Citizens Financial Group, Inc. · NYSE:CFG

Citizens Financial — Q1 2015 Earnings Presentation

36 slides from Citizens Financial's earnings presentation, Apr 22, 2015

  1. Slide 1: 1Q15 Financial Results

    1Q15 Financial Results April 22, 2015

  2. Slide 2: Forward-looking statements

    Forward‐looking statements This document contains forward‐looking statements within the Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward‐looking statement. These statements often include the words “believes,” “expects,” “

  3. Slide 3: 1Q15 highlights

    1Q15 highlights Improving  GAAP diluted EPS of $ $0.38;; Adjusted j diluted EPS1 of $ $0.39,, up p 30% from 1Q14 profitability and  Adjusted ROTCE1 of 6.7% vs. 5.2% in 1Q14 returns  Adjusted operating leverage1 of nearly 3% vs 1Q14  YoY average loan growth of 9% with strength in Commercial Comme

  4. Slide 4: Financial summary – GAAP

    Financial summary – GAAP 1Q15 change from Highlights $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 Linked quarter: $ % $ % Net interest income $ 836 $ 840 $ 808 $ (4) — % $ 28 3%  Net income up 6%, reflecting positive operating leverage and lower provision Noninterest income 347 339 358 8 2% (11) (3) % e

  5. Slide 5: Restructuring charges and special items

    Restructuring charges and special items GAAP results included restructuring charges and special items related to enhancing efficiencies and improving processes across the organization and separation from The Royal Bank of Scotland Group plc (“RBS”). 1 Restructuring charges and special items 1Q15 cha

  6. Slide 6: Adjusted 1Q15 financial summary excluding restructuring charges and special items

    Adjusted 1Q15 financial summary ‐ excluding restructuring charges and special items1 Highlights 1Q15 change h from f Linked quarter: $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14  Adjusted net income broadly stable in seasonally $ % $ % weaker quarter 184 Net interest income $ 836 $ 840 $ 808 $ (4) — % $

  7. Slide 7: Net interest income

    Net interest income $s in millions, except earning Net interest income Highlights assets $117B $ $119B $121B $113B $116B Linked quarter:  NII down modestly ─ Impact of two fewer days in the quarter $7953 $8203 ($12 million) and slightly higher borrowing and $808 $833 $ $820 $840 $836 d deposit cost

  8. Slide 8: Noninterest income

    Noninterest income $s in millions 1Q14 change from Highlights $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % Linked quarter: 215 Service charges and fees $ 135 $ 144 $ 139 $ (9) (6) % $ (4) (3) %  Noninterest income up $8 million as gains 216 Card fees 52 58 56 (6) (10) % (4) (7) % 217 Trust & inv

  9. Slide 9: Adjusted noninterest expense excluding restructuring charges and special items

    Adjusted noninterest expense – excluding. restructuring charges and special items1 Highlights change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 Linked quarter: 1 Adjusted salaries and benefits $ 420 $ 396 $ 405 $ 24 6% $ 15 4%  Adjusted noninterest expense up 1 Adjusted occupancy 78 76 81 2 3% (3

  10. Slide 10: Consolidated 1Q15 average balance sheet

    Consolidated 1Q15 average balance sheet 1Q15 change from Highlights $s in billions 1Q15 4Q14 1Q14 4Q14 1Q14 Linked q quarter: $ % $ %  Total earning assets up 2% Investments and interest bearing 265 deposits $ 27.1 $ 26.5 $ 25.2 $ 0.6 2% $ 1.9 8% ─ Commercial loans up $1.2 billion, given 266 Total

  11. Slide 11: Consumer Banking average loans and leases

    Consumer Banking average loans and leases $s in billions Average loans1 Highlights $49.2B $50.1B Linked quarter: $47.2B $47.7B $46.0B $2.6 $2.5  Average loans increased $890 million, or 2% $2.8 $2.7 $3.1 $2.9 $3.0 $3.2 $3 0 $3.0 $1.8 $ $2.3  Net average impact of loan purchases and sales of $3.3 $

  12. Slide 12: Commercial Banking average loans and leases

    Commercial Banking average loans and leases $s in billions Average loans Highlights $40.2B $38.9B Linked quarter: $37.4B $37.8B $36.6B $2.6 $2.2 $2.5  Average loans up $1.3 billion, or 3% on $2.0 $2.2 strength in Industry Verticals, Middle Market, $7 4 $7.4 $6.7 $7.0 $7.2 Mid‐Corporate and Commerci

  13. Slide 13: Average funding and cost of funds

    Average funding and cost of funds $s in billions Average interest‐bearing liabilities1 Highlights Linked quarter: $85.4B $80.8B $82.5B  Average interest‐bearing deposits increased $3.9 $1.4 billion, or 2%, with growth in nearly $74.8B $2.0 $2.8 $72 3B $72.3B $6 1 $6.1 $7.0 $ every category $1.4 $ $

  14. Slide 14: Strong credit quality trends continue

    Strong credit quality trends continue $s in millions Net charge‐offs (recoveries) Highlights  Overall credit quality remains strong $87 $88  Net charge‐offs were $54 million, or 0.23% of average loans and leases $15 $68 $80 $54 $9 $6 ─ Commercial net recoveries were $22 million in 1Q15, including

  15. Slide 15: Capital and liquidity remain strong

    Capital and liquidity remain strong as of $s in billions (period‐end) 1Q14 2Q14 3Q14 4Q14 1Q15 Highlights 1,2 Basel I Basel III Basel I/III transitional basis  Capital levels remain well above regional peers Common equity tier 1 capital $ 13.5 $ 13.4 $ 13.3 $ 13.2 $ 13.4 Risk‐weighted assets $ 100.

  16. Slide 16: Delivered for all stakeholders in Q1

    Delivered for all stakeholders in Q1  2014 Greenwich Middle Market Banking Excellence Awards in the Northeast for overall/Client satisfaction  Citizens’ mobile apps recognized for two years in a row as among the best in the industry by Javelin Customers Strategy & Research, with average customer r

  17. Slide 17: Summary of progress on strategic initiatives

    Summary of progress on strategic initiatives 1Q15 2015 INITIATIVE Commentary o e ay SStatus Outlook O l k 1 1Q15 YoY checking households up 2%; new customer cross‐sell rate Reenergize household growth improved to 3.3 vs. 2.9 in 1Q14 LOs up 84, or 23%, from 1Q14; Origination volume up 87% over 1Q14 2

  18. Slide 18: Steady progress against key financial targets

    Steady progress against key financial targets End 2016 Key Indicators 1Q14 1Q15 targets Adjusted return on average tangible common 5.2% 6.7% 10%+ equity1 Adjusted return on average total tangible 0 6% 0.6% 0 7% 0.7% 1 0%+ 1.0%+ assets1 Adjusted efficiency ratio1 69% 68% ~60% CET 1 risk‐based capital

  19. Slide 19: 2Q15 outlook

    2Q15 outlook 2Q15 expectations vs. 1Q15 Net interest  Average loan growth rate 1.5 ‐2% vs. prior quarter income, net  Net interest margin broadly stable/down slightly, as pressure from low‐rate environment continues interest margin  Positive day count benefit of $6 million expected Operating leve

  20. Slide 20: Key messages

    Key messages  Continuing to execute well against broad market stakeholder agenda  Financial performance has been led by balance sheet growth, expense discipline, and favorable credit  Keeping NIM stable is near‐term priority pending higher rates  Currently making the necessary investments to get

  21. Slide 21: Appendix

    Appendix %£ Citizens Financial Group, Inc.” 20

  22. Slide 22: Quarter over quarter results

    Quarter over quarter results Adjusted pre‐provision profit1 Period‐end loans2 Adjusted return on average $s in millions $s in billions ibl assets1 tangible  8% $94.5  9%  12 bps $383 $87.1 0.7% $356 0.6% 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 Adjusted net income1 Period‐end deposits2 Adjusted return on av

  23. Slide 23: Linked quarter results

    Linked quarter results Adjusted pre‐provision profit1 Basel III common equity Adjusted return on average $s in millions tier i 1 risk‐based i k b d capital i 2 i l ratio ibl assets1 tangible  1% ~20 bps unchanged $388 $383 12.4% 12.2% 0.7% 0.7% 3 4Q14 1Q15 4Q14 1Q15 4Q14 1Q15 Adjusted net income1

  24. Slide 24: Net interest margin

    Net interest margin NIM% walk 4Q14 to 1Q15 0.02% (0.02%) (0.01%) (0.01%) (0.01%) 2.80% 2.77% 4Q14 NIM% 4Q14 NIM% Pay‐fixed Investment Deposit costs Loan yields, Term‐debt 1Q15 NIM% 1Q15 NIM% swap costs t yields i ld mix, i & fees f i issuance NIM% walk 1Q14 to 1Q15 0.05% (0.05%) (0.05%) (0.04%) (0.0

  25. Slide 25: Consumer Banking segment

    Consumer Banking segment 1Q15 change from Highlights $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 Li k d quarter: Linked $ % $ % 310 Net interest income $ 533 $ 536 $ 537 $ (3) (1) % $ (4) (1) %  Net income up $9 million 311 Noninterest income 219 218 219 1 — % — — %  Net interest income decreased $3 m

  26. Slide 26: Commercial Banking segment

    Commercial Banking segment 1Q15 change from Highlights $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % Linked quarter: 323 Net interest income $ 276 $ 283 $ 256 $ (7) (2) % $ 20 8%  Commercial Banking net income increased $7 million 324 Noninterest income 100 111 107 (11) (10) % (7) (7) % 325 Total

  27. Slide 27: Other

    Other 1Q15 change from Highlights $ iin millions $s illi 1Q15 4Q14 1Q14 4Q14 1Q14 Linked quarter: $ % $ % 336 Net interest income $ 27 $ 21 $ 15 $ 6 29 % $ 12 80 %  Net income decreased $4 million from 4Q14 337 Noninterest income 28 10 32 18 180 % (4) (13) %  Net interest income increased $6 milli

  28. Slide 28: Restructuring charges and special items

    Restructuring charges and special items GAAP results included restructuring charges and special items related to enhancing efficiencies and improving processes across the organization and separation from the Royal Bank of Scotland Group plc (“RBS”). as of and for the three months ended Restructuring

  29. Slide 29: Loan Reconciliation

    Loan Reconciliation Average balances $s in millions 1Q14 2Q14 3Q14 4Q14 1Q15 Consumer Banking Segment $ 46,154 $ 47,368 $ 47,848 $ 49,351 $ 50,260 Add: Non‐core loans 3,199 3,066 2,932 2,801 2,667 (1) Retail R t il lloans iin C Commercial i lBBanking ki 117 135 134 145 143 Other 798 776 736 681 629

  30. Slide 30: Non-core home equity portfolio serviced by others (SBO)

    Non‐core home equity portfolio serviced by others (SBO)1 Non‐core period‐end loans $3 6B $3.6B $3.4B $3.2B $3.0B $2.9B SBO balances by LTV2 SBO balances by FICO2,3 120+ < 70 < 620 3 760+ 14% 12% 100‐119 25% 1Q14 2Q14 3Q14 4Q14 1Q15 31% Retail Commercial SBO 16% 70‐79 17% 620‐679 SBO balances and cha

  31. Slide 31: Non-GAAP Financial Measures

    Non‐GAAP Financial Measures This document contains non‐GAAP financial measures. The table below presents reconciliations of certain non‐GAAP measures. These reconciliations exclude restructuring charges and/or special items, which are usually included, where applicable, in the financial results pres

  32. Slide 32: Non-GAAP Reconciliation Table

    Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 1Q15 4Q14 3Q14 2Q14 1Q14 Noninterest income, income excluding special items: Noninterest income (GAAP) A $347 $339 $341 $640 $358 Less: Special items ‐ Chicago gai

  33. Slide 33: Non-GAAP Reconciliation Table

    Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 1Q15 4Q14 3Q14 2Q14 1Q14 Efficiency ratio and efficiency ratio, excluding restructuring charges and special items: Net interest income (GAAP) $836 $840 $820 $833 $

  34. Slide 34: Non-GAAP Reconciliation Table

    Non‐GAAP Reconciliation Table (Excluding restructuring charges and special items) QUARTERLY TRENDS 1Q15 v 1Q14 $s in millions, except per share data 1Q15 4Q14 3Q14 2Q14 1Q14 % Change Outside services, excluding restructuring charges and special items: Outside services (GAAP) W $79 $106 $106 $125 $83

  35. Slide 35: Non-GAAP Reconciliation Table

    Non‐GAAP Reconciliation Table Non-GAAP Reconciliation - Segments $s in millions T hre e M o nt hs E nde d M a rc h 3 1, T hre e M o nt hs E nde d D e c e m ber 3 1, T hre e M o nt hs E nde d S e pt e m be r 3 0 , 2 0 15 2 0 14 2 0 14 C o ns um er C o m m e rc ia l C o ns um e r C o m m e rc ia l C o

  36. Slide 36: 3« Citizens

    3« Citizens Financial Group, Inc.”

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