Citizens Financial Group, Inc. · NYSE:CFG
Citizens Financial — BancAnalysts Association of Boston Conference 2015
28 slides from Citizens Financial's conference presentation, Nov 5, 2015
Slide 1: BancAnalysts Association of Boston Conference
BancAnalysts Association of Boston Conference Eric Aboaf Chief Financial Officer November 5, 2015
Slide 2: Important Information and GAAP/Non-GAAP Information
Important Information and GAAP/Non-GAAP Information 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
Slide 3: Solid franchise with leading positions in attractive markets
Solid franchise with leading positions in attractive markets Retail presence in 11 states Dimension(2) Rank(3) Top 5 deposit market share in 9 of 10 largest MSAs(1) Assets - $135.4 billion #13 Loans - $97.4 billion #12 Deposits - $101.9 billion #13 Manchester, NH: #1 National Rochester, NY: #4 Branc
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 Deep client Extensive Credit/Debit Card + relationships product set Franchise Finance Wealth Management Asset Finance Home Equity loans/lines
Slide 5: Building a top-performing regional bank
Building a top-performing regional bank Where we’ve come from Where we are now Where we’re going Lagging revenue productivity Developed/implemented plan to Well-balanced Commercial and ─ Under-levered balance sheet address underlying issues and Consumer business mix ─ Lack of scale in key businesses
Slide 6: Summary of progress on strategic initiatives
Summary of progress on strategic initiatives 3Q15 Initiative Commentary Status 3Q15 household growth of 2% and deposits up 7% from 3Q14. New customer cross-sell rate Reenergize household growth increased to 3.26 vs. 3.05 in 3Q14. LOs up 81, or 22%, and origination volume up 53% from 3Q14. Expand mor
Slide 7: Loan growth tracking well vs. peers
Loan growth tracking well vs. peers Consumer Banking average loans and leases Commercial Banking average loans and leases $50.7B $51.6B $41.3B $41.8B $49.2B $50.1B $40.1B $47.7B $38.9B $37.8B 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 Yields 3.67% 3.68% 3.72% 3.68% 3.69% Yields 2.61% 2.62% 2.
Slide 8: CFG core revenue vs. peers
CFG core revenue vs. peers $s in millions CFG delivering solid core revenue growth as initiatives gain traction Growing revenues faster (Core revenue(1)) $1,191 $1,207 $1,159 $1,178 $1,165 growth 290 bps better than peers 3Q14 4Q14 1Q15 2Q15 3Q15 CFG Peer average(2) $2,063 $2,089 $2,035 $2,099 $2,08
Slide 9: CFG core net interest margin vs. peers
CFG core net interest margin vs. peers Continued efforts to optimize asset growth and minimize cost of deposits …current expectation is that this may be the bottom Lower net interest margin compression 3.08% 3.01% 2.98% 2.96% 2.94% 13 bps better than peers 2.77% 2.80% 2.77% 2.76% 2.72% 3Q14 4Q14 1Q1
Slide 10: Identifying and capitalizing on loan pricing opportunities
Identifying and capitalizing on loan pricing opportunities Strong focus on improving risk-adjusted commercial loan yields 6% R2 =63% N =61 Company X 4.75% 5% 4% Yield % 3% 2% 1% Company Y 1.75% 0% BBB BBB- BB BB- B+ B Investment grade or equivalent risk rating Identifying significant variance in ris
Slide 11: Optimizing loan mix to help drive improving yield and returns
Optimizing loan mix to help drive improving yield and returns Evaluating and refining targeted growth opportunities to drive enhanced risk-adjusted returns 3Q15 Average YoY Average Average YTD loan growth portfolio origination Loan Category rate coupon coupon Industry Verticals 42% 2.68% 2.65% Middl
Slide 12: Increasing our discipline on how we gather deposits
Increasing our discipline on how we gather deposits Focused on accelerating growth in lower-cost deposits 3Q15 3Q15 3Q14 2Q15 3Q15 Deposit category YoY growth vs. vs. Cost Cost Cost rate % 3Q14 2Q15 Post the Chicago Divestiture, deposit growth has largely been Commercial Banking driven by higher-cos
Slide 13: We remain positioned for rising rates
We remain positioned for rising rates… …but also see plenty of opportunity to further enhance performance by executing well on our initiatives Interest-rate sensitivity ranking (1,2) 13.0% (200 bps gradual increase) Net interest income poised to benefit from 10.4% rising rates 7.2% 7.1% ─ ~75% of as
Slide 14: CFG core noninterest income vs. peers
CFG core noninterest income vs. peers $s in millions $341 $339 $347 $360 $353 CFG $339 $338 $329 $351 $351 core noninterest income(1) 3Q14 4Q14 1Q15 2Q15 3Q15 Securities gains, estimated Chicago Divestiture fees, Foreign exchange and trade finance fees and estimated posting order change fees Core ot
Slide 15: CFG adjusted noninterest expense vs. peers
CFG adjusted noninterest expense vs. peers $s in millions 170 bps better than peers CFG $789 $791 $800 $801 $798 adjusted noninterest 68% 67% 69% 67% 66% expense(1) 3Q14(1) 4Q14(1) 1Q15(1) 2Q15(1) 3Q15 Adjusted salary and benefits Adjusted occupancy & equipment Adjusted all other Core efficiency rat
Slide 16: CFG core efficiency improving vs. peers
CFG core efficiency improving vs. peers Efficiency improvement Core efficiency improvement reflects benefit of (Core efficiency ratio(1)) revenue and expense initiatives ─ Real estate square footage down 5.8% from 68% 67% 69% 67% 9/30/2014 66% 275 bps improvement ─ Non revenue producing FTEs down 3.
Slide 17: CFG asset quality performance vs. peers
CFG asset quality performance vs. peers Considerable progress in cleaning up non-core issues and moving back towards peer averages Favorable charge-off trends (Net charge-offs/average loans and leases) 0.38% 0.35% 0.33% 0.31% 4 bps 0.27% improvement 0.32% 0.34% vs. peers 0.29% 0.26% 0.23% 3Q14 4Q14
Slide 18: Stronger capital than peers
Stronger capital than peers Total capital ratio(1) Executed $1.2 billion in capital exchange transactions since 6/30/14, mix of capital 16.1% 15.8% 15.5% 15.3% 15.4% now broadly aligned with peers 180 bps above peers 14.4% 14.2% 13.8% 13.6% 13.6% Capital mix 3Q14 4Q14 1Q15 2Q15 3Q15 16.1% 15.4% 14.4
Slide 19: CFG core profitability vs. peers
CFG core profitability vs. peers $s in millions Consistent record of improving profitability and returns, narrowing gap vs. peers Profitability growth 3Q14-3Q15 Improving return on equity (Core net income(1)) (Core return on average tangible common equity(1)) 5% 12.6% 12.6% 11.4% 11.5% 11.4% Peers 1
Slide 20: We are executing on strategic enterprise initiatives
We are executing on strategic enterprise initiatives Balance Sheet Management TOP 1 & 2 We need to continue to manage our asset TOP 1 is nearing completion growth plans in a disciplined way in light of ─ Will deliver approximately $200 million the persistent low-rate environment run-rate pre-tax imp
Slide 21: Key messages
Key messages We are executing well against our agenda; delivering near-term financial progress towards ambitious medium-term goals We have the foundation for a great franchise, though much to do to tap full potential Our turnaround plan addresses gaps/weaknesses on both a tactical and strategic leve
Slide 22: 3* Citizens
3* Citizens Financial Group, Inc.”
Slide 23: Appendix
Appendix 3* Citizens Financial Group, Inc.” 22
Slide 24: Summary GAAP Financial Information
Summary GAAP Financial Information 3Q15 change from $s in millions 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 $ % Net interest income $ 820 $ 840 $ 836 $ 840 $ 856 $ 36 4 % Noninterest income 341 339 347 360 353 12 4 Total revenue 1,161 1,179 1,183 1,200 1,209 48 4 Noninterest expense 810 824 810 841 798 (12) (1
Slide 25: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS Q315 Change 3Q15 2Q15 1Q15 4Q14 3Q14 from Q314 Noninterest income, excluding special items: Noninterest income (GAAP) A $353 $360 $347 $339 $341 Less: Special item
Slide 26: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS Q315 Change 3Q15 2Q15 1Q15 4Q14 3Q14 from Q314 Return on average tangible common equity and return on average tangible common equity, excluding restructuring charg
Slide 27: Non-GAAP Reconciliation Table
Non-GAAP Reconciliation Table (Excluding restructuring charges and special items) $s in millions, except per share data QUARTERLY TRENDS 3Q15 2Q15 1Q15 4Q14 3Q14 1 Pro forma Basel III fully phased-in common equity tier 1 capital ratio : Common equity tier 1 (regulatory) $13,200 Less: Change in DTA a
Slide 28: 3* Citizens
3* Citizens Financial Group, Inc.”
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