Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q3 2019 Earnings Presentation
31 slides from Citizens Financial's earnings presentation, Oct 18, 2019
Slide 1: 3Q19 Financial Results
3Q19 Financial Results October 18, 2019 Exhibit 99.2
Slide 2: Forward-looking statements and use of key performance metrics and non-GAAP financial measures
Forward-looking statements and use of key performance metrics and non-GAAP financial measures This document contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are for
Slide 3: 3Q19 GAAP financial summary
3Q19 GAAP financial summary See pages 29-30 for notes and important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, including “Underlying” results. “Underlying” results exclude the impact of notable items described on page 20.
Slide 4: Solid profitability and returns; strong capital, liquidity and credit quality
Solid profitability and returns Strong capital, liquidity and funding Strong credit quality Continued progress on strategic growth, efficiency and balance sheet optimization initiatives Overall credit quality remains strong; NPLs of 0.67% of loans stable with 2Q19 and improved from 0.73% in 3Q18 NPL
Slide 5: Highlights: 3Q19 Underlying financial summary
Highlights 3Q19 Underlying financial summary(1) Linked quarter: Underlying net income available to common remained relatively stable, with EPS of $0.98 up 2%, and TBV/share up 2% Third quarter results also reflect the impact of an aircraft lease restructuring that decreased PPNR $3 million. This tra
Slide 6: Net interest income
Highlights Net interest income Linked quarter: NII decreased $21 million, or 2%, as lower interest-earning asset yields, reflecting the impact of the challenging rate and yield-curve environment, and higher securities premium amortization were only partially offset by the benefit of day count and a
Slide 7: Noninterest income
Noninterest income Highlights Linked quarter: Record noninterest income up $31 million, or 7%, with strong results in mortgage banking and card fees Service charges and fees increased $2 million, or 2%, reflecting seasonality Strong card fees up $3 million, or 5%, including seasonally higher volumes
Slide 8: Noninterest expense
$s in millions Noninterest expense Highlights Linked quarter: Underlying noninterest expense increased $10 million, or 1%; stable before the impact of the lease restructuring Underlying salaries and employee benefits decreased $2 million Underlying equipment & software up $4 million, or 3%, driven b
Slide 9: Average loans and leases
Average loans and leases Highlights YoY loan growth á 3% á 3% á 4% Total core Total core retail Total core commercial Total core commercial loans and leases Total core retail loans (2) Linked quarter: Core loans and leases down $338 million, or 0.3% Relatively stable excluding the impact of second q
Slide 10: Deposits
Linked quarter: Total deposits up $769 million, or 1% Largely reflects growth in money market accounts, DDA and savings, partially offset by lower term deposits and checking with interest Citizens Access® attracted $5.6 billion through quarter end Total deposit costs down 5 bps, reflecting proactive
Slide 11: Credit quality remains strong
Credit quality remains strong $s in millions (1) Nonperforming loans Allowance for loan and lease losses Highlights Provision for credit losses, net charge-offs Provision for credit losses Total net c/os Net c/o ratio Core c/o ratio Overall credit quality remains strong, reflecting an improving risk
Slide 12: Capital levels remain at the higher end of the range for regional peers
Capital levels remain at the higher end of the range for regional peers 3Q19 CET1 ratio of 10.3% decreased modestly from 2Q19 LDR of 94.5% compares with 94.2% in 2Q19(2) Fully compliant with LCR(3) 2019 Capital Plan reflects further commitment towards prudent return of capital Increased quarterly co
Slide 13: Current Expected Credit Loss (CECL) standard implementation
Current Expected Credit Loss (“CECL”) standard implementation Estimated 1/1/2020 day-1 cumulative impact of CECL implementation: Net increase to allowance for credit losses of ~30%-35%;~22-25 bp reduction of CET1 on a fully-phased in basis Expect an increase in retail reserves tied to longer-duratio
Slide 14: Strategic initiatives update
3Q19 YoY Strategic initiatives update Fee growth Consumer Enhance Mortgage platform Record mortgage banking fees; originations up 91% and gain on sale margins improved 44 bps YoY Expand Wealth Strength in trust and investment services fees, up 12%; Managed money revenue up 16% YoY Commercial Expand
Slide 15: 4Q19 outlook
4Q19 outlook Net interest income Noninterest expense Credit trends, tax rate 4Q19 Underlying outlook (includes the impact of acquisitions and excludes expected notable items) Capital Noninterest income $954 million $101 million provision expense ~22% effective tax rate 3Q19 Underlying results(1) 10.
Slide 16: Key messages
Key messages Citizens 3Q19 results reflect the benefit of its diversified business model Modest revenue growth QoQ despite challenging rate and yield-curve environment; continued strong expense discipline Record fee income, led by strong mortgage results which offset pressure on NIM Delivered EPS gr
Slide 17: Appendix
Appendix Xx Citizens nancial Group,
Slide 18: Year-over-Year results
Year-over-Year results Pre-provision profit $s in millions Return on average total tangible assets Net income available to common shareholders and EPS $s in millions, except per share data Return on average tangible common equity Period-end loans $s in billions Period-end deposits $s in billions á 3
Slide 19: YTD 2019 vs YTD 2018 Underlying results
YoY Underlying before Acquisitions(1) YTD 2019 vs YTD 2018: Underlying net income available to common stockholders up $55 million, or 4%, and EPS of $2.86 up $0.28, or 11%(1) NII up $111 million, given 4% growth in average interest-earning assets which offset the impact of lower net interest margin,
Slide 20: Notable Items
Notable Items(1) 2019 quarterly results reflect notable items related to integration costs primarily tied to the August 1, 2018 Franklin American Mortgage Company (“FAMC”) acquisition, as well as third quarter 2019 costs related to strategic initiatives. Third quarter 2019 included a notable tax ite
Slide 21: GAAP noninterest income and noninterest expense summary
GAAP noninterest income and noninterest expense summary $s in millions
Slide 22: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data
Slide 23: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data
Slide 24: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data
Slide 25: Key performance metrics, Non-GAAP financial measures and reconciliations
Key performance metrics, Non-GAAP financial measures and reconciliations $s in millions, except share, per share and ratio data
Slide 26: Reconciliations – Underlying excluding Acquisitions
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying excluding Acquisitions $s in millions, except share, per share and ratio data
Slide 27: Reconciliations – Underlying excluding Lease Restructuring
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying excluding Lease Restructuring $s in millions, except share, per share and ratio data
Slide 28: Reconciliations – Underlying excluding Acquisitions and Lease Restructuring
Key performance metrics, Non-GAAP financial measures and reconciliations – Underlying excluding Acquisitions and Lease Restructuring $s in millions, except share, per share and ratio data
Slide 29: Notes on Key Performance Metrics and Non-GAAP Financial Measures
Notes on Key Performance Metrics and Non-GAAP Financial Measures See important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their
Slide 30: Notes on Key Performance Metrics and Non-GAAP Financial Measures
Notes on Key Performance Metrics and Non-GAAP Financial Measures See important information on Key Performance Metrics and Non-GAAP Financial Measures, as applicable, at the beginning and end of this presentation for an explanation of our use of these metrics and non-GAAP financial measures and their
Slide 31: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Q3 2019 Earnings Presentation on 6ix