According to CEO Bruce Van Saun, Citizens Financial Group Inc. plans to be known simply as Citizens in its new bank branches as the former regional bank grows as a national brand with more likely acquisitions.
The Rhode Island-based company has just marked seven years since its IPO in 2014 as a former unit of Royal Bank of Scotland and has taken steps to strengthen its mainstream and commercial banking pillars in four deals since May.
Citizens CFG plans to roll out its stripped-down Citizens brand, not Citizens Financial or Citizens Bank. It’s similar to Dunkin ‘which drops “Donuts” from its name and renames the company to Dunkin’ or DD, Van Saun said. In financial services, Truist TFC,
also dropped the word âFinancialâ.
âWe love the brand as citizens, it’s not just a bank name,â Van Saun said in an interview with MarketWatch.
The company plans to rename the banks it acquires in the New York City area and elsewhere as it expands its physical presence to 12 states. Along with the Big Apple, it also grows in California, the Southeastern United States, and Texas.
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As a regional bank that embraced electronic payments early on, Citizens has virtually a presence in all 50 states with its fully digital direct banking. At the last check, it had 1.7 million mobile banking users and 7.7 million customers nationwide.
It also got its name beyond its retail banking footprint as a lender of Apple Inc.’s AAPL iPhone loan program. Other major lines of business include student loan refinancing and mortgages.
The company is reorganizing its bank branches to reflect the reality that customers do most of their transactions remotely from their mobile devices.
âThe world is moving towards digital transactions, so we have turned our branches into advisory centers, where you can meet people,â said Van Saun.
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Like other regional banks forced to expand to compete with mega-banks as well as fintech challengers, Citizens has been particularly active on the acquisition front.
After building up its reserves and lowering itself during the coronavirus pandemic, Citizens has ramped up acquisitions by adding more companies this year.
It has announced its intention to purchase JMP Group LLC JMP,
for $ 149 million on September 8, after the larger purchase of Investors Bancorp ISBC,
for $ 3.5 billion in shares in July. In May, it acquired 80 branches of HSBC HSBC,
in New York City, the Mid-Atlantic and Florida, for an undisclosed amount. And in August, he bought valuation consulting firm Willamette Management Associates, also without disclosing financial details.
The JMP deal gives Citizens a greater presence in investment banking and capital markets, particularly in healthcare and technology, while Investors Bancorp significantly strengthens its presence in retail banking.
Looking ahead, Van Saun said he has focused on increasing the bank’s ROTCE – the return on tangible common stocks – a key indicator of a bank’s ability to increase profits. The four acquisitions announced this year will help the bank on this front, he said.
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Citizens have gradually increased this figure to around 12.5% ââROTCE, but they still lag behind some of their peers with 14-16% ROTCE.
The stock price target by analysts averages $ 53 per share, including a tangible book value of $ 35 per share. When it hits the 14% to 16% ROTCE, the company’s valuation would climb to around $ 70 per share, he said.
Citizen actions are often seen as a cyclical game on e-commerce and loan demand, as it has a high exposure to retail banking in its core business. The stock often bounces faster on rallies, but is also hit harder on the downside, he said.
Citizens stock has risen 25% so far this year at midday Thursday, compared to a 25.9% rise by Financial Select SPDR Fund XLF,
and a gain of 21% by the ETF SPDR S&P Banque RÃ©gionale KRE,
Another item on Van Saun’s bucket list is the use of potential acquisitions to increase the company’s presence in New York City. He would like this to be comparable to his market share of around 34% of retail branches in Boston and 26% in Philadelphia. The deal with Investors Bancorp will give it a market share of around 3% to 4% of bank branches in New York.
In terms of mergers and acquisitions, Citizens could announce smaller merger deals this year, but no major deals are pending before the HSBC deal closes in the first quarter and the Investors Bancorp deal closes early in the second. quarter 2022.
“We are putting the tires on on a few smaller contracts and maybe we will have something done by the end of the year,” said Van Saun. “We play on offense and spend the money to grow.”