All right. We're gonna get started here. Up next, joining us for the 10th straight year, I think every year they've been a public company. We're excited to have Citizens. Citizens had a busy year, continuing to build out its private banking initiative, optimize its balance sheet, and expand its franchise and private capital, and the New York Metro area, among other things. You know, they appear well-positioned to deliver best-in-class earnings expansion the next few years. Here to tell us more about the path ahead is Chairman and CEO Bruce Van Saun. Today's presentation's gonna be a fireside chat, and I do believe that they have some slides out there for those who wanna reference them. Bruce, thank you for being here once again.
My pleasure.
You know, maybe to kick it off, so it's been a busy year for the bank with lots of initiatives going on, all the things I referenced: the private bank, New York Metro, private capital, and a handful of others. So maybe just talk about, you know, the strategy behind all these initiatives and how do you think the bank is positioned to succeed in 2025? And kindly mute your phones.
I think the way to simplify, like, what we're trying to do is we talk about a triangle of businesses. We have our transformed consumer bank, our best-positioned commercial bank, and then we're aspiring to have the premier bank-owned private bank, and so the various initiatives that you laid out fall under each of those elements of the triangle. If I start with consumer, we're very focused on kinda transforming that deposit base and kinda moving up markets. We're really targeted on mass affluent and affluent value propositions, and we've been steadily doing that over time, and you can see that the actual deposit performance this cycle was kind of near the top third of our 10-bank peer group, and previously we've been at the bottom, so we've made a lot of progress there.
We're offering more advice to help people on their life journey, so there's a huge potential cross-sell over to wealth that we're positioned to capture, and then the last element in consumer has been geographically attacking that New York Metro opportunity, so if you wanna be a strong Northeast bank, you can't just be in New England and pick up in the middle and avoid New York, so the play we made three years ago or so with HSBC's East Coast branches and Investors Bank giving us 200 branches in the New York Metro region, a million new customers, that was gonna be a lot of work 'cause both franchises, legacy franchises, had underserved their customers relative to our standard, but we're really making a great go of it here in New York. We're growing households mid-single digits, growing deposits high single digits, gaining market share in a tough market.
So, that's how I would kinda frame what we're doing in consumer. In commercial, we've spent years really just building up coverage and building out the product capabilities and focus specifically on sponsors and serving private capital. Initially, that was private equity, but as private credit's come along, we have strategies to kinda serve the whole complex and help them be successful. I'd say we didn't really get the full benefit of kinda the revenue productivity from those investments because the market was in a lull for most of 2022 and 2023. It started to come back nicely in 2024, and I think our year-to-date capital markets revenues are up close to 50%. The pipelines are strong, and I think there's gonna be even more deal activity next year.
I kind of look at that build-out to serve private equity, who owns over half the middle market companies, in the U.S., being a real strength of ours. Beyond that, though, we were kinda very focused on industry verticals and having good teams that help serve the kinda power alleys of the U.S. economy.
Mm-hmm.
I think that's gone well. Then we've looked at to expand our middle market geographic coverage into important regions of the country like Florida and California. So we've just added teams in the last six months to go into those states. We feel very good about the commercial bank positioning. Then lastly, the private bank, we bid for all of First Republic. As you know, JP Morgan won. A lot of the folks didn't feel they fit into the way JPM runs the wealth business and looked for a new home and came over to us. We picked up teams in Boston, New York, Florida, three teams in the San Francisco Bay Area. In the fourth quarter, we've added another team in Southern California. So that business has gone very, very well.
Like, we're kinda at or exceeding all of our targets around deposits, loans a little softer with the high interest rates, but AUM as well. We're doing a bunch of lift-outs to help build up the wealth side of that. So you wanna provide for wealthy, sophisticated people, entrepreneurs, business needs, personal needs on the banking side, but then also for their wealth needs as well. So, anyway, we're heads down. This has been a year to really drive execution and feel really good about how we're progressing.
So, lots of things in there that we will get into, Bruce. Maybe just as you look into the future, you know, you've been targeting a 16%-18% return. While there's been some noise in the results from BSO, the build-out of the private bank, the core bank is still putting up an 11% return in what has been a challenging backdrop. Maybe just talk about the path from getting from where you're operating today to 16%-18%. What are the key drivers, and over what timeframe do you think this can happen?
Sure. So, you know, we're down at 10 or 11. We laid out an important slide in our last earnings deck that shows that return is suppressed by, you know, actions that we took when rates were low.
Mm-hmm.
Folks either invested in securities or put on swaps to hedge the downside of rates coming down quickly, which didn't happen. In hindsight now, you've got a drag on your returns from some of those swap positions. If you just look at kinda the runoff of the accounting hit, once you terminate, we terminated a lot of those swaps, that the expense get amortized.
Mm-hmm.
Into the future. That combined with our non-core runoff, which is pretty much like clockwork, it's auto loans, it just pay off, really pops about three or four hundred basis points to ROTCE without us having to do anything. It's all time-based. So that is a nice step up.
Mm-hmm.
We have some other swaps, and then we have other dynamics around the balance sheet, front book, back book, that probably is another couple hundred basis points. So you could get up into that kinda 15 or 16 just from those balance sheet dynamics alone. Then you look at driving the successful execution of private bank and the other initiatives I just talked about, that's a couple, two, three hundred basis points. And then probably credit is we're over-providing today versus peace time. You pick up a little on that, and then offsetting that a little bit'll be the AOCI drag will normalize. That's helping ROTCE today.
Mm-hmm.
In a strange way. But anyway, if you take that off, then you're solidly in that 16-18. So I think we feel extremely confident that we'll be able to migrate up to that and kinda hit that in kind of maybe 2026, 2027, as kinda those we execute well and some of those time-based benefits kick in.
Maybe let's spend a minute on the economy. So post the election, there seems to be a lot of excitement that, you know, we'll have an administration that's pro-business. You know, I know you're out in the markets a lot talking to commercial clients. Maybe just talk a little bit about how were they feeling about their business post the election.
Yeah, I'd say, folks are, like, they're happy that uncertainty's behind them.
Mm-hmm.
So uncertainty's always a dampener in terms of investing sentiment and people figuring out, like, their game plans for next year. So, I'd say one of the advantages we have is that we saw Trump 1.0, so now we have Trump 2.0.
Mm-hmm.
And there'll be some differences versus that. But it's generally gonna be, you know, pro-business, you know, pro-energy, kinda less taxes, less regulation, which generally creates a more conducive, business environment for, companies to invest. And so I'd say, there's cautious optimism here about, things going forward. And also that deal activity that, you know, we've had a lot of, extra scrutiny on transactions, not just in the banking industry, but across all industries, and, kind of a bias against bigness, which I think that'll dissipate, to a significant degree. So I do think that, certainly private equity, when you look at the deals that they're, kind of working on and they're in the pipeline, I think you'll just start to see, much more activity as we get into 2025 and 2026.
Gotcha. Makes a lot of sense. So, you know, one of the things that transpired over the year is obviously loan growth has been somewhat disappointing given all the uncertainty that you talked about waiting on the election, what the Fed's gonna do with rates. I'm just curious, based on your conversations, that what you're seeing and hearing, what are your expectations for loan demand, both, you know, on the commercial side and consumer? And how long do you think it's gonna take for us to start to see more, you know, meaningful, core loan growth to pick up?
Yeah. Well, you know, the economy, you know, people were worried for a good part of this year as to whether we would have a soft landing or go into a recession. And so I think that kinda held back, kind of borrowing and investing, which I think now the view is gonna be more positive that we're likely to see, you know, not a gangbusters growth in 2025, but certainly, we won't. We can take recession off the table and it looks like we'll have a nice environment, which I think will allow companies to play more offense, make more CapEx investment, do more deals.
So we'll start to see the return of new money transactions, which a lot of the past year or two has been a lot of refinancing transactions, either inside the BSL market or going out to the bond market. So I think that playing offense translates into more loan demand, and that can come in new facilities. It can also come in higher line utilization, both for traditional corporates and for subscription lines and other ways that the private capital complex borrows money. So I think that's the kind of thing that will change. It's not gonna turn on a dime.
Mm-hmm.
I think it's, you know, still not here yet.
Yep.
I think, but as we go through 2025, particularly get into the middle to the back of the year, I think, I think that should start to pick up and be meaningful. We have another driver as we're standing up the private bank, and they bring over new companies and new individuals, and rates come down. I think there's also opportunities for us to see nice growth in private banking. Then I'd say in consumer, you'll see traditional areas like mortgage and HELOC and card. You'll see some modest growth going forward as well.
Maybe to dig into some of the initiatives you just referenced, growth in the private bank, you've been building it out. You reached a milestone in the third quarter with break-even, you know, despite I think you just referenced before loan growth has been a little softer. Talk about how the build-out has been progressing, what have been some of the lessons learned, and how do you feel about some of the key financial targets that you had laid out regarding this?
I think the lesson that is almost a universal lesson is you win with great people. We had an opportunity to bring over the A -Team of the folks who built private banking at First Republic, and we weren't gonna swing and miss on that. That was a huge opportunity. You know, because they're so talented and their customers really respect them and wanna continue to bank with them, we've seen kinda huge inflow of customers. We actually, during parts of the year, we've had to add kinda extra shifts to just keep up with all the account opening, which is a nice problem to have. You know, I couldn't be more pleased with how they have kind of migrated into the Citizens' environment and they're customer-obsessed, we're customer-obsessed.
You know, they're learning some things from us, we're learning some things from them. I do think, you know, one of the things they sold was white-glove service and taking the pain out of the banking experience, and there's a lot that goes into that First Republic had years to build. We have all the core systems, but, to actually, kinda get the user experience in terms of very sophisticated single sign-on and things like that for a complex, banking array and wealth array, we're running hard to try to get those things in place.
Mm-hmm.
But I think, we're getting there. We're making substantive progress. And when we nail some of those things, I think there's some we're building it in a way that can help the rest of the bank.
Yeah.
And how we serve the broader customer base as well. So anyway, so I think it's going well. I think we're tracking to exceed on deposits, exceed on AUM, a little lag on loans when we get to the end of the year. But you know, if you're growing deposits $1 billion-$1.5 billion a quarter consistently, that's some very nice growth. And the other thing to point out is that the composition of that deposit growth is very attractive. So our demand accounts are kind of in the mid-30s.
Mm-hmm.
and the spread on loans versus deposits is very accretive to our net interest margin.
Mm-hmm.
It's good business that we're putting on the books.
Maybe to shift gears a little, talk about private capital. This is an area where you've had tremendous success. You know, you're number one in sponsored middle market book runner and, you know, been building a host of other capabilities. You know, parts of the lending business have been held back by higher rates. So maybe you just talk about where you're investing within that ecosystem. What are the best opportunities in that business? How are you working with private credit and do you view this as an opportunity or a threat?
Sure. Well, on the private equity side, we've been there for a long time, and I think we have, over time, added to our coverage banking force and we're covering more firms. We probably started out with, you know, 75 middle market-focused sponsors, and we're probably up to, say, 175, and client selection is very important there. You want folks who appreciate what a bank like us can do for them and that treats their banks well historically, so you don't have, you know, credit, undue credit risk, but anyway, I think, I think we're very well positioned. The fact that we also have 4,500 traditional middle market and mid-corporate companies that we service, and a certain number of them are gonna put themselves up for sale every year.
Mm-hmm.
And that's merchandise that we can show some of these PE firms is an extra edge that, you know, that's the number one thing they want is, how do I put my money to work? How do I get good opportunities to invest? So I think we've run the whole gamut of providing the financing solutions, showing deal flow, etc. Similarly, on private credit, they need to, you know, find opportunities where can they invest their funds. And so they can be a customer of ours. At some times, they could be a competitor to us, but it's typically on more leveraged structures.
Yep.
And so, you know, we've kinda looked at the T -account, so to speak, of, over the last two years, have we lost more revenues or gained more revenues since private credit is in the ascendancy? And it's actually gained more by a fairly meaningful amount. We're, you know, one of the things those private credit funds need is leverage. So they typically will own assets in a portfolio, say, of 100 credits. They put that in a securitization structure and want the banks to have a very low LTV loan against that with certain rights that make it very safe lending. But that's interestingly turns individual lending to one of their leveraged companies, which can be, say, a B+ risk.
Mm-hmm.
At a certain spread. In these securitization structures, you can lend, you know, the diversification effect takes you up a notch to, say, A or A+, and you're still making very attractive spreads and good risk-adjusted returns. So you just have to be smart. You have to be adaptable. The world's always gonna change.
Mm-hmm.
We've seen it for how many years we've been in the business, 30, 40 years, and you try to, you know, turn, you know, threats into opportunities, minimize the threat aspect.
Mm-hmm.
Look for opportunities to serve that as a new customer base.
Let's shift gears and talk about some financial things. So, you put out a medium-term target for a 325-340 NIM. You laid out some of the factors for swaps, non-core runoff, you know, improving balance sheet mix, and obviously the strength of the deposit base, which has been an ongoing project. And I think this included reaching 3% in 2025. However, I think some people walked away from last quarter's EPS call thinking that it was more back-end loaded. And since earnings, we've obviously seen the rate curve move around a bit. So, can you square what the margin message you're trying to get across and what will it take to reach that targeted level?
Yeah. So I think, again, that slide lays out that a lot of this is time-based. And we had kind of a time-based contributing 18 basis points to 25. It goes up to 33, so another 15 in 2026, and then gets to 40 in 2027. So actually, it isn't really that back-end loaded.
Mm-hmm.
There's some elements of kind of the rest of the balance sheet management, some of the active swaps that we have, and some of the frontbook-backbook dynamics that'll even that out. But we're looking for a nice benefit next year, a bounce-back year in terms of our EPS, and that'll be fueled by that NIM kinda lifting and kinda getting back towards something. You know, if you added the 18 basis points to our guide of 282, you're getting close to a 3% NIM. And so the nice thing about NII is you don't need a lot of people. It's not. There's not a high cost of goods sold. It just kinda drops through, and it is very beneficial to your operating leverage.
So I'd say, you know, we look out, we see that, I think, good fee growth opportunities based on how the capital markets business is positioned. And so we think, you know, 2025 will be a real bounce-back year for us.
So, Bruce, earlier on, you referenced the transformation of the deposit base. So last cycle, you were on the upper end of peers when it came to deposit cost increases. This time, you were one of the best. And there've been a handful of things driving this, right? Growing low-cost branch-based deposits. I think it was a 7% CAGR from 2018- 2023. Obviously, Metro New York, customer acquisition. Talk about what had drove this improvement this cycle and how does that position you for the next leg of the rate cycle?
Yeah. I think it's, you know, you have to look back to our heritage and how RBS assembled Citizens with acquisitions of a number of thrifts and savings and loans, that really was a rate-led value proposition and over time moving away from that to be kind of advice-led, and service-led, value proposition. So I think we've been very astute at segmenting the customer base and the mass affluent, affluent, using data and analytics to help personalize the offerings to people as we tried to grow those attractive mass affluent, affluent segments. So that really was, I think, the key on the consumer side of the house.
And I'd say, you know, in commercial, getting into certain areas that we didn't have significant capabilities, especially serving escrow needs, bankruptcy accounts, and broader services, investing in our cash management platforms to really make them kind of best in class in our regional bank space. Those are things that help drive that. And then the added element, you know, we have the private bank now, which is actually bringing in very attractive deposits, and they're not being utilized fully in the private banking, funding private banking loans. So that excess allows us to pay off less attractive sources of funding like FHLB borrowings, like brokered deposits. And so the balance sheet continues to clean up. We're kind of not focused on growth at the moment.
It's less run off, you know, now that deposits are more scarce, and everybody was caught up in growth when the Fed was.
Mm-hmm.
Going through quantitative easing. Let's look at what we have on the balance sheet, kinda where our loan capital is allocated, rejigger things. Let's get out of the auto business. Let's get out of our flow agreements. Let's start to run down CRE, and let's really focus on growing the things like C& I and some of the attractive consumer classes. So we're doing that, and we're doing the same thing on the right side of the balance sheet, which is, you know, let's make sure we really have a stable cadre of low-cost deposits, spread across our businesses and that we can kinda continue to grow that at a decent low speed so you can grow that 3%, 4%, 5% every year.
So, you know, maybe more near term, Bruce. So we're two months into the quarter. You've given a handful of items for 4Q. I think it was NII up one and a half to two and a half, the margin up five, fees up mid-teens, single-digit costs up 2%, and stable charge-offs. Maybe just give us an update on how the quarter's progressing and any trends that you're seeing in the market.
Yeah, so we feel really good about the guide and the quarter. I think it starts with revenues, and so I think we're feeling good about the NII guide, good about the fee guide. The NIM was something we called out that we thought we could grow five basis points sequentially. I think there was maybe a little head-scratching on that, but we kind of had some things built in. We could see the progression of last quarter that as the months went on, we were getting already closer to kinda the destination, and we thought we'd do a really good job on managing deposit betas as the Fed was cutting rates, and we've done that, so you know, we thought we could get the deposit betas to 40%, and you know, I think that clearly is in hand at this point, so it starts with that.
It starts with, you know, your revenue outlook. Feel good about that. Wanna have a good jump-off point as we go into 2025. You know, there's no surprises on credit or capital. You know, expenses we're managing. I mentioned we're taking opportunities to invest a little bit in adding that team in Southern Cal and adding the bankers, middle market bankers, in Florida and California. So, you know, when your revenues are coming in, you can invest a little bit more, but we're still disciplined, as you would expect, on the expense side as well.
Great. Maybe to build on one point, you noted that, you know, you talked about a 40% near-term beta. You're having success and maybe something similar on the way down as you had on the way up, so maybe low 50s. You know, obviously, the environment has shifted a little bit. We've heard from some other banks good near-term success, but maybe a little bit slower than they had thought just given the, you know, less rate cuts. How are you thinking about overall your ability, given that, as you just said, you're in optimization mode on the deposit side? How does that along with the shifting rate curve impact your ability to bring down rate over time?
Yeah. I mean, I would look at it, you know, when if you go back to that slide that we used that showed that cone from 325 to 340, because we're still modestly asset-sensitive. It actually, if the Fed goes on a softer glide path than a hard one, it actually pushes up us higher on that range. So anyway, I think we'll wait and see how that plays out. Most banks, including ourselves, are close to neutral, but we still are a bit asset-sensitive, which should be a benefit.
You know, you referenced it earlier, but obviously, post-election markets have become optimistic regarding capital markets, which I've enjoyed to see. Can you maybe just talk about what you're hearing from clients in terms of willingness to transact? What do you think capital market activity looks like not only in 2025 and over the next few years? What are the other best opportunities to grow fees looking ahead?
Yeah. So, clearly, capital markets, I'd keep at the top of the list. We've just built kind of great capabilities across helping our clients access the capital markets, access the loan markets, or do M&A. And so, I think there was a concern across a number of fronts, but regulatory was one of them, is that, you know, people I think were reluctant to go through these kind of long approval processes with uncertain outcomes. And so I think if we're back to game on, we can do deals. I think that's helpful. I also think rates coming down, particularly for levered players, is gonna be helpful. So anyway, we see lots of conversations. We're in the middle of a lot of things, and pipelines are strong. And I think that'll kind of come in for 2025.
I'd say the other big opportunity for us is in wealth, where, you know, if we had to be self-critical 10 years on, what did we get right and where are we behind where we hope to be? Wealth would be one area where we would say we were behind, not for lack of trying. We've made a lot of progress, but they're hard yards. But the real wealth opportunity, I think, is at the higher end of the pyramid. And now with the private bank and by doing these lift-outs and building out our private wealth capabilities, I think there's an opportunity to really step up and grow wealth fees. And, you know, the lower end of that in serving the branch customers for affluent and mass affluent customers also, I think we have a lot of momentum right now.
We have great new leadership, and things are going quite well there. So I would say capital markets, wealth, you know, we're doing solid, growth in card fees.
Mm-hmm.
So there's kind of all through the Global Markets, which encompasses our interest rate, FX and commodities hedging. I would say had a softer year than we expected.
Mm-hmm.
Due to lack of volatility and lots of uncertainty. I would expect that to also rebound somewhat next year as well.
When you think about investing into next year, you've obviously committed to positive operating leverage in 2025 and for the next few years. When you think about investing in the franchise, are we back to more normal? You know, obviously, 2024 was a very successful year on the cost front. Are we back to more normal years where we have some headline expense growth that's a little bit more elevated and we use TOPs to get back to more normal run rate?
Yeah. I think that's what you would expect. It all starts with your revenue outlook. And, again, the confidence that we have that the NII is suppressed today and when the swap drag burns off and some of the other things we're doing kick in, we should see healthy revenue outlook across 2025, 2026, and 2027. It actually builds in 2026 and 2027. So then you kinda start to look at, you know, how much do I wanna invest in some of the things where I have a strong franchise, and I wanna keep growing it. I think this year, you didn't get to do a lot of that because you were suppressing your expenses 'cause you knew it was gonna be a tougher revenue year. So I don't think it's a, you know, there's a bounce-back that is just automatically gonna happen.
Mm-hmm.
I think we'll continue to stay disciplined on the core expenses of running the bank. I think AI will help there. But I do think discretion from a discretionary standpoint, there's a lot of really interesting things for us to look at, starting with, you know, building the private bank and private wealth out further, building the coverage and the commercial bank out further, investing in our payments capabilities. There's a huge opportunity around payments to turn that from a threat into an opportunity.
Mm-hmm.
Like I said, and embedded finance. There's a lot of fintechs who are kinda looking to upgrade from small banks as their partner to bigger banks like us. And so there's just some really great things to think about, which you kinda have to ratchet down when you get in a year like, you know, 2024.
Yeah.
That you can start to think about again, but still maintaining those guardrails that you wanna run with positive operating leverage, which is what drives up your ROTCE.
Sure. So, shifting to capital. So banks in a very strong capital position, I think, you know, 10.6, which is above the target, one of the strongest adjusted capital ratios without needing to raise capital or do anything strategic. And, you know, you've been buying back stock consistently at a $200 million-$300 million a quarter clip. When thinking ahead, like, maybe give us some updated thoughts on capital allocation. You know, are you planning on getting more aggressive in returning capital? Are you holding dry powder for the return of loan growth? How are you thinking about capital allocation into next year?
Yeah. I think we've been comfortable operating where we are, just above the high end of the range given some of the uncertainty, and I'd say we were able to buy back a lot of stock this year, given that there wasn't a lot of loan demand. We actually were shrinking loans when you consider non-core net-net, and you know, we still were making a good, good return, so it gave us the wherewithal to buy the stock. It was nice to buy back the stock when it was quite a bit lower than it is today. Usually, companies in the tougher times, they don't have the wherewithal to buy back.
Mm-hmm.
Their stock. But we were able to do that, which was great. I think when we look out to next year, I think there'll be more loan growth. And so that's always been the top priority.
Mm-hmm.
So depending on the amount of the loan growth, you know, then after you pay your dividend, the next thing up is a good, attractive loan growth. Let's do that. And kinda the buyback then slides down in terms of your priority. So if the loan growth doesn't come through, you'll continue to buy back a decent amount of stock. If the loan growth comes through, you'll just buy back less stock.
Noticed you didn't make any reference to inorganic activity there, Bruce. You know, the bank has not been interested in M&A for a variety of factors, you know, the balance sheet marks and the other items. Do you think the shifting political and regulatory environment changes the way you think about acquisitions, whether traditional bank or even non-bank acquisitions?
Yeah. I'd say, we have a lot of growth that's built into just executing what's on our plate. And I, I really, wanna focus on that primarily. So let's make sure this private bank is getting across the river to the promised land. That is worth a huge amount of potential accretion to our bottom line. If you think about, you know, we said in 2025, when we launched the private bank, it should be 5% accretive to the bottom line, which it, it easily should be. But if I go back and think about, the deal metrics when we bought Investors Bank, you know, roughly $30 billion, it was a little more than that, but not a whole lot different than that.
Mm-hmm.
So, in that timeframe. So, you know, we can get a lot through these organic investments. Having said that, you know, there'll be more, I think, bolt-ons that attract us. These wealth lift-outs are somewhat like acquisitions.
Mm-hmm.
You know, is there as we build out our industry verticals, do we need M&A capabilities in a certain vertical? Those are pretty small, easy-to-digest things. In the payment space, which I think is really interesting and a lot of great innovation is taking place, there's something to buy as opposed to partner. Those are the things that would kinda be at the top of our list. I think you'll start to see deals flow again with rates coming down and the regulatory posture changing. But I think it'll probably tend to be more at the lower end where there's a need for more consolidation. It'll be interesting to see if kinda folks in our size category get active.
Yep.
and we'll kinda just be in a good position to play if something beautiful comes down the pike. But I'm not prioritizing that as something that we have to do.
Maybe just one last question to end on, Bruce. You touched on credit a couple of times. We're running around 50 basis points. You noted that, you know, maybe that's elevated where you expect to be. At earnings, you had some positive comments near the peak and NPA criticized. Maybe just give a quick rundown how you're feeling in credit over the medium term and, you know, maybe separating it out office versus everything else.
Sure, so, you know, I'd say, ultimately, we'd like to get back down to kind of low 30s, mid-30s.
Mm-hmm.
It's kinda what the composition of the kinda consumer and C&I and commercial real estate should deliver on a more through-the-cycle basis. We actually, I think, it's improved from where it had been historically as we exit the auto business. That was one of the higher charge-off portfolios.
Mm-hmm.
In consumer, so in any case, I feel like we should be able to operate in that, and the thing that's kept us elevated up around 50-55 right now is CRE, and it's CRE office.
Yep.
In particular. So that continues to be, you know, the pig going through the python. And I think there's a few more quarters of that before that starts to come down. But we're very heavily reserved on that. And I don't see it getting any worse. I think it's tracking to kind of what we expected. And maybe there's a possibility it gets a little better. But I wouldn't make that call at this point.
Great. Please thank me for joining Citizens.