Results include a $23 million benefit, or $0.04
per diluted common share, related to settlement of certain state
tax matters
First quarter 2017 net income up 43% and
diluted EPS up 49% versus year-ago quarter
ROTCE of 9.7% in first quarter 2017 with 7%
positive operating leverage year over year*
Citizens Financial Group, Inc. (NYSE: CFG or “Citizens”) today
reported first quarter net income of $320 million, up 43% from $223
million in first quarter 2016 with earnings per diluted common
share of $0.61, up 49% from $0.41 per diluted common share in first
quarter 2016. Compared with fourth quarter 2016, net income
increased 13% from $282 million and earnings per diluted common
share increased 11% from $0.55. First quarter 2017 results include
a $23 million benefit, or $0.04 per diluted common share, related
to the settlement of certain state tax matters. First quarter 2017
Return on Average Tangible Common Equity (“ROTCE”)* of 9.7%
improved from 8.4% in fourth quarter 2016 and 6.6% in first quarter
2016.
On an Underlying basis*, excluding the benefit of the state tax
settlement, first quarter 2017 net income of $297 million was up 5%
versus fourth quarter 2016 and 33% versus first quarter 2016. First
quarter 2017 earnings per diluted share of $0.57 was up 4% versus
fourth quarter 2016 and 39% versus first quarter 2016. First
quarter 2017 ROTCE of 9.0% improved by 0.6% relative to fourth
quarter 2016, and 2.4% relative to first quarter 2016.
“We are pleased to report another very strong quarter marking
continued progress in executing on our strategic initiatives,” said
Chairman and Chief Executive Officer Bruce Van Saun. “We are firing
on all cylinders, with strong loan and deposit growth, solid net
interest margin expansion, excellent results in our fee based
businesses, particularly in Capital Markets, Global Markets, and
Wealth Management, and good control of expenses and credit costs.
We also continue to deliver well on our broader stakeholder agenda,
with further progress on customer satisfaction, colleague
engagement and community impact. It’s great to get the year off to
a strong start, and we remain confident in our full year
outlook.”
Citizens also announced that its board of directors declared a
second quarter cash dividend of $0.14 per common share. The
dividend is payable on May 17, 2017 to shareholders of record at
the close of business on May 3, 2017.
*Please see important information on Key Performance Metrics and
Non-GAAP Financial Measures at the end of this release for an
explanation of our use of these metrics and non-GAAP financial
measures and their reconciliation to GAAP financial measures.
“Underlying” results exclude a $23 million benefit related to the
settlement of certain state tax matters in the first quarter
2017.
First Quarter 2017 vs. Fourth Quarter
2016
Key Highlights
- First quarter highlights include an 11%
increase in net income available to common stockholders, as 2%
revenue growth was led by strong net interest income, reflecting
continued loan growth and improved net interest margin. Results
also reflect continued expense management discipline with nearly 1%
positive operating leverage and a 50 basis point improvement in the
efficiency ratio to 62%. Provision expense decreased by $6 million,
as net charge-offs dropped back to 33 basis points of average
loans. Results also reflect a 14% decrease in income tax expense
driven by settlement of certain state tax matters.
- Tangible book value per common share of
$26.02 increased 1%. Fully diluted average common shares
outstanding decreased by 2.5 million.
Results
- Total revenue of $1.4 billion increased
2% with a 2% increase in net interest income and higher noninterest
income led by strength in capital markets fees, card fees, and
trust and investment services fees, despite the impact of
seasonally lower service charges and fees.
- Net interest income of $1.0 billion
increased $19 million, driven by 1.5% growth in average loans and
leases and loans held for sale and a six basis point increase in
net interest margin to 2.96%, partially offset by the $14 million
impact of lower day count.
- Net interest margin improvement was
driven by higher interest earning asset yields with improving loan
mix towards higher-return assets, and the benefit of higher
interest rates.
- Noninterest income of $379 million
improved $2 million, driven by higher capital markets fees, card
fees and trust and investment services fees, despite the impact of
seasonality and lower day count across service charges and
fees.
- Noninterest expense of $854 million
increased 1%, primarily reflecting higher salaries and employee
benefits expense given the impact of seasonally higher payroll
taxes and 401(k) benefit costs. Results also reflect higher
occupancy expense and a decrease in other operating expense,
largely legal and regulatory costs, as well as lower outside
services expense.
- Provision for credit losses of $96
million improved 6% as the impact of lower net charge-offs was more
than offset by an increase in the reserve for unfunded
commitments.
- Efficiency ratio improved 50 basis
points to 62%; ROTCE of 9.7%, with ROTCE of 9.0% excluding the
favorable impact of the settlement of certain state tax
matters.*
Balance Sheet
- Average interest-earning assets
increased $1.7 billion, or 1%, driven by continued loan
growth.
- Average deposits increased $829
million, or 1%, reflecting growth in term, checking with interest
and savings.
- Nonperforming loans and leases (“NPLs”)
to total loans and leases ratio of 0.97% remained stable,
reflecting a reduction in retail offset by an increase in
commercial. Allowance coverage of NPLs of 117% compares with
118%.
- Net charge-offs of 33 basis points
decreased six basis points from higher fourth quarter levels, which
included the impact of a methodology change in auto, reflecting
improvement in retail.
- Robust capital strength with a common
equity tier 1 (“CET1”) risk-based capital ratio of 11.2%.
- Repurchased 3.4 million shares of
common stock in the quarter; as of March 31, 2017, had completed
three quarters of the 2016 CCAR Capital plan with purchases of 20.7
million shares at a weighted-average price per share of $27.01, and
including common dividends, return of $756 million to
shareholders.
First Quarter 2017 vs. First Quarter
2016
Key Highlights
- First quarter results reflect a 45%
increase in net income available to common stockholders, led by
revenue growth of 12%, with strength in net interest income given
8% average loan growth and a ten basis point increase in net
interest margin, as well as noninterest income growth of 15%.
- Continued strong focus on top-line
growth and expense management helped drive positive operating
leverage of 7%, a four percentage point improvement in the
efficiency ratio and more than a three percentage point improvement
in ROTCE, while continuing to reinvest in technology and business
initiatives to improve our products and services and drive future
growth.*
- Provision expense increased by $5
million, largely reflecting the continued return to more normalized
net charge-off levels.
- Results also reflect a 6.5% reduction
in the income tax rate driven by the settlement of certain state
tax matters.
- Fully diluted average common shares
outstanding decreased by 19.1 million.
Results
- Total revenue of $1.4 billion increased
$150 million, or 12%, reflecting solid net interest income and
noninterestincome growth.
- Net interest income increased 11% given
8% average loan growth and a ten basis point improvement in
netinterest margin.
- Net interest margin of 2.96% reflects
improved loan yields, driven by higher rates and balance sheet
optimization initiatives, partially offset by investment portfolio
growth and higher deposit costs.
- Noninterest income increased 15%,
driven by strength in capital markets, card fees, foreign exchange
and interest rate products and mortgage banking fees.
- Noninterest expense increased 5%,
driven by higher salaries and employee benefits related to higher
payroll taxes and 401(k) benefit costs, largely tied to a change in
the timing of incentive payments, higher revenue-based incentives
and increases in other categories given continued investments in
the franchise, as well as higher FDIC insurance, fraud and
regulatory costs.
- Provision for credit losses increased
$5 million, or 5%, as the impact of higher commercial net
charge-offs, largely commodities-related credits and an increase in
the reserve for unfunded commitments were partially offset by a
reduction in retail real-estate secured net charge-offs.
- ROTCE* of 9.7% improved by 3.1%.
Excluding the impact related to settlement of certain state tax
matters, ROTCE of 9.0% improved by 2.4%.
Balance Sheet
- Average interest-earning assets
increased $10.2 billion, or 8%, driven by 8% loan growth and a 9%
increase in the investment portfolio.
- Average deposits increased $8.0
billion, or 8%, on strength in checking with interest, term, money
market and demand deposits.
- NPLs to total loans and leases ratio of
0.97% improved from 1.07%, as an underlying reduction in retail
nonperforming loans more than offset an increase in commercial
nonperforming loans, largely commodities-related credits. Allowance
coverage of NPLs of 117% compares with 113%.
- Net charge-offs of 33 basis points of
loans were stable with the prior-year quarter, reflecting continued
improvement in retail, partially offset by an increase in
commercial that represents continued normalization from lower
charge-off levels.
Update on Plan Execution
Consumer Banking
- Performance paced by solid loan growth
with continued traction in education, mortgage and unsecured
retail, along with increased loan yields, reflecting improving mix
and higher rates.
- Wealth management business continues to
build scale and add capabilities, with fee income growth up 13%
versus fourth quarter 2016. Positive trend continues in migrating
sales mix from transaction to fee-based sales.
- Mortgage loan officer recruiting
continues to track well, with an increase of 22 mortgage loan
officers in the quarter to 560.
- We continue to see strong momentum in
our efforts to use the Citizens Checkup program to build and deepen
relationships with our Consumer customers. Customer satisfaction
remains high and program metrics continue to track well against
expectations.
Commercial Banking
- Very strong year-over-year performance
across our fee-based activities led by Capital Markets, Foreign
Exchange and Interest Rate Products, demonstrates the quality,
strength and potential of our Commercial business model.
- Continue to grow our balance sheet and
add new customers, with 10% average loan growth from the year-ago
quarter, reflecting strength in Commercial Real Estate,
Mid-corporate and Middle Market, Franchise Finance and Industry
Verticals. In addition, average deposit growth was 17% versus the
prior-year quarter. Continue to add coverage bankers to expand
expertise in industry groups and to extend geographic reach.
Efficiency and balance sheet
optimization strategies
- Tapping Our Potential (“TOP”) III
continues to deliver benefits and is on track to meet targeted
pre-tax revenue and expense run-rate benefits of $100 million to
$115 million, including $20 million of tax benefits in 2017. Have
commenced efforts on TOP IV.
- Initiatives to shift loan portfolio mix
to higher-return categories continue to deliver benefits. Focused
on initiatives to gather lower-cost deposits and minimize funding
costs.
Earnings highlights 1Q17 change from ($s in millions,
except per share data)
1Q17 4Q16
1Q16 4Q16 1Q16 Earnings $
% $ % Net interest income $ 1,005 $ 986 $ 904
$ 19 2 % $ 101 11 % Noninterest income 379 377 330 2 1 49 15 Total
revenue 1,384 1,363 1,234 21 2 150 12 Noninterest expense 854 847
811 7 1 43 5 Pre-provision profit 530 516 423 14 3 107 25 Provision
for credit losses 96 102
91 (6 ) (6 ) 5 5
Net income 320 282 223 38 13 97 43 Preferred dividends 7 — 7 7 100
— — Net income available to common stockholders
313 282 216
31 11 97 45
Average common shares
outstanding Basic (in millions) 509.5 512.0 528.1 (2.6 ) (1 ) %
(18.6 ) (4 ) % Diluted (in millions) 511.3 513.9 530.4 (2.5 ) —
(19.1 ) (4 ) Diluted earnings per share $ 0.61
$ 0.55 $ 0.41 $ 0.06 11 $ 0.20
49
Key performance metrics* Net interest margin 2.96
% 2.90 % 2.86 % 6 bps 10 bps Effective income tax rate 26.4 31.9
32.9 (554 ) (651 ) Efficiency ratio 62 62 66 (50 ) (398 ) Return on
average common equity 6.5 5.7 4.5 82 207 Return on average tangible
common equity 9.7 8.4 6.6 125 307 Return on average total assets
0.87 0.76 0.65 11 22 Return on average total tangible assets
0.91 % 0.79 % 0.68 % 12
bps 23 bps
Capital adequacy(1,2) Common equity tier 1
capital ratio 11.2 % 11.2 % 11.6 % Total capital ratio 14.0 14.0
15.1 Tier 1 leverage ratio 9.9 %
9.9 % 10.4 %
Asset quality(2) Total
nonperforming loans and leases as a % of total loans and leases
0.97 % 0.97 % 1.07 % — bps (10 ) bps Allowance for loan and lease
losses as a % of loans and leases 1.13 1.15 1.21 (2 ) (8 )
Allowance for loan and lease losses as a % of nonperforming loans
and leases 117 118 113 (172 ) 317 Net charge-offs as a % of average
loans and leases 0.33 % 0.39 %
0.33 % (6 ) bps — bps
1) Current reporting-period regulatory
capital ratios are preliminary. Basel III ratios assume that
certain definitions impacting qualifying Basel III capital will
phase in through 2019.
2) Capital adequacy and asset-quality
ratios calculated on a period-end basis, except net
charge-offs.
Discussion of Results:
First quarter 2017 net income available to common stockholders
of $313 million increased $31 million, or 11%, versus fourth
quarter 2016, and diluted EPS of $0.61 increased $0.06, or 11%.
First quarter 2017 results reflect the impact of a $23 million, or
$0.04 EPS benefit, related to the settlement of certain state tax
matters. First quarter 2017 EPS reflects a 2.5 million reduction in
fully diluted average common shares outstanding.
Compared with first quarter 2016 levels, net income available to
common stockholders increased $97 million, or 45%, as the benefit
of 12% increase in revenue and a reduction in income taxes was
partially offset by a 5% increase in noninterest expense and
provision for credit losses. Diluted EPS of $0.61 increased $0.20,
or 49%, reflecting net income growth and a 19.1 million reduction
in average fully diluted shares outstanding.
Net
interest income 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 $ % $
% Interest income: Interest and fees on loans and
leases and loans held for sale $ 997 $ 968 $ 872 $ 29 3 % $ 125 14
% Investment securities 160 152 145 8 5 15 10 Interest-bearing
deposits in banks 3 2
2 1 50 1 50 Total
interest income $ 1,160 $ 1,122
$ 1,019 $ 38 3 % $ 141 14 %
Interest
expense: Deposits 86 76 60 10 13 % 26 43 % Federal funds
purchased and securities sold under agreements to repurchase 1 — 1
1 100 — — Other short-term borrowed funds 8 7 11 1 14 (3 ) (27 )
Long-term borrowed funds 60
53 43 7 13 17
40 Total interest expense $ 155
$ 136 $ 115 $ 19 14 % $ 40 35 % Net
interest income $ 1,005 $ 986
$ 904 $ 19 2 % $ 101 11 % Net interest margin
2.96 % 2.90 % 2.86
% 6 bps 10 bps
Net interest income of $1.0 billion increased $19 million, or
2%, from fourth quarter 2016, given a 1.5% increase in average
loans and leases and loans held for sale and a six basis point
improvement in net interest margin, which were partially offset by
the impact of lower day count of $14 million. The improvement in
net interest margin reflects the benefit of higher commercial and
consumer loan yields given higher interest rates and continued
portfolio mix shift towards higher-return assets, as well as
improved investment yields, partially offset by higher funding
costs.
Compared to first quarter 2016, net interest income increased
$101 million, or 11%, reflecting 8% average loan growth and a ten
basis point improvement in net interest margin. The improvement in
net interest margin reflects the benefit of higher commercial and
consumer loan yields given higher interest rates and balance sheet
optimization initiatives, partially offset by the impact of
securities portfolio growth and higher deposit and funding
costs.
Noninterest Income 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 $ % $
% Service charges and fees $ 125 $ 132 $ 126 $ (7 ) (5 ) % $
(1 ) (1 ) % Card fees 60 50 50 10 20 10 20 Capital markets fees 48
37 25 11 30 23 92 Trust and investment services fees 39 34 37 5 15
2 5 Letter of credit and loan fees 29 29 27 — — 2 7 Foreign
exchange and interest rate products 27 31 18 (4 ) (13 ) 9 50
Mortgage banking fees 23 36 18 (13 ) (36 ) 5 28 Securities gains,
net 4 3 9 1 33 (5 ) (56 ) Other income(1) 24
25 20 (1 ) (4 ) 4
20 Noninterest income $ 379 $ 377 $ 330
$ 2 1 % $ 49 15 %
1) Other income includes bank-owned life
insurance and other income.
Noninterest income of $379 million improved $2 million from
fourth quarter 2016, reflecting an increase in capital markets
fees, card fees and trust and investment services fees, partially
offset by a reduction in mortgage banking fees and the impact of
seasonality and lower day count on service charges and fees.
Service charges and fees decreased $7 million, reflecting the
impact of seasonality and lower day count. Card fees increased $10
million, reflecting revised contract terms commencing this quarter
for core processing fees, and a reduction in card reward expense
which more than offset the impact of seasonally lower purchase
volumes. Capital markets fees increased $11 million, driven by
strong results in loan syndications, bond underwriting and advisory
fees. Trust and investment services fees increased $5 million
driven by higher sales volume given increased wealth advisory
staffing. Foreign exchange and interest rate products income
decreased $4 million from strong fourth quarter levels. Mortgage
banking fees decreased $13 million from fourth quarter levels that
included improved mortgage servicing rights (“MSR”) valuations and
higher origination volumes.
Noninterest income improved $49 million, or 15%, from first
quarter 2016 levels, driven by strength in capital markets fees,
card fees, foreign exchange and interest rate products income and
improved mortgage banking fees. Service charges and fees remained
relatively stable despite one fewer day in the quarter. Card fees
increased $10 million as the benefit of revised contract terms
commencing this quarter for core processing fees, and a reduction
in card reward expense was partially offset by lower out-of-network
ATM fees. Capital markets fees increased $23 million, reflecting
strength in loan syndications and underwriting fees given strong
market volume and expanded capabilities. Trust and investment
services fees improved, reflecting an increase in investment sales
and growth in client-asset levels. Foreign exchange and interest
rate products income increased $9 million, or 50%, reflecting
strong client hedging activity and expanded capabilities. Mortgage
banking fees increased $5 million, reflecting improved MSR
valuations and higher origination volumes given the increase in
loan officers. Securities gains decreased $5 million.
Noninterest expense 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 $ % $
% Salaries and employee benefits $ 444 $ 420 $ 425 $ 24
6
%
$ 19
4
%
Outside services 91 98 91 (7 ) (7 ) — — Occupancy 82 77 76 5 6 6 8
Equipment expense 67 69 65 (2 ) (3 ) 2 3 Amortization of software
44 44 39 — — 5 13 Other operating expense 126
139 115 (13 ) (9 ) 11 10
Noninterest expense $ 854 $ 847 $ 811 $
7
1
%
$ 43
5
%
Noninterest expense of $854 million increased $7 million, or 1%,
from fourth quarter 2016, driven by higher salaries and employee
benefits expense given the impact of seasonally higher payroll
taxes and 401(k) benefit costs. Results also reflect higher
occupancy expense and a decrease in other expense and outside
services expense. Outside services expense decreased $7 million,
largely reflecting the impact of our ongoing efficiency
initiatives. Occupancy expense increased $5 million, reflecting
costs associated with branch rationalization and seasonally higher
maintenance costs. Other expense decreased $13 million, largely
reflecting lower insurance, fraud and regulatory costs.
Compared with first quarter 2016, noninterest expense increased
$43 million, or 5%, driven by higher payroll taxes and 401(k)
benefit costs tied to a change in the timing of incentive payments,
as well as higher revenue-based incentives. Occupancy expense
increased $6 million, driven by branch rationalization costs.
Amortization of software expense increased $5 million, reflecting
the impact of technology investments. Other expense increased $11
million, related to higher FDIC insurance expense and higher fraud
and regulatory costs.
The effective tax rate for first quarter 2017 of 26.4% compares
with 31.9% in fourth quarter 2016 and 32.9% in first quarter 2016.
First quarter 2017 results reflect the impact of a $23 million, or
5.2 per cent, rate benefit related to the settlement of certain
state tax matters.
Consolidated balance sheet review(1)
1Q17 change from
($s in millions)
1Q17 4Q16
1Q16 4Q16 1Q16 $ %
$ % Total assets $ 150,285 $ 149,520 $ 140,077
$ 765 1 % $ 10,208 7 % Loans and leases and loans held for sale
108,780 108,294 101,742 486 — 7,038 7 Deposits 112,112 109,804
102,606 2,308 2 9,506 9 Average interest-earning assets (quarterly)
136,410 134,758 126,165 1,652 1 10,245 8 Stockholders' equity
19,847 19,747 19,965 100 1 (118 ) (1 ) Stockholders' common equity
19,600 19,499 19,718 101 1 (118 ) (1 ) Tangible common equity $
13,258 $ 13,154 $ 13,333 $ 104 1 % $ (75 ) (1 ) % Loan-to-deposit
ratio (period-end)(2)
97.0
%
98.6 % 99.2 % (159 ) bps (213 ) bps Common equity tier 1 capital
ratio(3) 11.2 11.2 11.6 Total capital ratio(3)
14.0 % 14.0 % 15.1 %
1) Represents period end unless otherwise
noted.
2) Includes loans held for sale.
3) Current reporting period regulatory
capital ratios are preliminary. Basel III ratios assume that
certain definitions impacting qualifying Basel III capital will
phase in through 2019.
Total assets of $150.3 billion increased $765 million, or 1%,
from December 31, 2016, driven by a $660 million increase in
investment portfolio assets and a $486 million increase in loans
and leases and loans held for sale, partially offset by a $393
million reduction in other non-earning assets, largely derivatives
tied to a change in the classification of margin payments. Compared
with March 31, 2016, total assets increased $10.2 billion, or 7%,
driven by a $7.0 billion increase in loans and leases and loans
held for sale, as well as a $3.9 billion increase in investment
portfolio assets, partially offset by a $681 million reduction in
other non-earning assets, largely derivatives tied to a change in
the classification of margin payments.
Average interest-earning assets of $136.4 billion in first
quarter 2017 increased $1.7 billion, or 1%, from the prior quarter,
driven by a $1.0 billion increase in commercial loans and leases, a
$529 million increase in retail loans and a $94 million increase in
investment portfolio assets. Compared to first quarter 2016,
average interest-earning assets increased $10.2 billion, or 8%,
driven by commercial loan growth of $5.0 billion, retail loan
growth of $2.8 billion and a $2.2 billion increase in investment
portfolio assets, including a $1.9 billion increase in securities
and a $290 million increase in interest-bearing cash.
Interest-earning assets 1Q17 change from ($s in
millions)
1Q17 4Q16
1Q16 4Q16 1Q16 Period-end interest-earning
assets $ % $ %
Investments and interest-bearing deposits $ 29,458 $ 28,798 $
25,607 $ 660
2
%
$ 3,851
15
%
Commercial loans and leases 51,892 51,651 47,972 241 — 3,920 8
Retail loans 56,219 56,018 53,019 201 — 3,200 6 Total loans and
leases 108,111 107,669 100,991 442 — 7,120 7 Loans held for sale,
at fair value 448 583 365 (135 ) (23 ) 83 23 Other loans held for
sale 221 42 386 179 NM (165 ) (43 ) Total loans and leases and
loans held for sale 108,780
108,294 101,742 486 — 7,038
7 Total period-end interest-earning assets $
138,238 $ 137,092 $ 127,349 $ 1,146
1
%
$ 10,889
9
%
Average interest-earning assets Investments and
interest-bearing deposits $ 27,761 $ 27,667 $ 25,548 $ 94
—
%
$ 2,213
9
%
Commercial loans and leases 52,034 51,032 47,043 1,002 2 4,991 11
Retail loans 56,031 55,502 53,219 529 1 2,812 5 Total loans and
leases 108,065 106,534 100,262 1,531 1 7,803 8 Loans held for sale,
at fair value 510 551 306 (41 ) (7 ) 204 67 Other loans held for
sale 74 6 49 68 NM 25 51 Total loans and leases and loans held for
sale 108,649 107,091
100,617 1,558 1 8,032 8 Total
average interest-earning assets $ 136,410 $
134,758 $ 126,165 $ 1,652
1
%
$ 10,245
8
%
Period-end investments and interest-bearing deposits of $29.5
billion as of March 31, 2017 increased $660 million, or 2%,
compared with December 31, 2016, reflecting a $386 million increase
in securities and a $274 million increase in cash positions.
Compared with March 31, 2016, investments and interest-bearing
deposits increased $3.9 billion, or 15%, including a $1.9 billion
increase in securities and $1.9 billion increase in cash and
equivalents. At the end of first quarter 2017, the average
effective duration of the securities portfolio increased to 4.4
years compared with 4.3 years at December 31, 2016 and 2.9 years at
March 31, 2016, reflecting the impact of higher long-term rates,
which reduced mortgage security prepayment speeds.
Period-end loans and leases of $108.1 billion at March 31, 2017
increased $442 million, or 0.4%, from $107.7 billion at December
31, 2016 and increased $7.1 billion, or 7%, from $101.0 billion at
March 31, 2016. The linked-quarter change was driven by a $241
million increase in commercial loans and leases and a $201 million
increase in retail loans. The change from the prior-year period
reflects a $3.9 billion increase in commercial loans and leases and
a $3.2 billion increase in retail loans.
Average loans and leases increased $1.5 billion, or 1.5%, from
fourth quarter 2016, reflecting a $1.0 billion increase in
commercial loans and leases and a $529 million increase in retail
loans. Commercial loan and lease growth was largely driven by
strength in Commercial Real Estate, Mid-corporate and Middle
Market, Franchise Finance and Industry Verticals. Retail loan
growth reflects strength in education, mortgage and other unsecured
retail loans, partially offset by lower home equity and auto
balances.
Compared with first quarter 2016, average loans and leases of
$108.1 billion increased $7.8 billion, or 8%, reflecting a $5.0
billion increase in commercial loans and leases and a $2.8 billion
increase in retail loans. Commercial loan and lease growth was
driven by strength in Mid-corporate and Middle Market, Commercial
Real Estate, Franchise Finance and Industry Verticals. Retail loan
growth was driven by education, mortgage and other unsecured
retail, partially offset by lower home equity balances.
Deposits 1Q17 change
from ($s in millions)
1Q17
4Q16 1Q16 4Q16 1Q16
Period-end deposits $ % $
% Demand deposits $ 27,713 $ 28,472 $ 27,186 $ (759 )
(3
)%
$ 527
2
%
Checking with interest 21,913 20,714 18,706 1,199 6 3,207 17
Savings 9,441 8,964 8,748 477 5 693 8 Money market accounts 37,833
38,176 35,513 (343 ) (1 ) 2,320 7 Term deposits
15,212 13,478 12,453
1,734 13 2,759 22 Total period-end deposits
$ 112,112 $ 109,804 $ 102,606 $ 2,308
2
%
$ 9,506
9
%
Average deposits Demand deposits $ 28,098 $ 28,443 $ 27,170
$ (345 )
(1
)%
$ 928
3
%
Checking with interest 20,699 20,268 17,993 431 2 2,706 15 Savings
9,110 8,826 8,394 284 3 716 9 Money market accounts 37,874 38,397
36,225 (523 ) (1 ) 1,649 5 Term deposits
14,173 13,191 12,199 982
7 1,974 16 Total average deposits $
109,954 $ 109,125 $ 101,981 $ 829
1
%
$ 7,973
8
%
Total period-end deposits of $112.1 billion at March 31, 2017
increased $2.3 billion, or 2%, from December 31, 2016, driven by
growth in term deposits, checking with interest and savings,
partially offset by a decrease in demand deposits and money market
accounts. Compared with March 31, 2016, period-end total deposits
increased $9.5 billion, or 9%, reflecting growth across checking
with interest, term deposits and money market accounts.
First quarter 2017 average deposits of $110.0 billion increased
$829 million, or 1%, from fourth quarter 2016, given growth in
checking with interest, savings and term deposits. Compared with
first quarter 2016, average deposits increased $8.0 billion, or 8%,
reflecting growth in all categories.
Borrowed
funds 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16 4Q16
1Q16 Period-end borrowed funds $
% $ % Federal funds purchased and
securities sold under agreements to repurchase $ 1,093 $ 1,148 $
714 $ (55 )
(5
)%
$ 379
53
%
Other short-term borrowed funds 2,762 3,211 3,300 (449 ) (14 ) (538
) (16 ) Long-term borrowed funds 11,780
12,790 10,035 (1,010 ) (8 )
1,745 17 Total borrowed funds $ 15,635
$ 17,149 $ 14,049 $ (1,514 )
(9
)%
$ 1,586
11
%
Average borrowed funds $ 16,257 $
15,210 $ 13,873 $ 1,047
7
%
$ 2,384
17
%
Total borrowed funds of $15.6 billion at March 31, 2017
decreased $1.5 billion from December 31, 2016, largely reflecting a
$1.0 billion decrease in long-term borrowings, as well as a $449
million reduction in short-term Federal Home Loan Bank (“FHLB”)
borrowings. Compared with March 31, 2016, total borrowed funds
increased $1.6 billion, as a $1.7 billion increase in long-term
borrowings, largely reflecting senior debt issuance, was partially
offset by a reduction in other short-term borrowings, largely
short-term FHLB advances.
Average borrowed funds of $16.3 billion increased $1.0 billion
from fourth quarter 2016, as a $1.9 billion increase in long-term
FHLB borrowings was partially offset by a $1.0 billion reduction in
short-term FHLB borrowings. Compared with first quarter 2016,
average borrowed funds increased $2.4 billion, as a $2.5 billion
increase in long-term borrowings reflecting an increase in senior
debt and FHLB advances was partially offset by a reduction in
short-term borrowed funds, largely FHLB advances.
Capital 1Q17 change from ($s and shares in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 Period-end capital $
% $ % Stockholders' equity $ 19,847 $
19,747 $ 19,965 $ 100 1 % $ (118 ) (1 ) % Stockholders' common
equity 19,600 19,499 19,718 101 1 (118 ) (1 ) Tangible common
equity 13,258 13,154 13,333 104 1 (75 ) (1 ) Tangible book value
per common share $ 26.02 $ 25.69 $ 25.21 $ 0.33 1 $ 0.81 3 Common
shares - at end of period 509.5 512.0 528.9 (2.4 ) — (19.4 ) (4 )
Common shares - average (diluted) 511.3 513.9 530.4 (2.5 ) — %
(19.1
)
(4 ) % Common equity tier 1 capital ratio(1,2) 11.2
%
11.2 % 11.6 % Total capital ratio(1,2) 14.0 14.0 15.1 Tier 1
leverage ratio(1,2) 9.9 % 9.9 %
10.4 %
1) Current reporting-period regulatory
capital ratios are preliminary
2) Basel III ratios assume that certain
definitions impacting qualifying Basel III capital will phase in
through 2019.
On March 31, 2017, our Basel III capital ratios on a
transitional basis remained well in excess of applicable regulatory
requirements with a CET1 capital ratio of 11.2% and a total capital
ratio of 14.0%. Our capital ratios continue to reflect progress
against our objective of realigning our capital profile to be more
consistent with that of peer regional banks, while maintaining a
strong capital base to support our growth aspirations, strategy and
risk appetite. Tangible book value per common share of $26.02
increased 1% versus fourth quarter 2016 and 3% versus first quarter
2016.
As part of CFG’s 2016 Capital Plan (the “Plan”), during the
first quarter 2017 the company repurchased 3.4 million shares of
common stock and, including common dividends, returned $202 million
to shareholders; as of March 31, 2017, CFG had completed three
quarters of the 2016 CCAR Capital plan with purchases of 20.7
million shares at a weighted-average price per share of $27.01, and
including common dividends, return of $756 million to CFG
shareholders. The Plan includes the repurchase of up to $690
million of Citizens’ outstanding common stock beginning in third
quarter 2016 through second quarter 2017 with $130 million in
remaining availability as of March 31, 2017. In accordance with the
Plan, the company paid quarterly dividends of $0.12 per common
share in the third and fourth quarters of 2016 and $0.14 per common
share in first quarter of 2017. Future capital actions are subject
to consideration and approval by CFG’s Board of Directors.
Credit
quality review 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 $ % $ %
Nonperforming loans and leases $ 1,050 $ 1,045 $ 1,079 $ 5 — % $
(29 ) (3
)%
Net charge-offs 87 104 83 (17 ) (16 ) 4 5 Provision for credit
losses 96 102 91 (6 ) (6 ) 5 5 Allowance for loan and lease losses
$ 1,224 $ 1,236 $ 1,224 $ (12 ) (1 ) % $ — — % Total nonperforming
loans and leases
as a % of total loans and leases
0.97 % 0.97 % 1.07 % — bps (10 ) bps Net charge-offs as % of total
loans and leases 0.33 0.39 0.33 (6 ) bps — bps Allowance for loan
and lease losses as a % of total loans and leases 1.13 % 1.15 %
1.21 % (2 ) bps (8 ) bps Allowance for loan and lease losses as a %
of nonperforming loans and leases 116.60 %
118.32 % 113.43 % (172 ) bps
317 bps
Overall credit quality continued to improve reflecting the
benefit of growth in higher quality, lower risk retail loans and
modest increases in commercial categories. Nonperforming loans of
$1.1 billion increased slightly from December 31, 2016, as a $21
million decrease in retail, driven by continued improvement in
real-estate secured categories, was more than offset by a $26
million increase in commercial, largely commodities-related
credits. Compared to March 31, 2016, nonperforming loans and leases
decreased $29 million as a decrease in retail, largely tied to
real-estate secured categories, was partially offset by an increase
in commercial, largely commodities-related credits. The
nonperforming loans and leases to total loans and leases ratio of
0.97% at March 31, 2017 was stable with December 31, 2016 levels
and decreased ten basis points from 1.07% at March 31, 2016.
Net charge-offs of $87 million decreased $17 million driven by
an $8 million reduction in auto from higher fourth quarter 2016
levels, which included a $7 million impact tied to a methodology
change, a reduction in retail real-estate secured categories and a
decrease in education net charge-offs from seasonally higher fourth
quarter levels. Compared with first quarter 2016, net charge-offs
increased $4 million, driven by a $10 million increase in
commercial, partially offset by a $6 million reduction in retail
net charge-offs in real-estate secured categories. First quarter
2017 net charge-offs of 33 basis points of average loans and leases
compares with 39 basis points in fourth quarter 2016 and 33 basis
points in first quarter 2016.
Allowance for loan and lease losses of $1.2 billion decreased
modestly compared to fourth quarter 2016 and was stable with first
quarter 2016 levels, largely reflecting continued improvement in
credit quality and the impact of loan growth.
Allowance for loan and lease losses to total loans and leases
was 1.13% as of March 31, 2017, relatively stable compared with
1.15% as of December 31, 2016 and down modestly from 1.21% as of
March 31, 2016. The allowance for loan and lease losses to
nonperforming loans and leases ratio of 117% as of March 31, 2017
remained relatively stable compared to 118% as of December 31, 2016
and up from 113% as of March 31, 2016.
Additional Segment Detail:
Consumer Banking Segment 1Q17 change from ($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 Total revenue 858 866 789 (8 ) (1 ) 69 9 Noninterest
expense 647 649
616 (2 ) — 31 5
Pre-provision profit 211 217 173 (6 ) (3 ) 38 22 Provision for
credit losses 64 74
63 (10 ) (14 ) 1 2
Income before income tax expense 147 143 110 4 3 37 34 Income tax
expense 52 51
39 1 2 13 33 Net
income $ 95 $ 92 $ 71
$ 3 3 % $ 24
34
%
Average balances
Total loans and leases (1) $ 57,309 $ 56,711 $
53,744 $ 598
1
%
$ 3,565
7
%
Total deposits $ 74,133 $ 73,124
$ 70,871 $ 1,009
1
%
$ 3,262
5
%
Key performance metrics*
ROTCE (2) 7.1 % 7.0 % 5.6 % 9 bps 147
bps Efficiency ratio 75 % 75 % 78 % 51 bps (267 ) bps
Loan-to-deposit ratio (period-end)(1) 75.7 %
77.3 % 74.7 % (167 ) bps
92 bps
1) Includes held for sale.
2) Operating segments are allocated
capital on a risk-adjusted basis considering economic and
regulatory capital requirements. We approximate that regulatory
capital is equivalent to a sustainable target level of common
equity tier 1 and then allocate that approximation to the segments
based on economic capital.
Consumer Banking net income of $95 million in first quarter 2017
increased $3 million, or 3%, versus fourth quarter 2016, reflecting
a decrease in revenue and stable noninterest expense and a 14%
decrease in provision for credit losses. Net interest income
remained relatively stable versus fourth quarter 2016 as the
benefit of higher education, mortgage and other unsecured retail
loan balances and improved loan yields was partially offset by the
impact of fewer days and an increase in deposit costs. Noninterest
income decreased $7 million as a reduction in mortgage banking fees
from fourth quarter levels that included improved MSR valuations
and origination volumes as well as seasonally lower service charges
more than offset an increase in card fees, which was driven by
revised contract terms commencing this quarter for core processing
fees and a reduction in card reward expense, as well as higher
trust and investment services fees.
Noninterest expense remained relatively stable with fourth
quarter 2016, as an increase in salaries and employee benefit
costs, given the impact of seasonally higher payroll taxes and
401(k) benefit costs, and higher occupancy costs associated with
branch rationalization and seasonally higher maintenance costs were
largely offset by lower outside services expense and a reduction in
other operating expense, largely regulatory and fraud. Provision
for credit losses decreased $10 million, largely driven by
improvements in auto from higher fourth quarter levels, which
included a $7 million increase related to a methodology change.
Compared with first quarter 2016, net income increased $24
million, or 34%, reflecting a $69 million increase in total revenue
that more than offset a $31 million increase in noninterest
expense. Net interest income increased $57 million, or 10%, driven
by a $3.6 billion increase in average loans led by education,
mortgage and other consumer unsecured categories with higher loan
yields that included the benefit of higher rates, partially offset
by an increase in deposit costs. Noninterest income increased $12
million from first quarter 2016, driven by an increase in card
fees, which included the benefit of revised contract terms
commencing this quarter for core processing fees and a reduction in
card reward expense, as well as an increase in mortgage banking
fees, which reflected higher MSR valuations and improved
origination volumes. Noninterest expense increased $31 million, or
5%, largely driven by an increase in salaries and employee benefits
tied to higher commissions and payroll taxes as well as other
expenses largely tied to insurance and fraud and regulatory costs.
Results also reflect higher occupancy costs associated with branch
rationalization as well as outside services, driven by retail loan
origination and serving costs. Provision for credit losses
increased $1 million from first quarter 2016, largely driven by
higher net charge-offs in auto and education.
Commercial Banking Segment 1Q17 change from ($s in
millions)
1Q17 4Q16
1Q16 4Q16 1Q16 $ % $
% Net interest income $ 346 $ 347 $ 300 $ (1 )
—
%
$ 46
15
%
Noninterest income 134
122 99 12 10 35
35 Total revenue 480 469 399 11 2 81 20 Noninterest expense
190 187
187 3 2 3 2 Pre-provision
profit 290 282 212 8 3 78 37 Provision for credit losses
19 20 9
(1 ) (5 ) 10 111 Income before income
tax expense 271 262 203 9 3 68 33 Income tax expense
91 90 70
1 1 21 30 Net income $
180 $ 172 $ 133 $ 8
5
%
$ 47
35
%
Average balances
Total loans and leases (1) $ 48,154 $ 47,010 $
43,899 $ 1,144
2
%
$ 4,255
10
%
Total deposits $ 28,973 $ 29,410
$ 24,833 $ (437 )
(1
)%
$ 4,140
17
%
Key performance metrics*
ROTCE (2) 13.2 % 12.9 % 11.2 % 24 bps
199 bps Efficiency ratio 40 % 40 % 47 % (3 ) bps (694 ) bps
Loan-to-deposit ratio (period-end)(1) 165.1 %
166.2 % 185.1 % (116 ) bps
(2,004 ) bps
1) Includes held for sale.
2) Operating segments are allocated
capital on a risk-adjusted basis considering economic and
regulatory capital requirements. We approximate that regulatory
capital is equivalent to a sustainable target level for common
equity tier 1 and then allocate that approximation to the segments
based on economic capital.
Commercial Banking net income of $180 million in first quarter
2017 increased $8 million from fourth quarter 2016, reflecting an
$11 million increase in total revenue, a $3 million increase in
noninterest expense and relatively stable provision for credit
losses. Net interest income of $346 million remained relatively
stable as the benefit of loan growth and loan yields was offset by
the impact of an increase in deposit costs and one fewer day in the
quarter. Average loans and leases increased $1.1 billion, driven by
growth in Commercial Real Estate, Mid-corporate and Middle Market,
Franchise Finance and Industry Verticals. Noninterest income
increased $12 million, or 10%, reflecting strength in capital
markets and modest improvements in card fees and service charges,
which more than offset lower foreign exchange and interest rate
products income from strong fourth quarter levels. Noninterest
expense increased $3 million, or 2%, largely reflecting higher
salaries and benefits expense tied to seasonally higher payroll
taxes and 401(k) benefit costs and incentive compensation.
Provision for credit losses improved $1 million.
Compared to first quarter 2016, net income increased $47
million, or 35%, driven by an $81 million increase in total
revenue, partially offset by a $3 million increase in noninterest
expense and a $10 million increase in provision for credit losses.
Net interest income increased $46 million, or 15%, from first
quarter 2016, driven by 10% average loan growth and improved loan
yields, partially offset by higher deposit costs. Average loans and
leases increased $4.3 billion, driven by strength in Mid-corporate
and Middle Market, Commercial Real Estate, Franchise Finance and
Industry Verticals. Noninterest income increased $35 million from
first quarter 2016 levels, largely reflecting strength in capital
markets, foreign exchange and interest rate products income and
card fees. Noninterest expense increased $3 million from first
quarter 2016, driven by higher salaries and employee benefits
largely tied to higher payroll taxes given the change in timing of
incentive compensation. Expense results also reflected higher
amortization of software and a reduction in outside services.
Provision for credit losses increased $10 million from first
quarter 2016, driven by increased losses.
Other(1) 1Q17 change from ($s in millions)
1Q17 4Q16 1Q16
4Q16 1Q16 $ % $
% Net interest income $ 21 $ — $ 23 $ 21
100
%
$ (2 )
(9
)%
Noninterest income 25 28
23 (3 ) (11 ) 2 9 Total
revenue 46 28 46 18 64 — — Noninterest expense
17 11 8 6
55 9 113 Pre-provision profit (loss) 29 17 38 12 71
(9 ) (24 ) Provision for credit losses 13
8 19 5 63
(6 ) (32 ) Income (loss) before income tax expense (benefit)
16 9 19 7 78 (3 ) (16 ) Income tax expense (benefit)
(29 ) (9 ) — (20 ) (222 )
(29 ) (100 ) Net income (loss) $ 45
$ 18 $ 19 $ 27 150 $ 26 137
Average balances
Total loans and leases (2) $ 3,186 $ 3,370 $
2,974 $ (184 )
(5
)%
$ 212
7
%
Total deposits $ 6,848 $ 6,591
$ 6,277 $ 257
4
%
$ 571
9
%
1) Includes the financial impact of
non-core, liquidating loan portfolios and other non-core assets,
our treasury activities, wholesale funding activities, securities
portfolio, community development assets and other unallocated
assets, liabilities, revenues, provision for credit losses and
expenses not attributed to our Consumer Banking or Commercial
Banking segments.
2) Includes held for sale.
Other net income of $45 million in first quarter 2017 increased
$27 million versus fourth quarter 2016. First quarter results
include a $23 million benefit, or $0.04 per diluted common share,
related to settlement of state tax matters that lowered the
effective tax rate by 5.2 per cent. Other reflects net interest
income of $21 million in first quarter 2017 versus zero net
interest income in fourth quarter 2016, reflecting higher residual
funds transfer pricing and higher investment income, partially
offset by the lower benefit of swaps and higher funding costs.
Noninterest income of $25 million decreased $3 million, largely
reflecting fourth quarter gains not recorded in first quarter 2017.
Noninterest expense of $17 million increased $6 million, driven by
the impact of seasonally higher payroll taxes and higher
incentives. Provision for credit losses of $13 million increased $5
million as first quarter 2017 included a reserve build, partially
offset by lower net charge-offs in non-core, compared to a reserve
release in fourth quarter 2016.
Other net income in first quarter 2017 increased $26 million
versus first quarter 2016, driven by a $23 million benefit, or
$0.04 per diluted common share, related to settlement of state tax
matters that lowered the effective tax rate by 5.2 per cent. Net
interest income decreased $2 million, reflecting higher funding
costs and the lower benefit of swaps, partially offset by higher
investment income and higher residual funds transfer pricing.
Noninterest income remained relatively stable. Noninterest expense
increased $9 million from first quarter 2016, largely reflecting
increased depreciation expense related to the transfer of leases
from Commercial to non-core. Provision for credit losses decreased,
reflecting lower net charge-offs in non-core.
Corresponding Financial Tables and
Information
Investors are encouraged to review the foregoing summary and
discussion of Citizens' earnings and financial condition in
conjunction with the detailed financial tables and other
information available on the Investor Relations portion of the
company’s website at www.citizensbank.com/about-us.
Conference Call
CFG management will host a live conference call today with details
as follows: Time: 9:00 am ET Dial-in:
(800) 230-1092, conference ID 416825
Webcast/Presentation: The live webcast will be available at
http://investor.citizensbank.com under Events &
Presentations
Replay Information: A replay of the conference call will be
available beginning at 11:00 am ET on April 20 through May 20,
2017. Please dial (800) 475-6701 and enter access code 416825. The
webcast replay will be available at
http://investor.citizensbank.com under Events &
Presentations.
About Citizens Financial Group,
Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and
largest financial institutions, with $150.3 billion in assets as of
March 31, 2017. Headquartered in Providence, Rhode Island, Citizens
offers a broad range of retail and commercial banking products and
services to individuals, small businesses, middle-market companies,
large corporations and institutions. In Consumer Banking, Citizens
helps its retail customers “bank better” with mobile and online
banking, a 24/7 customer contact center and the convenience of
approximately 3,200 ATMs and approximately 1,200 Citizens Bank
branches in 11 states in the New England, Mid-Atlantic and Midwest
regions. Citizens also provides wealth management, mortgage
lending, auto lending, student lending and commercial banking
services in select markets nationwide. In Commercial Banking,
Citizens offers corporate, institutional and not-for-profit clients
a full range of wholesale banking products and services including
lending and deposits, capital markets, treasury services, foreign
exchange and interest hedging, leasing and asset finance, specialty
finance and trade finance. Citizens operates through its
subsidiaries Citizens Bank, N.A. and Citizens Bank of Pennsylvania
as Citizens Bank, Citizens Commercial Banking and Citizens One.
Additional information about Citizens and its full line of products
and services can be found at www.citizensbank.com.
Key Performance Metrics and Non-GAAP
Financial Measures and Reconciliations(in millions,
except share, per-share and ratio data)
Key Performance Metrics:
Our management team uses key performance metrics (KPMs) to gauge
our performance and progress over time in achieving our strategic
and operational goals and also in comparing our performance against
our peers. We have established the following financial targets, in
addition to others, as KPMs, which are utilized by our management
in measuring our progress against financial goals and as a tool in
helping assess performance for compensation purposes. These KPMs
can largely be found in our periodic reports which are filed with
the Securities and Exchange Commission, and are supplemented from
time to time with additional information in connection with our
quarterly earnings releases.
Our key performance metrics
include:
Return on average tangible common equity
(ROTCE);
Return on average total tangible assets
(ROTA);
Efficiency ratio;
Operating leverage; and
Common equity tier 1 capital ratio (Basel III
fully phased-in basis).
In establishing goals for these KPMs, we determined that they
would be measured on a management-reporting basis, or an operating
basis, which we refer to externally as “Adjusted” or “Underlying”
results. We believe that these “Adjusted” or “Underlying” results
provide the best representation of our financial progress towards
these goals as they exclude items that our management does not
consider indicative of our on-going financial performance. KPMs
that contain “Adjusted” or “Underlying” results are considered
non-GAAP financial measures.
Non-GAAP Financial Measures:
This document contains non-GAAP financial measures. The
following tables present reconciliations of our non-GAAP measures.
These reconciliations exclude “Adjusted” or “Underlying” items,
which are included, where applicable, in the financial results
presented in accordance with GAAP. “Adjusted” or “Underlying” items
include certain items that may occur in a reporting period which
management does not consider indicative of on-going financial
performance.
The non-GAAP measures presented in the following tables include
reconciliations to the most directly comparable GAAP measures and
are: “noninterest income”, “total revenue”, “noninterest expense”,
“pre-provision profit”, “income before income tax expense”, “income
tax expense”, “effective income tax rate”, “net income”, “net
income available to common stockholders”, “other income”, “salaries
and employee benefits”, “outside services”, “amortization of
software expense”, “other operating expense”, “net income per
average common share”, “return on average common equity” and
“return on average total assets”.
We believe these non-GAAP measures provide useful information to
investors because these are among the measures used by our
management team to evaluate our operating performance and make
day-to-day operating decisions. In addition, we believe “Adjusted”
or “Underlying” items in any period do not reflect the operational
performance of the business in that period and, accordingly, it is
useful to consider these line items with and without “Adjusted” or
“Underlying” items. We believe this presentation also increases
comparability of period-to-period results.
Other companies may use similarly titled non-GAAP financial
measures that are calculated differently from the way we calculate
such measures. Accordingly, our non-GAAP financial measures may not
be comparable to similar measures used by other companies. We
caution investors not to place undue reliance on such non-GAAP
measures, but instead to consider them with the most directly
comparable GAAP measure. Non-GAAP financial measures have
limitations as analytical tools, and should not be considered in
isolation, or as a substitute for our results as reported under
GAAP.
Key performance metrics, non-GAAP
financial measures and reconciliations(in millions, except
share, per-share and ratio data)
QUARTERLY TRENDS 1Q17 Change 1Q17
4Q16 3Q16 2Q16
1Q16 4Q16 1Q16 $ % $
% Noninterest income, adjusted: Noninterest income
(GAAP) $ 379 $ 377 $ 435 $ 355 $ 330 $ 2 1 % $ 49 15 % Less:
Notable items — — 67 — —
— — — — Noninterest income, adjusted
(non-GAAP) $ 379 $ 377 $ 368 $ 355 $ 330 $ 2 1 % $ 49
15 %
Total revenue, adjusted: Total revenue (GAAP) A $ 1,384
$ 1,363 $ 1,380 $ 1,278 $ 1,234 $ 21 2 % $ 150 12 % Less: Notable
items — — 67 — — —
— — — Total revenue, adjusted (non-GAAP) B $ 1,384 $
1,363 $ 1,313 $ 1,278 $ 1,234 $ 21 2 % $ 150 12 %
Noninterest expense, adjusted: Noninterest expense (GAAP) C
$ 854 $ 847 $ 867 $ 827 $ 811 $ 7 1 % $ 43 5 % Less: Notable items
— — 36 — — —
— — — Noninterest expense, adjusted (non-GAAP) D $
854 $ 847 $ 831 $ 827 $ 811 $ 7 1 % $ 43 5 %
Pre-provision profit: Total revenue (GAAP) A $ 1,384 $ 1,363
$ 1,380 $ 1,278 $ 1,234 $ 21 2 % $ 150 12 % Noninterest expense
(GAAP) C 854 847 867 827
811 7 1 43 5 Pre-provision profit (GAAP) $ 530
$ 516 $ 513 $ 451 $ 423 $ 14 3 % $ 107 25 %
Pre-provision profit, adjusted: Total revenue, adjusted
(non-GAAP) B $ 1,384 $ 1,363 $ 1,313 $ 1,278 $ 1,234 $ 21 2 % $ 150
12 % Less: Noninterest expense, adjusted (non-GAAP) D 854
847 831 827 811 7
1 43 5 Pre-provision profit, adjusted (non-GAAP) $ 530 $ 516
$ 482 $ 451 $ 423 $ 14 3 % $ 107 25 %
Income
before income tax expense, adjusted: Income before income tax
expense (GAAP) $ 434 $ 414 $ 427 $ 361 $ 332 $ 20 5 % $ 102 31 %
Less: Income before income tax expense (benefit) related to notable
items — — 31 — — —
— — — Income before income tax expense, adjusted
(non-GAAP) $ 434 $ 414 $ 396 $ 361 $ 332 $ 20 5 % $
102 31 %
Income tax expense and effective income tax rate,
adjusted: Income tax expense (GAAP) $ 114 $ 132 $ 130 $ 118 $
109 ($18 ) (14 %) $ 5 5 % Less: Income tax expense (benefit)
related to notable items — — 12
— — — — — — Income tax expense,
adjusted (non-GAAP) $ 114 $ 132 $ 118 $ 118 $ 109
($18 ) (14 %) $ 5 5 %
Net income, adjusted: Net income
(GAAP) E $ 320 $ 282 $ 297 $ 243 $ 223 $ 38
13
%
$ 97 43 % Add: Notable items, net of income tax expense (benefit)
— — (19 ) — — — —
— — Net income, adjusted (non-GAAP) F $ 320 $ 282 $ 278
$ 243 $ 223 $ 38 13 % $ 97 43 %
Net income
available to common stockholders, adjusted: Net income
available to common stockholders (GAAP) G $ 313 $ 282 $ 290 $ 243 $
216 $ 31 11 % $ 97 45 % Add: Notable items, net of income tax
expense (benefit) — — (19 ) — —
— — — — Net income available to common
stockholders, adjusted (non-GAAP) H $ 313 $ 282 $ 271 $ 243
$ 216 $ 31 11 % $ 97 45 %
Key performance metrics, non-GAAP
financial measures and reconciliations(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
% $ 150 12.16 % Less: Noninterest expense (GAAP) C 854 847 867 827
811 7 0.83 43 5.30 Operating leverage 0.71 % 6.86 %
Operating leverage, adjusted: Total revenue, adjusted
(non-GAAP) B $ 1,384 $ 1,363 $ 1,313 $ 1,278 $ 1,234 $ 21 1.54 % $
150 12.16 % Less: Noninterest expense, adjusted (non-GAAP) D 854
847 831 827 811 7 0.83 43 5.30 Operating leverage,
adjusted (non-GAAP) 0.71 % 6.86 %
Efficiency ratio and
efficiency ratio, adjusted: Efficiency ratio C/A 61.68 % 62.18
% 62.88 % 64.71 % 65.66 % (50 )
bps
(398 ) bps Efficiency ratio, adjusted (non-GAAP) D/B 61.68 62.18
63.31 64.71 65.66 (50 ) bps (398 ) bps
Return on average common
equity and return on average common equity, adjusted: Average
common equity (GAAP) I $ 19,460 $ 19,645 $ 19,810 $ 19,768 $ 19,567
($185 ) (1 %) ($107 ) (1 %) Return on average common equity G/I
6.52 % 5.70 % 5.82 % 4.94 % 4.45 % 82 bps 207 bps Return on average
common equity, adjusted (non-GAAP) H/I 6.52 5.70 5.44 4.94 4.45 82
bps 207 bps
Return on average tangible common equity and return
on average tangible common equity, adjusted: Average common
equity (GAAP) I $ 19,460 $ 19,645 $ 19,810 $ 19,768 $ 19,567 ($185
) (1 %) ($107 ) (1 %) Less: Average goodwill (GAAP) 6,876 6,876
6,876 6,876 6,876 — — — — Less: Average other intangibles (GAAP) —
1 1 2 3 (1 ) (100 ) (3 ) (100 ) Add: Average deferred tax
liabilities related to goodwill (GAAP) 531 523
509 496 481
8 2 50 10 Average tangible common equity J $
13,115 $ 13,291 $ 13,442 $ 13,386 $
13,169 ($176 ) (1 %) ($54 ) — % Return on
average tangible common equity G/J 9.68 % 8.43 % 8.58 % 7.30 % 6.61
% 125 bps 307 bps Return on average tangible common equity,
adjusted (non-GAAP) H/J 9.68 8.43 8.02 7.30 6.61 125 bps 307 bps
Return on average total assets and return on average total
assets, adjusted: Average total assets (GAAP) K $ 148,786 $
147,315 $ 144,399 $ 142,179 $ 138,780 $ 1,471 1 % $ 10,006 7 %
Return on average total assets E/K 0.87 % 0.76 % 0.82 % 0.69 % 0.65
% 11 bps 22 bps Return on average total assets, adjusted (non-GAAP)
F/K 0.87 0.76 0.77 0.69 0.65 11 bps 22 bps
Return on average
total tangible assets and return on average total tangible assets,
adjusted: Average total assets (GAAP) K $ 148,786 $ 147,315 $
144,399 $ 142,179 $ 138,780 $ 1,471 1 % $ 10,006 7 % Less: Average
goodwill (GAAP) 6,876 6,876 6,876 6,876 6,876 — — — — Less: Average
other intangibles (GAAP) — 1 1 2 3 (1 ) (100 ) (3 ) (100 ) Add:
Average deferred tax liabilities related to goodwill (GAAP)
531 523 509 496
481 8 2 50 10 Average
tangible assets L $ 142,441 $ 140,961 $ 138,031
$ 135,797 $ 132,382 $ 1,480 1 % $
10,059 8 % Return on average total tangible assets E/L 0.91
% 0.79 % 0.86 % 0.72 % 0.68 % 12 bps 23 bps Return on average total
tangible assets, adjusted (non-GAAP) F/L 0.91 0.79 0.80 0.72 0.68
12 bps 23 bps
Key performance metrics, non-GAAP
financial measures and reconciliations(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 common
share: Common shares - at end of period (GAAP)
M
509,515,646 511,954,871 518,148,345 529,094,976 528,933,727
(2,439,225 ) — % (19,418,081 ) (4 %) Common stockholders' equity
(GAAP) $ 19,600 $ 19,499 $ 19,934 $ 19,979 $ 19,718 $ 101 1 ($118 )
(1 ) Less: Goodwill (GAAP) 6,876 6,876 6,876 6,876 6,876 — — — —
Less: Other intangible assets (GAAP) — 1 1 2 3 (1 ) (100 ) (3 )
(100 ) Add: Deferred tax liabilities related to goodwill (GAAP)
534 532 519 507
494 2 — 40 8
Tangible common equity N $ 13,258 $ 13,154 $ 13,576
$ 13,608 $ 13,333 $ 104 1 % ($75
) (1 %) Tangible book value per common share N/M $ 26.02 $ 25.69 $
26.20 $ 25.72 $ 25.21 $ 0.33 1 % $ 0.81 3 %
Net income per
average common share - basic and diluted, adjusted: Average
common shares outstanding - basic (GAAP) O 509,451,450 512,015,920
519,458,976 528,968,330 528,070,648 (2,564,470 ) (1 %) (18,619,198
) (4 %) Average common shares outstanding - diluted (GAAP) P
511,348,200 513,897,085 521,122,466 530,365,203 530,446,188
(2,548,885 ) — (19,097,988 ) (4 ) Net income available to common
stockholders (GAAP) G $ 313 $ 282 $ 290 $ 243 $ 216 $ 31 11 $ 97 45
Net income per average common share - basic (GAAP) G/O 0.61 0.55
0.56 0.46 0.41 0.06 11 0.20 49 Net income per average common share
- diluted (GAAP) G/P 0.61 0.55 0.56 0.46 0.41 0.06 11 0.20 49 Net
income available to common stockholders, adjusted (non-GAAP) H 313
282 271 243 216 31 11 97 45 Net income per average common share -
basic, adjusted (non-GAAP) H/O 0.61 0.55 0.52 0.46 0.41 0.06 11
0.20 49 Net income per average common share - diluted, adjusted
(non-GAAP) H/P 0.61 0.55 0.52 0.46 0.41 0.06 11 0.20 49
Pro
forma Basel III fully phased-in common equity tier 1 capital
ratio1: Common equity tier 1 capital (regulatory)
$ 13,941 $ 13,822 $ 13,763 $ 13,768 $ 13,570 Less: Change in DTA
and other threshold deductions (GAAP) — —
— 1
1 Pro forma Basel III fully phased-in common equity tier 1
capital Q $ 13,941 $ 13,822 $ 13,763
$ 13,767 $ 13,569 Risk-weighted assets
(regulatory general risk weight approach) $ 124,881 $ 123,857 $
121,612 $ 119,492 $ 116,591 Add: Net change in credit and other
risk-weighted assets (regulatory) 247 244
228 228
232 Pro forma Basel III standardized approach
risk-weighted assets R $ 125,128 $ 124,101 $
121,840 $ 119,720 $ 116,823 Pro
forma Basel III fully phased-in common equity tier 1 capital ratio1
Q/R 11.1 % 11.1 % 11.3 % 11.5 % 11.6 %
1 Basel III ratios assume certain
definitions impacting qualifying Basel III capital, which otherwise
will phase in through 2019, are fully phased-in. Ratios also
reflect the required US Standardized methodology for calculating
RWAs, effective January 1, 2015.
Key performance metrics, non-GAAP
financial measures and reconciliations(in millions, except
share, per-share and ratio data)
QUARTERLY TRENDS 1Q17 Change 1Q17
4Q16 3Q16 2Q16
1Q16 4Q16 1Q16 $ % $
% Other income, adjusted Other income (GAAP) $ 24 $
25 $ 87 $ 15 $ 20 ($1 ) (4 %) $ 4 20 % Less: Notable items —
— 67 — — — — — —
Other income, adjusted (non-GAAP) $ 24 $ 25 $ 20 $ 15 $ 20
($1 ) (4 %) $ 4 20 %
Salaries and employee benefits,
adjusted: Salaries and employee benefits (GAAP) $ 444 $ 420 $
432 $ 432 $ 425 $ 24 6 % $ 19 4 % Less: Notable items —
— 11 — — — — — —
Salaries and employee benefits, adjusted (non-GAAP) $ 444 $ 420 $
421 $ 432 $ 425 $ 24 6 % $ 19 4 %
Outside services,
adjusted: Outside services (GAAP) $ 91 $ 98 $ 102 $ 86 $ 91 ($7
) (7 %) $ — — % Less: Notable items — — 8
— — — — — — Outside services,
adjusted (non-GAAP) $ 91 $ 98 $ 94 $ 86 $ 91 ($7 ) (7 %) $ —
— %
Occupancy, adjusted: Occupancy (GAAP) $ 82 $ 77 $ 78 $
76 $ 76 $ 5 6 % $ 6 8 % Less: Notable items — —
— — — — — — — Occupancy,
adjusted (non-GAAP) $ 82 $ 77 $ 78 $ 76 $ 76 $ 5 6 % $ 6 8 %
Equipment expense, adjusted: Equipment expense (GAAP) $ 67 $
69 $ 65 $ 64 $ 65 ($2 ) (3 %) $ 2 3 % Less: Notable items —
— — — — — — — —
Equipment expense, adjusted (non-GAAP) $ 67 $ 69 $ 65 $ 64 $ 65
($2 ) (3 %) $ 2 3 %
Amortization of software,
adjusted: Amortization of software (GAAP) $ 44 $ 44 $ 46 $ 41 $
39 $ — — % $ 5 13 % Less: Notable items — — 3
— — — — — — Amortization of
software, adjusted (non-GAAP) $ 44 $ 44 $ 43 $ 41 $ 39 $ — —
% $ 5 13 %
Other operating expense, adjusted: Other
operating expense (GAAP) $ 126 $ 139 $ 144 $ 128 $ 115 ($13 ) (9 %)
$ 11 10 % Less: Notable items — — 14 —
— — — — — Other operating expense,
adjusted (non-GAAP) $ 126 $ 139 $ 130 $ 128 $ 115 ($13 ) (9
%) $ 11 10 %
Key performance metrics, non-GAAP
financial measures and reconciliations(in millions, except
share, per-share and ratio data)
THREE MONTHS ENDED MAR 31, THREE MONTHS ENDED DEC 31,
2017
2016
ConsumerBanking
CommercialBanking
Other Consolidated
ConsumerBanking
CommercialBanking
Other
Consolidated
Net income available to common stockholders: Net income
(loss) (GAAP) A $ 95 $ 180 $ 45 $ 320 $ 92 $ 172 $ 18 $ 282 Less:
Preferred stock dividends — — 7
7 — — —
— Net income available to common stockholders
B $ 95 $ 180 $ 38 $ 313 $ 92 $
172 $ 18 $ 282
Return on average tangible
common equity: Average common equity (GAAP) $ 5,460 $ 5,528 $
8,472 $ 19,460 $ 5,275 $ 5,278 $ 9,092 $ 19,645 Less: Average
goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 Average other
intangibles (GAAP) — — — — — — 1 1 Add: Average deferred tax
liabilities related to goodwill (GAAP) — —
531 531 — —
523 523 Average tangible common
equity C $ 5,460 $ 5,528 $ 2,127 $ 13,115
$ 5,275 $ 5,278 $ 2,738 $ 13,291
Return on average tangible common equity B/C 7.06 % 13.18 % NM 9.68
% 6.97 % 12.94 % NM 8.43 %
Return on average total tangible
assets: Average total assets (GAAP) $ 58,660 $ 49,243 $ 40,883
$ 148,786 $ 58,066 $ 48,024 $ 41,225 $ 147,315 Less: Average
goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 Average other
intangibles (GAAP) — — — — — — 1 1 Add: Average deferred tax
liabilities related to goodwill (GAAP) — —
531 531 — —
523 523 Average tangible assets
D $ 58,660 $ 49,243 $ 34,538 $ 142,441
$ 58,066 $ 48,024 $ 34,871 $ 140,961
Return on average total tangible assets A/D 0.66 % 1.48 % NM 0.91 %
0.63 % 1.42 % NM 0.79 %
Efficiency ratio: Noninterest
expense (GAAP) E $ 647 $ 190 $ 17 $ 854 $ 649 $ 187 $ 11 $ 847 Net
interest income (GAAP) 638 346 21 1,005 639 347 — 986 Noninterest
income (GAAP) 220 134 25
379 227 122 28
377 Total revenue (GAAP) F $ 858 $ 480
$ 46 $ 1,384 $ 866 $ 469 $ 28
$ 1,363 Efficiency ratio E/F 75.41 % 39.80 % NM 61.68
% 74.90 % 39.83 % NM 62.18 %
THREE MONTHS ENDED SEPT
30, THREE MONTHS ENDED JUNE 30,
2016
2016
ConsumerBanking
CommercialBanking
Other Consolidated
ConsumerBanking
CommercialBanking
Other Consolidated Net income available to common
stockholders: Net income (loss) (GAAP) A $ 92 $ 162 $ 43 $ 297
$ 90 $ 164 ($11 ) $ 243 Less: Preferred stock dividends —
— 7 7 —
— — — Net income
available to common stockholders B $ 92 $ 162 $ 36
$ 290 $ 90 $ 164 ($11 ) $ 243
Return on average tangible common equity: Average
common equity (GAAP) $ 5,190 $ 5,172 $ 9,448 $ 19,810 $ 5,110 $
5,040 $ 9,618 $ 19,768 Less: Average goodwill (GAAP) — — 6,876
6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 1 1 — —
2 2 Add: Average deferred tax liabilities related to goodwill
(GAAP) — — 509 509
— — 496 496
Average tangible common equity C $ 5,190 $ 5,172
$ 3,080 $ 13,442 $ 5,110 $ 5,040
$ 3,236 $ 13,386 Return on average tangible common
equity B/C 7.04 % 12.50 % NM 8.58 % 7.09 % 13.04 % NM 7.30 %
Return on average total tangible assets: Average total
assets (GAAP) $ 56,689 $ 47,902 $ 39,808 $ 144,399 $ 55,660 $
47,388 $ 39,131 $ 142,179 Less: Average goodwill (GAAP) — — 6,876
6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 1 1 — —
2 2 Add: Average deferred tax liabilities related to goodwill
(GAAP) — — 509 509
— — 496 496
Average tangible assets D $ 56,689 $ 47,902 $
33,440 $ 138,031 $ 55,660 $ 47,388 $
32,749 $ 135,797 Return on average total tangible
assets A/D 0.64 % 1.35 % NM 0.86 % 0.65 % 1.39 % NM 0.72 %
Efficiency ratio: Noninterest expense (GAAP) E $ 650 $ 181 $
36 $ 867 $ 632 $ 186 $ 9 $ 827 Net interest income (GAAP) 621 327
(3 ) 945 602 314 7 923 Noninterest income (GAAP) 229
123 83 435 219
122 14 355 Total
revenue (GAAP) F $ 850 $ 450 $ 80 $ 1,380
$ 821 $ 436 $ 21 $ 1,278
Efficiency ratio E/F 76.46 % 40.21 % NM 62.88 % 76.98 % 42.88 % NM
64.71 %
THREE MONTHS ENDED MAR 31,
2016
ConsumerBanking
CommercialBanking
Other Consolidated Net income available to common
stockholders: Net income (loss) (GAAP) A $ 71 $ 133 $ 19 $ 223
Less: Preferred stock dividends — —
7 7 Net income available to common
stockholders B $ 71 $ 133 $ 12 $ 216
Return on average tangible common equity: Average common
equity (GAAP) $ 5,089 $ 4,790 $ 9,688 $ 19,567 Less: Average
goodwill (GAAP) — — 6,876 6,876 Average other intangibles (GAAP) —
— 3 3 Add: Average deferred tax liabilities related to goodwill
(GAAP) — — 481 481
Average tangible common equity C $ 5,089 $ 4,790
$ 3,290 $ 13,169 Return on average tangible
common equity B/C 5.59 % 11.19 % NM 6.61 %
Return on average
total tangible assets: Average total assets (GAAP) $ 55,116 $
45,304 $ 38,360 $ 138,780 Less: Average goodwill (GAAP) — — 6,876
6,876 Average other intangibles (GAAP) — — 3 3 Add: Average
deferred tax liabilities related to goodwill (GAAP) —
— 481 481 Average
tangible assets D $ 55,116 $ 45,304 $ 31,962 $
132,382 Return on average total tangible assets A/D 0.52 %
1.18 % NM 0.68 %
Efficiency ratio: Noninterest expense
(GAAP) E $ 616 $ 187 $ 8 $ 811 Net interest income (GAAP) 581 300
23 904 Noninterest income (GAAP) 208 99
23 330 Total revenue (GAAP) F $ 789
$ 399 $ 46 $ 1,234 Efficiency ratio E/F
78.08 % 46.74 % NM 65.66 %
Key performance metrics, non-GAAP
financial measures and reconciliations(in millions, except
share, per-share and ratio data)
QUARTERLY TRENDS 1Q17 Change 1Q17 4Q16
1Q16 4Q16 1Q16 $/bps % $/bps %
Income
before income tax expense (GAAP) A $ 434 $ 414 $ 332 $ 20 5 % $
102 31 %
Income tax expense and effective income tax rate,
underlying: Income tax expense (GAAP) B $ 114 $ 132 $ 109 ($18
) (14 %) $ 5 5 % Less: Settlement of certain state tax matters
(23 ) — — (23 ) 100
(23 ) 100 Income tax expense, underlying C $ 137 $
132 $ 109 $ 5 4 % $ 28 26 % Effective
income tax rate (GAAP) B/A 26.36 % 31.90 % 32.87 % (554 ) bps (651
) bps Effective income tax rate, underlying C/A 31.56 31.90 32.87
(34 ) bps (131 ) bps
Net income, underlying: Net income
(GAAP) D $ 320 $ 282 $ 223 $ 38 13 % $ 97 ¥ 43 % Less: Settlement
of certain state tax matters 23 —
— 23 100 23 100 Net
income, underlying E $ 297 $ 282 $ 223 $ 15
5 % $ 74 33 %
Net income available to common
stockholders, underlying: Net income available to common
stockholders (GAAP) F $ 313 $ 282 $ 216 $ 31 11 % $ 97 45 % Less:
Settlement of certain state tax matters 23 —
— 23 100 23 100
Net income available to common stockholders, underlying G $ 290
$ 282 $ 216 $ 8 3 % $ 74 34 %
Return on average common equity and return on average common
equity, underlying: Average common equity (GAAP) H $ 19,460 $
19,645 $ 19,567 ($185 ) (1 %) ($107 ) (1 %) Return on average
common equity F/H 6.52 % 5.70 % 4.45 % 82 bps 207 bps Return on
average common equity, underlying G/H 6.05 5.70 4.45 35 bps 160 bps
Return on average tangible common equity and return on average
tangible common equity, underlying: Average common equity
(GAAP) H $ 19,460 $ 19,645 $ 19,567 ($185 ) (1 %) ($107 ) (1 %)
Less: Average goodwill (GAAP) 6,876 6,876 6,876 — — — — Less:
Average other intangibles (GAAP) — 1 3 (1 ) (100 ) (3 ) (100 ) Add:
Average deferred tax liabilities related to goodwill (GAAP)
531 523 481 8 2
50 10 Average tangible common equity I $ 13,115
$ 13,291 $ 13,169 ($176 ) (1 %)
($54 ) — % Return on average tangible common equity F/I 9.68 % 8.43
% 6.61 % 125 bps 307 bps Return on average tangible common equity,
underlying G/I 8.98 8.43 6.61 55 bps 237 bps
Return on average
total assets and return on average total assets, underlying:
Average total assets (GAAP) J $ 148,786 $ 147,315 $ 138,780 $ 1,471
1 % $ 10,006 7 % Return on average total assets D/J 0.87 % 0.76 %
0.65 % 11 bps 22 bps Return on average total assets, underlying E/J
0.81 0.76 0.65 5 bps 16 bps
Return on average total tangible
assets and return on average total tangible assets, underlying:
Average total assets (GAAP) J $ 148,786 $ 147,315 $ 138,780 $ 1,471
1 % $ 10,006 7 % Less: Average goodwill (GAAP) 6,876 6,876 6,876 —
— — — Less: Average other intangibles (GAAP) — 1 3 (1 ) (100 ) (3 )
(100 ) Add: Average deferred tax liabilities related to goodwill
(GAAP) 531 523 481
8 2 50 10 Average tangible assets K $ 142,441
$ 140,961 $ 132,382 $ 1,480 1 % $
10,059 8 % Return on average total tangible assets D/K 0.91
% 0.79 % 0.68 % 12 bps 23 bps Return on average total tangible
assets, underlying E/K 0.85 0.79 0.68 6 bps 17 bps
Net income
per average common share - basic and diluted, underlying:
Average common shares outstanding - basic (GAAP) L 509,451,450
512,015,920 528,070,648 (2,564,470 ) (1 %) (18,619,198 ) (4 %)
Average common shares outstanding - diluted (GAAP) M 511,348,200
513,897,085 530,446,188 (2,548,885 ) — (19,097,988 ) (4 ) Net
income available to common stockholders (GAAP) F $ 313 $ 282 $ 216
$ 31 11 $ 97 45 Net income per average common share - basic (GAAP)
F/L 0.61 0.55 0.41 0.06 11 0.20 49 Net income per average common
share - diluted (GAAP) F/M 0.61 0.55 0.41 0.06 11 0.20 49 Net
income available to common stockholders, underlying G 290 282 216 8
3 74 34 Net income per average common share - basic, underlying G/L
0.57 0.55 0.41 0.02 4 0.16 39 Net income per average common share -
diluted, underlying G/M 0.57 0.55 0.41 0.02 4 0.16 39
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,” “anticipates,” “estimates,” “intends,”
“plans,” “goals,” “targets,” “initiatives,” “potentially,”
“probably,” “projects,” “outlook” or similar expressions or future
conditional verbs such as “may,” “will,” “should,” “would,” and
“could.”
Forward-looking statements are based upon the current beliefs
and expectations of management, and on information currently
available to management. Our statements speak as of the date
hereof, and we do not assume any obligation to update these
statements or to update the reasons why actual results could differ
from those contained in such statements in light of new information
or future events. We caution you, therefore, against relying on any
of these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that
could cause actual results to differ, materially, from those in the
forward-looking statements include the following, without
limitation:
- negative economic conditions that
adversely affect the general economy, housing prices, the job
market, consumer confidence and spending habits which may affect,
among other things, the level of nonperforming assets, charge-offs
and provision expense;
- the rate of growth in the economy and
employment levels, as well as general business and economic
conditions;
- our ability to implement our strategic
plan, including the cost savings and efficiency components, and
achieve our indicative performance targets;
- our ability to remedy regulatory
deficiencies and meet supervisory requirements and
expectations;
- liabilities and business restrictions
resulting from litigation and regulatory investigations;
- our capital and liquidity requirements
(including under regulatory capital standards, such as the Basel
III capital standards) and our ability to generate capital
internally or raise capital on favorable terms;
- the effect of the current low interest
rate environment or changes in interest rates on our net interest
income, net interest margin and our mortgage originations, mortgage
servicing rights and mortgages held for sale;
- changes in interest rates and market
liquidity, as well as the magnitude of such changes, which may
reduce interest margins, impact funding sources and affect the
ability to originate and distribute financial products in the
primary and secondary markets;
- the effect of changes in the level of
checking or savings account deposits on our funding costs and net
interest margin;
- financial services reform and other
current, pending or future legislation or regulation that could
have a negative effect on our revenue and businesses, including the
Dodd-Frank Act and other legislation and regulation relating to
bank products and services;
- a failure in or breach of our
operational or security systems or infrastructure, or those of our
third party vendors or other service providers, including as a
result of cyber-attacks; and
- management’s ability to identify and
manage these and other risks.
In addition to the above factors, we also caution that the
amount and timing of any future common stock dividends or share
repurchases will depend on our financial condition, earnings, cash
needs, regulatory constraints, capital requirements (including
requirements of our subsidiaries), and any other factors that our
board of directors deems relevant in making such a determination.
Therefore, there can be no assurance that we will pay any dividends
to holders of our common stock, or as to the amount of any such
dividends.
More information about factors that could cause actual results
to differ materially from those described in the forward-looking
statements can be found under “Risk Factors” in Part I, Item 1A in
our Annual Report on Form 10-K for the year ended December 31,
2016, filed with the United States Securities and Exchange
Commission on February 24, 2017.
Note: Percentage changes, per share amounts and ratios presented
in this document are calculated using whole dollars.
CFG-IR
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Citizens Financial Group, Inc.Media:Peter Lucht,
781-655-2289orInvestors:Ellen A. Taylor, 203-900-6854
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