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

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So the balance sheet on the deposit side, certainly we have the mix of cash management operating deposits as well as interest-bearing. But we are going to heather all relationships to being primary banking, whether it’s corporate or whether it’s personal. So you could expect low cost DDA to be mixed in with interest-bearing for a healthy profile primary banking relationships. On the asset side, I’d say we’re expecting about a 50/50 mix, what I would call sort of consumer personal retail lending and small-business and corporate lending. And on the personal lending side, really the large asset classes are going to be mortgage, home equity, and eventually partner loan program, where we are putting capital to individuals to engage as a partner and a higher-end consulting firm or private-equity firm, very traditional low-risk assets.

But this lodges the operating deposits and ultimately lead you to AUM. And on the business side, as mentioned earlier, the profile of the team we got over, does have a bent towards the innovation economy. So we’re expecting capital call line lending to dislodge operating deposit relationships with private equity and venture. And small segment where it’s appropriate relationship-wise on potentially multifamily in a very-high credit environment where we can also secure the personal wealth relationship. All of our balance sheet usage will be oriented around full end-to-end customer relationships that include deposits and ultimately AUM growth. So it’s a very integrated end-to-end business model and we feel like we’ve got the right recreation of the service strategy, married with the right corrections to the business model to ensure we get better profitability and also a stable business model that can withstand the test of time.

If that – we think we can get a really good growth around this, but we will control the growth with a guardrail of adequate profile of the business that will be healthy and profitable over the long haul.

Ken Usdin: Great color. Thank you, Brendan. And just one more question on the other side of the BSO. John, obviously talking a lot about the consumer side of the non-core portfolio here. Can you just dig and just let us know, you previously had done a lot on the commercial portfolio. And I’m just wondering, have you done any key currently deep diving into the CRE book, as you’ve talked about on the credit side. What might there still be to do on the commercial side of the portfolio in terms of BSO from that perspective. Thanks.

John Woods: Yes. I mean, I think, and as you know in this portfolio that we set up, that’s – it’s entirely a retail portfolio in terms of that $14 billion, but there are nevertheless in parallel BSO activity is continuing in the commercial side, and let Don talk about that.

DonMcCree: Yes, so we’ve been at this for probably three or four years now as we just grown out relationships where we haven’t been able to achieve across all that we’ve thought we have been achieved when we were going into the credit, several years ago. So it’s really an ongoing effort. It’s been running about $1 billion a year, and we probably will be running about that same pace. The good news is we’ve been able to replace some of that with growth in places like New York Metro, where we see a good amount of opportunity on a full wallet basis, particularly in the middle market, as we bring on these new hires. On the CRE side, as everybody knows, there is not a lot of liquidity, but there is some liquidity and we’re actually moving some of our exposures after the agencies and then do some private capital also.

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