CFG - Earnings call transcript Q3 2021 | Citizens Financial Group, Inc.

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Operator

Good morning, everyone, and welcome to the Citizens Financial Group Third Quarter 2021 Earnings Conference Call. My name is Alan, 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 Now, I'll turn the call over to Kristin Silberberg, Executive Vice President, Investor Relations. begin. may you Kristin,

Kristin Silberberg

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

also our Consumer Bruce we'll of third Brendan and CFO, this website. McCree, can Chairman First, morning, Head Investor our CEO, Banking, to our which additional will color. Head here Relations Coughlin, take an find Don on referencing the to John provide and Van happy overview provide Commercial results, of presentation, are Banking; quarter After presentation, of you be Woods, and Saun; questions.

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

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

Bruce Van Saun

for and continued We morning, to PPNR us and today. in joining X% and operating earnings everyone. call sequential in three Kristin. we leverage steps feel of solid execution performance strong third Thanks, busy good with our strategic positive Thanks Good financial our initiatives, successful announcement acquisitions. quarter, for that a had returns. growth we of franchise the taking value, offense, playing growth are By the in and and position featuring

halves forgiveness. benefited improvement grew should by in with chain NII loan on growth QX. should though Delta impact as and variant loan QX. as faster and the revenue equivalent forgiveness growth from labor impacts saw held benefits lower volumes continue loan expect meaningful supply of offset The second back we a as loan Nonetheless, is Our XXXX, X% though largely of impact the of Interestingly, and the to PPP which is faster abate fee up nicely. have forward, first a impacts even we QX on the towards interest and our demonstrated going a These Wealth amount interest QX in once by a soft income. again we expect roughly and net growth strong and expense in in of offset at modest growth excluding well QX forward, shortages. consumer quarter, X% recovery continued Strong commercial some amount in issues sequentially business expected the financial while QX sequential the PPP seasonality fees reflects gradual QX market PPP in the diversity capital which up growth Mortgage QX pre-pandemic performance both of net in the hit their helped levels. bounce-back had fees, pickup from retail income X%, recovery new a fees loan record from pull model. in materializing

all QX our again shape, sequential into well We results strong customers differentiate points. Metro and The for who present great basis in market collectively and top under expenses of in focused where York transactions investors positive feel have initiatives which million pipelines New Mortgage ourselves with poised are the XX quarter, in on credit only diversification expect execution modest and share a in strategic expenses we there's on year-to-date to and Markets HSBC to a feel and points credit across be And X.X%. NCOs should and in right we've deposit to the presentation. basis can areas new The where These guidance that of to quarter do the below XX go we from more to consumer continues continue well, we're strategic a more XX XX win. the in range given QX. can initiatives, set for. we kept of attractive and this we a City given exceptional on out We led give around for with prioritizing leverage Capital seasonally and play continue announced quarter. strong operating efficiency risk. a across to The financial standpoint, We softer our focused over control for commercial acquisitions we quarter, us are X

also and from thin a Washington, our bank, Miami. digital a gained base in We we online big customer augmentation D.C. network gained bank to branch HSBC's and

integration are nicely. Our far efforts so progressing

mid-QX, plus regarded. Upon coverage business compelling. we closing finance have equities deeper Our is and that broader well financial JMP technology, an acquisition is in very focused run, gain services, much a we'll the also corporate strategically deal in and highly healthcare and

continue to increase, lenders ownership to successfully continues to lending broaden we share banks companies this from be nonbank to equity it's new market able of compete take capabilities private As that in our landscape. important and

valuation more across capabilities. dramatically We expanded capability services a This outfit. the with given noting these synergistic our Also effort. broader that will customer with increasingly is base, capital generate our M&A Willamette transaction fee revenue business highly our prestigious and is expands worth markets

an So future and forward that, I'll With serious and over organization up, outlook. as taking we to our feel to our XXXX we're John. positioning very in strides sum good turn about it

John Woods

and morning, Bruce, everyone. Thanks, good

of reported EPS million net First, the I'll headlines start and We income $XXX the with for $X.XX. underlying quarter. of

good results X% we another of a highlights Mortgage in benefit quarter of credit recorded million, for seasonality, momentum with provision rebound in PPP include was strong Key X%, which the net growth reflects credit was a provision delivered and modest underlying fees, up impact giving well-controlled strong $X.X credit fourth Revenue were XX.X%, commercial. income linked in Wealth notwithstanding $XX X% retail ROTCE us a expenses. into both X% strong operating sequential with lower charge-offs. the with interest originations in and Markets, strong which and this billion leverage quarter. income. Period-end quarter quarter We Capital of positive includes fee loans performance quarter, the of up quarter were and Our for forgiveness, in benefit. heading excluding the up given Loans over

at is Our ratio loans. ACL excluding PPP now X.XX%

are during grow finally, capital year the dividends position up quarter with to ago. We our at continue end, a And per tangible X% shareholders to very a in and value share book after at with compared XX.X% quarter. returning $XX.XX million strong CETX was which $XXX we

net for margin given PPP yields impact forgiveness lowering provide X.XX%, on and continued accelerated basis the down basis quarter some well slides. was key X margin rates. to cash highlight I'll the up flat balances were day net stable by higher income offset is interest asset which and Next, our sequentially low referring count. X points while as takeaways on Slide quarter growth, was interest of third the X% presentation linked higher deposit the The of interest Net benefit costs, One as points. as funding improved interest-bearing progress earning asset XX given costs were to lower interest-earning

end The in decreased from Our second good XX.X% at points loan the primarily to We quarter. received entry the in given of quarter. the the fixed swaps and for about X.X% and curve. reflects $X.X in the decrease steepening yield exchanges of spots billion saw deposit asset sensitivity addition some the

from and added levers of address runoff to-date The in of fourth the So far hedging we we are the in have other headwinds actions XXXX low one impacts the swap executed another billion. pulling rate we've $X.XX are quarter, to environment.

the line saw improvement margins we production quarter, on further a MSR improved up higher upside fixed agency favorable asset sensitivity rates. a receive continue pricing portfolio to X. Slide steepens to We into with from moderate delivered sequentially adjusted which Referring to and up in benefit partially offset curve results. is our swap further as execution. improvement maintaining from expect XX%, given We while in lock agency modest meaningful to short-term the broadly volume, channels, Diving adding this the and Mortgage million linked industry quarter, level and trends. Markets results fees and across and fee production with was benefited sale about of lower in Wealth. revenue income diversity quarter, decline this solid in results rebounded fee as was fees fees, strong $XX performance, down gain demonstrating strength This by our in hedge $XX in Capital benefiting million

expected, the shift $X quarter. contribution originations, MSR higher amortization. XX% reflecting from to increased about linked total million decreased quarter operations in servicing see which second towards a third As of the quarter, The to in XX% continue we purchase from about

$XX Our up X% book quarter billion, third-party linked grew to and servicing X% year-over-year.

Lastly, unusually fees. levels, record negative million an our in given Capital QX. large linked from syndication Markets were results quarter $XX MSR particularly hedging improved result in a bit reflecting down seasonality,

fourth However, pipeline reflecting into quarter is higher and heading continuing were in Wealth the exceptionally from record levels, net to build inflows. strong. up fees management assets under on an slightly, fees M&A increase advisory were our

costs. debit pre-pandemic very we continue access points though see coming challenges for payoff linked as as elevated fees expense largely supporting and up saw which gradual This and Slide levels the were the of recovery as Moving XX strengthening exceed On continue largely efficiency X, in fees, real on Retail lending and economy payouts. mortgage, were in X%, positive We the environment. PPP. noteworthy controlled, markets. contributors. of near with spend, our growing, The quarter such auto higher estate, loans to were chain and favorable investments activity. charges reflects labor to underlying We and benefited continued Commercial issues activity, to X%, loans improvements quarter, of capital the foresee travel other X% holding up benefit discipline still PPP PPP. spot and drivers up deal-related Strength produced were operating the PPP. resolve in loans quarter X% in loans are X% Average excluding had on by activity diversity companies were up excluding a but still a has up a business excluding which as record Period-end in high another quarter bit and quarter origination or debt around basis commercial part was excluding offset Slide up down in X% line linked asset-backed loans to and card operational back utilization initiatives historic well commercial credit card themselves. shortages a strong supply Line and offset retail conditions some lows. from quarters into lending seen fee service led of good commercial was X up Diving X%, subscription education. more. We financing expenses levels. origination transactions robust tough X% by

deposits addition, will Overall picks period-end In low-cost the XX, for fourth in to for especially soft around of quarter. road growth deposit once up provides strong. growth ex-PPP in make On benefit X% commitments robust, the were broadly momentum year-over-year with our which quarter X% categories. loan ratios be in and linked Slide which and remain the the us continue demand underlying and X%, was up deposits categories, down by flows investment good up. Interest-bearing loan liquidity now are total Average XX% low-cost deposits strong of offset term quarter deposits, up as growth X% in stable our deposits in deposits. decline were demand demand

continue on basis total basis X We make to during good costs points deposit quarter deposit X XX points deposit costs opportunity basis down with down to points. with points further. to basis Interest-bearing to the were X progress reduce re-pricing,

quarter. XX decreased by basis Nonaccrual XX, credit X% on improvements Moving on we quarter. third loans XX quarter, points points and from portfolio. charge-offs Net XX the for excellent driven to the saw this Slide basis to credit linked dropped across results

the strong improving of X.XX% second ex-PPP, Given the performance decreased, outlook portfolio, with X.XX% at and quarter ending at reserves quarter. of compared the end the our the

excellent maintained Moving sheet to we XX, strength. Slide balance

slide. Our CETX our is capital capital dividends of stock the program XX.X% to our stable $XXX pending after listed shareholders priorities the the repurchase at in returning the in ratio We million quarter This through of at top the third quarter. November end estimated paused to on remained The shareholder Board pending vote of capacity closing XX. CETX of on current vote, remaining the scheduled cap. with investor have the along the under $XXX we our impacts the with resume repurchases acquisitions for are our After million targeted opportunity slide, the authorization. at

things our Company I exciting that XX. happening highlight Slide let XQ me on outlook, across some Before to the are on move

Everything stages. will on targeted Our TOP track, achieve and final we results. is program is X in its our

funding the are X to TOP strategic more the a driving operating programs this We of our leverage, follow to our financial in have achieving of medium-term TOP launch with positive for in which and targets. details been later year. key initiatives preparing These are program critical

digital us An direct that improving changes and promoting by excited pandemic. rapidly coming focus say reducing energy projects the channels, launched new companies the moving of behavioral we've program ESG very clients are for to to of to front, the to high positive a allow more I'm and deposits reserves that expected out greenhouse which On seen we towards efficiency, material has given green sustainability gases. to impact cash we've generate corporate been area their a and accelerated

Slide see You are Digital can of up XX%, number up XX%. XX. users sales, the Zelle transactions active are sales on Mobile book and some year-over-year of for are up the XX%. example,

our through enhance will continue will to by of end of the end this continue all And digital directly capabilities. by nearly include We X/X the And branches XXXX, to perform towards advice-based leverage model. be year, us provides This the transactions able all strong app. this of about an mobile to transactions. our with repositioning consumers

to Moving Slide XX.

helping providing feature rate impact deposit avoid make we of to fees. more We fees their of seems to to banking of banking new and better transparent to come ability a that part customers the to ongoing avoid our with return to communities The overdraft historical a fund Peace way access feature a alert designed including period account. to withdrawals the overdraft efforts to and to monitor over-drafting their our forgo announced overdraft capabilities financial lives, navigate ensure new with commitment accessible, unnecessary Mind, have As be will initiatives customers the and to and Citizens policy customers services. underserved introduced help a levels. overdraft recently financial several will to This new

XXXX are Slide around annualized charges The the to You year-to-date XXXX side benefits service on fees can expect of and these stabilize trend XX. right of changes shown levels.

attrition lower to time. revenues costs satisfaction, over the operational expect offset lower higher overdraft and foregone We

some meet serving standards. to affordable designed Lastly, outlook to ensure we and These new bank bank on for transactional has the a communities, will under on also on the no account introduction of XX. account with announced new including fees overdraft high-level commitment a features And national now account. access the commentary transparent, that checking everyone easy-to-use, and a Slide are to that

with NII to stable NII X% X% quarter we quarter up are a the to benefit into expect overall ex-PPP. to in around the positioned growth fourth quarter. lower pull be importantly, the expected be We to average see accelerate to X% and is from forward due up loan X.X% around in growth giving around impacts. loan well Most X% or PPP forgiveness broadly ex-PPP down up third loans or soft to slightly, ex-PPP fourth X.X% to X% the

is that, the be to margins we end are will middle broadly seasonal year. is well loan and expect I'll With than I is from continued to XX, given excludes We deal-related expect up with auto. of quarter, efficiency lower is Citizens subscription to strength the some the be income for in lending. exceptional To of activity our back close of we from PPP which as fourth and the targeting industry to in the in Bruce. heading this net us quarter. be XXXX it charge-offs. momentum be the strong commercial, on good as excess provision add well a acquisition, in that fourth some to Noninterest Fee quarter retail mortgage, guidance expected led into benefiting expense on JMP with And a by in charge-offs stable to as the Slide over for the wrap broadly initiatives. given stable this runoff. And hand impact should stable expected offset net expense mortgage in broadly see Markets decline offset expected pressure real capacity Capital strength we impact pipelines. expected education expect across positions by and This the growth supporting line growth financing, asset-backed helps

Bruce Van Saun

let's you, up right. it All to John. Q&A, open please. Thank Alan,

Operator

our Instructions] [Operator the first will be Piper Please go question ahead. go of We'll from Sandler. that Siefers with to line Scott

Scott Siefers

swaps could hoping you hoping the specifically targeting? specifically you've particular. about that sensitivity something sensitivity, more was adding and asset Let's on is should to see. John, other that? I talk with you be balance of is we're sort guess color on your a maybe between book there thinking what's that what In rates? we words, was in little been provide maintaining to. going your about higher I adding the how Or swap could I preferred that new

John Woods

Yes.

big start here. that mentioned, in of cycle think kind to I as good in seen this mean I picture sort I've layering Just opportunities of steepening we've, start some swaps broadly. new to

so the I at sensitivity the third about may asset down to As of X.X% have or quarter. mentioned, our end is

would the something across be that not that we've done October, the cycle to billion or likelihood, get $XX low only sensitivity tightening so in there, sorry, -- in billion order but hedging which would to may another that get us to to through would cycle. single try down low migrate of be come, near to we about will get the asset migrate tightening As digits. to in to XXXX we that all third a entire we date, in top require $XX the And require the expect single-digit when

thing offer The also acquisitions HSBC I'll sensitivity that also and other to of will offset. as is $X.X $X to billion ISBC that billion up and will require add the another

opportunities, good over which our as to picture, to we as that to short-term yield exposure to average And curve time. philosophy to is steepens, cost rates, we we'll continue have dollar to the big short-term majority maintain asset rates. So sensitivity our of is and monetize the see continue upside that attractive into

Scott Siefers

just little, deposit growth any your you you're appreciate that switching customers? retail between I your was that. in I hoping Perfect. seeing and commercial trends gears Okay. about a differences then And talk could

John Woods

ahead commercial strong highlight. growth both go both on and up Don think and we're they in And we'll growth flows positive Yes. to driven the and third I both but I'll anything. quarter, let was that want average uptake Brendan still mean offer primarily seeing maybe just sides. consumer X%. see quarter, of and deposit We're it in seeing in and the by I good we're had if spot to But and I and on we commercial, to maybe think seeing add Brendan Don

Don McCree

commercial I seeing flow, think down. to that the that's right fact deposit we're side, notwithstanding pricing we're of on trying a lot push still the

but year. So $X still see bit we surge as into a $X little we billion, or go deposits, billion of running off have we probably next

to continue deposits So we into 'XX. strong well think be

Brendan Coughlin

consumer trends and similar very deposits have up been consumer Yes, sticky despite been picking around. the spending have noninterest-bearing on activity The deposits the side. hanging

And the elevated deposits, to the stimulus so they're pockets. we're the They spent. balances still seeing were bit around surge a round were with generally and down pay and second third or more the saved that with not debt, customers' hanging used

interest-bearing rundown and basic of some with with seeing it's low-cost replaced products deposits the low generally side, interest-bearing a CDs. On we're savings like and CDs

cost So to X to in funds funds that's of points the allowing consumer gear all of now. cost down, sub continue basis

sticky. levels at still kind we're So of deposits and the seeing basement very, very

John Woods

that any And one that given relatively stays to deposits potential organic suspect around with the to deposits. of thing COVID-related hasten offsets search time, of over most marginal growth we deposits of the stable and stay some add runoff

a So, sign. that's good

Bruce Van Saun

deposits. point it's the add, demand are last of XX% total deposits now one would to about The be Bruce,

a consumer that affluent side focused on the where So, commercial base. funding really And on that's we've our and total been in had growing the an mass percentage good trying success to some side. of as effort we've raise

we about where feel sits. so, And that really good

Operator

Matt Go Bank. with ahead to next please. Deutsche O'Connor We'll go

Matt O'Connor

about kind of yesterday of new was pressure if where come kind wondering what's I as one re-pricing? especially about in continued peers loans on there versus rolling commercial, of And bit talk pricing on you I talked guess, have trends. a could your off loan

Don McCree

Matt, It but it's Why on don't little holding not -- we're material. up the We're transaction, deterioration, of it's pretty type Don. of well. that, depends seeing a bit but I Yes. take

We're So it stay trying our disciplined. nicely. in NIM you our NIM, holding see is up to

bit. -- see approach changed we where haven't So things our one we

of is spread overall loan look of on at we return which it. relationships a So piece

to on see spread a But we're if a loan. loan fee So we yield other just we'll business, to don't the book loan. chase bit little fee attached we to if that business compromise going not see

Brendan Coughlin

strong. there's cycle We've mildly book, Yes, there's auto keeping tend elevated returns this that say discipline particular. there's in similar than able or rate intensity got fintechs book And the one where book, of growth in front returns spots involved, asset front particularly two some expanded. and But a we to to to consumer. we're discipline back in book sure still in higher is our I'd very, or see state we're some are like returns, seeing our get little good are I'd the yield you driving see bit in on priced adequate putting yield student competition we're of and runoff whether point it's at are we on we're making the would where the or still sale classes very numbers. spreads balance, on. given that lending challenges to our about curve up a what and as support back feel ROTCE. can But what make say our

Matt O'Connor

taken And you forward? offset about any is loans, you're like it sounds or I together, guess, that the like think going margin pricing to confident pressure enough growing volume as

Brendan Coughlin

Yes.

of now of that you in us loan environment to also growth. to our about be elevated And an I when last On pace do, levels cash. continuing moderately sort the side, I able customers flushed growth with our think the deposits in are question around accelerate mind consumer see keep where

down, right starts up need of cash. draw that loan sitting now, as expect to to more pick they're where a as growth on more So we consumers even leverage lot

for good really the about medium feel we growth term loan prospects. So

Don McCree

new numbers strong, and but side, on we're loan side, the faster markets growing commitment clients we're we our highlight than And on our the XX% quarter-on-quarter side, into loan the XX% XX%, into John our loan book seeing pipelines mentioned, then that in the -- XX%, good fourth particular, are but on benefit go we're book. markets expansion as and not had very only as our don't quarter. we another add why I from the adding on that up the commercial as pace then to We've a the got capital

be begins utilization it to pick off as up So, commitment picking larger a will book. up,

that So today. as feels sit reasonably we good all here

Operator

next move please. RBC. line with to Go Gerard Cassidy We'll the ahead of

Gerard Cassidy

interest going XX to can environment by Can John, And we you the basis most rates back that kind the swap rising basis with you today? share on, of asset the your rate from short-term what up by the the as benefit points. come work of points will long-term sensitivity put second, didn't XXX that? you portfolio. balance us you've of part with meaning, rates have put or through then swap Can what that question, would you if on, sheet been book book

John Woods

with just I'll mean We're to the short end. level. exposed more the high than I long end Yes. curve the hit that a

-- about it's and migrate through pretty asset, frankly short long as So the the to we rising, XX-XX cycle.

portion will So, net our will when that rate and really margins That's Fed the interest drive of an begins. us lift-off C&I the NII book environment environment other that work upward the un-hedged floating exposures we that have. is well for given and

million favorable of plays point or for $XX about out And that basis the well give that, that the rise drives how a us. you you work still NII end would our for most environment so remains of a sense on So for did short just math on us. XX sort

helps quantify that of comes you the what -- kind So from. where benefit were

where There's do but up, risk mid-teens to as go And up, go is. low the in not be would they to we continue rates can really it's we appetite continuing sensitivity, go well. and hedge. without hope asset to our they down of can terms In

kind that exposure asset that we but And so downside not there's we're a profile only out. also there the to our cognizant and is we're with of when taking table we're the average preserve over risk sensitivity, swap cost attempting that, of off there time, dollar

Gerard Cassidy

then you metrics. Very good you good. digital data then look was digital I great your users? channel? what are Slide XX digital on percentage sales, the as mobile active you sales John, at active at us users, through when coming gave And year-over-year, book curious, when your are follow-up, mobile on your your of percentage look households that what of growth And a now some second,

Brendan Coughlin

look users Brendan. at I'd customers' XX% over digital. customer the on question. of Great incredibly have digitally we relationship, are when is lot It's We say, the engaged. a our digital Yes. different active primary of base high. It's metrics

good So, we feel foundation. about that

moving just in general are banking from efforts mobile. active way full-service transactional much on to a done everyday more Our now

play also, as you more really at customer the we dynamic know, them a for can for of got if top It's metrics customers we acquisition and hugely the we including these go across that there's growth. the center in branches digital. more lot nudge of and the and with branches pivot which we've engaged, can cost the underway So here and to a Company, efforts with engaged can our the get communicate then get our advice but funnel up, efforts us to back driving reinvest are in call retentive customers,

we and looking So, trends forward. upside here lot about mobile feel the of I in really see good a

Bruce Van Saun

of digital Percentage sales.

Brendan Coughlin

rapidly very it's Sorry, different growing, percentage of digital sales. it's Yes, by category. category and a

you'll more it's in to it see in XX% rate and deposits, things XX% in our whereas principally XX% to and was XX% years first, digital, range. the of range, of ago, businesses a student something XX% two like are digital DDA but Some the lending growing like

products still value some source acquisition, seeing for active is basic there's into play. of we're channel upticks. the largest coming branch So, deposit but customer The

Operator

please. question, ahead next Go Usdin of our line Jefferies. with we'll to go Ken the For

Ken Usdin

some had rate side end sensitivity, you've about book of to you period wanting versus the securities that previously see at keep securities average. the talked on of around John, earning mid-teens the other assets, added I and

to continuing excess And do in want environment, your the about to what changed for appetite swaps to Given already where of you've what's on you want of go? what vis-à-vis in what cash any we're book? book thoughts into you terms seeing that securities the the talked move and some

John Woods

Yes. Yes, I appreciate the question.

is could I into want bit, tick a to commercial a that's One mid-teens twofold. of the to really preference may still change we're consumer as that that our excess in we loan the that at percentage up our growth is but assets, deploy you and for of of lending, assets. relates is which think our plans off put that's given for think which there's -- cash. little when really a you a we but our book opportunities, reason that I that lift rise, where bit, prefer And interest-earning to look from is opportunities, that percentage seeing would securities really, see to any not around It starting diversity or of in total liquidity the the large that loan mode our it thereabouts. a securities interest-earning to

so And that in the the for term plan in would that what that's near head direction. be to

of on. other more think we risk to efficient have that with can bit securities rate that swaps. hedging, I is a also the the off that double do sheet books balance We it's the duty just with aspect view it a think

that's the average space. in is plan so still cost And to that dollar over time

Ken Usdin

what as in runs down? the basis you set sequentially. was expect being a deck, talked And on Got how point in And NII? level X PPP NII, Can just John, about you us it. trail the the PPP program that out slide increase on you to just much

John Woods

would $XX out. contribution fourth Yes. picture going there But same the be I million you've a way got versus had mean, the PPP in to half, -- that I I million the about from has we've the That been sense think increase throughout third really about a that all to is is the coming year, and quarter that's and playing first quarter was I mean, big PPP that quarter. talk second $XX half the in second NII.

it's how we hasten that see. seeing of would about to the and really third the I terms that really PPP to and that's the to XQ million is play to from XQ $XX then all million the because up fourth PPP. we're XQ that's ex-PPP, So that forward $XX going add out -- increase X% ex-PPP ex-PPP. from XQ on to in XQ, really, decrease NII growth But think of in a and And XQ we're from quarter, good NII pull mentioned in quarter I

So stable downdraft getting of PPP slightly. our to down a fact that is given offset is guide that really only lot the

Bruce Van Saun

been nice as something add earning reduce, add just an analysts us investors of but impact it on for that they very would been issue impact they view I what's quickly always have an to would would and this of off eventually asset has of these would interest -- transitory I XXXX, much start not for PPP. just Ken, for like were that We and that was then 'XX. the and fall great

in the all position was in PPP the particular, So running enough the And first loan offset we to soft had loans, substitute basically and can loans half develop the mission loan we off. for think and consumer core we with are growth what that future QX real any we'll to impacts expecting QX, in good accomplished in to of it be 'XX. that we're as relates growth

Ken Usdin

have quick I in the -- other against How Bruce weighing And John running know from what's there, Pay one Citizens the you is that growing much, one retail, just because and that? but Absolutely. in. presumably still off

Bruce Van Saun

What's it's that run two ago down against ran personal hit that we've era stop when originations. up years and decided new best portfolio then unsecured Yes. and is to back the about weighing the that COVID

a bit in little card. bit Pay nice of which deadweight in numbers. rebounding a area growth in have some exact the we've been Brendan, of masks that's seeing the little that may you we're a the the Citizens unsecured had So and

So what's left that point. of at this

Brendan Coughlin

and $XXX mode marine about all a run one is rate. book personal The rundown of is personal really a biggest about drag other the on and for RV our been the $XXX quarter-on-quarter well of have the left it's little loan million It's million-ish years Longer book, to that's built growth Yes. shy loan book. duration as us drag over that in fits is of

So $XXX or million so.

Operator

We go please. ahead to Pancari will with Evercore next ISI. Go John

John Pancari

is broaden, comment line to that you and to you could utilization that of the expect where expected as on line more you know increase strength I maybe in the bit Or that the on I the do on areas M&A recovery the a you areas and what you continue to bps you taking you subscription if mentioned little that on hold? see ABL, in Also know gradual indicated areas? finance, expect Can utilization, front, the build? the rebound loan XX momentum just expected. elaborate

John Woods

office that I seeing Yes. maybe well. in -- uptake I'll think in will in looking will growth. areas seeing asset-backed activity mentioned CRE we're continued an the make see forward a space and is, space is securitizations into that mean few as area in due strength we I with the some is that. Don a my finance, good I and comments, we're of remarks, the as where elaborate that we've commercial industrial on in M&A part place seen line Subscription continuing. to

well. commitments point starting to even think really two related growth there's still so very now and to that's a rising. are even I provides a if of bit we're as are contribute I if seeing still a if off, lift points about sectors contribution. to mean, And doesn't handful So utilization up, then next And just C&I some loan utilization, that. driving it, that creates commitments up utilization are levels And overall the tiny that positive your

You've couple energy, utilization over broad-based. seeing just of And It's a small construction, we're increases is to manufacturing or it maybe of number small and but broad-based somewhat increase, sectors turn in any... areas. Don the it somewhat got a for where

Don McCree

think I covered. of kind you

utilization. terms is book, think bit of I our John, little in of of we beginnings that middle the C&I core news, daylight are seeing the in market and good a

issue remarks, As is companies. and the John restraining chain the of some said labor the in the supply opening clearly, performance

is really year. lines financial strong as the the where oriented, core sits strong to The into last some have problems. capital we're supply in some get the stuff they're chain they markets if up are C&I -- now to be we ABS going But been quarter be beginning them their So, which couple of performing -- we have utilization. into didn't they would fourth and to and and to of next continue than months, see better even expect we subscription year, all

a combination of kind So of would see...

Bruce Van Saun

Probably market is where seeing line also -- for you hit on the on you're that utilization point, companies... middle take-up bigger the

John Woods

access Companies to that markets. don't capital have

So to given the the growth market capital on strength loan going downs is pay the the that challenge markets. people had are capital we've because of predominantly

really, is they're bit are cash They of their market middle really table. to just to see see little And on beginning some to light end companies to the CEO at really, COVID quicker margin. their part a beginning wane, companies. the confidence, the down begin grow at frankly. So squeezed And really of it the begin as they

John Pancari

it. Got Good. Yes.

I to capital there. line a times, then talk how maybe pipeline on mentioned you're And about should at look budgeting? that can remind business, know assume the top solid falls business, we how Okay. a very, you XXXX in really very us line separately, us you're bottom you then thinking much you as the line builds? that And few you particularly markets Can as deal to when that the also, about that momentum

Don McCree

may continue keying year. we get and as But here M&A a optimistic and it's go side on off to sitting was into year. a and banner think strong tax changes, markets this midyear I pipelines more I the that potential about very think our capital build, to we we to continue saying, going There's be lot is next both side. 'XX be more 'XX. really maybe the wow, of on

you've think a very a is going where relatively and have 'XX. very strong very, you're backdrop environment you're you're low that's I going interest got rates, strong high to general going my have and relatively have for an liquidity, economy, view to to

we've is yet our 'XX. don't One much on, going is of things got get eye how to we know the pulled just that into

the So be to get to we're pipelines first to quarter have maybe going in going. rebuilding

people, different is overall year that it pay may finance say to at the bankers. lot really the I'd I have lending comp my we marginal And our of don't it don't don't but have people. than I that. And We the quarter, balance is We I contribution way until efficiency We pay a -- And but quarter good, first we're... lower see remember, It's -- blends to M&A know tip number So is. of because people. what kind ratio together. payouts see wait higher, at fingers. a markets fourth pay upswing, you look of business we'll We the so of all and actually the pay actually the pretty I capital the pay people. corporate are

Bruce Van Saun

XX%.

Don McCree

Yes.

a out to ratio, bottom with the it washes line. XX% efficiency So

Bruce Van Saun

to very levels attractive secular capital financing to see to some pools work money Yes. trends. And We see and put we an leverage I would just private add, are too, equity these costs looking that and of gain growing low. opportunity

sell of JMP, trends including the get And what why broader boutique some be to intermediary those we can will them on in And of take money capabilities, we putting market flows an with to hell-bent done in want want if one and M&A those our work. price. companies to to middle we're So a continue. we've the themselves, good assembling market acquisitions reasons of

increasingly the have product the capabilities. base. got we've So, customer We

reason in so itself. optimism And of for on that's

'XX. continue out a we think synergies into lot as I look we'll of to gain

Don McCree

thing last the I'd the puzzle, on it's with only piece the And coming to Yes. of add that, really. board, Bruce, is JMP

capabilities whatever have diversity terms do to in We've they need got help product a sets. full do. to of only not our do service we So clients nice

and and and of good us markets benefit So, debt equities the vice it let benefit will markets are versa. the or kind when

Bruce Van Saun

Yes.

Operator

Instructions] to moment. Poonawala queue. next to seem go, Bank of line, [Operator lost We'll your if have we took Ebrahim of one yourself go your America. There with you Ebrahim, we out

ahead Your line is open. Go please.

Ebrahim Poonawala

those Just One, for close there? see any look where may risk still delay forma look of a any as as closings, HSBC a the sheets we assets, the And quick follow-ups. I closing guess, for deal? impact couple of of balance we're you through could one, track on that we remind think transactions. for those Are deal results I as we any pro us, XQ runoff there aspects

John Woods

John. I'll go Ebrahim, start. it's ahead and

expectation to a a first is the We're that. deep on on track. sort It's very the close of and quarter, expectation the much both for close mid HSBC So, preparations that's into conversion a... for and

Bruce Van Saun

And you have the approval regulatory

John Woods

have we exactly. the And --

have We that transaction. approvals in regulatory on hand

those overall at we transaction, when is one think but vote approvals 'XX, in allocation that November one look got ISBC that. I scheduled just legal other larger which an and of But pending shareholder monitoring close the that approvals big for it. in regulatory a was the XQ. So you is that keep -- strategic to early is pending, looking expected. nevertheless, have we've sometime and that for as we and separate are capital, expectation entity XX, in that on the target that's we'll and receive The opportunity And the we exactly

way we've the but relates of we're think profile front of all to have is book particular, because the than it different capabilities the it But that described I the have runoff. back not would businesses, table. we're runoff, activities investors the bringing with continue As to sort book, in would a expecting we those that to

ahead. off or And that expecting we'll so, we we're year down loan us runoff, given that profile, more book not expecting to to the any different C&I platform but be the line, have and two as a have are you have to more generate look lending a able consumer meaningful

Bruce Van Saun

points would there, I just of couple a John. add

HSBC, price on off, comes tied the is First to what over.

we if And the runoff, terms what try So premium shock would we diligently is is when very there comes quarter just JMP, we're it pay. have to working get secondly, closed ultimate in that to absorber that mid-fourth of to a any here. there

QX, in we here course. which So results six should to weeks, have of four be in accretive, the would say,

Ebrahim Poonawala

helpful. question. just separate one That's And

terms you cetera? the think time the banks Pay, about of in put in in business on a growth enabling payments there such with of some think be et to all I is understand should now payments, a XX% of Zelle, pay yourself you're doing about in-store terms think? the buy And Zelle later. players in do you When You you lot more shots what you that the Citizen of you spend stat don't in tech compete doing Zelle, as with in call Zelle more and

Brendan Coughlin

the something including sits built above been have think own on direct it's adequate. payments, control Brendan. UI needs that that's it's Pay with be of the around rails Zelle, the think I it's purchasing the industry layer of the would Zelle that the Zelle are Look, kind And take Citizens I for whether more with our Yes, pure Citizens to whether rails experience, innovate facilitated a customer and or platform. merchant, which

experience, big world similar you of making bit. something those you're see in both from we're a those where it's So, buying And converge capabilities whether can a little a whether so But think environments investments dramatic I think in or money don't you're merchant anything sending a that's Zelle needs innovate. the think rails are do possible. particular, I friend, I necessarily to adequate. to a

to around and And I that that's UI our scale make numbers, as engagement up can we engaged. can happening. more do get for what layer we things more see in further customers it's think the customers increase continue easier you to to want to deeper

Bruce Van Saun

It's differentiate can the use we on focusing and ourselves. just cases where

And decision-making so we've payments growth. will that future there things in sure and drive investing got consumer essential our make really that drive effort enterprise to that's we're commercial between and capability really coordinating

Operator

we question, our will go Go to Juneja. next of please. And ahead the for line Vivek

Vivek Juneja

PPP heard make numbers I maybe about The it look from X that and mentioned given the a seems to points, to you change not of equate XQ. $XX XX. might you've at if to -- but Just terms and easier the basis I XQ million since in clarification. that

numbers So when to I'm there missing that? what am what it do trying I just was it the I understand as give we said, XQ? is easier mean to and I XQ

Bruce Van Saun

denominator is that delta. numerator XX and a the that did numbers effect there's Yes, X points we the a reason shows Vivek. give is it effect, it that And a on basis the

So affects loans off, the running you denominator. have which

So impact. it really doubles the

and have be about having balances four to NII from three basis X and pickup down for loan you get forgiven. then the the run probably You points

Vivek Juneja

That's roll-off roll-on further? it. -- that Can is are how Bruce. going? you In color some you where on and how helpful, securities that the much us stands Got the give yields,

John Woods

think But I quarter. around to or has points think has quarters. not several fourth for in back is with premium the It's which mean, I I now been has which you've And basis a gone amortization, been book, a sure. and turn stabilize that got pure frankly, Yes, so drag. book, dynamic while about by XX there we've negative a falling. front securities to start also had yields for only the the been And so. however, back our outlook,

in will I of it'll XX front book at will see yields the to time, and premium positive points. XQ. think -- amortization large a to back something to the as neighborhood in the slow rise, in narrow, But it, seeing front we net call degree, the pure rates basis the provide we're securities also start same will fall also some that -- book,

Bruce Van Saun

point -- Vivek. really an inflection there, yes, about So it's we're at

book, with headwind turn see be that in being you reduced curve, now back steeper of a three tailwind going as quarters John when the to indicated, the a we're to front amortization, for first that factor from year. book So

Vivek Juneja

Okay. If more. may, one I

obviously, growth Pay, Citizens Is you've see, hard portfolio. a The recognize although signed the of us are runoff of terms Citizens you combined other in number related? but I there muddied? talking loans Pay doesn't up What it's so great, partners, because look lot the by some give overcast retail, numbers those that you've been can about the you seeing it's because to in

Brendan Coughlin

Yes. has pretty The growth in been substantial. Citizens stay

is life with merchants things lot a a year-over-year on work online, -- now So of pilot got We've takes we for see had them kind it They've bring of they ramp. with them, to market bringing half and the to we back accelerate. around clients, pay balances, come their year and that new in customers. continue activity buy of XX% things later them to while to to up to on all this these we

it's bit ramp-up a period. So of a

that happen beyond that through continue and XXXX the to this And so, need leading can scale to all to activities there. have confidence are

So, good capabilities new Pay out of Citizens a well. in it's within technical We're direction. building feel headed proposition pretty as that lot right we that's value broadening our the

very good, healthy So, underlying growth. very,

Bruce Van Saun

It could or the releases. and whole in for light probably shed conference unsecured some a more question. a sounds presentation that at be in we that future area Thanks for little like general Kristin, transparent our Yes.

Operator

go back are Bruce Mr. [Operator turn Instructions] that, no Van Saun. queue. in questions Please further There to With I'll ahead. it over

Bruce Van Saun

very All you right. Thank much.

always your appreciate for day. Thanks. great Have stay a support. and dialing Everybody, folks, in We today. interest thanks, well. So

Operator

you for gentlemen, your and Thank conference you will your conclude that and today. now may call disconnect. participation Ladies for

Citizens Financial (CFG) 20 Oct 212021 Q3 Earnings call transcript