Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Q1 2015 Earnings Presentation
36 slides from Citizens Financial's earnings presentation, Apr 22, 2015
Slide 1: 1Q15 Financial Results
1Q15 Financial Results April 22, 2015
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,” “
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
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
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
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) — % $
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
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
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
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
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 $
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
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 $ $
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
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.
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
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
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
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
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
Slide 21: Appendix
Appendix %£ Citizens Financial Group, Inc.” 20
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
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
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
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
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
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
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
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
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
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
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
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 $
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
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
Slide 36: 3« Citizens
3« Citizens Financial Group, Inc.”
Citizens Financial Group — Q1 2015 Earnings Presentation on 6ix