Group 1 - Citizens Financial Group (CFG) reported quarterly earnings of $0.79 per share, matching the Zacks Consensus Estimate, but down from $0.85 per share a year ago [1] - The company posted revenues of $1.9 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.91% and down from $2.01 billion year-over-year [2] - Over the last four quarters, Citizens Financial Group has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2][1] Group 2 - Citizens Financial Group shares have increased approximately 31.2% since the beginning of the year, outperforming the S&P 500's gain of 21.9% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the upcoming quarter is $0.87 on revenues of $1.99 billion, and for the current fiscal year, it is $3.23 on revenues of $7.85 billion [7] Group 3 - The Zacks Industry Rank for Financial - Savings and Loan is in the top 43% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Citizens Financial Group is currently mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it will perform in line with the market [6]

Core Viewpoint - Analysts forecast a decline in quarterly earnings and revenues for Citizens Financial Group, indicating potential challenges in the company's financial performance [1][2]. Earnings and Revenue Estimates - Citizens Financial Group (CFG) is expected to report earnings of $0.79 per share, reflecting a year-over-year decline of 7.1% [1]. - Anticipated revenues are projected to be $1.94 billion, down 3.8% compared to the same quarter last year [1]. Revisions and Analyst Consensus - The consensus EPS estimate has been revised downward by 1.2% in the past 30 days, indicating a reassessment by analysts [2]. - Analysts emphasize the importance of earnings projection revisions as a predictor of investor behavior and stock price performance [3]. Key Financial Metrics - Book value per common share is estimated to reach $49.07, up from $44.75 a year ago [5]. - Net charge-offs are projected at $177.44 million, compared to $153 million in the same quarter last year [5]. - The consensus for Net Interest Margin is 2.8%, down from 3% a year ago [5]. - Return on average common equity is estimated at 6.6%, down from 7.5% [6]. - Efficiency Ratio is projected to be 65.9%, compared to 64.2% last year [6]. - Average Balances - Total interest-earning assets are expected to be $199.98 billion, slightly up from $199.59 billion a year ago [6]. Capital Ratios - Tangible book value per common share is expected to reach $31.32, up from $27.73 last year [7]. - Common Equity Tier 1 Capital Ratio is projected at 10.7%, compared to 10.4% a year ago [7]. - Tier 1 Leverage Ratio is estimated at 9.3%, down from 9.4% last year [8]. - Tier 1 Capital Ratio is expected to be 11.9%, up from 11.5% a year ago [8]. - Total Capital Ratio is projected at 13.9%, compared to 13.4% last year [9]. Market Performance - CFG shares have returned +4% over the past month, while the Zacks S&P 500 composite has changed by +5.4% [9]. - CFG holds a Zacks Rank 3 (Hold), suggesting it may mirror overall market performance in the near future [10].

Citizens Financial Group (CFG) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released ...

Expansion Strategy - Citizens Financial Group, Inc. (CFG) is advancing its West Coast expansion strategy by adding a Private Banking team in Southern California and opening new office locations [1][4] - The expansion is part of CFG's integrated growth approach across Private Banking, Wealth Management, and Corporate & Investment Banking [2] Market Presence - CFG has a strong and growing presence in California, particularly in Commercial Banking, supported by investment banking, equity research, sales, and trading services [3] - The newly created Private Banking team will focus on the San Diego and Newport Beach markets, led by Victor Mena, who has significant regional expertise [4] New Office Openings - CFG has opened two new Private Banking offices in Mill Valley and Downtown San Francisco, marking its first branches in these areas [5] - Additional offices are planned in Newport Beach, San Diego, and Silicon Valley, expected to open by mid-2025 [4] Client Services - The new offices will provide personalized Private Banking and wealth management services to high-net-worth individuals, families, businesses, and philanthropic organizations [5][6] - CFG aims to deepen its presence and offer a comprehensive suite of banking and wealth management services with a focus on personal relationships and tailored solutions [6] Strategic Rationale - The CEO of Citizens JMP highlighted California's economic significance, noting it would be the fifth largest economy globally if it were a country [7] - CFG's expansion diversifies its geographic footprint and strengthens its competitive position in the financial services landscape, potentially increasing client acquisition and revenue generation [7] Stock Performance - Over the past six months, CFG's shares have increased by 17.5%, outperforming the industry's growth of 12.6% [8]

Citizens Financial Group, Inc. (CFG) remains well-poised for growth on the back of rising loans and deposit balances, along with efforts to improve its wealth management offerings. Additionally, strategic initiatives like Tapping Our Potential (TOP) will further support its financials. However, a rising cost base is likely to limit its bottom-line growth, and limited diversification in its loan portfolio presents an additional concern. Key Growth Drivers for CFG Efforts to Improve Wealth Management Unit: Ci ...

Core Viewpoint - Citizens Financial's shares have significantly outperformed the industry and the S&P 500 Index year to date, indicating strong market performance and investor confidence [1]. Financial Performance - The Zacks Consensus Estimate for earnings per share has increased by 1.6% and 1% for 2024 and 2025, respectively, suggesting a growth of 3.5% for this year and 21.9% for 2025 [3]. - The company's second-quarter 2024 earnings per share of 78 cents fell short of the Zacks Consensus Estimate of 79 cents, marking a decline from 92 cents in the previous year [9]. - The net interest margin decreased by 30 basis points to 2.86%, influenced by rising funding and swap costs [10]. Strategic Initiatives - Citizens Financial's long-term strategy includes expanding wealth management offerings and enhancing capabilities in the high-net-worth segment, with the launch of Citizens Private Bank in October 2023 [4]. - The company has implemented a series of revenue and efficiency initiatives through the 'Tapping Our Potential' (TOP) program, achieving significant pre-tax benefits over the years [5]. Acquisitions and Growth - The company has pursued growth through acquisitions, including College Raptor, Inc. and branches from HSBC, which have strengthened its presence in key markets [6]. - These acquisitions have bolstered the company's balance sheet and expanded its product and fee-generation capabilities [6]. Financial Stability - As of June 30, 2024, Citizens Financial reported total borrowed funds of $13.1 billion and total available liquidity of $12.3 billion, indicating a strong liquidity position [7]. - The company's capital ratios, including a Common Equity Tier 1 (CET1) ratio of 10.7%, support its capital distribution activities, including a recent increase in the share repurchase program [8]. Challenges - The company's non-interest expenses have grown at a CAGR of 11.3% over the past three years, with continued upward pressure expected due to expansion and technological investments [11]. - A high concentration of commercial loans, comprising 50.7% of total loans, poses a risk in a changing economic environment, potentially affecting credit quality [12].

Part I. Financial Information [Financial Statements](index=39&type=section&id=Item%201.%20Financial%20Statements) The company's financial position showed a decrease in total assets and stockholders' equity, while net income and diluted earnings per share declined in the second quarter of 2024 Consolidated Balance Sheet Highlights (Unaudited) | (in millions) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$219,938** | **$221,964** | | Net Loans and Leases | $139,717 | $143,861 | | Total Debt Securities | $40,833 | $38,961 | | Goodwill | $8,187 | $8,188 | | **Total Liabilities** | **$196,069** | **$197,622** | | Total Deposits | $176,352 | $177,342 | | Total Borrowed Funds | $13,084 | $13,972 | | **Total Stockholders' Equity** | **$23,869** | **$24,342** | Consolidated Statement of Operations Highlights (Unaudited) | (in millions, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $1,410 | $1,588 | $2,852 | $3,231 | | Provision for Credit Losses | $182 | $176 | $353 | $344 | | Noninterest Income | $553 | $506 | $1,070 | $991 | | Noninterest Expense | $1,301 | $1,306 | $2,659 | $2,602 | | **Net Income** | **$392** | **$478** | **$726** | **$989** | | **Diluted Earnings Per Share** | **$0.78** | **$0.92** | **$1.44** | **$1.92** | Consolidated Statement of Cash Flows Highlights (Unaudited) | (in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net change due to operating activities | $1,388 | $1,276 | | Net change due to investing activities | $1,218 | $4,641 | | Net change due to financing activities | ($2,463) | ($4,897) | | **Net change in cash and cash equivalents** | **$143** | **$1,020** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=5&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's financial performance in the first half of 2024 was characterized by decreased net interest income and net income, alongside balance sheet optimization and stable capital ratios [Financial Performance](index=8&type=section&id=Financial%20Performance) Second quarter 2024 financial performance saw a year-over-year decline in net income and diluted EPS, alongside a worsening efficiency ratio and decreased Return on Average Tangible Common Equity Q2 2024 vs Q2 2023 Performance Highlights | Metric | Q2 2024 (Reported) | Q2 2023 (Reported) | Q2 2024 (Underlying) | Q2 2023 (Underlying) | | :--- | :--- | :--- | :--- | :--- | | Net Income (millions) | $392 | $478 | $408 | $531 | | Diluted EPS | $0.78 | $0.92 | $0.82 | $1.04 | | ROTCE | 10.6% | 12.4% | 11.1% | 13.9% | | Efficiency Ratio | 66.3% | 62.3% | 64.6% | 58.9% | - Notable items for Q2 2024 totaled **$16 million** after tax, primarily related to TOP initiatives and integration costs, compared to **$53 million** in Q2 2023[14](index=14&type=chunk) [Results of Operations](index=10&type=section&id=Results%20of%20Operations) Operating results were primarily affected by an 11% decline in net interest income due to higher funding costs, partially offset by a 9% increase in noninterest income and stable noninterest expenses - **Net Interest Income (NII):** Decreased **11%** year-over-year to **$1.41 billion** in Q2 2024, with Net Interest Margin (NIM) contracting by **30 basis points** to **2.86%** due to higher funding costs[19](index=19&type=chunk) - **Noninterest Income:** Increased **9%** year-over-year to **$553 million** in Q2 2024, driven by a **63%** rise in capital markets fees and a **15%** increase in card fees[23](index=23&type=chunk) - **Noninterest Expense:** Remained stable year-over-year at **$1.301 billion** in Q2 2024, with a **2%** increase for the first six months due to Private Bank investments and a **$40 million** FDIC special assessment[24](index=24&type=chunk) - **Provision for Credit Losses:** Was **$182 million** in Q2 2024, up from **$176 million** year-over-year, mainly due to increased reserves for the CRE office portfolio[25](index=25&type=chunk) - **Income Tax Expense:** The effective tax rate for Q2 2024 was **18.5%**, down from **22.1%** year-over-year, due to lower pre-tax income and benefits from tax-advantaged investments[26](index=26&type=chunk) [Business Operating Segments](index=13&type=section&id=Business%20Operating%20Segments) Second quarter 2024 saw Consumer Banking net income grow, Commercial Banking net income decline, and the Non-Core segment continue its planned portfolio runoff Segment Net Income (Loss) - Q2 2024 vs Q2 2023 | Segment (in millions) | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Consumer Banking | $296 | $257 | $39 | | Commercial Banking | $259 | $305 | ($46) | | Non-Core | ($50) | ($55) | $5 | - **Consumer Banking:** Net Interest Income increased due to higher asset yields and growth, partially offset by higher funding costs, while noninterest income rose slightly from wealth and card fees[29](index=29&type=chunk) - **Commercial Banking:** Net Interest Income decreased due to lower Net Interest Margin and a decline in average assets, despite growth in noninterest income from M&A advisory, loan syndication, and underwriting fees[32](index=32&type=chunk)[33](index=33&type=chunk) - **Non-Core:** Average loans and leases decreased by **$5.0 billion** year-over-year, reflecting the planned portfolio runoff[34](index=34&type=chunk) [Analysis of Financial Condition](index=16&type=section&id=Analysis%20of%20Financial%20Condition) As of June 30, 2024, total loans and leases decreased due to balance sheet optimization, while credit quality showed stress with rising nonaccrual loans, and deposits remained stable - Total loans and leases decreased by **$4.1 billion (3%)** to **$141.8 billion** since December 31, 2023, reflecting a **$2.5 billion** decrease in commercial loans and a **$1.6 billion** decrease in retail loans[35](index=35&type=chunk) - Nonaccrual loans increased by **$163 million (12%)** to **$1.53 billion** since year-end 2023, primarily driven by a **$201 million** increase in nonaccrual Commercial Real Estate loans[38](index=38&type=chunk) - Total deposits decreased slightly by **$1.0 billion** to **$176.4 billion** since year-end 2023, with an estimated **70%** of deposits insured or secured[46](index=46&type=chunk)[47](index=47&type=chunk) - Total borrowed funds decreased by **$888 million** to **$13.1 billion** since year-end 2023, mainly due to a **$3.7 billion** decline in FHLB advances[47](index=47&type=chunk) [Capital and Regulatory Matters](index=21&type=section&id=Capital%20and%20Regulatory%20Matters) The company maintained strong capital ratios, with the CET1 ratio increasing to **10.7%**, and continued its capital return program through common stock repurchases Regulatory Capital Ratios (CFG) | Ratio | June 30, 2024 | Dec 31, 2023 | Required Minimum | | :--- | :--- | :--- | :--- | | CET1 Capital Ratio | 10.7% | 10.6% | 8.5% | | Tier 1 Capital Ratio | 12.0% | 11.8% | 10.0% | | Total Capital Ratio | 14.0% | 13.7% | 12.0% | | Tier 1 Leverage Ratio | 9.4% | 9.3% | 4.0% | - The Federal Reserve communicated a preliminary Stress Capital Buffer (SCB) of **4.5%** associated with the 2024 CCAR supervisory stress test, effective October 1, 2024[49](index=49&type=chunk) - In H1 2024, the company repurchased **$500 million** of common stock, and on June 28, 2024, the Board increased the share repurchase program capacity to **$1.25 billion**[53](index=53&type=chunk) [Liquidity](index=25&type=section&id=Liquidity) The company maintains a robust liquidity position with **$80.4 billion** in total available liquidity, supported by strong contingent liquidity and a healthy loan-to-deposit ratio Available Liquidity as of June 30, 2024 | Liquidity Source (in billions) | Amount | | :--- | :--- | | Unencumbered high-quality liquid securities | $32.1 | | Unused FHLB capacity | $19.8 | | Cash balances at the FRB | $10.5 | | **Total Contingent Liquidity** | **$62.4** | | Available discount window capacity | $18.0 | | **Total Available Liquidity** | **$80.4** | - Organically generated deposits are the primary funding source, resulting in a consolidated period-end loans-to-deposits ratio of **80.4%**[65](index=65&type=chunk) - The Parent Company's cash and cash equivalents totaled **$3.2 billion** as of June 30, 2024[60](index=60&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates, including the Allowance for Credit Losses, are based on a mild recession forecast, with sensitivity analysis indicating potential increases under more pessimistic scenarios - The Allowance for Credit Losses (ACL) economic forecast as of June 30, 2024, assumes a mild recession with peak unemployment of approximately **5.0%** and a real GDP decline of about **0.4%** over two years[69](index=69&type=chunk) - A sensitivity analysis using a more pessimistic forecast (peak unemployment of **5.8%**) would result in a quantitative lifetime loss estimate approximately **1.2 times** the current modeled ACL, an increase of about **$392 million**, before qualitative adjustments[70](index=70&type=chunk) [Market Risk](index=31&type=section&id=Market%20Risk) The company's market risk primarily stems from non-trading interest rate risk, which is actively hedged using derivatives, with the balance sheet remaining marginally asset-sensitive Net Interest Income Sensitivity (Instantaneous Change) | Basis Points Change | % Change in NII (June 30, 2024) | | :--- | :--- | | +200 | 0.3% | | +100 | 0.5% | | -100 | (1.1)% | | -200 | (2.8)% | - The company uses interest rate derivatives to manage non-trading risk, including **$39.0 billion** notional of receive-fixed/pay-SOFR cash flow hedges and **$7.7 billion** of pay-fixed/receive-SOFR fair value hedges as of June 30, 2024[79](index=79&type=chunk) - For trading risk, the average total Value at Risk (VaR) for Q2 2024 was **$5 million**, and the total Stressed VaR was **$7 million**, with total market risk regulatory capital at **$58 million**[86](index=86&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates by reference the detailed disclosures about market risk from the Management's Discussion and Analysis of Financial Condition and Results of Operations - Disclosures about market risk are presented in the "Market Risk" section of the MD&A (Part I, Item 2)[199](index=199&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[200](index=200&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter[200](index=200&type=chunk) Part II. Other Information [Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and regulatory matters, with management not expecting a materially adverse effect on financial statements - Information regarding legal proceedings is presented in Note 11 of the financial statements[201](index=201&type=chunk) - Management does not expect the outcome of current legal proceedings to have a materially adverse effect on the company's financial condition[175](index=175&type=chunk) [Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - The company refers to the risk factors described in its 2023 Form 10-K[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2024, the company repurchased approximately **5.8 million** shares of common stock and increased its share repurchase program authorization to **$1.25 billion** Share Repurchases for Q2 2024 | Period | Total Shares Repurchased | Average Price Paid | | :--- | :--- | :--- | | April 2024 | 4,765,352 | $34.77 | | May 2024 | 177 | $34.11 | | June 2024 | 989,720 | $34.75 | - On June 28, 2024, the Board of Directors increased the capacity of the common share repurchase program to **$1.25 billion**[203](index=203&type=chunk)

2Q24 GAAP summary Total: $ (32) $ (0.04) Forward-looking statements and use of non-GAAP financial measures In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory considerations, as well as any other factors that our Board of Directors deems relevant in maki ...

Financial Data and Key Metrics Changes - The company expects net interest income (NII) to come in at the upper end of the down 6% to 9% range, reflecting lower loan balances, with net interest margin (NIM) trending modestly better [1] - The company anticipates a rebound in NII and NIM in the fourth quarter due to swap costs peaking in the third quarter [1] - The target Common Equity Tier 1 (CET1) ratio is expected to be approximately 10.5% by year-end [1] Business Line Data and Key Metrics Changes - The private bank has diversified its loan book, with consumer loans now representing 36% of the loan book, up from the low 20s earlier in the year [6] - Fees were up 7% linked quarter, driven by strong results in capital markets and record card and wealth results [14] - The capital markets business improved 14% linked quarter, with higher bond underwriting and loan syndication fees due to strong refinancing activity [14] Market Data and Key Metrics Changes - Customer activities in the commercial space are picking up, particularly in M&A advisory-related finance and retail sectors [4] - There has been a significant increase in new money activity over the last six to eight weeks as the interest rate cycle appears to be abating [5] - The company is seeing strong growth in deposits, particularly in the private bank, which has generated $4 billion of deposits and $3.6 billion of assets under management (AUM) [13] Company Strategy and Development Direction - The company aims to build a premier bank-owned private bank and wealth franchise, focusing on transforming its consumer bank and enhancing its commercial banking capabilities [19] - The strategy includes reducing commercial real estate (CRE) exposure by at least 25% over the medium term while maintaining a strong capital position [92] - The company is optimistic about the recovery of the private capital ecosystem and is positioned to serve this market effectively [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall level of pre-provision net revenue (PPNR) and expects a positive operating leverage return in the fourth quarter [1] - The management noted that the Fed's potential rate cuts could help improve the economic environment and reduce losses in the office portfolio [28] - There is a belief that the risk of recession is less than it was a couple of quarters ago, which may reduce the need to add to reserves [63] Other Important Information - The company has reduced its period-end Federal Home Loan Bank (FHLB) borrowings by about $1.5 billion linked quarter [12] - The allowance for credit losses (ACL) coverage ratio stands at 1.63%, reflecting stable reserves and lower loan balances [18] - The company is executing well against its multi-year strategic initiatives, including the buildout of its private bank [11] Q&A Session Summary Question: Plans to reassess businesses to drive a lower stress capital buffer - Management acknowledged disappointment in the stress capital buffer result but stated that it does not hinder their strategy and significant changes to the business model are not necessary [8] Question: Update on the office portfolio and assumptions - Management indicated that the office sector remains uncertain, and they are maintaining a conservative approach with a high reserve while working through the portfolio [56] Question: Fee-based outlook and investment banking pipeline - Management expects a seasonal decline in capital markets in Q3 but believes the floor for this decline is higher than in previous years due to investments made [48] Question: Growth in the private banking side and AUM increase - Management confirmed that the recent increase in AUM is driven by stable, predictable deposits from private equity and venture capital firms, which are expected to grow further [88]

Citizens Financial Group (CFG) reported $1.96 billion in revenue for the quarter ended June 2024, representing a year-over-year decline of 6.3%. EPS of $0.78 for the same period compares to $0.92 a year ago. The reported revenue represents a surprise of +0.65% over the Zacks Consensus Estimate of $1.95 billion. With the consensus EPS estimate being $0.79, the EPS surprise was -1.27%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to W ...