Citizens Financial Group Inc ($CFG) Q4 2025 Earnings Call

Welcome and thank you for standing by. All participants will be on a listen-only mode until the question and answer session of today's call. At that time to ask a question, please press star one. Today's conference is being recorded. I would now like to turn the conference over to Kristen Silverberg. Thank you. You may begin.

Thanks Julie. Good morning everyone and thank you for joining us. First this morning, our chairman and CEO Bruce Van Saun and CFO Anoi Banerjee will provide an overview of our fourth quarter and full year results. Brendan Coughlin, our president, and Don McCree, our chair of commercial banking, are also here to provide additional color. We will be referencing our fourth quarter and full year presentation located on our investor relations website. After the presentation, we will be happy to take questions. Our comments today will include forward-looking statements which are subject to risks and uncertainties that may cause our results to differ materially from expectations. These are outlined for your review in the presentation. We also reference non-GAAP financial measures. So, it's important to review our GAAP results in the presentation and the reconciliations in the appendix. And with that, I will hand it over to Bruce.

Thanks, Bruce. Good morning, everyone. I am excited to be part of team Citizens and to help execute our well-planned strategy. Now, turning to our performance, as Bruce indicated, we delivered strong results in 2025 that were in line with our expectations at the beginning of the year. The fourth quarter delivered continued good performance and we are well positioned for 2026. Referencing slides 3 to 7, I will provide some highlights for the full year and the fourth quarter. First spending a moment on the full year results, we delivered EPS of $3.86 for 2025, up 19% on an underlying basis, and that includes a 28 cent or just over 7% contribution from the private bank. Importantly, we also achieved full year positive operating leverage of approximately 125 basis points on an underlying basis. Net interest income was up 4% as we delivered 13 basis points of margin expansion. Fees were up a strong 11% on an underlying basis, led by record results in both wealth up 22% and capital markets which had a nice pick up in the second half up 9% year-over-year. Expenses were managed well, up 4.6% on an underlying basis, reflecting the continued investment in the buildout of the private bank and wealth. We also managed credit well, maintaining strong reserve coverage levels with credit losses coming in line with our expectations at the start of the year. We ended the year in a very strong balance sheet position, maintaining robust capital, strong liquidity levels, and a healthy credit reserve. For the fourth quarter, we generated EPS of $1.13, up 8% linked quarter and 36% year-over-year and delivered a 12.2% ROTCE. The private bank continues to steadily grow its earnings contribution, adding 10 cents to EPS in Q4, up 2 cents linked quarter. Now I will talk through the fourth quarter results in more detail. Starting with net interest income on slide eight. Net interest income increased 3% linked quarters driven by a strong expansion of our net interest margin and a 1% increase in average interest earning assets. Our net interest margin continues to steadily expand up seven basis points this quarter to 3.07%. Three basis points of the margin expansion was driven by the benefits of non-core runoff and reduced impact from the terminated swaps, what we refer to as time-based benefits. The rest was a combination of fixed rate asset repricing and lower funding cost which was partially offset by lower asset yields. We continued to do a good job optimizing deposits in a competitive environment. Interest bearing deposit costs were down 15 basis points while total deposit costs were down 12 basis points. Our cumulative interest-bearing deposit beta is about 48% through the end of the year. Moving to slide nine. Fees are down 2% quarter but up 10% year-over-year on an underlying basis. Our wealth business delivered another record quarter driven by continued progress in the private bank and strength in the retail network up 5% linked quarter and 31% year-over-year. These results reflected higher advisory fees with continued positive momentum in fee-based AUM growth, including strong inflows from the conversion of private wealth liftouts as well as market appreciation. Capital markets delivered its third best quarter ever, up 16% year-over-year, though down 16% compared with the exceptionally strong third quarter. Several M&A and equity deals were pushed into 26 given the impacts associated with the government shutdown. As a result, we expect roughly $20 million of related fees to be recognized in the first quarter. Despite deals pushing into 26, our equity underwriting performance was still up nicely linked quarter and up significantly year-over-year. Loan syndication fees were very strong this quarter driven by refinance activity and bond underwriting fees were solid although lower than the very strong third quarter. We continued to perform well in the league tables, ranking second in the fourth quarter and fourth for the full year on both volume and number of deals for middle market sponsor loan syndications. And our deal pipeline across M&A debt and equity capital markets remain strong. On slide 10, expenses are up 6% on a sequential basis, largely reflecting continued investment in the buildout of the private bank and private wealth and higher incentive compensation. Disciplined expense management and strong revenues resulted in approximately 79 basis points of improvement in our efficiency ratio to 62%. Our top 10 program achieved $100 million of pre-tax run rate benefit exiting the year and we have launched our Reimagine the Bank initiative which I will discuss in more detail shortly. On slide 11, average and period end loans were up 1% or up 2% excluding the non-core portfolio runoff of roughly 500 million in the quarter. We saw solid loan growth across each of the businesses as non-core runoff and balance sheet optimization impacts lessened. The private bank delivered solid loan growth again this quarter with period end loans up about $1.2 billion driven by a pickup in sponsor line utilization along with growth in multifamily and residential mortgage. Commercial loans were up slightly on a spot basis driven by net new money originations in corporate banking and higher commercial line utilization partially offset by CRA paydowns. We continued to reduce CRA balances which were down about 4% this quarter and 10% for the year. And retail loans saw some nice growth driven by home equity and mortgage. Next on slides 12 and 13, we continue to do a good job on deposits with non-interest bearing balances up 2% maintaining a steady mix at 22% of the book even as our total spot deposits increased approximately 2% to $183 billion. Average deposits were also up 2% or $3.9 billion driven by growth in the private bank, commercial, and retail. Private bank deposits reached $14.5 billion at the end of the year, including some larger flows towards the end of the quarter. We continue to focus on optimizing our deposit funding costs, reducing the average rate paid across all businesses, driving interest-bearing deposit cost down 15 basis points linked quarter. This combined with the growth in non-interest bearing deposits helped to drive our total deposit cost down 12 basis points. And importantly, our non-interest-bearing and low-cost deposit mix increased to 43% and our stable retail deposits are 65% of our total deposits, which compares to a peer average of about 55%. Moving to credit on slide 14. Credit continues to trend favorably with net charge offs coming in at 43 basis points down from 46 basis points in the prior quarter. Non-accrual loans are down slightly linked quarter driven by a decrease in commercial real estate. Criticized balances also continued to decline. Turning to the allowance for credit losses on slide 15. The allowance was down slightly to 1.53% this quarter as the portfolio mix continues to improve due to non-core runoff the reduction in the CRA portfolio and lower loss content frontbook originations across CNI and retail real estate secured. The economic forecast supporting the allowance is relatively stable with the prior quarter and as we look broadly across the portfolio the credit outlook looks good. The general office portfolio continues to work out as expected and we maintain a robust allowance of 10.8% coverage. Importantly, the cumulative charge off plus the current reserve translates to a total expected lifetime loss rate of about 20% against the March 23 loan balance. And that level has been consistent with our view for the past year. Moving to slide 16, we maintain excellent balance sheet strength. Our CET1 ratio is 10.6% and adjusting for the AOCI opt out removal, our CET1 ratio increased to 9.5%. We returned a total of $326 million to shareholders in the fourth quarter with $21 million in common dividends and $125 million of share repurchases. For 2025, we returned $1.4 billion or 80% of our 2025 earnings to shareholders. We repurchased $600 million of common stock at an average price of $44.55 representing about 3% of outstanding shares at the beginning of the year. Our tangible book value per share increased to $38.7, up $1.34 or 4% sequentially with full year growth of $5.73 per share or 18% year-over-year. Moving to slide 17 through 20. We are well positioned to drive strong performance over the medium-term with our overall focused strategy. A transformed consumer bank, the best positioned super regional commercial bank, and our aspiration to build the premier bank-owned private bank and private wealth franchise. The private bank continues to make excellent progress. As you see on slides 19 and 20, we exceeded our balance sheet targets and delivered full year earnings of 28 cents, contributing a little over 7% to EPS in 2025, well ahead of our original projection of 5%. The private bank delivered strong deposit growth again this quarter, ending the year at $14.5 billion. Importantly, the overall deposit mix continues to be very attractive with about 36% in non-interest bearing at the end of the year. We also delivered strong loan growth in the quarter, adding roughly a billion dollars of loans to end the year at $7.2 billion. Since the launch of the private bank in 23, we have added 10 wealth teams to our platform with more in the pipeline. We ended the year with $10 billion of total client assets reflecting the continued strong conversion rates of the wealth hires. We have more runway here and we plan to continue adding top quality teams in key geographies. Given the investments we have made and our plans to further expand the private bank in 26, we think deposits can grow to 18 to 20 billion, loans in the range of 11 to 13 billion and client assets 16 to 20 billion. We expect this growth will help drive an increase in private bank's earnings contribution to mid-teens in the medium-term while maintaining a 20 to 25% ROE profile. Moving to slides 21 and 22, we have launched our firmwide Reimagine the Bank initiative. The objective is to position Citizens for long-term success by embracing a host of new innovative technologies across the bank and simplifying our business model which will reshape our customer experience and drive a meaningful improvement in productivity and efficiency. Slide 21 will give you a sense for the scope of the effort which spans nearly every part of the bank. Slide 22 lays out our financial targets for the program for 2026. We expect to minimize the EPS impact of one-time cost and capital investments by prioritizing initiatives with faster paybacks. There will be about $50 million of front-loaded one-time cost that will be effectively offset by $45 million of benefits to be realized later in the year. The program will drive positive net benefits in 27 that we expect will accelerate in 28. And we are targeting fully phased in pre-tax run rate benefits of approximately $450 million as we exit 2028. Roughly two-thirds of these benefits are tied to expense efficiencies which equate to about 5% of our full year 2025 expense base. Importantly, we are confident that the financial benefits of Reimagine the Bank will be additive to the 16 to 18% ROTCE targets we expect to achieve in the second half of 27. Moving to slide 23, I will take you through our full year 26 outlook which contemplates a forward curve with two 25 basis point Fed cuts, one in June and other in September, ending the year with Fed funds approaching 3% to 3.25% and a 10-year Treasury rate anchored around 4.25%. We expect NI to be up 10 to 12% with NIM expanding about four to five basis points a quarter toward 3.25% in 4Q26. Loan growth is expected to pick up this year with spot loans up 3 to 5%, average loans up 2.5 to 3.5% and overall earning assets up four to 5%. Non-interest income is expected to be up 6 to 8% driven primarily by wealth and capital markets. We are projecting expenses to be up 4.5% as we are confident in our revenue outlook and we plan to maintain our investments in growth initiatives. This translates to a 2026 full year operating leverage in excess of 500 basis points. We have provided a walk showing the key components of our 26 expense growth on slide 24. Credit is projected to continue to improve through the year with our outlook for net charge offs in the mid to high 30s basis points. Along with this credit trends, the improving credit trends the portfolio mix will also continue to improve. And finally, we expect to end the year with strong CET1 ratio of 10.5 to 10.6%. We expect to generate a substantial amount of capital which will put us in an excellent position to push forward with our strategic priorities while returning a substantial amount of capital to shareholders. Notwithstanding anticipated strong loan growth, we expect to repurchase 700 to $850 million in shares this year. Full year 2026 earnings incorporates a nice lift from the continued growth of the private bank. On slide 25, we provide the guide for the first quarter. Note that the first quarter has seasonal impacts on revenue with lower day count impacting net interest income. Taxes on the FICA reset and compensation payouts impacting expenses. Fees are normally softer in the first quarter, but we are expecting a strong performance from capital markets after incorporating the deals that were pushed from the fourth quarter. Moving to slides 26 to 28. Looking out over the medium-term, we see a clear path to achieving our 16 to 18% ROTCE target in the second half of 27 with further momentum in 2028. Reimagine the Bank benefits will be additive to returns. Expanding our net interest margin is a key driver which we project to be in the range of 330 to 350 basis points in 2027 along with the impact of successful execution of our strategic initiatives improving credit performance and delivering a strong capital return to shareholders. To wrap up, we delivered a good performance in 2025 in line with our expectations. We have a strong outlook for 2026 with significant margin expansion, good momentum in wealth as we continue to grow the private bank and we see our ship coming in on capital markets given the capabilities that we have built over the years. All of this puts us in a very good position to hit our medium-term 16 to 18% ROTCE target in the second half of 27. With that, I will hand it back over to Bruce.

Thank you. If you would like to ask a question, please press star one. To withdraw your question, press star two. Once again to ask a question, please press star one. Our first question comes from Ryan Nash with Goldman Sachs. Your line is open.

Good morning everyone.

Bruce, you know, appreciate all the details on the Reimagining the Bank. I think you noted in the slides that this should add, you know, 2% on ROTCE. First, maybe just talk about how much of this hits the bottom line versus gets reinvested and if it is reinvested, what are the areas that you will invest in? And then second, you know, the slide 28 says that you're not incorporating any of these benefits. Does this increase your confidence in getting to the high end or do you think this serves more as a hedge in case other parts of the business don't perform? Thank you. And I have a follow-up.

Got it. And then if I look on slide 27, you know, your prior NIM walk had deposit betas in the low to mid 50s. I think now you're saying high 40s. Maybe just talk about what is driving the change. Is it competition or a change in your strategy? And what are some of the offsets that are allowing the NIM to still reach slightly higher levels versus the prior expectations? Thank you.

Thanks for the call, Bruce.

Thank you. Our next question comes from Erica Najarian with UBS. Your line is open.

Hi, good morning. Just wanted to ask about the puts and takes on the loan growth guide. You know, it feels like a bit of, you know, sort of best-in-class relative to peers. Maybe remind us, Bruce, in terms of where you are in your balance sheet optimization journey. And as we come to a point where rates may come down, talk to us about, you know, the push-pull in terms of optimizing CRA versus taking advantage of potential refinancing opportunities.

Yeah, I'll start Erica by just talking about the environment. I mean across the board we're seeing positive sentiment from the client base. So Bruce mentioned the expansion markets, they're growing. So I think New York, California, Florida, they're growing extremely quickly. Those are core middle market relationships with full wallet realization. So not only is loan growth materializing, but we're also seeing it from an ROE standpoint being very attractive business. We're seeing remember for most of the last two or three years, the market has been really a refinancing market. I think Anoi mentioned that we're seeing new money demand both in our core client base which is translating into utilization growth and we're seeing it powerfully in the sponsor business where the sponsors finally seem to be coming alive and that'll impact not only our capital markets businesses but also our NBFI lending as we engage with the private capital community both on the PE capital call lines and private capital leveraging lines. So across the board, a pretty strong environment to be operating in and that should drive higher levels of loan growth as we look into 26 and beyond. We were probably running close to a billion dollars of CNI BSO over the last few years. That really is down to BAU. We're pretty much done with that. If it was going to be half a billion, I'd be surprised. But it'll be just a continuous kind of rhythm of cleaning out under returning relationships and replacing them with new relationships. And then the change in real estate, we're going to continue to trim the real estate exposures, but we're beginning to turn on the origination engine. And that's both private bank and commercial bank and we will be replacing some of the BSO that's happening with some attractive opportunities, you know, as we see them in the marketplace. So what was a pure drag in the past will be a little bit less of a drag in the future. Although we'll continue to kind of trend that down, but BSO will become less of a drag in the overall loan growth.

On my side maybe three points here. One similar to Don, the headwind on non-core is reducing. So just give you some numbers around it. Six, seven quarters ago we were dealing with a billion, a billion one in quarter-on-quarter rundown of non-core that exited Q4 at a half a billion and that's going to continue to minimize as we look forward into 2026 so that's a real positive to see that wrap it through the cycle and we've seen really strong growth in private banking kind of point number two and it's been really balanced across private equity, residential lending and multifamily granular high-quality commercial real estate where we have access to full relationships with wealth management. One of the dynamics we were facing early in 2025 is with rates high, there was a lot of cash out in the system with this client base and they were hesitant to go in and finance things with debt with rates as high as they were. That is starting to change and as the rates ease a bit, we expect loan growth demand to pick up in the private bank and our run rate to improve further. So, we've got confidence there that the pace of growth in the private bank will continue to accelerate as we look into 2026. And then in consumer, as Bruce mentioned, we're getting 700 to 800 million in quarter-on-quarter growth in HELOC. We're number one in net balance sheet growth in the United States, number one in originations in the United States in HELOC in a very high credit quality book with 95% plus of the customers coming with DDA and deep relationship-based banking. We expect that to continue and candidly with rates pulling back but not so far to crater through a 5% mortgage rate at least in the forward outlook it's really a perfect time period for HELOC where there's not going to be a ton of

Okay. Thank you. Our next question comes from Manan Gosali with Morgan Stanley. Your line is open.

Hey, good morning all and welcome. I wanted to start on the fee side. Can you expand a little bit on the underlying assumptions in the fees? I mean it feels like the private bank is doing well, capital markets are doing well, pipelines are strong. You had a survey out recently talking about M&A expanding on the middle market side. There's also been some push out from the fourth quarter into 2026. Just given all of that, it feels like the fee guide is a little conservative. So can you help us with some of the underlying assumptions there?

Very helpful. And then maybe pivoting over to the capital side. It looks like your buyback guide is a little more front-end loaded and then you spoke about the fact that you're hopeful that the SCB will come down this year. I guess the question is how important is a stress test in terms of your comfort level in bringing the CET1 ratio closer to your medium-term targets of like 10 to 10 and a half percent. How quickly can you do that? And where would that range put you in terms of buybacks as you get into the back half of the year?

Great. Thank you.

Our next question comes from John Pankeri with Evercore ISI. Your line is open.

Hi, this is Gerard Swinny on for John. Just want to revisit the private bank build up specifically in that 11 to 13 billion private bank related loans in 2026. Can you break down what loan categories within the private bank you're seeing growth? Any puts and takes there? And then longer term, how should we think about the loan to deposit ratio trending in the private bank? Thank you.

Yeah, it's Brendan, I can take that. It's pretty balanced growth. So about a third of it, I would say is coming from CNI, private equity based lending. We have about half of the balance sheet is I'd say residential and real estate. So mortgage and granular multifamily commercial real estate as I mentioned before tied into deep wealth management based clients and then there's a smaller portion in sort of other consumers. So our HELOC capabilities are making their way over to these clients. Some small credit cards, some specialty unsecured lending loans in the private banking portfolio. The PLP partner loans that we're leveraging to convert our private equity community into personal private banking relationships. So it's pretty broad-based but the largest categories are CNI, granular multifamily CRE and residential lending mortgage. We expect that to continue as rates pull back you know the traditional personal private banking should pick up. That would again going to the portfolio will benefit from HELOC and continued residential lending. And as our card portfolio picks up we have optimism that that can be a more meaningful player in the private bank over time.

Thank you, very helpful.

Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open.

Good morning. A bit of a follow-up to some comments you just made. I wanted to ask about the deposit growth assumption. I found it interesting. I think it's what's driving the higher net interest income outlook, but your earning asset growth is actually a bit above the loan growth on slide 23. So just trying to get a sense of deposit growth assumptions. And obviously you give us the private bank which is the one piece, but just the overall assumptions there and the confidence in that level.

I think the only other thing to add would be probably our non-interest bearing deposit growth has been very steady as well both coming from the private bank and as well as the consumer bank. We expect that 22% to be in the zone as we go through. The two points I'd add on the non-interest bearing would be we've gone through a period post-COVID three years of consistent headwinds on spending out the excess surplus. 2025 was a year of that kind of running its course and flattening out. We started to see some very modest DDA growth in most benchmarks in the consumer bank. We were number one in our peer set on relative DDA performance versus peer banks. We expect that relative position to continue and move from a flattening to starting to see some very modest DDA growth. And then the private bank, you can see our DDA percentage in the high 30s. But it's important to also look at checking with interest. The entirety of the personal banking deposits in the private bank are in checking with interest, which is de minimis interest. When you add that in our actual low-cost mix is in the mid 4s and we expect that range to continue the combination of DDA plus checking with interest. Healthy growth in the private bank in non-interest bearing or low interest bearing and continued number one performance or top quartile performance in the consumer bank on relative DDA.

And then just on the interest earning asset growth that's kind of 1 to 2% above loan growth and maybe deposit growth anything else driving that. You know I think we've seen more banks point to kind of less earning asset growth on loan growth and yours is the opposite. So was just wondering if there's something else kind of driving that. I think you've expanded your swap business for customers. So I don't know if there's something with trading assets or a rethinking of how you hedge the balance.

Okay. All right. Thank you.

Our next question comes from Ibram Punaala with Bank of America. Your line is open.

Hey, good morning. I guess just a couple of quick follow-ups. As we think about the 16 to 18% ROE exiting 27, it implies the margin probably being somewhere between around that 340 to 350. Am I thinking about that correctly?

And then as beyond that, as we think about the new growth that's coming on the balance sheet, on slide 19 for private bank, you call out the 4.1% spread on that growth. I'm just wondering if you had to have a similar number for the entire balance sheet in terms of growth, where would you say that new growth is coming? Is it close to 4%, close to 3%? I would love any color there.

Got it. And just one more Bruce on the private bank. Seven offices, four more to go. Why is that number not larger? Like is there only so much that you can do from a management bandwidth standpoint or do you think once you have these 10 to 15 private bank offices you've saturated the opportunity?

Yeah, our confidence is clearly increasing every quarter that gets behind us on our ability to drive sustainable growth and high quality. But if you kind of rewind the clock back to, you know, four quarters ago, we were very committed to make sure we deliver the profitability profile that we shared with you all before we got too far out over our skis. So we've been very thoughtful in terms of where to put these locations. It's a very connected business model. I call it first floor, second floor. First floor being kind of retail banking for private banking customers. Second floor being senior RMs and wealth teams that are not necessarily working the retail branch, but they're bringing in clients. We've got to grow that in a connected way. So, and we're keeping a very very high bar on quality. We don't want to grow so fast that we compromise on having a best in market team. So we've got aspirations for more sites. We'll continue to add them as we get the right teams, as we get the right locations. We're starting to think about geographic expansion. We also have to think about filling in the rest of our Citizens footprint. You've got plenty of markets that we have high net worth individuals in today where we don't yet offer the private banking package. And so in addition to adding more sites, you may see a handful of very targeted either conversions or dual branded sites with retail and private banking coming online where we can offer the full service of the bank, the full one Citizens in the same market. So with commercial partnering as well. So a lot to do. We expect a steady diet of continued openings and opportunistically we find talent in good locations. We'll upsize our ambition.

That's good. Thank you.

Our next question comes from David Shiverini with Jefferies. Your line is open.

Hi, thanks for taking the question. So, I wanted to ask about the efficiency ratio outlook. It looks, you know, very strong mid-50s medium-term versus the 62% in the fourth quarter. Can you talk about what could drive the high end versus the low end of the mid-50s outlook?

Thanks for that. And my follow-up is on AI. You've been front-footed on AI versus some of your peers. Can you talk about your AI spend and some of the use cases you're seeing?

Very helpful. Thank you.

Okay. Our next question comes from Gerard Cassidy with RBC. Your line is open.

Hi, Bruce.

Bruce, since going public, you've done a very good job of delivering on growing this organization that you head up and clearly you've done it in this wealth management area, most recently, the private bank. Can you guys share with us the growth that you're planning for this year, the 16 to 20 billion of client assets? How much is that coming from, you know, existing customers of their portfolios versus just new customers coming in with, you know, you're going to maybe hire more teams. And then I don't know if you can parse how much of a benefit has this three-year bull market been on this business.

Yeah, sounds good. On the privates, I'll unpack both of them very quickly. On the private banking side, just one strategic point to make. It's hard to totally separate the adding of new talent from the referrals coming from the banking teams that we hired because you need them both in place for either of them to happen. And once you get the new talent in, it is true that 80 to 90% of their previous book will follow them over. And we have seen that and we've actually seen better performance than that on most of our teams that we've lifted out. But they also have new productivity. They're bringing in their own clients on the wealth side, but then they're referring them back to the bank. So this is a bi-directional referral model. On the banking side, we have seen an acceleration of referrals as we've got high-quality wealth teams on through 2025, we expect that to continue into 2026 at a healthy clip. So as the business gets more granular, as we convert some of the business banking clients into personal banking, have the right wealth teams, we expect a continued acceleration of new business flow coming from that into these new wealth teams. And we expect, you know, we've been doing one to two teams a quarter of new liftouts. I would expect us to be in that range over the course of 2026 as well. So, a supplement of accelerating referrals, adding new teams, new teams bringing their backbooks, plus new teams bringing new business and hitting the market hard. On the mass affluent front, about 55% of our fee income or our AUM I should say is actually in the branch-based business and about 60% of our fee income is from the mass affluent business. So that business grew in 2025 by 15% on the AUM side and 25% on the fee income side and the effective rate of revenue on the mass affluent business is roughly twice of that of the private bank. So you're getting significant profitability jaws by growing that business as well. We had record referrals coming from our retail bank. We've had an overhaul of talent in our advisers that sit in the branches. We've grown that advisor base by above 50 advisers in 2025. We expect that to continue. So we're seeing sort of all boats rise with the rising tide. The wealth brand that we're building and the capabilities that we're building are coming through in all the client segments. We're getting a real strong uptick from Don's business as the commercial team has more confidence in the teams that we bring on. Your comment about the bull market, it is true a bull market helps. Market betas help. About a third of our private banking revenue uplift was driven by market betas. But you can't capture that market beta unless you acquire the customers to begin with. So, there's a bit of a virtuous circle here that's happening here as we're getting outsized new customer growth, outsized talent growth, and catching the market beta as it moves from whatever firm they exited over to Citizens. So, we feel really pleased with where we're at and we expect continued positive momentum across all sectors.

I have another question, Bruce.

As a follow-up, second taking a step back, Bruce, for a second. Obviously you've grown the company and you've painted a very strong organic growth picture for this year, but you've grown it successfully through timely acquisitions, whether it was Investors in 2022 or the HSBC branches as well as JMP. When you kind of with the regulatory environment being very supportive of consolidation, can you give us your big picture view of how you think shaping up in opportunities for Citizens over the next couple years?

Appreciate the insights. Thank you.

Our next question comes from Chris McGrady with KBW. Your line is open.

Oh, great. Thanks for fitting me in. Good morning. The 16 to 18% back half of next year ROE guide. Looking at our numbers and consensus, we're call it a little bit closer to 15. I hear you on the SCB that maybe gets you to 50 basis points and the combination of revenues, credit expenses probably gets you to the low end. Interested in kind of a gut check on our math and also you know to get firmly into the range. Is it about the expense growth rate from reimagine the bank moderating or is it something else? Thanks.

Great. And then just a quick follow-up on reserves. I hear you on the moderating credit costs. If we compare the reserves adjusted for the balance sheet optimization, I guess where are we relative to CECL day one?

Yeah.

Great. Very helpful. Thanks, Bruce.

Our last question comes from Ken Husden with Autonomous Research. Your line is open.

Apologize for just one quick one. Just bringing everything together on the private bank. You guys continue to point out slide 24 the impact of the private bank on overall expense growth. So you know 1.8% of the 4 and a halfish this year to your points about where growth is and where growth comes from it. Do we get through this year and get to kind of a lower natural growth incremental rate from the private bank or do you just kind of see what the opportunity set is as you look further out and potentially then move that to other potential investments? Thanks.

Got it. Thanks, Bruce.

Thank you for your participation. The conference has now concluded. You may disconnect at this time.