Citizens Financial Group, Inc. ($CFG)

All right. Thanks, everyone, for joining. Up next, we have Citizens Financial Group, and we're delighted to have with us today, Brendan Coughlin, President of Citizens.

Thanks for having me. Happy to be here.

Thanks so much for being here. Let's -- Brendan, let's start with the consumer bank. It's undergone quite a transition and the transformation over the last 10 years. And I think you have the stats to drive a lot of this transformation. Tell us about that journey. What did it take? And how do you feel about the overall positioning of the consumer bank today?

Well, the consumer bank is really the bedrock of Citizens Financial Group. It's transformed in its own right, but it also is an enabler for a lot of the other things that we're doing, whether it be the private bank or some of the things in the commercial organization. But within the consumer bank itself, if you rewind all the way back to when we took the bank public in 2014, it was really a bank that was made up of a whole bunch of threads and it wasn't well integrated and the profile of it was pretty subpar, high-cost deposits, low-priced loans, pretty thin margin business. So we've taken on a transformation journey over the last decade to really position it to look more like peers and then have outsized momentum in some areas than peers. So, kind of breaking it down a little bit, I'd start with our deposit franchise that in the last up cycle in 2015, we were literally dead last in our peer group in terms of interest-bearing beta cost, total cost of funds on an absolute basis. Transforming a deposit franchise takes a long time. We think we've done that well, and that's on center stage here right now in a relatively tricky deposit environment, and we're performing exceptionally well. So going from worst-in-class juxtaposed to now, we have been in the top quartile for 10 straight years in low-cost deposit DDA growth, basically 250 basis points on average better than peers in benchmarks that we look at. I've shared that on our earnings call, and that's been a consistent train over the last 10 years. That's really the foundation that drives a lot of our total deposit portfolio transformation. And then on the interest-bearing side, we've gone from worst-in-class betas to in line with peers. So when you marry those 2 up, the outsized low-cost performance with our interest-bearing beta performance, you get a deposit business that now went from worst-in-class on an absolute cost basis to now top third in the U.S. So we're very proud of that. That's one marker of the transformation. I'd say the other thing is our loan book. When we took the bank public, we leveraged our consumer lending franchise very innovatively to grow in a ZIRP environment. It was driving a lot of the early days growth of Citizens. We continue to have differentiated products. We're now pivoting that franchise to be higher returning relationship-based durable loan growth. And so you're seeing us rotate out of some lower returning low relationship assets like auto, some of the asset purchases we're doing and it's getting replaced with higher relationship things like HELOC, where we're the #1 lender in the United States and credit card to get higher returning profile. And then lastly, I'd just say on the wealth front, a lot to be made of the Citizens Financial Group story in our Private Bank, but not to be missed is inside of our retail bank, 70% of our wealth fees come from the retail bank and our retail customers. And that has gone exceptionally well. It's a bigger part of our franchise now, and we're really pleased to see 70% of our fees coming from the retail business, which is higher margin than the private bank in terms of wealth management.

So as you think about the next 3 to 5 years, this cross-sell from the wealth side, I guess, what else are you most excited about for the consumer bank?

Well, taking a step back and looking at consumer banking post great financial crisis, post-COVID, 70% of the economics in retail banking now come from the mass affluent and higher segments in retail banking. It's really tough to make a lot of money on mass market. The good news is we're very relevant there, and we do quite well with that segment. We over skew versus our peers in mass affluent customers. So we're doubling down on that. I'd describe our strategy is oriented around that type of customer base. Of course, we serve all customers in our community front to back, but that's our target segment, and we're building a business around that. So starting with our distribution, a continued focus on our digital capabilities and transformation. In fact, we just launched a new mobile app just last month that's gone exceptionally well. We're continuing to invest heavily in digital. Our branch channel is an area that we're making major investments to position it for a world post-COVID now that there's a lot of knowns on how consumer behavior in the U.S. is going to operate, really repositioning that for outsized market share growth long term. And then on the balance sheet, I'd say, continued focus on differentiated low-cost deposit growth through customer household acquisition and customer experience enhancements. We feel very confident on that. And then playing the story all the way through on our lending book that we want to continue to have outsized higher risk-adjusted returns with relationship orientation. All of that should drive a stickier, more durable revenue stream for the consumer bank that should drive valuation enhancement over time for the franchise.

So when you talk about the branch network, I think part of what you've spoken about before is driving growth by building density in your current footprint versus expanding to some of the newer markets. I guess, tell us why that approach is better for Citizens? And what are the plans to densify in the New York City metro area and over what time frame?

Yes. Well, I'd start by saying if you adjust our branch count for the 2 acquisitions that we did, HSBC's U.S. franchise and Investors Bank, we would have started at the point of our IPO with about 1,400 branches. We're now down to about 1,000. And our current state is when you look at revenue generated with cost, we have about the most efficient and effective branch network in the United States with the revenue that we get in the customer side and the deposits for the cost base. And we're pleased with that. We had a lot of fat around the fringes of the franchise when we took the bank public. So we've got through that story. Now it's about positioning for long-term differentiated market share gains and growth. To your point, I'm not particularly a fan of a bank our size going in de novo entering a new market with retail. I think it is very hard. It takes a long time. I don't particularly believe some of the metrics being shared by others in terms of earnbacks. We look at it and say our model in new markets is going to be ex retail. So private banking, commercial, business banking, you've seen us do that in California and Florida. Paybacks are much faster. So within retail, I'd say our plan is 3-pronged, and 2 are about the branches and one is about people. Our legacy core markets, everything ex New York City and New Jersey, we have about 120 supermarket branches still. Given that we're focused on mass affluent customers, they don't really fit our model long term anymore. So we have the ability to prune those and replenish with de novo branch builds in our core markets, which allow you to leverage your fixed marketing costs, leverage your brand and really get faster returns on those new branches, but position your network for outsized growth with the target customer that we want. So there's a whole plan around that to reposition the network in our legacy footprint for long-term growth with the target customer we want. In New York City, in New Jersey, we have -- when you add New Jersey, we call it 4% branch density, a little over 2% deposit share growth. We've grown tremendously since we did those acquisitions and got a lot of revenue synergies out of those deals but we're still undersized and under scale. So our view is that putting in over a 10-year period, organically, slowly adding onesie-twosie branches into Metro New York and Northern New Jersey can get you the right density to get outsized operating leverage long term. And again, that levers to fixed marketing expense that we're already doing. So unlike going into the Southeast where we have a whole bunch of other expenses put around it, we think we can get outsized operating leverage growth by densifying New York City and New Jersey and leveraging the assets that we already have. And then the third pillar is really around the people. So we're looking at our specialty job families, our business bankers, our wealth managers, our mortgage loan officers and thinking about how we add staff in some of our key more affluent areas to drive deeper wallet share from mass affluent and affluent. So we're putting this whole program together. It's all organic. It's all over a 10-year window on how we want to think about this but the path really is to drive long-term outsized deposit growth over kind of market normal norms.

So you brought up de novo growth and how that's hot in new markets, and maybe I'll ask my M&A question here. What are your views on bank M&A overall and trying to inorganically grow in outside your footprint?

Well, generally, obviously, the window is open from a political and regulatory standpoint. But unique to Citizens, I look at the momentum that we have as a franchise right now whether it be the private bank growth, whether it be what we've got going, where we're finally seeing the full capabilities of the commercial bank and the scale that we've built, the momentum I just talked about in the retail bank, the Reimagine The Bank program, which I'm sure we can hit on over the conversation here. The bar is really, really high for us to make an M&A acquisition make any sense for us. And we were at 12.5% ROTCE last quarter on the way to 16% to 18%, our NIM expanding rapidly. And I see all the great things happening in the franchise and I look at what realistically we would need to do if we ended up considering an acquisition is take people off the playing field on those things to redirect them to an integration. And it just doesn't make any sense to me right now for us to be seriously considering doing that. We're going to keep our head down. We've got an incredible amount of momentum in the franchise. The organic opportunities we have are very differentiated versus our peers. And I just don't know why we would take our eye off the ball to redirect. And then candidly, if you look at anything that you possibly could buy, I put it through the test of if they traded away tomorrow morning in the paper, would I lose any sleep? And candidly, I don't see anything that gets me so excited that we should make that trade of all the organic momentum. So suffice it to say, the management team at Citizens is completely heads down right now on our organic strategy focused on the momentum that we have and the initiatives in play.

Great. Perfect. Let's talk about the Private Bank build-out. That's been an incredibly successful strategy for Citizens. And I think that started with hiring a series of bankers from First Republic in 2023. Can you talk a little bit about how Citizens has been building out the product set and capabilities of the Private Bank? And how comfortable are you with where that is now?

Yes. I'll start with being very pleased and excited about how this is going overall. And most folks know the story well, but just a quick refresher on it is 2023, we hired 150 folks from First Republic. We took a $0.12 hit or so to EPS in 2023. And now in 2025, it was 7% of our earnings. In Q1, it was 10% of our earnings, and it's a 25% ROE business for us at the high end of our range of 20% to 25% that we had set. So we've met or exceeded most all important metrics in the build. We're now up to 650 people on the platform from the 150 we started with in 2023. So very, very pleased with the progress, $16.6 billion in deposits, $7 billion and change in loans and over $10 billion in AUM. So it's been an incredible story for us. Most importantly for me, it's also reshaping the brand image of the company, who we are, how we're competing with high net worth, ultra-high net worth, how it's plugging into our commercial bank into the sponsor community, so on and so forth. So we're very excited how it's going. We've made a lot of investments. We're 3 years in. We've made a lot of investments, really our aspiration is to be a preeminent private bank in the United States, bringing together banking, lending and wealth management, all together in the same value proposition. We believe that the mega banks are a little too big and bureaucratic to pull that off. The smaller banks don't have the sophisticated capabilities. So we're right in the sweet spot to be able to deliver this for the customer. We had all the capabilities, but we didn't have all the plumbing, right, to connect all of our businesses. That's what we've been up to over the last 3 years. And we've made tremendous progress. We still have a lot of work to do. We just kicked off an effort to fully technology replatform our wealth business front to back over the next 2 to 3 years. We've got a big initiative called Digital North Star to create new capabilities for the more sophisticated client, integrating wealth and banking and business banking all in the same mobile app. Having said all that, right now, our customers are voting with their feet and with their words, and we're at a 76 Net Promoter Score in the business. So despite the work left to go, 76 by all accounts is a world-class customer experience. So we aspire for it to be in the 80s. Right now, we're almost there. And so we're pleased. So capability building is a moving target for constant needs that are changing with your clients. We'll never get to the finish line. We'll always have more work to do. But I'm very pleased that the foundation is very strong. It's working, and we're attracting top talent and top clients as a result of where we're at today and independent of what's left to be done.

And how do you think about, I guess, growing organically from here versus lifting out wealth teams from other areas?

So if you think about it, the first 150 people we brought over were all bankers. They weren't wealth managers, and they worked very closely with wealth managers. So we were lopsided in our scale when we want to bring together banking and wealth management. We had all the right bankers and needed that higher scale in wealth. We've done that. We've now got 10 wealth -- private wealth teams. It's still a little bit heavier on the banking side than the wealth side. So we still need to round out our distribution. You can continue to expect us to attract top talent. We've set an incredibly high bar, by the way, we're looking at the top 1% of wealth talent in the United States, and we're going to be incredibly disciplined that the promise of this value proposition is truly exceptional world-class service by exceptional world-class talent, and we're not going to compromise on that. We're getting wealth people that want to be at a bank, don't just want to plant their wealth flag and do their business on their own. They've got to be bought into this integrated model. We will continue to hire talent. These wealth managers, a lot like the bankers have tremendous client followership. So typically, 90% of their clients follow from the firm that they're leaving to join us. That has happened, which is great to see. But now the flywheel is starting to go. The bankers bringing in new clients with business development. You've got the wealth managers that we're building at scale. They're connecting in our referrals between those 2 groups are up materially year-over-year. So you're starting to see the kind of the wheels turn. And importantly, it's not just about the private bank, our wealth teams that we're bringing in are also partnering with the commercial bank for the first time ever to really drive cross partnership across the piece.

So as you get that flywheel going, I think part of what you've also done is you've opened about 9 private bank offices, and there's at least, I guess, 2 more planned by the end of this year. Can you talk about the client acquisition strategy once you've added a private bank office in a given market?

Yes, sure. So we've got 9 -- to your point, 9 private banking offices open. Our distribution for private banking and wealth is concentrated in a few markets, Boston, New York, Southern Florida, Northern California, Southern California. We aspire to keep broadening out our distribution over time. To your point, 9 private banking offices going to approximately 11 by the end of the year with a medium-term aspiration to get that into the 20s. When we think about our client acquisition strategy, it's not really rocket science, but there's a very specific playbook that we have. First of all, you have a first floor and the second floor. I mean that sort of literally but also how you think about staff and quality that you've got a retail presence on the bottom. That's a high-end retail banker doing retail banking stuff but oriented for high net worth and ultra-high net worth individuals. And on the second floor, you have the senior team, the senior lenders, the senior relationship managers, the private wealth professionals, the financial planners. So these 2 teams work together to bring service to the market. They both have tremendous client followership. I'd say that the banking team we brought over has approximately 50% of their book of business brought over from their old place. As I mentioned earlier, the wealth teams tend to have 90% conversion. That's one of the main customer acquisition vehicles is just talent and attract client followership to that talent, which when you hold that bar at the top 1% of bankers and wealth managers, you do see that as your primary acquisition funnel. We also have marketing. We're building the brand. We're spending money in the markets. We're doing lots of client events. That has been great. And then you have this network effect that is really starting to play in now and you get client testimonials. Some of this sounds like motherhood and apple pie, but it's actually very real. And when you talk to clients, the experience that we deliver is so differentiated, truly uniquely differentiated that is it is something that they unprompted tell their friends about and say, you got to go talk to X banker, they're the best I've ever worked with. And so that is a very real thing. So the combination of best talent, first floor, second floor distribution, building the brand, ultimately leading to word of mouth with clients, that's all part of the model.

So the other part of it is the One Citizens initiative, and you've been increasingly talking about that since you launched the private bank, and that drives more synergy opportunities, particularly between the commercial bank and in the private bank. I guess where is that today? And are there some examples of success that you can share?

Yes. I realize that -- One Citizens, maybe, again, could sound like motherhood and apple pie, everybody's got to one-something, whatever your franchise is, is very real and authentic inside of the 4 walls of Citizens. And candidly, in a micro way, it is actually the business model of the private bank that -- and I'll start there, but other private banks, if you have a mortgage need or you have a business banking need, you're getting referred over to somebody else. Their model is One Citizens bring everything to the client first. We've done that inside the Private Bank, and now we're broadening it out to make sure it works across lines of business. So the momentum that we had early days was significant and very cultural where we have assets like the JMP team out on the West Coast now firing on all cylinders. If you think of what's going on in Silicon Valley with AI and the amount of on paper net worth some of these folks have, getting our JMP team in there to think about some of these firms want to go public, how do they think about selling themselves? What's their paper net worth, marrying up with a private banker to think about their banking needs, getting -- how do you get them into a mortgage when they've got paper net worth, but not liquidity and are you there for them when they monetize it and you can get them into your financial planning and wealth management. All that is very real. It was happening explosively at scale. And now our mindset is how do you systematize this goodwill. So we've got a whole formal program around that from building infrastructure to facilitate referrals from building compensation changes to encourage folks to have it bidirectional. So it's very real. I think we had last year, 400 or 500 major clients coming from the corporate bank into the private bank and 100 or 200 major clients that the private bank had relationships with that then got cross-sold and deepened. So look, the examples are many, and they range from the very simple and obvious of the private bank sitting down with our middle market companies and banking their C-suite and introducing that way and having our middle market corporate banking team getting motivated and incented and score carded on the basis of bringing the full bank to the client every single day to much more sophisticated examples like I was going down the path of us actually facilitating an IPO or facilitating a capital markets transaction and having the private banking team step in and help and really sort out how we think about who's doing the credit, who's doing the deposits, how do we bring financial planning and bring the full bank to the firm. So we still are in early innings of it, but I would tell you, inside the bank, it is definitely a cultural movement. And from a cost standpoint, think about the leverage you get there when you already have that relationship instead of having all the groups hunt in the wild for their own customers, being able to get that multiplier effect and leverage is something we're after and it's working so far.

And it sounds like you have the full product set to go to the client. Is there anything you're still looking to build?

A lot of it is actually just facilitating the connection points. Honestly, we don't really believe we have a lot of capability holes at the highest level. It's back to the way we thought about architecting the private bank and de-siloing and building the plumbing to connect all the capabilities. We now need to take it to the next level and go outside the private bank and do it across the enterprise. So if you have a relationship with the corporate bank and cash management, the private banking folks can see that, and we can think about how we want to price that and do we recognize the value that we're getting on the other side of the bank on how we bring the full bank, so you don't get into the siloism of this is my P&L or your P&L. So it's less product and more kind of building that information sharing so we can run the bank with a broader perspective.

Got it. All right. Perfect. So let's talk about Reimagine The bank. And in the past, the bank has had an annual TOP program to drive efficiencies. How is Reimagine The Bank different from those prior initiatives? And how can the bank look different over the next 3 to 5 years through Reimagine The Bank?

Yes. As you point out, it's been a hallmark for Citizens that Bruce started when we brought the bank public and we -- to have an annual efficiency and continuous improvement mindset. We called it Project Top. We had one every year since we took the bank public. Three times now in our history, we have dramatically upsized it to a more transformational program versus an annual continuous improvement program. One was the IPO itself. Second was in 2019, which was catching the digital transformation movement. And that program actually morphed quite a bit because the second we launched that we ran into COVID and had to -- it's kind of turned into an all things COVID response. So it got a little twisted. But -- and now here we are with the AI revolution and insert Reimagine The Bank as our next big upsized program. So it's very, very different. One is that we're taking a longer-term horizon, a 3-year view versus typically our Project Top has a 2-year view and also the benefits. Our Project Top program typically generated $100 million to $150 million in benefits. We're aiming for an exit rate of $450 million in income benefits for exit rate 2028. So the aspiration is quite broader. I'm very excited about this. Naturally, the company is at a phase. We've got through the IPO. We look more like our peers. We're on this financial trajectory to get ourselves into the 16% to 18% range. We got a lot of momentum, but yet there's so much going around in the market around us that it's the right moment to say, what's the next chapter for Citizens? How do we keep the momentum going? So it's the right time idiosyncratically with Citizens combined with the market movements. The program is structured, I'd say, to oversimplify it into non-AI-based transformation and AI-fueled transformation. The non-AI elements are equally strategic, just not as technical. So things like starting with the company's culture and our facilities footprint, how do we get -- how do we be more innovative, move faster and drive better tech and ops growth. So let's take a step back and say, colocation matters. We want people in the office. Let's assess our corporate footprint and get folks oriented into the right geographies in the same buildings. That's great from an operating culture standpoint. It also is going to squeeze out some expense. So we've got a decent amount of excess capacity in the footprint post return to office where seats aren't being utilized. It's a win-win that I can get the right people in the right locations and save a whole bunch of money and think about it over a long-term horizon versus over a 1- to 2-year horizon, you never quite can get that done on something like that. We already closed 21 buildings as an example, and booking that to the bottom line vendor savings as well. So it's not just about simple rate term restructures. We're actually going in and saying in an AI-fueled world, who are the right horses to bet on, which big tech providers, which big suppliers, which -- a couple of years ago, we consolidated to Mastercard versus having fragmented Mastercard and Visa, really upped our strategy, got a lot of economics in the deal. Where do we see opportunities like that. When you turn to the AI front, that's where it gets really exciting. We've got a very strict ROI-based mindset on AI, no 1,000 flowers blooming, no pet projects. This is economic value creation for our customers and for the bank. We've got a framework around how we're assessing those opportunities. A couple of big ones would be a full engineering -- reengineering of our call center, Agentic AI LLM-based replatforming. So total redo of the technology architecture, leveraging AI. By the end of this year, this is not 3 years down the road. By the end of this year, we should have 25% of our phone calls answered by a nonhuman. And by mid next year, it potentially could be as high as 50%. Another use case for AI would be in technology, where our engineers are using -- started to use Copilot, now they're using Claude Code and other tools to get leverage on how we think about our capital. And our early days testing, we maybe got a 30% or 40% efficiency rate for engineers. In certain instances, we're now up to 5 to 6x the productivity. for an engineer. That fundamentally changes not just the effectiveness of your tech capital dollar, but also the operating model. Now you have engineers that aren't actually writing code as much, they're actually inspecting code driven by AI and QA, QC-ing it before you put it into production. So for the money we spend on tech over time, can we get a multiple effect? And can it be a leveling dynamic for scale in a bank our size to say, now you can spend the same amount and get 3, 4x the output. That's really exciting. So those are some of the things we're working on. The $450 million in net income exit rate for 2028 is matched with not having a J-curve. So we expect it to be broadly breakeven in 2026, but it's with a lot of investment. So call it, $50 million to $60 million in benefits offset by $50 million to $60 million in investment. So we're starting the train here of driving leverage in the back end of the program, but we've been able to engineer it in such a way that you're not going to see it as a hit to our short-term financials or take us off track.

So breakeven in '26 and then benefits accelerating in ' 27.

'27 and '28, yes.

Got it. Okay. And as you think about...

Sorry, by the way, it's not -- as you hear us talk about our 16% to 18% ROTCE and our medium-term guidance, the impact of Reimagine hasn't really been contemplated in some of the metrics we've given out in the past.

And I get why because there's also the areas where you can invest that also is growing as well and as you get more returns from those investments. When you think about some of the KPIs that you're thinking through like the 25% of phone calls being done by a nonhuman, 5 to 6x productivity for engineers. Like are there any broader KPIs you're looking at across the business?

Yes. Obviously, in forums like this, we're really focused on the financials as the output. And obviously, we have those. But you mentioned a couple that I just said. Really, at its core, this needs to be an operating transformation for the bank that the financials will be the outcome of that. But we've got the team really focused on those things. So our first year attrition in our new checking account customers, we've got a full program around restacking our join the bank journey that should dramatically drive our attrition rates down, which will lead to low-cost deposits, which leads to NIM, which leads to ROE. So you can kind of see it play through. Our customer experience, we are good, but not great in a retail bank for customer experience. We have very tangible things we're working on that will drive customer experience, including AI-fueled chatbots inside the mobile app that will help get customers done front to back operationally and straight through process. Things like fraud losses, effectiveness of fraud controls, things like credit KPIs as we think about AI deployment of analytic tools there. In commercial, we've got a program called AI-Powered Banker that is all about enablement of productivity. So take all this external data, sift it down, put it in the hands of our middle market bankers so they can be more effective when they sit down with clients that should drive revenue throughput, turn times on loans cutting down materially. Those are the types of operating metrics that teams are working on.

Got it. All right. Perfect. So maybe staying on AI. What do you think it means for deposit customers and cash optimization, that debate has been front and center recently. How do you think this plays out?

Yes. It's obviously a hot topic. And candidly, I'm not that worried about it at the moment. We're watching it closely, but I'm not that worried about it. And here's why. If you're thinking about it from a corporate standpoint, you have professional CFOs and treasurers that are managing money today, and that's their job is to optimize their flow of financials. And so a corporate needs a specific amount of money in their operating cash management to make payroll to do all these things. It's hard to optimize that out to AI to a yield-bearing instrument when you need it to run cash. And then the money that they have in interest-bearing deposits, they're already optimizing. And we have these conversations every day with our businesses. So I'm not that worried. I think in corporate, they're already generally optimized. In the retail bank, it's the same dynamic really. If you think about our low-cost portfolio, our average customer has $3,500 in checking, right? That's your day-to-day operating cash to manage your payment, make your mortgage payment, pay your bills, pay your grocery bills. I don't think that's going to get optimized by yield seekers. And then when you think about interest-bearing deposits, look, direct banks have been around for 30 years, and they've consistently paid at or higher than traditional regional banks and the percentage of the U.S. deposits that have gone to direct banks has been relatively muted. It's 12% or 13%, and it's kind of flatlining-ish there. And so the idea that there's going to be this mass exodus to these AI optimizers, I just don't think when you break it down practically, the low-cost balances need to be there for operating cash management and payments reasons. The interest-bearing balances naturally are optimized. When you think about retail customers, the high net worth, ultra-high net worth operate a little bit more like a business where they're already optimizing. There's not a lot of just money sitting around not making any yield. So we're watching it. I don't see it as a big risk. But look, we're -- obviously, from a profitability standpoint, we're coming at AI to take out some costs, too. So should there be some squeeze somewhere on the deposit cost. I think we've got -- we're forward leaning to take cost extraction out, so we'll be able to neutralize any impact. But at this point, I'm not that worried about it of the deposit cannibalization.

Got it. Very clear. So as you think about just deposit competition overall, as we get the potential for rate hikes as we go into the back half of this year, like are you seeing anything on the deposit side?

Deposits are competitive. They are now. They always have been and they always will be. And so certainly, competition is high. Higher rates by itself should signal on the margin, especially for a bank like us that's modestly asset sensitive that we should see benefit to NIM. And look, I think what's happening now with uncertainty in the rate environment is that especially on the retail bank, there's sort of this 4% yield number out there that if you just looked at the yield curve, you'd argue that that's a little heavy, but a lot of banks have stuck there, and they're not breaking through the 4% floor. So that has some pressure on deposit competition, but that's not a new thing that we've been living in the same spot for the last 12 to 18 months. So look, I guess I would describe it as highly competitive and nothing new than we haven't been otherwise dealing with for the last 24 months. And I don't see really any material competition dynamic playing out right now that we're already not working through that's going to have any deterioration to our track.

Got it. All right. Perfect. So maybe in the last minute or 2 here, are there any updates that you'd like to share for the second quarter and the full year?

Well, we're almost through the second quarter here. And I'd say we remain incredibly confident in the guide that we have put out for the quarter and believe the quarter is playing out exactly as planned, and we're optimistic about it. And despite the challenges in the macro backdrop, it has not translated to a lot of customer behavior or volatility in our financials. So we feel very confident about the guide that we put out. And for that matter, same with the full year. We're on track. We feel a lot of conviction to get to our 16% to 18% ROTCE range by the end of next year. We feel very convicted that we're going to land in our NIM cone of 3.30% to 3.50% and we expect substantial progress on that between now and the end of the year. And if you looked at consensus, you all are kind of projecting us into the 14, mid-14s for ROE by the end of the year. We feel like that's where we're headed that with the structural burn-off of our swaps and the noncore and continued improvement to credit and business execution between now and the end of the year, we should make substantial progress to our medium-term targets. But all in line with our guidance, we're confident about how we guided and I think we'll have a strong quarter and don't see any reason to take ourselves off full year.

And maybe to wrap up, how do you get from that 14.5% or so to the 16% to 18% ROTCE target? What are the key drivers there?

Yes. The big drivers are the business execution. So when you think about the growth we're seeing in the Private Bank, as an example, the profile continues to be 20% to 25% ROE. So that's accretive continued growth in low-cost deposits, having outperformance to drive our NIM. Our NIM will make substantial progress between now and the end of the year, but there'll be more running room into 2027. So having that continue to bend up will drive us further into the range. And having the full strength of the commercial franchise that we built in a constructive environment play out the way we're seeing it right now and have it sustained into '27 should firmly get us into that range. We feel very, very strongly that pending any unexpected external happenings that that's the path we're on, and we'll deliver it.

All right. Got it. Brendan, thanks so much for joining us and you being here.

Thanks a lot. Appreciate it.