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
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 For The Nine Months Ended September 30, Reported 3Q19 change from 2019 Change $s in millions 3Q19 2Q19 3Q18 2Q19 3Q18 2019 2018 2018 $/bps % $/bps % $/bps % Net interest income $1,145 $ 1,166 $ 1,148 $ (21) (2)% $ (3) —% $ 3,471 $3,360 $ 111 3% Noninterest income 493 462
Slide 4: 3Q19 highlights
3Q19 highlights Underlying net income available to common of $436 million, down 2%, with EPS of $0.98 up 5% YoY(1) ─ Results reflect good operating discipline in the face of a challenging rate and yield-curve environment ─ Underlying ROTCE of 12.6%(1) compares with 13.5% in 3Q18 and 12.9% in 2Q19;
Slide 5: 3Q19 Underlying financial summary
3Q19 Underlying financial summary(1) 3Q19 change from Highlights 3Q19 2Q19 3Q18 2Q19 3Q18 (1) (1) (1) (1) (1) Linked quarter: $s in millions Underlying Underlying Underlying Underlying Underlying Underlying net income available to common remained relatively %/bps %/bps stable, with EPS of $0.98 up
Slide 6: Net interest income
Net interest income $s in millions, except earning assets Net interest income Highlights Linked quarter: NII decreased $21 million, or 2%, as lower interest-earning asset $142.2B $143.8B $145.5B $146.3B $146.5B yields, reflecting the impact of the challenging rate and yield- curve environment, and
Slide 7: Noninterest income
Noninterest income $s in millions Highlights 3Q19 change from Underlying, as applicable 3Q19 2Q19 3Q18 2Q19 3Q18 Linked quarter: $ % $ % Service charges and fees $ 128 $ 126 $ 131 $ 2 2 % $ (3) (2) % Record noninterest income up $31 million, or 7%, with strong results Card fees 67 64 61 3 5 6 10 i
Slide 8: Noninterest expense
Noninterest expense $s in millions Highlights 3Q19 change from Linked quarter: Underlying, as applicable 3Q19 2Q19 3Q18 2Q19 3Q18 $ % $ % Underlying noninterest expense increased $10 million, or Salaries & employee benefits $ 503 $ 505 $ 469 $ (2) —% $ 34 7% 1%; stable before the impact of the lea
Slide 9: Average loans and leases
Average loans and leases $s in billions Average core loans and leases YoY loan growth Highlights $114.2B $116.1B $116.3B $116.0B Total core $112.2B Linked quarter: 3% Core loans and leases down $338 million, or 0.3% ─ Relatively stable excluding the impact of second quarter 2019 loan sales tied
Slide 10: Average funding and cost of funds
Average funding and cost of funds $s in billions Average interest-bearing liabilities and DDA Highlights $134.5B $135.8B $136.4B $136.7B $132.7B Linked quarter: Fed funds, repo, $0.7 $0.9 $0.6 $1.4 $1.2 Total deposits up $769 million, or 1% ST borrowed funds $14.7 $12.4 $12.1 $14.3 $15.6 ─ Largely
Slide 11: Credit quality remains strong
Credit quality remains strong $s in millions Highlights Overall credit quality remains strong, reflecting an improving risk profile in retail and a Nonperforming loans relatively stable risk profile at favorable levels in commercial NPLs to total loans and leases ratio of 0.67% was stable with 2
Slide 12: Capital and liquidity remain strong
Capital and liquidity remain strong as of Highlights $s in billions (period-end) 3Q18 4Q18 1Q19 2Q19 3Q19 Capital levels remain at the higher end of the range for (1) Basel III basis regional peers Common equity tier 1 capital $ 14.4 $ 14.5 $ 14.4 $ 14.6 $ 14.4 3Q19 CET1 ratio of 10.3% decreased
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-dur
Slide 14: Strategic initiatives update
3Q19 YoY Strategic initiatives update Strategic & business highlights Record mortgage banking fees; originations up 91% and gain on Consumer Enhance Mortgage platform sale margins improved 44 bps YoY Group Strength in trust and investment services fees, up 12%; Fitch upgraded to F1 from F2:
Slide 15: 4Q19 outlook
4Q19 outlook 4Q19 Underlying outlook 3Q19 Underlying results(1) (includes the impact of acquisitions and excludes expected notable items) Net interest Relatively stable as loan growth offsets rate/yield-curve $1,145 million income effects on NIM Down modestly from record levels; higher capital
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 ─ Delivere
Slide 17: Appendix
Appendix ** Citizens Financial Group, Inc.” 17
Slide 18: Year-over-Year results
Year-over-Year results Pre‐provision profit Period‐end loans Return on average total $s in millions $s in billions tangible assets $663 $684 3% $114.7 $117.9 3% 1.20% 4 bps 1.16% 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 Net income available to Period‐end deposits Return on average tangible common shareho
Slide 19: 3Q19 YTD Underlying financial summary
3Q19 YTD Underlying financial summary(1) For The Nine Months Ended September 30, YoY 2019 2018 Underlying 2019 change from 2018 before Highlights (1) (1) Underlying Underlying $s in millions Acquisitions(1) $ /bps % YTD 2019 vs YTD 2018: Net interest income $ 3,471 $ 3,360 $ 111 3% 3% 7% Under
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 GAAP 3Q19 change from Noninterest Income 3Q19 2Q19 3Q18 2Q19 3Q18 $ % $ % Service charges and fees $ 128 $ 126 $ 131 $ 2 2 % $ (3) (2) % Card fees 67 64 61 3 5 6 10 Capital markets fees 39 57 47 (18) (32) (8) (17) Trust and inves
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 22
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 23
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 24
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 25
Slide 26: 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 26
Slide 27: Non-GAAP 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 27
Slide 28: Non-GAAP 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 28
Slide 29: Notes
Notes 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
Slide 30: Notes
Notes 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
Slide 31: Citizens Financial Group, Inc.
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