Photo by James Sanna | Banker & Tradesman Staff/file
In its third-quarter earnings call Wednesday, Providence-based Citizens Bank revealed that its new private bank had eclipsed $5 billion in deposits.
That’s up from $4 billion in the second quarter and $1.2 billion in the first quarter, making for a 316 percent jump since March 31, and follows Citizens’ hiring of several wealth executives from competitor banks at the start of the year.
“Our strategy rests on a transformed consumer bank, the best positioned super-regional commercial bank and the aspiration to have the premier bank owned private bank,” chairman and CEO Bruce Van Saun said during the call. “We reached breakeven in August and September, and expect to be profitable in Q4 with good momentum entering 2025.”
Citizens recently opened two new private bank offices in the San Francisco Bay Area and also made additions to its private banking team to help cover southern California. According to Citizens’ earnings presentation, roughly 34 percent of Citizens Private Bank deposits are non-interest-bearing.
“You should expect to see us opportunistically adding talent to bolster our banking and wealth capabilities. Notably, our private bank revenue grows 64 percent to $49.7 million in the third quarter, breaking even by mid quarter,” CFO John Woods told investors Wednesday. “We are on track for the private bank to start contributing to earnings in the fourth quarter and add meaningfully to [earnings per share] next year.”
With the Federal Reserve signalling it’s in the opening stages of an interest rate-cutting campaign, and more expected to come in the future, Citizens expects that it will be able to lower the cost of deposits and that it will be much easier for the bank to drop deposit rates.
“I think the way to think about that is, the longer the down cycle lasts, the more you can continue to contribute to ongoing lowering of deposit costs but broadly, I think what we’ve said in the past was that our down cycle betas are going to approximate our upcycle [deposit] betas,” Van Saun stated.
Citizens’ net interest income was $1.4 billion in third quarter, a 2.9 percent dip from the second quarter. The bank’s net interest margin of 2.77 percent was down 10 basis points compared to the second quarter. Looking further back, net interest income decreased 10 percent and net interest margin decreased by 26 basis points year-over-year.
