Right along. Very pleased to have Citizens Financial up next. From the company, Chairman and CEO, Bruce Van Saun. Bruce has been a very big supporter of this event since Citizens' IPO.
And prior.
And even prior in his prior two jobs, actually.
Yeah.
But since the company went public in 2014, just maybe talk to, as you look at the competitive landscape, how do you feel about the firm's current positioning? Where do you see the greatest opportunities? What are you most excited about? Yeah.
I think we're positioned very well for the future. It's been kind of a long transformation journey to get here. When I look at the strategy we have, we've tried to simplify the story and really talk about a triangle of businesses. That would be the Consumer Bank, the Commercial Bank, and P rivate Bank and Wealth. I think we have really strong positioning in each three. Lots of things to focus on to both grow households, grow customer base, grow the balance sheet, grow our fee penetration. When I look at starting with the Consumer Bank, we're very strong in mass affluent and affluent households, and have had a lot of growth in low-cost deposits. The acquisitions that we've put together in New York to compete in this marketplace have gone exceptionally well, and I think it's our fastest-growing region in terms of households and deposits.
There's a lot more that we can do to get further growth. We're number one originator in HELOCs in the country. That's a lead product to bring people into the bank, especially mass affluent households. So feel very positive about that. We're investing in our digital and our data capabilities to keep upping the game in terms of customer experience. Lastly, I'd say we've started to tap into the great opportunity to cross-sell the Wealth products and services. So see that as something that will continue to drive deeper penetration into households and our Wealth fee revenue. In the Commercial Bank, I'd like to immodestly say I think we're the best-positioned super-regional Commercial Bank when it comes to, in particular, capital markets capabilities. As the markets heat up and there's more deal activity, I think you see our revenues are flexing up.
It's a proof point as to what we have. We're going to show, I think, faster revenue growth than most of our peers, given the investments that we've made over the years. We've also made a lot of investments in the payment space, and I think there's some great opportunities there. Embedded finance is one that we're focused on. So feel good about commercial. Clearly, Private Bank and Wealth with what we did to start up the Private Bank by bringing over a lot of very talented bankers from First Republic after it failed and scaled that up and have roughly $18 billion in deposits and $10 billion or $11 billion in loans and client assets. It's now 12% of the bottom line and got a 25% ROE, and it's growing in a controlled but very strong fashion.
That has kind of no roadblocks to continue to grow at a meaningful clip. Beyond just the businesses, Reimagine the Bank which I'm sure you'll ask me some questions about, so I won't steal your thunder on that. I think the deployment of new technologies, AI, agentic AI, rethinking how we serve customers, all the functions that we do at the bank, that's going exceptionally well. I think the fact that we know how to put these things in a program to deliver results is differentiating. Feel good about that. Lastly, I think One Citizens, we have a culture of working well in a collaborative fashion across the enterprise. Having the Private Bank with the Commercial Bank working together to bank successful people across their business needs, their personal needs, their family needs for both Banking and Wealth products is pretty differentiating.
A lot of the folks we compete against, they either don't have that full product set or they don't have that culture, or they operate too much in silos. I think that can really stand out and be differentiated for us as well.
There's a lot in there, and I want to double-click on a bunch of those points. Before we do that, just maybe pull back and maybe just talk about the macro environment. Different today than when we had you here last year. Just how are you thinking about the path of the U.S. economy and interest rates? Just maybe talk about the health of your customer base, any changes you've seen recently, et cetera.
Yeah. I think the economic backdrop has been relatively good. The GDP growth for the year, I think will be at least 2%. I think we could end up ticking up a little bit. When I look out the next four or five quarters, I think we could be at 2.5%. Some of that depends on geopolitical and other events. But if you look, the economy's growing. Unemployment is holding in in the low 4%. Inflation is being affected by the war and energy prices and tariffs. But those things get absorbed, and I think ultimately we should be able to bring that inflation down, particularly if we can have a resolution to the Iran situation. But I feel there's a lot of pent-up demand around the capital markets. They're open. Spreads remain relatively tight.
We've got huge pipelines, and companies generally, our corporate customers are all having good years. They're kind of sticking to their game plans. It's a little more throttled and conservative than if we were completely without some of this uncertainty. But they are playing offense. They are investing. They are borrowing money. I think on the consumer side, clearly high-end folks are doing extremely well. They're just getting the benefit of a really high value stock market and home values holding in really nicely. But even as you go down into the lower spectrum, folks are managing okay. I think they've become adaptable and resilient, and kind of make trade-offs in how they're spending their money. But we don't see a lot of stress. We don't see delinquency roll rates ticking up or anything like that.
Got it. Maybe we could talk a bit more on the Private Bank and Wealth opportunity. I think we're up to 11.5% of earnings in the second quarter, 25% ROE deposits, loans, assets under management, or client assets all growing, as you add new offices, expand teams. First Republic kind of built that business operating very low yielding mortgages. I don't think you're taking that approach. Why don't you talk to kind of how you're gathering customers and just what does the future hold?
Yeah, I think First Republic initially offered some low mortgage rates in particular to bring customers to the bank. Then I think over time, their kind of pitch became more about the service levels that we offer white glove service, and we take the pain out of your banking experience, and we always have your back, and we have a lot of expertise. When they came over to us, that was the calling card. The reason a lot of their customers followed over to Citizens Private Bank is because they love their bankers and the experience they were getting. They already had their mortgages, and they were still kind of sold on to JPMorgan. We were in a higher rate environment, so the demand for credit from us wasn't really that significant at the outset.
So we started out, we were running a loan-to-deposit ratio of 30% or 40%. That's now moving up towards 60%. Some of those mortgages were 7/1 ARMs, and they're coming due. So we're seeing a pickup in demand for things like mortgages or CRE. But I don't really see the business getting to a point where that LDR is north of 60% or 70%. I think we have a real focus on operating accounts for PE/VC and businesses. The two-legged customers is something where we're trying to manage that LDR to be in a reasonable place. So looking forward, even if that LDR goes up a bit, so we're using a little more capital in the business, we get scale benefits as it continues to go up. So I don't see that ROE dipping.
I mean, we said initially that we'd be between 20% and 25%, and we've sustained it at 25%. But it should certainly be in that ballpark and probably closer to the higher end.
Got it. While the Private Bank gets a lot of publicity, I feel like the Commercial Bank, what you've done there over the last several years has been maybe equally as exciting. I know you're now transitioning leadership of that business to Ted Swimmer. Maybe talk any expected changes in strategy. Maybe update us what's going on there. Maybe talk to the capital markets opportunity, just given kind of a macro uncertainty out there.
Yeah. Ted, and Don, and I were the ones who made the strategic choices to build the business and do some acquisitions and build out product capabilities while we were building out some great coverage bankers. One of the things I think we made a really good call on early was how are we going to distribute coverage. Middle market is something that generally you need strong regional base of coverage bankers who know the customers and can kind of really lean in on those local relationships. As we kind of migrated up, those are generally companies $25 million - $500 million in revenues. We wanted to grow that. That's a very attractive business, and you get a lot of deposits from that business as well. Mid-corporate are bigger companies. They're usually multi-bank.
A lot of them are public, and their revenues are $500 million - $3 billion. If you're really going to play in that space, you need to bring in some bankers with industry expertise. So we set up industry verticals in areas that we thought we'd see a lot of activity, and we already had some existing knowledge and expertise and relationships. One of the ones that we saw early on was digital infrastructure as one of the verticals, and we bought an M&A boutique, DH Capital, who was one of the best independent advisors in that space. Timing was good on that one. We did that in 2022, and now you see kind of the whoosh of demand for compute and data centers and things. So we're right in the thick of it.
Making good calls across aerospace and defense, online gaming, I think we've done that well. The other one has been in sponsors. We kind of early on thought that PE sponsors would increasingly own more of middle-market Americans. So we had to build out not only the coverage bankers to cover that space, but then also the product capabilities and subscription lines and other things that they need. One of the things that makes us particularly relevant to sponsors is, if we have 4,500 corporate clients, a certain percentage are going to sell themselves every year. So we built out M&A capabilities so we can take them to market. We can either go the strategic route, or we know which PE firms, what's their swim lanes, and that makes you quite valuable because they're always looking for opportunities to put their money to work.
We've, I think, really thought through how to build this the right way along the way into six M&A boutiques. We bought JMP, which brought us some equities capability. As the IPO market heats up, we're also participating in that. Just feel really good that we have really great talent, and we can go toe to toe when the mega banks come into our space, the JPMorgans, Wells Fargos, Bank of Americas . We can win head-to-head contests with them, which feels really good.
Maybe to build on that. We've seen loan growth accelerate really across all major line items last quarter. Corporate bank was a contributor to that. We saw higher utilization rates in both corporate banking and sponsor finance. Technology, energy were kind of key contributors in industries. Maybe talk about the outlook from here and just what role is AI-related investment spending playing? What's the runway there? There's been some talk around loan spreads. How are those behaving?
Yeah. I think we're tracking to where we thought the kind of loan growth would be on a spot basis for the year. I think some of that accelerated a bit into the second quarter. So we're running a bit ahead on the average or at the top end of the range on the average loan basis. I don't look at it as quarter- by- quarter. You'll have ebbs and flows where you might have some pull forward in one quarter and then a corresponding drop off a little bit in the next quarter. You might be anticipating a repayment of a CRE loan that doesn't happen, then it happens in the next quarter.
What I would say is for the full year, I think we're tracking where we expected, and we'll have growth in the second half, but it won't be as significant as what we had in Q2. I think there's certainly plenty of competition out there, but I wouldn't say spreads are compressing at this point.
Got it. On the Consumer Bank, last quarter you unveiled this NEXT initiative, Network Evolution and eXperience Transformation. Talking about authorizing your branch network, I think that was a lot of people I talked to looked at it as like a shift from in-store back to traditional branches. But you also talk about adding specialists to select locations and focusing more on small business and Wealth. Maybe talk about the near-term and longer-term financial implications of that initiative.
Yeah, I am really excited by this. I think increasing the whole speed of our consumer deposit growth rate is really important. If your stable deposit base is growing at a good clip, that creates a lot of optionality in terms of what kind of loan growth you can go fund. That was important, and we see different banks taking different approaches on that, Jason. Some banks are moving outside of their region. They think they are saturated in their region, or they are doing acquisitions to acquire those deposits. I think that we have brought in a really strong leader for consumer, Matt Boss, who came from TD Bank and part of that Bank of America. He has got a lot of experience in the footprint about how we can tilt the playing field a little bit.
Getting mostly out of the remaining in-stores, opening up in some great locations, looking at each micro-market to optimize those markets, opening selective de novos in that, and positioning ourselves to be attractive to the kind of consumer customers we want to bring into the bank and serve, and also small businesses. There is a huge opportunity, I think, to up our game with small business and get meaningful deposit growth and fee growth from that segment. Part of this is in the short run, we will front run some of the investment in the people. They have relatively quick paybacks. So we have piloted a number of regions where we put either Wealth specialists or business banking specialists into the branch and tried to look at optimizing our sales capacity across a region. To very good results on both sides, both on Wealth results and business banking results.
That gives us the confidence that we can start to thread that in and do that pretty aggressively, I think over the next 18 or 24 months and still stay within our overall expense guardrails that we would like to set. The repositioning, we have done a lot of the work to know what is going to happen and what locations we want to move to, and we are working to secure that. That stretches out over a longer period of time. If you are moving just simply from an in-store to a nearby branch, you start with 40%-50% of the number of customers you would have in a standalone branch. If you have a pure de novo, you start with zero. I think the de novos will be spaced out.
But some of these moves out of the in-stores is more actionable, be more front-loaded, and not have a significant drag in the short term and actually start to, as you go from 40%- 50% up to 100%, really start to tick up that deposit growth rate.
You touched on Reimagine the Bank earlier, and you're in this kind of comprehensive modernization program. Maybe expand on that a little bit. Talk about how AI is impacting how you operate and serve customers today, what's driving some of those productivity enhancements you thought about. I think you talked about $100 million annualized pre-tax benefits this year, growing to $450 million as you exit 2028. Are those still the numbers and maybe the biggest near-term opportunities?
Yeah. So basically, we've looked at everything the bank does, from onboarding customers to servicing a complaint to dealing with a fraud issue, and kind of worked with a blank chalkboard and said, "Here's the technology, the people, and the processes that support that function today. And if we deploy these new tools, what could it look like in two or three years?" And the net result of that is you're going to have a much better customer experience. You're going to be more efficient in how you operate, and you'll have better kind of risk and control environment as well. So there's a lot of benefits that come out of that. The trick is getting from here to there. So I think we've gone through the architecting phase. And in various areas, of the total program, there's 50 initiatives, and probably about 30 of those involve technology.
Maybe 20 are kind of rethinking vendor relationships and trying to consolidate vendors and things like that, or facilities and kind of optimizing kind of where people work and how they show up at work. So it's a mix, but the technology stuff is already starting to drive dividends. We're capturing complaints and being able to spot things that we can improve. We're dealing with more self-service in our kind of chat in consumer. We're doing, I think, better efforts around commercial for doing annualized reviews or prospecting. So we have a lot of things in flight. Most of the benefit for this year would be kind of the tried and true in terms of got a lot of benefits coming from vendor. A number of benefits from facilities consolidation. We got some early-stage wins in the technology-driven, but that really starts to ramp in year two and year three.
The interesting thing is the $450 million is not all expenses because if you do a better job with your customers, your attrition goes down. If you can get them using your products quicker, you are deepening and generating more revenues from those customers and reducing their attrition. So by year three, we have significant revenue benefits that I think are real. A lot of times people will diss revenues and say, "Just tell me what the expenses are going to be." If you do an M&A deal, that is how people look at it. But in this instance, we have some real science behind how that is going to play out, particularly in the Consumer Bank.
Maybe we could pull up for a second before we get into some more detail. There is a lot of guidance out there for Q3 and the full year. I know there was always some puts and takes. Maybe give us any updates you provide. I know you gave us a little nugget earlier, average loans at the upper end of the range. I do not know if that was total company or commercial.
That is for the year, for the full year.
For the company overall?
Yeah. For the company overall.
Anything else you want to highlight?
Yeah. Look, I think we're having a good quarter, and I think we're comfortable with our guides. That would be the short story there.
You're probably going to get me. Now I'm just going to have to push you. Let's start with deposits. Modest growth in the second quarter. Private Bank contributed. Deposit costs did go up about 4 basis points. on the call, you talked about stronger than expected loan demand maybe kind of drove more deposit competition. Maybe just talk about kind of where we are in the quarter in terms of the competitive landscape, just near-term expectations for deposit levels, mix, pricing.
Yeah. I think the backdrop on deposit costs right now has been the anticipation of a Fed rate hike and some of your more price-sensitive customers at the bigger end, corporates, some of your higher wealth people anticipating things are going up and wanting to participate a little bit in that. So you do have a little bit of upward pressure from that. If the Fed actually goes through and hikes later this week, which is the expectation, then you'd start to reset on the asset side as well. I think the net of the reset across C&I with SOFR, which plays out a little bit over time. It's usually one-month SOFR. Then your HELOCs and your credit card plays out a little, takes a little longer.
But you're going to capture, since we're on the asset-sensitive side, that would be net accretive, net positive which at the end of the day could contribute a basis point, say, in the fourth quarter. So that's kind of the dynamic I'd say more than at this point is there is it's always competitive, so there's no incremental competitive pressure. I think the loan growth isn't as significant in Q3 as it was in Q2. So there's things that would say you're in a pretty good spot, but then there's this anticipation of the hike, which just creates a little pressure. Having said all that, again, I say I'm comfortable with our guide, and I'm comfortable that the NII and NIM outlook is still very solid. We have a lot of confidence.
I guess on NII, I guess on NIM. You talked to for the fourth quarter of this year 3.22% - 3.27%. That's up 6 - 9 basis points of expansion in the back half of the year. We may get a hike on Wednesday. The tenure, I'm told, broke 5% today. Then you talk about next year, this 3.3% to 3.5% net interest margin for 4Q 2027. Fairly wide range. I do like that cone chart you have in the slide deck. Just how does this current rate drop backdrop influence that? Just what dictates where you kind of end up within those ranges?
Yeah. Well, I'd say in the second half of this year, there's more weight. If you look at the time-based on those charts, there's more benefit in Q4 than Q3, and I think that's embedded in most analysts' guides. We still have a lot of confidence in kind of the fourth quarter being a pretty big uptick that puts us into that range. Then when we go forward into 2027, there's a number of factors. You'll have fewer time-based benefits, but still some. You have a pretty good front-back book dynamic as the curve stays steep. That can contribute even more. Then there's really just the overall balance sheet dynamics as to can you keep growing your low-cost deposits? Do we get the benefit of some of the actions we're taking in the Consumer Bank?
Does the Private Bank continue to grow at the same mix that they've had? The balance sheet dynamics and pricing dynamics in the market have an impact that could be positive to that, or it could be a little bit of a challenge. But I think at this point, we're still pretty optimistic that that ends up being net positive.
Got it. At the start of the year, you were talking about 10%-12% Net Interest Income growth. You'll likely exceed that just based on the stuff you talked about on the earnings call. I like the quote you had, "Objects in motion tend to stay in motion." As we begin to think about 2027, it's really not hard to get to a high single-digit NII growth rate based on what you said. Is that kind of the right way to think about it? Just in an increasingly competitive environment for lending and deposits, just how are you thinking about balancing higher net interest margin with Net Interest Income? That's something we're starting to hear more about.
Well, you're not going to trick me into giving guidance on 2027 yet. But yeah, I think based on a full-year effect of where we've come this year, there's going to be a lot of lift built into next year. So I feel good about the outlook for NII for next year. I'll say that. I do think that the economy, if it's growing at 2.5%, there'll be reasonable amount of loan demand. If loans are growing, deposits tend to grow. We have idiosyncratic things to Citizens around the Private Bank getting loan growth, getting deposit growth that is differentiated versus our peer group. So yeah, I do feel that NII should be strong, and that's kind of a locomotive that pulls the rest of your PPNR forward.
I guess maybe shifting to on the fee income side. Record second quarter for capital markets. Wealth management was an all-time high. A lot of your payment businesses did well, aided by seasonality. But just as you look forward, I think you talked to kind of the upper end of the 6%-8% growth base for this year. Just where do you see the biggest opportunities?
Yeah. So clearly capital markets, given what we've built, and we've been in a lackluster external environment for the better part of 3 .5 , four years, and that's changing. You can start to see every quarter we're having record quarters. We look at our pipelines and the kind of deals that we're working on. It's very exciting. I do think in that business, our ship is coming in, and it still has a lot of room to run as we look out into 2027. We've also been hitting record quarters in Wealth. Every next quarter is bigger than the last, which creates a new record. That's a business that we're doing well in the branch-based business serving the mass affluent customers. Then we're kind of adding to that by investing in our Wealth capabilities in the Private Bank. We're getting good levels of cross-sell.
But we're still bringing teams in and expanding our wingspan overall in the business. So Wealth would be another one that I feel quite positive about. Payments is no slacker. They've been growing maybe 10% a year for the last three years. Kind of card fees. We've launched a new card complex, and that is gaining good traction. So it's not just a one-trick pony. It's not just capital markets. I think it's diversified, but I think the star of the show for the next six quarters is going to be capital markets.
Got it. Then maybe on the expense side. This year, you pointed to more than 600 basis points of positive operating leverage for the full year. I imagine you started the budgeting process for next year. Just how are you thinking about expense growth and operating leverage? I know in the past you've talked about this 4.5% kind of expense growth number. I think right now you're still 61% efficiency ratio, wanting to get to the mid-50%s. Can you talk to how you can get there and what role AI plays?
Yeah. So I think, yeah, we'll have 600 basis points or whatever this year, positive operating leverage. That's the name of the game, to drive your ROTCE higher, is to make sure that when you're getting that revenue growth, you don't just go out and spend it. I do think investors want to see us get to the ROTCE destination before we do too much investing. We already have quite a bit on our plate investing in the Private Bank. We kind of set a constraint that we want to keep the overall expense growth at the 4.5%. I think on the last guide, we said that could be a little higher just because of the compensation related to the higher revenues. But we're not going crazy. We're taking our discipline, maintaining that discipline. There are opportunities.
There's a lot of people, for example, in Commercial Banking that are looking to jump platforms and would love to come to Citizens. They love our story. We just have to say, Rome's not built in a day. We can't just bring them all on at once, and we have to pace ourselves and kind of target the sectors that we think are the bankers that can have the biggest impact here. Anyway, between the continued build-out of Private Bank, NEXT program, commercial with all these talent acquisition opportunities, we try to manage that kind of to a level that we think allows us to sustain high operating leverage so we can really land the plane in that 16%-18% ROTCE level.
I do think that RTB will start to contribute to lower expense levels, and how much of that we flow through versus reinvest in some of these other opportunities is still TBD. I don't like to kind of stick a pin in it until we get there, and we actually see the things come through, and then we'll be more transparent about how we're approaching that. Clearly, in the past, when we always ran our top programs, a lot flowed through to benefit the shareholders. We have this mindset of continuous improvement. If we're going to spend money, then we have to figure out ways to fund that.
Got it. Credit quality has been very benign. Are there any areas you're watching more closely than others? Anything you're paying particular attention to?
No, I feel good across the board. We don't see any real hotspots in C&I. I mentioned nothing in consumer that's been concerning. Then in CRE, the reason that we still have higher charge-offs than we would kind of at this point in the cycle is we're still working off the backlog of the office portfolio, which is much smaller and much more under control, and a lot of it's behind us. There's still probably a few more quarters to kind of get that completely behind us. But now we're back in the mid to high 30s in terms of charge-off rate, and I think that could ultimately settle down in the low 30s once that residue from the office portfolio gets behind us.
All right. Then capital. Very good stress test results. I know the SCB didn't count this year but came down a lot. If we understand the Basel III endgame proposal, that's another kind of benefit to Citizens. You have talked about slower buyback in the third quarter. Can you talk to just how you think about capital return? Then ultimately, where do you kind of think CET1 ends up?
Yeah. So we were pleased with the SCB. I think when the new models, I'll just put this little anecdote in there. When the new models are approved, I think we'll be even better. So we won't just be at the floor, we'll be below the floor. Everybody likes to publish that number. So stay tuned on that. But it's been a long time coming. But look, we have kept the CET1 ratio a little higher than our stated range, which has been 10% -1 0.5%. We've generally had it at 10.6% or 10.7%. It dipped a little last quarter. But with all this uncertainty to run with a little extra capital, I think is sensible. We are committed to the strong dividend and then to do smart bolt-on M&A, and then kind of return what's left to shareholders.
So we've been pretty aggressive for the last three or four years just in terms of the amount of stock that we've bought back. I'm pleased that we kept a conservative capital profile so we could buy in our stock when it was washed out with everybody else's, and no one else was buying back the stock. Anyway, that was a real benefit. But I think over time, we can start to migrate back into that 10% - 10.5% range. Clearly, we'll take a lot of things into consideration on that. Regulator, rating agency, where are peer levels. But the business model we focused over time and making sure that you want to own this stock because it's got good returns, but we've chopped off a lot of the tail risk, and we've really tightened our risk appetite on credit.
I think we're being really smart about how we're hedging interest rate risk. So I think we probably could run closer towards 10% over time.
Got it. Staying with that theme a little bit, M&A, we did Matrix Capital earlier this year. You have mentioned some other non-bank acquisitions earlier. Just what else in that segment interests you today? Then you talked about in the past your success with Investors Bancorp and HSBC's branches. Just why haven't you been more aggressive buying banks?
Well, I would say on the bolt-ons, to answer that part of the question, we selectively will look if we are trying to strengthen an industry vertical. Is there something we can buy to plug in to really give us more capabilities and presence? That has been one. The lift-outs, they are not technically acquisitions, but these teams that we are buying in the Private Wealth space, that will continue. I think we should see a half a dozen of those this year and next year, and there was half a dozen last year. So that activity continues. We like the payment space. Whether we need to buy something or we can partner with people, that is the other kind of place. But that is not a huge shopping list. Those are not hugely expensive deals, but we continue to troll for things that are attractive in that space.
I think on the banking, at this point, we have so much organic growth, and what we have heard from investors is you have got the Private Bank that is like a juggernaut. Just keep focused on that, on maturing that and hardening that. You have got Reimagine the Bank, which is also another capital-light way to really boost your returns and your overall earnings level. So don't get distracted. Don't go out and buy things. When I look around at what there is to buy, there is nothing that we feel that if we plug it in, it is going to make a dramatic difference. So staying focused on the things that matter. There may be a time where we come back and look at stuff harder, but we are really not looking at this point.
Got it. We have got a minute left. I am going to take you through some math. But you did 14% ROTCE in the second quarter. If I just take my model and just roll through the terminated swaps and fixed rate asset repricing, I get to 16%. Factor in organic growth net of some AOCI impacts, get to 17% ROTCE. Reimagine the Bank kind of wasn't in your kind of ROTCE target. So you think you make the case for even higher returns over time? I don't know if you necessarily endorse the math or not. But maybe how do you kind of think about returns? What do you think is kind of underappreciated about the earnings power of the franchise today?
Well, I think we've been really transparent in showing that ROTCE walk. What are the elements that are going to contribute to getting that ROTCE to a level? Then really how sustainable is that? Are we over-earning in any place like the spread coming off the balance sheet or on credit or anything? I don't think so. I think that 16%-18% is pretty solid. One of the things that makes a big difference for a bank like us with a big consumer deposit base is getting off of ZIRP, which for 15 years you had zero interest rates and getting the Fed funds back up kind of starts to show the true earnings power of the franchise. Now with a business like the Private Bank that's ROE 25%, it's now 12% of the bottom line and going to keep expanding.
We have drivers that put kind of upward pressure when we get through time-based and we get through credit normalizing. There's things that should continue to deliver a positive push on that ROTCE. Anyway, I'm not going to recast the 16% - 18% at this point. We got to get there. Anyway, we like our chances of getting there. I think we've been pretty transparent. I think the market, fortunately, has come around to believe, yes, it's doable. They're good at execution. They just got to keep their head down and keep executing, then we'll see where we are at that point.
Great. Perfect place to end it. On that note, please join me in thanking Bruce for his time today.