side very of side loan expect this about that fully sheet. that for of to --

would and to Yes, attractive the overall talk quite and cost, very good about. mix So I accretive say is

little term to over Slide in a promotions money cost, outside pie and a are and very that savings no that character then the roughly of franchise. of XX%, liquid core XX, are of out market the lays interest, with with deposits. the low offering of of most there's chart very If which the Yes. Matt, But kind norm DDA and . checking that

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

in And in couple added there? basis remain fourth Just front, a in to you overall and points XX that releases? releases you where peak came you could quarter, year? questions see reserve hit on confidence maybe And the to reserves you for of quarter, can what you about XXXX. gives around you that -- about expect What credit they in Charge-offs -- front. to need points implied the do losses in on but see to to XX basis the then XXXX. the us you average XX Can fourth you the similarly, at to the an of know expect bps drive I talk and full

Yes.

some John So more I'll start can give color. and then

bit kind think over seen that so course push So of -- could the higher into we've I that higher 'XX continue a of 'XX. the little

One most for these opening the in a XX my fairly remarks, I twofold the and say out. is this going credits And said XX and them very of that of on top So from as predictable. carefully we're to all lot wall, CRE working we're we're is kind Office is watching of maturity is part. General

of kind to do months, look we can X might take kind So we some of ahead, and restructuring months, X anticipate charge-offs. where have might where we can we

think we good And so have into visibility that. I

process long a General Office. It's on CRE

the is, we'll important charge-off with and rate. that and well into it, we're thing I think as But run baked Again, likely think this it's through into I have us 'XX for reserved well. all 'XX

than normalization which really has were still slightly consumer pre-COVID. second better the The gradual, just slow area but is on and been where continued they're we side. extremely

push as will forward. And just gently go up we so that

other driver. would be so And that the

of any kind the hotspots. good is seeing we're say I'd in that really not news C&I,

we have XXXX. for so we pretty C&I a through And feel broad that good outlook

is or And that down. On the we've scenario draw reserves be to a soft -- start think will this the to there's year, shallow building we've I the been that we consistently get likely landing quarter. ACL if to away of question recession, each you where a enough very able put

provision was charge-offs that, can on so it flat. quarter, starting of of but you reserve see kind we've will the time that this build It reduce already to absolute from tell over And in was of kind been XXX/XXX. amount

it's so I to to from for building exceed we could can even I up you see you a provisions John, bit, add And want charge-offs go if through charge-offs don't any pick need think provision year. as likely reduce having little that color the that? the know, if

little a bit. just Yes,

you drivers I think moderate to is all want the sense. of is And makes your environment a over economic we say that reserve conservative which horizon, to outcome. adverse mild relatively the I'd where with have a predicted that be

in. built our we're back in stabilization that's book in the of seeing We of performance So book. think the terms loan that

is back high-quality flat the private may other from there's on book a that -- to a what running off visibility in book. origination while a see putting ACL portfolio front commercial the when in away in build the driver other the very then other building the into, the improved of we be you're stuff is bank that outlook. into the the 'XX charge-off we're building terms ACL load and profile we're And in be higher loans could net So rotating of actually which and

things the to are just Bruce I said. add those So what would

then indicated that? fair resume how the buybacks $XXX rate? possibly All at be should And you to assume. Or of quarterly million right. you Great. pace And front, to expect on 'XX. back help that first the quantify buybacks could capital you you separately, of that quarter that's Could us maybe if the about in we think

first million. this at of for a kind the Well, about we've estimate quarter point, of firm $XXX given

growth. So lending indicated. capital to we're will, of Bank going -- the is much Private XX.X.So under And the of have commercial, down, net don't year, and until in the in for really flex with kind not to above hindsight, Noncore second and you have coming more in we the loan with, could quarter. bought the in half we little half the going of if bridge then target the first in as have the probably, play quarter, see XXXX John to benefit first but be fourth we a running some

think to more I tend be So the buybacks oriented. half first would

But a lot can the happen over the of year. course

likely first of differ solid from out. kind kind rate, of the print a have I quarterly year to just and in we'll the and a then quarter, plays second the giving so And we'll say quarter run in see more how

strong us back Yes. when to And it I buybacks. to that's see just reiterate driving work, and preference. in form priorities, strong moderates would capital give put capital And opportunities our if you that our And our really That's of we returns. clients when have bit, serving dividend. the great a risk-adjusted

so be And opportunity the an extremely [indiscernible]. able to we're have to position in strong

we I'm your would really to these on point be because my at happy think I great And add-on . point is, it's say, levels stock buying to last add one value.

line We'll Bank go with Poonawala the of America. to Ebrahim of next

one I Bruce. for question guess you, maybe

terms actions. you As last capital deployment, about busy of the think strategic in year you've been pretty

either opportunities like the big are we where terms about of things organic basis, as lift-outs an the you pieces investments you thinking wondering franchise, for just and done Just for new how you team are place? see Or new see now outright in putting that you or could at do on in look investment M&A?

organic right I initiatives. orientation now say is the question. Good would Yes. our for backing

to the to it we doing And continue York proposition, mentioned New up been there brand we've banks, need certainly, awareness we're and success. good the as that and make to ground the very investing but showing get in that big off results. to invest your and that, and expensive marketplace private a So we've get is

certain change presents are going There think a and opportunities. like that payments of always through lot I that are change, businesses

top investing Those grow so to share of that making to gain to deliver business. very mind are position and we're of continue And the sure we're that focused on. that ourselves for things and clients that kind come

and in of think significant I commercial. over time acquisitions in our capabilities, made we've fee-based investments terms

And level. scale so and is quite size our a good at M&A

could possibilities makes that there. could something be we selective an there. do there's imminent, but vertical if there's Don't So see we industry anything maybe that sense,

think year We has rest which to been bring the to is wealth, [indiscernible], looking bought go turned some really fantastic the to then acquisition. to route onto I this be out orientation, out to the trying But a and of And platform. things. we've lift at teams buy

we're try work And so at Citizens that to scale wealth. hard to on up private

place I our franchise the I a will a have good to from relative So think, would shape. of, say There's in peers. of kind in is lot initiatives that growth outperform standpoint us

back and deploying in inorganically. think selective be capital I can of terms we So sit

when flex to you helpful. whatever just maybe us particular, look expense if I terms don't you done was That we reason, of in just you've out expense one around given the just level of fee like anticipate for everything And talk in at some things follow-up side? guide guess cost your . of revenue should as kind are these offset? of play pretty some tight expected, Or on NII,

Yes. expense I opportunities your mean, there's down. look base always to to flex

at think be to your it we've appear of term initiatives trajectory I'd of with decision you're you hard to jeopardy here scrape bank, up say a if term on if a to some really the try to looking But been at level. strategic that the puts the I get again, $X.XX flexibility. And and wouldn't or come pretty magnitude, offer kind medium to it something this advisable like to that things to $X.XX take. to private longer

always will look at that. So we

trying point, we're trust targeted getting delivery. can for eye to with ROTCE both you kind to But the that this medium that. the really towards an . back manage and us of know at term range. into near-term You also do But

And your the come Scott of with line next Sandler. Piper question will Siefers from

into you've got the think cuts I X rate built guidance.

specifically, more I thought guess, balance cuts geared broad more how now NII where words, impact other is outlook? or would a of sheet maybe the sort Just fewer that on

the I we continuing is the what's but deposit -- quarter. other, Yes. important neutral it very one close have I'd would say quarter I up mean this think to really and continued or And say to migration down. outlook that I that we're to every or moderate way

quarter. still to continue doesn't is first as it our that get But expect next go away. outlook cut, We to completely

today if higher the we around window forward to cut cuts what a that's holding that would year, slight around. [indiscernible] in this is cut curve a a in general in come be came think staying a the would sheet, have fewer bias, expectation the over if is with again, might an maybe that tiny I probably We're slight okay. first But time for the we XXXX in comes very and first looking down around in that indicate. I an neutral is our second say there out and nevertheless, . what in So we of rates little balance key benefit get think the the quarter, neighborhood still is bit orderly normalization if good a fashion

for long curve too, is had time. to that, an just a other we've The aspect inverted

think term, to we medium where yield point presumably, benefits curve, NII. you about a which there's a the also when normal get So back

Perfect. And for also, then John, you.

margin looking at the the been on be of where to into But of forward. noise going a are pardon building a going presumably, I less we efforts So guess in if liquidity some journey. rate, just they've -- neutral. sort the NII guidance, me, maybe liquidity the that's even factor have that just introduced thought

being liquidity a and believe, of build we And say banks. XXX% with respect kind we've X for -- -- position strong Category achieved basically headline the around Yes. requirements our there. our of it's the to I'd we're is very objectives

being going And forward, therefore, I think to see matches interest. a our will headwind not liquidity you objectives. that net

It back QX. in us of think we talking half year. that in I something affected the Yes, affected was QX. us in the It about were

neutral underlying. of close look to that. another exit do NII is on far, basis us everybody's who's the our back, points, going only way dropped did year so underlying to one If NIM liquidity to performance Well, It X. dialogues X are we which you good. I was build, actually we X% but at, that think, relative is showing The took to actually on quite which the reported the down up well calls these

to closer liquidity is So build [indiscernible]. that up but [indiscernible] then we XXX exiting to end

here So we . drivers focus exercising conversation the can that on underlying from out. on not that focusing are -- just from and just on having what the

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

Just X follow-up.

NII expect second PPNR disconnect the the on based you timing slight mentioned in bottom a I'm quarter. to just You the would wondering, bottoming how coincident swaps work there that? do with through? Or be

NII Yes. -- we that I mean I at looking of revenue. that think that is XX% are being the our driver. Basically,

the as quarter is going that NII yes, bottom well. So to in

But kick in QX, other in. Ken, loan then to starting you'd have growth kicking growth, fee strong things in, like

what that I is incremental that. around dynamic look then though even at would performance allow the think swaps business to us have starting whole to absorb see expect the forward so to And you'd in we swap the

Yes, in [indiscernible] XQ.

sorry, John, can I [indiscernible]. clarify it don't want you just I'm to again,

[indiscernible] but And think trough NIM -- we in Yes. XQ. the were is I that is the trough mentioning NII

'XX you I talking show see gave, X.XX, you you fourth seems And It NIM curing medium-term funds guidance it. of out And put can from that looking just X.XX getting the like the in the just most buckets the be X.XX rate. Got then about gotten Fed quarter Okay. range. longer-term just at that end of X that a from level. that

in expect the deposit and just expecting that there's because and you of moving to well lot parts a wondering you're growth costs beta there, too, just as I'm I And traject. But mix range. by XXs just how that of know just maybe talking influences start the just to just can about on act low NIM changes. that you how way to the you're expects up, medium-term getting and if So

the you you've about. as Yes, it's a if in to of and May. which cut is the the deposit think big takes go there. things, are migration stabilizing talked after at we've I first deposit mean big that big driver. looking portfolio, we a tailwind But side I mean over swap I got puts around mid-XX%

cuts this, we being up the at see continue, beta then You of migration as or XX% first, versus lot we imply a down early expectations XXXXs where tightening call XX% And down to stabilizing. instructive cutting basis flipping would it, cycle XXX -- beta to cycle type a for the XXX as beta. that for of points. look deposit that loosening to the And start rate

of early that so data, yardstick think And full grow part that's down up. the full close the think -- but our so our that less we're data in good getting than nevertheless, time, expectation beta to cycle, up and beta, to from will up down the where going . through over big to be a I ended get our contributions beta, will the

with Nigerian And from your come will next the UBS. of question Erika line

in gave to said quarter, I XXXX. Is forecasted on and follow-up range discussed handle you've told that 'XX about that and if you're based Putting you'll medium-term dynamics exit your Bruce the seems all in of answers fourth In a a margin X in see to rate of that like X underlying NIM underlying you terms the in just we about outlook seems good be you Bruce the and XX, despite for it thinking that XX Ken then together, had bridge to of together betas. everything us, net question. me XXXX exiting that to us? the where that it your interest about deposit that net Slide John income, put what that just interest

say, of quarter fourth We, is -- where well, at X.XX. 'XX to we're exiting 'XX fourth of indicated We've will going the 'XX quarter I that's would be.

headed X.XX that's And to range. X.XX to so the

on And us would so X.XX. see to . sometime you in level X% crossing 'XX way that the

the comes Gerard your of with from RBC. next line question And Cassidy

Bruce, this you are public transforming you company. guys done today job from went where to have you when great a in

margin curious on mix with ROTCE. a XX% the that Meaning you're you -- think XX% XX% kind medium-term you'll to do pretax need the I'm of percentage think target? of also income you bank, to your do you ROTCE then fees for on from outlook to revenue of that versus there. reach to get Can highlight get to private us you you net So what the what targeting share improvement, XX% need you and how interest

XX%. say, John. capital optimization see to sheet in Yes. have term, all XX%. our Maybe deposit the of opportunities a be I to with running that, would of relationship to with efforts the I'll front you're on balance that the the are book. attractive consistent putting we're that It's neighborhood off in with what mean, the I think fees just book, start we're we over medium much revenues seeing and I'd it going would migrate to than work total associated opportunities where the closer Gerard. fee-based off at greater back rate with And

going fee so percentage drive And to that's XX%. up that closer to

on I assets think ROTCE of we north from and it, a, X%. consistent that that seeing return the term you're -- that the medium a returns And is expect the in call with that's tangible return

the to about think what way as the see on are side. you returns a to So getting that basis closer points asset XXX

John, wealth cross-sell. do low-cost percentage company on there. kind at you're there, very deposits from answering get MTO I will bank time. it I private be And we focused specifically spread think significant. as But the fee then I the there's assets the are And we on Gerard, kind the at say, build think, private is kind more bank of of we least comprehensive of on in percentage think the the should time, Today, the I high of upside that XX-XX. where in at given that page, over But would today is over mix.

a on maintain lending to But and capital achieve return. other HELOCs We yet. things loans of in that the spread and tend lines seen priced come haven't the really some good size and And price I with as think a our we be generally, call business there nice discipline well.

looked at I don't to banking if know, think models if equity of kind mature you a you to all? return at to to XX% want on that Brendan, is add private I have XX% realistic. So

$XX performance I said. to of reiterate well it's hoped over in type the $XX $X think what down with billion repeat more of deposits, a to come that terms I our we would that billion at wealth would our just are to growth financial line in of think ability scale QX I AUM. XXXX have obviously, lot time, drive the recall drive on come, in billion and in in profile return the loan it loans will for is targets and of it, and in I end

the aligned we deliver with of far seeing in the return. profile, so profile composition, if kind that is profitability expense So we're that

and So our hopefully, we're QX going the first it work from half. in to hard deliver sustains performance to

what more But a Very good. of in maybe talk see on in markets big Citizens, risk delayed for a the know from And some proposed the Any following bond from the then on you it's a will about Endgame. like Basel losses including seems how all this portfolio. know, might implementation up, regional the to it a is and as maybe perspective all available-for-sale lot might what scale focus, the be thoughts was Obviously, Bruce, thoughts capital the on -- we back final of your in you of and going initially for be scaling we from the there's unrealized proposal? back operating what the it's banks, businesses. it because numerator, changes benefit III

that most RWA focused the been the erode reduce we've appetite banks supply, potentially Yes. I for things those activities to the it in would that would areas size, the wouldn't of on would economics. it have lend certain lending because increases that to the say our

more credit like people business card to attracting or capital So lending, lower-income lending mortgage small capital. lines attracting things and

U.S. flaws those and have of to in And though I economy, we're like adjusted. the think result been they chronicled. even RWA inflation things those meaningful the I in we'd proposal don't us. mean stewards for well see a

our That's of kind been banks size. for

at kind top of the main list. think of the I thing

the have a banks I But they more. bigger increases seem operational the kind fairly big on Nonetheless, of to pump the scale. think risk affect

to those that have that come maybe think, but rethink big ourselves. more we'll down the so like extent, everybody, likely, I a banks banks probably And some benefit and would than

impact if it in a our that is even likely as And strong number. gone that at RWA case, on to standpoint us. an earlier, add quick by AOCI proposed, survive. are as even incredibly gone we we we're that X% expecting opt-in. Maybe initially AOCI, But relates just that's deducting as III to mentioned -- if had from And the the -- had it very modest to through Endgame an Basel just a add

about of is in the think there what's if the. on rate, when sort us really we comes going you So to run behind it really and will,

a having this can the John peer are of our of that's given and about up catching pre point strength. not kind of Many is think not raised, which kind on capital something of our and capital and still hold these to banks them. given worried in that Gerard, getting any I distribution, strength back really position is about that we're just capital worried good absorb both impacts. position, that post But we -- regulatory really capital of AOCI,

to offense position play catch-up, to play able is a more and in. kind good not we're have So to of be which

Absolutely.

up In fact, point a XX% term the Bruce, ROTC XX%. core total legacy your do guidance in medium good of you company, for to on bring the

you share we of interpret You final significant rules be we Should topline. Is guys dividend well you set and guys are earnings, to we're get repurchases. pointed of number ratio that that for to the a out payout fair combined and go. then XXX% all buyback a because once

you and years, a XX XX-year place, and back it's the average, at about the been almost just has go Gerard, IPO of XX%. and number to the over all under looked like over but XXX time if you that if XXX

and business lend grow to capital customers. having your so And enough actually to

is, the stated using one, to growth, have But as dividend extent principally to You equation. the work to the certainly loan John repurchasing support priorities, then capital the organic that number into book in shares. and

level, we our think levels through returns both I be consistent our return dividend repurchases. into and get And story. viewed that we'll share through should earnings a as of we capital if returning back be to high shareholders, the

Yes.

had in performance 'XX. return a I capital think we XX%

to that . So XX range XXX over it's time. in

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

towards come a continuing down there's Just about the likely would follow-up peers down rates deposits. are down behavior about deposit core consumers talked here. big was are you expectations on of pressure A the to from higher They've wondering what quickly, given what a consumer few beta some still seeing come or but have basically accounts. question on coming as talked your rate right down? side that I commercial moving how to more And rates on do consumer have be and now franchise, consumer your deposit you're

Brendan, take to do want you that?

a then on and you give color Yes, expectations. Well, take sure, me let and start that. picture big QX little I'll

be well, what So we deposit that were and we've we've think our truly actually for in in been better basis peer talking XXX modestly open seeing -- rather, been basis points net may have our year last peers a have case balances hundred I our average betas consumer look been or our signs we're when worst transforming performing. but for And at consumer than XXXX. And this that better. transformational than points year the book while peers was as growth benchmarking now the couple there a is that's better investments almost peer-like, of here made DDA our for base deposit are years At we -- performance. that certainly,

relative at an QX be. a better outperformance said signs It's what still path on already. for to going absolute an stimulus. That's to a excess consumers' better equation, sustain, I that, of expect, we basis, what with and slowdown seeing and was in deterioration And look in XXXX those our really we're good a you Having growth, normalizing. on of consumer saw that DDA. regardless So outperformance in face in grounded behavior beta, place we deposit conditions

first to of rates should the has I start we're of And So down. that begun the pace in half still slow. seeing continue. normalization But as the see to think tick sustain that we year

with speak, contagion, to contain sort there in as similar about and really more bank thinking on all some on higher where haven't interest-bearing aggressive dynamics the deposits. we advantage, platform growth of It's than still competitive can markets, competitive a bank interest-bearing reprice full shifted private out but side, a in put so the way. and Access yet. cost into interest-bearing believe to the On money gives of those not got we've a retail real Citizens fairly side, we our the CDs ways we're levers us

down got balances. consumer follows projected compete. rate come we've will expect, all interest-bearing if we're the And of do to to So starting mix side the as deposits start the as think We tools on to curve about well.

balance those we'll more looking the part at potentially got course us balances first levers more lot of the down of over in betas some manage savings that the here liquid over roll to a can year to into of CDs and of We've give year. put that the be

way. is I say, in see to that feel we'll I've peers and outperform environment expect confidence that all our good we dynamics a consumer continue, pretty to lot are situated. starting whatever with how got We're good So about of the comes to

do long-end the move the talk seeing like Great. service where And trend Great. couple ratios portfolio, how on ago? lower today things like the you're now? the then in credit, versus multifamily coverage of about given is anything you months can expect curve maybe look given a forward in And just to follow do you that right to up rates, in how debt non-office CRE

multi-family loan would that good just sizes, diversification we relatively answer of I fixed It's Yes. feel good It's portfolio. a small about term the geographically. broadly characteristics. lot loans,

service And lost now quite to ticking terms cash the distance kind the But of flows. that between so air coverage that kind obviously, low. and be content we, going with ratio of think, in provides more down, felt debt there rates of I was

that feel previously. And helpful, it's but weren't much worried we so all that we

that's anyway, [indiscernible]. So

that to [indiscernible] the just properties, capital that than I mean and further are context activity. -- markets it's tailwind different I still the Yes. multifamily just buying provide selling of in to add very will active. and office. that general

a lot There there. is of liquidity

are there. liquidity and Yes, still Buyers transacting. there's sellers

general a okay construct the was maybe very night certainly, day -- general of different just to that have office. with. have to a won't impact it's positive very multifamily office and rates, the We'll on So which already compared on have much begin situation and much impact an

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

appreciate everyone, for Have Thank We the Thanks Kaley. you. Great, again, great rest Okay. today. dialing week. in of support. your interest a and

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