Q4 2021 First Citizens BancShares Inc (Delaware) Earnings Call
Okay.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the first citizens Bancshares fourth quarter and year end 2021 earnings conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During this session you need to press star one on your telephone if you require operator assistance during the program. Please press Star then zero as a reminder, today's conference is being recorded.
I would now like to introduce the host of this conference call Ms. Deanna Hart Senior Vice President of Investor Relations you may begin.
Thank you Philip good morning, and thank you for joining US today. It is my pleasure to introduce our chairman and Chief Executive Officer, Frank holding as well as our Chief Financial Officer, Craig next who will provide an overview of our fourth quarter and year end results and we'll be referencing our investor presentation, which you can find on our Investor relations.
<unk> web site.
We're also pleased to have several other members of our leadership team in attendance today, who are available to participate in the Q&A portion of our call if needed.
Following the completion of our formal presentation material, we will be happy to take any questions you may have.
We will mostly be speaking today on first citizens Bancshares Standalone financial results, but will provide an update on our merger activities with the I T as well as some C. I T Standalone quarterly and year to date financial highlights which are included on pages 22, and 23 of the presentation.
Comments during today's presentation will include forward looking statements, which are subject to risks and uncertainties that may cause our results to differ materially from expectations, we assume no obligation to update such statement.
These risks are outlined for your review on page two of the presentation. We will also reference non-GAAP financial measures reconciliations of these measures against the most directly comparable GAAP measures are available in the appendix. Finally for citizens is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference.
Transcript provided by third party with that I'll hand, it over to Frank.
Thank you Dan and good morning, everyone. We appreciate all of you joining us today.
As you can see on page three of our industrial presentation, a weird a daunting of a new and exciting era with the closing of our transformational merger with T. Creating a top 20 U S financial institution with over $110 billion in assets.
We believe this merger brings opportunity to become an even better bank than we've been for the last 124 years.
Mark's big and important changes in our long and accomplished history.
In terms of our structure size scope and capabilities.
The goal in combining our two companies is to create long term value for all our constituents, including shareholders customers.
<unk> and communities.
Do this through our emphasis on stable leadership enduring values.
Our commitment to helping people and businesses prosper by focusing on their long term success.
We also believe success is grounded in our forever. One <unk> motto is outlined on page four of the presentation.
The core of Forever first is the notion that we're going to be here for the long term.
We will always put our customers first.
While the way, we do banking changes as we bring forward new products, New services, new conveniences, and new ways of engaging our customers.
The key principles of financial stability, our focus on long term growth and customer experience are things that will never change.
On page five of the presentation, you'll see our statement of purpose better banking better tomorrows.
In recent months, we looked at the statement with fresh eyes to update it as we look forward to the merger with <unk> T.
We're forever first focuses on our customers.
Statement of purpose focuses on our associates, specifically, how we work and the culture, we want to promote.
Supporting the statement, our three pillars on top of that in quotation marks.
Which helps express the ways, we deliver better buying can you better tomorrows.
These are qualities that are essential to who we are and how we work.
The first pillar is long term thinking.
We place a lot of emphasis on building relationships to create long term value and opportunity for our customers.
The second pillar is service excellence, we believe in providing better service to our customers than our competitors and are dedicated to doing it with integrity transparency and respect.
The third pillar is powerful results.
We want to help create better outcomes for our customers associates and communities.
As we work to integrate CIP. This statement will guide our teams and ensure we remain focused all while delivering value to our shareholders.
Since the combination of our companies on January 3rd.
We've been actively engaging with and ensuring our new associates are properly welcome to the combined company with the goal of binding us all into a unified team.
We're also actively engaging with our customers reaffirming our commitment to helping them with their financial needs.
As far as other integration activities, we anticipate the Onewest bank conversion will occur during the third quarter, followed by legacy mutual of Omaha during the fourth quarter.
We are working diligently to finalize our combined.
Strategic priorities and integration timelines, which we will share over the coming months.
This morning, we reported fourth quarter net income of $123.3 million or $12 nine per share.
Delivering another quarter of strong results to our shareholders.
When compared to the third quarter, we saw increased net income.
Im sorry increased net interest income despite continued growth in deposits and pressure from our excess liquidity.
We were able to deploy some of this excess liquidity into our loan and investment portfolios. Despite the decline in the loan portfolio from SBA PPP loan forgiveness activity.
Non interest income.
From our core fee income producing lines of business continued to be a source of strength.
Our credit quality remains solid resulting in another net provision benefit.
All in all it was another great quarter for first citizens and I want to thank all of our associates for their commitment in 2021.
As we look forward I want to mention a change we're making around the middle of the year regarding NSF and O D fees and overdraft fees.
We will be eliminating our NSF fees and significantly lowering our overdraft fee from $36 to $10 on consumer accounts. We believe these changes are necessary to remain competitive in the current marketplace.
I will turn it over to Craig for a closer look at our financial results and then we'll open the line for questions.
Thank you Frank and good morning, everyone. Starting on page six of the Investor presentation, I will cover our fourth quarter earnings highlights.
Earnings for the fourth quarter totaled $123 3 million down 800000 from the linked quarter and $14 8 million from the same quarter a year ago, while earnings were down compared to both periods. We are pleased with our core earnings performance performance, which I will touch on in a moment.
Earnings for the fourth quarter translated into a return on average assets of 84% and our return on average equity of 10 nine 6%.
Net income per common share was $12 nine compared to $12.17 in the third quarter and $13.59 in the compare comparable quarter a year ago.
For the linked quarter lower earnings were due to higher noninterest expense and a decline in gain on sale of securities partially offset by increased net interest income and an increase in net benefit for credit losses.
Lower earnings from the comparable quarter, a year ago due to lower fair value.
Market value adjustments on equity securities and a decline in gain on sale of securities higher non interest expense and lower SBA PPP income.
All partially offset by higher net interest income ex PPP a decline in provision for credit losses, and higher core non interest income.
While earnings were down for the linked and comparable quarters. We were pleased with ex PPP net interest income growth as well as core noninterest income from our fee income producing lines of business.
We were also pleased with our comparable fourth quarter results from a pre provision net revenue growth perspective, after removing non core income and expense items.
We continued to experience strong credit quality and reported a net recovery for the quarter and.
In addition, macroeconomic factors continue to improve resulting in a further reserve release, providing a $5 $1 million net benefit from provision for credit losses during the fourth quarter.
For the year as macroeconomic factors have improved and we have sustained good credit quality.
We released $45 8 million in reserves compared to a reserve build of $35 9 million last year related to the uncertainty surrounding COVID-19.
On page seven we highlight our year over year results net income totaled $547 5 million for the full year at $55 7 million or 11, 3% increase over 2020.
This translated into a return on average assets of 1% and a return on average equity of 12 eight 4%.
The most significant factor contributing to the increase in earnings was a $36 $8 million net benefit from provision for credit losses in 2021 compared to a provision expense of $58 4 million last year.
The net charge off ratio for the year declined from eight basis points to three basis points.
While net interest margin declined by 51 basis points, our efficiency ratio remained flat.
Primarily due to core net revenue growth offsetting core noninterest expense growth.
Turning to pages eight through 10, I will cover trends in net interest income and net interest margin.
Net interest income increased by 3% versus the prior quarter, primarily driven by higher SBA PPP income higher loan and investment balances only partially offset by lower loan and investment yields.
While an increase in SBA PPP interest income accounted for most of the dollar increase in net interest income during the quarter net interest income X P. P. P. In PCB lines increased by $5 $3 million.
This increase over the linked quarter was due to loan investment portfolio growth offsetting impacts from the low interest rate environment and excess liquidity. We are pleased that loans ex PPP grew at an annualized rate of five 7% over the third quarter.
While the increase in the absolute level of net interest income during the quarter was a bright spot as expected net interest margin declined from the linked quarter by three basis points as discussed in prior quarters. We continued to operate with liquidity above normal operating ranges, which continued to put downward pressure on net interest.
Margin.
On prior calls we stated that we were monitoring interest rates closely and looking for opportunities to redeploy excess liquidity to grow the absolute level of net interest income.
So in addition to solid organic loan growth during the quarter, we invested $2 billion in short duration U S. Treasuries to increased interest income, while adding minimal interest rate risk.
Felt the time was right to implement the strategy given that the market had fully priced in six fed interest rate hikes into the 22 and 'twenty three yield curves, thereby allowing us to pick up a sufficient spread over the fed funds rate as we await the fed to raise rates.
Despite deploying this chasm and some earlier in the year, leading to a $3 $2 billion increase in our investment portfolio over the last year or overnight investment balance at the end of the fourth quarter was $9 1 billion essentially unchanged from the prior quarter.
As mentioned in prior quarters, we purposely maintained a conservative posture with respect to liquidity given that we believe there were opportunities to optimize our balance sheet once our merger with CIP was complete.
To that end, we announced Monday that we intend to redeem $2 $9 billion of senior unsecured debt assumed in connection with our merger with CIP.
The debt will be redeemed on February 24, 2022 to $2 9 billion includes for unsecured notes with maturities ranging from 2022 to 2025, and a weighted average coupon rate of 5%.
This redemption aligns with our strategy to optimize the balance sheet for the newly combined company as we work to reduce higher debt costs by utilizing excess cash from our deposit growth.
In 2022.
Net interest income ex PPP as appose is poised to grow through balance sheet growth. However, we expect net headline net interest margin to decline.
More moderately than it did in 2021 due to continued excess liquidity at SBA PPP income, becoming less of a contributor moving forward. We will continue to seek opportunities to grow absolute levels of net interest income to offset declines in margin through organic loan growth opportunistic additions to our investment portfolio.
Are you continuing to optimize the liability side of the balance sheet.
Turning to page 11, I'll cover noninterest income, which totaled $114 3 million during the fourth quarter.
Headline noninterest income was down $8 7 million compared to the linked quarter driven mostly by an expected decline in securities gains core noninterest income was relatively stable for the linked period headline.
Headline noninterest income declined by 12, and a half million dollars.
When compared to the fourth quarter of 2020 primary drivers included a $21 2 million dollar reduction in fair market value adjustments on equities and securities gains, partially offset by an $8 $6 million increase in income from fee producing lines of business. The most significant factor of the increase.
It was higher wealth income driven by stronger sales in market value impact leading to growth in assets under management. We also saw increases in service charges and income from credit from card services.
These increases were partially offset by a decline in mortgage income.
Turning to 2022, we expect continued momentum in our wealth and payments related businesses. We expect to continue to see moderation in mortgage income due to the impact of higher mortgage rates and consequently, the slowing in refinance activity.
As Frank noted earlier, we are making changes to our NSF and overdraft practices, which will reduce service charges.
Tumor NSF and overdraft fees constitute approximately 50% of our service charges income statement line item and.
And we expect this change to result in a 35% to 40% decline in service charge revenue once fully implemented.
In terms of the dollar impact we estimate a 2022 impact in the $15 million to $20 million range and full impact going forward to be between $35 million to $40 million.
Given all of these factors, we expect low single digit percentage growth in core noninterest income in 2020 , two as well paid well and payments businesses continued to grow providing an offset to lower mortgage and service charges income.
Turning to page 12, I'll cover noninterest expense.
Noninterest expense increased by $10 $4 million over the linked quarter. Most of the increase occurred in other noninterest expense with the largest increases in foreclosure and collection expense and consulting costs.
The remainder of the increase was spread among other general and administrative account.
The efficiency ratio increased slightly during the quarter.
From 66.9% to $66 three 1%.
When considering the impact of the current quarter's expenses for merger related costs the impact of merger pre hires and other episodic expenses expenses were in line with expectations.
We expect that our run rate and I'm talking legacy FCB here will increase by approximately 3% to 5% next year, reflecting wage pressures sales force additions in wealth and in our fastest growing markets and continued and continued investment in digital transformation.
Page 13 provides balance sheet highlights and key ratios and I'll cover the significant components of the balance sheet on subsequent pages.
Turning to page 14, I will cover loan growth for the linked quarter and year over year periods.
Loans decreased $144 million or about one 8% on an annualized basis. This quarter, primarily due to a $593 million net decrease in SBA PPP loans as I mentioned earlier, excluding PPP loans, we experienced solid annualized organic growth of five 7% over.
The third quarter.
The largest growth components, where commercial and industrial and owner occupied commercial real estate loans.
On a year over year basis loans declined by $420 million or about one 3% primarily due to a $1 9 billion dollar decrease in SBA PPP loans, excluding PPP loans, we saw organic growth of $1 5 billion or four 9%.
Overall, we are pleased with organic loan growth this year and we expect that growth will continue in the mid single digit percentage range moving forward. However, the ultimate level of loan growth will be dependent upon continued economic expansion in our markets.
Turning to pages 15 through 17, I will cover our credit quality trends in our allowance for credit losses.
Credit quality continues to be a source of strength, we reported a total net recovery of one basis point for the quarter.
The nonperforming assets to total loans and other real estate ratio was five 1% at quarter end down from six 5% in the prior quarter and the lowest level since the second quarter of 2019.
Given these trends and improvement in macroeconomic factors, we released $45 8 million in reserves year to date compared to a reserve build of $35 9 million last year related to uncertainty surrounding the pandemic our allowance ratio ex PPP loans.
Declined mostly from the con modestly from 58 basis points in the third quarter to 56 basis points in the fourth of five 6% compared to five 8% in the third quarter.
While credit quality continues to be strong and we have little indication that it won't continue to be moving forward. We do not expect significant reserve releases in 2022, and anticipate building reserves to support loan growth at some point during the year.
Pages, 18, and 19 I'll cover deposit trends in our funding mix. We continued to experience strong deposit growth during the fourth quarter with deposits growing at an annualized rate of 10, 6% since the end of the third quarter.
On a year over year basis deposits grew by 18, 4%.
Our balance sheet continues to be funded predominantly by core deposits with deposits representing over 96% of our funding base at the end of the quarter.
Total cost of deposits declined by one basis point during the quarter to six basis points. The total cost of interest bearing liabilities also declined by one basis point.
Deposits and deposit growth are obviously at record levels as we move forward. We will continue to monitor our deposits in the pandemic flow to try to project future deposit growth and customer behavior. While we acknowledged that the pandemic has contributed to our deposit growth. We were pleased that over two thirds of our 2021 deposit growth occurred in.
Core checking account.
While we expect that overall deposit growth will moderate in 2022, we expect overall deposit balances to remain elevated and that they will continue to be a source of strength for our balance sheet and margin even as interest rates rise.
Turning to page 20, our capital position remains strong with all ratios above or within target ranges as of the end of the fourth quarter. Our CET. One ratio was 11, 5% and our total risk based capital ratio was $14 three 5%.
Most of the growth in our risk based capital ratios was attributable to strong earnings during the year, partially offset by growth in total risk weighted asset.
As we have noted in prior quarters, our leverage ratio has been impacted by significant deposit growth that remains within an acceptable target range as earnings are mostly offsetting the impact of increasing average assets.
We expect that our merger with <unk> will return our leverage ratio to a more normal level.
As Deanna stated earlier, we have included CIB income statements and balance sheets on pages 22, and 23 of the presentation.
First I will provide year to date income statement highlights for.
For the year CIB reported net income of $922 3 million compared to a loss of $615 3 million in 2024.
For the year <unk> recognized a benefit for provision.
$327 $4 million compared to provision of $823 million in the prior year.
The provision release in 2021 reflected a combination of factors, including a continued low level of net charge offs a reduction in loan balances as well as modest improvements in various macroeconomic factors.
Note that the net charge off ratio declined from $1, one 4% in 2000, 22.16% in 2021.
Nonaccrual loans declined by 190 million or by 32% during 2021 and ended the year at $1 two 1% of total lines down for 163% at the end of 2020, Despite Realer reserve releases during the year of the allowance for credit losses at the end of the year. It was two 2%.
Above the pre pandemic posts diesel implementation level of two 4%.
Net interest income held up fairly well during the year, despite lower loan balances declining by $11 $4 million as lower interest expense on deposits and borrowings borrowings, mostly offset a decline in interest income.
Noninterest income increased by $84 8 million or about six 2% over the prior year, primarily due to higher gain on sale of investment securities and higher factoring commissions.
Noninterest expense was down $731 4 million the largest component of the decline was related to a goodwill write down in 2020.
Which did not recur in 2021, the remaining client was spread among other operating expense account.
Turning to the quarter met and for <unk>.
Net income for the fourth quarter was $216 1 million up from $175 $5 million in the linked quarter.
Net interest income increased by $5 9 million due to higher investment balances and higher yields on earning assets lower deposit balances and run off of higher cost Cds and brokered deposits.
These positive impacts more than offset lower loan balances, which declined declined by 2% from the end of the third quarter.
Net.
The benefit from credit provision increased by $3 $6 million due to the same factors cited for the year to date change net charge offs were 11 basis points during the fourth quarter.
During the fourth quarter non interest income increased by $49 million over the linked quarter. The prior quarter included a $13 million charge related to the release of a cumulative transition adjustment related to the liquidation of a foreign subsidiary the remaining 27 $9 million increase was related to.
Higher rental income due to increased rail utilization and upward pricing of leases higher factoring commissions on seasonally higher volume higher capital market fees and higher equipment sale gains all partially offset by lower gains.
On the sale of Securities.
Noninterest income noninterest expense declined by $18 million, primarily related to lower head count during the quarter.
Turning to the balance sheet.
Loans declined by $3 3 billion since the end of 2020 most of the decline was attributable to elevated levels of prepayments on real estate finance loans. The sale of the aviation portfolio and continued sales of consumer mortgage loans.
During the fourth quarter originations increased over the prior quarter, but they were outstripped by commercial loan prepayments and the sale of consumer mortgage lines.
Deposits were down $3 7 million billion, mostly due to run off of higher rate Cds, let's see it continued to optimize its balance sheet.
We are pleased with Cit's year to date and quarterly results and are excited about the combination of our companies just as we were when we announced the planned merger in October of 2020, we remain positive about our prospects as we one preserve and grow both banks core businesses to optimize the funding on the combined.
Lets sheet and three enhanced operational efficiency by gaining economies of scale.
Work is currently underway to produce a financial forecast and plan for the combined company. This involves reassessing our earnings expectations for 2022, and 2023 by gaining a better line of sight into Cit's business plans and financial forecasts validating expected efficiency and finalizing our purchase accounting.
Mark.
Given that this work is underway, we will not be sharing pro forma financial information on the combined company today, we estimate that this work will be complete by early March and we plan to share the results with you as soon as practicable after its completion.
This concludes my comments. Thank you all for joining US today. We appreciate your time I will now hand, the floor back over to the operator to open it up for Q&A.
Ladies and gentlemen.
If you have any questions.
Or a comment at this time. Please press the Star then the one key on your tech talent telephone.
As a courtesy to others on the call. We ask that you limit yourself to one question and one follow up and then return to the call queue. If you have additional questions. If your question has been answered and wish to remove yourself from the queue. Please press the pound key.
Pause for one moment to compile the Q&A roster.
Our first question comes from the line of Kevin Fitzsimmons with D. A Davidson.
Good morning, everyone.
Good morning, Kevin.
I appreciate the detail on.
Putting the excess liquidity to work in the B step up with these short term securities Craig I'm just wondering.
Beyond that move what additional moves you might be you know and I know.
We're probably talking just on US first citizens standalone basis for what other moves in terms of increasing the securities portfolio portfolio you would like.
Likely look to do.
In the coming months.
Well I can't I can't say, because you have the company's balance sheet combined cash would be around $12 billion. The redemption that we just would take us to around nine.
Overall, thats still sub optimal from a from an overnight investments to earning assets ratio. So we will continue to look for opportunities to redeploy.
That cash into investments and loans and we and we will also.
Look for opportunities in the combined company.
For funding synergies and specifically targeting higher cost deposits on the liability side to replace with lower cost core deposits.
Okay.
Okay. Thank you.
One question on just this is more.
Looking further out.
On a combined basis, but not not getting into the weeds on the numbers, but I'm just thinking more conceptually and timing I always thought of that one of the opportunities was combined the companies integrated.
Get performance up to a certain level and then get more comfortable stepping in and utilizing some of the excess capital and buying back the stock and I am just Frank I'm curious what your.
Thought given that we've had the delay in closing the deal and now.
So when you expect to get the conversions done just curious what your timing expected timing might be when you would.
Feel comfortable stepping in and doing that.
Well, Kevin obviously the first.
Work ahead for us is to integrate the companies and exhibit that we are following through with our integration plans.
So as soon as we can after that occurs when we demonstrate that we're integrating as planned and that we put some you know some earnings together and continue to build capital as soon as we can after that so we would intend to resume.
And stock repurchases.
I don't really have a specific timeframe, but as soon as possible.
Okay. Thanks very much. Thank you. Thank you Kevin.
Your next question comes from the line of Brian Foran with Autonomous research.
Hey, good morning.
Maybe just to follow up on the March potential communication and financial forecast pro forma.
Just in terms of nuts in Bulks is there anything we should watch out between now and then do you file a pro forma balance sheet at any point for us.
If we're if we're kind of waiting for more info on the pro forma company March is the next milestone.
We will.
We're required to file pro forma information 71 days or 75 days. After the effective date of the acquisition. So we do intend to do that and shortly thereafter, we would plan to come back and share those results.
Great.
And then.
I think thats, a quantitative work is underway and I wonder if just qualitatively you could share it's been 400 days or so you've had a lot of time to watch the I T sometime to start working on the integration.
Is there any items you would highlight for people as better or worse than <unk>.
Actual expectations again on a qualitative basis.
Step back and look what's gone better than whats gotten worse.
I would I would say what's gone better is definitely credit losses.
Quality.
Actually in both companies.
It has gotten better.
Obviously, we continued over this period, we've gotten around the uncertainty some of the uncertainty around the pandemic.
Causing some conservatism in terms of some of the adjustments some of that uncertainty has dissipated.
So I would think that would be the major thing I would point out in that other other items.
<unk>.
I don't think there'll be significant fluctuations.
And then maybe lastly on the NIM commentary.
I mean first to clarify when you talked about some residual pressure.
Is that including any change in interest rates from the fed or is that where we are today not contemplating potential fed hikes.
Are you talking about our forward look.
Yeah, I think if I got it right. When you were talking about the NII Guide you talked about rose driven by earning.
Earning assets, but with some NIM pressure still so hopefully I got that right and then just clarifying is that NIM pressure.
Include any rising rates or is that extra capex.
It includes it.
And if you look if you really really have to look at it.
If you look at it without PPP, we sort of bottom out in the first quarter and then when the fed starts when rates start rising and we do have some rate hikes built into the two our pro forma.
We started a turnaround in the second third and fourth quarters, and obviously the more rate increases the higher that turnaround the better that turnaround would be.
So we do start to see more.
Margin improvement sort of ex PPP.
Sort of third and fourth quarters as those rate hikes take effect.
Great. Thank you.
Your next question.
Comes from the line of Brady Gailey with K B W.
Hey, Thanks, good morning, guys.
I wanted to start just.
I wanted to start on a follow up on the share buyback and if you look at <unk>.
The FCA in here you guys have been.
You know pretty.
Active in the buyback like when I look at 2019 and 2020 combined.
Thank you repurchased about 16% of the confidence of our big figure.
You mentioned reengage in the buyback.
Will <unk> be sensitive to the price of the stock when they think about buybacks or you know the way that you view it as just kind of a good practice to always invest internally and repurchase shares over time I'm just wondering how.
Stock has been pretty volatile.
Recently, but if the stock goes up a lot should we still expect share buybacks or do you think that you're really going to be pretty price sensitive there.
I would say I'll give you a nuanced answer here I would say our general philosophy is to remain active in buybacks, but obviously price ways into that we want to make sure there is a.
Tangible book value payback period.
Thats adequate, but we're actually getting the return on that investment just like we would any other acquisition that a general philosophy would.
It would be to remain active.
Okay and then.
Remember in the past you guys guiding to a target common equity tier one ratio of 9% to 11%.
I know youre on top of that today or at year end.
Without CIP.
Think about the buyback what capital ratio are you focusing on the most.
What is the target of that ratio longer term.
Well first of all.
I'm not going to share the pro forma capital ratios as a combined company, but I think someone asked about what has gotten better obviously with the earnings of both companies and the credit quality of both companies proving our capital ratios are going to be fairly high coming into this transaction much higher than we projected.
Back in October of 2020, so I would say that our capital ratio I'm not going to.
I'm not going to provide a target that our capital ratios will be significantly.
We will have significant excess capital.
To grow internally.
Or repurchase shares.
So we feel like we feel like we'll have good capacity to do that.
We do have target ranges that we operate in and and we'll be mindful of those.
As we as we engage in that activity.
And just remind us Craig what are your target ranges kind of longer term capital as the as the target ratio still common equity tier one is at 9% to 11% that's correct.
Okay.
Alright, and then finally for me just on the loan growth mid single digit I know is what you guys have been pointing to that's what you did this quarter.
So in line as we think about 'twenty, two and 'twenty three.
Do you think the combined company will still be able to grow loans in the mid single digit level with CIC.
Involved.
That change at all.
With the new pro forma company.
We would probably aspire to that but I will tell you based on what.
Where things are right now that would be a challenge.
And we're really right now trying to get a better line of sight into Cit's business units to determine that so I would not I would not promise our project mid single digit percentage growth at this time for the combined company.
Okay, alright, great. Thanks for the color guys. Thank.
Thank you.
That now ends our Q&A session I would now like to turn the call back over to our host for any closing remarks.
Thank you Phil and thank you everyone for joining this morning as always we are appreciative of your ongoing interest in our company and if you have any further questions or need additional information. Please feel free to reach out I hope everyone has a great day.
Ladies and gentlemen. This concludes today's conference call. You may now disconnect have a wonderful day.
Okay.
Yes.
Sure.
Okay.
Okay.
Yes.
Yes.
Okay.
[music].
Okay.
Okay.
Yes.
[music].
Okay.
Okay.
Operator.
Okay.
Okay.
Hum.
[music].
Okay.
[music].
Hi.
Alright.
[music].
Yes.
Okay.
Yes.
No.
Okay.
Yeah.
Yes.
Yeah.
Okay.
Got it.
Okay.
Okay.
[music].
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Hum.
[music].
Sure.
[music] milestones.
Okay.
Okay.
Okay.
Sure.
[music].
Okay.
Yeah.
Okay.