Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — FY2014 Earnings Presentation
36 slides from Citizens Financial's earnings presentation, Jan 26, 2015
Slide 1: 4Q14 and FY 2014 Financial Results
4Q14 and FY 2014 Financial Results January 26, 2015
Slide 2: Forward-looking statements
Forward-looking statements This document contains forward-looking statements within 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
Slide 3: 4Q14 highlights
4Q14 highlights GAAP diluted EPS of $0.36; Adjusted diluted EPS1 of $0.39, up 30% from 4Q13 Improving Adjusted ROTCE1 of 6.8% vs. 5.2% in 4Q13 profitability and YoY period-end loan growth of 9% with 8% growth in net interest income returns Benefit of growth and efficiency initiatives driving
Slide 4: Financial summary – GAAP
Financial summary – GAAP Quarterly trends Full year HighlightsQuarterly trends 4Q14 change from 2014 change $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 2014 2013 from 2013 Linked quarter: Net interest income $ 840 $ 820 $ 779 $ 20 $ 61 $ 3,301 $ 3,058 $ 243 Net income up 4% driven by 2% total Noninter
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”). as of and for the three months ended as of and for
Slide 6: Adjusted 4Q14 financial summary - excluding restructuring charges and special items
Adjusted 4Q14 financial summary - excluding restructuring charges and special items1 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 $ % $ % Linked quarter: 184 Net interest income $ 840 $ 820 $ 779 $ 20 2 % $ 61 8% Adjusted net income up 7% reflecting solid 185 Noninterest inc
Slide 7: Adjusted full year financial summary - excluding restructuring charges and special items
Adjusted full year financial summary - excluding restructuring charges and special items1 2014 change from $s in millions 2014 2013 2013 Highlights $ % Adjusted net income up 18% driven by a 33% decrease Net interest income $ 3,301 $ 3,058 $ 243 8% in provision expense Adjusted noninterest income
Slide 8: Net interest income
Net interest income Net interest income $s in millions, Highlights except earning assets $116B $117B $119B $113B Linked quarter: $109B NII up $20 million, or 2%, driven by increased investment portfolio income and 3% loan growth $833 NIM improved 3 bps to 2.80% $8202 $820 $840 $779 $808 ─ 4Q14 i
Slide 9: Noninterest income
Noninterest income 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 $ % $ % Linked quarter: 215 Service charges and fees $ 144 $ 144 $ 152 $ — — % $ (8) (5) % Noninterest income up by $5 million excluding 216 Card fees 58 58 58 — — % — — % MSR swing: 217 Trust & investment servi
Slide 10: Adjusted noninterest expense – excluding restructuring charges and special items
Adjusted noninterest expense – excluding. restructuring charges and special items1 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 $ % $ % Linked quarter: 1 Adjusted salaries and benefits $ 396 $ 409 $ 386 $ (13) (3) % $ 10 3% Adjusted noninterest expense and 235 236 Adjusted o
Slide 11: Consolidated 4Q14 average balance sheet
Consolidated 4Q14 average balance sheet 4Q14 change from Highlights $s in billions 4Q14 3Q14 4Q13 3Q14 4Q13 Linked quarter: $ % $ % Total earning assets up 1% Investments and interest bearing 265 deposits $ 26.5 $ 27.3 $ 22.9 $ (0.9) (3) % $ 3.5 15 % ─ Commercial loans up $1.1 billion, driven by 2
Slide 12: Total average loans and leases and LHFS
Total average loans and leases and LHFS Consumer Banking Average loans1 Highlights $46.2B $47.4B $47.8B $49.4B $44.8B Linked quarter: 3.68% 3.70% 3.69% 3.67% 3.68% Consumer Banking segment loans increased $1.5 billion ─ Purchased $493 million of residential mortgages and 4Q13 1Q14 2Q14 3Q14 4Q14 $
Slide 13: Average deposits and rates
Average deposits and rates Average deposits and Highlights deposits held for sale Linked quarter: $93.2B $91.6B $92.2B $91.7B $94.8B Average deposits increased $3.1 billion, or 3%, with growth in all categories and particular strength in Commercial Banking 0.28% ─ Term deposits up $1.3 billion, mo
Slide 14: Capital and liquidity remain strong
Capital and liquidity remain strong as of as of $s in billions (period-end) 4Q13 1Q14 2Q14 3Q14 4Q14 Highlights 1 Basel I Capital levels remain well above regional Tier 1 common capital $ 13.3 $ 13.5 $ 13.4 $ 13.3 $ 13.2 Basel I risk-weighted assets $ 98.6 $ 100.4 $ 101.4 $ 103.2 $ 105.9 peers Tie
Slide 15: Credit quality continues to improve
Credit quality continues to improve $s in millions Net charge-offs (recoveries) Highlights $115 Overall credit quality remains strong $18 $87 $68 $88 $80 Net charge-offs were $80 million, or 0.35% of average loans $79 $15 $9 and leases $11 $6 $80 $75 $72 Allowance coverage for NPLs remained re
Slide 16: Summary of progress on strategic initiatives
Summary of progress on strategic initiatives 2014 Status 2015 INITIATIVE CFG Market Outlook Commentary Execution Condition Arrested household decline with new offerings. Contending with 1 Reenergize household growth competition and reduced foot traffic. Key is training/improved lead generation. Achi
Slide 17: Steady progress against key financial targets
Steady progress against key financial targets End 2016 Key Indicators 4Q13 4Q14 targets Adjusted return on average tangible common 5.2% 6.8% 10%+ equity1 Adjusted return on average total tangible 0.6% 0.7% 1.0%+ assets1 Adjusted efficiency ratio1 68% 67% ~60% Tier 1 common equity ratio2 13.5% 12.4%
Slide 18: 1Q15/FY2015 outlook
1Q15/FY2015 outlook 1Q15 expectations vs. 4Q14 FY2015 expectations vs. FY2014 Net interest Earning asset growth consistent with 4Q14/3Q14 Target 5-7% earning asset growth income, net Net interest margin relatively stable Net interest margin broadly stable, though with interest margin Day c
Slide 19: Key messages
Key messages Underlying business performance continues to make progress, marked by loan growth, positive operating leverage and growing customer satisfaction 2014 was a successful transition year, with Chicago region gain funding various initiatives to drive better performance over 2015/2016 T
Slide 20: Appendix
Appendix 3 Citizens Financial Group, Inc.” 19
Slide 21: 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 tangible assets1 $388 6% $93.4 9% 10 bps $366 $85.9 0.69% 0.59% 4Q13 4Q14 4Q13 4Q14 4Q13 4Q14 Adjusted net income1 Period-end deposits2 Adjusted return on aver
Slide 22: Linked quarter results
Linked quarter results Adjusted pre-provision profit1 Basel I tier 1 common equity Adjusted return on average $s in millions capital ratio2 tangible assets1 $388 4% ~50 bps 3 bps $372 12.9% 0.69% 12.4% 0.66% 3Q14 4Q14 3Q14 4Q14 3Q14 4Q14 Adjusted net income1 Leverage ratio2 Adjusted return on a
Slide 23: Full year results
Full year results Adjusted pre-provision profit1 Basel I tier 1 common equity Adjusted return on average $s in millions capital ratio2 tangible assets1 0.3% ~110 bps 5 bps $1,472 $1,468 13.5% 0.65% 12.4% 0.60% 2013 2014 2013 2014 2013 2014 Adjusted net income1 Leverage ratio2 Adjusted return on
Slide 24: Net interest margin
Net interest margin NIM% walk 3Q14 to 4Q14 0.02% 0.01% (0.02%) (0.02%) 0.02% 0.02% 2.77% 2.80% 3Q14 NIM% Excess cash Investment Loan growth/ Pay-fixed Deposit growth/ Sub-debt 4Q14 NIM% at Fed yields mix/fees swap costs yields issuance NIM% walk 4Q13 to 4Q14 0.07% 0.02% (0.01%) (0.01%) (0.01%) (0.01
Slide 25: Net interest margin
Net interest margin NIM% walk FY2013 to FY2014 0.04% 0.01% (0.01%) (0.02%) (0.04%) 0.10% (0.10%) 2.85% 2.85% 2.83% 2.83% FY2013 NIM% Pay-fixed swap Deposit Other Chicago Investment Sub-debt Loan growth/ FY2014 NIM% cost mix/yields borrowings Divestiture portfolio issuance mix/fees growth 24
Slide 26: Consumer Banking segment
Consumer Banking segment 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 Linked quarter: $ % $ % 310 Net interest income $ 536 $ 532 $ 543 $ 4 1% $ (7) (1) % Consumer Banking net income down $2 311 Noninterest income 218 226 235 (8) (4) % (17) (7) % million with pre-provision p
Slide 27: Commercial Banking segment
Commercial Banking segment 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 $ % $ % Linked quarter: 323 Net interest income $ 283 $ 270 $ 260 $ 13 5% $ 23 9% 324 Noninterest income 111 104 105 7 7% 6 6% Commercial Banking net income 325 Total revenue 394 374 365 20 5% 29 8% incr
Slide 28: Other
Other 4Q14 change from Highlights $s in millions 4Q14 3Q14 4Q13 3Q14 4Q13 Linked quarter: $ % $ % 336 Net interest income (expense) $ 21 $ 18 $ (24) $ 3 17 % $ 45 188 % Other net income increased $9 337 Noninterest income 10 11 39 (1) (9) % (29) (74) % million from 3Q14 338 Total revenue 31 29 15
Slide 29: 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 as of and for
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 $3.8B $3.6B $3.4B $3.2B $3.0B SBO balances by LTV2 SBO balances by FICO2,3 120+ < 70 < 620 6% 760+ 14% 19% 100-119 18% 4Q13 1Q14 2Q14 3Q14 4Q14 31% Retail Commercial SBO 70-79 17% 620-679 16% 19% SBO balances and char
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 goodwill impairment, restructuring charges and/or special items, which are usually included, where applicable, in the f
Slide 32: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data $s in millions, except per share data QUARTERLY TRENDS FULL YEAR 4Q14 3Q14 2Q14 1Q14 4Q13 2014 2013 Noninterest income, excluding special items: Noninterest income (GAAP) A $339 $3
Slide 33: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data $s in millions, except per share data QUARTERLY TRENDS FULL YEAR 4Q14 3Q14 2Q14 1Q14 4Q13 2014 2013 Efficiency ratio and efficiency ratio, excluding restructuring charges and speci
Slide 34: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS FULL YEAR 4Q14 3Q14 2Q14 1Q14 4Q13 2014 2013 Amortization of software, excluding restructuring charges and special items: Amortization of software AA $43 $38 $33 $
Slide 35: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table T hre e M o nt hs E nde d D e c e m be r 3 1, 2 0 14 T hre e M o nt hs E nde d S e pt e m be r 3 0 , 2 0 14 T hre e M o nt hs E nde d J une 3 0 , 2 0 14 Non-GAAP Reconciliation - Segments C o ns um e r C o m m e rc ia l C o ns um e r C o m m e rc ia l C o ns um e r C o
Slide 36: Citizens Financial Group, Inc.
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