CFG - Earnings call transcript Q1 2024 | Citizens Financial Group, Inc.

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Operator

Good morning, everyone, and welcome to Citizens Financial Group First Quarter 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.

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

Kristin Silberberg

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

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

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

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

measures, GAAP review financial the important also appendix. in of X reference results Page and so our the presentation reconciliations the non-GAAP to it's on We

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

Bruce Van Saun

joining pleased a Thank Thanks Good today. for everyone. with year call the were you, morning, solid start our We Kristen. quarter. to

to for play now allowance a our our XX%, defense environment XX.X%. of reserves and LDR at at general of with an CETX XXX% office ratio uncertain loss XX.X%, continue ratio loan We through strong

still . our modest sequential X.XX%. flat. seeing we in NII by decline capital though led quarter, On P&L, picked up the and card NIM were expenses are at stable X% was a Fees by markets and

during the we in are rundown. trends as line with of expectations. quarter credit shares $XXX up Our our repurchased capital We free noncore from million

with the the of QX for year. our remain and expectations guide full at consistent Our year outset

end. good start, Bank Private progress. deposits a are reaching at to initiatives in strategic Our good off The making $X.X billion quarter is

year. over of the accelerate the We expect to further momentum course

wealth building in We out further imminent several management also investment are team lift-outs. on through focused plus Clarfeld private

continues and initiative well Promoter of of growth any strong City the go really our Our New regions with fastest Metro Net to York Scores.

over verticals X has private program middle is of we position build great growth year. while put pickup in muted. rate self-fund to allowing to course growth growth and of our us a And further investments serving the which benefit capital expense commercial key expect the bank Our keeping being activity, well, to the from in the overall market us focus deal executed our in TOP

While over the are as the there challenges uncertainties a are still in well positive environment, and external a the medium feel many the arise, of we may to balance position year term. for we as maintain Citizens navigate that outlook we good in the

of decade, a past transformation we undertaken have Citizens. major Over the

and franchise. are and Consumer Commercial to we Banking Our bank for positioned looking build and private owned bank wealth segments success, premier are the now

risk-adjusted sheet Our exceptionally we strong and better been more has balance selectively deploying capital returns. with to profile, liquidity achieve loan and our are an capital repositioned funding

base tightly offering to clearly, times expense Our further With potential for over with has it for breakthroughs. the AI managed Lots to accomplished that, do, exciting with me been turn let John. Citizens. more

John Woods

good Bruce, Thanks, everyone. and morning,

off As a start. the year is Bruce mentioned, to good

performance an and improvement to a solid capital stability backdrop largely environment, supported margin in our constructive results against were quarter of expected. macro that First out markets, which as credit the in play more continues

and levels strong to of credit capital peer a We sheet a . either excellent group, with position. top maintain our continue reserve liquidity balance healthy

of against multiyear our our including this private well strategic positions execute initiatives, bank. to us build-out Importantly, the

'XX. improvement start to expected the the last million Slides we our in from revenues EPS before a quarter results, breakeven progress is income includes generated from Let our We quarter to Bank, first Private we impact negative of highlights $X.XX. first details. referencing discuss $XXX X I for financial underlying of of This and quarter as some and pick me start the with which $X.XX see XH significant net to impact up $X.XX a X the

It a also $X.XX contributed impact. negative the portfolio, the moves impact noncore which of

results, running drag noncore sizable currently it is a forward. steadily While off, is for creating portfolio our to performance a going tailwind

notable FDIC other consists efficiency-related an primarily special $X.XX, adjustment of top Our to and the and this which assessment expenses. were items quarter

ROCE Excluding quarter these notable was items, our for underlying the XX.X%.

at of we adjusted or opt-out [indiscernible] our CETX and priority with defense quarter list, removal. ended remains the balance with at a sheet AOCI XX.X% the very strong top X.X% the position. for

and We profile also to our quarter. improvements first to make liquidity the funding continue meaningful in

quarter. excess prior XXX%, XX% the XXX% from which the of bank to large in pro X our to forma Our is and period-end in requirement XX% category of LCR improved strengthened well LDR

On billion FHLB a modest about the $X billion. to period-end we reduced funding borrowings $X.X by our front, linked quarter

our our also and of successful to week. tightest another funding issuance $X.X have the senior $X.XX auto base issuance another increased billion issuance a This quarter. is collateralized auto date. very And billion spreads executed We expected $X was billion at we structural to and fourth credit during this it with issuance, settle backed our

NCOs to unsecured more be issuer expect debt of quarter. XX we with with in addition, going been senior at in our points a basis have first trends coming the Credit expectations, forward. In line programmatic performing for

in ratio X.XX% points up for the prior is coverage X coverage of XX.X% from general office, slightly basis a up includes from quarter. ACL year-end. Our This XX.X%

expected medium range to We of term that are the a tailwinds NIM well X.X%. X.XX% positioned to for support with

is Bank the well. initiatives, strategic doing Private very Regarding

We York in nicely. continue inroads and New progressing Metro is our latest top the make to program

our in capital In addition, business an with improving continue synergies we to investments levels environment from from poised capitalize the and pick as our activity positioning are us markets benefit acquisitions to up. to

net more X. quarter detail, Slide first the interest in through talk starting with I'll Next, on income results

a down decrease is assets day-count. margin lower X% reflecting average a interest-earning given on quarter, balances loan stable and linked X% in NII expected, As

NIM yields combined see benefit day swaps. of at can were funding our the count slide, and the higher offset from of the flat the and was As higher at noncore the you walk X.XX% runoff asset and costs of impact by as bottom margin

peers. see rate of Overall, impact beta in our remains slowing. And we is deposit the the interest-bearing deposit low continue XX%. the cumulative at our performed deposit our expected, with well migration, XXs beta migration franchise has As to generally although

X. Slide to Moving

given up a Our and in bond notable results. capital were The and quarter card improvement X% in capital underwriting M&A in pickup results. nice good activity fees a markets strong markets reflects improvement linked

top business Capital X market book sponsor spot. holds consistently Markets and achieved Our #X the middle the we renter quarter, position this

deal and refinancing market. Our to continue positive bond momentum see strong quarter pipelines the with capital markets remain continuing strong, this in we in activity early

a benefit In a had by increase, driven our cards Mastercard. conversion primarily to of card, of we credit strategic debit and nice the

and decline in business driven partially down The production a mortgage by quarter hedging of MSR this client in improved fees lower in a was with lot stable. P&L, offset net banking as bit fees was and a Our modest commodities while volumes servicing from by decline hedging higher margin the lower benefit were activity FX. valuation

nice expenses, we which were job X, a managing stable. Slide did our underlying On

environment, by approach noncore our loans, portfolio highly commercial to are XX, continue lower lower self-fund quarter. our period returning relationships. which runoff execute average X% down This will loan end capacity in the and and We on credit-only lending generally of was a gives decline selective client to with exits along this initiatives. and given On to loans us driven program, TOP linked Slide our in demand, growth paydowns

in continued was uncertain quarter of cautious market the line environment. Commercial to an this decline as remain face clients and utilization limited M&A activity

largely we Year-on-year XX, expected by deposits growth private in retail growth and XX offset Slides billion up linked driven continue were end commercial period-end and bank. given to in were impacts down $X.X in deposits. on bank do and seasonal the slightly branch Period the deposits. private well by in retail Next, deposits quarter

well were which up costs deposit controlled, a XX% basis points, cumulative translates to interest-bearing Our X beta.

cost franchise approximately is XX% are stable are About channels. insured in of and the higher deposits secured. attractive effectively manage deposits rate us efficiently our and to base deposit of highly mix our has our product overall Our deposits consumer environment. or This diversified across allowed deposit granular, XX% deposits and

With the deposits of we holding categories contribution deposits attractive to total And Fed with of steady to private saw deposits. bank, holding at the cost of the are moderate. from XX% the about continue higher deposits migration steady, noninterest-bearing

saw Moving pre Net expectations. office, were XX basis in on points, X quarter. In improvement. our increased we X% decline with This retail, modest increased line Slide basis includes were driven The Office. charge-offs loans XX. general other in on continued General points modest [indiscernible] linked Nonaccrual drove runoff linked categories by a which retail commercial to related to quarter credit were up retail, a auto charge-offs portfolio seasonal while the of stable.

Slide XX. for to the Turning losses credit on allowance

up is ratio $X.X coverage slightly office XX.X% stable commercial broadly X.XX%, the the runoff The and stands point general represents coverage, portfolio in noncore from given loan reserves increase overall with which balance fourth reserve quarter. a X lower optimization. billion balances the fourth at sheet from reflecting quarter, XX.X% Our for basis

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

Moving to Slide XX.

We have sheet excellent balance maintained strength.

X.X%. is a have peers CETX XX, we top regulatory would you can consistently and currently to where TCE removal on proposal, been under quarter. and CETX Both fourth our current relative XX.X% if Our for our the the the see were be adjust to strong CETX ratio ratio the of ratios opt-out peers, you in AOCI our among and Slide stand

resumed we common share a and we quarter. total the million including position, capital returned first to repurchases strong our of in shareholders Given dividends, $XXX

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

have are a we wealth a and opportunity franchise, revenue capable First, relationship-based bank strong meaningful lending and business with a on consumer lending we transformed where we XX, our a scale Slide business. deposit as diverse prioritizing robust

Metro. to retail building XX% we in base deposits make we up share deposit as Importantly, continue New progress with year-on-year our York continue taking customer great

wake on in opportunity fill private Slide XX, left void bank, of taking year. our you me update building last to the premier bank the a in the failures let the progress

and build very Our momentum. is well net going gaining

business base Also, have roughly over of effort. loans newest continuing We client $X Palm $X.X banking opened attractive our and deposits of just capabilities billion to just that private our with billion our we Management now the talent to opportunistically are Wealth Clarfeld billion centerpiece grow. investments adding our noninterest-bearing. of bolster about now $X.X and we and at are office of in and growing Florida, Beach, banking are with as We XX% wealth and

we on above bank, commercial formidable full-service its weight. punches which have Next, consistently a Slide XX, built

talent, an we the to are private to In market, and uniquely the capital of investments services mid-corporate in capabilities economy. industry particular, sponsor U.S. sectors multiyear us cycle in ecosystem. expertise high-growth serve provide Our to clients in life middle put and positioned enviable position

take advantage our capital sponsored As a lead results acquisitions the consistent quarter. evidenced excited we by start are more coming well through top to constructive of we the the and in to of our standing positioned environment our tables, from are markets seeing this synergies at

second Moving XX, guidance provide quarter. the to we for Slide the

NII X%. to about expect should Noninterest We up decrease to approximately X% X%. be income

charge-offs XX basis expect about from down runoff. We to expected points stable to noncore should and noninterest to be continue the slightly. are benefit expense be ACL to Net the

Our CETX planned. currently expected XX.X% is million in repurchases with about at approximately come to $XXX of share

our year reaffirming broadly are We guide. XXXX full

expected, to lower NII our better impact a of land of X% with than to range demand. expect loan with X%, offsetting margin within guidance, coming January We down in consistent the little the

PPNR other tracking also of to our The January guidance. components are

for the with points NCOs expectations XX year. in trending our line addition, are of In basis approximately

approximately of is the Our our and of and XXXX target growth. CETX loan repurchases ratio share environment dependent the for external view on be XX.X%, will level

rate Given look out NIM changing portfolio further outlook, our and noncore and expected the you to as the and in how XXXX update on beyond. are I to we wanted impact NII swaps

swaps offset impact partly in to from XX XXXX, we Slide by NII rundown. expense included expect the expected which We've higher and By benefit the shows through XXXX. the the noncore swap appendix, XQ noncore be

core the of This runoff Looking be to out in range the rates. benefit will asset-sensitive impact further, sheet, and impact over given and we the by the X.XX% noncore tailwind term medium-term NIM NII offset of partially expect a of swaps balance significant NIM a resulting lower medium from and X.X%.

expense we management up, strong by NIM, wrap To performance. a in-line capital solid fee performance cards, credit tight quarter, markets delivered stable and featuring led and

unique We progressing series have are a of that well. initiatives

Our has transformed. been consumer bank

us franchise. and the profile to strong exceptionally to capital is and positioned premier allows liquidity bank invest aim our while commercial wealth to bank-owned a and our we customers in bank Our build continuing private We enjoy funding strategic initiatives. support that well

it XX% with return Given we back several our are I'll over in ability strong tailwinds, XX% combined target. to that, continued to to medium-term hand With hit our confident execution, Bruce.

Bruce Van Saun

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

Operator

from Goldman Nash line of first . Ryan come with Our the Sachs. Instructions] [Operator will question

Ryan Nash

with the Maybe guidance. of some to start off

low can broadly expecting you expectations take have range. still follow-up like out you than and flesh you at it to could [indiscernible] better better. reiterated the the there? are year. around it bit sounds just held John? the the main And be XXX -- NII, of I think in a -- it the get changed, end it You you how on end of XXX and and margin, just the to the to a maybe expectations some change relative as be the you But be were you the what flat to particularly expect How noted what have little would drivers

John Woods

the you have remarks, I'd interest trends margin say, that. of Yes, heard do net we sure. quite that expect I'll good. some through go have opening and as in talk may been

look the do interest pinned in of better. be over a range and better were are drivers end starting really deposit deposit net where better, to of margin you a the the we are interest lot the that of on the that expected year. at quarter margin at interest-bearing in so to fruition. first can come at And maybe of a the come are years And made the the than expect bit And levels investments rather little net we we to in it, franchise than high that little costs deposit we've when beginning

look you So just when improved overall, borrowing our has mix funding at significantly. and --

So dynamic It's the very that's net book side combine when that of the with lot you And the playing where you powerful. a of margin. see the underpinning sheet, other book interest balance out. back front

the so hitting seeing NIM in that's you're with think around confidence we're And respect interest better margin. net feeling given net trajectory. that income to about interest confidence our what And that I range,

that I where out. you then to come we'll said about we when think, year, get at above, given maybe be maybe in end offset say has towards now that around look As mentioned, the couple original we the upper range. it point I range to XXX year, tad going would end XXX out a of as guide I'd range, probably previously, the that our in of we'll off And the of those and we're points of as a percentage see average plays see loans. end maybe But of the loan demand a loans loan started towards equals just on lower basis NIM the

the in So be just down math the our of of that works to fairway terms right out guide. middle

cause in little could a What better. it to come

our across rebound of Continued our execution other see second the deposit and commercial private our initiatives half how we the if strategic kind on accelerating And bank, side. initiatives see the plays of out. execution let's key

M&A M&A We part to half. in in utilization of the expecting general, front the story half. are to in capital We're expecting and activity up in even levels working the second We're to finance expecting pick pick starting the second be up.

little starts comes original earlier that see lower NII little us could a or a of stronger, maybe the end it if in towards in that you so coming And guide.

Bruce Van Saun

add doing just kind The deposit X would we're given loan to a light side. I thing, is, of that it's I is fact Brian, Yes, the on what a little think, demand there's okay, the loop Bruce.

if, or shrinkage funding. cost off And there's run deposit of the therefore, chase sheet, in we source funding balance can growth. not we're going FHLB higher to broker So loan a either little our

So the advantage that, helping full NIM. we're bolster is of taking which

with is less more growth, freeing up The end you other loan thing capital.

to here. us I repurchase is and gives wherewithal think And stock. up value stock continue that to great so our And the step

on in all we're So that.

Ryan Nash

follow-up, that what's allowance just side, in you're maybe that? think driving the do past the jump any And the office could color inevitably portfolio on line as you increased -- in see it. And what few. you that quarter color of with a this when in Got Are in seems we tracking peak. just seeing on losses terms relative saw front-loading the a severity? we And some some Was where be credit Maybe just specific losses? maybe which expectations? to to your to

Bruce Van Saun

and Let But say here, there's flip then to surprises me [indiscernible]. Ryan. I'd start real no

basically have, see handling bespoke on that we've all careful We've been working can of exposures kind all office we of just that and the significant So win-win have the maturities. borrowers the sure got we make with we can to situation. a

their can return borrowers properties our with a So on through we best getting environment. through stay tough can and come the loans

And I going think that's well. all

python. million, or $XX kind some that So use up modest if where but to basically around tick of going to the next is down a about work its the to quarter way is line, this. pig go any colloquialism, the you thing not charge-offs variation And quarters to million take the you're have it's going they quarter, $XX see through. that a through one But few we're going for fully the seeing which more good surprises,

that, pick And with Don, maybe could you up. so

Donald McCree

exactly billion right. We've I that's $X.X $X.X No, general from taken our about think office billion. to

coming The So AB to and properties move actually the structures -- of most nicely, selling and are been actually charge-offs have loan modest. basically it's of on. the deciding where doing down we're out charge-offs and

quite had paydowns few also. We've a

doom So years of We've I expected portfolio, go we a lot exactly at myself X.X kind it's said, ago back involved. by of got looked Bruce and If teams it's I'd there was fully and property. uncertainty. But to to as what office out name, took name not our gloom. property it playing all It's workout back be. by the

more a now. I think there's uncertainty lot

reserve losses where that the any losses are been. got in So for are P&L of absorption materializing, amount huge have remember, date severity of a just above portfolio to our and the for levels my I've well capacity

work going we as the peak loss we this, like the feel to through levels. next we're and So we begin to few quarters said, over at feel

Bruce Van Saun

At Yes. rate down of high but see office from And through we it's to reserve. increase gone and and is reserve we'll off high, from of just -- terms I where so remains be that in add to do start but been full holding you and go you -- to reserves point, the XX.X, charge drawing we've coverage the that levels. can that P&L at maybe, the slowing on the can John, XX.X on able ratio taking this, here some

I don't starting that, on to is just that. build want make slow. the to But note that take call

I so it's maybe beginning good But if to point we can reserves, this we for know drawing on And next those year. a don't later get down or year which will be of where P&L. eventually will start

John Woods

Yes, just or I all that, agree a I'd point with add two.

So what's in XX% reserve slide property it a an some is expectation remaining the that's of see values. in you'll XX And drives into materials built this decline what of XX.X% losses. for our

Bruce Van Saun

than we've including severe seen wide historically, great by more Which financial a is margin. anything the recession

John Woods

we of put behind think And that us, just us. we we also losses that implies behind should mention another Exactly. I given X% put what

in So we've about We've million off reserve. X. got XX.X the charged

year we XX% we we'll coverage, over to pretty out. terms where good up losses themselves, peak reserves you're in we've this mentioned, feel play So we and think Bruce of the are as they But about maybe next. going got early it, charge-offs think later covered. And or that's the

Operator

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

Robert Siefers

migration much thought on longer negative how continues. John, a deposit maybe just

on your think prevailing thoughts but updated of and why just is to kind when trough. it's hear I wisdom curious we might the slowing,

John Woods

quarter year. in a been performance been say has things we I And decelerating. for were coming been of that Yes. -- has mean, have into I'd what excellent -- this terms been our the expecting saying deposit versus we've while

DDA again, continuing to decelerate. migration levels low overall overall, and high cost flows So look to good. deposit cost,

we point around XX% I were at to, at at can We DDA the XX/XX. where you XX% And -- year think of that at and are, look at at of you can flattened last we if XX/XX out. were we end

of is the And that that's decelerating. out having what point until you cost, on been it's continue us to which And historically is going is continue decelerate. getting interest margin. indicating a we what again, however, expect. net would the the to see it stabilizing. cost Fed, we've to first cut -- it's diminishing So will the DDA But to where for the impact as low high And

and the the for delivering excellent. overall, our elevate of feeling the the you back XX% good growth that rest getting franchise is contribution 'XX is is when DDA more. about about you initiatives think at we're margin so because stability and company. noninterest-bearing the accretive net launching, or us to when And maybe the we're to We're And that very what's deposit trajectory, throughout overall strategic the to interest bank around private trends idiosyncratic

that dragging And so number up. that's

So I we have some think

Bruce Van Saun

another York opportunity. Metro offers New

John Woods

And a New York good Metro as really well as point.

of expectation interest quite we DDA as of that year. into combination latter of nicely. you the part the those the and out margin the flattening some So growing and net strategic underpins get initiatives, have

Bruce Van Saun

Yes. Maybe, Brandon, you can add some color.

Brendan Coughlin

we've Yes. -- seeing. #X set a variety that's Sure. linked in book like from I since what consumer for be years around up quarter believe on couple get that we with order our we on through the of reiterate that, overall We sources, And that in or transformed we were We've much peer so book of to believe better. modestly now the pure consumer we how talking benchmarking book deposits a just would been linked DDA. some our were we're of that comes deposit

it's on down the COVID franchise beginning the stable of, customer course. deposits burn pointed relative look is And When kind that that its the we're basis, that have and confidence is as around built. that's slowing. think And at really out, run peers customer lot of to remixing customer. John is we I actually the pretty indicating So dramatically quite demonstrating still $XX,XXX we've per a outperforming have a been quality of you level,

cycle. but getting that may that pretty more, be little a we're So feel good bit behavioral there of kind of we end the

pre look basis, back on overall they're at basically deposits to inflation-adjusted We COVID. an

operating the kind here consumer. nearing of So floors I think we're for

strength to have peers. deposits relative that of Given low-cost had we the

that billion our I implication is And we've rollover funds. believe over materially I X% and $X prices we're alone were managing lower We've peaked retained do X%. as XX% in interest-bearing how we in X%. deposits. had of those consumer March they priced segment of in flipped that in CD other and between that the cost believe in QX The why do around

So you the see I it's consumer start do where of to imagine in We'll you by performance. really to here see at. out it building are tailwinds low-cost can in the potentially how of segment But in funds the peaked and that of plays driven rates reduce. beginning cost the believe we've strength our sort QX,

need we to costs So don't interest-bearing a that. chase of high as result

I about where we're good at. So feel really

Operator

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

John Pancari

[indiscernible] And get end and low initial ultimate expectation where this and can a you you some in separately, there what cited loan the similar pockets bit said the expectation. around at deposit in -- some [indiscernible] know of of see you elaborate your you the I for timing? weaker your commentary. additional you growth little do line growth utilization see color a on weakness strengthening Where at year where point. then terms maybe if question

for how at point? around out X%. Any you're up and around guidance you additional at think year, had to can figured the full you this color I provide X% feeling that

John Woods

the the around second quarter the first commercial the half, starting the into was loans get to and some expected. see on that capital the start just second than . utilization activity of -- trend a seeing and nevertheless, drive that lower is and I'll putting interest to in we you up reversal as off to pick working still half. going I really in can in But work add. that is utilization But mean, we're others little what originally coming Yes,

see On nice in in the and commercial lending in driven gotten still is HELOC we retail the up. of where -- the we're we've and seeing picking private which that terms good start bank, opportunities mostly a of side of a And line activity in subscription space. things, that amount relationship mortgage

had one be the as the And in, a case. Maybe is coming we out would pickup about in all business any may it but other the loans, color. of meaning lighter will and expected So private be playing out half then be little expected, we that bank. on bit second the commercial just

Bruce Van Saun

any well That's said, Don, color.

Donald McCree

mean, -- due as bond I And opposed the then the are I running also, lot loan lines. a I'll the No, we're commercial seeing access across lower to existing customers levels bond board I to down there's to concerned Yes. booming side. of of And economy. is levels, but Part it's customers markets think the the think they've a on it not about positive draw leverage it been for because with markets.

We're seeing base. of a really across view client of broad, the swaths overall more wide economy positive our

the bounce things year. So they're the half plant back active in back going that more some drive to capital, construction, and of would indicate that get like working growth, M&A, so in should that

Bruce Van Saun

Anything from Brendan. you,

Brendan Coughlin

lot is outs only add maybe I strategically would of there's under the cover. thing and The that just Yes. ins a

the essentially So other asset HELOC as relationship, high-returning with the billion private we run growth, down $X high noncourt whether on auto and getting bank. by replaced or side it's

what have transformative you revenue time. that over areas to of around more create sources use the headline around we're growth, handful loan that going numbers you capital dig is fees other into more doing So see that a things our have the of durable, that and are cross-sell sticky around to

going. how with that's we're So pleased

John Woods

on deposits. then a the -- had you And question about

time the first the in quarters. in side of DDA I flatten for saw we many things mentioned out On first quarter. the deposit before, as

to good see. really is that So

flatten cost low saw also We out.

low XX% XX% quarter at and were low we're in we this overall, at So quarter last cost, cost plus DDA.

been the favorable. perspective mix deposit from a So have trends

execution driven Brendan and been tackling of that at invest franchise. the contributing than have expected. higher That's at along deposits New quantity years of a and we a the and came from as end level Bank for Don Private number mentioned of blocking initiatives in our Metro the And and just York strategic the with earlier, quarter by strong to in

And our and see do we growth are paying in second expect loan deposit growth of all to investments those the 'XX. so of supporting off, half

Bruce Van Saun

that highlight that's the would -- deposit just Private certainly I had of quarters and think is kind piece Bank last color sustainable could with has see that -- of billion-plus just pleased quick that, would now I Yes, we to of and X growth accelerate. $X very even one

So we the start, continue expect and to great a that we're off to accelerate. and ship has even landed, and

John Pancari

on All scenario, AACI around when here. the I look buybacks resumption repurchases here the buybacks, it. you the dial how right. With in you [indiscernible] X.X% see from of in capital the incremental And Got do CETX $XXX at did quarter. in then million likelihood this front, at to the

pace think a of now on right that be given do that buybacks, where CETX. of could terms sitting In you you're reasonable

John Woods

Yes.

is that's time. this to what generated clients accretive think we're our have priority of capital we that capital waterfall, is and is cost to And really capital that and that we've about lot our that's when top over want to capital capital think work mean what that flexibility. do customers you I a expecting to that And is and creating put our of to us I maintained position to support And do. really flexibility. allows

cushions uncertainties. It also against

the continue that capital with planning for the into did the -- back capital And our able we the to capital elevated half. if at potential very dividend, a first the levels, then second list. to of And of the extent macro we we're course, other uncertainties down which is in look capital. you use to shareholders, our the top have left here downside quarter. it level so in also number strong there second flexibility to be of at strong do that there then uses into will We give When manifest we're been And of of at the support to quarter, we're clients, cushion a but a another and get kind to position. being

loan macro, we monitor So as demand will into second buybacks of play the half. the and that trajectory the in

Bruce Van Saun

Yes. plan And that just there's less also loan say, I back I'd have to a comment we would this an because growth. go year earlier front-loaded

there'll that loan that start earlier support capacity In loan year then fact, be by half the less the see contraction we turns we to and the year, the second there's in loan share need to capital for in of growth would, mean definition, growth and repurchases. around

number second But where to we mentioned the the and then doesn't If saw half. the the see turn growth the in we'll the first can actually -- John anyway, get loan around we quarter, stock. materialize, second XXX in And XXX keep just gave repurchasing in quarter. we fully the you

Operator

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

Peter Winter

coming we given to relief up You no debt guys have ratios the no rate rates? but forecasting charge-offs for maintained than could lead for the renewal assume higher or if charge-off at net on it this guidance kind just net cuts higher loans service coverage year, of year,

Bruce Van Saun

Well, quality what very is credit would still is that say the on I broad good.

leaned look the So good now business in cost early if more in C&I that's locked you weathered year. in our shape. models, really They're doing and the our that of pandemic at Companies book, financing. lower

So we in a don't with hotspots really kind of for C&I. see even higher scenario longer

labor consumer, in market. The good we're benefiting consumer levels, very Similarly, liquidity shape. still a strong in still is strong from

that. in migrations adverse we haven't NPAs or seen any so like delinquencies anything And or

So loan the bulk portfolio. that's the of

then to as the of there's trends. real reports return particular, of think a up. the look commercial picking you loan I potentially office the relatively that's the If that small kind We're in some estate overall office watching at is book. percentage general And and

so counter the not maybe margin, of But in office number longer. burden at change think charge-off it's going I that the trend hire there's for to additional little offsets that materially. kind And a of

Donald McCree

benefit my rates lower run are to go from where curve. the don't forecast today. and side. in that's Peter, out Because We We policy. we I'll know credit future we scenarios based made on our on that just no just our going all our rates. that assumptions from we're didn't

peak-ish even you've difference kind a another So lasts to rate of year, charge-offs. it way think we a If don't think couple or forecast quarters going of environment. a to another got material make I I the it's

Brendan Coughlin

no consumer only mostly signs resi, is I book. seeing year-over-year. really on stress our by would levels actually over are point The the but delinquency QX that of down net add we're QX, on led

that I that As unless Bruce a for in so really longer pointed and economic higher shape. shock big good there's a even out, we're really feel in good

Peter Winter

believe year. maturities happened then quickly, half more office. I office I that the on And guess, a this of just than on just follow-up

and charge-offs start towards end think then lower? the early you year do peak . to net this next year, So of maybe could trend

Donald McCree

I -- it's really hard to forecast that.

comfortable year back expectations. into how loan. how probably, is but how to said put what when according go, ball, depends they I of crystal this think peak how will we it's progressing kind working is the I'll much these book be say it year of to next some extend, or the It's progressing much before the by late our exactly the have I is -- we're through is. early don't negotiations I go . capital I But transactions and loan

Operator

from come will of question next Jefferies. Houston Your line the with Ken

Kenneth Usdin

really a side. the we're the capital backward. couple a Just you been more markets to line as well, have as seeing thinking It's items wondering just went of couple improvement see a of went question I'm would kind broadly. of fee nice on items

your like Just markets. you're capital the first thinking point progression, here relative fee the quarter wondering how the what's look pipeline about drivers better just and start the to for

John Woods

and jump I'll are I to the Yes, I and trust and -- But wealth are you card capital they be mean, here. markets, well, in start mean, X services trending and at for investment all look we fees off other significant drivers expect the can XXXX. contributors big in us,

had each of years So strategic significant even and businesses investment over have the more recently. those

#X We for a capital to it's first to markets of year. we activity but only rebound from and fruition. about the the business side, in not investments and lead So activity -- on the tables feel made second continued, nice had sponsor come very pace the see the early the the for the strong really quarter. big good full trends quarter, the in fourth the XQ, quarter there, good in has in The quarter

you In the ago the of wealth with number and developments are and of from drive private card driving of Clarified throughout a the the conversion to we've flows a those along acquisition all years a bank number to positive business, business, hires know, adviser strategic that's there as the XXXX. in made Mastercard, together all coming

feeling about we're fees. trajectory quite So for the good

Bruce Van Saun

strong lines your had global areas. weakness X we were other there's some below service also worry say, in charges, little And would that is I news our we FX there areas, a about. those then just expectations. to good were a markets, The of mortgage, there Ken, the and that rate bit interest little point, nothing structural

we'll performance confidence over for we'll year, rest the maintain think our strong see the and add to of I which growth will backs our fee year. that overall bounce the

Kenneth Usdin

follow-up swap and more you've looking just the deck. clear made and guidance. at the all pretty are that the in the the to book swaps XX NII the And Great. one Okay. it's just incorporated you're on and XX from Pages your And increases saying

So as income then million everything quarter net the on is of and quarter, that of that prospectively $XX first that to -- progresses? still inclusive like is as will interest cumulative now fourth come impact both year active

John Woods

Yes, is. Yes. it

And that $XX active of so up primarily outstanding. are that what driven is, million, is made that million about from $XX swaps

or to into from you offset million XQ. about to of from about call million that there's $XX $XX by notional gets of then drag. $XX by coming active noncore number. billion and billion million incorporated or positive about, to So million noncore $XX outstanding. the benefit That's grows But so, that $XX it's That the it swaps $XX

you swap play all see year, when swaps broadly, coming little just sheet. as, portfolio securities core on activity, a Page it XX the actually as that's interest the swaps. in of margin balance for receiving [indiscernible] well that out of happening better, of everything our this course, incorporating in rest the are really, We are the again, net you what But in the have offsetting trends is

in NIM better. a at got that trends broadest sense kind So you of little the think are actually coming

get to And actually XXXX incorporates get you where tailwinds that aren't will, really on terms begin swaps XQ fixed right rate majority, in getting that noncore. XXXX a of dependent. point But is baked you components the tailwind everything fact this to baked side into super majority of of and you if the and that all later years, out as in. have the the then the gets you plus contribute. It And are terminated seeing start start you to out that of you in a receive

Bruce Van Saun

add is confidence in The that. coming and just there, in then had think outlook the forward that our guide step-up the we NIM more we're concerned color into about starting I'd Ken, in And and QX that that people year, QX. swaps were giving incorporate I

for the longer balance for So we're better able to is higher absorb sheet. core that because

the did book. have in We some swaps fixed we securities pay

confidence absorb continue to year. NIM in the kind the able that step-up outlook we're swap maintain book to So of the in and for

Kenneth Usdin

the And know if that broader of all X guidance broadly affirmed Bruce. quarter great, your That's outlook. of quarter have first to and down the just can Yes. X, we bring you and I together, so down second kind

points more about that the coming you're would this making what how biggest within swaps knowing NIM work. now detail range in all will these So better of be the that based swing factors and the on about

Bruce Van Saun

range. me, in Yes. where really the that to volume it's land we To be would key

actually for is their attractive And see strong that very deposit spread they're be that the private making we deposits loans do then So accelerating attractive. strong and also that growth in on funding. could the bank

in that So book. see sponsor we that's we come a back totally we pipelines -- expect that feeling think the our I with accretive And Do our the to also on community. front and kind of commercial conversations our based book, customers in. growth and

Right think see refinancing, you're start the pull to I now, been there's new half a forward in lot of going second in of to money more the deals some year. but

want will John, window we're highly factors know, impact. materialize. big think I we it don't I of those have kind So the those out see volume today, the will looking anything. if confident to that add you way a things But

John Woods

Maybe end a higher range playing swing the good. the say with of that's well. a with balance that. little all lower sheet All still think other versus the that out of agree it I think I'd factor. I end. bit loan mean even are But Yes, is a out we at demand, lighter components that I comes

XQ, have Our that in swaps mix the in quarter PPIC would outlook for mix really the interest the in last deposit those also XQ is really and I driven margin. net yield. to nice that underpinning added we uptake funding and securities add hasten

driver. book quarter, on I the You that's range as seeing is quarter. of book securities huge a getting of back is on balance see in the and back And -- make basis then the component should points. points that around book that's first front big and that of almost loan in sheet where XXX up we're basis And you're balance the that the front securities yields the points also a first basis XX well the book sheet, offsetting in side core contributing XXX that's our clear

are balance of the So there are all sheet and good swaps the in. baked core in dynamics

Kenneth Usdin

said we the at in could come end. higher You

the better think meant end. you I

Just for clarity plan. on everybody's that

Okay.

Operator

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

Matthew O'Connor

the envision the But think Clearly, net remixing, you're overall will few sheet you or years? private on look Most you kind you noncore of talk my do kind do size thoughts this [indiscernible] answered, And the medium-term grow are as when questions have there of like the I'm What you interest your balance sheet? the of running is next balance been out about of bank. the growth I but [indiscernible] sheet net margin. guess, curious specifically, balance

John Woods

our the in the see in so place, will portfolio. think And that the say I I initiatives of think think the expect at do growing the you optimize balance But have opportunity to interest-earning And grand look assets total expectation. have I term, of second a grow. to the get It's that the optimization of -- I'd we Yes. be grow. a sheet we're sheet we and program putting balance medium that's half that's that when over over portion do year. you the as turning you out certain we

Bruce Van Saun

the done in Commercial we start as say have middle of the flex kind Bank on would a growth of point the of see heavy private lifting and kind when we kick of we the is year that repositioning, in. bank lot start to I to Yes. discussed, then

see net rates. looking out year. strong already strong reasonably back growth could kind expect in the of So we in to And would economy that 'XX, of then 'XX half get should we we growth the a second to

leverage, of reason of we the where for primacy, part but positive pandemic, of up. we at equity delivery Again, is return no how into math the get on being that and nominal relationships GDP years operating play, way selective focusing on and which grow many we that, hit did you plays we before the couldn't back your there's kind primary

And so that's to to. model we'd the like get back

Operator

of will question next from line RBC. come Gerard Cassidy with the Your

Unknown Analyst

is Circling [indiscernible] calling behalf on Thomas This deployment of Gerard. capital quickly. to back

you Can outright guys XXXX outs how pretty franchise lift in and You of or us prioritize for you actions. further M&A? in investment update busy guys the were even about strategic on you're opportunities organic terms how growth thinking versus team

Bruce Van Saun

Yes.

So say plate things that in, right the I'd we full we're have. in now, that a have very organic initiatives terms we of investing the growth

or really not inorganic -- opportunities. at looking much I we're So not situations would

up these focused getting execution. initiatives line. and say this There's And outs, so a want Clarfeld something you they're private point I have while payoff all just would wealth team the we capabilities scale lift extent. at have that the right, we a mentioned of part of we're kind our a is for place, of big . to on at, complex, to hinting we need private because trend private stay great in wealth bank as large to I kind on and

again, looking us start you'll with fits of this watch thing But fit business say the I will extent, treat so our are like build that And of but think strategy only are they're of them We'll that's cultural having would and and some And out. because to good M&A the space prudent. that we're we organic. their discussions kind teams, you that's it outside. part of kind that be transactions I and kind accretive can see to they

they we're want but were that. or color Brendan, acquisition I on any deals. argue it's kind you could organic to whether You as lens that's small don't the whether if acquisition these like, if know, on put same using of

Brendan Coughlin

I'd wealth just Maybe interest like is high, X from at is say a seen citizens points. that management quick the perspective a before. One in we've never

brands in the of wealth to big talking States. we're across the very some best all managers So the United

the distinctive. what in going unique doing be to But so very And and quite here selective. we're we're is interest

top expect our boost to a and board we talent So really some give to strategy. wealth

But M&A impact we the like return -- mentioned, around in capital. we're though on very the de thinking metrics a an lift Keep really what is the would mentally though, we bank point just that private do potentially that even a or with to deal. capital mind about minimis out you

look just so second the of the and when being And getting the breakeven really through guarantees we eating throughput. when it's of the why this half bank year, expense -- that's about private talk revenue you

of on a will So guarantee de capital. and minimis board, on it bring revenue any material expense their has teams curve very impact impact And on where true through be getting the lift-outs a real much them capital. more we the will versus same wealth mindset on having it be our

Unknown Analyst

guys C&I loan demand being nonbank are seeing despite private color. on real you is And helpful pretty That's then has healthy of Great. players growth market separately measured by loan general from do by Okay. just credit others? the in economy driven as lack you that the pretty like think just growth. been Or C&I demand more caution? obviously GDP, tepid and competition customer

Bruce Van Saun

Yes.

still had they're happen expressing think caution. our I think have with I going what's of years, what's but most caution just happen to it's in general a to rates. about going the economy, And companies good

been private to syndicated bank lock market, lending of credit in and loans [indiscernible]. it's move So interesting. that with over we're the private lower to refinance other opportunities actually actually out financing. kind not and the way take because We're business to them It's losing those are cost -- there's coming

and of the been quarter. that's part in quarter, -- it's a into first continuing big So here story the second Don. the

Donald McCree

I think that's right.

the area private a sheet we think hold is leverage see balance active we credit of that most don't buyout I market, anyway. which that our lot the in on

a of us. are distribution for they source So

done actually the distributed in the deals of we've private we've a credit first So into couple market. quarter where

So impact fee it helps of that drive doesn't have a balance it sheet some our lines.

Operator

Point. will Your of line Compass Dave from come the Rochester next question with

David Rochester

range. that driving this mentioned hitting you mentioned NII guide. NII possibly hit guide C&I you only expecting year. But Can Earlier, end factor you major growth If for still the loan half ends I a the know a that less for in of that of materialize whatever expecting? back the up the flows reason, you little you're net better NII were and that growth year? doesn't that filling loan in growth for swing the runoff mentioned

Bruce Van Saun

say mean confident that I the Yes. would still range. in we're I

better that things the at if so the way, If range. And we end don't, be of we break could be side our lower that of they could at range.

of kind guardrails. the still use I'd as So that

of a kind that bit quite outside from range. fall of You'd have expectation to to deviation have of

John Woods

on to the that quarter. what that in of -- that we Yes, we come great. at saying we'll based just range seeing just for able trends to margin expectation point, interest performance end have been first reiterate the an and the in the we've the that is And net were generate better we're

On maybe demand tad a better. range, of seeing that's So margin, that interest also that. we're the would net that at you us see upper being there's end some offsetting that loan fact lighter the

together, made And case that base range, the Bruce the made. middle takes those the and put to point earlier. puts that upon back And that You and that and to down that's terms of right got we're in we're Bruce we just our point now have volume could depending updating. there there be

Operator

line comes next the question David with of KBW. Your Konrad from

David Konrad

earlier, Sorry just the but discussion. of down on NIM if I kind missed this drilling

a quarter. XX next curious didn't on yields C&I we're at onboarding before looking quarter-over-quarter. quarter, the this in quarter swaps curious think on at around the where this that just looking dropped Just heavy bps was swap third I this the quarter, come in maybe but

John Woods

Yes. I'd ex at say, try when broadly, to swaps you've the book I what's increase I book, make incorporated yields all loan as you would fundamentals back book underlying mean, NIM point look hit are the is loan the the swaps. that driving on, of just the an in And front it. guide. really going the into

So that's point. first the

there with together swaps change shift had negative that itself. ended some standpoint, an pull receives is we As maturities lower at swap in was quarter, impact replaced why but had mix standpoint, And coming a relates on rate from that up from notional when at net being starters forward receive overall -- we it the there fell receipts. that just accounting is and line that's much, you by a negative swap you didn't -- the a the impact higher in that to that some why

even it But again, all when swap for flat And put incorporating margin strong net a drag. net all had interest components, performance quite overall, interest quarter. the the together was that we you with margin

David Konrad

Yes, And front about the then the securities the then pay back you your securities just I But coming out. agree. growth book book the outlook talked book, floaters both of the and book for forward? going curious

John Woods

think done. Yes. had And I the to I build largely year. late last the that's we've liquidity we point mean gotten where basically

right And as assets earning about the so see our be of where is securities where time. a overall we'll percentage interest now you book over

securities the we'll of for and As of the a from probably is and securities rest mix but standpoint, first overall quarter grow assets the cash to volume of loans, end the the year. at similar be we'll we percentage grow basis a about cash on where interest-earning

incorporating and Fed through that's upon mix that to And through all looks at then that, sheet franchise securities. you the our XX/XX including a of all deposits most insured way which proportion peers. standpoint. is was -- it much at add And Category look the deposit at strong having and standardized I than primarily and incredibly LCR based overall, if secured the that's XXX%, would liquidity and balance being played banks, of higher secured crank hasten of a X from our reflected that you insured cash when consumer And

Operator

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

Manan Gosalia

question, with rate NIM some with deposit bit growth more weaker to on And a loan into noted, last through right for solid, willing change pretty is are the term a look that to cheaper now? you're put XXXX. considering follow-up in has the cuts fewer positioning on in there you as thinking the to as bit the right separately, through? now, you side? on a coming downside is medium So you're XXXX something protection you growth being and expectation any as Maybe little And duration got being little in it security put how

John Woods

side, objectives say the I'd couple being of favors management. addressed, and between liquidity Yes. security a I would on and there's capital interest the say it's interplay and

of is were probably swaps we've that the thought couple likely quite overcooked. that off [indiscernible] over of nicely many we a our they what X So to X, $X because added of did has billion we that beginning paid at the be the quarters thought cuts, down, little were we year, last view whatever, cuts X, rates of was however

And that. so related we in part [indiscernible] put on those to

likely multiyear reduce the to the to the related given from part a of securities book capital be objective treated standpoint. in will duration how But it

over to that or closer get right the is the And objectives securities about into to shorten duration continue now so came which something both down of we to of those We're and when play book securities X.X shortened duration likely to of thereabouts. time book years. the X book,

the really there. that's so And driver

comes swaps do when it of downside think at matter. to a the But in adding it significant note and 'XX. that out we entry receipt off standpoint, you quarter I to balance protection asset-sensitive and had a balance When the little fourth add an out sheet. XXXX sensitivity into overall get from to made we And balance have drop and first got asset in the we sheet quarter. look XX/XX, sense in you overall the years, we sheet remain points And an

our We do are points give elevated, the there. think the entry we'll that don't provides want we locking and So book upside us rates terms and up we continue and careful of when that be that that value loan attractive to in if C&I there's it to stay trade in.

of how in be that in over the would that would rate with rate medium And continue terms 'XX plays we 'XX, and to as balance term. out the out protect general, environment and X% receive of of opportunistic north we'll be consistent sheet into something a the be

Manan Gosalia

in helpful. then their NIB look they're suggested shifting peers to recently? of that optimizing clients of some And corporate one this higher morning, your seeing corporate you take has Very environment at balances IB. behavior rate it. the NIB seeing from Got another Are longer your for

Donald McCree

of this book, it's I but We've a at shift little bit much course slowed down. pretty think run had point. its in really a the it's

I think the clients of have rates. advantage been pretty opportunistic in terms of higher taking

our So now, it mix I'd say stay is expect our book right here. we and to pretty and stable

John Woods

overall, DDA XX% That's in a this say I'd you XQ, the at happened our And That's saw important. end end the XX% at of of while. the at time first Yes. stable XQ. has

contributing. to you Private see throughout expect for and the as we as actually so the the continue that rest based other the earlier, stability strategic get And on and mentioned growth, we Bank year -- . initiatives of

Operator

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

Bruce Van Saun

for Okay. Well, day. your a thanks, for appreciate support everyone, great dialing Have interest Citizens. and in today. We

Operator

that participation today. you using will AT&T for and call conference and Teleconferencing. conclude for Event your for Thank gentlemen, Ladies your

now may disconnect. You

Citizens Financial (CFG) 17 Apr 242024 Q1 Earnings call transcript