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Citizens Financial Group Incri (CFG) SEC Filing 8-K Material Event for the period ending Wednesday, October 20, 2021

Citizens Financial Group Incri

CIK: 759944 Ticker: CFG



citizenslogoa05.jpg

Citizens Financial Group, Inc. Reports Third Quarter 2021 Net Income of
$530 million and EPS of $1.18
Underlying Net Income of $546 million and EPS of $1.22*

Key Financial Data3Q212Q213Q20
Third Quarter 2021 Highlights
Income
Statement
($s in millions)
Underlying ROTCE of 14.2% and underlying EPS of $1.22 reflect broad-based strength across our businesses, including a rebound in Mortgage, along with excellent credit results
Underlying PPNR of $671 million reflects:
Strong results in Capital Markets, Wealth and Mortgage
Net interest income up 2% QoQ, given interest-earning asset growth with stable margin, higher day count
Interest-bearing deposit costs of 14 bps, down 2 bps QoQ
Credit provision benefit of $33 million reflects strong credit performance and macroeconomic improvement
Period-end loans up 1% (up 2% excluding PPP impact); average loans down 1% QoQ (up 1% excluding PPP)
Period-end LDR of 81.0%
Strong capital position with CET1 at 10.3%
TBV/share of $34.44, up 7% YoY
Total revenue$1,659 $1,609 $1,791 
Pre-provision profit648 618 803 
Underlying pre-provision profit671 629 834 
Provision for credit losses(33)(213)428 
Net income530 648 314 
Underlying net income546 656 338 
Balance Sheet
&
Credit Quality
($s in billions)
Period-end loans and leases$123.3 $122.6 $124.1 
Average loans and leases122.6 123.5 124.9 
Period-end deposits152.2 150.6 142.9 
Average deposits151.9 150.3 141.4 
Period-end loans-to-deposit ratio81.0 %81.4 %86.8 %
ACL to loans ratio1.63 1.70 2.21 
ACL to loans ratio, ex. PPP1.65 1.75 2.29 
NCO ratio0.14 %0.25 %0.70 %
Financial MetricsDiluted EPS$1.18 $1.44 $0.68 
Underlying EPS1.22 1.46 0.73 
ROTCE13.7 %17.5 %8.3 %
Underlying ROTCE14.2 17.7 9.0 
Net interest margin, FTE2.72 2.72 2.83 
Efficiency ratio61 62 55 
Underlying efficiency ratio60 61 53 
CET110.3 %10.3 %9.8 %
TBV/Share$34.44 $33.95 $32.24 
Comments from Chairman and CEO Bruce Van Saun
“We delivered strong results in the third quarter, paced by solid revenue growth across both net interest income and fees, which combined with excellent expense discipline resulted in positive sequential operating leverage in excess of 2%,” said Chairman and CEO Bruce Van Saun. “Integration planning for our recent acquisitions is going well, and we are excited about the franchise and synergy benefits as we look forward to 2022. While economic growth and loan demand in the second half have been affected by the pandemic, we maintain a positive outlook for a gradual, strong recovery through next year.”

Citizens also announced today that its board of directors declared a fourth quarter 2021 common stock dividend of $0.39 per share. The dividend is payable on November 12, 2021 to shareholders of record at the close of business on October 29, 2021.


*References in this release to "Underlying" results exclude notable items and are non-GAAP Financial Measures. For more details on non-GAAP Financial Measures see page 15 in this release. References in this release to balance sheet items are on an average basis and loans exclude loans held for sale (“LHFS”) unless otherwise noted. References to net interest margin are on a fully taxable equivalent (“FTE”) basis and all references to earnings per share represent fully diluted per common share.  References to consolidated and/or commercial loans, loan growth, nonaccrual loans and allowance for loan losses include leases. The "Company" refers to Citizens. Current reporting-period regulatory capital ratios are preliminary. Select totals may not sum due to rounding.

Citizens Financial Group, Inc.


Discussion of results:
Net interest income 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
$/bps%$/bps%
Interest income:
Interest and fees on loans and leases and loans held for sale$1,100 $1,084 $1,157 $16 1 %$(57)(5) %
Investment securities116 124 121 (8)(6)(5)(4)
Interest-bearing deposits in banks100200
Total interest income$1,222 $1,211 $1,280 $11 1 %$(58)(5) %
Interest expense:
Deposits$35 $42 $89 $(7)(17) %$(54)(61) %
Short-term borrowed funds— — — — — 
Long-term borrowed funds42 45 54 (3)(7)(12)(22)
Total interest expense$77 $87 $143 $(10)(11) %$(66)(46) %
Net interest income$1,145 $1,124 $1,137 $21 2 %$1 %
Net interest margin, FTE2.72  %2.72  %2.83  %—  bps(11) bps
Third quarter 2021vs.second quarter 2021
Net interest income of $1.145 billion increased 2% given interest-earning asset growth and higher day count, with stable net interest margin.
Net interest margin of 2.72% reflects the benefit of accelerated PPP forgiveness, as well as improved funding mix and deposit pricing, partially offset by elevated cash balances given strong deposit flows, and lower earning-asset yields. Interest-bearing deposit costs were down 2 basis points to 14 basis points.
Third quarter 2021vs.third quarter 2020
Net interest income of $1.145 billion increased 1% reflecting 4% growth in interest-earning assets, largely offset by lower net interest margin.
Net interest margin of 2.72% decreased 11 basis points, primarily reflecting the impact of elevated cash balances and the lower rate environment, partly offset by improved funding mix and deposit pricing and the benefit of accelerated PPP loan forgiveness. Interest-bearing deposit costs decreased 21 basis points to 14 basis points.

2

Citizens Financial Group, Inc.

Noninterest Income 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
$%$%
Mortgage banking fees$108 $85 $287 $23 27  %$(179)(62) %
Service charges and fees110 100 97 10 10 13 13 
Capital markets fees72 91 58 (19)(21)14 24 
Card fees66 64 57 16 
Trust and investment services fees61 60 53 15 
Letter of credit and loan fees39 38 37 
Foreign exchange and interest rate products29 28 27 
Securities gains, net— — 200 
Other income(1)
26 16 37 10 63 (11)(30)
Noninterest income$514 $485 $654 $29  %$(140)(21) %
1) Includes bank-owned life insurance income and other miscellaneous income for all periods presented.
Third quarter 2021vs.second quarter 2021
Noninterest income of $514 million increased $29 million, or 6%, from $485 million.
Mortgage banking fees increased $23 million, reflecting strong origination levels, the benefit of lower agency fees and improved MSR hedge results ($14 million loss in second quarter compares with a $1 million gain in third quarter).
Capital markets fees decreased $19 million from record levels reflecting seasonally lower activity, primarily syndication fees, partially offset by higher M&A advisory fees.
Service charges and fees increased $10 million and card fees increased $2 million, reflecting seasonality and the benefit of economic recovery.
Trust and investment services fees increased 2% reflecting an increase in assets under management from strong inflows.
Other income increased $10 million, reflecting the benefit of higher community development-related income and a seasonal improvement in tax-advantaged investments.
Third quarter 2021vs.third quarter 2020
Noninterest income of $514 million decreased $140 million, or 21%.
Mortgage banking fees were down $179 million, driven by lower gain-on-sale margins and production volumes.
Service charges and fees increased $13 million, reflecting recovery from COVID-19 impacts.
Capital market fees were up $14 million, driven by higher loan syndication and M&A advisory fees.
Card fees increased $9 million, given higher debit and credit card volumes given economic recovery.
Trust and investment services fees, up $8 million, reflecting an increase in assets under management from higher equity market levels and strong inflows.
Letter of credit fees were up $2 million, reflecting higher commitment fees.
Foreign exchange and interest rate products revenue increased $2 million, reflecting improved client foreign exchange hedging activity.
Other income decreased $11 million from the third quarter 2020 level which included a gain on sale of education loans.
3

Citizens Financial Group, Inc.
Noninterest Expense 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
$%$%
Salaries and employee benefits$509 $524 $524 $(15)(3)%$(15)(3)%
Equipment and software157 155 149 
Outside services144 137 139 
Occupancy77 82 81 (5)(6)(4)(5)
Other operating expense124 93 95 31 33 29 31 
Noninterest expense$1,011 $991 $988 $20 %$23 %
Notable items$23 $11 $31 $12 109 %$(8)(26)%
Underlying, as applicable
Salaries and employee benefits$522 $524 $511 $(2)— %$11 %
Equipment and software150 151 148 (1)(1)
Outside services132 133 123 (1)(1)
Occupancy76 79 80 (3)(4)(4)(5)
Other operating expense108 93 95 15 16 13 14 
Underlying noninterest expense$988 $980 $957 $%$31 %
Third quarter 2021vs.second quarter 2021
Noninterest expense of $1.0 billion, or $988 million on an Underlying basis, was up slightly reflecting strong expense discipline and the benefit of efficiency initiatives. Other operating expense increased $15 million reflecting higher operational and travel costs.
Third quarter 2021vs.third quarter 2020
Noninterest expense of $1.0 billion remains well-controlled. On an Underlying basis, noninterest expense of $988 million increased by $31 million, or 3%, given higher salaries and employee benefits reflecting revenue-based compensation and merit increases, higher outside services tied to growth initiatives, and increased other operating expenses reflecting higher travel and advertising costs.

4

Citizens Financial Group, Inc.
Interest-earning assets 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
Period-end interest-earning assets$%$%
Investments$28,107 $27,976 $26,124 $131 —  %$1,983  %
Interest-bearing deposits in banks12,860 12,007 8,640 853 4,220 49 
Commercial loans and leases57,955 59,083 62,362 (1,128)(2)(4,407)(7)
Retail loans65,363 63,498 61,709 1,865 3,654 
Total loans and leases123,318 122,581 124,071 737 (753)(1)
Loans held for sale, at fair value3,177 3,616 3,587 (439)(12)(410)(11)
Other loans held for sale93 82 127 11 13 (34)(27)
Total loans and leases and loans held for sale126,588 126,279 127,785 309 — (1,197)(1)
Total period-end interest-earning assets$167,555 $166,262 $162,549 $1,293  %$5,006  %
Average interest-earning assets
Investments$27,468 $27,600 $24,658 $(132)—  %$2,810 11  %
Interest-bearing deposits in banks13,749 11,259 6,250 2,490 22 7,499 120 
Commercial loans and leases58,681 60,653 63,861 (1,972)(3)(5,180)(8)
Retail loans63,960 62,837 61,051 1,123 2,909 
Total loans and leases122,641 123,490 124,912 (849)(1)(2,271)(2)
Loans held for sale, at fair value3,299 3,751 3,295 (452)(12)— 
Other loans held for sale112 233 1,061 (121)(52)(949)(89)
Total loans and leases and loans held for sale126,052 127,474 129,268 (1,422)(1)(3,216)(2)
Total average interest-earning assets$167,269 $166,333 $160,176 $936  %$7,093  %
Third quarter 2021vs.second quarter 2021
Period-end interest-earning assets of $167.6 billion increased $1.3 billion, or 1%, given a $853 million increase in cash held in interest-bearing deposits and a $737 million increase in loans and leases. Loan growth of 1% was driven by retail given strength in mortgage, auto and education, partially offset by payoffs and PPP forgiveness in commercial. Excluding PPP, loan growth was 2%.
Average interest-earning assets of $167.3 billion increased $936 million, or 1%, as elevated liquidity drove a $2.5 billion increase in cash held in interest-bearing deposits. Results also reflect a $849 million, or 1%, decrease in loans driven by a $2.0 billion decrease in Commercial. These results were partially offset by a $1.1 billion increase in retail. Excluding PPP, average loan growth was 1%.
The average effective duration of the securities portfolio was 3.9 years compared with 3.6 years at June 30, 2021.
Third quarter 2021vs.third quarter 2020
Period-end interest-earning assets of $167.6 billion increased $5.0 billion, or 3%, as elevated liquidity drove a $4.2 billion increase in cash held in interest-bearing deposits, and a $2.0 billion increase in investments. This was partially offset by a $753 million decrease in loans, primarily driven by commercial payoffs and a $2.8 billion decrease in PPP loans.
Average interest-earning assets of $167.3 billion increased $7.1 billion, or 4%, as elevated liquidity drove a $7.5 billion increase in cash held in interest-bearing deposits, and a $2.8 billion increase in investments. Loans decreased $2.3 billion, or 2%, with a $5.2 billion decrease in commercial reflecting payoffs and $1.9 billion decrease in PPP loans. Retail loans increased $2.9 billion, or 5%, driven by growth in education, residential mortgage and auto, partially offset by planned run off of personal unsecured installment loans and a decrease in home equity.
The average effective duration of the securities portfolio was 2.8 years at September 30, 2020.
5

Citizens Financial Group, Inc.
    
Deposits 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
Period-end deposits$%$%
Demand deposits$48,184 $47,480 $41,249 $704  %$6,935 17  %
Checking with interest27,985 28,074 27,141 (89)— 844 
Savings21,166 20,382 17,237 784 3,929 23 
Money market accounts48,935 48,150 46,400 785 2,535 
Term deposits5,951 6,550 10,894 (599)(9)(4,943)(45)
Total period-end deposits$152,221 $150,636 $142,921 $1,585  %$9,300  %
Average deposits
Demand deposits$47,873 $46,630 $40,608 $1,243  %$7,265 18  %
Checking with interest27,965 27,278 26,638 687 1,327 
Savings20,803 20,077 16,902 726 3,901 23 
Money market accounts49,159 49,394 45,187 (235)— 3,972 
Term deposits6,071 6,970 12,032 (899)(13)(5,961)(50)
Total average deposits$151,871 $150,349 $141,367 $1,522  %$10,504  %
Third quarter 2021vs.second quarter 2021
Total period-end deposits of $152.2 billion increased $1.6 billion, or 1%, reflecting growth in money market accounts, savings and demand deposits, partially offset by a decline in term deposits.
Citizens Access® deposits were $4.6 billion at September 30, 2021, down from $4.9 billion at June 30, 2021, primarily due to rate reduction strategies that resulted in a decrease in term deposits.
Average deposits of $151.9 billion increased $1.5 billion, or 1%, as growth in demand deposits and savings and checking with interest was partially offset by a decrease in term deposits and money market accounts.
Third quarter 2021vs.third quarter 2020
Total period-end deposits of $152.2 billion increased $9.3 billion, or 7%, as a result of elevated liquidity tied to government stimulus associated with the COVID-19 disruption. Growth in demand deposits, savings, money market accounts and checking with interest was partially offset by a decrease in term deposits.
Average deposits of $151.9 billion increased $10.5 billion, or 7%, reflecting an increase in demand deposits, money market accounts, savings and checking with interest, partially offset by a decrease in term deposits.


6

Citizens Financial Group, Inc.
Borrowed Funds 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
Period-end borrowed funds$%$%
Short-term borrowed funds$$62 $252 $(54)(87) %$(244)(97) %
Long-term borrowed funds
FHLB advances20 18 19 11 
Senior debt5,345 5,357 7,504 (12)— (2,159)(29)
Subordinated debt and other debt1,582 1,582 1,586 — — (4)— 
Total borrowed funds$6,955 $7,019 $9,361 $(64)(1) %$(2,406)(26) %
Average borrowed funds
Short-term borrowed funds$23 $69 $240 $(46)(67) %$(217)(90) %
Long-term borrowed funds
FHLB advances19 18 13 217 
Senior debt5,356 5,834 7,515 (478)(8)(2,159)(29)
Subordinated debt and other debt1,581 1,582 1,675 (1)— (94)(6)
Total average borrowed funds$6,979 $7,503 $9,436 $(524)(7) %$(2,457)(26) %
Third quarter 2021vs.second quarter 2021
Period-end borrowed funds decreased $64 million, or 1%, and average borrowed funds decreased $524 million, or 7%, as elevated liquidity enabled the pay down of senior debt.
Third quarter 2021vs.third quarter 2020
Period-end borrowed funds decreased $2.4 billion, or 26%, and average borrowed funds decreased $2.5 billion, or 26%, reflecting the pay down of senior debt and short-term borrowings given strong customer deposit inflows.

7

Citizens Financial Group, Inc.
Capital 3Q21 change from
($s and shares in millions, except per share data)3Q212Q213Q202Q213Q20
Period-end capital$%$%
Stockholders' equity$23,423$23,199 $22,469 $224  %$954  %
Stockholders' common equity21,40921,185 20,504 224 905 
Tangible common equity14,677 14,466 13,771 211 906 
Tangible book value per common share$34.44 $33.95 $32.24 $0.49  %$2.20  %
Common shares - at end of period426.2 426.1 427.1 0.1 — (0.9)— 
Common shares - average (diluted)427.8 427.6 428.0 0.3 —  %(0.2)—  %
Common equity tier 1 capital ratio(1)
10.3 %10.3 %9.8 %
Total capital ratio(1)
13.4 13.5 13.3 
Tier 1 leverage ratio(1)
9.7 %9.7 %9.5 %
1) Current reporting-period regulatory capital ratios are preliminary.
Third quarter 2021
Our Basel III capital ratios remain strong, with a CET1 capital ratio of 10.3% as of September 30, 2021 compared with 10.3% at June 30, 2021 and 9.8% at September 30, 2020.
The acquisition of JMP Group LLC is expected to close in fourth quarter 2021 and have an approximate 5 basis point impact on CET1. The acquisition of the HSBC East Coast branches and online deposits is targeted to close in first quarter 2022 and have an approximate 24 basis point impact on CET1. The acquisition of Investors Bancorp, Inc. is expected to close in early second quarter 2022 and be neutral to CET1.
Total capital ratio of 13.4% compares with 13.5% at June 30, 2021 and 13.3% as of September 30, 2020. During the second quarter 2021, the company issued $300 million of Series G preferred stock that qualifies as additional tier 1 capital. On July 6, 2021, the company redeemed its $250 million of outstanding Series A preferred stock.
Tangible book value per common share of $34.44 increased 1% compared with second quarter 2021 and increased 7% from third quarter 2020.
Citizens paid $167 million in common dividends to shareholders during third quarter 2021. This compares with $168 million in common dividends in each of second quarter 2021 and third quarter 2020.
In third quarter 2021, Citizens announced that it entered into a definitive agreement and plan of merger under which Citizens will acquire all of the outstanding shares of Investors Bancorp, Inc. The transaction is targeted to close in early second quarter 2022, subject to approval by the shareholders of Investors, the required regulatory approvals and other customary closing conditions. The company is poised to resume common stock repurchases after the Investors shareholder vote scheduled for November 19, 2021.
8

Citizens Financial Group, Inc.
Credit quality review 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
$/bps%$/bps%
Nonaccrual loans and leases(1)
$747 $779 $1,277 $(32)(4) %$(530)(42) %
90+ days past due and accruing(2)
312 280 28 32 11284 NM
Net charge-offs44 78 219 (34)(44)(175)(80)
Provision for credit losses(33)(213)428 180 85 (461)NM
Allowance for credit losses $2,004 $2,081 $2,736 $(77)(4) %(732)(27) %
Nonaccrual loans and leases to loans and leases0.61  %0.64  %1.03  %(3) bps(42) bps
Net charge-offs as a % of total loans and leases0.14 0.25 0.70 (11)(56)
Allowance for credit losses to loans and leases1.63 1.70 2.21 (7)(58)
Allowance for credit losses to loans and leases (ex. PPP)1.65 1.75 2.29 (10)(64)
Allowance for credit losses to nonaccrual loans and leases268.3  %267.0  %214.2  %132  bps5,408  bps
1) Loans fully or partially guaranteed by the FHA, VA and USDA are classified as accruing.
2) 90+ days past due and accruing includes $289 million, $266 million, and $11 million of loans fully or partially guaranteed by the FHA, VA, and USDA for September 30, 2021, June 30, 2021, and September 30, 2020, respectively.
Third quarter 2021vs.second quarter 2021
Nonaccrual loans of $747 million decreased $32 million, or 4%, reflecting a $35 million decrease in retail given improvement in residential real estate-secured loans, partially offset by a $3 million increase in commercial.
The nonaccrual loans to total loans ratio of 0.61% is down from 0.64% at June 30, 2021.
Net charge-offs of $44 million decreased $34 million driven primarily by commercial.
Net charge-offs were 14 basis points of average loans and leases, down from 25 basis points.
Credit provision benefit of $33 million reflects strong credit performance across both retail and commercial, and macroeconomic improvement. Second quarter 2021 credit provision benefit was $213 million.
Allowance for credit losses ratio of 1.63%, or 1.65% before the impact of PPP loans, compares with 1.70% as of June 30, 2021, or 1.75% before the impact of PPP loans. The reduction reflects a reserve release of $77 million.
The allowance for credit losses to nonaccrual loans and leases ratio of 268% compares with 267% as of June 30, 2021.
Third quarter 2021vs.third quarter 2020
Nonaccrual loans decreased $530 million, or 42%, primarily driven by a $491 million decrease in commercial given charge-offs, loan sale activity and repayments.
The nonaccrual loans to total loans ratio of 0.61% decreased from 1.03% at September 30, 2020.
Net charge-offs of $44 million decreased $175 million reflecting a $156 million decrease in commercial given economic recovery, and a $19 million decrease in retail, as consumers continue to benefit from government stimulus and strong mortgage and auto collateral values.
Net charge-offs of 14 basis points of average loans and leases compares with 70 basis points in third quarter 2020.
Credit provision benefit of $33 million compares with a $428 million provision in third quarter 2020, reflecting strong credit performance across the retail and commercial loan portfolios and improvement in the macroeconomic outlook.
Allowance for credit losses of $2.0 billion compares with $2.7 billion at September 30, 2020. Allowance for credit losses ratio of 1.63% as of September 30, 2021, or 1.65% before the impact of PPP loans, compares with 2.21% as of September 30, 2020, or 2.29% before the impact of PPP loans.
The allowance for credit losses to nonaccrual loans and leases ratio of 268% compares with 214% as of September 30, 2020.
9

Citizens Financial Group, Inc.
Earnings highlights:
Quarterly Trends
 3Q21 change from
($s in millions, except per share data)3Q212Q213Q202Q213Q20
Earnings$/bps%$/bps%
Net interest income$1,145 $1,124 $1,137 $21 2 %$1 %
Noninterest income514 485 654 29 6(140)(21)
Total revenue1,659 1,609 1,791 50 3(132)(7)
Noninterest expense1,011 991 988 20 223 2
Pre-provision profit648 618 803 30 5(155)(19)
Provision for credit losses(33)(213)428 180 85(461)NM
Net income530 648 314 (118)(18)216 69
Preferred dividends26 32 25 (6)(19)4
Net income available to common stockholders$504 $616 $289 $(112)(18) %$215 74 %
After-tax notable Items16 24 100(8)(33)
Underlying net income$546 $656 $338 $(110)(17) %$208 62 %
Underlying net income available to common stockholders$520 $624 $313 $(104)(17) %$207 66 %
Average common shares outstanding
Basic (in millions)426.1 425.9 426.8 0.1 (0.8)
Diluted (in millions)427.8 427.6 428.0 0.3 (0.2)
Diluted earnings per share$1.18 $1.44 $0.68 $(0.26)(18) %$0.5 74 %
Underlying diluted earnings per share$1.22 $1.46 $0.73 $(0.24)(16) %$0.49 67 %
Performance metrics
Net interest margin2.72 %2.71 %2.82 % bp(10) bps
Net interest margin, FTE2.72 2.72 2.83 — (11)
Effective income tax rate22.4 22.0 16.1 39 625 
Efficiency ratio61 62 55 (71)574 
Underlying efficiency ratio60 61 53 (137)611 
Return on average common equity9.4 11.9 5.6 (246)379 
Return on average tangible common equity13.7 17.5 8.3 (379)538 
Underlying return on average tangible common equity14.2 17.7 9.0 (357)517 
Return on average total assets1.13 1.41 0.70 (28)43 
Underlying return on average total tangible assets1.21 %1.48 %0.79 %(27) bps42  bps
Capital adequacy(1,2)
Common equity tier 1 capital ratio10.3 %10.3 %9.8 %
Total capital ratio13.4 13.5 13.3 
Tier 1 leverage ratio9.7 9.7 9.5 
Allowance for credit losses to loans and leases1.63 %1.70 %2.21 %(7) bps(58) bps
Asset quality(2)
Nonaccrual loans and leases to loans and leases0.61 %0.64 %1.03 %(3) bps(42) bps
Allowance for credit losses to nonaccrual loans and leases268 267 214 132 5,408 
Net charge-offs as a % of average loans and leases0.14 %0.25 %0.70 %(11) bps(56) bps
1) Current reporting-period regulatory capital ratios are preliminary.
2) Capital adequacy and asset-quality ratios calculated on a period-end basis, except net charge-offs.




10

Citizens Financial Group, Inc.
Consolidated balance sheet review(1):

 3Q21 change from
($s in millions)3Q212Q213Q202Q213Q20
$/bps%$/bps%
Total assets$187,007 $185,104 $179,228 $1,903  %$7,779  %
Total loans and leases123,318 122,581 124,071 737 (753)(1)
Total loans held for sale3,270 3,698 3,714 (428)(12)(444)(12)
Deposits152,221 150,636 142,921 1,585 9,300 
Stockholders' equity23,423 23,199 22,469 224 954 
Stockholders' common equity21,409 21,185 20,504 224 905 
Tangible common equity$14,677 $14,466 $13,771 $211  %$906  %
Loans-to-deposit ratio (period-end(2)
81.0 %81.4  %86.8  %(37) bps(580) bps
Loans-to-deposit ratio (average)(2)
80.8 %82.1 %88.4 %(139)(761)
1) Represents period end unless otherwise noted.
2) Excludes loans held for sale.

11

Citizens Financial Group, Inc.
The following table provides information on Underlying results which exclude the impact of notable items.

Underlying results:

Quarterly Trends
 3Q21 change from
($s in millions, except per share data)3Q212Q213Q202Q213Q20
Net interest income$1,145 $1,124 $1,137  % %
Noninterest income514 485 654 (21)
Total revenue$1,659 $1,609 $1,791  %(7) %
Noninterest expense1,011 991 988 
Notable items23 11 31 109 (26)
Underlying noninterest expense$988 $980 $957  % %
Underlying pre-provision profit671 629 834 (20)
Provision for credit losses(33)(213)428 85 NM
Net income available to common stockholders504 616 289 (18)74
Underlying net income available to common stockholders$520 $624 $313 (17)%66 %
Performance metrics
Diluted EPS$1.18 $1.44 $0.68 (18) %74  %
Underlying EPS$1.22 $1.46 $0.73 (16) %67  %
Efficiency ratio61  %62  %55  %(71) bps574  bps
Underlying efficiency ratio60 61 53 (137)611 
Return on average tangible common equity13.7 17.5 8.3 (379)538
Underlying return on average tangible common equity14.2  %17.7  %9.0  %(357) bps517  bps
Operating leverage1.2 %(9.6)%
Underlying operating leverage2.3  %(10.6) %




















12

Citizens Financial Group, Inc.
Notable items:
Second quarter and third quarter 2021, and third quarter 2020 results reflect notable items primarily related to TOP 6 transformational and revenue and efficiency initiatives as well as integration costs. Third quarter 2021 also includes a pension settlement charge recorded in other operating expense and a compensation-related tax credit. These notable items have been excluded from reported results to better reflect Underlying operating results.



Notable items - integration costs3Q212Q213Q20
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
  Noninterest income$— $— $ $— $— $— 
Salaries & benefits$— $— $— $— $— $— 
Equipment and software$— — — — (1)(1)
Outside services$(4)(3)(2)(1)(1)(1)
Occupancy$— — — — — — 
Other expense$— — — — — — 
   Noninterest expense$(4)$(3)$(2)$(1)$(2)$(2)
Total Integration Costs$(4)$(3)$(2)$(1)$(2)$(2)
Other notable items - primarily tax and TOP3Q212Q213Q20
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
Tax notable items$— $— $— $— $— $— 
Other notable items- TOP & other actions
Salaries & benefits13 — — (13)(9)
Equipment and software(7)(5)(4)(3)— — 
Outside services(8)(6)(2)(2)(15)(12)
Occupancy(1)— (3)(2)(1)(1)
Other expense(16)(11)— — — — 
   Noninterest expense$(19)$(13)$(9)$(7)$(29)$(22)
Total Other Notable Items$(19)$(13)$(9)$(7)$(29)$(22)
Total Notable Items$(23)$(16)$(11)$(8)$(31)$(24)
EPS Impact$(0.04)$(0.02)$(0.05)


13

Citizens Financial Group, Inc.

Corresponding Financial Tables and Information
Investors are encouraged to review the foregoing summary and discussion of Citizens’ earnings and financial condition in conjunction with the detailed financial tables and other information available on the Investor Relations portion of the company’s website at www.citizensbank.com/about-us.
Media:    Peter Lucht - 781.655.2289
Investors: Kristin Silberberg - 203.900.6854
Conference Call
CFG management will host a live conference call today with details as follows:
Time:    9:00 am ET
Dial-in: (877) 336-4440, conference ID 6052001
Webcast/Presentation: The live webcast will be available at http://investor.citizensbank.com under Events & Presentations.
Replay Information: A replay of the conference call will be available beginning at 12:00 pm ET on October 20, 2021 through November 20, 2021. Please dial (866) 207-1041 and enter access code 7904509. The webcast replay will be available at http://investor.citizensbank.com under Events & Presentations.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $187.0 billion in assets as of September 30, 2021. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,000 ATMs and approximately 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com or visit us on Twitter, LinkedIn or Facebook.

14

Citizens Financial Group, Inc.

Non-GAAP Financial Measures and Reconciliations
Non-GAAP Financial Measures:
This document contains non-GAAP financial measures denoted as Underlying results and excluding elevated cash. In historical periods, these results may have been referred to as Adjusted or Adjusted/Underlying results. Underlying results for any given reporting period exclude certain items that may occur in that period which Management does not consider indicative of the Company’s on-going financial performance. We believe these non-GAAP financial measures provide useful information to investors because they are used by our Management to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our Underlying results in any given reporting period reflect our on-going financial performance in that period and, accordingly, are useful to consider in addition to our GAAP financial results. We further believe the presentation of Underlying results increases comparability of period-to-period results. The Appendix presents reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures. The following tables present reconciliations of our non-GAAP measures to the most directly comparable GAAP financial measures.
Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by such companies. We caution investors not to place undue reliance on such non-GAAP financial measures, but to consider them with the most directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our results reported under GAAP.
15

Citizens Financial Group, Inc.

Non-GAAP financial measures and reconciliations
(in millions, except share, per-share and ratio data)
QUARTERLY TRENDS
3Q21 Change
3Q212Q213Q202Q213Q20
$%$%
Total revenue, Underlying:
Total revenue (GAAP)A$1,659 $1,609 $1,791 $50 %($132)(7 %)
Less: Notable items— — — — — — — 
Total revenue, Underlying (non-GAAP)B$1,659 $1,609 $— $1,791 $50 %($132)(7 %)
Noninterest expense, Underlying:
Noninterest expense (GAAP)C$1,011 $991 $988 $20 %$23 %
Less: Notable items23 11 31 12 109 (8)(26)
Noninterest expense, Underlying (non-GAAP)D$988 $980 $957 $8 %$31 %
Pre-provision profit:
Total revenue (GAAP)A$1,659 $1,609 $1,791 $50 %($132)(7 %)
Less: Noninterest expense (GAAP)C1,011 991 988 20 23 
Pre-provision profit (GAAP)$648 $618 $803 $30 %($155)(19 %)
Pre-provision profit, Underlying:
Total revenue, Underlying (non-GAAP)B$1,659 $1,609 $1,791 $50 %($132)(7 %)
Less: Noninterest expense, Underlying (non-GAAP)D988 980 957 31 
Pre-provision profit, Underlying (non-GAAP)$671 $629 $834 $42 %($163)(20 %)
Income before income tax expense, Underlying:
Income before income tax expense (GAAP)E$681 $831 $375 ($150)(18 %)$306 82 %
Less: Expense before income tax benefit related to notable items(23)(11)(31)(12)(109)26 
Income before income tax expense, Underlying (non-GAAP)F$704 $842 $406 ($138)(16 %)$298 73 %
Income tax expense, Underlying:
Income tax expense (GAAP)G$151 $183 $61 ($32)(17 %)$90 148 %
Less: Income tax benefit related to notable items(7)(3)(7)(4)(133)— — 
Income tax expense, Underlying (non-GAAP)H$158 $186 $68 ($28)(15 %)$90 132 %
Net income, Underlying:
Net income (GAAP)I$530 $648 $314 ($118)(18 %)$216 69 %
Add: Notable items, net of income tax benefit16 24 100 (8)(33)
Net income, Underlying (non-GAAP)J$546 $656 $338 ($110)(17 %)$208 62 %
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)K$504 $616 $289 ($112)(18 %)$215 74 %
Add: Notable items, net of income tax benefit16 24 100 (8)(33)
Net income available to common stockholders, Underlying (non-GAAP)L$520 $624 $313 ($104)(17 %)$207 66 %
16

Citizens Financial Group, Inc.
Non-GAAP financial measures and reconciliations (continued)
(in millions, except share, per-share and ratio data)
QUARTERLY TRENDS
3Q21 Change
3Q212Q213Q202Q213Q20
$/bps%$/bps%
Operating leverage:
Total revenue (GAAP)A$1,659 $1,609 $1,791 $50 3.11 %($132)(7.33 %)
Less: Noninterest expense (GAAP)C1,011 991 988 20 1.91 23 2.31 
Operating leverage1.20 %(9.64 %)
Operating leverage, Underlying:
Total revenue, Underlying (non-GAAP)B$1,659 $1,609 $1,791 $50 3.11 %($132)(7.33 %)
Less: Noninterest expense, Underlying (non-GAAP)D988 980 957 0.78 31 3.26 
Operating leverage, Underlying (non-GAAP)2.33 %(10.59 %)
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio C/A60.92 %61.63 %55.18 %(71) bps574  bps
Efficiency ratio, Underlying (non-GAAP)D/B59.55 60.92 53.44 (137) bps611  bps
Effective income tax rate and effective income tax rate, Underlying:
Effective income tax rateG/E22.35 %21.96 %16.10 %39  bps625  bps
Effective income tax rate, Underlying (non-GAAP)H/F22.45 22.01 16.79 44  bps566  bps
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)M$21,326 $20,833 $20,534 $493 %$792 %
Return on average common equityK/M9.39 %11.85 %5.60 %(246) bps379  bps
Return on average common equity, Underlying (non-GAAP)L/M9.70 12.02 6.05 (232) bps365  bps
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP)M$21,326 $20,833 $20,534 $493 %$792 %
Less: Average goodwill (GAAP)7,055 7,050 7,050 — — 
Less: Average other intangibles (GAAP)52 53 62 (1)(2)(10)(16)
Add: Average deferred tax liabilities related to goodwill (GAAP)
383 381 375 
Average tangible common equityN$14,602 $14,111 $13,797 $491 %$805 %
Return on average tangible common equity K/N13.71 %17.50 %8.33 %(379) bps538  bps
Return on average tangible common equity, Underlying (non-GAAP)L/N14.17 17.74 9.00 (357) bps517  bps
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)O$186,108 $184,456 $177,675 $1,652 %$8,433 %
Return on average total assetsI/O1.13 %1.41 %0.70 %(28) bps43  bps
Return on average total assets, Underlying (non-GAAP)J/O1.16 1.43 0.76 (27) bps40  bps
Return on average total tangible assets and return on average total tangible assets, Underlying:
Average total assets (GAAP)P$186,108 $184,456 $177,675 $1,652 %$8,433 %
Less: Average goodwill (GAAP)7,055 7,050 7,050 — — 
Less: Average other intangibles (GAAP)52 53 62 (1)(2)(10)(16)
Add: Average deferred tax liabilities related to goodwill (GAAP)383 381 375 
Average tangible assetsQ$179,384 $177,734 $170,938 $1,650 %$8,446 %
Return on average total tangible assets I/Q1.17 %1.46 %0.73 %(29) bps44  bps
Return on average total tangible assets, Underlying (non-GAAP)J/Q1.21 1.48 0.79 (27) bps42  bps
17

Citizens Financial Group, Inc.
Non-GAAP financial measures and reconciliations (continued)
(in millions, except share, per-share and ratio data)