Citizens Financial Group, Inc. (NYSE:CFG) Q2 2023 Earnings Call Transcript

Vivek Juneja: Okay. Thank you. And for a follow-up, just Don. Don, what are you seeing on the whole sponsor side given with high rates in the market? When – what level do you expect it to come back to even in ’24, say, just given if rates stay high, yes, some cuts, but I don’t think anybody is expecting it to go back to where we were 1.5 years ago? So any thoughts on what level of activity do you think we get back?

Don McCree: We’ll see. High level, our pipelines are about 30% higher than they were at this time last quarter. So we’re seeing the pipelines build. Sponsors are certainly engaging in conversations whether they can get to actual transactions or not, although there have been. Some there was a Worldpay transaction that was announced a few weeks ago. So we’re beginning to see some transactions. Remember, one of the things that we benefit from, and I’ve said this a couple of quarters, is we tend to play in smaller deals, right? So we’re $100 million to $750 million to $1 billion in terms of deal size, whether it be advisory or financing. We were number one in the middle-market leveraged finance league tables in the last quarter.

Volumes were down, but we were the number one institution playing. So we’re gaining share for what’s available. So do I think we’re going to be back to 2021 levels? No. But I think if you get stability in rates, it’s the beginning of deal formation will happen, and it will just depend on valuation dynamics between sponsors and sellers. And there’s just a lot of companies in our portfolio that just need to sell. They want to sell for generational leases. So there are things that are available, deals make it over-equitized just to keep the interest burden down if value doesn’t come down. But we’re starting to see a lot of conversations going. So I don’t think we’re going to be off to the races, but I think it’s going to continually build. And I think ’24 could be a pretty good year.

Vivek Juneja: Thank you.

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

Bruce Van Saun: All right. Thanks, Alan, and thanks again, everyone, for dialing in today. We certainly appreciate your interest and support. Have a great day.

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