Last10K.com

Citizens Financial Group Incri (CFG) SEC Filing 8-K Material Event for the period ending Wednesday, January 19, 2022

Citizens Financial Group Incri

CIK: 759944 Ticker: CFG




citizenslogoa05a.jpg

Citizens Financial Group, Inc. Reports Fourth Quarter 2021 Net Income of
$530 million and EPS of $1.17
Underlying Net Income of $569 million and EPS of $1.26*
2021 Net Income of $2.3 billion and EPS of $5.16, $5.34 on an Underlying basis

Key Financial Data4Q213Q214Q20
Fourth Quarter 2021 Highlights
Income
Statement
($s in millions)
Underlying ROTCE of 14.6% and Underlying EPS of $1.26 reflects our diversified fee businesses and excellent credit results
Underlying PPNR of $710 million reflects outstanding Capital Markets results
Fee revenue of $594 million, up 16% QoQ
NII reflects modestly lower margin, largely offset by loan growth
QoQ operating leverage of 1.5%
Credit provision benefit of $25 million; NCO ratio stable QoQ at 14 bps
Period-end loans up 4%, up 5% excluding PPP impact; average loans up 2% QoQ, up 3% excluding PPP
Period-end LDR of 83.0%
Strong capital position with CET1 at 9.9%
TBV/share of $34.61, up 6% YoY
Total revenue$1,720 $1,659 $1,707 
Pre-provision profit659 648 695 
Underlying pre-provision profit710 671 737 
Provision for credit losses(25)(33)124 
Net income530 530 456 
Underlying net income569 546 480 
Balance Sheet
&
Credit Quality
($s in billions)
Period-end loans and leases$128.2 $123.3 $123.1 
Average loans and leases125.2 122.6 123.5 
Period-end deposits154.4 152.2 147.2 
Average deposits153.0 151.9 145.3 
Period-end loans-to-deposit ratio83.0 %81.0 %83.6 %
NCO ratio0.14 %0.14 %0.61 %
Financial MetricsDiluted EPS$1.17 $1.18 $0.99 
Underlying EPS1.26 1.22 1.04 
ROTCE13.6 %13.7 %12.2 %
Underlying ROTCE14.6 14.2 12.9 
Net interest margin, FTE2.66 2.72 2.75 
Efficiency ratio62 61 59 
Underlying efficiency ratio59 60 57 
CET19.9 %10.3 %10.0 %
TBV/Share$34.61 $34.44 $32.72 
Comments from Chairman and CEO Bruce Van Saun
“We finished a successful 2021 with a strong fourth quarter, featuring record Capital Markets revenue, strong loan growth, good expense management and pristine credit,” said Chairman and CEO Bruce Van Saun. “Over the course of 2021 we continued to raise our game in terms of delivering for our stakeholders - customers, colleagues, communities and shareholders. I’d like to thank our colleague base for once again rising to the occasion and handling the many challenges presented by the environment. Continued successful execution of our strategic initiatives and acquisition integration will position us for superior growth in 2022 and beyond.”

Citizens also announced today that its board of directors declared a first quarter 2022 common stock dividend of $0.39 per share. The dividend is payable on February 11, 2022 to shareholders of record at the close of business on January 31, 2022.

*References in this release to "Underlying" and "excluding acquisitions" results exclude notable items and/or the impact of the acquisitions closed in 2021. These results are non-GAAP Financial Measures. For more details on non-GAAP Financial Measures see page 16 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 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
$/bps%$/bps%
Interest income:
Interest and fees on loans and leases and loans held for sale$1,079 $1,100 $1,125 $(21)(2) %$(46)(4) %
Investment securities119 116 121 3(2)(2)
Interest-bearing deposits in banks(2)(33)33
Total interest income$1,202 $1,222 $1,249 $(20)(2) %$(47)(4) %
Interest expense:
Deposits$33 $35 $69 $(2)(6) %$(36)(52) %
Short-term borrowed funds— 100— 
Long-term borrowed funds42 42 50 — (8)(16)
Total interest expense$76 $77 $120 $(1)(1) %$(44)(37) %
Net interest income$1,126 $1,145 $1,129 $(19)(2) %$(3)— %
Net interest margin, FTE2.66  %2.72  %2.75  %(6) bps(9) bps
Fourth quarter 2021vs.third quarter 2021
Net interest income of $1.1 billion decreased 2% given modestly lower net interest margin, partially offset by loan growth.
Net interest margin of 2.66% decreased 6 basis points reflecting lower earning-asset yields and a reduced benefit from PPP forgiveness. These were partially offset by the deployment of cash into loan growth, which happened relatively late in the quarter. Interest-bearing deposit costs were down 1 basis point to 13 basis points.
Fourth quarter 2021vs.fourth quarter 2020
Net interest income of $1.1 billion was stable reflecting 3% growth in interest-earning assets, largely offset by lower net interest margin.
Net interest margin of 2.66% decreased 9 basis points reflecting the impact of lower asset yields, partially offset by improved funding mix and deposit pricing, as well as higher PPP benefit. Interest-bearing deposit costs decreased 14 basis points to 13 basis points.

2

Citizens Financial Group, Inc.

Noninterest Income 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
$%$%
Capital markets fees$184 $72 $88 $112 156  %$96 109  %
Service charges and fees100 110 104 (10)(9)(4)(4)
Mortgage banking fees76 108 193 (32)(30)(117)(61)
Card fees65 66 56 (1)(2)16 
Trust and investment services fees60 61 52 (1)(2)15 
Letter of credit and loan fees41 39 38 
Foreign exchange and interest rate products35 29 35 21 — — 
Securities gains, net— (2)(67)100 
Other income(1)
32 26 12 23 20 167 
Noninterest income$594 $514 $578 $80 16  %$16  %
1) Includes bank-owned life insurance income and other miscellaneous income for all periods presented.
Fourth quarter 2021vs.third quarter 2021
Noninterest income of $594 million increased $80 million, or 16%, from $514 million. Fourth quarter 2021 includes $29 million of fees from acquisitions that closed in third and fourth quarter 2021.
Record capital markets fees increased $112 million reflecting higher M&A advisory and loan syndication fees; fourth quarter includes $27 million of fees from acquisitions.
Mortgage banking fees decreased $32 million, reflecting a decline in gain-on-sale margins and seasonally lower production volume, partially offset by improved mortgage servicing income.
Service charges and fees decreased $10 million, primarily reflecting the impact on overdraft fees of the new customer-friendly deposit account feature, Citizens Peace of MindTM.
Other income increased $6 million, primarily reflecting higher leasing income.
Fourth quarter 2021vs.fourth quarter 2020
Noninterest income of $594 million increased $16 million, or 3%, as record results in Capital Markets and improvements in card fees and wealth fees were partially offset by a decline in mortgage banking fees. Fourth quarter 2021 includes $29 million of fees from acquisitions that closed in third and fourth quarter 2021.
Mortgage banking fees decreased $117 million, driven by lower gain-on-sale margins and production volumes.
Record capital markets fees increased $96 million, driven by higher M&A advisory and loan syndication fees; fourth quarter 2021 includes $27 million of fees from acquisitions.
Card fees increased $9 million, driven by higher debit and credit card volumes given economic recovery.
Trust and investment services fees increased $8 million, reflecting an increase in assets under management from higher equity market levels and strong net inflows.
Service charges and fees decreased $4 million, primarily reflecting the impact on overdraft fees of the new customer-friendly deposit account feature, Citizens Peace of MindTM.
Other income increased $20 million, primarily reflecting higher leasing and investment income.
3

Citizens Financial Group, Inc.
Noninterest Expense 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
$%$%
Salaries and employee benefits$551 $509 $537 $42 %$14 %
Equipment and software146 157 141 (11)(7)
Outside services175 144 148 31 22 27 18 
Occupancy86 77 84 12 
Other operating expense103 124 102 (21)(17)
Noninterest expense$1,061 $1,011 $1,012 $50 %$49 %
Notable items$51 $23 $42 $28 122 %$21 %
Underlying, as applicable
Salaries and employee benefits$546 $522 $519 $24 %$27 %
Equipment and software144 150 140 (6)(4)
Outside services138 132 131 
Occupancy81 76 78 
Other operating expense101 108 102 (7)(6)(1)(1)
Underlying noninterest expense$1,010 $988 $970 $22 %$40 %
Fourth quarter 2021vs.third quarter 2021
Noninterest expense was $1.1 billion, up 5%, or 2% on an Underlying basis. Excluding acquisitions that closed in third and fourth quarter 2021, Underlying noninterest expense of $989 million was broadly stable, and operating leverage in the quarter was 1.8%. The impact of higher incentive compensation tied to strong Capital Markets revenue and continued strategic investments was offset by strong expense discipline and the benefit of efficiency initiatives.
The effective tax rate of 22.4% was stable. On an Underlying basis, the effective tax rate of 22.6% compares with 22.5% for third quarter 2021.
Fourth quarter 2021vs.fourth quarter 2020
Noninterest expense of $1.1 billion remains well-controlled. On an Underlying basis and excluding acquisitions that closed in third and fourth quarter 2021, noninterest expense of $989 million increased by $19 million, or 2%. This reflects higher salaries and employee benefits given revenue-based compensation and merit increases, as well as higher outside services tied to growth initiatives, partially offset by the benefit of efficiency initiatives.
The effective tax rate of 22.4% increased from 20.2%. On an Underlying basis, the effective tax rate of 22.6% increased from 21.7%. This primarily reflects higher pre-tax income and the benefit of discrete items recognized in fourth quarter 2020.
4

Citizens Financial Group, Inc.
Interest-earning assets 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
Period-end interest-earning assets$%$%
Investments$29,042 $28,107 $26,847 $935  %$2,195  %
Interest-bearing deposits in banks8,319 12,860 12,002 (4,541)(35)(3,683)(31)
Commercial loans and leases60,350 57,955 60,793 2,395 (443)(1)
Retail loans67,813 65,363 62,297 2,450 5,516 
Total loans and leases128,163 123,318 123,090 4,845 5,073 
Loans held for sale, at fair value2,733 3,177 3,564 (444)(14)(831)(23)
Other loans held for sale735 93 439 642 NM296 67 
Total loans and leases and loans held for sale131,631 126,588 127,093 5,043 4,538 
Total period-end interest-earning assets$168,992 $167,555 $165,942 $1,437  %$3,050  %
Average interest-earning assets
Investments$28,193 $27,468 $25,474 $725  %$2,719 11  %
Interest-bearing deposits in banks11,152 13,749 11,303 (2,597)(19)(151)(1)
Commercial loans and leases58,900 58,681 61,515 219 — (2,615)(4)
Retail loans66,309 63,960 61,946 2,349 4,363 
Total loans and leases125,209 122,641 123,461 2,568 1,748 
Loans held for sale, at fair value3,133 3,299 3,185 (166)(5)(52)(2)
Other loans held for sale321 112 110 209 187 211 192 
Total loans and leases and loans held for sale128,663 126,052 126,756 2,611 1,907 
Total average interest-earning assets$168,008 $167,269 $163,533 $739 —  %$4,475  %

Fourth quarter 2021vs.third quarter 2021
Period-end interest-earning assets of $169.0 billion were broadly stable, as a $4.8 billion increase in loans and leases and a $935 million increase in investments was offset by a $4.5 billion decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 4% was driven by growth in both retail (4%), with strength in mortgage and auto, and in commercial (4%), as strong underlying growth in C&I was partially offset by PPP forgiveness. Excluding PPP impact, commercial loan growth was 6% and total loan growth was 5%.
Average interest-earning assets of $168.0 billion were broadly stable, as a $2.6 billion increase in loans and a $725 million increase in investments was offset by a $2.6 billion decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 2% was driven by retail. Excluding PPP impact, average commercial loan growth was 3% and average total loan growth was 3%. The average effective duration of the securities portfolio was 4.3 years compared with 3.9 years at September 30, 2021 and 2.7 years at December 31, 2020.
Fourth quarter 2021vs.fourth quarter 2020
Period-end interest-earning assets of $169.0 billion increased $3.1 billion, or 2%, as a $5.1 billion increase in loans and a $2.2 billion increase in investments was partly offset by a $3.7 billion decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 4% was driven by a $5.5 billion increase in retail given strength in mortgage and auto, partially offset by planned run off of personal unsecured installment loans. Commercial loans decreased $443 million as underlying growth in C&I was more than offset by a $3.4 billion decrease in PPP loans. Excluding PPP impact, commercial loan growth was 5% and total loan growth was 7%.
Average interest-earning assets of $168.0 billion increased $4.5 billion, or 3%, as a $2.7 billion increase in investments and a $1.7 billion increase in loans was partly offset by a $151 million decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 1% was driven by a $4.4 billion increase in retail loans given strength in mortgage, auto and education, partially offset by planned run off of personal unsecured installment loans. This was partly offset by a $2.6 billion decrease in commercial loans as underlying growth in C&I was more than offset by a $3.2 billion decrease in PPP loans. Excluding PPP impact, average commercial loan growth was 1% and average total loan growth was 4%.
5

Citizens Financial Group, Inc.
    
Deposits 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
Period-end deposits$%$%
Demand deposits$49,443 $48,184 $43,831 $1,259  %$5,612 13  %
Checking with interest30,409 27,985 27,204 2,424 3,205 12 
Savings22,030 21,166 18,044 864 3,986 22 
Money market accounts47,216 48,935 48,569 (1,719)(4)(1,353)(3)
Term deposits5,263 5,951 9,516 (688)(12)(4,253)(45)
Total period-end deposits$154,361 $152,221 $147,164 $2,140  %$7,197  %
Average deposits
Demand deposits$49,206 $47,873 $42,411 $1,333  %$6,795 16  %
Checking with interest28,075 27,965 26,432 110 — 1,643 
Savings21,575 20,803 17,566 772 4,009 23 
Money market accounts48,512 49,159 48,667 (647)(1)(155)— 
Term deposits5,636 6,071 10,191 (435)(7)(4,555)(45)
Total average deposits$153,004 $151,871 $145,267 $1,133  %$7,737  %
Fourth quarter 2021vs.third quarter 2021
Total period-end deposits of $154.4 billion were up 1%, reflecting growth in checking with interest, demand deposits and savings, offset by a decline in money market accounts and term deposits.
Average deposits of $153.0 billion were up 1%, as growth in demand deposits, savings and checking with interest was largely offset by a decrease in money market accounts and term deposits.
Fourth quarter 2021vs.fourth quarter 2020
Total period-end deposits of $154.4 billion increased $7.2 billion, or 5%, as a result of elevated liquidity tied to government stimulus associated with the COVID-19 disruption. Growth in demand deposits, savings and checking with interest was partially offset by a decrease in term deposits and money market accounts.
Average deposits of $153.0 billion increased $7.7 billion, or 5%, reflecting an increase in demand deposits, savings and checking with interest, partially offset by a decrease in term deposits.



6

Citizens Financial Group, Inc.
Borrowed Funds 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
Period-end borrowed funds$%$%
Short-term borrowed funds$74 $$243 $66 NM$(169)(70) %
Long-term borrowed funds
FHLB advances19 20 19 (1)(5)— — 
Senior debt5,326 5,345 6,740 (19)— (1,414)(21)
Subordinated debt and other debt1,587 1,582 1,587 — — — 
Total borrowed funds$7,006 $6,955 $8,589 $51  %$(1,583)(18) %
Average borrowed funds
Short-term borrowed funds$24 $23 $232 $ %$(208)(90) %
Long-term borrowed funds
FHLB advances18 19 19 (1)(5)(1)(5)
Senior debt5,338 5,356 6,845 (18)— (1,507)(22)
Subordinated debt and other debt1,587 1,581 1,586 — — 
Total average borrowed funds$6,967 $6,979 $8,682 $(12)—  %$(1,715)(20) %
Fourth quarter 2021vs.third quarter 2021
Period-end borrowed funds and average borrowed funds were broadly stable.
Fourth quarter 2021vs.fourth quarter 2020
Period-end borrowed funds decreased $1.6 billion, or 18%, and average borrowed funds decreased $1.7 billion, or 20%, reflecting the pay down of senior debt and short-term borrowings given strong customer deposit inflows.

7

Citizens Financial Group, Inc.
Capital 4Q21 change from
($s and shares in millions, except per share data)4Q213Q214Q203Q214Q20
Period-end capital$%$%
Stockholders' equity$23,420$23,423 $22,673 $(3)—  %$747  %
Stockholders' common equity21,40621,409 20,708 (3)— 698 
Tangible common equity14,609 14,677 13,979 (68)— 630 
Tangible book value per common share$34.61 $34.44 $32.72 $0.17 —  %$1.89  %
Common shares - at end of period422.1 426.2 427.2 (4.1)(1)(5.1)(1)
Common shares - average (diluted)426.9 427.8 428.9 (1.0)—  %(2.0)—  %
Common equity tier 1 capital ratio(1)
9.9 %10.3 %10.0 %
Total capital ratio(1)
12.7 13.4 13.4 
Tier 1 leverage ratio(1)
9.7 %9.7 %9.4 %
1) Current reporting-period regulatory capital ratios are preliminary.
Fourth quarter 2021
Our Basel III capital ratios remain strong, with a CET1 capital ratio of 9.9% as of December 31, 2021 compared with 10.3% at September 30, 2021 and 10.0% at December 31, 2020.
The acquisition of JMP Group LLC closed in the quarter and had a 4 basis point impact on CET1.
The acquisition of the HSBC East Coast branches and online deposits is targeted to close on February 18, 2022 and have an approximate 22 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 12.7% compares with 13.4% at September 30, 2021 and 13.4% as of December 31, 2020.
Tangible book value per common share of $34.61 was up slightly compared with third quarter 2021 and increased 6% from fourth quarter 2020.
Citizens paid $168 million in common dividends to shareholders during fourth quarter 2021. This compares with $167 million in common dividends during third quarter 2021 and $168 million during fourth quarter 2020.
Citizens resumed common stock repurchases in November 2021, repurchasing $200 million in common shares in fourth quarter 2021.
8

Citizens Financial Group, Inc.
Credit quality review 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
$/bps%$/bps%
Nonaccrual loans and leases(1)
$702 $747 $1,019 $(45)(6) %$(317)(31) %
90+ days past due and accruing(2)
575 312 62 263 84513 NM
Net charge-offs45 44 190 (145)(76)
Provision for credit losses(25)(33)124 24 (149)NM
Allowance for credit losses $1,934 $2,004 $2,670 $(70)(3) %(736)(28) %
Nonaccrual loans and leases to loans and leases0.55  %0.61  %0.83  %(6) bps(28) bps
Net charge-offs as a % of total loans and leases0.14 0.14 0.61 — (47)
Allowance for credit losses to loans and leases1.51 1.63 2.17 (12)(66)
Allowance for credit losses to loans and leases (ex. PPP)1.52 1.65 2.24 (13)(72)
Allowance for credit losses to nonaccrual loans and leases275.7  %268.3  %262.0  %741  bps1,370  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 $544 million, $289 million, and $21 million of loans fully or partially guaranteed by the FHA, VA, and USDA for December 31, 2021, September 30, 2021, and December 31, 2020, respectively.
Fourth quarter 2021vs.third quarter 2021
Nonaccrual loans of $702 million decreased $45 million, or 6%, reflecting a decrease in commercial driven by commercial real estate, partially offset by an increase in retail driven by residential mortgage loans exiting forbearance.
The nonaccrual loans to total loans ratio of 0.55% is down from 0.61% at September 30, 2021.
Net charge-offs of $45 million, or 14 basis points of average loans and leases, were stable with prior quarter.
Credit provision benefit of $25 million reflects strong credit performance across retail and commercial and improvement in the economy. Third quarter 2021 credit provision benefit was $33 million.
Allowance for credit losses ratio of 1.51%, compares with 1.63% as of September 30, 2021. The reduction reflects a reserve release of $70 million. The January 1, 2020 day one CECL-based reserve was 1.47%.
The allowance for credit losses to nonaccrual loans and leases ratio of 276% compares with 268% as of September 30, 2021.
Fourth quarter 2021vs.fourth quarter 2020
Nonaccrual loans decreased $317 million, or 31%, primarily driven by a $275 million decrease in commercial given repayments, charge-offs and loan sale activity, as well as an overall improvement in credit.
The nonaccrual loans to total loans ratio of 0.55% decreased from 0.83% at December 31, 2020.
Net charge-offs of $45 million decreased $145 million reflecting a $135 million decrease in commercial given economic recovery, and a $10 million decrease in retail, as consumers continue to benefit from the economic recovery and strong mortgage and auto collateral values.
Net charge-offs of 14 basis points of average loans and leases compares with 61 basis points in fourth quarter 2020.
Credit provision benefit of $25 million compares with a $124 million provision in fourth quarter 2020, reflecting strong credit performance across the retail and commercial loan portfolios and improvement in the economy.
Allowance for credit losses of $1.9 billion compares with $2.7 billion at December 31, 2020. Allowance for credit losses ratio of 1.51% as of December 31, 2021, compares with 2.17% as of December 31, 2020.
The allowance for credit losses to nonaccrual loans and leases ratio of 276% compares with 262% as of December 31, 2020.
9

Citizens Financial Group, Inc.
Earnings highlights:
Quarterly TrendsFull Year
 4Q21 change from2021 change from 2020
($s in millions, except per share data)4Q213Q214Q203Q214Q2020212020
Earnings$/bps%$/bps%$$$/bps
Net interest income$1,126 $1,145 $1,129 $(19)(2) %$(3)— %$4,512 $4,586 $(74)
Noninterest income594 514 578 80 1616 32,135 2,319 (184)
Total revenue1,720 1,659 1,707 61 413 16,647 6,905 (258)
Noninterest expense1,061 1,011 1,012 50 549 54,081 3,991 90 
Pre-provision profit659 648 695 11 2(36)(5)2,566 2,914 (348)
Provision for credit losses(25)(33)124 24(149)NM(411)1,616 (2,027)
Net income530 530 456 — 74 162,319 1,057 1,262 
Preferred dividends32 26 32 23— 113 107 
Net income available to common stockholders$498 $504 $424 $(6)(1) %$74 17 %$2,206 $950 $1,256 
After-tax notable Items39 16 24 23 14415 6378 83 (5)
Underlying net income$569 $546 $480 $23 4 %$89 19 %$2,397 $1,140 $1,257 
Underlying net income available to common stockholders$537 $520 $448 $17 3 %$89 20 %$2,284 $1,033 $1,251 
Average common shares outstanding
Basic (in millions)424.7 426.1 427.1 (1.4)(2.4)(1)425.7 427.1 (1.4)
Diluted (in millions)426.9 427.8 428.9 (1.0)(2.0)427.4 428.2 (0.7)
Diluted earnings per share$1.17 $1.18 $0.99 $(0.01)(1) %$0.18 18 %$5.16 $2.22 $2.94 
Underlying diluted earnings per share$1.26 $1.22 $1.04 $0.04 3 %$0.22 21 %$5.34 $2.41 $2.93 
Performance metrics
Net interest margin2.66 %2.72 %2.75 %(6) bps(9) bps2.71 %2.88 %(17) bps
Net interest margin, FTE2.66 2.72 2.75 (6)(9)2.72 2.89 (17)
Effective income tax rate22.4 22.4 20.2 224 22.1 18.5 356 
Efficiency ratio62 61 59 76 240 61 58 360 
Underlying efficiency ratio59 60 57 (84)188 60 56 383 
Return on average common equity9.3 9.4 8.2 (13)106 10.5 4.6 584 
Return on average tangible common equity13.6 13.7 12.2 (14)137 15.4 6.9 851 
Underlying return on average tangible common equity14.6 14.2 12.9 44 172 16.0 7.5 845 
Return on average total assets1.12 1.13 1.00 (1)12 1.25 0.60 65 
Return on average total tangible assets1.17 1.17 1.04 — 13 1.30 0.62 68 
Underlying return on average total tangible assets1.25 %1.21 %1.10 % bps15  bps1.34 %0.67 %67  bps
Capital adequacy(1,2)
Common equity tier 1 capital ratio9.9 %10.3 %10.0 %
Total capital ratio12.7 13.4 13.4 
Tier 1 leverage ratio9.7 9.7 9.4 
Allowance for credit losses to loans and leases1.51 %1.63 %2.17 %(12) bps(66) bps
Asset quality(2)
Nonaccrual loans and leases to loans and leases0.55 %0.61 %0.83 %(6) bps(28) bps
Allowance for credit losses to nonaccrual loans and leases276 268 262 741 1,370 
Net charge-offs as a % of average loans and leases0.14 %0.14 %0.61 %—  bps(47) bps0.26 %0.56 %(30) 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.

Highlights
2021
vs.2020
Underlying net income of $2.4 billion, with EPS of $5.34
Record Capital Markets up 71%, or 60% excluding acquisitions, record Wealth up 18%
Underlying ROTCE of 16.0% compares with 7.5% for 2020
Excellent credit results; NCOs of 26 basis points; NPLs to loans of 0.55%, down from 0.83% in 2020

10

Citizens Financial Group, Inc.

Consolidated balance sheet review(1):

 4Q21 change from
($s in millions)4Q213Q214Q203Q214Q20
$/bps%$/bps%
Total assets$188,409 $187,007 $183,349 $1,402  %$5,060  %
Total loans and leases128,163 123,318 123,090 4,845 5,073 
Total loans held for sale3,468 3,270 4,003 198 (535)(13)
Deposits154,361 152,221 147,164 2,140 7,197 
Stockholders' equity23,420 23,423 22,673 (3)— 747 
Stockholders' common equity21,406 21,409 20,708 (3)— 698 
Tangible common equity$14,609 $14,677 $13,979 $(68)—  %$630  %
Loans-to-deposit ratio (period-end)(2)
83.0 %81.0  %83.6  %202  bps(61) bps
Loans-to-deposit ratio (average)(2)
81.8 %80.8 %85.0 %108  bps(316) bps
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 TrendsFull Year
 4Q21 change from2021 Change
($s in millions, except per share data)4Q213Q214Q203Q214Q2020212020from 2020
%%%
Net interest income$1,126 $1,145 $1,129 (2) %—  %$4,512 $4,586 (2) %
Noninterest income594 514 578 16 2,135 2,319 (8)
Total revenue$1,720 $1,659 $1,707  % %$6,647 $6,905 (4) %
Noninterest expense1,061 1,011 1,012 4,081 3,991 
Notable items51 23 42 122 21105 125 (16)
Underlying noninterest expense$1,010 $988 $970  % %$3,976 $3,866  %
Underlying pre-provision profit710 671 737 (4)2,671 3,039 (12)
Provision for credit losses(25)(33)124 24 NM(411)1,616 NM
Net income available to common stockholders498 504 424 (1)172,206 950 132 
Underlying net income available to common stockholders$537 $520 $448 %20 %$2,284 $1,033 121  %
Performance metrics
Diluted EPS$1.17 $1.18 $0.99 (1) %18  %$5.16 $2.22 132  %
Underlying EPS$1.26 $1.22 $1.04  %21  %$5.34 $2.41 122  %
Efficiency ratio62  %61  %59  %76  bps240  bps61  %58  %360  bps
Underlying efficiency ratio59 60 57 (84)188 60 56 383 
Return on average tangible common equity13.6 13.7 12.2 (14)13715.4 6.9 851 
Underlying return on average tangible common equity14.6  %14.2  %12.9  %44  bps172  bps16.0 %7.5 %845  bps
Operating leverage(1.3)%(4.1)%(6.0)%
Underlying operating leverage1.5  %(3.3) %(6.6) %




















12

Citizens Financial Group, Inc.
Notable items:
Quarterly results for 2021 and 2020 reflect notable items primarily related to TOP transformational and revenue and efficiency initiatives as well as integration costs associated with pending and closed acquisitions, primarily HSBC East Coast branches and online deposits, Investors Bancorp, Inc. and JMP Group LLC. 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 costs4Q213Q214Q20FY 2021FY 2020
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
  Noninterest income$— $— $ $— $— $— $— $— $ $— 
Salaries & benefits$(3)$(2)$— $— $— $— $(3)$(2)$— $— 
Equipment and software(1)(1)— — — — (1)(1)(2)(2)
Outside services(22)(17)(4)(3)(2)(2)(28)(21)(8)(6)
Occupancy— — — — — — — — — — 
Other expense(3)(2)— — — — (3)(2)— — 
   Noninterest expense$(29)$(22)$(4)$(3)$(2)$(2)$(35)$(26)$(10)$(8)
Total Integration Costs$(29)$(22)$(4)$(3)$(2)$(2)$(35)$(26)$(10)$(8)
Other notable items - primarily tax and TOP4Q213Q214Q20FY 2021FY 2020
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
Tax notable items$— $— $— $— $— $$— $— $— $11 
Other notable items- TOP & other actions
Salaries & benefits$(2)$(2)$13 $$(18)$(14)$11 $$(45)$(34)
Equipment and software(1)(1)(7)(5)(1)— (16)(12)(1)— 
Outside services(15)(11)(8)(6)(15)(11)(32)(24)(55)(42)
Occupancy(5)(4)(1)— (6)(4)(18)(13)(14)(10)
Other expense(16)(11)— — (15)(11)— — 
   Noninterest expense$(22)$(17)$(19)$(13)$(40)$(29)$(70)$(52)$(115)$(86)
Total Other Notable Items$(22)$(17)$(19)$(13)$(40)$(22)$(70)$(52)$(115)$(75)
Total Notable Items$(51)$(39)$(23)$(16)$(42)$(24)$(105)$(78)$(125)$(83)
EPS Impact$(0.09)$(0.04)$(0.05)$(0.18)$(0.19)


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:    8:00 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 January 19, 2022 through February 19, 2022. Please dial (866) 207-1041 and enter access code 6109255. 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 $188.4 billion in assets as of December 31, 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 940 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 acquisitions. 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 TRENDSFULL YEAR
4Q21 Change2021 Change
4Q213Q214Q203Q214Q20202120202020
$%$%$%
Total revenue, Underlying:
Total revenue (GAAP)A$1,720 $1,659 $1,707 $61 %$13 %$6,647 $6,905 ($258)(4 %)
Less: Notable items— — — — — — — — — — — 
Total revenue, Underlying (non-GAAP)B$1,720 $1,659 $1,707 $61 %$13 %$6,647 $6,905 ($258)(4 %)
Noninterest expense, Underlying:
Noninterest expense (GAAP)C$1,061 $1,011 $1,012 $50 %$49 %$4,081 $3,991 $90 %
Less: Notable items51 23 42 28 122 21 105 125 (20)(16)
Noninterest expense, Underlying (non-GAAP)D$1,010 $988 $970 $22 %$40 %$3,976 $3,866 $110 %
Pre-provision profit:
Total revenue (GAAP)A$1,720 $1,659 $1,707 $61 %$13 %$6,647 $6,905 ($258)(4 %)
Less: Noninterest expense (GAAP)C1,061 1,011 1,012 50 49 4,081 3,991 90 
Pre-provision profit (GAAP)$659 $648 $695 $11 %($36)(5 %)$2,566 $2,914 ($348)(12 %)
Pre-provision profit, Underlying:
Total revenue, Underlying (non-GAAP)B$1,720 $1,659 $1,707 $61 %$13 %$6,647 $6,905 ($258)(4 %)
Less: Noninterest expense, Underlying (non-GAAP)D1,010 988 970 22 40 3,976 3,866 110 
Pre-provision profit, Underlying (non-GAAP)$710 $671 $737 $39 %($27)(4 %)$2,671 $3,039 ($368)(12 %)
Income before income tax expense, Underlying:
Income before income tax expense (GAAP)E$684 $681 $571 $3 — %$113 20 %$2,977 $1,298 $1,679 129 %
Less: Expense before income tax benefit related to notable items(51)(23)(42)(28)(122)(9)(21)(105)(125)20 16 
Income before income tax expense, Underlying (non-GAAP)F$735 $704 $613 $31 %$122 20 %$3,082 $1,423 $1,659 117 %
Income tax expense, Underlying:
Income tax expense (GAAP)G$154 $151 $115 $3 %$39 34 %$658 $241 $417 173 %
Less: Income tax benefit related to notable items(12)(7)(18)(5)(71)33 (27)(42)15 36 
Income tax expense, Underlying (non-GAAP)H$166 $158 $133 $8 %$33 25 %$685 $283 $402 142 %
Net income, Underlying:
Net income (GAAP)I$530 $530 $456 $— — %$74 16 %$2,319 $1,057 $1,262 119 %
Add: Notable items, net of income tax benefit39 16 24 23 144 15 63 78 83 (5)(6)
Net income, Underlying (non-GAAP)J$569 $546 $480 $23 %$89 19 %$2,397 $1,140 $1,257 110 %
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)K$498 $504 $424 ($6)(1 %)$74 17 %$2,206 $950 $1,256 132 %
Add: Notable items, net of income tax benefit39 16 24 23 144 15 63 78 83 (5)(6)
Net income available to common stockholders, Underlying (non-GAAP)L