Last10K.com

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

Citizens Financial Group Incri

CIK: 759944 Ticker: CFG



citizenslogoa05.jpg

Citizens Financial Group, Inc. Reports First Quarter 2022 Net Income of
$420 million and EPS of $0.93
Underlying Net Income of $476 million and EPS of $1.07*

Key Financial Data1Q224Q211Q21
First Quarter 2022 Highlights
 
Income
Statement
($s in millions)
Completed acquisitions of HSBC East Coast branches and national online deposits (the “HSBC transaction”) on February 18th and Investors Bancorp on April 6th
Underlying EPS of $1.07 and ROTCE of 13.0%
Underlying PPNR of $587 million reflects lower fees, partly offset by higher net interest income
NII up 2% QoQ given improved net interest margin and strong loan growth; interest-bearing deposit costs down 3 bps to 10 bps
Fees down 16% QoQ reflecting lower capital markets fees from prior quarter record
Underlying credit benefit of $21 million; NCOs up slightly QoQ at 19 bps
Period-end loans up 2% and average loans up 3% QoQ
Period-end LDR of 82.7%; liquidity position remains strong
Strong capital position with CET1 at 9.7%
TBV/share of $30.97, down 10.5% QoQ
Total revenue$1,645 $1,720 $1,659 
Pre-provision profit539 659 641 
Underlying pre-provision profit587 710 661 
Provision (benefit) for credit losses(25)(140)
Net income420 530 611 
Underlying net income476 569 626 
Balance Sheet
&
Credit Quality
($s in billions)
Period-end loans and leases$131.3 $128.2 $122.2 
Average loans and leases129.2 125.2 122.8 
Period-end deposits158.8 154.4 151.3 
Average deposits155.1 153.0 146.6 
Period-end loans-to-deposit ratio82.7 %83.0 %80.7 %
NCO ratio0.19 %0.14 %0.52 %
Financial MetricsDiluted EPS$0.93 $1.17 $1.37 
Underlying EPS1.07 1.26 1.41 
ROTCE11.4 %13.6 %17.2 %
Underlying ROTCE13.0 14.6 17.6 
Net interest margin, FTE2.75 2.66 2.76 
Efficiency ratio67 62 61 
Underlying efficiency ratio64 59 60 
CET19.7 %9.9 %10.1 %
TBV/Share$30.97 $34.61 $32.79 

First Quarter 2022 ImpactsPre-tax $EPS
Notable Items($s in millions except per share data)
Integration expenses$(37)$(0.07)
HSBC Day 1 CECL provision expense (“double count”)**(24)(0.04)
TOP revenue and efficiency initiatives(11)(0.03)
Total:$(72)$(0.14)
**Day 1 CECL reserve for non-credit impaired loans acquired
Comments from Chairman and CEO Bruce Van Saun
“We started off 2022 with solid financial performance, as strong net interest income, good expense discipline and excellent credit helped to offset the macro environment’s impact on Capital Markets and Mortgage revenue,” said Chairman and CEO Bruce Van Saun. “We were pleased to close both the HSBC branch and the Investors Bancorp acquisitions, and look forward to building out a strong franchise in the New York City Metro market. Our strategic initiatives are on track, which should drive relative out-performance in the future. During the quarter, we actively managed our balance sheet strategies, and we feel well-positioned to benefit from the market expectations for significant rate rises. Our refreshed guidance demonstrates
*Results presented on an Underlying basis are non-GAAP Financial Measures. See page 18 for additional information on our use of Non-GAAP Financial Measures.

Citizens Financial Group, Inc.
confidence in our outlook for a strong 2022.”


Citizens also announced today that its board of directors declared a second quarter 2022 common stock dividend of $0.39 per share. The dividend is payable on May 17, 2022 to shareholders of record at the close of business on May 3, 2022.
2

Citizens Financial Group, Inc.
Earnings highlights(1):
Quarterly Trends
 1Q22 change from
($s in millions, except per share data)1Q224Q211Q214Q211Q21
Earnings$/bps%$/bps%
Net interest income$1,147 $1,126 $1,117 $21 2 %$30 3 %
Noninterest income498 594 542 (96)(16)(44)(8)
Total revenue1,645 1,720 1,659 (75)(4)(14)(1)
Noninterest expense1,106 1,061 1,018 45 488 9
Pre-provision profit539 659 641 (120)(18)(102)(16)
Provision (benefit) for credit losses(25)(140)28 NM143 NM
Net income420 530 611 (110)(21)(191)(31)
Preferred dividends24 32 23 (8)(25)4
Net income available to common stockholders$396 $498 $588 $(102)(20) %$(192)(33) %
After-tax notable Items56 39 15 17 4441 NM
Underlying net income$476 $569 $626 $(93)(16) %$(150)(24) %
Underlying net income available to common stockholders$452 $537 $603 $(85)(16) %$(151)(25) %
Average common shares outstanding
Basic (in millions)422.4 424.7 426.0 (2.3)(1)(3.6)(1)
Diluted (in millions)424.7 426.9 427.9 (2.2)(1)(3.2)(1)
Diluted earnings per share$0.93 $1.17 $1.37 $(0.24)(21) %$(0.44)(32) %
Underlying diluted earnings per share$1.07 $1.26 $1.41 $(0.19)(15) %$(0.34)(24) %
Performance metrics
Net interest margin2.75 %2.66 %2.75 % bps—  bps
Net interest margin, FTE2.75 2.66 2.76 (1)
Effective income tax rate21.7 22.4 21.8 (70)(6)
Efficiency ratio67 62 61 555 588 
Underlying efficiency ratio64 59 60 557 409 
Return on average common equity7.7 9.3 11.6 (161)(392)
Return on average tangible common equity11.4 13.6 17.2 (221)(581)
Underlying return on average tangible common equity13.0 14.6 17.6 (162)(460)
Return on average total assets0.90 1.12 1.36 (22)(46)
Return on average total tangible assets0.94 1.17 1.41 (23)(47)
Underlying return on average total tangible assets1.06 %1.25 %1.44 %(19) bps(38) bps
Capital adequacy(2,3)
Common equity tier 1 capital ratio9.7 %9.9 %10.1 %
Total capital ratio12.5 12.7 13.4 
Tier 1 leverage ratio9.6 9.7 9.5 
Allowance for credit losses to loans and leases1.43 %1.51 %1.94 %(8) bps(51) bps
Asset quality(3)
Nonaccrual loans and leases to loans and leases0.60 %0.55 %0.82 % bps(22) bps
Allowance for credit losses to nonaccrual loans and leases238 276 235 (3,769)261 
Net charge-offs as a % of average loans and leases0.19 %0.14 %0.52 % bps(33) bps
1) Unless otherwise noted, references to balance sheet items are on an average basis, loans exclude loans held for sale, earnings per share
represent fully diluted per common share and references to NIM are on a FTE basis.
2) Current reporting-period regulatory capital ratios are preliminary
3) Capital adequacy and asset-quality ratios calculated on a period-end basis, except net charge-offs.







3

Citizens Financial Group, Inc.
Notable items:
Quarterly results for first quarter 2022, fourth quarter 2021, and first quarter 2021 reflect notable items primarily related to integration costs associated with acquisitions, primarily HSBC East Coast branches and online deposits, Investors Bancorp, Inc. and JMP Group LLC, as well as TOP transformational and revenue and efficiency initiatives. First quarter 2022 also includes a $24 million pre-tax day-one CECL provision expense (“double count”) notable item tied to the HSBC transaction. These notable items have been excluded from reported results to better reflect Underlying operating results.
Notable items - integration expense1Q224Q211Q21
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
Salaries & benefits$(4)$(3)$(3)$(2)$— $— 
Equipment and software— — (1)(1)— — 
Outside services(28)(21)(22)(17)— — 
Other expense(5)(3)(3)(2)— — 
   Noninterest expense$(37)$(27)$(29)$(22)$— $— 
EPS Impact - Noninterest expense integration expense$(0.07)$(0.05)$— 
HSBC Day 1 CECL provision expense (“double count”)$(24)$(18)$— $— $— $— 
EPS Impact - HSBC Day 1 CECL provision expense$(0.04)$— $— 
Total integration expense$(61)$(45)$(29)$(22)$— $— 
EPS Impact - Total integration expense$(0.11)$(0.05)$— 
Other notable items - primarily tax and TOP1Q224Q211Q21
($s in millions, except per share data)Pre-taxAfter-taxPre-taxAfter-taxPre-taxAfter-tax
Tax notable items$— $(3)$— $— $— $— 
Other notable items- TOP & other actions
Salaries & benefits$(2)$(1)$(2)$(2)$— $— 
Equipment and software(2)(2)(1)(1)(4)(3)
Outside services(7)(5)(15)(11)(7)(5)
Occupancy— — (5)(4)(9)(7)
Other expense— — — — 
   Noninterest expense$(11)$(8)$(22)$(17)$(20)$(15)
Total Other Notable Items$(11)$(11)$(22)$(17)$(20)$(15)
EPS Impact - Other Notable Items $(0.03)$(0.04)$(0.04)
Total Notable Items$(72)$(56)$(51)$(39)$(20)$(15)
Total EPS Impact$(0.14)$(0.09)$(0.04)


4

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

Underlying results:

Quarterly Trends
 1Q22 change from
($s in millions, except per share data)1Q224Q211Q214Q211Q21
$/bps%$/bps%
Net interest income$1,147 $1,126 $1,117 $21  %$30  %
Noninterest income498 594 542 (96)(16)(44)(8)
Total revenue$1,645 $1,720 $1,659 $(75)(4) %$(14)(1) %
Noninterest expense$1,058 $1,010 $998 $48  %$60  %
Provision (benefit) for credit losses(21)(25)(140)16119 85
Net income available to common stockholders$452 $537 $603 $(85)(16)%$(151)(25)%
Performance metrics
EPS$1.07 $1.26 $1.41 $(0.19)(15) %$(0.34)(24) %
Efficiency ratio64  %59  %60  %557  bps409  bps
Return on average tangible common equity13.0  %14.6  %17.6  %(162) bps(460) bps
Operating leverage(9.1) %(6.7) %




5

Citizens Financial Group, Inc.

Consolidated balance sheet review(1):

 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
$/bps%$/bps%
Total assets$192,097 $188,409 $187,217 $3,688  %$4,880  %
Total loans and leases131,305 128,163 122,195 3,142 9,110 
Total loans held for sale1,816 3,468 4,379 (1,652)(48)(2,563)(59)
Deposits158,776 154,361 151,349 4,415 7,427 
Stockholders' equity22,074 23,420 22,653 (1,346)(6)(579)(3)
Stockholders' common equity20,060 21,406 20,688 (1,346)(6)(628)(3)
Tangible common equity$13,100 $14,609 $13,964 $(1,509)(10) %$(864)(6) %
Loans-to-deposit ratio (period-end)(2)
82.7 %83.0  %80.7  %(33) bps196  bps
Loans-to-deposit ratio (average)(2)
83.3 %81.8 %83.8 %145  bps(49) bps
1) Represents period end unless otherwise noted.
2) Excludes loans held for sale.

6

Citizens Financial Group, Inc.


Discussion of results:
Net interest income 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
$/bps%$/bps%
Interest income:
Interest and fees on loans and leases and loans held for sale$1,071 $1,079 $1,085 $(8)(1) %$(14)(1) %
Investment securities138 119 128 19 16 10 
Interest-bearing deposits in banks— — 33 
Total interest income$1,213 $1,202 $1,216 $11  %$(3)—  %
Interest expense:
Deposits$25 $33 $50 $(8)(24) %$(25)(50) %
Short-term borrowed funds— — (1)(100)— — 
Long-term borrowed funds41 42 49 (1)(2)(8)(16)
Total interest expense$66 $76 $99 $(10)(13) %$(33)(33) %
Net interest income$1,147 $1,126 $1,117 $21  %$30  %
Net interest margin, FTE2.75  %2.66  %2.76  % bps(1) bps
First quarter 2022vs.fourth quarter 2021
Net interest income of $1.1 billion increased 2% given loan growth and higher net interest margin, partially offset by the reduced benefit from PPP forgiveness (~$23 million) and the impact of lower day count (~$18 million).
Net interest margin of 2.75% increased 9 basis points reflecting the deployment of cash into loan growth, and higher earning-asset yields, partially offset by a reduced benefit from PPP forgiveness (~(4) bps). Interest-bearing deposit costs were down 3 basis points to 10 basis points.
First quarter 2022vs.first quarter 2021
Net interest income of $1.1 billion increased 3%, reflecting 3% growth in interest-earning assets and broadly stable net interest margin.
Net interest margin of 2.75% decreased 1 basis point as the impact of lower earning-asset yields was largely offset by the deployment of cash into loan growth. Interest-bearing deposit costs decreased to 10 basis points from 20 basis points.

7

Citizens Financial Group, Inc.

Noninterest Income 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
$%$%
Capital markets fees$93 $184 $81 $(91)(49) %$12 15  %
Service charges and fees98 100 99 (2)(2)(1)(1)
Mortgage banking fees69 76 165 (7)(9)(96)(58)
Card fees60 65 55 (5)(8)
Trust and investment services fees61 60 58 
Letter of credit and loan fees38 41 38 (3)(7)— — 
Foreign exchange and derivative products51 35 28 16 46 23 82 
Securities gains, netNM33 
Other income(1)
24 32 15 (8)(25)60 
Noninterest income$498 $594 $542 $(96)(16) %$(44)(8) %
1) Includes bank-owned life insurance income and other miscellaneous income for all periods presented.
First quarter 2022vs.fourth quarter 2021
Noninterest income of $498 million decreased $96 million, or 16%, from $594 million.
Capital markets fees decreased $91 million from a record level in fourth quarter 2021 reflecting lower M&A advisory, underwriting and loan syndication fees given market volatility, seasonal impacts and some pull-forward of transactions into fourth quarter 2021.
Record foreign exchange and derivative products revenue increased $16 million, reflecting increased client interest rate and commodities hedging activity.
Mortgage banking fees decreased $7 million, reflecting a decline in gain-on-sale margins and seasonally lower production volume, partially offset by improved mortgage servicing income.
Card fees and service charges and fees decreased $5 million and $2 million, respectively, reflecting seasonal impacts.
Other income decreased $8 million, primarily reflecting lower leasing income.
First quarter 2022vs.first quarter 2021
Noninterest income of $498 million decreased $44 million, or 8%, primarily reflecting lower mortgage banking fees.
Mortgage banking fees decreased $96 million, driven by lower gain-on-sale margins and production volumes.
Record foreign exchange and derivative products revenue increased $23 million reflecting increased client interest rate and commodities hedging activity.
Capital markets fees increased $12 million. Excluding acquisitions, results reflect lower M&A advisory and underwriting fees, partially offset by higher loan syndication fees. First quarter 2022 includes $21 million of fees from acquisitions closed during the second half of 2021.
Card fees increased $5 million, driven by higher debit and credit card volumes.
Trust and investment services fees increased $3 million, reflecting an increase in assets under management from strong net inflows and higher equity market levels.
Service charges and fees decreased $1 million, reflecting the impact on overdraft fees of the new customer-friendly deposit account feature, Citizens Peace of MindTM, introduced in fourth quarter 2021, partially offset by higher transaction volumes.
8

Citizens Financial Group, Inc.
Other income increased $9 million, primarily reflecting higher investment income.
Noninterest Expense 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
$%$%
Salaries and employee benefits$594 $551 $548 $43 %$46 %
Equipment and software150 146 152 (2)(1)
Outside services169 175 139 (6)(3)30 22 
Occupancy83 86 88 (3)(3)(5)(6)
Other operating expense110 103 91 19 21 
Noninterest expense$1,106 $1,061 $1,018 $45 %$88 %
Notable items$48 $51 $20 $(3)(6)%$28 140 %
Underlying, as applicable
Salaries and employee benefits$588 $546 $548 $42 %$40 %
Equipment and software148 144 148 — — 
Outside services134 138 132 (4)(3)
Occupancy83 81 79 
Other operating expense105 101 91 14 15 
Underlying noninterest expense$1,058 $1,010 $998 $48 %$60 %
First quarter 2022vs.fourth quarter 2021
Noninterest expense of $1.1 billion was up 4%, or up 5% on an Underlying basis given higher salaries and employee benefits, reflecting seasonal increases in payroll taxes and 401k costs, partially offset by lower incentive compensation tied to lower capital markets revenue. Underlying noninterest expense for first quarter 2022 includes $13 million tied to the HSBC transaction. Excluding the impact of the HSBC transaction and other acquisitions closed in the second half of 2021, Underlying noninterest expense was up 3%. Results reflect strong expense discipline and the benefit of efficiency initiatives.
The effective tax rate of 21.7% was broadly stable. On an Underlying basis, the effective tax rate of 21.7% compares with 22.6% for fourth quarter 2021.
First quarter 2022vs.first quarter 2021
Noninterest expense of $1.1 billion remains well-controlled. Excluding acquisitions, on an Underlying basis, noninterest expense increased 2% reflecting higher salaries and employee benefits, as well as higher other operating expense associated with increased travel and advertising costs, partially offset by the benefit of efficiency initiatives.
The effective tax rate of 21.7% was broadly stable. On an Underlying basis, the effective tax rate of 21.7% decreased from 21.8%.
9

Citizens Financial Group, Inc.
Interest-earning assets 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
Period-end interest-earning assets$%$%
Investments$28,116 $29,042 $28,138 $(926)(3) %$(22)—  %
Interest-bearing deposits in banks9,398 8,319 13,851 1,079 13 (4,453)(32)
Commercial loans and leases61,521 60,350 60,413 1,171 1,108 
Retail loans69,784 67,813 61,782 1,971 8,002 13 
Total loans and leases131,305 128,163 122,195 3,142 9,110 
Loans held for sale, at fair value1,717 2,733 4,304 (1,016)(37)(2,587)(60)
Other loans held for sale99 735 75 (636)(87)24 32 
Total loans and leases and loans held for sale133,121 131,631 126,574 1,490 6,547 
Total period-end interest-earning assets$170,635 $168,992 $168,563 $1,643  %$2,072  %
Average interest-earning assets
Investments$29,247 $28,193 $27,034 $1,054  %$2,213  %
Interest-bearing deposits in banks8,055 11,152 10,861 (3,097)(28)(2,806)(26)
Commercial loans and leases60,573 58,900 60,877 1,673 (304)— 
Retail loans68,581 66,309 61,970 2,272 6,611 11 
Total loans and leases129,154 125,209 122,847 3,945 6,307 
Loans held for sale, at fair value2,366 3,133 3,254 (767)(24)(888)(27)
Other loans held for sale454 321 385 133 41 69 18 
Total loans and leases and loans held for sale131,974 128,663 126,486 3,311 5,488 
Total average interest-earning assets$169,276 $168,008 $164,381 $1,268  %$4,895  %

First quarter 2022vs.fourth quarter 2021
Period-end interest-earning assets of $170.6 billion increased $1.6 billion, or 1% as a $3.1 billion increase in loans and leases and a $1.1 billion increase in cash held in interest-bearing deposits was largely offset by a $1.7 billion decrease in loans held for sale and a $926 million decrease in investments. Loan growth of 2% was driven by 3% growth in retail, led by mortgage, education and home equity, and 2% growth in commercial, driven by C&I. Excluding PPP impact, commercial loan growth was 3%.
Average interest-earning assets of $169.3 billion increased $1.3 billion, or 1%, as a $3.9 billion increase in loans and a $1.1 billion increase in investments was offset by a $3.1 billion decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 3% was driven by a $2.3 billion, or 3%, growth in retail, led by mortgage, auto and home equity, and growth in commercial of $1.7 billion, or 3%, driven by C&I. Excluding PPP impact, average commercial loan growth was 4%.
The average effective duration of the securities portfolio was 5.3 years compared with 4.3 years at December 31, 2021 and 4.1 years at March 31, 2021.
First quarter 2022vs.first quarter 2021
Period-end interest-earning assets of $170.6 billion increased $2.1 billion, or 1%, as a $9.1 billion increase in loans was partly offset by a $4.5 billion decrease in cash held in interest-bearing deposits, reflecting the partial deployment of elevated liquidity, and a $2.6 billion decrease in loans held for sale. Loan growth of 7% was driven by an $8.0 billion, or 13%, increase in retail given strength in mortgage, auto, education and home equity, partially offset by planned run off of personal unsecured installment loans. Commercial loans increased $1.1 billion, or 2%, as underlying growth in C&I was largely offset by a $4.7 billion decrease in PPP loans. Excluding PPP impact, commercial loan growth was 11%.
Average interest-earning assets of $169.3 billion increased $4.9 billion, or 3%, as a $2.2 billion increase in investments and a $6.3 billion increase in loans was partly offset by a $2.8 billion decrease in cash held in interest-bearing deposits reflecting the partial deployment of elevated liquidity. Loan growth of 5% was driven by a $6.6 billion, or 11%, increase in retail loans given strength in mortgage, auto and education, partially offset by planned run off of personal unsecured installment loans.
10

Citizens Financial Group, Inc.
Commercial loans decreased by approximately $300 million as underlying growth in C&I was more than offset by a $4.2 billion decrease in PPP loans. Excluding PPP impact, average commercial loan growth was 7%.
11

Citizens Financial Group, Inc.
    
Deposits 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
Period-end deposits$%$%
Demand$50,113 $49,443 $46,067 $670  %$4,046  %
Money market45,342 47,216 51,074 (1,874)(4)(5,732)(11)
Checking with interest32,417 30,409 26,883 2,008 5,534 21 
Savings26,104 22,030 19,634 4,074 18 6,470 33 
Term4,800 5,263 7,691 (463)(9)(2,891)(38)
Total period-end deposits$158,776 $154,361 $151,349 $4,415  %$7,427  %
Average deposits
Demand$48,641 $49,206 $43,814 $(565)(1) %$4,827 11  %
Money market47,220 48,512 49,536 (1,292)(3)(2,316)(5)
Checking with interest30,417 28,075 26,116 2,342 4,301 16 
Savings23,835 21,575 18,611 2,260 10 5,224 28 
Term4,970 5,636 8,572 (666)(12)(3,602)(42)
Total average deposits$155,083 $153,004 $146,649 $2,079  %$8,434  %
First quarter 2022vs.fourth quarter 2021
Total period-end deposits of $158.8 billion were up 3%, driven by the $6.3 billion impact of the HSBC transaction. Excluding the HSBC transaction, deposits of $152.5 billion were down 1% given seasonal impacts, as well as continued normalization from elevated liquidity levels.
Average deposits of $155.1 billion were up 1%, including the $2.9 billion impact of the HSBC transaction. Excluding the HSBC transaction, deposits of $152.2 billion were down 1% given seasonal impacts.
First quarter 2022vs.first quarter 2021
Total period-end deposits of $158.8 billion increased $7.4 billion, or 5%, driven by the $6.3 billion impact of the HSBC transaction. Excluding the HSBC transaction, up 1% with growth in checking with interest, savings and demand, partially offset by decreases in money market accounts and term.
Average deposits of $155.1 billion increased $8.4 billion, or 6%, including the $2.9 billion impact of the HSBC transaction. Excluding the HSBC transaction, deposits were up 4%, given growth in demand, checking with interest and savings, partially offset by decreases in money market accounts and term.



12

Citizens Financial Group, Inc.
Borrowed Funds 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
Period-end borrowed funds$%$%
Short-term borrowed funds$25 $74 $70 $(49)(66) %$(45)(64) %
Long-term borrowed funds
FHLB advances20 19 19 
Senior debt4,290 5,326 6,714 (1,036)(19)(2,424)(36)
Subordinated debt and other debt1,584 1,587 1,583 (3)— — 
Total borrowed funds$5,919 $7,006 $8,386 $(1,087)(16) %$(2,467)(29) %
Average borrowed funds
Short-term borrowed funds$29 $24 $150 $21  %$(121)(81) %
Long-term borrowed funds
FHLB advances20 18 19 11 
Senior debt4,461 5,338 6,732 (877)(16)(2,271)(34)
Subordinated debt and other debt1,585 1,587 1,585 (2)— — — 
Total average borrowed funds$6,095 $6,967 $8,486 $(872)(13) %$(2,391)(28) %
First quarter 2022vs.fourth quarter 2021
Period-end borrowed funds and average borrowed funds decreased by $1.1 billion and $872 million, respectively, given a decrease in senior debt.
First quarter 2022vs.first quarter 2021
Period-end borrowed funds and average borrowed funds decreased by $2.5 billion and $2.4 billion, respectively, given a decrease in senior debt.

13

Citizens Financial Group, Inc.
Capital 1Q22 change from
($s and shares in millions, except per share data)1Q224Q211Q214Q211Q21
Period-end capital$%$%
Stockholders' equity$22,074$23,420 $22,653 $(1,346)(6) %$(579)(3) %
Stockholders' common equity20,06021,406 20,688 (1,346)(6)(628)(3)
Tangible common equity13,100 14,609 13,964 (1,509)(10)(864)(6)
Tangible book value per common share$30.97 $34.61 $32.79 $(3.64)(11) %$(1.82)(6) %
Common shares - at end of period423.0 422.1 425.9 0.9 — (2.9)(1)
Common shares - average (diluted)424.7 426.9 427.9 (2.2)(1) %(3.2)(1) %
Common equity tier 1 capital ratio(1)
9.7 %9.9 %10.1 %
Total capital ratio(1)
12.5 12.7 13.4 
Tier 1 leverage ratio(1)
9.6 %9.7 %9.5 %
1) Current reporting-period regulatory capital ratios are preliminary.
First quarter 2022
Our CET1 capital ratio was 9.7% as of March 31, 2022 compared with 9.9% at December 31, 2021 and 10.1% at March 31, 2021.
The HSBC transaction closed on February 18, 2022 and had an approximate 20 basis point impact on CET1.
Total capital ratio of 12.5% compares with 12.7% at December 31, 2021 and 13.4% as of March 31, 2021.
Tangible book value per common share of $30.97 decreased 10.5% compared with fourth quarter 2021, primarily driven by the $3.76 negative impact of higher long-term rates on accumulated other comprehensive income. Tangible book value per common share decreased 5.6% compared with first quarter 2021.
Citizens paid $165 million in common dividends to shareholders during first quarter 2022. This compares with $168 million in common dividends during fourth quarter 2021 and $167 million during first quarter 2021.
14

Citizens Financial Group, Inc.
Credit quality review 1Q22 change from
($s in millions)1Q224Q211Q214Q211Q21
$/bps%$/bps%
Nonaccrual loans and leases(1)
$789 $702 $1,008 $87 12  %$(219)(22) %
90+ days past due and accruing(2)
826 575 46 251 44 780 NM
Net charge-offs59 45 158 14 31 (99)(63)
Provision (benefit) for credit losses(25)(140)28 NM143 NM
Allowance for credit losses $1,878 $1,934 $2,372 $(56)(3) %(494)(21) %
Nonaccrual loans and leases to loans and leases0.60  %0.55  %0.82  % bps(22) bps
Net charge-offs as a % of total loans and leases0.19 0.14 0.52 (33)
Allowance for credit losses to loans and leases1.43 1.51 1.94 (8)(51)
Allowance for credit losses to loans and leases (ex. PPP)1.43 1.52 2.03 (9)(60)
Allowance for credit losses to nonaccrual loans and leases238.0  %275.7  %235.4  %(3,769) bps261  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 $792 million, $544 million, and $20 million of loans fully or partially guaranteed by the FHA, VA, and USDA for March 31, 2022, December 31, 2021, and March 31, 2021, respectively.
First quarter 2022vs.fourth quarter 2021
Nonaccrual loans of $789 million increased $87 million, or 12%, largely reflecting an increase in retail primarily tied to residential real estate-secured loans exiting forbearance.
The nonaccrual loans to total loans ratio of 0.60% is up from 0.55% at December 31, 2021.
Net charge-offs of $59 million, or 19 basis points of average loans and leases, were up slightly from prior quarter.
Underlying credit provision benefit of $21 million reflects the continuing strong credit performance across retail and commercial. The first quarter 2022 Underlying credit provision benefit excludes a $24 million day-one CECL provision expense (“double count”) tied to the HSBC transaction. Fourth quarter 2021 credit provision benefit was $25 million.
Allowance for credit losses ratio of 1.43% compares with 1.51% as of December 31, 2021. The reduction reflects a reserve release of $56 million.
The allowance for credit losses to nonaccrual loans and leases ratio of 238% compares with 276% as of December 31, 2021.
First quarter 2022vs.first quarter 2021
Nonaccrual loans decreased $219 million, or 22%, primarily driven by a $170 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 0.60% decreased from 0.82% at March 31, 2021.
Net charge-offs of $59 million decreased $99 million reflecting a $93 million decrease in commercial given economic recovery, and a $6 million decrease in retail, as consumers continue to benefit from the economic recovery and strong mortgage and auto collateral values.
Net charge-offs of 19 basis points of average loans and leases compares with 52 basis points in first quarter 2021.
Underlying credit provision benefit of $21 million compares with a $140 million benefit in first quarter 2021, reflecting strong credit performance across the retail and commercial loan portfolios and improvement in the economy. The first quarter 2022 Underlying credit provision benefit excludes a $24 million day-one CECL provision expense (“double count”) tied to the HSBC transaction.
Allowance for credit losses of $1.9 billion compares with $2.4 billion at March 31, 2021. Allowance for credit losses ratio of 1.43% as of March 31, 2022, compares with 1.94% as of March 31, 2021.
15

Citizens Financial Group, Inc.
The allowance for credit losses to nonaccrual loans and leases ratio of 238% compares with 235% as of March 31, 2021.
16

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 April 19, 2022 through May 19, 2022. Please dial (866) 207-1041 and enter access code 8193987. 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 $192.1 billion in assets as of March 31, 2022. 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 full-service customer contact center and the convenience of approximately 3,300 ATMs and more than 1,200 branches in 14 states and the District of Columbia. 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.

17

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, excluding HSBC, excluding acquisitions and excluding PPP. 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. See the following pages for 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.
18

Citizens Financial Group, Inc.

Non-GAAP financial measures and reconciliations
(in millions, except share, per-share and ratio data)
QUARTERLY TRENDS
1Q22 Change
1Q224Q211Q214Q211Q21
$%$%
Total revenue, Underlying:
Total revenue (GAAP)A$1,645 $1,720 $1,659 ($75)(4 %)($14)(1 %)
Less: Notable items— — — — — — — 
Total revenue, Underlying (non-GAAP)B$1,645 $1,720 $1,659 ($75)(4 %)($14)(1 %)
Noninterest expense, Underlying:
Noninterest expense (GAAP)C$1,106 $1,061 $1,018 $45 %$88 %
Less: Notable items48 51 20 (3)(6)28 140 
Noninterest expense, Underlying (non-GAAP)D$1,058 $1,010 $998 $48 %$60 %
Pre-provision profit:
Total revenue (GAAP)A$1,645 $1,720 $1,659 ($75)(4 %)($14)(1 %)
Less: Noninterest expense (GAAP)C1,106 1,061 1,018 45 88 
Pre-provision profit (GAAP)$539 $659 $641 ($120)(18 %)($102)(16 %)
Pre-provision profit, Underlying:
Total revenue, Underlying (non-GAAP)B$1,645 $1,720 $1,659 ($75)(4 %)($14)(1 %)
Less: Noninterest expense, Underlying (non-GAAP)D1,058 1,010 998 48 60 
Pre-provision profit, Underlying (non-GAAP)$587 $710 $661 ($123)(17 %)($74)(11 %)
Provision (benefit) for credit losses, Underlying:
Provision (benefit) for credit losses (GAAP)$3 ($25)($140)$28 NM$143 NM
Less: Notable items24 — — 24 100 24 100 
Provision (benefit) for credit losses, Underlying (non-GAAP)($21)($25)($140)$4 16 %$119 85 %
Income before income tax expense, Underlying:
Income before income tax expense (GAAP)E$536 $684 $781 ($148)(22 %)($245)(31 %)
Less: Expense before income tax benefit related to notable items(72)(51)(20)(21)(41)(52)NM
Income before income tax expense, Underlying (non-GAAP)F$608 $735 $801 ($127)(17 %)($193)(24 %)
Income tax expense, Underlying:
Income tax expense (GAAP)G$116 $154 $170 ($38)(25 %)($54)(32 %)
Less: Income tax benefit related to notable items(16)(12)(5)(4)(33)(11)(220)
Income tax expense, Underlying (non-GAAP)H$132 $166 $175 ($34)(20 %)($43)(25 %)
Net income, Underlying:
Net income (GAAP)I$420 $530 $611 ($110)(21 %)($191)(31 %)
Add: Notable items, net of income tax benefit56 39 15 17 44 41 NM
Net income, Underlying (non-GAAP)J$476 $569 $626 ($93)(16 %)($150)(24 %)
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)K$396 $498 $588 ($102)(20 %)($192)(33 %)
Add: Notable items, net of income tax benefit56 39 15 17 44 41 NM
Net income available to common stockholders, Underlying (non-GAAP)L$452 $537 $603 ($85)(16 %)($151)(25 %)
19

Citizens Financial Group, Inc.
Non-GAAP financial measures and reconciliations (continued)
(in millions, except share, per-share and ratio data)
QUARTERLY TRENDS
1Q22 Change
1Q224Q211Q214Q211Q21
$/bps%$/bps%
Operating leverage:
Total revenue (GAAP)A$1,645 $1,720 $1,659 ($75)(4.33 %)($14)(0.85 %)
Less: Noninterest expense (GAAP)C1,106 1,061 1,018 45 4.28 88 8.65 
Operating leverage(8.61 %)(9.50 %)
Operating leverage, Underlying:
Total revenue, Underlying (non-GAAP)B$1,645 $1,720 $1,659 ($75)(4.33 %)($14)(0.85 %)
Less: Noninterest expense, Underlying (non-GAAP)D1,058 1,010 998 48 4.74 60 5.89 
Operating leverage, Underlying (non-GAAP)(9.07 %)(6.74 %)
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio C/A67.23 %61.68 %61.35 %555  bps588  bps
Efficiency ratio, Underlying (non-GAAP)D/B64.28 58.71 60.19 557  bps409  bps
Effective income tax rate and effective income tax rate, Underlying:
Effective income tax rateG/E21.70 %22.40 %21.76 %(70) bps(6) bps
Effective income tax rate, Underlying (non-GAAP)H/F21.70 22.61 21.85 (91) bps(15) bps
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)M$20,981 $21,320 $20,611 ($339)(2 %)$370 %
Return on average common equityK/M7.65 %9.26 %11.57 %(161) bps(392) bps
Return on average common equity, Underlying (non-GAAP)L/M8.75 9.97 11.85 (122) bps(310) bps
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP)M$20,981 $21,320 $20,611 ($339)(2