Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — Goldman Sachs US Financial Services Conference 2014
33 slides from Citizens Financial's conference presentation, Dec 9, 2014
Slide 1: Goldman Sachs US Financial Services Conference 2014
Goldman Sachs US Financial Services Conference 2014 December 9, 2014 Bruce Van Saun, Chairman and Chief Executive Officer
Slide 2: Forward-looking statements and Non-GAAP financial measures
Forward-looking statements and Non-GAAP financial measures 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. Statem
Slide 3: Solid franchise with leading positions in attractive markets
Solid franchise with leading positions in attractive markets 13th largest U.S. retail bank by assets Dimension Rank (2) Significant scale in core markets(1) Assets - $131.3 billion #13 State Deposit Market Share Loans - $91.0 billion #13 >10% 5–10% Deposits - $93.5 billion #14 National <5% Mancheste
Slide 4: Robust product offerings and balanced business mix
Robust product offerings and balanced business mix Consumer Commercial Retail deposit services Corporate banking Mobile/online banking Commercial real estate Credit/debit card Franchise finance Deep client + Extensive Asset finance Wealth management relationships product set PE/sponsor finance Home
Slide 5: Strong, clean balance sheet funded with low-cost deposits
Strong, clean balance sheet funded with low-cost deposits Well capitalized with a Tier 1 common equity ratio of 12.6%(1); pro forma common equity Tier 1 ratio of 12.2%(1) on a fully phased-in Basel III basis Solid asset quality performance with net charge-offs of 37 bps YTD 3Q14; core net charge-off
Slide 6: 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 Offer fulfilling jobs Regulators Investors Comply with Deliver letter and Customers strong value spirit of rules Serve our proposition and customers well and regulations attractive returns Communities & Soci
Slide 7: Embarked on a plan to improve financial results
Embarked on a plan to improve financial results Goal is to deliver a 10%+ run-rate ROTCE by end of 2016 End 2016 Key Indicators 2011 2013(1) YTD 2014 Targets Return on average tangible common equity (“ROTCE”)(2) 4.2% 4.9% 6.9% 10%+ Future target 12%+ Adjusted ROTCE(2)(3) 4.5% 5.1% 5.9% Return on ave
Slide 8: Our vision and strategy
Our vision and strategy Our objective is to be a top-performing bank that delivers well for our stakeholders Our vision is to deliver the best possible banking experience Our strategy to achieve this is to: Offer our customers a differentiated customer experience through the quality of our colleague
Slide 9: Our strategy results in six priorities
Our strategy results in six priorities 1 Position Consumer Banking to deliver improved capabilities and profitability Reenergize household growth and deepen relationships through cross-sell Scale up growth in consumer asset businesses Move towards smaller branch formats with fewer but more productiv
Slide 10: Year over year progress on strategic priorities
Year over year progress on strategic priorities Priorities Initiatives Proof Points 1 Introduced new One Deposit Product; investing in advertising Reenergizing and marketing Household Growth Net checking account growth of over 80,000 YTD 3Q14 Leveraging Auto originations/flow purchases up 112% from
Slide 11: Progress on strategic priorities
Progress on strategic priorities Priorities Initiatives Proof Points 4 Efficiency initiatives on track to achieve 25% of 2016 $200 million Achieving Cost targeted cost saves by YE 2014 Saves to Fund Since 3Q13 - upgraded or enhanced branch teller platform, ATM Enhanced Investments network, call cent
Slide 12: ROTCE is trending in line with plan
ROTCE is trending in line with plan Adjusted ROTCE(1) Target 10% + +188 bps 6.28% 6.22% 5.24% 5.24% 4.34% 3Q13 4Q13 1Q14 2Q14 3Q14 End 2016 11 1) Excluding restructuring charges and special items. See appendix pages 29-31 for a reconciliation of non-GAAP items.
Slide 13: Growing the balance sheet again – well positioned for rising rates
Growing the balance sheet again – well positioned for rising rates Delivering loan growth NII growing with NIM broadly stable Average earning assets Net interest income $s in billions $s in millions $833 $820 $116.0 $117.2 $808 $112.5 $820(2) $109.0 $779 $105.9 $770 $795(2) (2) $766(2) $757 3Q13 4Q1
Slide 14: Adjusted noninterest income relatively stable, with recent underlying growth
Adjusted noninterest income relatively stable, with recent underlying growth(1) Adjusted noninterest income $s in millions $383 $379 $358 $352 $341 5% CAGR $310 $301 $301 $310 since 3Q13 in $283 capital markets fees, trust and investment services fees, and mortgage banking fees (1) 3Q13 4Q13 1Q14 2Q
Slide 15: Discipline on expenses is funding investments to drive growth
Discipline on expenses is funding investments to drive growth $200 million targeted cost savings by end 2016(2) Adjusted noninterest expense(1) $s in millions Salaries and Align employee benefits to market employee benefits Organizational redesign $810 $833 ~$120 $788 $792 $789 Reduction in FTEs $81
Slide 16: Credit quality continues to improve
Credit quality continues to improve 3Q14 net charge-offs of 0.38% of average loans and leases with core portfolio charge-offs of 0.31% Allowance coverage of NPLs of 111%, up from 72% in 3Q13 NPLs to total loans and leases down 79 bps to 1.19% from 1.98% in 3Q13 Provision for credit losses, charge-of
Slide 17: Adjusting capital structure towards peers
Adjusting capital structure towards peers Tier 1 common equity ratio(1) Progress against capital plan: (2) Citizens 12.6% – $333 million capital exchange transaction on Regions 11.8% 8/1/14 KeyCorp 11.3% – $334 million sub-debt issuance and 14.3 million share repurchase on 10/8/14 PNC 11.1% 3Q14 Tie
Slide 18: Building blocks are in place to drive enhanced performance
Building blocks are in place to drive enhanced performance 13th largest U.S. retail bank holding company with attractive demographics Attractive, in core markets client-centric Attractive business mix with growing and profitable commercial business franchise with complementing strong consumer busine
Slide 19: x* Citizens
NS x* Citizens Financial Group, Inc.”
Slide 20: 3* Citizens
3* Citizens Financial Group, Inc.”
Slide 21: Appendix
Appendix 3* Citizens Financial Group, Inc.”
Slide 22: Expected path to improving ROTCE
Expected path to improving ROTCE 4Q16 ROTCE targeted to be in excess of 10% Momentum carries forward beyond 2016 Potential upside from 0.7 – 0.8% 10%+ further normalization 0.9 – 1.0% 1.3 – 1.6% Full Impact of: E Capital 0.8 – 1.0% D normalization(1) 0.8 – 1.0% C Rate normalization(2) 5% (+100 to +1
Slide 23: Progress on ROTCE improvement plan
Progress on ROTCE improvement plan Highlights 1 Commercial loans up 7% annualized from year end 2013, driven by growth in mid-corporate, Earning Asset franchise finance, technology, and business capital Growth & NII Retail loans up 8% annualized from year end 2013, driven by growth in auto and mortg
Slide 24: Delivered solid 3Q14 adjusted financials
Delivered solid 3Q14 adjusted financials(1) 3Q14 change from Highlights $s in millions 3Q14 2Q14 3Q13 2Q14 3Q13 Linked quarter: $ % $ % Adjusted net income down $3 million largely Net interest income $ 820 $ 833 $ 770 $ (13) (2) % $ 50 6% 1 driven by effect of unusually low 2Q14 Adjusted noninterest
Slide 25: Strong and experienced leadership team
Strong and experienced leadership team Bruce Van Saun Chairman and Chief Executive Officer 30 Years in Banking David Bowerman Brad Conner Robert Matthews John Fawcett Robert Nelson Nancy Shanik Vice Chairman- Vice Chairman- Vice Chairman- Chief Financial Chief Compliance Group EVP- Business Services
Slide 26: Well respected and accomplished Board of Directors
Well respected and accomplished Board of Directors Board Member Title and Company Year Joined Committees Chairman and Chief Executive Officer Chairman of the Board Bruce Van Saun 2013 Citizens Financial Group, Inc. and Head of RBS Americas Chair of Executive Committee Lead Director Former Chairman,
Slide 27: Diversified and granular loan mix
Diversified and granular loan mix $52.2 billion $38.5 billion 3Q14 Consumer Banking segment portfolio(1) 3Q14 Commercial Banking segment portfolio(1) Other Non-core Credit cards 3% Non-core 24% Other Leases 1% 27% Other Education finance 6% Home 3% 10% Business banking 3% equity Mid- 6% 36% 30% Atla
Slide 28: Non-core portfolio significantly reduced
Non-core portfolio significantly reduced Non-core end of period assets Non-core end of period assets $s in billions as of 3Q14 $s in billions Serviced by others home equity portfolio(1) $1.9 $20.5 $18.3 Other consumer real estate 0.6 $13.5 Student lending 0.4 $8.4 Commercial real estate 00.3 $5.7 $3
Slide 29: Core home equity portfolio
Core home equity portfolio(1) 3Q14 $15.5 billion HELOC 3Q14 $3.9 billion HELOAN Highlights Lien position Lien position 3Q14 home equity originations of $1.1 billion ─ HELOC originations had a weighted-average 1st 2nd FICO score of 788, and a weighted-average 31% 45% CLTV of 64% 55% Between October 2
Slide 30: 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 to the most directly comparable measures. These Non-GAAP measures exclude discontinued operations, goodwill impairment, restructuring charges and/or s
Slide 31: Non-GAAP reconciliation table
Non-GAAP reconciliation table 2011 2013 YTD 2014 $s in millions, except per share data Noninterest income, excluding special items: Noninterest income (GAAP) A $1,711 $1,632 $1,339 Less: Special items - - 288 Noninterest income, excluding special items (non-GAAP) B $1,711 $1,632 $1,051 Total revenue
Slide 32: Non-GAAP reconciliation table
Non-GAAP reconciliation table 3Q13 4Q13 1Q14 2Q14 3Q14 $s in millions, except per share data Net interest income, excluding estimated Chicago Divestiture impact: Net interest income (GAAP) $770 $779 $808 $833 $820 Less: estimated Chicago Divestiture Impact 13 13 13 13 — Net interest income, excludin
Slide 33: 3* Citizens
3* Citizens Financial Group, Inc.”
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