Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Deutsche Bank Global Financial Services Conference 2017
41 slides from Citizens Financial's conference presentation, May 31, 2017
Slide 1: Deutsche Bank Global Financial Services Conference
Deutsche Bank Global Financial Services Conference May 31, 2017 Brad Conner Vice Chairman, Head of Consumer Banking
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 Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement
Slide 3: Solid franchise with leading positions in attractive markets
Solid franchise with leading positions in attractive markets Retail presence in 11 states Dimension(1) Rank(2) Top 5 deposit market share in 9 of 10 largest MSAs(3) Assets: $150.3 billion #12 Loans: $108.1 billion(4) #11 #12 nationally; Manchester, NH: #1 Deposits: $112.1 billion Top 5 rank in Detro
Slide 4: Consumer Banking
Consumer Banking Results reflect strong loan growth, improving yields, and investment in talent, infrastructure, product and advisory capabilities Robust loan growth $s in billions Recognition $56.2 $56.9 $53.5 $54.0 $55.0 Top 5 JD Power recognition Mortgage servicing and originations(2) 1Q16 2Q16 3
Slide 5: Continued Consumer Banking strength in 1Q17
Continued Consumer Banking strength in 1Q17 1Q17 change from Highlights $s in millions 1Q17 4Q16 1Q16 4Q16 1Q16 $ % $ % Net interest income $ 638 $ 639 $ 581 $ (1) — % $ 57 10 % Noninterest income 220 227 208 (7) (3) 12 6 Positive operating leverage is Total revenue 858 866 789 (8) (1) 69 9 drivin
Slide 6: Consumer Banking — Delivering on a multi-year growth strategy
Consumer Banking — Delivering on a multi-year growth strategy 11) Further enhancing branch network efficiency and effectiveness ─ Evolving distribution to better meet changing consumer preferences and create integrated multi-channel experience ─ Focus on becoming trusted advisor and developing deepe
Slide 7: Evolving our integrated distribution and advice model
Evolving our integrated distribution and advice model 1 Retail Network Digital Objectives (Branch & ATM) Online banking Focus on end-to-end customer 36% HHs experience non-branch 2% YoY(1) Enable needs-based advice and Serve customers deposits where, when & solutions through programs such as Mob
Slide 8: Branch experience remains important to success
Branch experience remains important to success 1 External measurement highlights Internal measures also show consistent and significant progress steady progress Successful migration to specialist Top 10% of companies for customer model(3) experience across all industries(1) 1Q14 1Q17 % change
Slide 9: Our strategy focuses on customer segment needs
Our strategy focuses on customer segment needs 2 Segment(1) Approach Maintain steady growth and accelerate shift to digital: Pre-Mass Differentiate customer experience through branch, online & Market ~≤$100,000 mobile channels and Mass Market Provide appropriate suite of products and services ~$
Slide 10: With a heightened focus on the Mass Affluent and Affluent segments
With a heightened focus on the Mass Affluent and Affluent segments 2 Target segments represent They hold ~$600B in assets Deepening remains an 49% of our retail households outside of Citizens opportunity $ billions in thousands Affluent HH Client Penetration(1) 2.6 million $1,088 HNW 4% 167 169 Affl
Slide 11: Building lending capabilities
Building lending capabilities 3 $ billions Home equity line of credit Education originations Consumer unsecured originations portfolio growth(2) $5.2 $1.9 $4.2 $4.0 $1.5 $1.0 75% 74% $0.7 33% $0.5 $0.4 27% 13% 10% 14% 43% $0.3 17% 73% 67% 57% 26% 25% 83% 2014 2015 2016 2014 2015 2016 1Q16 2Q16 3Q16
Slide 12: Re-balancing loan mix to drive improved risk-adjusted returns
Re-balancing loan mix to drive improved risk-adjusted returns 3 Retail loan performance $ billions 2013 2016 Loan Loss Loan Loss $54.2 Mix(1) rate Mix(1) rate $51.3 $46.7 $48.1 Auto 19% 0.06% 26% 0.68% 97% 95% Core home equity 44 0.66 30 0.15 91% 94% Core resi mortgage 18 0.38 25 0.08 Education Core
Slide 13: Robust deposit growth with continued pricing discipline
Robust deposit growth with continued pricing discipline 3 Consumer Banking deposits(1) $ billions Continued focus on cost effectively growing deposits $68.2 $69.7 $72.0 – Deposit costs remain $8.1 $10.2 $9.6 well-controlled; up ~1 bp linked $26.0 $27.1 $25.6 quarter and up ~4 bps YOY $7.8 $7.9 $8.
Slide 14: Using data and analytics to reach customers more effectively
Using data and analytics to reach customers more effectively 4 Improving Targeting Enabling Sales Intelligence Expanding Sales Channels Direct Mail Alerts Future of Fulfillment Rolling out new targeting Enabling and empowering Leveraging preassembled models across all front-end colleagues acro
Slide 15: Aligning sales force to better serve our highest-opportunity wealth clients
Aligning sales force to better serve our highest-opportunity wealth clients 5 Growing advisory staff(1) Building momentum with investment sales(2) Financial Consultants $ millions 2014 306 2015 320 2016 362 $763 $739 2017 target 405 $687 $674 $608 Premier Bankers 2014 132 86% 80% 2015 162 70% 61% 64
Slide 16: Accelerating Mortgage fee growth
Accelerating Mortgage fee growth 5 Growing mortgage fees $112 $ millions $101 Double digit growth in mortgage $71 banking fees 538 442 Expansion of sales force and focus on 412 conforming expected to help drive fee growth and improved returns 2014 2015 2016 40% Mortgage fees Loan officers(1) E
Slide 17: Continuously improving processes to drive efficiencies
Continuously improving processes to drive efficiencies 6 A mindset of continuous improvement Benefits Improved customer experience Enhanced risk management Increased productivity Quicker implementation Example: Using process automation for debit card chargeback processing to deliver recovery
Slide 18: Key messages
Key messages Consumer Banking continues to deliver strong growth and improving performance Adapting to the changing world of retail banking Remain focused on a customer-segment strategy Optimizing lending portfolio and enhancing deposit capabilities Investing to grow wealth and mortgage bu
Slide 19: Appendix / Key performance metrics, Non-GAAP financial measures and reconciliations
Appendix / Key performance metrics, Non-GAAP financial measures and reconciliations 19
Slide 20: Aspire to be a top-performing regional bank, delivering well for all stakeholders
Aspire to be a top-performing regional bank, delivering well for all stakeholders Colleagues Regulators Customers Investors Communities & Society Customer-centric culture 20
Slide 21: Our vision and credo guide us
Our vision and credo guide us Mission To help our customers, colleagues and communities reach their potential To be a top-performing bank distinguished by its customer-centric culture, mindset Vision of continuous improvement and excellent capabilities We perform our best every day so we can do more
Slide 22: At Citizens, continue to smartly grow our balance sheet
At Citizens, continue to smartly grow our balance sheet Total loans $ billions $108(1) 16% $99 $94 3.58% 3.34% Good loan growth with rising yields 3.34% 2014 2015 2016 Loan yield 21% 21% 23% 10% Return on loan book regulatory capital improving(2) 2014 2015 2016 5.8% 5.1% 4.8% 17% Stress lo
Slide 23: Core retail portfolio
Core retail portfolio Highlights 4Q16 $54.5 billion core retail portfolio Weighted-average core FICO score of 760 63% of the retail portfolio has a FICO score by Product type by Geography(1) by refreshed FICO(1) of >750 Cards Other <600 Education Out of New 600-649 3%3% Footprint England 800+ 3%
Slide 24: Core home equity portfolio
Core home equity portfolio(1) Highlights 4Q16 $14.1 billion HELOC 4Q16 $1.8 billion HELOAN 53% of the portfolio is secured by 1st lien by Lien position(2) by Lien position(2) Weighted-average FICO of 766 88% has an LTV of less than 80% 2nd 1st 34% 4Q16 HELOC originations of $1.3 billion 51%
Slide 25: HELOC payment shock management
HELOC payment shock management Highlights Maturing vintages as of December 31, 2016 Between 2017 – 2019, $3.1 billion in drawn balances 2014 – $899 million 2015 – $1.26 billion 2016 – $916 million ($3.0 billion of undrawn balances) are scheduled to 3% 3% 3% 2% 1% 4%1% 3% mature, or 22%, of the tot
Slide 26: Core mortgage portfolio overview
Core mortgage portfolio overview Highlights 4Q16 $14.9 billion core mortgage portfolio Jumbo mortgages originated primarily within the Bank’s lending footprint by Refreshed CLTV(1) by Refreshed FICO (1) 90-100%100%+ <600 600-649 Predominately in-footprint with a 80-89% 1% 2% 5% 650-699 weighted-
Slide 27: Auto portfolio credit metrics
Auto portfolio credit metrics Highlights (1) 4Q16 $13.9 billion Auto portfolio Auto Finance portfolio – purchase only, no by Refreshed FICO score (1,2) by Origination LTV (2) leasing, weighted-average FICO score of 730 ≤ 600 % new car ≥ 120% ≤ 80% ≥ 800 601-649 4Q16 originations of $1.4 billion
Slide 28: Core education finance portfolio overview
Core education finance portfolio overview Highlights 4Q16 $6.3 billion core education finance portfolio Core education finance portfolio average FICO score of 774 (1) by Refreshed FICO by Segment and co-sign rate of 49% <650 650-699 Acquired 95% of InSchool loans co-signed with average FICO of 7
Slide 29: Consumer unsecured
Consumer unsecured* Highlights Consumer unsecured portfolio Launched merchant partnership financing in 3Q15 2016 growth trend and in 2016 expanded our unsecured offerings with $s in millions the launch of our consumer unsecured installment product $1,049 Originated ~$1.2 billion unsecured loans
Slide 30: 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 QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16 3Q16 2Q16 1Q16 4Q16 1Q16 $ % $ % Noninterest inc ome, adjusted: Noninterest income (GAAP) $379 $377 $435 $355 $330 $2 1% $49 15 % Les
Slide 31: 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 QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16 3Q16 2Q16 1Q16 4Q16 1Q16 $/bps % $/bps % Operating leverage: Total revenue (GAAP) A $1,384 $1,363 $1,380 $1,278 $1,234 $21 1.54 % $15
Slide 32: 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 QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16 3Q16 2Q16 1Q16 4Q16 1Q16 $/bps % $/bps % Tangible book value per c ommon share: Common shares - at end of period (GAAP) M 509,515,646
Slide 33: 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 QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16 3Q16 2Q16 1Q16 4Q16 1Q16 $ % $ % Other inc ome, adjusted Other income (GAAP) $24 $25 $87 $15 $20 ($1) (4%) $4 20 % Less: Notable item
Slide 34: 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 FULL Y EAR 2016 Change 2016 2015 2014 2015 $ % Noninterest inc ome, adjusted: Noninterest income (GAAP) $1,497 $1,422 $1,678 $75 5% Less: Special items — — 288 — — Less: No
Slide 35: 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 FULL Y EAR 2016 Change 2016 2015 2014 2015 $/bps % Operating leverage: Total revenue (GAAP) A $5,255 $4,824 $431 8.93 % Less: Noninterest expense (GAAP) C 3,352 3,259 93 2.
Slide 36: 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 FULL Y EAR 2016 Change 2016 2015 2014 2015 $/bps % Tangible book value per c ommon share: Common shares - at end of period (GAAP) Q 511,954,871 527,774,428 545,884,519 (15,
Slide 37: 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 FULL YEAR 2016 2015 2014 Total Total Total Consumer and Consumer and Consumer and Consumer Commercial Commercial Consumer Commercial Commercial Consumer Commercial Commerci
Slide 38: 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 THREE MONTHS ENDED MAR 31, THREE MONTHS ENDED DEC 31, THREE MONTHS ENDED SEPT 30, 2017 2016 2016 Consumer Commerc ial Other Consolidated Consumer Commerc ial Other Consolid
Slide 39: 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 QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16 1Q16 4Q16 1Q16 $/bps % $/bps % Inc ome before inc ome tax expense (GAAP) A $434 $414 $332 $20 4.8 % $102 30.7 % Inc ome tax expense a
Slide 40: 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 FOR THE THREE MONTHS ENDED MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, JUNE 30, MAR. 31, DEC. 31, SEP. 30, 2017 2016
Slide 41: Citizens Financial Group, Inc.
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