Citizens Financial Group in Providence, Rhode Island, is in the midst of three acquisitions, but it’s still eyeing more deals, particularly in wealth management, said Chairman and CEO Bruce Van Saun.
Another wealth management acquisition would add more fee revenue and also help to accelerate Citizens’ strategy of capturing more business from the mass-affluent, Van Saun said Wednesday. The $187 billion-asset Citizens
“We’re out looking,” Van Saun said in an interview after the company reported its third-quarter results. “We’ve made no secret that we’re seeking other wealth platforms.”
Citizens has built up its fee-generating businesses with a steady pace of nonbank acquisitions over the years, including deals for a mortgage lender and capital markets and merger and acquisition advisory firms. It recently announced an agreement to acquire
Investors would be Citizens’ first whole-bank acquisition since the bank was spun off from Royal Bank of Scotland in 2015. It and the HSBC deal are expected to close in the first half of next year, while the JMP deal is expected to close by the end of this year. Citizens also recently
Citizens’ third-quarter net income rose 69% from the year-ago quarter to $530 million. Earnings per share were $1.18, but would have been $1.22 if not for some one-time items, including a pension settlement charge and expenses related to an ongoing efficiency program. The mean estimate of analysts surveyed by FactSet Research Systems was $1.16.
Total loans and leases contracted slightly to $123.3 billion. Total retail loans increased 5% to $65.4 billion, driven by growth in auto and education lending, but that growth was offset by a 7% decline in commercial loans, to $58 billion. Citizens attributed the drop primarily to early paydowns.
Fee income fell sharply due to a significant decline in gains on sales of mortgage loans. Though trust and investment services fees rose 15% to $61 million and capital markets fee income increased 24% to $72 million, overall fee income fell 21% from the same period last year, to $514 million.
Deposits increased 7% year over year to $152.2 billion, thanks largely to growth in low-cost savings and demand deposits. Term deposits dwindled as certificates of deposit ran off and depositors moved those funds into lower-cost savings accounts.
Citizens is projecting loan growth of 1.5% to 2% in the fourth quarter. Van Saun said he is seeing strong demand for asset-backed loans, subscription lines to private equity firms and even select commercial real estate loans. He said the bank is eyeing opportunities to finance lab space in the Boston and Philadelphia markets and that demand for office space is strong in some sectors, particularly technology. He also described industrial and warehouse properties as “very vibrant.”
“As we move more and more into this digital economy and see e-commerce taking a bigger share, the demand for warehousing space and smart distribution points is very high,” he said. “There’s lots of that to look at and lending opportunities around that.”
