Operator: Good morning, everyone, and welcome to the Citizens Financial Group Second Quarter 26 Earnings Conference Call. My name is Ivy, and I will be your operator today. Currently, all participants are in a listen-only mode. As a reminder, this event is being recorded. I will now turn the call over to Kristin Silberberg, Head of Investor Relations. Kristin, you may begin.

Kristin Silberberg: Thank you, Ivy. Good morning, everyone, and thank you for joining us. First this morning, our Chairman and CEO, Bruce Winfield Van Saun and CFO, Aunoy Banerjee will provide an overview of our second quarter results. Brendan Coughlin, our President and Ted Swimmer, Head of Commercial Banking are also here to provide additional color. We will be referencing our second quarter located on our Investor Relations website. After the presentation, we will be happy to take your 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. It is 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.

Bruce Winfield Van Saun: Thanks, Kristin, and good morning, everyone. Thanks for joining our call today. Announced outstanding results for the quarter as our strong momentum continues. EPS growth was 15% sequentially quarter, 41% year on year and our ROTCE improved to 13.9%. Our performance was powered by significant revenue growth, NII was up 4.4% sequentially and 14% versus a year ago, which was paced by continued NIM expansion and accelerating loan growth across each of our businesses. Fee revenues were up 8% sequentially, 9% year on year as our capital markets hit a second quarter record, and wealth hit an all time high and various payment related revenues had a nice seasonal bounce. We maintained strong expense discipline which resulted in positive operating leverage of 4% sequentially and 6.4% year on year. Credit continues to trend favorably as we continue to shift originations into portfolios with deep relationships and lower credit risk while continuing to run down non core and CRE portfolios. Our balance sheet remains robust across capital, liquidity, funding and credit allowance. We were pleased about the DFAST stress loss results and we anticipate further improvement under the new Fed models. Our key initiatives are progressing well. The private bank continued its consistent growth with spot deposits of $17.8 billion, loans of $9.7 billion and client wealth assets of $11.2 billion We continue to attract some really great talent and we continue to broaden out and strengthen our capabilities. The business now contributes 11.5% of pretax income while maintaining an ROE of around 25%. Reimagine the bank is moving along nicely We are excited about how several of our early AI deployments are having real impact on how we operate and how we serve customers. We are also attracting some great talent into the commercial bank given our strong position in the market, our focused strategy and our outstanding culture. We maintain strong deal pipelines and anticipate that higher activity levels can extend well beyond this year. We are continuing to refine branch optimization strategy in consumer, which we have named NEXT. for Network Evolution and Experience Transformation. The objective will be to add specialists in select branch locations and to enhance our branch locations to achieve faster retail household and deposit growth over time. We are quite excited by this. We have shared a page in the slide deck that provides more details. We feel good about our outlook for the remainder of 2026 and feel we are set up for strong performance over the medium term. We have a distinctive strategy focused on a growing consumer bank, the commercial bank of choice, and the premier private bank and wealth platform. Our talented leadership team is focused on further building up these businesses leaning into the areas where we have a right to win and driving strong execution. With that, I will turn it over to Aunoy for the financial details. Aunoy?

Aunoy Banerjee: Thanks, Bruce. Good morning, everyone. As Bruce mentioned, we delivered strong second quarter results. Record revenue performance and expense discipline drove more than 600 basis points of positive operating leverage year over year. Referencing slides 3 and 4, we delivered EPS of $1.30 for the second quarter. A $0.17, or 15%, improvement over the first quarter. And we saw solid improvement in ROTCE to 13.9% up from 12.2% in the first quarter. Results reflect strong NII performance with continued net interest margin expansion and loan growth picking up across all 3 businesses and exceeding expectations. We also delivered better than expected fee growth for the quarter. With continued capital markets momentum and a seasonal pickup in payments related revenues across card and treasury solutions, being the main business drivers. Importantly, we are executing well against our strategic initiatives. Including the build out of our private bank and our Reimagine the Bank program, which is progressing well. As Bruce said, the Private Bank delivered another standout performance. Contributing $0.15 up $0.04 from the prior quarter. Representing 11.5% of total EPS. We opened our tenth private bank office adding West Palm Beach this quarter and we continue to attract top quality wealth advisors to the platform. With respect to our balance sheet, we continue to maintain robust capital strong liquidity levels and a healthy credit reserve. We ended the second quarter with CET1 at 10.4%. While executing $225 million in stock buybacks during the quarter. Now turning to Slide 5. I will discuss the second quarter results in more detail starting with net interest income. Which was up 4.4% linked quarter given the increase in interest earning assets and higher net interest margin. Our net interest margin continued to expand this quarter. Increasing 3 basis points linked quarter or a combined 10-basis-point lift through the first half of the year. The time based benefits from terminated swaps and non core runoff contributed 6 basis points this quarter, and fixed rate asset repricing added another 1 basis point. Funding costs ticked up slightly. As loan demand strengthened through the quarter across each of the 3 businesses. Importantly though, we saw solid growth in DDA and other low cost deposits, which helped mitigate the increase in overall deposit costs. We also had an increase in FHLB funding during the quarter to help support the stronger than expected loan growth. We continue to do a good job on optimizing the deposits in a competitive environment. Our interest bearing deposit costs were up 4 basis points. And total deposit costs were up 3 basis points reflecting the good DDA and low cost deposit growth. And our cumulative interest bearing deposit beta met our expectations at 48%. As the Fed continued to hold rates steady. Moving to slide 6. Non-interest income is up 8% linked quarter and up 9% year over year. This was a strong fee result. Notwithstanding the continued market volatility associated with heightened geopolitical tensions. The capital markets momentum continued to pick up. Delivering our strongest second quarter ever. With fees up 14% compared with the strong first quarter and up 46% year over year. Loan syndications and bond underwriting drove the outperformance this quarter. Both equity underwriting and M&A delivered good results in the quarter, with performance broadly stable linked quarter. M&A fees were up significantly year over year and our pipeline is strong and continues to build. We continue to maintain strong market share. Ranking as the second middle market sponsored book runner by number of deals and volume. This is for both the second quarter and over the last 12 months. Wealth delivered another record quarter. With AUM growth in the private bank and in our retail network. As well as a positive markets impact. Wealth fees were up 2% linked quarter and 16% year over year. Service charges and fees were up $5 million driven primarily by seasonality and new commercial clients driving growth in account and cash management fees. The card business also delivered a strong quarter. up $6 million driven by a seasonal improvement in purchase volumes. On slide 7, expenses were managed tightly. Up about 1% linked quarter and we improved our efficiency ratio to 61%. Second quarter results include implementation cost of about $7 million for the Reimagine the Bank program. Moving to loans on Slide 8. Average loans were up 2% linked quarter, and period-end loans were up 3%. With loan growth across each of the businesses. The Private Bank period end loans were up $1.9 billion this quarter reflecting higher commercial line utilization and strong originations in high quality residential mortgage and multifamily lending. Spot commercial loans, excluding the private bank, were up $1.5 billion, or 2%, linked quarter. The commercial growth was driven by C and I, with net new money originations in corporate banking and higher line utilization across both corporate banking and our sponsor business. This was partially offset by continued planned reductions in CRE, primarily driven by multifamily and general office paydowns. Importantly, the C and I growth was fairly broad based. With the pickup in loan demand reflecting a positive backdrop for corporate clients with new investment and increased working capital needs. We are adding new clients and seeing new borrowings from existing clients. Primarily across technology healthcare, energy and the FIG sectors. Private credit funds are actively utilizing facilities as we grow our lead role in these relationships. We also saw some CRE pay downs push into Q3. Growth in retail loans ex non core on a spot basis was about $800 million led by real estate secured categories. This was partially offset by the non core auto portfolio run up of roughly $400 million for the quarter. Next on Slides 9 and 10, we continued to do a good job on deposits. With average deposits up 1%, or $2.3 billion, linked quarter. Primarily driven by the growth in the private bank and retail. Spot deposits were up $1.6 billion driven primarily by the private bank. Which reached $17.8 billion in deposits at the end of the quarter. Commercial also contributed to the period end growth. Our consumer deposits represent 64% of our total deposits. Steady with prior quarter. This compares favorably to a peer average of about 56% Total non interest bearing and low cost deposit mix was broadly stable at 42% of total deposits. Now moving to slide 11. Credit continues to drain favorably. With net charge offs coming in at 37 basis points, down from 39 basis points in the prior quarter. Non-accrual loans are down 4% linked quarter. Driven by a decrease in commercial real estate as we continue to work out the general office portfolio. As Bruce mentioned, we are pleased with the results of this year's Fed stress test. Which projected a credit loss rate that ranks third-best amongst our regional bank peers. This is reflective of the work we have done to improve our balance sheet mix running down the non core portfolio and commercial real estate while growing higher quality relationship based lending across the private bank, commercial and residential retail. Turning to Slide 12. The allowance was stable this quarter with ACL coverage ratio at 1.48% reflecting the continued improvement in our portfolio mix with the continued non core runoff the reduction in the commercial real estate and strong originations of lower loss content C and I residential real estate secured and private bank loans. As we look broadly across the portfolio, the credit outlook remains positive. Though we continue to carefully monitor the macroeconomic environment. Moving to Slide 13, we maintained excellent balance sheet strength. Ending the quarter with CET1 at 10.4%. with debt slightly below our 10.5% target, as loan growth accelerated during the quarter and exceeded expectations. We returned about $422 million to shareholders in the second quarter. with $197 million in common dividends and $225 million of share repurchases. This makes a total of $920 million returned to shareholders through the first half of the year. Moving to Slide 14. The private bank continues to make excellent progress. The private bank delivered strong deposit growth again. Ending the quarter at $17.8 billion. Importantly, the overall deposit mix and cost continues to be very attractive. We also delivered solid loan growth in the quarter. adding $1.9 billion of loans driven by increased commercial line utilization and strong originations in residential mortgage and multifamily. To end the quarter at $9.7 billion of loans. The portfolio maintains a healthy spread of approximately 4% over deposit cost. Client assets increased by about $1 billion to end the quarter with $11.2 billion of total client assets. We added another strong wealth team in Southern California this quarter and we plan to continue adding top quality teams in key geographies. We also opened a private bank office in West Palm Beach, our tenth. Moving to Slide 15, Our Reimagine the bank program is progressing well. The objective is to position Citizens for long term success. By embracing a host of new and innovative technologies across the bank and simplifying our business model. This will reshape our customer experience and drive a meaningful improvement productivity and efficiency. Several key work streams are well underway. And we expect to hit our financial targets for the program. With a minimal net cost for 2026 and as we realize quick wins to cover implementation costs. We expect to exit 2026 with about $100 million of annualized pretax benefit. Doubling that in 2027 and reaching about $450 million as we exit 2028. On Slide 16, we have an overview of our network evolution and experience transformation. or NEXT, for short. This focuses on accelerating consumer household and deposit growth while increasing revenue opportunities across our branch network. After creating a more efficient retail branch network over the last 10 years, we are embarking on a long term initiative to now further optimize our existing network. The focus will be on eliminating approximately 100 to 120 in-store branches. We will add some standalone advisory and business banking focused branches. Including selective branch consolidation and upgrades. We also aim to gain more density in high opportunity core markets through self funded de novo branch expansion at a measured pace. A key element of NEXT will be to add specialist talent in select branches with a focus on small business and wealth. The financial impact of this program is expected to benefit the medium term. While not impacting our path to achieving our 16% to 18% ROTCE target. Moving to Slide 17. We provide our outlook for the third quarter, which contemplates the Fed holding rate steady. We expect net interest income to be up in the range of 2.5% to 3.5%. Driven by continued expansion in net interest margin and earning asset growth. Don interest income is expected to be up approximately 1% led by capital markets and wealth. We are projecting expenses to be stable to up slightly. The charge off level is expected to be stable to down slightly. And we should end the third quarter with 10.5%. Including share repurchases of about $125 million. In addition, for our full year outlook, we are tracking favorably against the guidance provided in January. Revenue is trending above our initial guidance range, which combined with expense discipline puts us on track to deliver over 600 basis points of positive operating leverage for the full year. Looking out further, we see a clear path to achieving our 16% to 18% ROTCE target by the end of 2027. We continue to improve our net interest margin adding 10 basis points in the first half of 2026. And we project to deliver a 4Q 26 NIM in the range of 3.22% to 3.27% and in the range of 3.3 to 350% in 4Q 27. Slide 18 provides incremental details on our net interest margin progression to the end of 2027. The projected margin expansion combined with the increased contribution from the private bank and the diversified capital markets business we have built as well as normalizing credit, should drive our ROTCE to the target range of 16% to 18%. To wrap up, we delivered a strong second quarter result. Highlighted by record revenue and a robust level of positive operating leverage. We have a positive outlook for the rest of the year with good momentum across our businesses. We will continue to focus on driving forward our strategic initiatives and delivering for our shareholders. With that, I will hand it back over to Bruce.

Bruce Winfield Van Saun: Okay, Aunoy, thank you. Operator, let's open it up for Q and A.

Operator: Thank you, Mr. Van Saun. We are now ready for the question and answer portion of the call. If you need to withdraw your question at any time, you may press 2. Again, that is 1 to ask a question. And first question comes from the line of Ryan Nash from Goldman Sachs. Please go ahead.

Ryan Nash: Good morning, everyone. Hi, Ryan. First, just congrats to Brendan on the expanded responsibilities. And Bruce, I hope you are still celebrating the next victory like I am. Very enjoyable. it is got a lasting, taste to it. You are telling me. Maybe to kick it off so deposit costs were up 4 bps in the quarter and you highlighted that a portion was driven by the private bank given an influx of growth. So can you maybe just talk about your deposit cost expectations from here relative to the high-40s beta that you have been targeting? And what does all this mean for their trajectory of your margin and maybe where you are tracking relative to both year end and the long term ranges? Thank you. And I have a follow-up.

Bruce Winfield Van Saun: Yes, sure. I would say the kind of deposit cost number and deposit growth is going to move around a little bit from quarter to quarter. there is going to be seasonal factors typically our strong quarter is Q4 particularly in commercial when we get a significant amount of deposit growth. If you look at year-over-year spot deposit growth, it is up 6%. In the second quarter, it tends to be a little lighter And I would say, there was a bit more loan growth than people expected coming into the quarter, which might have caused deposit competition to increase a little bit. I think that likely just evens out. I do not think it is a trend that we are all that concerned about and we would still kind of hold our view that deposit betas will be likely to be stable. From here, which it could be that the cycle ends if the Fed goes to a hike, but at this point, I think we will be on hold for a reasonable period of time. So in any case, I think we are managing that impact. We are still showing positive NIM progression. We do have time based benefits that really helps distinguish us versus others when we look out the second half of the year. I think we have confidence in the outlook around DDA and low cost deposit growth even accelerating a bit in the second half of the year. So we feel, taking all things into account, we are not that concerned about a slight uptick in the deposit cost for Q2. Aunoy, do you want to add anything to that?

Aunoy Banerjee: Yeah. Ryan, it is Aunoy here. I would say if you look at for the second half, as you saw in the first half, we did almost 10 basis points of NIM expansion. And in the second half, if you look at on page 18, we got 7 basis points of terminated swap impact and a couple of points of front book, back book. So we have got 9 basis points. that is that is a nice increase, and that puts you at the higher end of our 4 range. And as Bruce said, we have good line of sight on good DDA growth. And we continue to rotate loans into higher earning assets. So we feel good about where we are. And also, have a very disciplined hedging program, and we continue to hedge our any downside risk. So we feel good about our NIM ranges from here.

Ryan Nash: Got it. No. that is great. And maybe just to build on that 2 quick follow ups. You know, the slides reference you thought you would be above the high end of the 10-12 guide, maybe the can you put a finer point on that? And given the strength in NII growth, do you think you can, and further margin expansion, do you think you can maintain these type of NII growth rates at least through 2027? Thank you.

Bruce Winfield Van Saun: Yeah. We do not usually give specific guides on the full year outlook just to kind of broad update. I think if you look at where consensus is and what we just posted in the second quarter plus the third quarter, guidance, we would tend to move past consensus. So we would be higher than where consensus is, which is already I think at 12.2 or 12.3 or something like that. So other than that, there is a lot to play out. So I do not want to be too specific on it other than we feel good about the trajectory for NII coming from both NIM expansion and loan growth continuing into the second half of the year. We also feel good about the fee trajectory as well where we think we will come at the at the high end of the range there as well. And then with respect to 2027, I think it is a little early to call that. We will give you obviously the full guidance in January, but at this point, objects in motion tend to stay in motion. We think the economic backdrop is going to be supportive for 2027. So we should continue to see reasonable levels of loan growth. And then we just talked about the slide about the drivers that will continue to allow us to expand the net interest margin.

Aunoy Banerjee: The only thing that I would add also is we also delivered 600 basis points of operating leverage and you saw our ROTCE tick up to 13.9% this quarter We expect the ROTCE to just keep ticking up as we go through the year. Thanks for the color.

Ryan Nash: Okay.

Operator: Thank you, Ryan. Thanks, Next, we will go to the line of Erika Najarian from UBS. Please go ahead.

Erika Najarian: Hi, good morning. I am actually now going to reframe my question because it seems like you are keen on what consensus, movements could be. So obviously, good guys in terms of the NII upgrade and fees. Expenses slightly higher given strong revenue performance. Obviously, the operating leverage is widening from the from 500 to 600. So Bruce and Aunoy do you know, if you think about what the expectations are on the street, do you expect a PPNR upgrade relative to what you are expecting? I think if we do back of the envelope math, you could go conclude anywhere from no upside to PPNR to 3% upside to PPNR.

Bruce Winfield Van Saun: Yes. I mean, I think the guide is very solid. So we would not be surprised to see PPNR move up a bit. And I would say on expenses specifically, I do not really have any concern nor do I think investors should have any concern at all that we are viewing the positive operating leverage as an opportunity to go double down and start spending a lot of money. The slight and I would emphasize the word slight increase in expense is really just additional incentive compensation for paying our people for delivering significantly higher revenues than you know, at the high end of the range or higher, things like that. You gotta pay people. So if that number moves up, slightly, that is a good thing. it is tied to revenue production, and it was still resulting in an increase in positive operating leverage for the year. Relative to the beginning of year guide.

Erika Najarian: And my follow-up question, thank you for that, Bruce, is, Aunoy, you mentioned that you did take on more FHLB given the gap loan growth and deposit growth. Maybe talk to us about sort of your strategy at the end of the year. You mentioned holding the line on deposit costs, And so what is sort of the math that you are doing if as you are thinking about the FHLB advance draws versus you know, having a more attractive deposit rate. And is the timing of the fourth quarter strength sort of a consideration in terms of the maybe temporary FHLB strategy? I am sorry for the compound question. But Brian started it, so I might as well, follow through. If we do get a rate hike, which is not contemplated in your guide, what do you expect for the your asset sensitivity generally and for deposit beta specifically?

Bruce Winfield Van Saun: Wow. there is a lot of questions you have factored into that 1, Erika. Sorry. I am going to just finish off a little bit since it related to the Ryan question. But again I mentioned there is kind of seasonal patterns in deposit growth. And so, you know, we borrowed a bit of money in the second quarter in FHLB. I think that ultimately drops out or drops to lower levels as we get into the second half of the year and we would expect to see more robust deposit growth particularly in Q4. So anyway just to that specific question that is how we see it. And we are still at very, very modest levels of FHLB advances. We are almost entirely and we have been for several quarters entirely deposit funded which I think is a real strong suit and shows our incredible liquidity and funding position relative to our peers. But anyway, I will turn it back over to Aunoy.

Aunoy Banerjee: Yes, I think Erika just to add to Bruce's point, I think we are seeing some good deposit trends underlying our businesses. If you think about the private bank, it has grown nicely. And as you know, the private bank comes with almost 30% DDA and over 50% of the DDA plus CV. So that is a nice growth that we are seeing that is quite, quite unique to us in a good way. And then also in the consumer bank, we are seeing a good DDA growth. We are seeing good checking We are seeing checking balances per household grow in our affluent and mass affluent segment. So we are seeing nice deposit trajectory, and as Bruce mentioned, with the commercial bank. Coming in seasonally higher in the fourth quarter, we expect deposit growth to continue for here. Your point on asset sensitivity, look, I think we are as we have always been slightly asset sensitive, and we continue to do that, and we have hedged our downside. Risk as well. And but we remain a little bit asset sensitive. So as rates go up, if they go up, it will be a more of an impact in 2027. As some of the hedges amortized.

Bruce Winfield Van Saun: And it would be a good tailwind to have the first. I would say, you know, on the slide where we show you that cone in the deck, Erika, the fact that the macro outlook seems pretty stable and the rate outlook seems pretty stable for the next 18 months I mean, you might see a hike or 2 up or eventually a cut 1 or 2. But not moving that far off of where it is. A lot of the downside risk in particular if rates get cut a lot. Seems to be reduced. And so it basically means that the time based success at repricing and then our own balance sheet dynamics, how we are managing the low cost growth, how we are rotating capital out of loan portfolios today into more attractive loan portfolios in the future. That helps determine that NIM trajectory more and more with less kind of a wild card coming from the external rate environment. Thank you.

Operator: Okay. Next, we will go to the line of Matt O'Connor from Deutsche Bank. Please go ahead.

Matt O'Connor: Good morning. Bruce, I was just hoping to ask about succession given some of the media articles out there that have been covering the topic of late Sure.

Bruce Winfield Van Saun: So I have undertaken a very considerate process to make sure that the team that got us this point, we have had a tremendous run, stocks up over 3 times since the IPO. The bank's been transformed Some of those folks on my team have hit retirement, and I have brought 4 new folks onto Exco last year, and we promoted Ted to run commercial, and Don McCree retired. I think Brendan has demonstrated great leadership qualities and we made him president last year and under a consistent basis we are continuing to broaden his remit. So he sees more of the bank and he can be tested, but also just gaining knowledge and I think he is doing a great job and, you know, this new tuck in commercial under is another chance to broaden what he understands and about the bank. So I am in no rush to go anywhere. I feel lots of energy and really have a spring in my step every day when I come to work. But you have to go about these things. it is an important duty for the board and me to make sure that we have a team that can take us forward for the next 5 or 10 years. And I think we are doing that in a very thoughtful way. Okay. that is helpful.

Matt O'Connor: And then just separately, as we think about the private bank build out, I guess, specifically next year, some of the markets that you are targeting? there is obviously been just a lot of price increases on inflation and I think about the competitive backdrop for private bankers, that is I think, probably increased quite a bit too as everyone's trying to lean in there. So is it getting harder to do some of these build for those reasons? Or is that kind of being balanced by the momentum that you have had? You kind of have talked about how the beginning was a little bit harder because you had not really done it before. But as you have built momentum, it is kind of fed on itself. So how do those 2 kind of shake out on a net basis? Thanks.

Brendan Coughlin: Yes. it is Brendan. Incredibly pleased with where we are at foundation that we have built. And as the quarters have gone on, our confidence around us having a winning formula has improved remarkably. You see sort of the steady and very significant quarter on quarter growth married with the very strong profitability that has held in there every quarter. We are still maintaining the deposit quality of the book, even despite the growth and starting to see loan growth pick up and the attraction of new talent and teams has not slowed. As I have mentioned in past calls, the first maybe 2 years, we were held back on, intentionally on going really fast on growth to make sure we could demonstrate to ourselves that we could build this model and do it effectively and deliver effectively for our clients while maintaining a profitability profile that is accretive. We feel really good about that now. And so we are in the mode of expansion. As Aunoy mentioned, we opened 10 PBOs. We are projecting that to be in the 15, 16 range by the end of 27. So we will continue to open and densify in the markets that we are already in. And yes, we are looking and thinking about where else we can bring this model. And I think look no further than some of our core legacy Citizens markets where we have incredible retail and commercial presence, and we want to round out the 3 legs of the stool in great markets that we already are operating in with great brand to connect our 1 citizens model altogether. So we will be looking, further at expansion. We have particular, are interested in continuing to bring on top quality wealth teams. We expect the pace of growth to broadly be consistent with where it is today. And, that is what I think you can expect, over the near term and medium term outlook still going to do it in an incredibly disciplined and paced way as well. We have got to continue to validate that we got this right. But the opportunity is still very much right in front of us. We believe the white space is still wide open. Clients continue to give us that feedback that we have got a competitive edge, and we are going to continue to walk through that door. Okay. Thank you.

Bruce Winfield Van Saun: I would add to Matt that we are excited about the expanding PBO presence that we now have 10 up and running. We have 7 or so planned for next year. We have done a very thick build out in California, which you would expect given that was the nexus for first Republic's operations. But we see Florida as an area for growth that we would like to keep investing there to get it caught up in scale somewhat to where California is. And then the Northeast, we have some satellite opportunities around New York around Boston to kind of thicken in those regions and then I think Philadelphia would be another location that would be on our drawing board. So really excited about kind of the pace and some of the things that are on the drawing board that will help continue and sustain our momentum. Hey. We have another question. Yes.

Operator: Our next question comes from John Pancari from Evercore ISI. Good morning. Please go ahead.

John Pancari: Morning. Just on the on your medium term targets, I know you reiterated your 16 to 18% ROTCE by end of year 2020. 7. Can you just update us on what efficiency ratio is assumed underneath that? I know you had previously cited a mid-50s efficiency ratio. I think the last time you put that in your slides, maybe it was fourth quarter or so. I know you are at 61% for this quarter. How should we think about where that needs to head to in order to support the 16% to 18% ROTCE? Thanks.

Aunoy Banerjee: Yeah. Hi, John. it is Aunoy here. Look, on the 16% to 18% ROTCE, we see quite a good trajectory from here onwards. As you saw, we delivered 13.9 ROTCE this quarter, up from the 12.2 And to your point, efficiency ratio keeps coming down and it is at 61%. So as we go through this year as well as through the quarters of year, you will see that our efficiency ratio keeps coming down. And it would be probably in the mid-fifties range. We just update our the medium term guidance at the end of the fourth quarter when we look at the full year. So that is that is how we would do that.

Bruce Winfield Van Saun: So mid fifties is still the target, John. And just you know, the walk itself, you know, gets clearer and clearer as you, we are counting on a lot of time based benefit to flow through. And to ultimately get us close to the bottom end of the range before we had our own business performance kick in. And so call it 14% today, there is roughly another kind of call it 2% from time based plus fixed asset repricing which kind of gets you to 16 on its own. You have the business performance which could be another 150 to 200. You have credit improvement which can be kind of a smidge higher. And then you have kind of reducing AOCI, which grows the equity base, which you will still be repurchasing some shares, but that is about a 1% or so negative. So just that alone gets you to the midpoint roughly of the 16% to 18%. And then you have not even factored in the benefits from RTB at that point. So anyway, just to kind of pull that walk forward, it is still very consistent. But we have already realized some of the big time based benefits in pulling us up from kind of 11 high elevens up to where we are today at 14%. Okay. Great. Thanks, for the detail there.

John Pancari: And then just separately, believe you have already commented a bit on what you are seeing around deposit pricing. What are you seeing around the lending side in terms of loan spreads Maybe if you can give us a little bit of color by business and maybe what are some of the new money loan yields that you are seeing either in commercial, then also in the private bank, just as you have been growing that book steadily, what type of new money yields are you seeing there? Thanks.

Bruce Winfield Van Saun: Yeah. Do you want to go first, Aunoy?

Aunoy Banerjee: Yeah. I think, John, it is Aunoy here. Look, I think we had we are very pleased with our loan performance this quarter. If you think about loan growth was up around 3%, 3.8 billion and it came across all the businesses. So private bank grew nicely. There was growth in resi mortgage and the utilization of our--than the commercial book there as well as the multifamily CRE group. And then on the commercial side, again, a very, very diverse growth side. So whether we have our sectors that we go in mid corporate, we got new clients, new money in. We also saw utilization going up. So our clients are actually quite bullish about the economic environment and put money to work. We also saw sponsor utilization go up. So we were very pleased with many of the commercial line utilization that is there. And on the on the on the on the retail side, we also saw HELOC going up nicely. So, obviously, on spreads, pricing is tight. there is a lot of demand, but there is also a lot of money. But we are very disciplined. We look at our overall relationship based view against the balance sheet that we lend out But spreads remain probably stable from last quarter.

Bruce Winfield Van Saun: Yeah. Go to Ted. You can talk about the commercial and then Brendan maybe a little more color on consumer and private bank.

Theodore C. Swimmer: Thanks. Yes, just adding to what you said, Aunoy, we are seeing I would say in the second quarter we saw a stable spreads and with the increase in loan issuance out there, we did not see the incredible pricing pressures we have seen earlier last year and early in the first quarter. So in the NDFI pricing is kind of leveled off where we had seen more pressure on that earlier. On the corporate side of the business, maybe a little more pressure, but relatively stable to where we have been. And we enter into the third quarter, we have not seen increased pressure on this. I think banks with the increased amount of loans that have been out there have been able to be a little bit more choosy and not had the pressure on spreads that we have had in prior quarters. So I will pass over to you Brendan to talk about consumer.

Brendan Coughlin: Yes, sure. Starting on a private bank quickly, we think similar story, very stable spreads. Our yields on the loan book is just north of 6% and the deposit cost is about 2.10%. All in. So you are getting at a net loan over deposit spread of just under 4%, which has been really consistent for the past bunch of quarters. So, you know, obviously, in the short term, that is very accretive to NII. When you look at the net contribution from the private bank. The loan book is about a third, a third, a third residential, commercial real estate, multi family, granular tied to high net worth individuals. And then, you know, business banking and c and I. So no new news there. Strong spreads. Accelerating originations, and accelerating deposit growth. No deterioration in quality or margin. On the retail side, we have been posting year over year growth around 3% range for the last few quarters led by HELOC and mortgage with now some modest tick up in credit card given our new product investments. The yields are also in the low 6s, 6.15% or so as compared to a deposit cost in consumer in the 1.30s. So really healthy margin on the consumer bank. The HELOC yields are north of 7% So the place we are getting the most growth is a very obviously, a variable rate asset with very healthy yields. So we are able to take No. 1 in United States market share in the asset class with very low risk profile and very significant outsized yields in that space. We have got a very, large competitive advantage there. We are gonna keep that going. We do not see that falling anytime soon. Thanks for all the detail.

John Pancari: Appreciate it.

Operator: Sure. Next, we will go to the line of Ken Usdin from Autonomous Research. Please go ahead.

Ken Usdin: Thanks. Good morning. Just on the fee side, I heard your comments in the guide that you could be at the towards the high end of the fee guide for year. But I wanted to ask specifically, this is a really good capital markets quarter. And I am just wondering like where you think that is in terms of the potential of the business. Obviously, it is a great environment, and it certainly reflects that. But could that be the sort of potentially some more juice? And I guess, what other drivers would you expect if you end up doing better than that high end? Thanks a lot.

Bruce Winfield Van Saun: Let me let me start and flip it to Ted. I will keep the bar high for Ted. But in any case, Ken, you look at trailing 12 month revenue for cap markets, $595 million so call it $600 million And you know, I think there is we have built out a lot mean, once had a high watermark order back in the fourth quarter of 2021, which I think was $181 million, which annualizes to a number. If you could do if you could replicate that, you would be over $700 million. But know, since that time, that was, like, a perfect storm to the upside of everything trying to get done in a very narrow window in that fourth quarter. But if you look at kind of what we have continued to do is we have kind of built out industry verticals with really corporate finance expertise and M&A expertise. We have continued to grow the relationships with private credit We have bought more boutiques DH Capital gives us a great advisory group in the digital and data infrastructure space. We just bought another boutique Matrix Capital Partners. So we have continued to build out capabilities. We continue to add talent 1 of the things I am really pleased about is there is lots of folks that are great bankers who are getting tired of the places they are operating, whether it is politics or change in direction. And kind of people are beating a path to our door to get on our platform, which is an enviable position to be in. So I think there is clearly continued upside to that number How much is probably partly on our own. Execution, but also the market backdrop. But from where we sit today, the deal pipelines are very strong and this could be kind of a secular multiyear trend that we would be very well positioned and poised to capture that revenue upside probably better than most of our peers in my view. But Ted, with that, over to you.

Theodore C. Swimmer: Yeah. I and thanks, Bruce. And I agree with everything you said. We built a really, really good engine in our capital markets business. We feel like we have all the products that we want to cover now between what we have always had, which is DCM on the bank and bond side, adding equities with JMP back 5 years ago. And then the number of boutiques that Bruce described with Matrix being the most 1 that we purchased earlier this year. I would say after all that I do not still feel like we have seen the perfect deal market that wouldaccentuate all of the efforts that we put into building this. We had a record Second Quarter this year in DCM, almost our best quarter ever, and I still feel like we did most of those from refinancing transactions versus new underwrites where we generally make more money on those deals As we look at our M&A business, we have had 2 good quarters this compared to last year, but as we see our pipelines, we feel like there is real upside if the markets remain as strong as they are right now. We are continuing to win, I think, better and much more complex transactions than we had in the past. So with the same people, we think we could produce more. And as Bruce said, we are seeing a lot of opportunities to bring talent in from other places if we so choose given changes of strategies to other banks have made and then what people feel like they can accomplish on our platform. So we feel after opportunistic that if we get into even a better M&A and, leveraged underwriting market than we have had before, there is still upside. As far as our equities business goes, there is been great combinations now reached between the existing JMP platform and our and the existing Citizens platform. We are just beginning to see the benefits of that in the reach space, in the fixed space where we feel like we can make more money on the equity side than we have made in the past. So, again, Bruce has put a pretty high bar out there. I am not gonna commit to that, but I do feel like we still have our better days to come in this market as long as the market stays, and the geopolitical environment stays. Relatively calm. Thanks for the question. All right. Thanks for the color.

Operator: Next, we will go to the line of David Chiaverini from Jefferies. Please go ahead.

David Chiaverini: Hi, thanks for taking the questions. You mentioned about how the private bank net interest spread is 4%, very strong. Curious about how sustainable this could be as the build out matures?

Brendan Coughlin: I think we have demonstrated that it is sustainable. We are 3 years in and it is been right around the same range the entire time and every quarter we are putting consistently up $1 billion to $1 billion plus in net new deposits. And the portfolio composition has not really moved at all. And in some case, it is got a little bit better. So, we think the model is working. And the balance of the you know, the secret sauce in the model of banking everything connected to the high net worth individual, including their business. That is driving a healthy portion of the deposit book being operating cash management for the entities that they are connected with. If you were thinking about it just from the standpoint of individuals, you may hypothesize that there is a pinch there on deposits at some point, but because we are banking the entire ecosystem for the client, we feel good that it is sustainable going forward.

David Chiaverini: Great to hear. And then it was good to see the stress capital buffer improving to the 2.5% minimum. Does this change the way you manage the business at all?

Bruce Winfield Van Saun: The short answer is no. I would say the thing we were waiting to see was a more print. it is been frustrating for various reasons. That we ended up with an elevated stress loss result in prior DFAST. And so having that now get down to the minimum at 2.5%, to me is really step 1. I think we should be better than that there is still some modeling issues that the Fed is addressing. And those models are out for review. And then hopefully once they get them approved and finalized, we will be even better than that. But to me, I like to refer to this as tearing the scarlet letter off our jersey to get rid of the that result and being an outlier. And just getting back into the pack where we always should have been 1 of the other things that Aunoy mentioned in his prepared remarks, we came in kind of number 3 of 10 in our credit losses, which I have more confidence in the way credit is modeled than I did PPNR. So anyway, that is positive as well. I would say in terms of where we are in the range, still focused on 10% to 10.5 I think that is still where we are. We are not moving those goalposts at this point. A lot has to play out I think that, there is RWA adjustments that are proposed, could be favorable. And so we will see how much additional capacity potentially that creates. But I tend to philosophically like to operate from a conservative capital position because there is things happen and if you have that little extra capital cushion, then you can take advantage of things like we were invited into bid on First Republic and we are able to take the risk of hiring all the people to start the private bank. And so in any case, we might move down from kind of the current anchor at 10.5 over time, but I do not see in the near term that we would be revising that, you know, 10 to 10.5 range. Very helpful. Thank you. Sure.

Operator: Next, we will go to the line of Gerard Cassidy from RBC Capital Markets. Please go ahead.

Gerard Cassidy: Hi, Bruce. Hi, Aunoy. Hey, Gerard. Aunoy, you said in your prepared remarks you gave us some color about the growth in the commercial loan portfolio areas like technology, healthcare. Energy, fixed sectors. You also mentioned about the private credit funds are actively utilizing your facilities. Can you share with us more about that? Where are you seeing that growth? And within the private credit funds? And then as a second part to the question, you also mentioned about the commercial real estate pay downs. Do you expect that to bottom sometime this year and we could actually see commercial real estate mortgage growth for Citizens possibly going into 2027?

Bruce Winfield Van Saun: Gerard, I am going to flip that over to Ted. I think he is best positioned on that question.

Theodore C. Swimmer: So on the fund financing, Gerard, look, we had this strategy for years and we have been we have been migrating our fund finance strategy from a participant role to a left lead role. We have been building this pipeline for years now. And in the second quarter, we actually closed on a number of transactions that increased our exposure by, I think, approximately $800 million on fund finance. Those were all left lead transactions and were part of the strategy that we had put in place. We continue to--outstanding to--our business continue to be stratified much similarly the way they have been in the past. We do not see a pickup in any 1 sector. We still feel very, very good about the underlying credits in those areas. We have seen really no deterioration in any way, shape or form from the underlying assets. So we continue to find it a very good asset class to be in. We saw in a more temporary increase, I think more episodic on our subscription line finance business. I think we were up approximately $600 million in that business over the second quarter. I think that those outstandings, I would expect to get repaid over in the short order as the equity comes in and takes out the loans in those businesses in those deals. But on the on the fund finance side, we had a really good quarter. We have had a really good track record. We feel very good about what we are doing on that side of the business.

Bruce Winfield Van Saun: So CRE, Ted. On the CRE side, we actually thought we were gonna be coming down quicker in that than we did. We had a couple of payoffs that we expected to get done in the second quarter that got pushed out into the third quarter. We are gonna continue to wind down, not wind down, but we will continue to be very selective on the real office portfolio. So I do not know that we will see that bottom out in the near future on the repayment side. We are though continuing to look at, digital infrastructure as an opportunity to put some capital to work in the real estate side and on the REIT side of the business where we see good opportunities and we can cross sell with both our equity business and our bond and bank business. We will continue to look at those selectively. So office will probably continue will continue to go down and maybe somewhat offset by some stuff in digital infrastructure and REITs. So I would at the top of the house, just say that we will still have a bias to net shrink, through commercial. With the offsets that Ted mentioned is not fully covering the downdraft in office and downdraft in some multi family that we acquired through the investors acquisition. When you look over to the private bank though, we are creating some capacity for them to serve their client investor base that a lot of folks that are wealthy made their wealth through investing in commercial real estate. So we have to have balance sheet available to do selective lending a lot of that is multifamily, but very you know, they never had a credit loss at Republic and they have not had any here in 3 years as Brendan mentioned. So really smart lending to great counterparties and so, overall, we are kind of probably approaching the bottom across the enterprise and then eventually that may start to tick up modestly. But we certainly do not see that as a big overall driver of our loan growth going forward.

Gerard Cassidy: Very good. And then coming back Ted, you commented about the M&A business. You have had 2 good quarters compared to last year. You see the pipelines. The Dealogic data will you are showing record levels of M&A activity, of course, it is the very large deals with the very large investment banks. What do you think when you look at your prime customer in this space, is it going to take for more deal activity to really kick in? Because the smaller deals just have not really gained the momentum like some of these really large mega M&A deals that we have seen in the past 6 to 12 months.

Theodore C. Swimmer: Yes, it is fair point, Gerard. What our pipelines would tell us is that these middle market customers are ready to get off the sidelines. If you looked at the last 2 marches where we have had a lot of volatility, we got off to a good start in 2025, expected to have a good pipeline and then it got delayed with all the concerns around tariffs and things of that nature, which made selling a company a little bit more challenging. Same things happened at start of 2026, But as we look at our pipelines, we are feeling we are seeing a fair amount of customers in the middle market getting ready to sell As we talk to our financial sponsors, they are seeing levels of books coming that they have not seen in the last 5 years. So it feels like that trend is beginning to pick up and my expectation is into the fourth quarter and into next year, you will start seeing those M&A transactions start to occur. So it feels like with some stability, should have a good answer to that question towards the end of this year. Great. I appreciate it, Ted. Thank you.

Operator: Oh, go ahead, Bruce.

Bruce Winfield Van Saun: Sorry. Good. I was just saying thank you, Gerard. Okay.

Operator: Next, we will go to the line of Brian France from Truist. Please go ahead.

Bryan Fran: Hey, I actually have a little bit of a follow-up on that last question, but maybe more by industry and this overall market debate about narrow economic strength versus broadening across sectors. And I guess just to set the stage for a while, there is been this concern that the business economy is doing well. But the drivers by industry are fairly concentrated. And I am looking at your Slide 24, which always great. It gives a lot more detail than most of your peers. And if I am mapping it right, it kind of shows that because you have got 7 sectors that are flat or down year over year, 4 that are up single digits. And 7 that are up double digits in the C and I categories you give. So I guess the question is, do you feel like as you look at your pipelines, as you talk to your customers, are we still on this kind of narrow concentrated growth path? Or do you feel like it is not just AI, it is not just everything related to it, We are really starting to see this broadening theme play out on the ground.

Theodore C. Swimmer: So that is a really good question. I would say, first, we are starting to see it start to widen out. AI was clearly in a lot in the news, and the businesses that surround AI like digital infrastructure and the and the stuff that goes into digital infrastructure has been a big piece of this first and second quarter. But as we look at our pipeline, it is not just digital infrastructure. We are seeing a lot of stuff within the industrial subsectors start to pick up. With things that do not necessarily go into, digital which is great. We are seeing some stuff in health care. We have seen a pickup in biotech. And then we are the only place we really have not seen a big pickup yet is on the consumer side of the business. But our pipelines look pretty, diversified as we look out over the next 6 to 9 months from what we can see. That was different than what we saw in the first and second quarter. As Gerard picked up on the earlier, a lot of the deals were very large transactions. We are getting much more granular in the middle market which, by definition, is more granular. it is starting to show real signs of life. And therefore, I expect we will continue to see more granularity in the industries that pick up over the foreseeable future.

Bryan Fran: Thank you. That was all I had. Thanks.

Operator: Next, we will go to the line of Manan Gosalia from Morgan Stanley. Please go ahead.

Manan Gosalia: Hey, good morning. Bruce, can you unpack that comment on the CET1 range a little bit? I think you said you are still targeting that 10% to 10.5% range, but do you think you can move down from the 10.5% number over time? I guess what do you need to see to get to the lower end of that range? And is it finalization of Basel Endgame? Is it the 2027 stress test? Just trying to assess trajectory of the capital ratio here.

Bruce Winfield Van Saun: I would say number of things. Go into the considerations there. But you know, 1 is rating agency actually. I think the rating agencies coming out of the downdraft in 2023 felt that, you know, profitability has weakened. And commercial real estate portfolios are problematical to some degree. And until you kind of restore your profitability and until you work through some of your commercial real estate loans, you should hold more capital. And I do not take issue with that. I think the whole industry coming out of 2023 actually built their CET1 ratios up to 10.5 or even more And so that is certainly we are getting to a flex point where profitability is now restored and has momentum to be positive going forward and a lot of the workout on commercial real estate has occurred and there is been no big surprises there. So you are kind of getting to the point where you can I think, start to, you know, make some decisions as to do I still need to hold as much extra capital for things like this? And then there will be a whole other consideration around kind of the RWA adjustments that boost your capital in the short run, phase-in AOCI, but net potentially give you another 50 basis to us, it would be 50 or 60 basis points additional net CET1, I think by the time that AOCI is fully phased in. And then what do you do with that money? Do you do you did the set ratios set 1 ratios for the whole industry go up by an amount because people still focus on TCE to TA? Or do you just say, that the old calibration was off and this is the new calibration and so we can use that for loan growth or buying back stock and still manage within the same guide range that we had before. So I think just the nature of things means that I think over time we will be able to drift down. Within that range. We will not get out ahead of anybody, but I think there is opportunity to both support our customers with loan growth and be big buyers of our stock, which I never miss a beat on a call to say I think our stock is still good value here. So anyway, I hear you. that is great context.

Manan Gosalia: Maybe just on the next program, you mentioned the financial impact is a benefit to the medium term and does not impact the 16 to 18% proxy target. Can you just maybe expand on that a little bit? Is there any near term expenses or anything else we should be thinking about And, you know, how are you thinking about the revenue after that?

Bruce Winfield Van Saun: Yeah. So I will start, let Brendan pick up. But there I would say is it is crystal clear to us that we want to get to that 16% to 18% range. So this is really a 10-year program that we can phase accordingly. And so I think initially, in the short run, we are doing a lot of planning about extricating ourselves out of a lot of the supermarket branches that we have and how do we set up standalone branches full service branches nearby that we can migrate the customers to that branch and not be a full de novo, but actually be in a much better position to grow and add customers. So there is some of that. that is probably more in the planning stage in the short run. And then adding people, adding specialists, looking at the branches where there is the biggest opportunities to grow small business, small business specialists in place to penetrate the wealth opportunity, put wealth specialists in place we can I think make those investments in people and they will have very quick paybacks? We have already piloted this in select branch and we can see that those really are not a drag and they are actually positive very quickly. And so anyway, we will that is kind of the frame. What do we win if we win is kind of the big question over the 10 year period. I think what we are trying to accomplish is faster household growth and mainly faster deposit growth, attract low cost deposit growth, which if you kind of play out your retail small business deposit franchise should grow roughly at GDP. If you can add 2% to that growth rate through this program, that is a meaningful amount of deposits over a 10-year period. that is $20 billion to $30 billion of incremental attractive deposits. And so that is what this program is designed to do. And kind of how we invest in it and the pace of investment will be informed by, like, let's get into the range and let's not, you know, start investing too heavily until we are in the range. Then we will have RTB kicking in, which could allow us some acceleration opportunities if we choose to do that. But that is how we think about it.

Brendan Coughlin: Brendan, anything to add? Well, I will put a few just a few quick points. So just grounding on where we are at today. If you if you looked at our branch network when we took the bank public and then added investors in ISBC to that, we would have had about 1.4 thousand branches. And today, we have kind of call it a thousand, squiggly line a thousand. We now have 1 of the more profitable and effective branch networks in the country where, you know, if you look at revenue to expense ratios, we are at 5-6 to 1. Industry is at 3-4 to 1. So we are we have got a really profitable and efficient network. If you look out 5 to 7 years, we actually do not imagine our branch count to net change by a tremendous amount. It should be sort of in that range of plus or minus a thousand branches. So when you unpack the various different things that we are doing to accelerate long term outsized retail deposit growth, our legacy markets ex Metro New York, really this is about repositioning them for strength and even further growth, but it actually could mean slightly less branches because we have this lot of in store branches that we could thin over time and replace with even more powerful branches that you get sort of a 2 for 1 trade in terms of the strength and it better positions us for our target segments mass affluent and affluent customers, which gear better to where the profitability of the retail business is over time, where you can get more wallet share, really where our strengths are with home equity wealth. So on and so forth. So that is there will be some self funding dynamics in our legacy markets that allow us to selectively and organically slowly plant some de novos and densify some of our other markets that we are a little thin in. So the combination of those factors should drive a more powerful network, more equipped for the target customers we are going at, with a number of self funding mechanisms. And then to Bruce's point, where we are adding people their high quality advisory folks, wealth, private client bankers, business bankers, those have really quick payback We are gonna see the revenue growth coming soon, and that is something we have we have validated over a long period of time.

Manan Gosalia: Thank you. Really appreciate all the detail. Sure.

Operator: Next, we will go to Dave Rochester from Cantor Fitzgerald. Please go ahead.

Dave Rochester: Hey, good morning guys. Solid quarter. I wanted to go back to the private bank You have seen some really good momentum in that segment. It continues to exceed growth expectations. I was wondering as you look out to next year, assuming your PVO build outs are on time, you are able source the good people that you want for those offices, Do you think if this higher growth trajectory continues, there is a better chance you are going to land closer to the upper end of that 16% to 18% ROTCE target? By the end of the year or 2027 rather. Are you thinking that upper half of the range maybe is more reasonable? At this point?

Bruce Winfield Van Saun: Yeah. I would I would not pin the where we are in the range just to that. So you know, I think there is a number of factors that go into where we land in the range that kind of net interest income development is very significant there. But we already have pretty high ambition for private bank And I think you know, we have demonstrated what I am most proud of here really is we are not just growing it, but we are growing it in a prudent controlled fashion and getting excellent growth. But we are managing the returns in the business so that we are getting roughly a 25% return on equity in the business, which, as that continues to grow, is just pulling the ROE for the overall enterprise higher. So you are right to say that should be something that lifts But I think it is a little early to say there is enough upside in our mindset and view on private bank that we can commit to that is going to pull us to the upper end of the range. David. Mhmm. Okay.

Dave Rochester: Fair enough. And then Bruce, you mentioned earlier, Florida is maybe the next market you selected for greater density. How would you compare the potential value out of that market fully built out with know, all the PVOs you plan. Versus the California market where you already have a lot of density and have a sense for the value you are expecting there. How meaningful could Florida be for you and what is the timeline for getting that density you want up and running?

Bruce Winfield Van Saun: Well, I would say and Brendan you can add to this, but California was the natural place for the build out because First Republic really dominated that market, Northern Cal and Southern Cal. So we have kind of replicated that in a significant way. And not only that, we did it bringing in very strong commercial banking teams which really First Republic did not have. And then we have JMP based in San Francisco, so we have a whole investment bank focused on emerging tech and other kind of emerging growth areas of the economy. So we are quite strong and quite built out there. I think Florida in comparison what is really attractive to us is as a principal East Coast bank with our kind of retail and business bank footprint, we have there is a lot of migration kind of out of the Northeast or people who kind of live part of the time in the Northeast and part of the time in Florida. And it is very fast growing economy in Florida. So to serve existing customers and leverage our networks it is a great opportunity. But again staying focused with the similar playbook at the high end of the market more PVOs, more private bankers, We have already hired very strong commercial banking team in that market. And so kind of getting that 1-Citizens dynamic going in Florida the way we have it in California is very attractive to us. it is almost as if we feel like we cannot miss as long as we get the right people in place. I think it is gonna take a while, to your point. I do not think we will be California like for 5 to 7 years. I mean, Brendan, you can call me on that, but just off the top of my head to gradually open the right private banking locations to hire the right people, to get our name well known in Florida, I think takes it is going to take a little while. But to me, the opportunity is really immense.

Brendan Coughlin: Yeah. Not a ton to add. So it would be the exact same playbook in Florida that we are we are doing in California. We are 1 or 2 steps behind in terms of pace in Florida than we are in California. It is just as strategic as California, but it will probably ultimately be a little bit smaller in the private banking space at least in Florida than California. Long term. But you can imagine, you know, right now, our presence in private in Florida is centered right around Palm Beach and West Palm Beach. You can imagine over the 5 year horizon that we are in, you know, 5 or 6 of the affluent communities in Central And Southern Florida. So that is our aspiration. We are just getting situated in Palm Beach, and we will we will start to in the same playbook that we did in California, into Florida over the next couple of years.

Dave Rochester: Sounds good. Alright. Thanks, guys. Thanks.

Operator: Next, we will go to the line of Chris McGrattyGrady from KBW. Please go ahead.

Christopher McGratty: Great. Thanks for fitting me in. On the private bank, you guys gave a medium term-- Are you more optimistic about growing the loans or the deposits for this business? And ask it because your loan to deposit ratio is roughly down around 50%. Anything magical about that number? Thanks.

Bruce Winfield Van Saun: No, I would say what is interesting is a lot of folks thought that First Republic built the business based on giving away cheap credit. And then and that is how they people in the door. I think we turned that script upside down that eventually the offering that First Republic had was kind of white glove service unparalleled banking experience and we can handle all your banking needs deposits, investments, and loans. But in a higher rate environment and with a lot of those mortgages now sitting on JP Morgan's books, there was not the same demand for lending. And what we are really pleased about is that the strength of the relationships of the private bankers is allowed customers to come over and they trust the bankers, they trust our platform, they find it attractive. And so we have led with deposits and investments And we are only of late starting to see a loan demand pick up. And so I would think that you know, over time, we wanna stay with that formula. The Deposit is very attractive. Investments off balance sheet, fee revenue is very attractive. Loans attract capital, but you have got to have a balance sheet, you have got to support your customers for their needs. I think we could probably settle into a you know, 60% to 70% LDR as where the ultimate kind of framework will sit for the private bank. And so that means there is gonna be some catch up loan growth. And, you know, some of those some of those mortgages are gonna be need to be refinanced and so there will be more loan demand there. And as we really focus on the business sector and PEVC companies. I think those continued growth there and as the deal flow cycle picks up, there will be more line utilization and things like that. So I do think there is a little bit of momentum at this point behind loans, but I do not see it really getting to something that exceeds 70%.

Brendan Coughlin: Only thing I would add is think about from a balance sheet strategy standpoint, the private bank right now is a net liquidity contributor to the top of the house. If you look at the lendability of the deposits, it is strong in between 60% and 70%, and we are lending at 50%. So is that tightens a little bit to Bruce's point and gets into the LDR of 60% to 70%, I think that would be spot on the top of sort of a self funding dynamic the private bank where it is not drawing down liquidity from retail or anything else. it is still self funding. And I and I expect that to continue into the medium term. Right. Perfect. Thank you.

Christopher McGratty: And then more of a modeling question. The earning asset growth linked quarter Q1 to Q2, any reason that would not be about the same for next quarter? Thanks.

Aunoy Banerjee: Yes. it is Manan here, But I would say think about it: It depends on how deposit growth goes, how loan growth comes in. So I do not think it should change that much. And if you look at our full year guide on lending, our average lending growth, are in the range on that side.

Bruce Winfield Van Saun: Although, would say that there was a bit of pull forward on loan growth for reasons we have talked about earlier in the call that kind of kept it a bit higher. So, you know, can just look at the NII guide in Q3 and it is a little less. it is, you know, 2.5% to 3.5 and we printed over 4% this quarter. So anyway, it will reflect that dynamic that I think loan growth is a little less and that is for a number of reasons. You know, Ted talked about the private capital and we talked about CRE repayments coming in Q3 So those some of the factors to consider. Great. Thanks so much.

Operator: Thank you. And for our final question, we will go to the line of Matt Breese from Stephens. Please go ahead. Good morning. Thanks for taking my questions. Just a follow-up there. Should we infer from your comments particularly around the NII guide, loan growth for the year will be above your 2026 guide and just curious to what extent, Bruce, I know you just discussed some offsets there, but I am curious on the whole Yes. Go ahead, Aunoy.

Aunoy Banerjee: Yes. I would say if you think about it, had some good loan growth this quarter and it was a pull forward as Bruce mentioned. But if you take the average of the loan growth that is what we for the full year, I think we will probably slightly be ahead of what we had guided in January. Think spot loan growth will depend on how fourth quarter ends, etcetera. But I would say on the average side, we would be slightly ahead versus our January guide.

Bruce Winfield Van Saun: Yep. And, you know, that is a good point, Aunoy, is that the average was bolstered by having more loan growth earlier in the year. So I am not sure that the spot changes a huge amount. So when you think about how do we get to the high side and above the high side of the range that volume is big driver of that. I think the we said that we thought that the NIM would approach $3.25, that is still a check. And so really having more loan growth in the first half of the year is very helpful to drive NII higher.

Analyst: Got it. And then thinking about the margin longer term, Aunoy, when you model it out, how much longer might we see fixed asset repricing benefits to the NIM? And I am particularly focused on 2028, just given if you roll the clock back 5 years, in 2023, you saw kind of loan yield spike for the industry. But thinking we start to roll out of some of those in 2028, I am curious if you see that in your model as well and what the impacts might be.

Aunoy Banerjee: Yes. I think if you look at it 2027 as we go it in the guide page, if you start to think of it, it is it is still going up a point or so in the quarter and it goes up, and it obviously depend on the steepness of the curve. Generally, what we see is roughly $3 billion to $5 billion between securities and loans getting repriced, and generally comes at a spread of 60 to 75 basis points. So I think that will continue in 27. And 2028 as we go through it. Obviously, some of those repricing starts to the volume starts to come down. But I would say it would still continue into 2028 in the-- probably at reduced levels.

Bruce Winfield Van Saun: Reduced levels. Yeah. Yeah. Leave it there. Thanks for taking my questions. Sure. I think that brings us to the end of the questions. Appreciate everybody dialing in today and your interest and support. And everybody have a great day. Take care.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect.