Citizens Bank reduced its headcount by about 650 positions, or 3.5%, in the fourth quarter, the Providence, Rhode Island-based lender said Wednesday in an earnings release.
The trim represents a combination of layoffs and attrition, bank officials said Wednesday.
"I think we have been very, very diligent in … looking at staffing levels across all the different activities in the bank and seeking efficiencies,” Citizens CEO Bruce Van Saun said Wednesday, according to American Banker, adding that the bank’s risk and audit segments were “spared.”
"I think we're kind of lean and mean and in good fighting shape as we enter into 2024,” Van Saun said.
Severance costs accounted for $115 million in noninterest expenses, the bank said Wednesday. By comparison, Citizens’ payment of $225 million as part of the Federal Deposit Insurance Corp.’s special assessment fee, related to the failures last year of Signature and Silicon Valley Bank, weighed notably heavier.
The headcount reduction came, too, as Citizens withdrew from its wholesale mortgage business and launched its private bank.
The private bank operation took in roughly $1.2 billion in deposits during its first quarter. But the bank is targeting $11 billion in deposits, $10 billion in assets and $9 billion in loans by 2025, Bloomberg reported.
“If we are able to hit those numbers and we have kind of the right nature of loans and deposits, we would see this as being a highly profitable business,” Van Saun said, adding he expects the venture to break even by the second half of this year.
Citizens has hired about 200 bankers for its private-bank operation and expects to bring more aboard. It is also targeting six to eight premier banking offices — it has opened an office in Boston and plans a presence in Palm Beach and San Francisco in the coming months, Van Saun told Bloomberg. Further, it is investing in technology to allow customers to access their loan, wealth and deposit accounts with a single login, he said.
“We do a good job with our customers, but the First Republic, high-end, high-touch white glove service levels for these customers is at another level up,” Van Saun told the wire service. “We’ve been very focused on that and I think we’re making good progress. We won’t be there overnight, but there’s a lot of things that we can do today that are just as good as First Republic is doing.”
Overall, net income fell to $189 million in the fourth quarter, Citizens disclosed. That’s a 71% drop from a year earlier.
The bank’s net income would have been $426 million without counting the FDIC fee, severance costs and $5 million the bank took in integration costs from its acquisitions of 80 HSBC branches and New Jersey-based Investors Bancorp. That still would have given Citizens a 37.8% slide in net income year over year.
Net charge-offs at the bank have increased for the past six quarters over its exposure to commercial real estate — and Van Saun said that can be expected to keep rising.
“It’s just a process that we have to go through with time that’s going to be with us all through 2024 and probably a good bit into 2025,” he told Bloomberg. “We think we have those loans properly reserved for.”