Citizens Financial Group, Inc. Reports First Quarter 2021 Net Income of $611 million and EPS of $1.37 Underlying Net Income of $626 million and EPS of $1.41* Key Financial Data 1Q21 4Q20 1Q20 First Quarter 2021 Key Highlights Income Statement ($s in millions) ■ Underlying ROTCE of 17.6% and underlying EPS of $1.41 reflects strength across our fee businesses and strong credit results ■ Underlying PPNR of $661 million down from record levels – Reflects lower mortgage revenue given tightening gain-on-sale margins – Strength in Capital Markets, record results in Wealth, and well-controlled expenses ■ Net interest margin of 2.76% up slightly QoQ – Interest-bearing deposit costs of 20 bps, down 7 bps QoQ ■ Negative provision for credit losses of $140 million reflects strong credit results and improving macroeconomic outlook ■ Returned $262 million to shareholders, including share repurchases and common dividends ■ LDR improved to 80.7%, down 290 bps QoQ ■ Strong capital position with CET1 at 10.1% ■ TBV/share of $32.79 increased 3% YoY Total revenue $1,659 $1,707 $1,657 Pre-provision profit 641 695 645 Underlying pre-provision profit 661 737 678 Provision for credit losses (140) 124 600 Net income 611 456 34 Underlying net income 626 480 59 Balance Sheet & Credit Quality ($s in billions) Period end loans and leases $122.2 $123.1 $127.5 Average loans and leases 122.8 123.5 121.1 Period-end deposits 151.3 147.2 133.5 Average deposits 146.6 145.3 126.6 Period-end loans-to-deposit ratio 80.7 % 83.6 % 95.5 % ACL to loans ratio 1.94 2.17 1.73 ACL to loans ratio, ex. PPP 2.03 2.24 1.73 NCO ratio 0.52 % 0.61 % 0.46 % Financial Metrics Diluted EPS $1.37 $0.99 $0.03 Underlying EPS 1.41 1.04 0.09 ROTCE 17.2 % 12.2 % 0.4 % Underlying ROTCE 17.6 12.9 1.1 Net interest margin, FTE 2.76 2.75 3.10 Efficiency ratio 61 59 61 Underlying efficiency ratio 60 57 59 CET1 10.1 % 10.0 % 9.4 % TBV/Share $32.79 $32.72 $31.97 Comments from Chairman and CEO Bruce Van Saun “We are pleased to get off to strong start to 2021, with strength in our fee businesses, good balance sheet management and excellent performance on credit,” said Chairman and CEO Bruce Van Saun. “We are making good strides in our digital and next generation technology initiatives, and maintain a confident outlook for the balance of the year. While we increasingly see positive signs that the economy is improving rapidly and that life is returning to normal, we remain focused on continuing to assist those companies and individuals most impacted by the pandemic and lockdowns.” Citizens also announced today that its board of directors declared a second quarter 2021 common stock dividend of $0.39 per share. The dividend is payable on May 13, 2021 to shareholders of record at the close of business on April 29, 2021. *References in this release to “Underlying” results exclude notable items and are Non-GAAP Financial Measures. Where there is a reference to “Underlying” or “excluding elevated cash” results in a paragraph, all measures that follow these references are on the same basis. Additional information regarding the impact of notable items, elevated cash balances and Acquisitions on our results is described in this release. Please see the end of this release for important information on our use of Non-GAAP Financial Measures, and their reconciliation to GAAP financial measures. References in this release to balance sheet items are on an average basis and loans exclude loans held for sale (“LHFS”) unless otherwise noted. References to net interest margin are on a fully taxable equivalent (“FTE”) basis and all references to earnings per share represent fully diluted per common share. References to consolidated and/or commercial loans, loan growth, nonaccrual loans and allowance for loan losses include leases. The "Company" refers to Citizens. Current reporting-period regulatory capital ratios are preliminary. Select totals may not sum due to rounding.
Transcript
Citizens Financial Group, Inc. Reports First Quarter 2021 Net Income of $611 million and EPS of $1.37
Underlying Net Income of $626 million and EPS of $1.41*
Key Financial Data 1Q21 4Q20 1Q20 First Quarter 2021 Key Highlights
Income Statement
($s in millions) ■ Underlying ROTCE of 17.6% and underlying EPS of $1.41 reflects strength across our fee businesses and strong credit results
■ Underlying PPNR of $661 million down from record levels
– Reflects lower mortgage revenue given tightening gain-on-sale margins
– Strength in Capital Markets, record results in Wealth, and well-controlled expenses
■ Net interest margin of 2.76% up slightly QoQ
– Interest-bearing deposit costs of 20 bps, down 7 bps QoQ
■ Negative provision for credit losses of $140 million reflects strong credit results and improving macroeconomic outlook
■ Returned $262 million to shareholders, including share repurchases and common dividends
■ LDR improved to 80.7%, down 290 bps QoQ
■ Strong capital position with CET1 at 10.1%
■ TBV/share of $32.79 increased 3% YoY
Total revenue $ 1,659 $ 1,707 $ 1,657
Pre-provision profit 641 695 645
Underlying pre-provision profit 661 737 678
Provision for credit losses (140) 124 600
Net income 611 456 34
Underlying net income 626 480 59
Balance Sheet
&Credit Quality
($s in billions)
Period end loans and leases $ 122.2 $ 123.1 $ 127.5 Average loans and leases 122.8 123.5 121.1 Period-end deposits 151.3 147.2 133.5 Average deposits 146.6 145.3 126.6 Period-end loans-to-deposit ratio 80.7 % 83.6 % 95.5 %
ACL to loans ratio 1.94 2.17 1.73
ACL to loans ratio, ex. PPP 2.03 2.24 1.73 NCO ratio 0.52 % 0.61 % 0.46 %
Financial Metrics
Diluted EPS $ 1.37 $ 0.99 $ 0.03
Underlying EPS 1.41 1.04 0.09
ROTCE 17.2 % 12.2 % 0.4 %
Underlying ROTCE 17.6 12.9 1.1
Net interest margin, FTE 2.76 2.75 3.10
Efficiency ratio 61 59 61
Underlying efficiency ratio 60 57 59
CET1 10.1 % 10.0 % 9.4 %
TBV/Share $ 32.79 $ 32.72 $ 31.97
Comments from Chairman and CEO Bruce Van Saun
“We are pleased to get off to strong start to 2021, with strength in our fee businesses, good balance sheet management and
excellent performance on credit,” said Chairman and CEO Bruce Van Saun. “We are making good strides in our digital and next
generation technology initiatives, and maintain a confident outlook for the balance of the year. While we increasingly see
positive signs that the economy is improving rapidly and that life is returning to normal, we remain focused on continuing to
assist those companies and individuals most impacted by the pandemic and lockdowns.”
Citizens also announced today that its board of directors declared a second quarter 2021 common stock dividend of $0.39 per
share. The dividend is payable on May 13, 2021 to shareholders of record at the close of business on April 29, 2021.
*References in this release to “Underlying” results exclude notable items and are Non-GAAP Financial Measures. Where there is a reference to “Underlying” or “excluding elevated cash” results in a paragraph, all measures that follow these references are on the same basis. Additional information regarding the impact of notable items, elevated cash balances and Acquisitions on our results is described in this release. Please see the end of this release for important information on our use of Non-GAAP Financial Measures, and their reconciliation to GAAP financial measures. References in this release to balance sheet items are on an average basis and loans exclude loans held for sale (“LHFS”) unless otherwise noted. References to net interest margin are on a fully taxable equivalent (“FTE”) basis and all references to earnings per share represent fully diluted per common share. References to consolidated and/or commercial loans, loan growth, nonaccrual loans and allowance for loan losses include leases. The "Company" refers to Citizens. Current reporting-period regulatory capital ratios are preliminary. Select totals may not sum due to rounding.
Effective income tax rate 21.8 20.2 24.1 160 (237)
Efficiency ratio 61 59 61 207 25
Underlying efficiency ratio 60 57 59 336 111
Return on average common equity 11.6 8.2 0.2 337 1,133
Return on average tangible common equity 17.2 12.2 0.4 497 1,681
Underlying return on average tangible common equity 17.6 12.9 1.1 470 1,649
Return on average total assets 1.36 1.00 0.08 36 128
Underlying return on average total tangible assets 1.44 % 1.10 % 0.15 % 34 bps 129 bps
Capital adequacy(1,2)
Common equity tier 1 capital ratio 10.1 % 10.0 % 9.4 %
Total capital ratio 13.4 13.4 12.5
Tier 1 leverage ratio 9.5 9.4 9.6
Allowance for credit losses to loans and leases 1.94 % 2.17 % 1.73 % (23) bps 21 bps
Asset quality(2)
Nonaccrual loans and leases to loans and leases 0.82 % 0.83 % 0.61 % (1) bps 21 bps
Allowance for credit losses to nonaccrual loans and leases 235 262 283 (2,660) (4,806)
Net charge-offs as a % of average loans and leases 0.52 % 0.61 % 0.46 % (9) bps 6 bps1) Current reporting-period regulatory capital ratios are preliminary. 2) Capital adequacy and asset-quality ratios calculated on a period-end basis, except net charge-offs.
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The following table provides information on Underlying results which exclude the impact of notable items.
Underlying results:
Quarterly Trends
1Q21 change from
($s in millions, except per share data) 1Q21 4Q20 1Q20 4Q20 1Q20Net interest income $ 1,117 $ 1,129 $ 1,160 (1) % (4) %Noninterest income 542 578 497 (6) 9 Total revenue $ 1,659 $ 1,707 $ 1,657 (3) % — %Noninterest expense 1,018 1,012 1,012 1 1 Notable items 20 42 33 (52) (39)Underlying noninterest expense $ 998 $ 970 $ 979 3 % 2 %Underlying pre-provision profit 661 737 678 (10) (3) Provision for credit losses (140) 124 600 NM NMNet income available to common stockholders 588 424 12 39 NMUnderlying net income available to common stockholders $ 603 $ 448 $ 37 35 % NMPerformance metricsDiluted EPS $ 1.37 $ 0.99 $ 0.03 38 % NMUnderlying EPS $ 1.41 $ 1.04 $ 0.09 36 % NMEfficiency ratio 61 % 59 % 61 % 207 bps 25 bpsUnderlying efficiency ratio 60 57 59 336 111 Return on average tangible common equity 17.2 12.2 0.4 497 1,681 Underlying return on average tangible common equity 17.6 % 12.9 % 1.1 % 470 bps 1,649 bpsOperating leverage (3.4) % (0.4) %Underlying operating leverage (5.8) % (1.9) %
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Notable items:
First quarter 2021, fourth quarter 2020 and first quarter 2020 results reflect notable items primarily related to TOP 6
transformational and revenue and efficiency initiatives. The 2020 results also reflect notable items related to integration costs
primarily tied to the August 1, 2018 Franklin American Mortgage Company ("FAMC") acquisition. These notable items have been
excluded from reported results to better reflect Underlying operating results. Cumulative after-tax integration costs related to
the FAMC acquisition totaled $34 million through the end of first quarter 2021.
Notable items - integration costs 1Q21 4Q20 1Q20
Cumulative after-tax integration costs
($s in millions, except per share data) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax FAMC Other Total
Total Interest-Earning Assets excluding the impact of elevated cash (non-GAAP) D $155,396 $154,071 $150,946 $1,325 1% $4,450 3%
Day count E 90 92 91
Day count (year) F 365 366 366
Ratios:
Net interest margin, FTE (GAAP)A / C / E * F 2.76 % 2.75 % 3.10 % 1 bps (34) bps
Net interest margin, FTE, excluding the impact of elevated cash (non-GAAP)
B / D / E * F 2.92 % 2.92 % 3.10 % — bps (18) bps
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Forward-Looking Statements
This document contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends, as well as the potential effects of the COVID-19 pandemic and associated lockdowns on our business, operations, financial performance and prospects, are forward-looking statements. Also, 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,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”
Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:
• Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense;
• The rate of growth in the economy and employment levels, as well as general business and economic conditions, and changes in the competitive environment;
• Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals;
• The COVID-19 pandemic and associated lockdowns and their effect on the economic and business environments in which we operate;
• Our ability to meet heightened supervisory requirements and expectations;
• Liabilities and business restrictions resulting from litigation and regulatory investigations;
• Our capital and liquidity requirements under regulatory capital standards and our ability to generate capital internally or raise capital on favorable terms;
• The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
• Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;
• The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
• Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;
• A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and
• Management’s ability to identify and manage these and other risks.
In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends. Further, statements about the effects of the COVID-19 pandemic and associated lockdowns on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and
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duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us.
More information about factors that could cause actual results to differ materially from those described in the forward-lookingstatements can be found under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
Note: Per share amounts and ratios presented in this document are calculated using whole dollars.
