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John Woods is the CFO of Citizens Bank, a regional bank with around 1,000 branches, holding total assets of $217.5b. We spoke with him to hear how businesses are responding to tariffs, economic volatility, and the risk of a recession.
This interview has been edited for length and clarity.
It’s been a very volatile quarter. What have you been seeing in terms of consumer behavior?
No significant changes. Credit quality is very stable, and we’re keeping an eye on consumer spending, which we think would be one of the harbingers of whether we would be heading into a downturn.
On the business side, we are seeing some caution there…We haven’t lost pipelines of plans for businesses to make investments or to execute transactions. But what we need is a reduction of uncertainty, and we’re going to need a road map on tariffs that creates an ability for the world, the US, commercial customers of ours, to understand what the macro environment will be like.
Right now there’s too many variables, too much risk of recession. If it’s temporary, I think we’ll get back to a good spot, but if it continues for several months, we could be risking a recession and potentially pushing out this rebound in activity in part into the early part of ’26.
Are your business customers, in particular, feeling any pain from tariffs right now?
A month or two ago, what we were hearing is that there was some front-running of tariffs. That resulted in a little more activity in the first quarter than is usually the case. Typically, the first quarter is a seasonally down quarter for a lot of this activity, but we did see some loan growth.
There was some M&A activity in the first quarter. There was some business investment from a capital investment perspective.
What our commercial customers are now trying to figure out is, what do they do with these tariffs? The original equipment manufacturer that’s exporting, will they eat some of the tariff? Not often, but if that’s an opportunity, then great. Do they have pricing power with the customer? Which isn’t great, because that raises prices, and that’s where inflation comes from, and that’s part of what the Fed’s worried about. And once they’ve exhausted those options, then it’s just left to the company to eat it in their margin. And if they’re going to have to have margin shrink, then what they’re thinking about is, how can I streamline my operations, take some costs out to try to protect profitability, and ensure that I’ve got good access to backup lines of credit and liquidity lines, revolvers with my banks, and all of that. We have customers engaging in those contingency playbooks right now, hoping for the best, but preparing for a downside.
Are there other points you’d like to make about the current economic situation?
We’re keeping an eye on hard data and soft data. The hard data is the labor market, what’s going on with consumer spending, all of that, and that’s good, but it’s also lagging. It’s rearview mirror-type stuff…The soft data with respect to sentiment is taking a downward turn. And so what we’re trying to monitor is what’s happening with consumer spending and business investment, and which one will win the battle of the teeter-totter?
Recession odds are rising, and we are preparing in our models for a recession. For example, our credit model assumes a recession. Not every bank has assumed a recession in the model they use to create the allowance for loan losses, but we’re preparing for that in a conservative way, and we’re keeping an eye on the Fed.
On April 30, Citizens Bank announced that Woods will be leaving in August to pursue another opportunity, and "will continue to work with the bank’s strong finance team to ensure a smooth transition.”