Core Viewpoint - Citizens Financial Group's share price increased by nearly 11% in June due to a significant share repurchase plan and favorable results from the Federal Reserve's banking industry stress test [1][2]. Group 1: Share Repurchase Plan - Citizens Financial announced a $1.2 billion increase to its existing stock buyback program, bringing the total to $1.5 billion, which is substantial for a company with a market cap under $21 billion [2][4]. Group 2: Stress Test Results - The Federal Reserve's annual stress tests showed that all 22 major U.S. banks, including the "big four" (Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup), passed their evaluations, indicating that mid- and large-sized banks are generally in good health [5][6]. - Citizens Financial is tested every two years and was not part of this year's stress test, but the positive results for other banks suggest resilience in the banking sector [6][8]. Group 3: Financial Performance - Despite the positive market reaction, Citizens Financial's first-quarter revenue was stagnant, with a decline in average loans and leases, although net profit increased by 12% to $374 million due to a rise in non-interest income [9].

Interest Rate Outlook - The odds of the Federal Reserve cutting interest rates in July are approximately 20%, increasing to around 68% in September, and analysts predict a 50% chance of a 50 basis points reduction by October [1] Market Reaction - Investors are positioning themselves ahead of potential rate cuts, leading to increased stock purchases, particularly in finance stocks due to the expected bullish impact on the broader market [2] Yield Curve Dynamics - A Federal Reserve rate cut would lower short-term borrowing rates while longer-term rates may remain stable or rise, resulting in a steepening yield curve, which is favorable for banks benefiting from an expanded net interest margin (NIM) [3] Fifth Third Bancorp - Fifth Third Bancorp has seen its NIM expand for five consecutive quarters, attributed to a diversified loan portfolio with a 3% increase in average loans sequentially and year-over-year [4] - The bank's CET1 capital ratio stands at approximately 10.5%, significantly above the 7.7% requirement, and it plans to buy back up to 100 million shares, contributing to a positive outlook [6] - Analysts project a consensus price target of $47.53 for Fifth Third Bancorp, indicating a potential 17.4% increase [6] Comerica - Comerica is highly sensitive to interest rate changes, with earnings expected to rise as loan yields increase faster than deposit costs, although muted loan activity has led to a year-over-year decline in EPS [8] - The bank anticipates improved loan activity in the second half of the year, despite projecting a 1% to 2% decrease in average loans for the full year 2025 [9] - Analysts forecast a 9% growth in EPS for Comerica this year, with a consensus price target of $61.95, representing a 7.3% gain [10] Citizens Financial Group - Citizens Financial Group has shifted its balance sheet towards higher-yielding commercial loans, which is expected to enhance earnings growth as rate pressures ease [11] - The bank's CET1 ratio is 10.6%, and analysts project a 27% growth in EPS over the next 12 months, suggesting the stock may be undervalued [12] - The consensus price target for Citizens Financial Group is $47.89, with a current dividend yield of 3.93% [13]

Core Viewpoint - Citizens Financial Group (CFG) is enhancing its shareholder-focused strategy, demonstrating confidence in its long-term performance through an increased share repurchase authorization of $1.5 billion, up from $300 million previously approved in June 2024 [1][8]. Financial Performance - CFG's quarterly dividend has been increased twice in the last five years, with a current payout ratio of 53% and a dividend yield of 4.15% based on a closing price of $40.45 [2]. - CFG's total revenues experienced a compound annual growth rate (CAGR) of 3% from 2020 to 2024, with net interest income (NII) growing at a CAGR of 5.3% during the same period [12]. - For 2025, management anticipates NII growth of 3-5% and non-interest income growth of 8-10% [14]. Capital Position - As of March 31, 2025, CFG reported total long-term borrowed funds of $12.3 billion and total available liquidity of $12.2 billion, indicating a strong balance sheet [5]. - The Common Equity Tier 1 ratio was 10.6%, and the total capital ratio was 13.9% as of the same date, reflecting a solid capital position [5]. Growth Strategy - CFG is pursuing growth through acquisitions, cost-cutting programs, and private banking expansion, with notable acquisitions including Investors Bancorp and HSBC's East Coast branches [9][8]. - The "Tapping Our Potential" (TOP) program has delivered consistent cost savings, with TOP 9 achieving $150 million in pre-tax run-rate benefits in 2024, and TOP 10 targeting an additional $100 million in savings by year-end 2025 [10]. Loan and Deposit Trends - CFG's loans and leases and total deposits recorded CAGRs of 3.1% and 4.4%, respectively, from 2020 to 2024, with expectations of continued growth through 2027 [11]. - Despite a dip in loan balances in early 2025, management remains optimistic about sustaining a healthy loan pipeline through a relationship-driven lending model [11]. Expense Management - Non-interest expenses have seen a CAGR of 18.4% from 2020 to 2024, with management projecting a 4% increase in adjusted non-interest expenses for 2025 [15]. - The company is facing elevated expense levels due to investments in private banking and digital infrastructure [15]. Market Performance - CFG shares have increased by 16.3% over the past year, outperforming the industry growth of 11.1% [17]. - CFG trades at a forward price-to-earnings (P/E) ratio of 10.76X, slightly above the industry average of 10.1X [20]. Investment Considerations - CFG's ongoing efficiency initiatives and strategic growth moves provide a solid foundation for future financial growth, despite near-term challenges related to elevated expenses and reliance on commercial lending [24].

Summary of Citizens Financial Group (CFG) 2025 Conference Call Company Overview - **Company**: Citizens Financial Group (CFG) - **Date of Conference**: June 10, 2025 - **Speaker**: Don McCree, Senior Vice Chair and Head of Commercial Banking Key Points Company Positioning and Strategy - Citizens Financial Group is positioned as one of the best commercial banks among super regional peers, focusing on national expansion from its initial regional base in New England and the Mid-Atlantic [2][3] - The bank has developed a comprehensive set of capabilities beyond traditional lending, including leveraged finance, syndicated finance, and global markets [4][5] - Citizens has built a significant private equity and private capital business, banking 4,000 middle market companies, with 10% of them looking to transition at any time, primarily into private equity [6][7] Competitive Advantages - Citizens competes effectively with larger money center banks by focusing on the middle market, where larger banks often lack attention [8][10] - The bank has a strong team with extensive experience, allowing it to evaluate risk and price opportunities effectively [9][10] - Citizens ranks number two in middle market leverage league tables, demonstrating its competitive success [10] Macro Environment and Client Sentiment - Clients are adjusting to macroeconomic uncertainties, with a general sense of optimism emerging regarding business activity [13][15] - Companies have improved their financial management practices post-COVID, leading to reduced financial distress [14][15] - There is a growing confidence among companies to pursue acquisitions if they can secure favorable valuations [56][57] Financial Performance and Guidance - Citizens expects solid performance in the second quarter, maintaining guidance with strong net interest income (NII) and credit performance [17][18] - The bank anticipates an 8-10% growth in fee income for 2025, driven by diversified revenue streams including M&A, syndicated finance, and global markets [21][22] Capital Markets and M&A Activity - The capital markets have seen a resurgence, with increased activity expected in the second half of the year, despite previous volatility [30][31] - There is a significant amount of liquidity in the market, with private equity firms actively fundraising [28][29] - Citizens is well-positioned to capitalize on generational changes in ownership within companies, facilitating M&A transactions [26][27] Loan Growth and Commercial Lending - Commercial lending activity is driven by inventory building and real investments, with healthy pipelines expected to continue [48][49] - The bank is seeing increased line utilization, indicating a positive trend in loan growth [49] Risk Management and Credit Quality - Citizens is closely monitoring office real estate exposure, which has been well reserved, and is actively reducing its overall commercial real estate portfolio [86][88] - The bank has seen a decline in loans moving into workout groups, indicating stable credit quality [86] Private Capital and Private Equity - Citizens has positioned itself to serve both private equity and private credit markets, focusing on comprehensive service offerings [72][73] - The bank has opted not to enter partnerships with private credit firms, preferring to maintain flexibility and optionality in its client relationships [76][78] Future Outlook - The bank is optimistic about the potential for new money transactions to increase, driven by improved market conditions and client sentiment [30][31] - Citizens aims to leverage its private banking capabilities to enhance cross-selling opportunities and strengthen its market presence [64][71] Additional Insights - Citizens is focusing on enhancing its treasury solutions business, which has shown a 10% revenue CAGR since 2015, by expanding into new sectors and technologies [39][40] - The bank is also exploring opportunities in embedded finance and partnerships with fintechs to enhance its service offerings [44][45]

Financial Data and Key Metrics Changes - The return on tangible common equity has improved from below 5% to over 10%, with a path to the mid to upper teens over time [2] - The company anticipates net interest income growth of 3% to 5% for the year, with a net interest margin forecasted between 3.25% and 3.50% [34][36] Business Line Data and Key Metrics Changes - The consumer banking segment has been transformed to target mass affluent and affluent customers, resulting in mid-single-digit household growth and high-single-digit deposit growth [14][15] - The commercial banking segment has expanded its coverage to mid-corporate clients, with significant investments in industry expertise and product capabilities [16][18] - The private banking segment is expected to become a significant contributor to profitability, with a projected EPS accretion of over 5% [31] Market Data and Key Metrics Changes - The company has entered the New York market, which is its fastest-growing region, demonstrating confidence in competing against larger banks [14][15] - Loan demand is expected to grow, particularly in the private banking sector, with anticipated growth of nearly $1 billion per quarter [38] Company Strategy and Development Direction - The company has undergone a significant transformation over the past decade, shedding legacy businesses and focusing on building new ones [10][11] - The strategy includes a focus on a "one citizens" approach, integrating private and commercial banking teams to enhance service delivery in key markets [29][30] - The company aims to improve its efficiency ratio from the mid to upper 60s down to the mid-50s over the long term [55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic outlook, citing a pro-business administration and anticipated improvements in trade and regulatory policies [3][4] - The company is well-positioned to weather economic uncertainties, with a strong credit outlook and minimal adverse migration in consumer loans [7][70] Other Important Information - The company has made significant investments in technology and risk management to support its growth strategy [11][64] - There is a focus on enhancing customer experience through improved digital capabilities and high-touch service models [28][64] Q&A Session Summary Question: What is the outlook for loan growth? - Management anticipates solid growth in the private banking sector, with modest growth in consumer loans focused on real estate-backed lending [38][39] Question: How does the company plan to improve its efficiency ratio? - The company aims to achieve a lower efficiency ratio through disciplined investment and operational improvements, targeting a mid-50s ratio in the long term [55][58] Question: What is the company's stance on regulatory changes? - Management is optimistic about the regulatory environment, believing that recent changes will facilitate a more favorable operating landscape for the bank [79][80]

Financial Performance - Net income for the three months ended March 31, 2025, was $373 million, an increase of $39 million compared to the same period in 2024, with earnings per diluted common share rising by $0.12 to $0.77[18] - Total revenue for the same period was $1.9 billion, a decrease of $24 million year-over-year, primarily due to a 4% decline in net interest income[18] - The efficiency ratio improved to 67.91% for the three months ended March 31, 2025, compared to 69.33% for the same period in 2024[18] - Return on Average Tangible Common Equity (ROTCE) increased to 9.64% for the three months ended March 31, 2025, up from 8.86% in the prior year[18] - Tangible book value per common share rose by 5% to $33.97 from December 31, 2024[18] Income and Expenses - Net interest income decreased by $51 million, or 4%, for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to a 3% decrease in average interest-earning assets[27] - Noninterest income increased by $27 million, or 5%, for the three months ended March 31, 2025, compared to the same period in 2024, with notable increases in service charges and fees (up 14%) and mortgage banking fees (up 20%)[32] - Noninterest expense decreased by $44 million, or 3%, for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to lower other operating expenses[33] - Provision for credit losses decreased to $153 million for the three months ended March 31, 2025, down from $171 million for the same period in 2024, reflecting Non-Core portfolio runoff and improving loan mix[37] Loans and Deposits - Total loans and leases decreased by $1.568 billion to $137.635 billion as of March 31, 2025, primarily due to a $2.3 billion decrease in retail loans[45] - Average deposits decreased by $3.4 billion, driven by lower commercial deposits and a reduction in higher-cost Treasury deposits[30] - Total deposits increased to $177,576 million as of March 31, 2025, up from $174,776 million on December 31, 2024, reflecting growth in Private Bank and consumer deposits[58] Capital and Liquidity - The company maintains cash and cash equivalents totaling $3.0 billion as of March 31, 2025, compared to $2.7 billion as of December 31, 2024[109] - Total available liquidity for CBNA was approximately $87.7 billion, including $71.0 billion in contingent liquidity[112] - Citizens Financial Group's CET1 capital ratio was 10.6%, while CBNA's was 12.3%[129] - The regulatory capital ratio, including AOCI impact (non-GAAP), was 10.8% as of March 31, 2025, compared to 9.1% in the previous period[141] Stock and Dividends - During the three months ended March 31, 2025, the Parent Company declared dividends on common stock of $186 million and on preferred stock of $33 million[110] - The Board of Directors increased the common share repurchase program capacity to $1.25 billion, an increase of $656 million from the previous authorization[136] - The company repurchased $200 million of outstanding common stock and declared quarterly common stock dividends of $0.42 per share, totaling $186 million[139] Regulatory and Compliance - The SEC's climate disclosure rule is under litigation, with the agency withdrawing from defense, which may impact future regulatory compliance[22] - The FDIC, FRB, and OCC announced intentions to rescind the Community Reinvestment Act final rule issued in October 2023, reinstating the previous framework[23] Market and Economic Outlook - The company’s economic forecast includes a mild recession with peak unemployment projected at approximately 5.1%[145] - The average effective duration of the securities portfolio was 3.6 years as of March 31, 2025, compared to 3.7 years as of December 31, 2024[43]

Core Viewpoint - Citizens Financial Group (CFG) reported strong adjusted earnings per share of 77 cents for Q1 2025, exceeding estimates and reflecting an 18.4% year-over-year increase, driven by higher non-interest income and reduced expenses, despite challenges from lower net interest income and declining loan balances [1][2][10] Financial Performance - Net income on a GAAP basis was $373 million, a 12% increase from the prior year [2] - Total revenues for the quarter were $1.94 billion, slightly missing estimates by 0.3% and showing a 1.2% decline year-over-year [2] - Net interest income (NII) decreased by 4% year-over-year to $1.39 billion, attributed to a lower net interest margin and a decline in average interest-earning assets [3] - The net interest margin (NIM) shrank by 1 basis point to 2.90% [3] - Non-interest income rose by 5% year-over-year to $544 million, driven by increased service charges, wealth fees, and mortgage banking income [4] - Non-interest expenses decreased by 3% to $1.31 billion, reflecting lower costs in outside services and occupancy [5] Loan and Deposit Trends - Total loans and leases as of March 31, 2025, were $137.6 billion, down 1.1% from the prior year [6] - Total deposits increased by 1.6% to $177.6 billion [6] Credit Quality - Provision for credit losses was $153 million, down 10.5% year-over-year [7] - The allowance for credit losses decreased by 4% to $2.21 billion [7] - Net charge-offs increased by 10% to $200 million [7] - Non-accrual loans and leases rose by 8% to $1.58 billion [7] Capital Position - The tier 1 leverage ratio improved to 9.4%, up from 9.3% in the prior year [8] - The common equity tier 1 capital ratio remained stable at 10.6% [8] - The total capital ratio increased to 13.9%, compared to 13.8% in the prior year [8] Shareholder Returns - In Q1 2025, CFG repurchased $200 million of common shares and paid out $186 million in common dividends [9] Strategic Outlook - CFG's focus on strategic initiatives and efficiency improvements supports its financial performance, while a solid liquidity position allows for sustainable capital distributions [10]

Core Insights - Citizens Financial Group (CFG) reported revenue of $1.94 billion for the quarter ended March 2025, reflecting a decrease of 1.2% year-over-year, with an EPS of $0.77 compared to $0.65 in the same quarter last year [1] - The revenue was slightly below the Zacks Consensus Estimate by 0.29%, while the EPS exceeded the consensus estimate by 2.67% [1] Financial Performance Metrics - Efficiency Ratio was reported at 67.9%, slightly better than the estimated 68.1% [4] - Net Interest Margin stood at 2.9%, matching the average estimate [4] - Book value per common share was $51.99, exceeding the estimated $50.90 [4] - Return on average common equity was 6.2%, surpassing the 6% average estimate [4] - Net charge-offs amounted to $200 million, higher than the estimated $176.35 million [4] - Return on average total assets was 0.7%, consistent with the average estimate [4] - Average balances of total interest-earning assets were $195.06 billion, slightly below the estimated $195.79 billion [4] - Net charge-offs as a percentage of average loans and leases were 0.6%, above the estimated 0.5% [4] - Tangible book value per common share was $33.97, exceeding the estimated $32.68 [4] - Tier 1 Leverage Ratio was reported at 9.4%, matching the estimate [4] - Tier 1 Capital Ratio was 11.9%, slightly below the estimated 12% [4] - Total Capital Ratio was reported at 13.9%, consistent with the average estimate [4] Stock Performance - Citizens Financial Group's shares have returned -11.9% over the past month, compared to a -4.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - Citizens Financial Group (CFG) reported quarterly earnings of $0.77 per share, exceeding the Zacks Consensus Estimate of $0.75 per share, and up from $0.65 per share a year ago, representing an earnings surprise of 2.67% [1] - The company posted revenues of $1.94 billion for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 0.29%, and a slight decrease from $1.96 billion year-over-year [2] - Citizens Financial Group shares have declined approximately 17.5% since the beginning of the year, compared to a decline of 8.3% for the S&P 500 [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.90 on revenues of $2 billion, and for the current fiscal year, it is $3.77 on revenues of $8.16 billion [7] - The Zacks Industry Rank for Banks - Northeast is in the top 26% of over 250 Zacks industries, indicating that the industry is performing relatively well [8] - Byline Bancorp, another company in the same industry, is expected to report quarterly earnings of $0.62 per share, reflecting a year-over-year decline of 11.4% [9]

1Q25 Financial Results April 16, 2025 Forward-looking statements and use of non-GAAP financial measures This document contains forward-looking statements within the meaning of 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, ...