Citizens Bank hiring as share sale brings new scrutiny
Post-IPO, Citizens CEO Bruce Van Saun face Wall St.
"It's good discipline to face investors on a regular basis," says Bruce Van Saun, chief executive of Citizens Financial Group Inc., Rhode Island-based owner of Citizens Bank of Pennsylvania. Van Saun's bank posted higher profits from last year and faced (a few, mostly detail-oriented) questions from Wall Street bank analysts this morning for the first time as a public company CEO: Citizens sold shares in an initial public stock offering (IPO) last month. On a day bank stocks were mixed, Citizens (CFG) slipped to $22.93, down 25 cents, by mid-afternoon. The company is still controlled by Royal Bank of Scotland Group Plc, which is selling Citizens in stages.
Sales were up, loans were up, but the net interest margin -- the difference between what Citizens pays to raise money and what it charges to lend it -- was tighter. "It's par for the course across the industry," Van Saun said. He expects borrowers are going to be refinancing their loans again and "taking a bite out of the net interest margin" this fall. He's betting analysts at Goldman Sachs are right when they predict the Federal Reserve's Fed funds rate will start moving north next fall, boosting interest income and profit margins: "It would certainly help."
Meanwhile, Citizens keeps hiring. Its Pennsylvania branch network has shrunk a bit, to 361 offices at midyear, down from 397 ten years ago; while its Pennsylvania deposit-market share has slipped to 7.5%, from 10%, third in the state after Wells Fargo and PNC.
Pushing for growth, Citizens has hired more foreign-exchange, cash management and trading executives (for its New England trading offices), and is boosting the number of mortgage loan officers across the Northeast and Midwest, to 700 by the end of 2016, from 350. Van Saun says he's also hiring 60 buisness bankers, 60 financial consultants, and up to 40 commercial lenders. He wants Citizens to be ready "to benefit when rates go up."