Exhibit 99.1
Citizens Financial Group, Inc. Reports Second Quarter Net Income of
$453 million and EPS of $0.95
Underlying net income of $458 million up 8% and EPS of $0.96 up 9% year over year*
Strong fee revenue growth paced by record results in Mortgage, Wealth and Capital Markets
Tangible book value per share up 12% year over year; up 4% sequential quarter
Raised third quarter 2019 common dividend 13% to $0.36 per share
PROVIDENCE, RI (July 19, 2019) Citizens Financial Group, Inc. (NYSE: CFG or “Citizens”) today reported second quarter net income of $453 million, up 7% from $425 million in second quarter 2018, and earnings per share of $0.95, up 8% from $0.88 per share in second quarter 2018. Second quarter 2019 results reflect a net $5 millionafter-tax reduction, or $(0.01) per share, from notable items compared with none in second quarter 2018 and a net $4 millionafter-tax reduction, or $(0.01) per share, in first quarter 2019. Second quarter 2019 Return on Average Tangible Common Equity* (“ROTCE”) of 12.8% compares with 12.9% in second quarter 2018 and 13.0% in first quarter 2019.
On an Underlying basis, which excludes notable items,* second quarter 2019 net income available to common stockholders of $440 million increased 4% from second quarter 2018 and 3% from first quarter 2019. Earnings per common share of $0.96 per share increased 9% from second quarter 2018 and 3% from first quarter 2019. Underlying second quarter 2019 ROTCE* of 12.9% compares with 12.9% in second quarter 2018 and 13.1% in first quarter 2019. Tangible book value per common share of $30.88 increased 12% from second quarter 2018 and 4% from first quarter 2019.
“We are pleased to report another strong quarterly result, paced by good fee income growth, strong expense discipline and solid execution against our strategic initiatives,” said Chairman and Chief Executive Officer Bruce Van Saun. “We feel good about our ability to integrate and leverage our recentfee-based acquisitions, and about our continued success with Citizens Access, which provides a springboard for broader digital initiatives. Also noteworthy is the launch of our TOP 6 Program, which will drive further improvement in the overall efficiency and effectiveness of our organization, while providing the capacity to self-fund investments to drive innovation and future growth.”
Citizens also announced today that its board of directors declared a four cent, or 13%, increase in the quarterly common stock dividend to $0.36 per share. The dividend is payable on August 14, 2019 to shareholders of record at the close of business on July 31, 2019. The quarterly common dividend is now 33% higher than theyear-ago quarter.
* | Please see important information on Key Performance Metrics andNon-GAAP Financial Measures, as applicable, at the end of this release for an explanation of our use of these metrics andnon-GAAP financial measures and their reconciliation to GAAP financial measures. Where there is a reference to “Underlying” results in a paragraph, all measures that follow these references are on the same basis, when applicable. References to “Underlying results before the impact of Acquisitions” exclude the impact of the acquisitions that occurred after second quarter 2018 and notable items, as applicable. Additional information regarding the impact of Acquisitions and notable items may be found in the Notable Items portion of this release. Throughout this release, references to balance sheet items are on an average basis and loans exclude held for sale 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 and loan growth include leases. Loans held for sale are also referred to as LHFS. Current reporting-period regulatory capital ratios are preliminary. Select totals may not sum due to rounding. |
Citizens Financial Group, Inc.
In addition, Citizens recently announced that its board of directors has authorized the Company to repurchase up to $1.275 billion of the Company’s common stock over the four-quarter period beginning July 1, 2019, which represents a 25% increase over last year’s authorization. Additionally, Citizens continues to target a medium-term dividend payout ratio in the 35 to 40 percent range.
Second quarter 2019 vs. second quarter 2018
Key highlights
• | Second quarter results reflect revenue growth of 8%, with a 19% increase in noninterest income and a 4% increase in net interest income. |
• | Strong momentum in fee income with record results in mortgage banking, capital markets fees, trust and investment services fees, and card fees. |
• | Delivered an efficiency ratio of 58.4% and ROTCE of 12.8%, with Underlying ROTCE of 12.9%.* Before the impact of notable items and Acquisitions,* operating leverage of 1% reflects continued strong focus ontop-line growth and expense management, while the Underlying efficiency ratio was 58.0%.* |
• | Further improvement in theloan-to-deposit ratio with aperiod-end ratio of 94.2%, down from 96.9%. |
• | Tangible book value per common share of $30.88 increased by 12%. Fully diluted average common shares outstanding decreased by 26.8 million shares, or 6%. |
Results
• | Total revenue increased $119 million, or 8%. Total revenue before the impact of notable items and Acquisitions,* increased $65 million, or 4.3%. |
• | Net interest income increased 4%, given 4% growth in interest-earning assets and stable net interest margin. |
• | Net interest margin of 3.21% was relatively stable, reflecting higher interest-earning asset yields given higher rates and continued mix shift towards higher-yielding assets, offset by an increase in funding costs tied to higher rates and growth. |
• | Noninterest income of $462 million increased $74 million, or 19%, reflecting underlying momentum with record results in Mortgage, Wealth, Capital Markets and card fees. Before the impact of Acquisitions,* noninterest income increased 6%. |
• | Noninterest expense increased 9% from second quarter 2018 driven by the impact of Acquisitions and notable items. Before the impact of Acquisitions and notable items,* noninterest expense increased 3.7%, reflecting higher salaries and employee benefits, given the impact of merit increases, investments in strategic growth initiatives and higher revenue-driven incentives, as well as an increase in equipment and software expense. |
• | Provision for credit losses of $97 million increased $12 million, reflecting continued seasoning in retail growth portfolios and several idiosyncratic losses in commercial, with key credit metrics continuing to reflect strong credit quality. |
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Citizens Financial Group, Inc.
• | ROTCE of 12.8% compares with 12.9% for second quarter 2018. Underlying ROTCE* of 12.9% was stable with second quarter 2018 as an approximately 50 basis point drag from higher equity value, given the benefit on securities valuations from lower long-term rates, offset the benefit of profitability growth. |
Balance Sheet
• | Interest-earning assets increased $5.8 billion, or 4%, driven by loan growth of 4%, with a 6% increase in commercial and a 3% increase in retail. |
• | Average deposits increased $8.0 billion, or 7%, on strength in term, savings and checking with interest, partially offset by a reduction in money market accounts and demand deposits. The averageloan-to-deposit ratio improved to 95.6% from 98.0%;period-endloan-to-deposit ratio improved to 94.2% from 96.9% in second quarter 2018. |
��� | Nonperforming loans and leases (“NPLs”) to loans and leases ratio of 0.66% improved from 0.75%, reflecting decreases in both retail and commercial. |
• | Allowance coverage of NPLs of 159% improved from 148%. |
• | Net charge-offs of 36 basis points of loans increased nine basis points, reflecting several idiosyncratic losses in commercial and continued seasoning in retail growth portfolios. |
• | Capital remains strong, with a preliminary common equity tier 1 (“CET1”) risk-based capital ratio of 10.5%. |
• | Repurchased 3.5 million shares of common stock at a weighted average price of $34.64 in the quarter, and including common dividends, returned $268 million in capital to shareholders. |
Year-over-year update on plan execution
Consumer Banking
• | Continued balance sheet momentum, with 3% loan growth, including continued growth in more attractive risk-adjusted return categories; 11% deposit growth, including 7% growth in demand deposits. |
• | Strong momentum in fee income categories. Generated record trust and investment services fees, up 23%; record mortgage fees, up 135%; record card fees, up 9%. |
• | Citizens Access®, our digital platform, attracted $5.4 billion of spot deposits through second quarter 2019. |
Commercial Banking
• | Strong balance sheet performance with commercial loan growth of 7%, driven by geographic, product and client-focused expansion strategies as well as strength in commercial real estate. |
• | Continue to benefit from investments in broadening and enhancing our capabilities, highlighted by overall record capital markets fees, up 19%, with strength in bond underwriting and M&A fees. |
Efficiency and balance sheet optimization initiatives
• | New transformational TOP 6 Program expected to deliver significant benefits. |
• | Continued execution on our TOP V efficiency Program, which is expected to deliverpre-tax annualizedrun-rate benefit of approximately$95-$105 million by end of 2019. |
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Citizens Financial Group, Inc.
• | Continued progress on Balance Sheet Optimization (“BSO”) initiatives to grow more attractive risk-adjusted return portfolios and optimize deposit mix. |
Second quarter 2019 vs. first quarter 2019
Key highlights
• | Second quarter highlights include ROTCE of 12.8%, and Underlying ROTCE* of 12.9%, which decreased from 13.1% in first quarter 2019. Underlying results* reflect an approximately 30 basis point drag from higher equity value, given the benefit from lower long-term rates on securities valuations, which offset the benefit of profitability growth. |
• | Tangible book value per common share of $30.88 increased 4%. Fully diluted average common shares outstanding decreased by 3.2 million shares. |
• | Second quarter 2019 results reflect a net $5 millionafter-tax reduction, or ($0.01) per fully diluted share, from notable items compared with a net $4 millionafter-tax reduction, or ($0.01) per share, in first quarter 2019. |
• | Results reflect an efficiency ratio of 58.4%, which includes the impact of $7 million of notable expense items. On an Underlying basis,* delivered an efficiency ratio of 58.0% with higher revenues and well-controlled expenses. |
Results
• | Total revenue of $1.6 billion increased 3%, reflecting relatively stable net interest income and strength in noninterest income. |
• | Net interest income of $1.2 billion increased $6 million, as the benefit of day count, interest-earning asset growth and improved mix was partially offset by a modest decrease in net interest margin. |
• | Net interest margin of 3.21% decreased four basis points, driven by the impact of lower interest rates on earning asset yields, an increase in deposit costs given growth and the impact from day count. Interest-bearing deposit costs increased by three basis points, reflecting proactive pricing discipline against the impact of higher deposit betas. |
• | Noninterest income of $462 million increased $34 million, or 8%, with record results in Mortgage, Wealth, Capital Markets and card fees. |
• | Noninterest expense of $951 million increased $14 million, or 1%, including the impact of notable items. On an Underlying basis,* noninterest expense of $944 million increased by $12 million, largely reflecting higher outside services and other operating expense, partially offset by seasonally lower salaries and employee benefits. |
• | Provision expense of $97 million compares with $85 million in the prior quarter, largely related to an increase in commercial charge-offs tied to several idiosyncratic losses and expected seasoning in retail growth portfolios, partially offset by the impact of continued improvement in underlying credit quality. |
Balance sheet
• | Average interest-earning assets increased $810 million, reflecting an increase in loans held for sale tied to higher mortgage origination volumes, as well as growth in the investment portfolio. Loans were relatively stable compared with first quarter 2019, and up 0.4% before the impact of first and second quarter 2019 loan sales tied to our balance optimization initiatives. |
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Citizens Financial Group, Inc.
• | Average deposits increased $2.7 billion, or 2%, reflecting growth in term, savings and checking with interest as well as relatively stable demand deposits and money market accounts. |
• | NPLs to loans and leases ratio was stable at 0.66%. Allowance coverage of NPLs of 159% was relatively stable. |
• | Averageloan-to-deposit ratio improved to 95.6% from 97.7% in first quarter 2019;period-endloan-to-deposit ratio improved to 94.2% from 94.9% in first quarter 2019. |
5
Citizens Financial Group, Inc.
Earnings highlights:
Quarterly Trends | ||||||||||||||||||||||||||||
2Q19 change from | ||||||||||||||||||||||||||||
($s in millions, except per share data) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
Earnings | $/bps | % | $/bps | % | ||||||||||||||||||||||||
Net interest income | $ | 1,166 | $ | 1,160 | $ | 1,121 | $ | 6 | 1 | % | $ | 45 | 4 | % | ||||||||||||||
Noninterest income | 462 | 428 | 388 | 34 | 8 | 74 | 19 | |||||||||||||||||||||
Total revenue | 1,628 | 1,588 | 1,509 | 40 | 3 | 119 | 8 | |||||||||||||||||||||
Noninterest expense | 951 | 937 | 875 | 14 | 1 | 76 | 9 | |||||||||||||||||||||
Pre-provision profit | 677 | 651 | 634 | 26 | 4 | 43 | 7 | |||||||||||||||||||||
Provision for credit losses | 97 | 85 | 85 | 12 | 14 | 12 | 14 | |||||||||||||||||||||
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Net income | 453 | 439 | 425 | 14 | 3 | 28 | 7 | |||||||||||||||||||||
Preferred dividends | 18 | 15 | — | 3 | 20 | 18 | 100 | |||||||||||||||||||||
Net income available to common stockholders | $ | 435 | $ | 424 | $ | 425 | $ | 11 | 3 | % | $ | 10 | 2 | % | ||||||||||||||
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After-tax notable Items | 5 | 4 | — | 1 | 25 | 5 | 100 | |||||||||||||||||||||
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Underlying net income* | $ | 458 | $ | 443 | $ | 425 | $ | 15 | 3 | % | $ | 33 | 8 | % | ||||||||||||||
Underlying net income available to common stockholders* | $ | 440 | $ | 428 | $ | 425 | $ | 12 | 3 | % | $ | 15 | 4 | % | ||||||||||||||
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Average common shares outstanding | ||||||||||||||||||||||||||||
Basic (in millions) | 458.2 | 460.7 | 484.7 | (2.6 | ) | (1 | ) | (26.6 | ) | (5 | ) | |||||||||||||||||
Diluted (in millions) | 459.3 | 462.5 | 486.1 | (3.2 | ) | (1 | ) | (26.8 | ) | (6 | ) | |||||||||||||||||
Diluted earnings per share | $ | 0.95 | $ | 0.92 | $ | 0.88 | $ | 0.03 | 3 | $ | 0.07 | 8 | ||||||||||||||||
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Underlying diluted earnings per share* | $ | 0.96 | $ | 0.93 | $ | 0.88 | $ | 0.03 | 3 | % | $ | 0.08 | 9 | % | ||||||||||||||
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Key performance metrics* | ||||||||||||||||||||||||||||
Net interest margin | 3.20 | % | 3.23 | % | 3.20 | % | (3 | ) bps | — bps | |||||||||||||||||||
Net interest margin, FTE | 3.21 | % | 3.25 | % | 3.22 | % | (4 | ) | (1 | ) | ||||||||||||||||||
Effective income tax rate | 21.9 | 22.4 | 22.6 | (56 | ) | (72 | ) | |||||||||||||||||||||
Efficiency ratio | 58 | 59 | 58 | (59 | ) | 46 | ||||||||||||||||||||||
Underlying efficiency ratio* | 58 | 59 | 58 | (65 | ) | 7 | ||||||||||||||||||||||
Return on average common equity | 8.5 | 8.6 | 8.7 | (8 | ) | (11 | ) | |||||||||||||||||||||
Return on average tangible common equity | 12.8 | 13.0 | 12.9 | (25 | ) | (18 | ) | |||||||||||||||||||||
Underlying return on average tangible common equity* | 12.9 | 13.1 | 12.9 | (23 | ) | (4 | ) | |||||||||||||||||||||
Return on average total assets | 1.13 | 1.11 | 1.11 | 2 | 2 | |||||||||||||||||||||||
Underlying return on average total tangible assets* | 1.19 | % | 1.17 | % | 1.16 | % | 2bps | 3bps | ||||||||||||||||||||
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Capital adequacy(1,2) | ||||||||||||||||||||||||||||
Common equity tier 1 capital ratio | 10.5 | % | 10.5 | % | 11.2 | % | ||||||||||||||||||||||
Total capital ratio | 13.4 | 13.4 | 13.8 | |||||||||||||||||||||||||
Tier 1 leverage ratio | 10.1 | % | 10.0 | % | 10.2 | % | ||||||||||||||||||||||
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Asset quality(2) | ||||||||||||||||||||||||||||
Nonperforming loans and leases as a % of loans and leases | 0.66 | % | 0.66 | % | 0.75 | % | — bps | (9 | ) bps | |||||||||||||||||||
Allowance for loan and lease losses as a % of loans and leases | 1.05 | 1.06 | 1.10 | (1 | ) | (5 | ) | |||||||||||||||||||||
Allowance for loan and lease losses as a % of nonperforming loans and leases | 159 | 160 | 148 | (25 | ) | NM | ||||||||||||||||||||||
Net charge-offs as a % of average loans and leases | 0.36 | % | 0.31 | % | 0.27 | % | 5bps | 9bps | ||||||||||||||||||||
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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. |
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Citizens Financial Group, Inc.
Notable items:
First and second quarter 2019 results reflect notable items related to integration costs primarily tied to the August 1, 2018 Franklin American Mortgage Company (“FAMC”) acquisition which have been excluded from reported results to better reflect Underlying operating results.*
Total estimatedafter-tax FAMC integration costs are expected to be in the$30-$45 million range, with completion targeted byyear-end 2019. Cumulativeafter-tax integration costs related to FAMC totaled $26 million through the end of second quarter 2019.
Notable items* | 2Q19 | 1Q19 | Cumulativeafter-tax integration costs | |||||||||||||||||||||||||||||||||
($s in millions, except per share data) | Pre-tax | After-tax | EPS | Pre-tax | After-tax | EPS | FAMC | Other | Total | |||||||||||||||||||||||||||
Integration costs | ||||||||||||||||||||||||||||||||||||
Noninterest income | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3 | ) | — | $ | (3 | ) | |||||||||||||||||
Salaries and employee benefits | (2 | ) | (1 | ) | — | (1 | ) | (1 | ) | — | (9 | ) | — | (9 | ) | |||||||||||||||||||||
Occupancy | — | — | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||||||||
Outside services | (5 | ) | (4 | ) | (0.01 | ) | (4 | ) | (3 | ) | (0.01 | ) | (10 | ) | (2 | ) | (12 | ) | ||||||||||||||||||
Other operating expense | — | — | — | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||||||||||||
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Noninterest expense | $ | (7 | ) | $ | (5 | ) | $ | (0.01 | ) | $ | (5 | ) | $ | (4 | ) | $ | (0.01 | ) | $ | (23 | ) | (2 | ) | $ | (25 | ) | ||||||||||
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Total notable items - integration costs | $ | (7 | ) | $ | (5 | ) | $ | (0.01 | ) | $ | (5 | ) | $ | (4 | ) | $ | (0.01 | ) | $ | (26 | ) | $ | (2 | ) | $ | (28 | ) | |||||||||
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The following table provides information on Underlying results before the impact of notable items and Acquisitions.*
Quarterly Trends | ||||||||||||||||||||
Underlying results/impact of Acquisitions:* | 2Q19 change from | |||||||||||||||||||
($s in millions, except per share data) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||
Net interest income | $ | 1,166 | $ | 1,160 | $ | 1,121 | 1 | % | 4 | % | ||||||||||
Noninterest income | 462 | 428 | 388 | 8 | 19 | |||||||||||||||
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Total revenue | $ | 1,628 | $ | 1,588 | $ | 1,509 | 3 | % | 8 | % | ||||||||||
Noninterest expense | $ | 951 | $ | 937 | $ | 875 | 1 | % | 9 | % | ||||||||||
Notable items | 7 | 5 | — | 40 | 100 | |||||||||||||||
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Underlying noninterest expense* | $ | 944 | $ | 932 | $ | 875 | 1 | % | 8 | % | ||||||||||
Underlyingpre-provision profit* | 684 | 656 | 634 | 4 | 8 | |||||||||||||||
Provision for credit losses | 97 | 85 | 85 | 14 | 14 | |||||||||||||||
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Net income available to common stockholders | 435 | 424 | 425 | 3 | 2 | |||||||||||||||
Underlying net income available to common stockholders* | 440 | 428 | 425 | 3 | 4 | |||||||||||||||
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Key performance metrics* | ||||||||||||||||||||
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Diluted EPS | $ | 0.95 | $ | 0.92 | $ | 0.88 | 3 | % | 8 | % | ||||||||||
Underlying EPS* | $ | 0.96 | $ | 0.93 | $ | 0.88 | 3 | 9 | ||||||||||||
Efficiency ratio | 58 | % | 59 | % | 58 | % | (59 | ) bps | 46 | bps | ||||||||||
Underlying efficiency ratio* | 58 | 59 | 58 | (65 | ) | 7 | ||||||||||||||
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Operating leverage | 1.0 | % | (0.8 | )% | ||||||||||||||||
Underlying operating leverage* | 1.1 | (0.1 | ) | |||||||||||||||||
Underlying operating leverage before Acquisitions* | 0.6 | % | ||||||||||||||||||
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7
Citizens Financial Group, Inc.
Discussion of results: | 2Q19 change from | |||||||||||||||||||||||||||
Net interest income | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
($s in millions) | $/bps | % | $/bps | % | ||||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||
Interest and fees on loans and leases and loans held for sale | $ | 1,409 | $ | 1,396 | $ | 1,238 | $ | 13 | 1 | % | $ | 171 | 14 | % | ||||||||||||||
Investment securities | 164 | 166 | 165 | (2 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||||
Interest-bearing deposits in banks | 7 | 8 | 8 | (1 | ) | (13 | ) | (1 | ) | (13 | ) | |||||||||||||||||
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Total interest income | $ | 1,580 | $ | 1,570 | $ | 1,411 | $ | 10 | 1 | % | $ | 169 | 12 | % | ||||||||||||||
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Interest expense: | ||||||||||||||||||||||||||||
Deposits | $ | 308 | $ | 287 | $ | 181 | $ | 21 | 7 | % | $ | 127 | 70 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 3 | 2 | 1 | 1 | 50 | 2 | 200 | |||||||||||||||||||||
Other short-term borrowed funds(1) | 1 | — | 1 | 1 | 100 | — | — | |||||||||||||||||||||
Long-term borrowed funds(1) | 102 | 121 | 107 | (19 | ) | (16 | ) | (5 | ) | (5 | ) | |||||||||||||||||
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Total interest expense | $ | 414 | $ | 410 | $ | 290 | $ | 4 | 1 | % | $ | 124 | 43 | % | ||||||||||||||
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Net interest income | $ | 1,166 | $ | 1,160 | $ | 1,121 | $ | 6 | 1 | % | $ | 45 | 4 | % | ||||||||||||||
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Net interest margin, FTE | 3.21 | % | 3.25 | % | 3.22 | % | (4 | ) bps | (1 | ) bps | ||||||||||||||||||
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1) | Beginning in 1Q19, borrowed funds interest expense is based on original maturity and prior periods have been revised consistent with the current presentation. |
Net interest income increased $45 million, or 4%, from second quarter 2018, given 4% growth in interest-earning assets and stable net interest margin. Net interest margin of 3.21% was relatively stable, reflecting higher interest-earning asset yields given the impact of improved mix shift and higher short-term rates, offset by an increase in funding costs reflecting higher short-term rates and growth.
Compared with first quarter 2019, net interest income of $1.2 billion increased $6 million, or 1%, as the benefit of day count, interest earning asset growth and improved mix was partially offset by lower net interest margin. Net interest margin of 3.21% decreased four basis points, reflecting the impact of lower interest rates on earning asset yields, an increase in deposit costs given growth and day count.
Noninterest Income | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
Service charges and fees | $ | 126 | $ | 123 | $ | 127 | $ | 3 | 2 | % | $ | (1 | ) | (1 | )% | |||||||||||||
Card fees | 64 | 59 | 60 | 5 | 8 | 4 | 7 | |||||||||||||||||||||
Capital markets fees | 57 | 54 | 48 | 3 | 6 | 9 | 19 | |||||||||||||||||||||
Trust and investment services fees | 53 | 47 | 43 | 6 | 13 | 10 | 23 | |||||||||||||||||||||
Mortgage banking fees | 62 | 43 | 27 | 19 | 44 | 35 | 130 | |||||||||||||||||||||
Letter of credit and loan fees | 33 | 33 | 32 | — | — | 1 | 3 | |||||||||||||||||||||
Foreign exchange and interest rate products | 35 | 36 | 34 | (1 | ) | (3 | ) | 1 | 3 | |||||||||||||||||||
Securities gains, net | 4 | 8 | 2 | (4 | ) | (50 | ) | 2 | 100 | |||||||||||||||||||
Other income(1) | 28 | 25 | 15 | 3 | 12 | 13 | 87 | |||||||||||||||||||||
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Noninterest income | $ | 462 | $ | 428 | $ | 388 | $ | 34 | 8 | % | $ | 74 | 19 | % | ||||||||||||||
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1) | Other income includes bank-owned life insurance and other income. |
Noninterest income of $462 million in second quarter 2019 increased $74 million, or 19%, from second quarter 2018, reflecting record results in mortgage banking fees, capital market fees, trust and investment services fees and card fees. Before the impact of Acquisitions,* noninterest income of $413 million increased $25 million, or 6%, driven by record results in capital market fees, trust and investment services fees and card fees. Results also reflect growth in other income reflecting higher leasing income.
8
Citizens Financial Group, Inc.
Compared with first quarter 2019, noninterest income increased $34 million, or 8%, driven by record results in mortgage banking fees, capital market fees, trust and investment services fees and card fees. Results also reflect growth in service charges and fees given seasonally higher volumes.
Noninterest Expense | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||
Salaries and employee benefits | $ | 507 | $ | 509 | $ | 453 | $ | (2 | ) | — | % | $ | 54 | 12 | % | |||||||||||||
Equipment and software expense | 126 | 125 | 110 | 1 | 1 | 16 | 15 | |||||||||||||||||||||
Outside services | 118 | 110 | 106 | 8 | 7 | 12 | 11 | |||||||||||||||||||||
Occupancy | 82 | 83 | 79 | (1 | )�� | (1 | ) | 3 | 4 | |||||||||||||||||||
Other operating expense | 118 | 110 | 127 | 8 | 7 | (9 | ) | (7 | ) | |||||||||||||||||||
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Noninterest expense | $ | 951 | $ | 937 | $ | 875 | $ | 14 | 1 | % | $ | 76 | 9 | % | ||||||||||||||
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Notable items* | $ | 7 | $ | 5 | $ | — | $ | 2 | 40 | % | $ | 7 | 100 | % | ||||||||||||||
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Salaries and employee benefits | $ | 505 | $ | 508 | $ | 453 | $ | (3 | ) | (1 | )% | $ | 52 | 11 | % | |||||||||||||
Equipment and software expense | 126 | 125 | 110 | 1 | 1 | 16 | 15 | |||||||||||||||||||||
Outside services | 113 | 106 | 106 | 7 | 7 | 7 | 7 | |||||||||||||||||||||
Occupancy | 82 | 83 | 79 | (1 | ) | (1 | ) | 3 | 4 | |||||||||||||||||||
Other operating expense | 118 | 110 | 127 | 8 | 7 | (9 | ) | (7 | ) | |||||||||||||||||||
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Underlying noninterest expense* | $ | 944 | $ | 932 | $ | 875 | $ | 12 | 1 | % | $ | 69 | 8 | % | ||||||||||||||
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Second quarter 2019 noninterest expense of $951 million increased $76 million, or 9%, from second quarter 2018 driven by the $44 million impact of Acquisitions* and notable items. Underlying noninterest expense before the impact of Acquisitions* of $907 million increased $32 million, or 4%, largely reflecting an increase in salaries and employee benefits given the impact of annual merit increases, revenue-based incentives and a $3 million severance charge, as well as an increase in equipment and software expense. These results reflect the impact of our investments in growth initiatives, partially offset by lower other operating expense, largely tied to a reduction in FDIC insurance and advertising expense.
Compared with first quarter 2019, noninterest expense increased $14 million, or 1%. Underlying noninterest expense of $944 million increased $12 million, or 1%, driven by higher outside services and other expense. These results were partially offset by seasonally lower salaries and employee benefits. Results also reflect continued focus on expense discipline and the benefit of TOP efficiency initiatives.
The second quarter 2019 effective tax rate of 21.9% was broadly stable and compares to 22.6% for second quarter 2018 and 22.4% for first quarter 2019.
9
Citizens Financial Group, Inc.
Consolidated balance sheet review(1) | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
$/bps | % | $/bps | % | |||||||||||||||||||||||||
Total assets | $ | 162,749 | $ | 161,342 | $ | 155,431 | $ | 1,407 | 1 | % | $ | 7,318 | 5 | % | ||||||||||||||
Total loans and leases | 116,838 | 117,615 | 113,407 | (777 | ) | (1 | ) | 3,431 | 3 | |||||||||||||||||||
Total loans held for sale | 2,205 | 1,252 | 710 | 953 | 76 | 1,495 | 211 | |||||||||||||||||||||
Deposits | 124,004 | 123,916 | 117,073 | 88 | — | 6,931 | 6 | |||||||||||||||||||||
Stockholders’ equity | 22,017 | 21,531 | 20,467 | 486 | 2 | 1,550 | 8 | |||||||||||||||||||||
Stockholders’ common equity | 20,884 | 20,399 | 19,924 | 485 | 2 | 960 | 5 | |||||||||||||||||||||
Tangible common equity | $ | 14,141 | $ | 13,649 | $ | 13,394 | $ | 492 | 4 | % | $ | 747 | 6 | % | ||||||||||||||
Loan-to-deposit ratio(period-end)(2) | 94.2 | % | 94.9 | % | 96.9 | % | (70 | ) bps | (265 | ) bps | ||||||||||||||||||
Loans to deposit ratio (average)(2) | 95.6 | 97.7 | 98.0 | (206 | ) bps | (237 | ) bps | |||||||||||||||||||||
Common equity tier 1 capital ratio(3) | 10.5 | 10.5 | 11.2 | |||||||||||||||||||||||||
Total capital ratio(3) | 13.4 | % | 13.4 | % | 13.8 | % | ||||||||||||||||||||||
1) Represents period end unless otherwise noted. 2) Excludes loans held for sale. 3) Current reporting period regulatory capital ratios are preliminary. |
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Total assets of $162.7 billion at June 30, 2019 increased $7.3 billion, or 5%, from June 30, 2018 reflecting a $3.4 billion increase in loans and leases and a $2.0 billion increase tied to the FAMC acquisition, largely representing loans held for sale and a mortgage servicing rights portfolio innon-interest earning assets. Compared with March 31, 2019, total assets increased $1.4 billion given growth in interest-earning assets.
Interest-earning assets | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
Period-end interest-earning assets | $ | % | $ | % | ||||||||||||||||||||||||
Investments and interest-bearing deposits | $ | 28,123 | $ | 27,331 | $ | 28,495 | $ | 792 | 3 | % | $ | (372 | ) | (1 | )% | |||||||||||||
Commercial loans and leases | 56,963 | 57,689 | 54,888 | (726 | ) | (1 | ) | 2,075 | 4 | |||||||||||||||||||
Retail loans | 59,875 | 59,926 | 58,519 | (51 | ) | — | 1,356 | 2 | ||||||||||||||||||||
Total loans and leases | 116,838 | 117,615 | 113,407 | (777 | ) | (1 | ) | 3,431 | 3 | |||||||||||||||||||
Loans held for sale, at fair value | 1,750 | 1,186 | 521 | 564 | 48 | 1,229 | 236 | |||||||||||||||||||||
Other loans held for sale | 455 | 66 | 189 | 389 | NM | 266 | 141 | |||||||||||||||||||||
Total loans and leases and loans held for sale | 119,043 | 118,867 | 114,117 | 176 | — | 4,926 | 4 | |||||||||||||||||||||
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Totalperiod-end interest-earning assets | $ | 147,166 | $ | 146,198 | $ | 142,612 | $ | 968 | 1 | % | $ | 4,554 | 3 | % | ||||||||||||||
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Average interest-earning assets | ||||||||||||||||||||||||||||
Investments and interest-bearing deposits | $ | 26,854 | $ | 26,638 | $ | 27,004 | $ | 216 | 1 | % | $ | (150 | ) | (1 | )% | |||||||||||||
Commercial loans and leases | 57,879 | 57,707 | 54,543 | 172 | — | 3,336 | 6 | |||||||||||||||||||||
Retail loans | 59,904 | 59,942 | 58,313 | (38 | ) | — | 1,591 | 3 | ||||||||||||||||||||
Total loans and leases | 117,783 | 117,649 | 112,856 | 134 | — | 4,927 | 4 | |||||||||||||||||||||
Loans held for sale, at fair value | 1,528 | 1,035 | 470 | 493 | 48 | 1,058 | 225 | |||||||||||||||||||||
Other loans held for sale | 158 | 191 | 195 | (33 | ) | (17 | ) | (37 | ) | (19 | ) | |||||||||||||||||
Total loans and leases and loans held for sale | 119,469 | 118,875 | 113,521 | 594 | — | 5,948 | 5 | |||||||||||||||||||||
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Total average interest-earning assets | $ | 146,323 | $ | 145,513 | $ | 140,525 | $ | 810 | 1 | % | $ | 5,798 | 4 | % | ||||||||||||||
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Period-end interest earning assets of $147.2 billion increased $4.6 billion, or 3%, from June 30, 2018, as a $4.9 billion, or 4%, increase in loans and loans held for sale was partially offset by a reduction in the investment portfolio. Compared with March 31, 2019,period-end interest earning assets increased $968 million, or 1%. Results reflect the benefit of growth in the investment portfolio, derivatives and loans held for sale, partially offset by a decrease in loans and leases, given the impact of second quarter portfolio loan sales tied to balance sheet optimization. At the end of second quarter 2019, the average effective duration of the securities portfolio decreased to 3.3 years from 3.8 years at June 30, 2018 and 4.5 years at March 31, 2019, given lower long-term rates that drove an increase in securities prepayment speeds.
Average interest-earning assets of $146.3 billion in second quarter 2019 increased $5.8 billion, or 4%, from second quarter 2018, driven by a $4.9 billion, or 4% increase in loans and leases. Commercial loans and leases increased $3.3 billion, or 6%, while retail loans increased $1.6 billion, or 3%. Results also reflect a $1.0 billion increase in loans held for sale, reflecting the impact of the FAMC acquisition.
10
Citizens Financial Group, Inc.
Commercial loan results reflect strength in commercial and industrial loans, driven by geographic, product and client-focused expansion strategies as well as strength in commercial real estate, partially offset by planned reductions in commercial leases. Retail loan growth was driven by mortgage, unsecured and education finance, partially offset by a planned reduction in auto and lower home equity.
Compared with first quarter 2019, average interest-earning assets increased $810 million, or 1%, driven by a $460 million increase in loans held for sale, and a $216 million increase in the investment portfolio. Results also reflect relatively stable average loans given the impact of loan sales in the first half of 2019. Excluding the impact of portfolio sales in first and second quarter 2019, average loans increased $510 million, or 0.4%.
Deposits | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
Period-end deposits | $ | % | $ | % | ||||||||||||||||||||||||
Demand deposits | $ | 28,192 | $ | 28,383 | $ | 29,439 | $ | (191 | ) | (1 | )% | $ | (1,247 | ) | (4 | )% | ||||||||||||
Checking with interest | 25,021 | 23,482 | 22,775 | 1,539 | 7 | 2,246 | 10 | |||||||||||||||||||||
Savings | 13,495 | 13,239 | 9,902 | 256 | 2 | 3,593 | 36 | |||||||||||||||||||||
Money market accounts | 35,329 | 35,972 | 36,139 | (643 | ) | (2 | ) | (810 | ) | (2 | ) | |||||||||||||||||
Term deposits | 21,967 | 22,840 | 18,818 | (873 | ) | (4 | ) | 3,149 | 17 | |||||||||||||||||||
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Totalperiod-end deposits | $ | 124,004 | $ | 123,916 | $ | 117,073 | $ | 88 | — | % | $ | 6,931 | 6 | % | ||||||||||||||
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Average deposits | ||||||||||||||||||||||||||||
Demand deposits | $ | 28,389 | $ | 28,465 | $ | 28,834 | $ | (76 | ) | — | % | $ | (445 | ) | (2 | )% | ||||||||||||
Checking with interest | 23,919 | 22,987 | 22,185 | 932 | 4 | 1,734 | 8 | |||||||||||||||||||||
Savings | 13,324 | 12,626 | 9,889 | 698 | 6 | 3,435 | 35 | |||||||||||||||||||||
Money market accounts | 35,228 | 35,209 | 36,396 | 19 | — | (1,168 | ) | (3 | ) | |||||||||||||||||||
Term deposits | 22,292 | 21,127 | 17,838 | 1,165 | 6 | 4,454 | 25 | |||||||||||||||||||||
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Total average deposits | $ | 123,152 | $ | 120,414 | $ | 115,142 | $ | 2,738 | 2 | % | $ | 8,010 | 7 | % | ||||||||||||||
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Totalperiod-end deposits of $124.0 billion at June 30, 2019 increased $6.9 billion, or 6%, from June 30, 2018, driven by growth in term deposits, savings, and checking with interest, partially offset by a decrease in demand deposits and money market accounts.
Compared with March 31, 2019,period-end total deposits increased $88 million reflecting increases in checking with interest and savings, partially offset by decreases in money market accounts and term deposits.Period-end demand deposits were relatively stable. Citizens Access® deposits were $5.4 billion at the end of second quarter 2019, up from $4.6 billion at March 31, 2019.
Second quarter 2019 average deposits of $123.2 billion increased $8.0 billion, or 7%, from second quarter 2018, reflecting growth in term, savings and checking with interest. These results were partially offset by a decline in money market accounts and demand deposits.
Compared with first quarter 2019, average deposits increased $2.7 billion, or 2%, reflecting growth in term deposits, checking with interest and savings. Average demand deposits and money market accounts were relatively stable.
11
Citizens Financial Group, Inc.
Borrowed Funds | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
Period-end borrowed funds | $ | % | $ | % | ||||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | $ | 1,132 | $ | 668 | $ | 326 | $ | 464 | 69 | % | $ | 806 | 247 | % | ||||||||||||||
Other short-term borrowed funds(1) | 309 | 11 | 10 | 298 | NM | 299 | NM | |||||||||||||||||||||
Long-term borrowed funds(1) | ||||||||||||||||||||||||||||
FHLB advances | 2,258 | 2,508 | 6,010 | (250 | ) | (10 | ) | (3,752 | ) | (62 | ) | |||||||||||||||||
Senior debt | 7,624 | 7,558 | 7,470 | 66 | 1 | 154 | 2 | |||||||||||||||||||||
Subordinated debt and other debt | 1,656 | 1,659 | 1,650 | (3 | ) | — | 6 | — | ||||||||||||||||||||
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Total borrowed funds | $ | 12,979 | $ | 12,404 | $ | 15,466 | $ | 575 | 5 | % | $ | (2,487 | ) | (16 | ) | |||||||||||||
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Average borrowed funds | ||||||||||||||||||||||||||||
Federal funds purchased and securities sold | $ | 818 | $ | 640 | $ | 504 | $ | 178 | 28 | % | $ | 314 | 62 | % | ||||||||||||||
Other short-term borrowed funds(1) | 45 | 58 | 191 | (13 | ) | (22 | ) | (146 | ) | (76 | ) | |||||||||||||||||
Long-term borrowed funds(1) | ||||||||||||||||||||||||||||
FHLB advances | 3,155 | 5,694 | 5,434 | (2,539 | ) | (45 | ) | (2,279 | ) | (42 | ) | |||||||||||||||||
Senior debt | 7,573 | 7,391 | 7,470 | 182 | 2 | 103 | 1 | |||||||||||||||||||||
Subordinated debt and other debt | 1,658 | 1,651 | 1,976 | 7 | — | (318 | ) | (16 | ) | |||||||||||||||||||
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Total average borrowed funds | $ | 13,249 | $ | 15,434 | $ | 15,575 | $ | (2,185 | ) | (14 | )% | $ | (2,326 | ) | (15 | )% | ||||||||||||
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1) | Beginning in 1Q19, borrowed funds balances are based on original maturity and prior periods have been revised consistent with the current presentation. |
Total borrowed funds of $13.0 billion at June 30, 2019 decreased $2.5 billion, or 16%, from June 30, 2018, reflecting a $3.6 billion decrease in long-term borrowings, and a $1.1 billion increase in short-term borrowings reflecting improved funding mix from deposit growth.
Compared with March 31, 2019, total borrowed funds increased $575 million, reflecting a $762 million increase in short-term borrowed funds, partially offset by a $187 million decrease in long-term borrowings.
Average borrowed funds of $13.2 billion decreased $2.3 billion, or 15%, from second quarter 2018 driven by a $2.5 billion decrease in long-term borrowings reflecting improved funding mix from deposit growth. Average borrowed funds decreased $2.2 billion, or 14%, from first quarter 2019, reflecting a $2.4 billion decrease in long-term borrowings.
Capital |
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($s and shares in millions except per share data) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
Period-end capital | $ | % | $ | % | ||||||||||||||||||||||||
Stockholders’ equity | $ | 22,017 | $ | 21,531 | $ | 20,467 | $ | 486 | 2 | % | $ | 1,550 | 8 | % | ||||||||||||||
Stockholders’ common equity | 20,884 | 20,399 | 19,924 | 485 | 2 | 960 | 5 | |||||||||||||||||||||
Tangible common equity | 14,141 | 13,649 | 13,394 | 492 | 4 | 747 | 6 | |||||||||||||||||||||
Tangible book value per common share | $ | 30.88 | $ | 29.60 | $ | 27.67 | $ | 1.28 | 4 | $ | 3.21 | 12 | ||||||||||||||||
Common shares - at end of period | 457.9 | 461.1 | 484.1 | (3.2 | ) | (1 | ) | (26.2 | ) | (5 | ) | |||||||||||||||||
Common shares - average (diluted) | 459.3 | 462.5 | 486.1 | (3.2 | ) | (1 | )% | (26.8 | ) | (6 | )% | |||||||||||||||||
Common equity tier 1 capital ratio(1) | 10.5 | % | 10.5 | % | 11.2 | % | ||||||||||||||||||||||
Total capital ratio(1) | 13.4 | 13.4 | 13.8 | |||||||||||||||||||||||||
Tier 1 leverage ratio(1) | 10.1 | % | 10.0 | % | 10.2 | % |
1) | Current reporting-period regulatory capital ratios are preliminary. |
At June 30, 2019, our Basel III capital ratios remained well in excess of applicable regulatory requirements with a CET1 capital ratio of 10.5% compared with 10.5% at March 31, 2019 and 11.2% at June 30, 2018, and a total capital ratio of 13.4% compared with total capital ratios of 13.4% as of March 31, 2019 and 13.8% as of June 30, 2018. Our capital ratios continue to reflect progress towards our objective of aligning our capital profile with that of peer regional banks, while maintaining a strong capital base to continue to drive future performance.
Tangible book value per common share of $30.88 increased 4% from first quarter 2019 and 12% from second quarter 2018.
12
Citizens Financial Group, Inc.
During the second quarter 2019, the company repurchased 3.5 million shares of common stock at a weighted-average price of $34.64, and including common dividends, returned $268 million to shareholders. These results compare with $349 million returned to common shareholders in first quarter 2019 and $257 million in second quarter 2018.
Citizens’ 2019 Capital Plan includes the ability to repurchase up to $1.275 billion of Citizens’ outstanding common stock beginning in third quarter 2019 and ending in second quarter 2020. This share repurchase authorization represents a 25% increase compared to $1.02 billion under the 2018 Capital Plan. Future capital actions are subject to consideration and approval by Citizens’ Board of Directors. Citizens continues to target a medium-term dividend payout ratio in the 35 to 40 percent range.
Credit quality review | 2Q19 change from | |||||||||||||||||||||||||||
($s in millions) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||||||||||||
$/bps | % | $/bps | % | |||||||||||||||||||||||||
Nonperforming loans and leases | $ | 770 | $ | 780 | $ | 845 | $ | (10 | ) | (1 | )% | $ | (75 | ) | (9 | )% | ||||||||||||
Net charge-offs | 106 | 89 | 76 | 17 | 19 | 30 | 39 | |||||||||||||||||||||
Provision for credit losses | 97 | 85 | 85 | 12 | 14 | 12 | 14 | |||||||||||||||||||||
Allowance for loan and lease losses | $ | 1,227 | $ | 1,245 | $ | 1,253 | $ | (18 | ) | (1 | )% | $ | (26 | ) | (2 | )% | ||||||||||||
Nonperforming loans and leases as a % of loans and leases | 0.66 | % | 0.66 | % | 0.75 | % | — | bps | (9 | ) bps | ||||||||||||||||||
Net charge-offs as a % of average loans and leases | 0.36 | 0.31 | 0.27 | 5 | 9 | |||||||||||||||||||||||
Allowance for loan and lease losses as a % of loans and leases | 1.05 | 1.06 | 1.10 | (1 | ) | (5 | ) | |||||||||||||||||||||
Allowance for loan and lease losses as a % of nonperforming loans and leases | 159.4 | % | 159.7 | % | 148.2 | % | (25 | ) bps | NM |
Overall credit quality remains strong, reflecting growth in high quality retail loans and an improved risk profile in commercial portfolios. Nonperforming loans and leases decreased $75 million, or 9%, compared with June 30, 2018, reflecting a $61 million decrease in commercial and a $14 million decrease in retail. The nonperforming loans and leases to loans and leases ratio of 0.66% at June 30, 2019 remained stable with March 31, 2019 levels and improved nine basis points from 0.75% at June 30, 2018.
Compared to March 31, 2019, nonperforming loans and leases of $770 million decreased $10 million, or 1%.
Net charge-offs of $106 million increased $30 million from second quarter 2018, reflecting a $21 million increase in commercial driven by a small number of idiosyncratic losses. Results also reflect a $9 million increase in retail driven by expected seasoning in growth portfolios. Second quarter 2019 net charge-offs of 36 basis points of average loans and leases compares with 27 basis points in second quarter 2018 and 31 basis points in first quarter 2019.
Compared with first quarter 2019, net charge-offs of $106 million increased $17 million, driven by a $9 million increase in commercial and an $8 million increase in retail.
Allowance for loan and lease losses of $1.2 billion remained relatively stable with first quarter 2019, reflecting continued improvements in underlying credit quality, and relatively stable with second quarter 2018 levels, as underlying credit quality improvements helped offset reserves to fund loan growth.
The ratio of the allowance for loan and lease losses to loans and leases of 1.05% as of June 30, 2019, remained stable compared with 1.06% as of March 31, 2019 and decreased modestly from 1.10% as of June 30, 2018. The allowance for loan and lease losses to nonperforming loans and leases ratio of 159% as of June 30, 2019 compares to 160% as of March 31, 2019, and 148% as of June 30, 2018.
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 atwww.citizensbank.com/about-us.
Media: Peter Lucht - 781.655.2289
Investors: Ellen A. Taylor - 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: (800)230-1059, conference ID 468592
Webcast/Presentation: The live webcast will be available athttp://investor.citizensbank.com under Events & Presentations.
Replay Information: A replay of the conference call will be available beginning at 11:00 am ET on July 19 through August 19, 2019. Please dial (800)475-6701 and enter access code 468592. The webcast replay will be available athttp://investor.citizensbank.comunder Events & Presentations.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $162.7 billion in assets as of June 30, 2019. 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 2,900 ATMs and approximately 1,100 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 corporate, institutional andnot-for-profit clients a full range of wholesale banking products and services, including lending and deposits, capital markets, treasury services, foreign exchange and interest rate products, and asset finance. More information is available atwww.citizensbank.com or visit us onTwitter,LinkedIn orFacebook.
14
Citizens Financial Group, Inc.
Key Performance Metrics andNon-GAAP Financial Measures and Reconciliations
(in millions, except share,per-share and ratio data)
Key Performance Metrics:
Our Management uses certain key performance metrics (KPMs) to gauge our progress against strategic and operational goals, as well as to compare our performance against peers. The KPMs are referred to in our Registration Statements on FormS-1 and our external financial reports filed with the Securities and Exchange Commission. The KPMs include:
• | Return on average tangible common equity (ROTCE); |
• | Return on average total tangible assets (ROTA); |
• | Efficiency ratio; |
• | Operating leverage; and |
• | Common equity tier 1 capital ratio. |
Established targets for the KPMs are based on Management-reporting results which are currently referred to by the Company as “Underlying” results. In historical periods, these results may have been referred to as “Adjusted” or “Adjusted/Underlying” results. We believe that Underlying results, which exclude notable items, provide the best representation of our underlying financial progress toward the KPMs as the results exclude items that our Management does not consider indicative of ouron-going financial performance. We have consistently shown investors our KPMs on a Management-reporting basis since our initial public offering in September of 2014. KPMs that reflect Underlying results are considerednon-GAAP financial measures.
Non-GAAP Financial Measures:
This document containsnon-GAAP financial measures denoted as Underlying results. 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’son-going financial performance. We believe thesenon-GAAP financial measures provide useful information to investors because they are used by our Management to evaluate our operating performance and makeday-to-day operating decisions. In addition, we believe our Underlying results in any given reporting period reflect ouron-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 ofperiod-to-period results. The following tables present reconciliations of ournon-GAAP measures to the most directly comparable GAAP financial measures.
Other companies may use similarly titlednon-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, ournon-GAAP financial measures may not be comparable to similar measures used by such companies. We caution investors not to place undue reliance on suchnon-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.
Key performance metrics,non-GAAP financial measures and reconciliations
(in millions, except share,per-share and ratio data)
QUARTERLY TRENDS | ||||||||||||||||||||||||||||||||
2Q19 Change | ||||||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||||||
Noninterest income, Underlying: | ||||||||||||||||||||||||||||||||
Noninterest income (GAAP) | $ | 462 | $ | 428 | $ | 388 | $ | 34 | 8 | % | $ | 74 | 19 | % | ||||||||||||||||||
Less: Notable items | — | — | — | — | — | — | — | |||||||||||||||||||||||||
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Noninterest income, Underlying(non-GAAP) | $ | 462 | $ | 428 | $ | 388 | $ | 34 | 8 | % | $ | 74 | 19 | % | ||||||||||||||||||
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Total revenue, Underlying: | ||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 3 | % | $ | 119 | 8 | % | |||||||||||||||||
Less: Notable items | — | — | — | — | — | — | — | |||||||||||||||||||||||||
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Total revenue, Underlying(non-GAAP) | B | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 3 | % | $ | 119 | 8 | % | |||||||||||||||||
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Noninterest expense, Underlying: | ||||||||||||||||||||||||||||||||
Noninterest expense (GAAP) | C | $ | 951 | $ | 937 | $ | 875 | $ | 14 | 1 | % | $ | 76 | 9 | % | |||||||||||||||||
Less: Notable items | 7 | 5 | — | 2 | 40 | 7 | 100 | |||||||||||||||||||||||||
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Noninterest expense, Underlying(non-GAAP) | D | $ | 944 | $ | 932 | $ | 875 | $ | 12 | 1 | % | $ | 69 | 8 | % | |||||||||||||||||
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Pre-provision profit: | ||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 3 | % | $ | 119 | 8 | % | |||||||||||||||||
Less: Noninterest expense (GAAP) | C | 951 | 937 | 875 | 14 | 1 | 76 | 9 | ||||||||||||||||||||||||
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Pre-provision profit (GAAP) | $ | 677 | $ | 651 | $ | 634 | $ | 26 | 4 | % | $ | 43 | 7 | % | ||||||||||||||||||
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Pre-provision profit, Underlying: | ||||||||||||||||||||||||||||||||
Total revenue, Underlying(non-GAAP) | B | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 3 | % | $ | 119 | 8 | % | |||||||||||||||||
Less: Noninterest expense, Underlying(non-GAAP) | D | 944 | 932 | 875 | 12 | 1 | 69 | 8 | ||||||||||||||||||||||||
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Pre-provision profit, Underlying(non-GAAP) | $ | 684 | $ | 656 | $ | 634 | $ | 28 | 4 | % | $ | 50 | 8 | % | ||||||||||||||||||
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Income before income tax expense, Underlying: | ||||||||||||||||||||||||||||||||
Income before income tax expense (GAAP) | E | $ | 580 | $ | 566 | $ | 549 | $ | 14 | 2 | % | $ | 31 | 6 | % | |||||||||||||||||
Less: Income (expense) before income tax expense (benefit) related to notable items | (7 | ) | (5 | ) | — | (2 | ) | (40 | ) | (7 | ) | (100 | ) | |||||||||||||||||||
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Income before income tax expense, Underlying(non-GAAP) | F | $ | 587 | $ | 571 | $ | 549 | $ | 16 | 3 | % | $ | 38 | 7 | % | |||||||||||||||||
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Income tax expense, Underlying: | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) (GAAP) | G | $ | 127 | $ | 127 | $ | 124 | $ | — | — | % | $ | 3 | 2 | % | |||||||||||||||||
Less: Income tax expense (benefit) related to notable items | (2 | ) | (1 | ) | — | (1 | ) | (100 | ) | (2 | ) | (100 | ) | |||||||||||||||||||
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Income tax expense, Underlying(non-GAAP) | H | $ | 129 | $ | 128 | $ | 124 | $ | 1 | 1 | % | $ | 5 | 4 | % | |||||||||||||||||
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Net income, Underlying: | ||||||||||||||||||||||||||||||||
Net income (GAAP) | I | $ | 453 | $ | 439 | $ | 425 | $ | 14 | 3 | % | $ | 28 | 7 | % | |||||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 5 | 4 | — | 1 | 25 | 5 | 100 | |||||||||||||||||||||||||
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Net income, Underlying(non-GAAP) | J | $ | 458 | $ | 443 | $ | 425 | $ | 15 | 3 | % | $ | 33 | 8 | % | |||||||||||||||||
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Net income available to common stockholders, Underlying: | ||||||||||||||||||||||||||||||||
Net income available to common stockholders (GAAP) | K | $ | 435 | $ | 424 | $ | 425 | $ | 11 | 3 | % | $ | 10 | 2 | % | |||||||||||||||||
Add: Notable items, net of income tax expense (benefit) | 5 | 4 | — | 1 | 25 | 5 | 100 | |||||||||||||||||||||||||
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Net income available to common stockholders, Underlying(non-GAAP) | L | $ | 440 | $ | 428 | $ | 425 | $ | 12 | 3 | % | $ | 15 | 4 | % | |||||||||||||||||
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16
Citizens Financial Group, Inc.
Key performance metrics,non-GAAP financial measures and reconciliations (continued)
(in millions, except share,per-share and ratio data)
QUARTERLY TRENDS | ||||||||||||||||||||||||||||||||
2Q19 Change | ||||||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||||||||||||||||||
$/bps | % | $/bps | % | |||||||||||||||||||||||||||||
Operating leverage: | ||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 2.46 | % | $ | 119 | 7.81 | % | |||||||||||||||||
Less: Noninterest expense (GAAP) | C | 951 | 937 | 875 | 14 | 1.43 | 76 | 8.66 | ||||||||||||||||||||||||
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Operating leverage | 1.03 | % | (0.85 | %) | ||||||||||||||||||||||||||||
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Operating leverage, Underlying: | ||||||||||||||||||||||||||||||||
Total revenue, Underlying(non-GAAP) | B | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 2.46 | % | $ | 119 | 7.81 | % | |||||||||||||||||
Less: Noninterest expense, Underlying(non-GAAP) | D | 944 | 932 | 875 | 12 | 1.33 | 69 | 7.93 | ||||||||||||||||||||||||
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Operating leverage, Underlying(non-GAAP) | 1.13 | % | (0.12 | %) | ||||||||||||||||||||||||||||
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Efficiency ratio and efficiency ratio, Underlying: | ||||||||||||||||||||||||||||||||
Efficiency ratio | C/A | 58.41 | % | 59.00 | % | 57.95 | % | (59 | ) bps | 46 | bps | |||||||||||||||||||||
Efficiency ratio, Underlying(non-GAAP) | D/B | 58.02 | 58.67 | 57.95 | (65 | ) bps | 7 | bps | ||||||||||||||||||||||||
Effective income tax rate and effective income tax rate, Underlying: | ||||||||||||||||||||||||||||||||
Effective income tax rate | G/E | 21.86 | % | 22.42 | % | 22.58 | % | (56 | ) bps | (72 | ) bps | |||||||||||||||||||||
Effective income tax rate, Underlying(non-GAAP) | H/F | 21.89 | 22.44 | 22.58 | (55 | ) bps | (69 | ) bps | ||||||||||||||||||||||||
Return on average common equity and return on average common equity, Underlying: | ||||||||||||||||||||||||||||||||
Average common equity (GAAP) | M | $ | 20,420 | $ | 19,942 | $ | 19,732 | $ | 478 | 2 | % | $ | 688 | 3 | % | |||||||||||||||||
Return on average common equity | K/M | 8.54 | % | 8.62 | % | 8.65 | % | (8 | ) bps | (11 | ) bps | |||||||||||||||||||||
Return on average common equity, Underlying(non-GAAP) | L/M | 8.63 | 8.71 | 8.65 | (8 | ) bps | (2 | ) bps | ||||||||||||||||||||||||
Return on average tangible common equity and return on average tangible common equity, Underlying: | ||||||||||||||||||||||||||||||||
Average common equity (GAAP) | M | $ | 20,420 | $ | 19,942 | $ | 19,732 | $ | 478 | 2 | % | $ | 688 | 3 | % | |||||||||||||||||
Less: Average goodwill (GAAP) | 7,040 | 7,018 | 6,887 | 22 | — | 153 | 2 | |||||||||||||||||||||||||
Less: Average other intangibles (GAAP) | 80 | 59 | 2 | 21 | 36 | 78 | NM | |||||||||||||||||||||||||
Add: Average deferred tax liabilities related to goodwill (GAAP) | 370 | 368 | 357 | 2 | 1 | 13 | 4 | |||||||||||||||||||||||||
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Average tangible common equity | N | $ | 13,670 | $ | 13,233 | $ | 13,200 | $ | 437 | 3 | % | $ | 470 | 4 | % | |||||||||||||||||
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Return on average tangible common equity | K/N | 12.75 | % | 13.00 | % | 12.93 | % | (25 | ) bps | (18 | ) bps | |||||||||||||||||||||
Return on average tangible common equity, Underlying(non-GAAP) | L/N | 12.89 | 13.12 | 12.93 | (23 | ) bps | (4 | ) bps | ||||||||||||||||||||||||
Return on average total assets and return on average total assets, Underlying: | ||||||||||||||||||||||||||||||||
Average total assets (GAAP) | O | $ | 161,489 | $ | 160,415 | $ | 153,253 | $ | 1,074 | 1 | % | $ | 8,236 | 5 | % | |||||||||||||||||
Return on average total assets | I/O | 1.13 | % | 1.11 | % | 1.11 | % | 2 | bps | 2 | bps | |||||||||||||||||||||
Return on average total assets, Underlying(non-GAAP) | J/O | 1.14 | 1.12 | 1.11 | 2 | bps | 3 | bps | ||||||||||||||||||||||||
Return on average total tangible assets and return on average total tangible assets, Underlying: | ||||||||||||||||||||||||||||||||
Average total assets (GAAP) | O | $ | 161,489 | $ | 160,415 | $ | 153,253 | $ | 1,074 | 1 | % | $ | 8,236 | 5 | % | |||||||||||||||||
Less: Average goodwill (GAAP) | 7,040 | 7,018 | 6,887 | 22 | — | 153 | 2 | |||||||||||||||||||||||||
Less: Average other intangibles (GAAP) | 80 | 59 | 2 | 21 | 36 | 78 | NM | |||||||||||||||||||||||||
Add: Average deferred tax liabilities related to goodwill (GAAP) | 370 | 368 | 357 | 2 | 1 | 13 | 4 | |||||||||||||||||||||||||
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Average tangible assets | P | $ | 154,739 | $ | 153,706 | $ | 146,721 | $ | 1,033 | 1 | % | $ | 8,018 | 5 | % | |||||||||||||||||
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Return on average total tangible assets | I/P | 1.17 | % | 1.16 | % | 1.16 | % | 1 | bps | 1 | bps | |||||||||||||||||||||
Return on average total tangible assets, Underlying(non-GAAP) | J/P | 1.19 | 1.17 | 1.16 | 2 | bps | 3 | bps |
17
Citizens Financial Group, Inc.
Key performance metrics,non-GAAP financial measures and reconciliations (continued)
(in millions, except share,per-share and ratio data)
QUARTERLY TRENDS | ||||||||||||||||||||||||||||||||
2Q19 Change | ||||||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||||||||||||||||||
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Tangible book value per common share: |
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Common shares - atperiod-end (GAAP) | Q | 457,903,826 | 461,116,723 | 484,055,194 | (3,212,897 | ) | (1 | %) | (26,151,368 | ) | (5 | %) | ||||||||||||||||||||
Common stockholders’ equity (GAAP) | $ | 20,884 | $ | 20,399 | $ | 19,924 | $ | 485 | 2 | $ | 960 | 5 | ||||||||||||||||||||
Less: Goodwill (GAAP) | 7,040 | 7,040 | 6,887 | — | — | 153 | 2 | |||||||||||||||||||||||||
Less: Other intangible assets (GAAP) | 74 | 80 | 2 | (6 | ) | (8 | ) | 72 | NM | |||||||||||||||||||||||
Add: Deferred tax liabilities related to goodwill (GAAP) | 371 | 370 | 359 | 1 | — | 12 | 3 | |||||||||||||||||||||||||
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Tangible common equity | R | $ | 14,141 | $ | 13,649 | $ | 13,394 | $ | 492 | 4 | % | $ | 747 | 6 | % | |||||||||||||||||
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Tangible book value per common share | R/Q | $ | 30.88 | $ | 29.60 | $ | 27.67 | $ | 1.28 | 4 | % | $ | 3.21 | 12 | % | |||||||||||||||||
Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying: | ||||||||||||||||||||||||||||||||
Average common shares outstanding - basic (GAAP) | S | 458,154,335 | 460,713,172 | 484,744,354 | (2,558,837 | ) | (1 | %) | (26,590,019 | ) | (5 | %) | ||||||||||||||||||||
Average common shares outstanding - diluted (GAAP) | T | 459,304,224 | 462,520,680 | 486,141,695 | (3,216,456 | ) | (1 | ) | (26,837,471 | ) | (6 | ) | ||||||||||||||||||||
Net income per average common share - basic (GAAP) | K/S | $ | 0.95 | $ | 0.92 | $ | 0.88 | $ | 0.03 | 3 | $ | 0.07 | 8 | |||||||||||||||||||
Net income per average common share - diluted (GAAP) | K/T | 0.95 | 0.92 | 0.88 | 0.03 | 3 | 0.07 | 8 | ||||||||||||||||||||||||
Net income per average common share - basic, Underlying(non-GAAP) | L/S | 0.96 | 0.93 | 0.88 | 0.03 | 3 | 0.08 | 9 | ||||||||||||||||||||||||
Net income per average common share - diluted, Underlying(non-GAAP) | L/T | 0.96 | 0.93 | 0.88 | 0.03 | 3 | 0.08 | 9 | ||||||||||||||||||||||||
Salaries and employee benefits, Underlying: | ||||||||||||||||||||||||||||||||
Salaries and employee benefits (GAAP) | $ | 507 | $ | 509 | $ | 453 | ($ | 2 | ) | — | % | $ | 54 | 12 | % | |||||||||||||||||
Less: Notable items | 2 | 1 | — | 1 | 100 | 2 | 100 | |||||||||||||||||||||||||
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Salaries and employee benefits, Underlying(non-GAAP) | $ | 505 | $ | 508 | $ | 453 | ($ | 3 | ) | (1 | %) | $ | 52 | 11 | % | |||||||||||||||||
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Outside services, Underlying: | ||||||||||||||||||||||||||||||||
Outside services (GAAP) | $ | 118 | $ | 110 | $ | 106 | $ | 8 | 7 | % | $ | 12 | 11 | % | ||||||||||||||||||
Less: Notable items | 5 | 4 | — | 1 | 25 | 5 | 100 | |||||||||||||||||||||||||
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Outside services, Underlying(non-GAAP) | $ | 113 | $ | 106 | $ | 106 | $ | 7 | 7 | % | $ | 7 | 7 | % | ||||||||||||||||||
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18
Citizens Financial Group, Inc.
Key performance metrics,non-GAAP financial measures and reconciliations - Underlying excluding Acquisitions
(in millions, except share,per-share and ratio data)
QUARTERLY TRENDS | ||||||||||||||||||||||||||||||||
2Q19 Change | ||||||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||||||||||||||||||
$/bps | % | $/bps | % | |||||||||||||||||||||||||||||
Net interest income, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Net interest income (GAAP) | $ | 1,166 | $ | 1,160 | $ | 1,121 | $ | 6 | 1 | % | $ | 45 | 4 | % | ||||||||||||||||||
Less: Acquisitions Impact | 5 | 2 | — | 3 | 150 | 5 | 100 | |||||||||||||||||||||||||
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Net interest income, Underlying excluding Acquisitions(non-GAAP) | $ | 1,161 | $ | 1,158 | $ | 1,121 | $ | 3 | — | % | $ | 40 | 4 | % | ||||||||||||||||||
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Noninterest income, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Noninterest income (GAAP) | $ | 462 | $ | 428 | $ | 388 | $ | 34 | 8 | % | $ | 74 | 19 | % | ||||||||||||||||||
Less: Acquisitions impact | 49 | 26 | — | 23 | 88 | 49 | 100 | |||||||||||||||||||||||||
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Noninterest income, Underlying excluding Acquisitions(non-GAAP) | $ | 413 | $ | 402 | $ | 388 | $ | 11 | 3 | % | $ | 25 | 6 | % | ||||||||||||||||||
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Total revenue, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 3 | % | $ | 119 | 8 | % | |||||||||||||||||
Less: Acquisitions impact | 54 | 28 | — | 26 | 93 | 54 | 100 | |||||||||||||||||||||||||
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Total revenue, Underlying excluding Acquisitions(non-GAAP) | B | $ | 1,574 | $ | 1,560 | $ | 1,509 | $ | 14 | 1 | % | $ | 65 | 4 | % | |||||||||||||||||
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Noninterest expense, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Noninterest expense (GAAP) | C | $ | 951 | $ | 937 | $ | 875 | $ | 14 | 1 | % | $ | 76 | 9 | % | |||||||||||||||||
Less: Notable items | 7 | 5 | — | 2 | 40 | 7 | 100 | |||||||||||||||||||||||||
Less: Acquisitions impact | 37 | 33 | — | 4 | 12 | 37 | 100 | |||||||||||||||||||||||||
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Noninterest expense, Underlying excluding Acquisitions(non-GAAP) | D | $ | 907 | $ | 899 | $ | 875 | $ | 8 | 1 | % | $ | 32 | 4 | % | |||||||||||||||||
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Operating leverage: | ||||||||||||||||||||||||||||||||
Total revenue (GAAP) | A | $ | 1,628 | $ | 1,588 | $ | 1,509 | $ | 40 | 2.46 | % | $ | 119 | 7.81 | % | |||||||||||||||||
Less: Noninterest expense (GAAP) | C | 951 | 937 | 875 | 14 | 1.43 | 76 | 8.66 | ||||||||||||||||||||||||
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Operating leverage | 1.03 | % | (0.85 | %) | ||||||||||||||||||||||||||||
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Operating leverage, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Total revenue, Underlying excluding Acquisitions(non-GAAP) | B | $ | 1,574 | $ | 1,560 | $ | 1,509 | $ | 14 | 0.92 | % | $ | 65 | 4.29 | % | |||||||||||||||||
Less: Noninterest expense, Underlying excluding Acquisitions(non-GAAP) | D | 907 | 899 | 875 | 8 | 0.97 | 32 | 3.73 | ||||||||||||||||||||||||
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Operating leverage, Underlying excluding Acquisitions(non-GAAP) | (0.05 | %) | 0.56 | % | ||||||||||||||||||||||||||||
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Efficiency ratio and efficiency ratio, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||||||
Efficiency ratio | C/A | 58.41 | % | 59.00 | % | 57.95 | % | (59 | ) bps | 46 | bps | |||||||||||||||||||||
Efficiency ratio, Underlying excluding Acquisitions(non-GAAP) | D/B | 57.64 | 57.62 | 57.95 | 2 | bps | (31 | ) bps |
19
Citizens Financial Group, Inc.
Key performance metrics,non-GAAP financial measures and reconciliations - Underlying excluding Acquisitions (continued)
(in millions, except share,per-share and ratio data)
QUARTERLY TRENDS | ||||||||||||||||||||||||||||
2Q19 Change | ||||||||||||||||||||||||||||
2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | ||||||||||||||||||||||||
$/bps | % | $/bps | % | |||||||||||||||||||||||||
Trust and investment services fees, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||
Trust and investment services fees (GAAP) | $ | 53 | $ | 47 | $ | 43 | $ | 6 | 13 | % | $ | 10 | 23 | % | ||||||||||||||
Less: Acquisitions impact | 6 | 7 | — | (1 | ) | (14 | ) | 6 | 100 | |||||||||||||||||||
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Trust and investment services fees, Underlying excluding Acquisitions(non-GAAP) | $ | 47 | $ | 40 | $ | 43 | $ | 7 | 18 | % | $ | 4 | 9 | % | ||||||||||||||
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Salaries and employee benefits, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||
Salaries and employee benefits (GAAP) | $ | 507 | $ | 509 | $ | 453 | ($ | 2 | ) | — | % | $ | 54 | 12 | % | |||||||||||||
Less: Notable items | 2 | 1 | — | 1 | 100 | 2 | 100 | |||||||||||||||||||||
Less: Acquisitions impact | 21 | 19 | — | 2 | 11 | 21 | 100 | |||||||||||||||||||||
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Salaries and employee benefits, Underlying excluding Acquisitions(non-GAAP) | $ | 484 | $ | 489 | $ | 453 | ($ | 5 | ) | (1 | %) | $ | 31 | �� | 7 | % | ||||||||||||
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Total Consumer average demand deposits, Underlying excluding Acquisitions: | ||||||||||||||||||||||||||||
Total Consumer average demand deposits (GAAP) | $ | 18,026 | $ | 17,326 | $ | 16,827 | $ | 700 | 4 | % | $ | 1,199 | 7 | % | ||||||||||||||
Less: Acquisition impact | 750 | 571 | — | 179 | 31 | 750 | 100 | |||||||||||||||||||||
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Total Consumer average demand deposits, Underlying excluding Acquisitions(non-GAAP) | $ | 17,276 | $ | 16,755 | $ | 16,827 | $ | 521 | 3 | % | $ | 449 | 3 | % | ||||||||||||||
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20
Citizens Financial Group, Inc.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”
Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:
• | Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense; |
• | The rate of growth in the economy and employment levels, as well as general business and economic conditions, and changes in the competitive environment; |
• | Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals; |
• | Our ability to meet heightened supervisory requirements and expectations; |
• | Liabilities and business restrictions resulting from litigation and regulatory investigations; |
• | Our capital and liquidity requirements (including under regulatory capital standards, such as the U.S. Basel III capital rules) and our ability to generate capital internally or raise capital on favorable terms; |
• | The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; |
21
Citizens Financial Group, Inc.
• | Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; |
• | The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; |
• | Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; |
• | A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and |
• | Management’s ability to identify and manage these and other risks. |
In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.
More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in our Annual Report on Form10-K for the year ended December 31, 2018.
Note: Per share amounts and ratios presented in this document are calculated using whole dollars.
CFG-IR
22