Citizens Financial (CFG) Up 28.7% YTD: Is it Worth Considering?

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].