Citizens Financial (CFG) - 2025 Q2 - Quarterly Results

Consolidated Financial Highlights This section summarizes key financial performance indicators, including operating data, per-share metrics, and capital ratios Selected Operating Data The company reported strong 2Q25 financial performance, with total revenue increasing 5% QoQ and net income growing 17% QoQ | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :----------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total revenue | $2,037 | $1,935 | $1,963 | $102 | 5% | $74 | 4% | | Noninterest expense | 1,319 | 1,314 | 1,301 | 5 | — | 18 | 1% | | Pre-provision profit | 718 | 621 | 662 | 97 | 16% | 56 | 8% | | Provision for credit losses | 164 | 153 | 182 | 11 | 7% | (18) | (10%) | | NET INCOME | 436 | 373 | 392 | 63 | 17% | 44 | 11% | - For the six months ended June 30, 2025, total revenue increased by 1% to $3,972 million, and net income grew by 11% to $809 million compared to the same period in 2024[4] Per Common Share Data Diluted earnings per common share significantly increased QoQ and YoY, alongside healthy growth in book and tangible book values | Metric | 2Q25 | 1Q25 | 2Q24 | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :----- | :----- | :----- | :------------- | :------------- | :------------- | :------------- | | Diluted earnings | $0.92 | $0.77 | $0.78 | $0.15 | 19% | $0.14 | 18% | | Book value per common share | 53.43 | 51.99 | 48.03 | 1.44 | 3% | 5.40 | 11% | | Tangible book value per common share | 35.23 | 33.97 | 30.61 | 1.26 | 4% | 4.62 | 15% | | Cash dividends declared and paid per common share | 0.42 | 0.42 | 0.42 | — | — | — | — | - The dividend payout ratio decreased to 45% in 2Q25 from 54% in 1Q25 and 53% in 2Q24, indicating improved earnings coverage for dividends[4] Common Shares Outstanding Common shares outstanding decreased QoQ and YoY, positively impacting per-share metrics | Metric | 2Q25 | 1Q25 | 2Q24 | QoQ Change | QoQ Change (%) | YoY Change | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :----------- | :----------- | :------------- | :----------- | :------------- | | Average Basic Shares | 433,640,210 | 438,320,757 | 454,142,489 | (4,680,547) | (1%) | (20,502,279) | (5%) | | Average Diluted Shares | 436,539,774 | 442,200,180 | 456,561,022 | (5,660,406) | (1%) | (20,021,248) | (4%) | | Common shares at period-end | 432,768,811 | 437,668,127 | 452,961,853 | (4,899,316) | (1%) | (20,193,042) | (4%) | Financial Ratios Key financial ratios improved in 2Q25, with increased net interest margin and decreased efficiency ratio, indicating better profitability | Metric | 2Q25 | 1Q25 | 2Q24 | QoQ Change (bps) | YoY Change (bps) | | :--------------------------------- | :----- | :----- | :----- | :--------------- | :--------------- | | Net interest margin (FTE) | 2.95% | 2.90% | 2.87% | 5 | 8 | | Return on average common equity | 7.18% | 6.21% | 6.70% | 97 | 48 | | Return on average tangible common equity | 11.05% | 9.64% | 10.61% | 141 | 44 | | Return on average total assets | 0.80% | 0.70% | 0.72% | 10 | 8 | | Efficiency ratio | 64.76 | 67.91 | 66.27 | (315) | (151) | | Noninterest income as a % of total revenue | 29.41 | 28.14 | 28.16 | 127 | 125 | - The effective income tax rate increased to 21.37% in 2Q25 from 20.26% in 1Q25 and 18.49% in 2Q24[5] Capital Ratios - Period-End (Preliminary) Capital ratios remained stable or slightly improved, maintaining a strong capital position with CET1 ratio at 10.6% | Metric | 2Q25 | 1Q25 | 2Q24 | | :-------------------- | :----- | :----- | :----- | | CET1 capital ratio | 10.6% | 10.6% | 10.7% | | Tier 1 capital ratio | 11.9 | 11.9 | 12.0 | | Total capital ratio | 13.8 | 13.9 | 14.0 | | Tier 1 leverage ratio | 9.4 | 9.4 | 9.4 | | Common equity ratio | 10.6 | 10.3 | 9.9 | | Tangible common equity ratio | 7.2 | 7.0 | 6.5 | Selected Balance Sheet Data Loan-to-deposit ratio increased QoQ but decreased YoY, while full-time equivalent colleagues increased | Metric | 2Q25 | 1Q25 | 2Q24 | QoQ Change (bps) | YoY Change (bps) | | :--------------------------------- | :----- | :----- | :----- | :--------------- | :--------------- | | Loan-to-deposit ratio (period-end) | 79.56% | 77.51% | 80.43% | 205 | (87) | | Loan-to-deposit ratio (average) | 79.72 | 80.89 | 82.38 | (117) | (266) | | Full-time equivalent colleagues (period-end) | 17,677 | 17,315 | 17,510 | 362 | 167 | Consolidated Statements of Operations (unaudited) This section details the company's consolidated statements of operations, focusing on interest and noninterest income and expenses Interest Income and Expense Total interest income increased QoQ but decreased YoY, while net interest income slightly increased QoQ and decreased YoY | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total interest income | $2,407 | $2,352 | $2,575 | $55 | 2% | ($168) | (7%) | | Interest and fees on loans and leases | 1,851 | 1,829 | 2,011 | 22 | 1% | (160) | (8%) | | Total interest expense | 970 | 961 | 1,165 | 9 | 1% | (195) | (17%) | | Deposits interest expense | 802 | 795 | 965 | 7 | 1% | (163) | (17%) | | Net interest income | 1,437 | 1,391 | 1,410 | 46 | 3% | 27 | 2% | - For the six months ended June 30, 2025, total interest income decreased by 8% and total interest expense decreased by 17% compared to 2024, resulting in a 1% decrease in net interest income[6] Noninterest Income and Expense Noninterest income grew strongly QoQ and YoY, driven by mortgage banking fees, while noninterest expense remained stable | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total noninterest income | $600 | $544 | $553 | $56 | 10% | $47 | 8% | | Mortgage banking fees | 73 | 59 | 54 | 14 | 24% | 19 | 35% | | Other income | 42 | 22 | 10 | 20 | 91% | 32 | NM | | Total noninterest expense | 1,319 | 1,314 | 1,301 | 5 | — | 18 | 1% | | Salaries and employee benefits | 681 | 696 | 645 | (15) | (2%) | 36 | 6% | - For the six months ended June 30, 2025, total noninterest income increased by 7% to $1,144 million, while total noninterest expense decreased by 1% to $2,633 million compared to 2024[6] Consolidated Balance Sheets (unaudited) This section presents the company's consolidated balance sheets, detailing assets, liabilities, and stockholders' equity Assets Total assets decreased slightly QoQ and YoY, with loans and leases showing modest QoQ growth but a YoY decline | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :--------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | TOTAL ASSETS | $218,310 | $220,148 | $219,938 | ($1,838) | (1%) | ($1,628) | (1%) | | Loans and leases | 139,304 | 137,635 | 141,842 | 1,669 | 1% | (2,538) | (2%) | | Loans held for sale | 2,093 | 2,820 | 683 | (727) | (26%) | 1,410 | 206% | | Debt securities available for sale | 34,658 | 34,208 | 31,938 | 450 | 1% | 2,720 | 9% | Liabilities and Stockholders' Equity Total deposits decreased QoQ and YoY, while stockholders' equity increased, driven by retained earnings and comprehensive income | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :--------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Total deposits | $175,086 | $177,576 | $176,352 | ($2,490) | (1%) | ($1,266) | (1%) | | Noninterest-bearing deposits | 38,001 | 37,556 | 36,927 | 445 | 1% | 1,074 | 3% | | Interest-bearing deposits | 137,085 | 140,020 | 139,425 | (2,935) | (2%) | (2,340) | (2%) | | Total long-term borrowed funds | 12,526 | 12,267 | 13,082 | 259 | 2% | (556) | (4%) | | TOTAL LIABILITIES | 193,076 | 195,282 | 196,069 | (2,206) | (1%) | (2,993) | (2%) | | TOTAL STOCKHOLDERS' EQUITY | 25,234 | 24,866 | 23,869 | 368 | 1% | 1,365 | 6% | | Retained earnings | 10,783 | 10,566 | 10,079 | 217 | 2% | 704 | 7% | Loans and Deposits This section provides a detailed breakdown of the company's loan and deposit portfolios by category Loans and Leases Breakdown Total loans and leases increased QoQ but decreased YoY, with commercial growth offsetting retail declines | Loan Category | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :---------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Commercial and industrial | $45,412 | $43,781 | $43,623 | $1,631 | 4% | $1,789 | 4% | | Commercial real estate | 26,230 | 26,727 | 28,311 | (497) | (2%) | (2,081) | (7%) | | Total commercial | 71,642 | 70,508 | 71,934 | 1,134 | 2% | (292) | — | | Residential mortgages | 33,823 | 33,114 | 31,890 | 709 | 2% | 1,933 | 6% | | Home equity | 17,711 | 16,853 | 15,534 | 858 | 5% | 2,177 | 14% | | Automobile | 3,407 | 4,044 | 6,383 | (637) | (16%) | (2,976) | (47%) | | Education | 8,550 | 8,779 | 11,265 | (229) | (3%) | (2,715) | (24%) | | Total retail | 67,662 | 67,127 | 69,908 | 535 | 1% | (2,246) | (3%) | | Total loans and leases | $139,304 | $137,635 | $141,842 | $1,669 | 1% | ($2,538) | (2%) | Deposits Breakdown Total deposits decreased QoQ and YoY, with noninterest-bearing demand deposits increasing while interest-bearing deposits declined | Deposit Category | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :----------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Noninterest-bearing demand | $38,001 | $37,556 | $36,927 | $445 | 1% | $1,074 | 3% | | Checking with interest | 34,918 | 34,456 | 34,421 | 462 | 1% | 497 | 1% | | Savings | 25,400 | 25,765 | 27,240 | (365) | (1%) | (1,840) | (7%) | | Money market | 55,638 | 55,996 | 52,599 | (358) | (1%) | 3,039 | 6% | | Time | 21,129 | 23,803 | 25,165 | (2,674) | (11%) | (4,036) | (16%) | | Total deposits | $175,086 | $177,576 | $176,352 | ($2,490) | (1%) | ($1,266) | (1%) | Average Balance Sheets, Annualized Yields and Rates This section analyzes average balance sheet components, annualized yields, and rates for interest-earning assets and liabilities Interest-Earning Assets Average interest-earning assets increased QoQ but decreased YoY, with yields slightly up QoQ but down YoY | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total interest-earning assets | $196,318 | $195,058 | $198,465 | $1,260 | 1% | ($2,147) | (1%) | | Total loans and leases | 138,809 | 139,710 | 143,067 | (901) | (1%) | (4,258) | (3%) | | Yield on total interest-earning assets | 4.89% | 4.84% | 5.17% | 5 bps | | (28) bps | | | Yield on total loans and leases | 5.31% | 5.26% | 5.60% | 5 bps | | (29) bps | | - For the six months ended June 30, 2025, average total interest-earning assets decreased by 2% and the yield decreased by 32 bps compared to 2024[11] Interest-Bearing Liabilities Average interest-bearing liabilities increased QoQ but decreased YoY, with rates paid slightly down QoQ and significantly down YoY | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total interest-bearing liabilities | $150,202 | $149,494 | $152,882 | $708 | — | ($2,680) | (2%) | | Total interest-bearing deposits | 136,778 | 136,162 | 137,465 | 616 | — | (687) | — | | Rate on total interest-bearing liabilities | 2.59% | 2.60% | 3.06% | (1) bps | | (47) bps | | | Rate on total interest-bearing deposits | 2.35% | 2.37% | 2.82% | (2) bps | | (47) bps | | - For the six months ended June 30, 2025, average total interest-bearing liabilities decreased by 2% and the rate decreased by 47 bps compared to 2024[11] Net Interest Margin Net interest margin (FTE) improved QoQ and YoY, reaching 2.95% in 2Q25, reflecting enhanced profitability | Metric | 2Q25 | 1Q25 | 2Q24 | QoQ Change (bps) | YoY Change (bps) | | :-------------------------- | :----- | :----- | :----- | :--------------- | :--------------- | | Net interest margin (FTE) | 2.95% | 2.90% | 2.87% | 5 | 8 | | Net interest income (FTE) | $1,441 | $1,395 | $1,415 | $46 | $26 | - For the six months ended June 30, 2025, net interest margin (FTE) increased by 3 bps to 2.92% compared to 2024, despite a slight decrease in net interest income (FTE)[11] Mortgage Banking Fees This section analyzes the company's mortgage banking fees, including production revenue and MSR valuation changes Mortgage Banking Fees Summary Total mortgage banking fees significantly increased QoQ and YoY, driven by MSR valuation changes and production revenue growth | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total mortgage banking fees | $73 | $59 | $54 | $14 | 24% | $19 | 35% | | Production revenue | 19 | 15 | 14 | 4 | 27% | 5 | 36% | | Mortgage servicing revenue | 28 | 32 | 35 | (4) | (13%) | (7) | (20%) | | MSR valuation changes, net of hedge impact | 26 | 12 | 5 | 14 | 117% | 21 | NM | - For the six months ended June 30, 2025, total mortgage banking fees increased by 28% to $132 million compared to 2024, largely due to MSR valuation changes[12] Residential Real Estate Originations Total residential real estate originations surged QoQ and YoY, with strong growth across retail, third-party, and investment channels | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total originations | $4,105 | $2,918 | $2,907 | $1,187 | 41% | $1,198 | 41% | | Retail originations | 2,189 | 1,444 | 1,584 | 745 | 52% | 605 | 38% | | Third Party originations | 1,916 | 1,474 | 1,323 | 442 | 30% | 593 | 45% | | Originated for sale | 2,486 | 1,916 | 1,872 | 570 | 30% | 614 | 33% | | Originated for investment | 1,619 | 1,002 | 1,035 | 617 | 62% | 584 | 56% | - For the six months ended June 30, 2025, total residential real estate originations increased by 45% to $7,023 million compared to 2024[12] Segment Financial Highlights This section provides financial highlights for the company's key operating segments: Consumer Banking, Commercial Banking, Non-Core, and Other Consumer Banking Consumer Banking reported strong growth in total revenue and net income, driven by increased net interest and noninterest income | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total revenue | $1,547 | $1,490 | $1,397 | $57 | 4% | $150 | 11% | | Net income | 376 | 336 | 296 | 40 | 12% | 80 | 27% | | Net interest income | 1,218 | 1,193 | 1,120 | 25 | 2% | 98 | 9% | | Noninterest income | 329 | 297 | 277 | 32 | 11% | 52 | 19% | | Efficiency ratio | 62.24 | 64.06 | 65.49 | (182) bps | | (325) bps | | | Average total loans and leases | 72,402 | 71,054 | 67,960 | 1,348 | 2% | 4,442 | 7% | | Average deposits | 127,271 | 125,728 | 120,478 | 1,543 | 1% | 6,793 | 6% | - For the six months ended June 30, 2025, Consumer Banking's total revenue increased by 11% to $3,037 million and net income increased by 25% to $712 million compared to 2024[13] Commercial Banking Commercial Banking saw YoY revenue and net income decreases due to lower net interest income, but net income improved QoQ | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total revenue | $671 | $656 | $736 | $15 | 2% | ($65) | (9%) | | Net income | 206 | 196 | 259 | 10 | 5% | (53) | (20%) | | Net interest income | 439 | 441 | 494 | (2) | — | (55) | (11%) | | Noninterest income | 232 | 215 | 242 | 17 | 8% | (10) | (4%) | | Efficiency ratio | 47.47 | 49.77 | 42.28 | (230) bps | | 519 bps | | | Average total loans and leases | 63,057 | 62,437 | 65,997 | 620 | 1% | (2,940) | (4%) | | Average deposits | 42,481 | 42,178 | 44,203 | 303 | 1% | (1,722) | (4%) | - For the six months ended June 30, 2025, Commercial Banking's total revenue decreased by 10% to $1,327 million and net income decreased by 22% to $402 million compared to 2024[15] Non-Core The Non-Core segment significantly improved net income (loss) QoQ and YoY, reducing its net loss, with improved net interest income | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total revenue | ($2) | ($15) | ($31) | $13 | 87% | $29 | 94% | | Net income (loss) | ($14) | ($51) | ($50) | $37 | 73% | $36 | 72% | | Net interest income | ($5) | ($15) | ($31) | $10 | 67% | $26 | 84% | | Average total assets | $5,216 | $6,536 | $9,418 | ($1,320) | (20%) | ($4,202) | (45%) | | Net interest margin | (0.43)% | (0.90)% | (1.36)% | 47 bps | | 93 bps | | - For the six months ended June 30, 2025, the Non-Core segment's net income (loss) improved by 41% to ($65) million compared to ($110) million in 2024[16] Other The 'Other' segment reported a larger net loss QoQ and YoY, primarily due to increased negative net interest income, despite decreased noninterest expense | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total revenue | ($179) | ($196) | ($139) | $17 | 9% | ($40) | (29%) | | Net income (loss) | ($132) | ($108) | ($113) | ($24) | (22%) | ($19) | (17%) | | Net interest income | ($215) | ($228) | ($173) | $13 | 6% | ($42) | (24%) | | Noninterest expense | 24 | 17 | 49 | 7 | 41% | (25) | (51%) | | Provision for credit losses | (3) | (47) | (2) | 44 | 94% | (1) | (50%) | - For the six months ended June 30, 2025, the 'Other' segment's net income (loss) improved by 4% to ($240) million compared to ($250) million in 2024, despite a significant increase in negative net interest income[17] Credit-Related Information This section provides an overview of the company's credit quality, including nonaccrual loans, past due loans, and charge-offs Nonaccrual Loans and Leases Total nonaccrual loans and leases decreased QoQ but remained stable YoY, with commercial declines offset by residential mortgage increases | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Total nonaccrual loans and leases | $1,524 | $1,582 | $1,527 | ($58) | (4%) | ($3) | — | | Commercial and industrial | 233 | 283 | 261 | (50) | (18%) | (28) | (11%) | | Commercial real estate | 706 | 700 | 678 | 6 | 1% | 28 | 4% | | Residential mortgages | 198 | 198 | 153 | — | — | 45 | 29% | | Nonaccrual loans and leases to loans and leases | 1.09% | 1.15% | 1.08% | (6) bps | | 1 bps | | Loans and Leases 90 Days or More Past Due and Accruing Loans and leases 90+ days past due increased QoQ but decreased YoY, driven by a significant QoQ rise in commercial real estate | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Total loans and leases | $194 | $155 | $228 | $39 | 25% | ($34) | (15%) | | Commercial real estate | 60 | 4 | 36 | 56 | NM | 24 | 67% | | Residential mortgages | 128 | 138 | 182 | (10) | (7%) | (54) | (30%) | Charge-offs, Recoveries, and Related Ratios Total net charge-offs decreased QoQ but slightly increased YoY, with commercial charge-offs up and retail charge-offs down QoQ | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Total gross charge-offs | $201 | $234 | $223 | ($33) | (14%) | ($22) | (10%) | | Total gross recoveries | 34 | 34 | 39 | — | — | (5) | (13%) | | Total net charge-offs | 167 | 200 | 184 | (33) | (17%) | (17) | (9%) | | Commercial net charge-offs | 92 | 81 | 96 | 11 | 14% | (4) | (4%) | | Retail net charge-offs | 75 | 119 | 88 | (44) | (37%) | (13) | (15%) | | Annualized net charge-off rate (Total loans and leases) | 0.48% | 0.58% | 0.52% | (10) bps | | (4) bps | | - For the six months ended June 30, 2025, total net charge-offs increased by 1% to $367 million compared to 2024[21] Summary of Changes in the Components of the Allowance for Credit Losses Total allowance for credit losses decreased slightly QoQ and YoY, with net charge-offs down QoQ and provision for losses down YoY | Metric | 2Q25 ($ Millions) | 1Q25 ($ Millions) | 2Q24 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :---------------- | :---------------- | :---------------- | :------------- | :------------- | :------------- | :------------- | | Allowance for loan and lease losses - ending | $2,008 | $2,014 | $2,125 | ($6) | — | ($117) | (6%) | | Total allowance for credit losses - ending | 2,209 | 2,212 | 2,306 | (3) | — | (97) | (4%) | | Net charge-offs | 167 | 200 | 184 | (33) | (17%) | (17) | (9%) | | Total provision for loan and lease losses | 161 | 153 | 223 | 8 | 5% | (62) | (28%) | | Commercial allowance for credit losses | 1,269 | 1,312 | 1,429 | (43) | (3%) | (160) | (11%) | | Retail allowance for credit losses | 940 | 900 | 877 | 40 | 4% | 63 | 7% | - For the six months ended June 30, 2025, the total allowance for credit losses decreased by 4% to $2,209 million compared to 2024[23] Capital and Ratios This section reviews the company's capital structure, including capital ratios and tangible common equity Capital Ratios and Components (Preliminary) Capital ratios remained strong and stable in 2Q25, with CET1 and Tier 1 capital slightly up QoQ but down YoY | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | CET1 capital | $17,812 | $17,751 | $18,086 | $61 | — | ($274) | (2%) | | Tier 1 capital | 19,925 | 19,864 | 20,198 | 61 | — | (273) | (1%) | | Total capital | 23,221 | 23,156 | 23,551 | 65 | — | (330) | (1%) | | Risk-weighted assets | 168,017 | 166,908 | 168,393 | 1,109 | 1% | (376) | — | | CET1 capital ratio | 10.6% | 10.6% | 10.7% | | | | | | Tier 1 leverage ratio | 9.4% | 9.4% | 9.4% | | | | | Tangible Common Equity (Period-End and Average) Tangible common equity (TCE) increased healthily QoQ and YoY, driven by common stockholders' equity growth and reduced intangible assets | Metric | June 30, 2025 ($ Millions) | Mar 31, 2025 ($ Millions) | June 30, 2024 ($ Millions) | QoQ Change ($) | QoQ Change (%) | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------- | :------------- | :------------- | :------------- | | Total tangible common equity (period-end) | $15,246 | $14,867 | $13,866 | $379 | 3% | $1,380 | 10% | | Total tangible common equity (average) | 14,611 | 14,297 | 13,527 | 314 | 2% | 1,084 | 8% | | Common stockholders' equity (period-end) | 23,121 | 22,753 | 21,757 | 368 | 2% | 1,364 | 6% | | Other intangible assets (period-end) | 128 | 137 | 139 | (9) | (7%) | (11) | (8%) | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles non-GAAP financial measures, providing insights into underlying operational performance Non-GAAP Financial Measures Overview This section defines 'Underlying' non-GAAP measures, which exclude non-recurring items, used by management and investors to assess ongoing performance - Non-GAAP measures, labeled 'Underlying,' exclude specific items that management deems not indicative of the company's ongoing financial performance[25] - These measures are used by management for evaluating operating performance and making day-to-day operating decisions, and are considered useful for investors in conjunction with GAAP results[25] - Investors are cautioned not to rely solely on non-GAAP measures, but to consider them with the most directly comparable GAAP measures, as they have limitations as analytical tools[26] Key Non-GAAP Reconciliations This section provides detailed reconciliations for 'Underlying' non-GAAP measures, adjusting GAAP figures by removing 'notable items' for core performance insights | Metric | 2Q25 (GAAP) | 2Q25 (Underlying) | 2Q24 (GAAP) | 2Q24 (Underlying) | YoY Change (Underlying) ($) | YoY Change (Underlying) (%) | | :--------------------------------- | :---------- | :---------------- | :---------- | :---------------- | :-------------------------- | :-------------------------- | | Total revenue | $2,037 | $2,037 | $1,963 | $1,959 | $78 | 4% | | Noninterest expense | 1,319 | 1,319 | 1,301 | 1,265 | $54 | 4% | | Net income | 436 | 436 | 392 | 408 | $28 | 7% | | Diluted earnings per share | 0.92 | 0.92 | 0.78 | 0.82 | $0.10 | 12% | | Efficiency ratio | 64.76% | 64.76% | 66.27% | 64.59% | 17 bps | | | Return on average common equity | 7.18% | 7.18% | 6.70% | 7.00% | 18 bps | | | Return on average tangible common equity | 11.05% | 11.05% | 10.61% | 11.09% | (4) bps | | - Notable items, which are excluded from 'Underlying' measures, impacted noninterest income, noninterest expense, and income tax expense in prior periods, but had no impact in 2Q25[27]