Photo by James Sanna | Banker & Tradesman staff

Citizens Bank jumped into what it said was a “void” in the region’s banking market for the richest individuals and businesses Thursday, launching a private bank and beefing up its wealth management services with new hires.

Citizens Private Bank will provide banking services to high-net-worth individuals, families, and businesses. It has so far attracted $500 million in deposits and investments, according to the bank’s third-quarter earnings report.

The bank will open six private banking offices later this year and throughout 2024, located in Boston, New York City and Palm Beach, Florida, as well as in places throughout the San Francisco Bay Area—downtown San Francisco, Silicon Valley, and Marin County.

After hiring 50 wealth managers from the defunct First Republic Bank this summer, Citizens also said Thursday it hired 25 additional employees to beef up its wealth management and private banking business.

Donald H. McCree, vice chair and head of commercial banking at Citizens, said the bank seeks to “quickly fill a void left in the private banking market” after the failure of First Republic Bank and Silicon Valley Bank this spring. He said Citizens wants to serve clients in the private equity, venture capital and multifamily industries who are looking for a “strategic partner to help them with their unique financial journey.”

The bank also noted that family foundations, nonprofits, commercial real estate firms and life science companies would be targeted. It provides services such as personal and commercial banking, financial and retirement planning, and investment management.

“Today’s launch represents a significant step forward for Citizens and our Private Banking and Wealth Management strategy, as we bring to market an extraordinary client service model for high-net-worth individuals and businesses,” Brendan Coughlin, vice chair and head of consumer banking at Citizens, said in a statement. “We’ve continued to grow our talented team of relationship managers, wealth managers, and support staff in a market that has been materially disrupted, which positions Citizens to be a preeminent Private Bank over time.”

Susan deTray will head Citizens Private Bank, while each of the private bank’s expansion regions – Boston, New York City, the San Francisco Bay Area and Palm Beach – will have teams of four to six relationship managers.

Quarterly Earnings

Citizens also reported its third-quarter earnings this week. The bank saw its third-quarter net income amount to $430 million, which was lower than $478 million from the previous quarter and $636 million from the same time last year.

This was due to lower net interest income and margin given the high funding costs outpacing the higher yields on loans as well as $35 million in non-core expenses from starting the new Citizens Private Bank business. Net interest income (NII) was down 4 percent quarter-on-quarter to $1.52 billion from $1.58 billion while its net interest margin (NIM) fell to 3.03 percent from 3.17 percent the previous quarter.

Loans and leases declined to $150.8 billion from $153.7 billion in the second quarter while deposits ended higher at $178.2 billion, up from $177.7 billion a quarter ago.

The bank is gradually raising capital as its common equity tier one capital (CET1) ratio is at 10.41 percent after it repurchased $250 million in common shares.

“We continue to post solid results through a dynamic environment. Our spot deposit levels were up slightly relative to the second quarter and broadly stable with a year ago, and our NII and NIM were in line with expectations. We increased our CET1 ratio to 10.4 percent while continuing to repurchase a modest amount of stock. The ramp of the Citizens Private Bank is making good progress, with several launch events over the next few weeks, and the non-core rundown is on track. Successful execution of these initiatives will meaningfully bolster EPS and returns,” Citizens Chairman and CEO Bruce Van Saun said in the bank’s earnings release.

“We will continue to play strong defense given the external environment, while advancing important strategic initiatives,” he added.

Citizens also declared a quarterly common stock dividend of $0.42 per share, payable on Nov. 15 to shareholders of record on Nov. 1.