1 00:00:00,040 --> 00:00:02,120 Speaker 1: We've been talking a lot about the election, but before 2 00:00:02,160 --> 00:00:04,280 Speaker 1: we get there, runners will be off to the races 3 00:00:04,360 --> 00:00:06,600 Speaker 1: this Sunday at the New York City Marathon, and for 4 00:00:06,640 --> 00:00:10,040 Speaker 1: the second consecutive year, Citizens will be the official bank 5 00:00:10,160 --> 00:00:12,879 Speaker 1: of the race. The bank has also announced a one 6 00:00:12,960 --> 00:00:16,560 Speaker 1: hundred thousand dollars grand to help improve green spaces in 7 00:00:16,600 --> 00:00:18,680 Speaker 1: the city. For more on the race and the future 8 00:00:18,720 --> 00:00:20,760 Speaker 1: of Citizens, I'm pleased to say we're joined now by 9 00:00:20,760 --> 00:00:24,680 Speaker 1: Bruce Benson. He is Citizens Financial CEO. Bruce, it's great 10 00:00:24,720 --> 00:00:27,440 Speaker 1: to speak with you again. Interested to see, of course 11 00:00:27,440 --> 00:00:29,920 Speaker 1: that you're sponsoring the marathon for the second year in 12 00:00:29,960 --> 00:00:32,440 Speaker 1: a row, and it really lines up with this push 13 00:00:32,720 --> 00:00:36,600 Speaker 1: that Citizens has made into New York City in particular. 14 00:00:37,000 --> 00:00:39,400 Speaker 1: Where are you on that tell us about the progress 15 00:00:39,440 --> 00:00:40,760 Speaker 1: that you've made in New York City. 16 00:00:41,640 --> 00:00:44,160 Speaker 2: Yeah, so we have been at it now for two 17 00:00:44,240 --> 00:00:46,360 Speaker 2: or three years in New York and. 18 00:00:46,280 --> 00:00:48,680 Speaker 3: It's been really going well. 19 00:00:48,760 --> 00:00:52,080 Speaker 2: So I would say when we look at our regions, 20 00:00:52,120 --> 00:00:55,080 Speaker 2: it's the fastest growing region that we have in the system. 21 00:00:55,120 --> 00:00:58,120 Speaker 2: We're growing households at kind of mid single digits and 22 00:00:58,160 --> 00:01:01,880 Speaker 2: we're growing deposits at mid to high single digits. But 23 00:01:02,040 --> 00:01:04,520 Speaker 2: it certainly is an expensive market and there's a lot 24 00:01:04,560 --> 00:01:08,160 Speaker 2: of competition there, so we've looked for opportunities to elevate 25 00:01:08,200 --> 00:01:11,160 Speaker 2: our brand, and partnering with New York road Runners and 26 00:01:11,200 --> 00:01:15,959 Speaker 2: the New York Marathons such a distinctively New York experience 27 00:01:16,360 --> 00:01:18,000 Speaker 2: really has been beneficial to us. 28 00:01:18,800 --> 00:01:21,040 Speaker 4: I want to get to the rate environment here, Bruce, 29 00:01:21,080 --> 00:01:24,720 Speaker 4: because the FED is starting to cut obviously looks like 30 00:01:24,800 --> 00:01:27,800 Speaker 4: they're going to continue. Is that bad for you? Net 31 00:01:27,800 --> 00:01:32,360 Speaker 4: interest margins is something we instantly think about with banks 32 00:01:32,360 --> 00:01:36,679 Speaker 4: because obviously, especially a local bank will make all of 33 00:01:36,720 --> 00:01:40,800 Speaker 4: its money or the majority of it, from getting more 34 00:01:40,840 --> 00:01:43,160 Speaker 4: on loans than it pays on deposits. 35 00:01:44,160 --> 00:01:46,320 Speaker 3: Yeah, so it's a little complicated. 36 00:01:46,880 --> 00:01:52,000 Speaker 2: Actually, the banks typically are benefited from higher rates, but 37 00:01:52,760 --> 00:01:57,000 Speaker 2: we have different strategies to cope with lower rates, including hedges. 38 00:01:58,000 --> 00:02:02,000 Speaker 2: So I'd say we're pretty neutrally positioned at this point. 39 00:02:02,240 --> 00:02:05,440 Speaker 2: I think that there's other benefits from falling rates, and 40 00:02:05,520 --> 00:02:08,320 Speaker 2: you'd have to take into accounts. So first is it'll 41 00:02:08,360 --> 00:02:12,120 Speaker 2: stimulate more loan demand, so you'll get the volume effect 42 00:02:12,960 --> 00:02:18,120 Speaker 2: that will be beneficial. You also stimulate deal activity, so 43 00:02:18,200 --> 00:02:22,359 Speaker 2: capital markets fees should kick in more, and it's beneficial 44 00:02:22,400 --> 00:02:26,600 Speaker 2: to borrowers, particularly the more levered borrowers like commercial real 45 00:02:26,720 --> 00:02:32,160 Speaker 2: estate owners, will have a chance to refinance at more 46 00:02:32,160 --> 00:02:35,040 Speaker 2: attractive rates, So that'll be good for bank credit costs. 47 00:02:35,040 --> 00:02:38,079 Speaker 2: So you kind of have to look across to all 48 00:02:38,160 --> 00:02:41,520 Speaker 2: of the different ways that banks perform, and lower rates 49 00:02:41,560 --> 00:02:45,400 Speaker 2: I think are going to be beneficial, and that's one 50 00:02:45,400 --> 00:02:49,320 Speaker 2: of the reasons bank stocks have been performing recently, well, 51 00:02:49,680 --> 00:02:50,799 Speaker 2: last thirty days or so. 52 00:02:51,000 --> 00:02:53,600 Speaker 5: You know, Bruce Wee, we have right now price of 53 00:02:53,840 --> 00:02:56,480 Speaker 5: your stock over the last one year surging about eighty 54 00:02:56,520 --> 00:03:00,760 Speaker 5: two percent. Clearly investors look to citizens as a place 55 00:03:00,760 --> 00:03:03,760 Speaker 5: of stability here in a regional banking market where there 56 00:03:03,800 --> 00:03:06,440 Speaker 5: are a lot of other concerns. We have an amazing 57 00:03:06,480 --> 00:03:09,360 Speaker 5: story on Bloomberg right now about how for the first 58 00:03:09,360 --> 00:03:13,000 Speaker 5: time since the Great Financial Crisis, buyers of top rated 59 00:03:13,040 --> 00:03:16,280 Speaker 5: commercial mortgage backed securities are suffering losses with triple A 60 00:03:16,400 --> 00:03:21,160 Speaker 5: bonds going bust. How much more pain is there in 61 00:03:21,200 --> 00:03:24,440 Speaker 5: parts of this real estate market, especially in some of 62 00:03:24,480 --> 00:03:26,640 Speaker 5: these big cities that you're keeping an eye on, And 63 00:03:26,680 --> 00:03:28,080 Speaker 5: what might it mean for the industry. 64 00:03:29,160 --> 00:03:33,640 Speaker 2: Yeah, I would say, you know, all real estate is local, 65 00:03:33,800 --> 00:03:37,160 Speaker 2: so it certainly depends kind of where the properties are 66 00:03:37,200 --> 00:03:39,880 Speaker 2: located and what the tenant structure is. 67 00:03:39,880 --> 00:03:41,440 Speaker 3: If it's an office. 68 00:03:41,360 --> 00:03:46,680 Speaker 2: Location, office is really the area that has to readjust 69 00:03:46,720 --> 00:03:50,120 Speaker 2: so there has to be some losses recognized. You have 70 00:03:50,200 --> 00:03:54,600 Speaker 2: to take some stock out of circulation and basically get 71 00:03:54,680 --> 00:03:58,840 Speaker 2: supplied back to equal demand as companies need less office 72 00:03:59,480 --> 00:04:02,680 Speaker 2: space given the slow return to office trends and the 73 00:04:03,040 --> 00:04:05,480 Speaker 2: kind of permanence of hybrid work arrangements. 74 00:04:05,560 --> 00:04:08,000 Speaker 3: So that's going to play out gradually. 75 00:04:08,280 --> 00:04:12,600 Speaker 2: I think most banks are well reserved for their exposure there. 76 00:04:12,680 --> 00:04:15,920 Speaker 2: We feel we are, so I think it's not big 77 00:04:16,000 --> 00:04:19,599 Speaker 2: on the worry list these days from investors in bank 78 00:04:19,640 --> 00:04:22,599 Speaker 2: stocks that they've seen banks get. 79 00:04:22,400 --> 00:04:26,080 Speaker 3: Their arms around around around most surprises. Currently. It is 80 00:04:26,200 --> 00:04:29,040 Speaker 3: tough on the office segment, but banks are working work it. 81 00:04:29,680 --> 00:04:32,599 Speaker 1: Yeah, it seems definitely like investors have found other things 82 00:04:32,640 --> 00:04:34,640 Speaker 1: to worry about. To your point, I want to talk 83 00:04:34,640 --> 00:04:37,720 Speaker 1: a little bit about private credit here, private capital. It's 84 00:04:37,760 --> 00:04:41,720 Speaker 1: an area that you've highlighted as a potential opportunity for citizens, 85 00:04:41,760 --> 00:04:44,160 Speaker 1: especially when it comes to leverage lending. 86 00:04:44,400 --> 00:04:44,719 Speaker 2: There. 87 00:04:45,279 --> 00:04:47,880 Speaker 1: Where are you on that journey? How do you differentiate 88 00:04:47,920 --> 00:04:51,320 Speaker 1: from some of your peers, particularly in the regional space. 89 00:04:52,480 --> 00:04:55,599 Speaker 2: Yeah, so we've been focused on private capital for a 90 00:04:55,640 --> 00:05:00,760 Speaker 2: long time, so starting with private equity sponsors who increasingly 91 00:05:00,800 --> 00:05:04,320 Speaker 2: own more and more of middle market companies in America. 92 00:05:05,000 --> 00:05:06,839 Speaker 2: So you want to be able to service them, You 93 00:05:06,880 --> 00:05:08,760 Speaker 2: want to be able to show them deal flow, you 94 00:05:08,800 --> 00:05:11,080 Speaker 2: want to be able to finance their transactions. So I 95 00:05:11,120 --> 00:05:14,080 Speaker 2: think we're very well positioned for that. The more recent 96 00:05:15,240 --> 00:05:19,680 Speaker 2: emphasis has been on private credit, so as the private 97 00:05:19,720 --> 00:05:24,120 Speaker 2: equity folks look to expand their overall complexes, they're getting 98 00:05:24,160 --> 00:05:27,480 Speaker 2: into private credit and there's direct players in private credit, 99 00:05:28,160 --> 00:05:32,080 Speaker 2: and they're looking to finance more leverage transactions. In some 100 00:05:32,200 --> 00:05:36,640 Speaker 2: cases they're disintermediating banks, but in many cases banks don't 101 00:05:36,680 --> 00:05:40,320 Speaker 2: play at that end of the leverage spectrum. So banks 102 00:05:40,360 --> 00:05:42,880 Speaker 2: are looking to see how can we serve those players. 103 00:05:43,440 --> 00:05:47,280 Speaker 2: They need credit themselves, so can we lend to their 104 00:05:47,360 --> 00:05:50,640 Speaker 2: fun complexes in a safe and secure way. And I 105 00:05:50,720 --> 00:05:54,200 Speaker 2: also think that we've developed good relationships there and we're 106 00:05:54,680 --> 00:05:57,720 Speaker 2: also having opportunities to lend to those complexes. 107 00:05:57,760 --> 00:06:00,520 Speaker 3: So net I think we're positive. 108 00:06:00,279 --> 00:06:02,679 Speaker 2: As opposed to it being a worry beat in terms 109 00:06:02,720 --> 00:06:06,280 Speaker 2: of kind of opportunities leaving the banking system. 110 00:06:06,160 --> 00:06:08,160 Speaker 1: Right, Well, that's exactly where I wanted to go because 111 00:06:08,160 --> 00:06:10,839 Speaker 1: it seems like private credit that industry, in the banking 112 00:06:10,880 --> 00:06:13,400 Speaker 1: industry are kind of frontemies at this point. And my 113 00:06:13,520 --> 00:06:15,719 Speaker 1: question to you is going to be have you seen 114 00:06:15,800 --> 00:06:19,200 Speaker 1: private credit encroach on your territory? But just to crystallize 115 00:06:19,240 --> 00:06:22,400 Speaker 1: your point, it sounds like you're saying no, Yeah. 116 00:06:22,440 --> 00:06:25,520 Speaker 2: I mean, there will be some deals that we lose 117 00:06:25,920 --> 00:06:29,440 Speaker 2: but at the margin, But for the most part, we're 118 00:06:29,480 --> 00:06:32,920 Speaker 2: playing in our sandbox. They're playing in a slightly different sandbox, 119 00:06:32,960 --> 00:06:35,279 Speaker 2: and then they need banks to make their strategies go, 120 00:06:35,480 --> 00:06:37,560 Speaker 2: so you have to turn that kind of risk into 121 00:06:37,640 --> 00:06:38,440 Speaker 2: an opportunity. 122 00:06:39,360 --> 00:06:42,200 Speaker 5: I'm curious as we get into this part of the cycle, 123 00:06:42,279 --> 00:06:44,479 Speaker 5: when we get into a regular way bank lending to 124 00:06:44,600 --> 00:06:46,800 Speaker 5: consumers as well. Brus, I'd love for you to comment, 125 00:06:47,200 --> 00:06:50,160 Speaker 5: we saw a consumer sentiment really start to tick up 126 00:06:50,200 --> 00:06:53,440 Speaker 5: once again. Do you think that this could be a 127 00:06:53,480 --> 00:06:57,680 Speaker 5: bullish signal for ANII and lending moving forward? Do you 128 00:06:57,720 --> 00:07:00,719 Speaker 5: think people are ready to take on debt to start spending. 129 00:07:02,120 --> 00:07:07,080 Speaker 2: Well, I'd say there's a couple of considerations there. One is, 130 00:07:07,480 --> 00:07:10,600 Speaker 2: the higher rates have been an impediment from people wanting 131 00:07:10,640 --> 00:07:15,160 Speaker 2: to borrow, so as rates come down, that'll stimulate, I 132 00:07:15,160 --> 00:07:20,200 Speaker 2: think more more borrowing and lending. The other aspect has 133 00:07:20,200 --> 00:07:24,520 Speaker 2: been uncertainty, and so I think more broadly in the economy, 134 00:07:24,600 --> 00:07:29,679 Speaker 2: the election coming up and the prognosis are we going 135 00:07:29,680 --> 00:07:31,880 Speaker 2: into a soft landing? Are we going into a recession? 136 00:07:31,920 --> 00:07:34,560 Speaker 2: I think the more we see clarity on that we 137 00:07:34,640 --> 00:07:37,040 Speaker 2: get through the election, we have a better census to 138 00:07:37,920 --> 00:07:40,120 Speaker 2: is the economy holding up? It seems like it is. 139 00:07:40,760 --> 00:07:43,440 Speaker 2: That gives people more confidence. So I would say the 140 00:07:43,480 --> 00:07:46,480 Speaker 2: two things, less uncertainty, more conviction on the path of 141 00:07:46,560 --> 00:07:49,920 Speaker 2: the economy, and then lower rates. The combination all of 142 00:07:49,960 --> 00:07:52,160 Speaker 2: that should mean that there's going to be more loan 143 00:07:52,200 --> 00:07:54,000 Speaker 2: demand as we head into twenty twenty five. 144 00:07:54,680 --> 00:07:57,120 Speaker 4: All right, Bruce, great to get your take on these issues. 145 00:07:57,160 --> 00:07:58,119 Speaker 4: Great to have you on the program. 146 00:07:58,160 --> 00:07:59,120 Speaker 3: Thanks so much for joining us. 147 00:07:59,120 --> 00:07:59,360 Speaker 5: Bruce. 148 00:07:59,360 --> 00:08:03,600 Speaker 4: Fans on there of citizens Financial group. And are you 149 00:08:03,640 --> 00:08:06,400 Speaker 4: gonna run the marathon? No? Does either one of you run? 150 00:08:06,560 --> 00:08:08,120 Speaker 5: I do have I can't do more than that. 151 00:08:08,120 --> 00:08:09,520 Speaker 4: I know you run marathons, right. 152 00:08:09,520 --> 00:08:11,720 Speaker 1: Well, I was a middle distance runner in college, so 153 00:08:11,960 --> 00:08:13,480 Speaker 1: I like to keep the races shorter. 154 00:08:13,800 --> 00:08:16,400 Speaker 4: All right, we're they're saying, yeah, I like to keep 155 00:08:16,440 --> 00:08:17,880 Speaker 4: my race is very short.