UPDATE: This story includes quotes from Citizens' earnings call and from an interview with CEO Bruce Van Saun.
Citizens Financial Group has reached a deal to sell about $1.9 billion of student loans, which its CEO described as part of the bank's strategy of focusing on deepening relationships with its existing customers.
Roughly $200 million of non-core student loans were settled during the first quarter of 2025, with the rest to be settled later this year, the Providence, Rhode Island bank said Wednesday. The transaction helped push Citizens' average loans for the quarter down 4% from a year ago to $139.7 billion.
In an interview with American Banker, CEO Bruce Van Saun described the sell-off as a matter of shifting priorities. Back when the bank was in "big growth mode," he said, Citizens bought up a number of loans from other lenders, including auto and education loans. Now the bank's goal is to shed that "non-core" portfolio and use the capital for other projects, he said.
"We pivoted to say we're really ultimately focused on primary, deep lending relationships with our customers," Van Saun said.
The particular trouble with the student loans, Van Saun said, was their duration. While auto loans have a fairly short timeframe for repayment — the average is a little under six years, according to
"Those would have been kind of sticky in the portfolio," Van Saun said. "The goal was, could we be in a situation where we could sell those loans … and free up that capital, because they weren't going to run off naturally the way the auto loans were running off."
At the start of 2025, Citizens found a way to "pull the rip cord" and sell those debts. The bank will be completely rid of its purchased education loans by the end of the third quarter, according to its earnings presentation.
What will Citizens do with the freed-up capital? In the short run, Van Saun said, the cash can be used to repurchase the bank's own stock — which, like that of other banks, is available at a discount thanks to the Trump administration's
But in the longer run, Van Saun wants to invest more in his passion project: the company's private bank. Citizens Private Bank launched in 2023 and
"That's deep relationship lending," Van Saun said. "It's very profitable, and it's the real customers of the bank."
In other respects, Citizens' first quarter met expectations. Earnings per share were 77 cents, slightly above analysts' average estimate of 75 cents, according to S&P. Revenue was $1.94 billion, matching Wall Street's estimates, per S&P. Net income was $373 million, up 12% from the first quarter of 2024.
Raymond James analyst David Long viewed it as a solid performance, but saw storm clouds gathering in the macro environment.
"Citizens' 1Q results continue to show progress on recent initiatives, including its build out of the Private Bank, running down its non-core portfolio, and enhancing its net interest margin," Long wrote in a research note. "Its 2025 outlook was maintained, but as expected, risks were noted given the increase in economic uncertainty since its January report."
In recent months, the Trump administration
In spite of this turbulence, Citizens reaffirmed its 2025 outlook, which includes an expectation of 3%-5% net interest income growth. But the bank also noted that its outlook could change "if current macro challenges persist."
"If the environment calms down and uncertainty is reduced, this could be a really, really strong year from a capital market standpoint," Van Saun said. "Who knows when exactly the tariff situation is resolved … But I'll be the optimist who's always looking for silver linings."
