Company Performance - Citizens Financial Group reported quarterly revenues of $1.96 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.65%, but down from $2.09 billion year-over-year [2] - The company posted quarterly earnings of $0.78 per share, missing the Zacks Consensus Estimate of $0.79 per share, and down from $0.92 per share a year ago [8] - Over the last four quarters, Citizens Financial Group has not been able to surpass consensus EPS estimates [9] Stock Performance - Citizens Financial Group shares have increased approximately 19.5% since the beginning of the year, compared to the S&P 500's gain of 18.8% [3] - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $1.96 billion, and for the current fiscal year, it is $3.19 on revenues of $7.87 billion [5] Industry Outlook - The Financial - Savings and Loan industry, to which Citizens Financial Group belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, indicating potential challenges ahead [13] - The estimate revisions trend for Citizens Financial Group is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [12]

Financial Performance - Total interest income for Q2 2024 was $2,575 million, a decrease of 1% from Q1 2024 and an increase of 5% from Q2 2023[4] - Net interest income decreased by 2% to $1,410 million in Q2 2024 compared to Q1 2024, and decreased by 11% from Q2 2023[4] - Noninterest income increased by 7% to $553 million in Q2 2024 compared to Q1 2024, and increased by 9% from Q2 2023[4] - Total revenue for Q2 2024 was $1,963 million, remaining stable compared to Q1 2024 but down 6% from Q2 2023[4] - Net income for Q2 2024 was $392 million, representing a 17% increase from Q1 2024, but a decrease of 18% from Q2 2023[4] - The company reported a net income available to common stockholders of $357 million in Q2 2024, a 17% increase from Q1 2024[4] - The underlying net income available to common stockholders was $373 million in Q2 2024, a 2% increase from Q1 2024[4] Asset and Liability Management - Total assets decreased to $219,222 million in Q2 2024 from $220,770 million in Q1 2024, a decrease of $1,548 million[6] - Total liabilities decreased to $195,739 million in Q2 2024 from $197,057 million in Q1 2024, a decline of $1,318 million[6] - Stockholders' equity decreased to $23,483 million in Q2 2024 from $23,713 million in Q1 2024, a decrease of $230 million[6] - Total interest-earning assets decreased to $198,465 million in Q2 2024 from $200,068 million in Q1 2024, a decline of $1,603 million[6] - Total loans and leases amounted to $143,067 million in Q2 2024, down from $144,822 million in Q1 2024, a decrease of $1,755 million[6] - Total interest-bearing deposits decreased to $137,465 million in Q2 2024 from $139,420 million in Q1 2024, a decline of $1,955 million[6] Credit Quality and Losses - Provision for credit losses increased by 6% to $182 million in Q2 2024 compared to Q1 2024[4] - Total loans and leases 90 days or more past due and accruing decreased to $228 million, down 24% from the previous quarter[21] - Total commercial nonaccrual loans reached $939 million, a 5% increase from the previous quarter and a 48% increase year-over-year[44] - The allowance for loan and lease losses increased slightly to $2.125 billion, compared to $2.086 billion in the previous quarter[13] - Total gross charge-offs for Q2 2024 were $223 million, a decrease of 3% from Q1 2024 and an increase of 18% from Q2 2023[47] Efficiency and Ratios - The efficiency ratio for Q2 2024 was 66.27%, an improvement of 306 basis points from Q2 2023[30] - Return on average common equity for Q2 2024 was 6.70%, an increase of 107 basis points from Q1 2024 but a decrease of 130 basis points from Q2 2023[30] - The effective income tax rate for Q2 2024 was 18.49%, down 379 basis points from Q2 2023[30] - Return on average total tangible assets improved to 1.61% in Q2 2024, compared to 1.49% in Q1 2024[8] Segment Performance - Net income available to common stockholders for Consumer Banking was $296 million, up from $272 million in the previous quarter, reflecting a 8.8% increase[33] - Total revenue for the consolidated entity was $1,963 million, slightly up from $1,959 million in the previous quarter, showing a marginal increase of 0.2%[33] - Net income for the commercial banking segment was a loss of $50 million, an improvement of $10 million from the previous quarter[69] - Net interest income for the commercial banking segment showed a loss of $31 million, improving by $6 million from the previous quarter[69] Dividends and Shareholder Returns - Dividend payout ratio was 53% in Q2 2024, down from 64% in Q1 2024 and significantly lower than 124% in Q4 2023[54] - Cash dividends declared and paid per common share remained stable at $0.42 in Q2 2024, consistent with previous quarters[54] - Basic earnings per share were $0.93, reflecting a 20% increase from the previous quarter[62] - Diluted earnings per share were $0.92, also a 20% increase from the prior quarter[62]

Core Insights - Citizens Financial Group (CFG) is expected to report quarterly earnings of $0.79 per share, reflecting a 14.1% decline year-over-year. Revenue is forecasted at $1.95 billion, down 6.8% from the previous year [1]. Financial Metrics Summary - The 'Efficiency Ratio' is anticipated to be 66.3%, an increase from 62.3% reported in the same quarter last year [4]. - The 'Return on average common equity' is estimated at 6.6%, down from 8% a year ago [5]. - 'Net charge-offs' are projected to reach $180.45 million, compared to $152 million in the previous year [6]. - The 'Common Equity Tier 1 Capital Ratio (CET1 Capital Ratio)' is expected to be 10.6%, slightly up from 10.3% reported last year [7]. - The 'Tier 1 Capital Ratio' is forecasted at 11.8%, compared to 11.4% a year ago [8]. - 'Nonaccrual loans and leases and repossessed assets' are estimated to reach $1.49 billion, up from $1.20 billion in the same quarter last year [9]. - 'Average Balances - Total interest-earning assets' are expected to be $199.03 billion, down from $201.50 billion a year ago [12]. - The 'Net Interest Margin' is projected at 2.9%, down from 3.2% reported in the same quarter last year [13]. - 'Book value per common share' is expected to be $48.41, compared to $45.44 in the same quarter last year [14]. - The 'Tangible book value per common share' is forecasted at $30.85, up from $28.72 a year ago [15]. - The 'Tier 1 Leverage Ratio' is estimated at 9.3%, slightly down from 9.4% last year [16]. - The 'Total Capital Ratio' is projected to be 13.7%, compared to 13.3% a year ago [17]. Stock Performance - CFG shares have increased by 10.8% over the past month, outperforming the Zacks S&P 500 composite, which rose by 4.3% [10].

Core Viewpoint - Citizens Financial Group (CFG) is anticipated to report a year-over-year decline in both quarterly revenues and earnings for Q2 2024, with specific estimates indicating a challenging financial environment [1][31]. Key Factors & Estimates for Q2 - **Net Interest Income (NII)**: The Federal Reserve's steady interest rates at a 23-year high of 5.25-5.5% are expected to limit significant improvements in NII. The inverted yield curve and high funding costs are also likely to negatively impact NII growth [3]. - **Fee Income**: Despite a decline in mortgage rates from over 8% to nearly 7%, mortgage origination volume remains weak due to high home prices and lower supply. This has resulted in limited improvement in mortgage demand [4]. However, robust equity market performance is expected to boost trust and investment services fees, with a consensus estimate of $70 million, reflecting a 2.9% increase from the previous quarter [5]. - **Earnings Estimates**: The consensus estimate for NII is $1.42 billion, indicating a 1.9% decrease from the prior quarter. The estimate for mortgage banking fees is $57.1 million, showing a 16.5% rise from the previous quarter [10][11]. - **Non-Interest Income**: Management expects non-interest income to increase by approximately 3-4%, with a consensus estimate of $534.9 million, suggesting a 3.5% sequential increase [13]. - **Asset Quality**: CFG is expected to set aside substantial provisions for potential bad loans due to anticipated economic slowdown [14]. - **Lending Activities**: A stabilizing macroeconomic backdrop and expectations of Federal Reserve easing interest rates later this year are likely to support lending activities, particularly in commercial and industrial loans [22]. - **Expenses**: CFG's expenses are projected to rise due to the opening of private banking offices, franchise expansion, and investments in technology [27]. Earnings Whispers - The Zacks Consensus Estimate for second-quarter earnings has been revised upward by 1.3% to 79 cents per share, indicating a 14.1% decrease from the previous year. The consensus estimate for quarterly revenues is $1.95 billion, reflecting a 6.7% decline from the prior-year quarter [31].

The market expects Citizens Financial Group (CFG) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended June 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's ...

The 2024 Fed's stress test determined Citizens Financial Group, Inc.'s (CFG) preliminary Stress Capital Buffer (SCB) at 4.5%. This implied a regulatory minimum CET1 ratio of 9%, up from 8.5% in 2023. According to the Federal Reserve's stress test results released on Jun 26, 2024, CFG is among the 31 U.S. banks that successfully passed the test. As of Mar 31, 2024, the company had total borrowed funds of $13.8 billion, while total available liquidity (comprising cash and due from banks, interest-bearing cash ...

The Federal Reserve is slated to announce its annual bank health check results on Jun 26. Also known as the 'stress test,' the results will show how much capital large banks need to withstand any renewed turmoil in the sector. This annual exercise will also dictate how much banks will return to shareholders through dividend payouts and share repurchases. Last year, some notable ones announcing a hike in quarterly dividends were JPMorgan (JPM) , Goldman Sachs (GS) , Wells Fargo and Morgan Stanley (MS) . Also ...

Industry Overview - Regional bank stocks have faced significant challenges this year due to soaring borrowing costs, which have negatively impacted net interest income, and the decline in value of older bonds due to higher yields [1] - The SPDR S&P Bank ETF is down 3% this year, indicating a lack of recovery in the sector [1] Investment Opportunities - Despite the broader market showing signs of recovery, bank stocks are expected to take longer to adjust, presenting a potential opportunity for investors [2] - High-quality regional bank stocks are currently undervalued and priced below book value, offering upside potential as market conditions stabilize [8] Citizens Financial Group (CFG) - Citizens Financial Group is highlighted as a top-value regional bank stock, with a price-to-book ratio of 0.72 and a forward dividend yield close to 5%, which can exceed 10% when including buybacks [4] - The bank benefits from a strong economic recovery in Rhode Island, where the labor market has dropped below 3% unemployment for the first time since 1988, supporting its operational outlook [5][9] KeyCorp - KeyCorp is positioned as an inexpensive bank stock with a focus on middle-market commercial banking in Ohio and New York, offering a 5.9% dividend yield [11] - Morningstar estimates KeyCorp's fair per-share value to be nearly 40% higher than its current trading price, indicating strong potential for growth [11] Valley National Bancorp (VLY) - Valley National Bancorp is noted for its compelling 6.7% dividend yield and unique access to the cannabis market, trading at just 0.57 times book value [12] - Analysts have set an average price target of $9.44 for Valley National, approximately 31% above its current share price, with a significant positive shift in analyst sentiment [13]

Citizens Financial Group, Inc. (CFG) unveiled a few developments aimed at accelerating growth of its Wealth Management business to attract new high-net-worth clients. The company's CEO, Bruce Van Saun, stated that management wants to have more choices for customers in terms of wealth options. With the bank failures of 2023, it is clear that significant white space exists in the market for a new entrant to fill by delivering best-in-market customer service for Private Banking and Wealth Management clients. H ...

PM Images M&T Bank Corporation (MTB) priced an offering of $750 million worth of new series J non-cumulative preferred stock, offering a fixed dividend rate of 7.5%. The new shares were rated by all four of Moody's, S&P, Fitch, and DBRS, at Baa3, BB+, BBB- and BBB, respectively. The new shares traded temporarily on the OTC under symbol MTDJV before moving to permanent symbol MTB-J on the New York Stock Exchange. Citizens Financial Group (CFG) priced an offering of $400 million worth of new series H non-cumu ...