Citizens Financial (CFG) - 2020 Q4 - Annual Report

Part I Item 1. Business Citizens Financial Group, Inc. is the 13th largest U.S. retail bank holding company with $183.3 billion in assets, operating through Consumer and Commercial Banking segments - Citizens Financial Group, Inc. is the 13th largest retail bank holding company in the United States, with total assets of $183.3 billion and total deposits of $147.2 billion as of December 31, 2020[11] - The company operates through two primary business segments: Consumer Banking and Commercial Banking[12] - In response to COVID-19, the company provided payment forbearance to approximately 159,000 retail customers and 490 commercial clients, and delivered approximately $4.8 billion in PPP loans[20][21][22] - The company's operations are subject to extensive regulation by federal and state authorities, including the FRB, OCC, and CFPB[38][42][43] Item 1A. Risk Factors The company faces significant risks from the COVID-19 pandemic, interest rate changes, LIBOR discontinuation, cybersecurity threats, and extensive regulatory oversight - The COVID-19 pandemic has negatively affected the U.S. economy, leading to higher provisions for credit losses, increased charge-offs, and reduced net interest margin, with ultimate impact highly uncertain[83][84] - Changes in interest rates can materially affect net interest income, loan volume, and mortgage servicing rights value, making profitability sensitive to monetary policy and economic shifts[88] - The planned discontinuation of LIBOR after 2021 (with some tenors extending to mid-2023) presents significant risks, potentially affecting financial instrument values and requiring contract renegotiation, leading to increased costs and legal risks[91][92][93] - The company is subject to comprehensive regulation that could restrict its ability to implement strategic plans, expand business, and make capital distributions to stockholders[87][136] - Significant cybersecurity risks exist due to new technologies and sophisticated malicious actors, with successful attacks potentially resulting in unauthorized information release, financial loss, and reputational damage[117][118] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[161] Item 2. Properties As of December 31, 2020, the company owned 38 facilities and leased 1,172, including key operations centers in Rhode Island, deemed adequate for current needs - As of December 31, 2020, the company's subsidiaries owned 38 facilities and leased 1,172 facilities, with key owned operations centers in Johnston and East Providence, RI[162] Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 18 of the financial statements - Details on legal proceedings are provided in Note 18 of Item 8[163] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[164] Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE under symbol "CFG", with no equity repurchases in Q4 2020, and its performance is benchmarked against key indices - The company's common stock is traded on the NYSE under the symbol "CFG"[166] - No equity securities were purchased by the company during the quarter ended December 31, 2020[169] Item 6. Selected Consolidated Financial Data This section summarizes five years of key financial data, highlighting a significant decrease in 2020 net income to $1.1 billion due to increased credit loss provisions, despite asset growth to $183.3 billion Selected Financial Data (2019 vs 2020) | (in millions, except per-share data) | 2020 | 2019 | | :--- | :--- | :--- | | Operating Data | | | | Total revenue | $6,905 | $6,491 | | Provision for credit losses | $1,616 | $393 | | Net income | $1,057 | $1,791 | | Net income per diluted common share | $2.22 | $3.81 | | Balance Sheet Data (End of Period) | | | | Total assets | $183,349 | $165,733 | | Loans and leases | $123,090 | $119,088 | | Total deposits | $147,164 | $125,313 | | Total stockholders' equity | $22,673 | $22,201 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations In 2020, net income decreased 41% to $1.1 billion due to increased credit loss provisions, while total revenue grew 6% to $6.9 billion, supported by noninterest income, and the company maintained a strong 10.0% CET1 ratio - Net income for 2020 was $1.1 billion, a 41% decrease from 2019, with diluted EPS at $2.22, down 42% from $3.81 in 2019, primarily due to COVID-19 and CECL adoption resulting in a $923 million reserve build[180] - Total revenue increased 6% to $6.9 billion, as a 24% increase in noninterest income (driven by mortgage banking and capital markets fees) offset a 1% decrease in net interest income[183] - Provision for credit losses surged to $1.6 billion, an increase of $1.2 billion from 2019, reflecting CECL adoption and COVID-19 economic impact[185] - The company's CET1 capital ratio remained stable at 10.0% at year-end 2020, well above the regulatory minimum plus the new Stress Capital Buffer (SCB) of 3.4%[272][267] Item 7A. Quantitative and Qualitative Disclosures about Market Risk Disclosures regarding market risk are incorporated by reference from the "Market Risk" section within Item 7, Management's Discussion and Analysis - Disclosures about market risk are located in the "Market Risk" section of Item 7[361] Item 8. Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2020, including balance sheets and statements of operations, highlighting $183.3 billion in total assets and $1.1 billion in net income Consolidated Balance Sheet Highlights (as of Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $183,349 | $165,733 | | Net Loans and Leases | $120,647 | $117,836 | | Total Deposits | $147,164 | $125,313 | | Total Liabilities | $160,676 | $143,532 | | Total Stockholders' Equity | $22,673 | $22,201 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in millions) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Interest Income | $4,586 | $4,614 | $4,532 | | Provision for Credit Losses | $1,616 | $393 | $326 | | Noninterest Income | $2,319 | $1,877 | $1,596 | | Noninterest Expense | $3,991 | $3,847 | $3,619 | | Net Income | $1,057 | $1,791 | $1,721 | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[611] Item 9A. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2020, with new controls implemented in Q1 2020 for CECL accounting standard adoption - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[613] - In Q1 2020, the company implemented controls related to the adoption of the CECL accounting standard, which included enhanced data validation and governance routines for the Allowance for Credit Loss process[613] Item 9B. Other Information The company reports no other information for this item - None[617] Part III Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[614] Item 11. Executive Compensation Information concerning executive compensation is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[615] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership is incorporated by reference from the 2021 Proxy Statement, detailing 3,496,231 securities for outstanding awards and 51,261,793 available for future issuance under equity plans as of December 31, 2020 - Information on security ownership is incorporated by reference from the 2021 Proxy Statement[619] Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Securities to be issued upon exercise () | Securities remaining available for future issuance () | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 3,496,231 | 51,261,793 | | Total | 3,496,231 | 51,261,793 | Item 13. Certain Relationships and Related Transactions, and Director Independence Information concerning related person transactions and director independence is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[620] Item 14. Principal Accountant Fees and Services Information concerning principal accountant fees and services is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[621] Part IV Item 15. Exhibits and Financial Statement Schedules This section lists all financial statements, schedules, and exhibits filed with the Form 10-K report, including governance documents, debt agreements, and compensation plans - This item lists all financial statements and exhibits filed with the report, including governance documents, debt agreements, and compensation plans[623][626] Item 16. Form 10-K Summary This item is not applicable - Not applicable[629]