Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q2 2019 Earnings Presentation
32 slides from Citizens Financial's earnings presentation, Jul 19, 2019
Slide 1: 2Q19 Financial Results
2Q19 Financial Results July 19, 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: 2Q19 GAAP financial summary
2Q19 GAAP financial summary See pages 30-31 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 22.
Slide 4: Overall credit quality remains strong
Overall credit quality remains strong; NPLs of 66 bps of loans stable with 1Q19 and improved from 75 bps in 2Q18 NPL coverage ratio of 159% relatively stable with 1Q19 and improved from 148% in 2Q18 Allowance to loans of 1.05% vs. 1.06% in 1Q19 and 1.10% in 2Q18, reflecting continued improving credi
Slide 5: Highlights: 2Q19 Underlying financial summary
Highlights 2Q19 Underlying financial summary(1) Linked quarter: Underlying net income available to common stockholders up 3%, and EPS of $0.96 up 3%, TBV/share up 4% NII up 1% as the benefit of day count, interest-earning asset growth and improved mix was partially offset by a modest decrease in net
Slide 6: Net interest income
Highlights Net interest income Linked quarter: NII increased $6 million, or 1%, as the benefit of day count, interest earning asset growth and improved mix was partially offset by a modest decrease in net interest margin NIM of 3.21% decreased 4 bps Reflects the impact of lower interest rates on ear
Slide 7: Noninterest income
Noninterest income Highlights Linked quarter: Noninterest income up $34 million, or 8%, with record results in Mortgage, Wealth, Capital Markets and card fees; up $11 million, or 3%, before Acquisitions(1) Service charges and fees increased $3 million, or 2%, reflecting seasonality Record card fees
Slide 8: Underlying noninterest expense
$s in millions Underlying noninterest expense(1) Highlights Linked quarter: Underlying noninterest expense increased $12 million, or 1% Underlying salaries and employee benefits relatively stable Seasonal reductions in payroll taxes and 401(k) matching costs were partially offset by higher revenue-b
Slide 9: Average loans and leases
Average loans and leases Highlights YoY loan growth á 5% á 3% á 7% 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 relatively stable, up $262 million Loan growth was 0.4% before the impact of
Slide 10: Average deposits and funding costs
Linked quarter: Total deposits up $2.7 billion, or 2% Largely reflects growth in term, savings, checking with interest and relatively stable DDA Citizens Access® raised $5.4 billion through quarter end with an average balance of $5.1 billion, up $1.1 billion over the prior quarter Deposit costs up 3
Slide 11: Strong credit-quality trends continue
Strong credit-quality trends continue $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 YoY impro
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 2Q19 CET1 ratio of 10.5% stable with 1Q19 LDR of 94.2% compares with 94.9% in 1Q19(3) Fully compliant with LCR(2) 2019 Capital Plan reflects further commitment towards prudent return of capital Approved new share repurchase prog
Slide 13: Strategic initiatives update
2Q19 YOY Strategic initiatives update Balance Sheet Optimization Grow more attractive risk-adjusted return portfolios Consumer- core education, personal unsecured and merchant financing up 16%. Commercial- continue to recycle capital toward higher return relationships, Industry Verticals up 12% Repo
Slide 14: Launching a significant TOP Program
Launching a significant TOP 6 Program The Program will consist of two elements The transformational program is designed to: Improve how we deliver for customers and how we run the Bank We will redefine our cross-organizational operating model to deliver a more customer-centric, efficient and agile e
Slide 15: Launching a significant TOP Program: initiatives and benefits
Launching a significant TOP 6 Program Efficiency initiatives ~65% Accelerate retail network transformation Digitize Business Banking sales Redesign Wealth operations Further organizational simplification Revenue initiatives ~35% Launch digital sales engine Deploy pricing optimization Leverage person
Slide 16: 3Q19 outlook
3Q19 outlook Net interest income Noninterest expense Credit trends, tax rate 3Q19 Underlying outlook (includes the impact of acquisitions and excludes expected notable items) Capital Noninterest income $944 million $97 million provision expense 21.9% effective tax rate 2Q19 Underlying results(1) 10.
Slide 17: Key messages
Key messages Citizens 2Q19 results highlight disciplined execution and continued momentum Delivered EPS growth 9% YoY on Underlying basis(1) 58.0% efficiency ratio on Underlying basis(1) Positive operating leverage YoY on Underlying basis before Acquisitions(1) 12.9% ROTCE on Underlying basis(1) TBV
Slide 18: Appendix
Appendix Xx Citizens nancial Group,
Slide 19: YTD 2019 vs YTD 2018 Underlying before Acquisitions
YoY Underlying before Acquisitions(1) YTD 2019 vs YTD 2018: Underlying net income available to common stockholders up $62 million, or 8%, and EPS of $1.88 up $0.23, or 14% NII up $114 million, reflecting 5% average loan growth and a 2 bp increase in net interest margin, reflecting higher rates and b
Slide 20: 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 21: Granular/diverse core commercial portfolio; credit discipline
Granular/diverse core commercial portfolio; risk-ratings improved YoY(2) Highly disciplined on credit: diversified and granular core loan mix Core mortgage – FICO ~790; CLTV of ~60% Core home equity – FICO ~765; 52% 1st lien Auto – FICO ~725 Education lending – FICO ~780 Unsecured portfolio - FICO ~
Slide 22: Notable Items
Notable Items(1) Several items have been excluded from reported results to better reflect Underlying operating results. 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”) acquisitio
Slide 23: GAAP noninterest income and noninterest expense summary
GAAP noninterest income and noninterest expense summary $s in millions
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: 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 27: 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 28: Non-GAAP 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 29: Non-GAAP 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 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: 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 32: Citizens Financial Group, Inc.
3* Citizens Financial Group, Inc.”
Citizens Financial Group — Q2 2019 Earnings Presentation on 6ix