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    Citizens Financial Group Inc (CFG)

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    Business Description

    Citizens Financial Group, Inc. (CFG) is a financial services company that operates primarily through two main business segments: Consumer Banking and Commercial Banking, with a third segment classified as Non-Core. CFG provides a range of financial products and services to individuals, small businesses, and large corporations, including deposits, lending, credit cards, and wealth management services . The company serves its customers through a network of branches and ATMs, as well as digital banking platforms nationwide .

    1. Consumer Banking - Serves individuals and small businesses with annual revenues up to $25 million, offering products such as deposits, mortgage and home equity lending, credit cards, small business loans, and wealth management services. Operates through a network of approximately 1,100 branches and 3,200 ATMs, and provides digital banking services nationwide .

    2. Commercial Banking - Caters to companies and institutions with annual revenues ranging from $25 million to over $3 billion, providing financial products and solutions including lending, leasing, deposit and treasury management services, foreign exchange, risk management solutions, and capital markets capabilities. Focuses on middle-market companies, large corporations, and institutions, with specialized industry teams in areas such as Aerospace, Defense, and Government Services .

    3. Non-Core - Includes CFG's indirect auto and certain purchased consumer loan portfolios, which were transferred from the Consumer Banking segment as part of a balance sheet optimization strategy. Reflects CFG's decision to discontinue the origination of certain non-strategic lending portfolios .

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Bruce Van SaunChairman and Chief Executive OfficerOctober 2013Bruce Van Saun has been serving as the Chairman and CEO of CFG since October 2013. He has extensive experience in the financial services industry, having previously served as Finance Director at The Royal Bank of Scotland Group plc and held senior positions at The Bank of New York Mellon, Deutsche Bank, Wasserstein Perella Group, and Kidder Peabody & Co. .
    John F. WoodsVice Chair and Chief Financial OfficerMarch 2017John F. Woods joined CFG in February 2017 and became CFO in March 2017. He was appointed Vice Chair in February 2019. Before CFG, he was CFO of MUFG Americas and held positions at J.P. Morgan Chase. He began his career with Arthur Andersen in 1986 .
    Donald H. McCree IIIVice Chair and Head of Commercial BankingAugust 2015Donald H. McCree III has been Vice Chair and Head of Commercial Banking at CFG since August 2015. He previously held senior leadership positions at J.P. Morgan Chase & Co. for over 30 years .
    Brendan CoughlinVice Chair and Head of Consumer BankingJanuary 2020Brendan Coughlin serves as Vice Chair and Head of Consumer Banking at CFG. He has been with CFG for over 19 years, holding various positions in Consumer Banking. He was named President of Consumer Lending in June 2015 .
    Elizabeth S. JohnsonVice Chair and Chief Experience Officer2013Elizabeth S. Johnson is the Vice Chair and Chief Experience Officer at CFG. She joined CFG in 2013 as Head of Corporate Strategy and has held roles such as Chief Marketing Officer and Head of Virtual Channels .
    Polly Nyquist KlaneExecutive Vice President, Chief Legal Officer, and General CounselApril 2022Polly Nyquist Klane joined CFG as Executive Vice President, Chief Legal Officer, and General Counsel in April 2022. She previously served as Deputy General Counsel at Capital One and Fannie Mae .
    Susan LaMonicaExecutive Vice President and Chief Human Resources Officer2011Susan LaMonica has been the Chief Human Resources Officer at CFG since 2011. She previously held senior leadership roles at J.P. Morgan Chase .
    Michael RuttledgeExecutive Vice President, Chief Information Officer, and Head of Enterprise Security and Technology2019Michael Ruttledge is the Executive Vice President, CIO, and Head of Enterprise Security and Technology at CFG. He joined CFG in 2019 and has led the Next Generation Technology transformation .
    Richard SteinExecutive Vice President and Chief Risk OfficerJanuary 1, 2024Richard Stein joined CFG in May 2023 as Executive Vice President and Senior Risk Advisor. He was appointed Chief Risk Officer on January 1, 2024 .
    C. Jack ReadExecutive Vice President and ControllerJuly 2018C. Jack Read is the Executive Vice President and Controller at CFG. He joined CFG in July 2018 and became Chief Accounting Officer in August 2018 .
    Claude E. WadeUpcoming Board Member, will serve on the Risk CommitteeMarch 1, 2025Claude E. Wade has been appointed to the Board of Directors of CFG, effective March 1, 2025. He will serve on the Board's Risk Committee. He currently serves as Executive Vice President, Chief Digital Officer, and Global Head of Business Operations at AIG .
    Wendy A. WatsonCurrent Board Member, Chair of the Audit Committee, member of the Risk Committee and the Compensation and Human Resources CommitteeOctober 2010Wendy A. Watson has been a board member of CFG since October 2010. She is the Chair of the Audit Committee and a member of the Risk and Compensation and Human Resources Committees. She will retire in April 2025 .

    Questions to Ask Management

    1. Given that you've terminated $4 billion of swaps in the third quarter and the forward curve now implies fewer rate cuts, how will this decision impact your net interest margin guidance, and can you elaborate on the accounting treatment and its effect on earnings in the coming quarters?
    2. With your general office commercial real estate exposure still at $3.2 billion and reserves increasing to 12.1%, how confident are you that you've adequately provisioned for potential future losses, especially considering the ongoing challenges in the office sector?
    3. You anticipate deposit betas nearing 40% by the end of the fourth quarter; given the competitive deposit environment, what strategies are you implementing to manage deposit costs, and how sustainable is it to expect stable or improving deposit costs while maintaining deposit balances?
    4. Your net interest margin guidance relies on front book/back book dynamics contributing to expansion; can you specify the volumes and yields of loans and securities expected to reprice, and quantify the anticipated impact on NIM given current rate expectations?
    5. The Private Bank is expected to start contributing to earnings in the fourth quarter; considering the significant investments and rapid expansion, what risks do you foresee in achieving profitability, and how sustainable is the growth in deposits and loans in this segment?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateJune 28, 2024
    End Date/DurationN/A
    Total additional amount$656 million
    Remaining authorization amount$925 million
    DetailsThe program aims to return capital to shareholders. The timing and amount of repurchases depend on factors such as the company's capital position, financial performance, strategic initiatives, market conditions, and regulatory considerations.

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate (%)% of Total Debt
    2024$17 4.023% fixed-rate subordinated debt 4.023 0.1% = (17 / 13,944) * 100
    2025$1,945 4.350% fixed-rate subordinated debt, 4.300% fixed-rate subordinated debt, 2.250% senior unsecured notes, 6.064% fixed/floating-rate senior unsecured notes 4.350, 4.300, 2.250, 6.064 14.0% = (1,945 / 13,944) * 100
    2026$3,330 2.850% fixed-rate senior unsecured notes, 5.284% fixed/floating-rate senior unsecured notes, 3.750% senior unsecured notes 2.850, 5.284, 3.750 23.9% = (3,330 / 13,944) * 100
    2027$8 N/A N/A 0.1% = (8 / 13,944) * 100
    2028$2,696 4.575% fixed/floating-rate senior unsecured notes 4.575 19.3% = (2,696 / 13,944) * 100
    2029 and thereafter$5,948 5.841% fixed/floating-rate senior unsecured notes, 2.500% fixed-rate senior unsecured notes, 3.250% fixed-rate senior unsecured notes, 3.750% fixed-rate reset subordinated debt, 4.300% fixed-rate reset subordinated debt, 4.350% fixed-rate reset subordinated debt, 5.718% fixed/floating-rate senior unsecured notes, 2.638% fixed-rate subordinated debt, 6.645% fixed/floating-rate senior unsecured notes, 5.641% fixed-rate reset subordinated debt 5.841, 2.500, 3.250, 3.750, 4.300, 4.350, 5.718, 2.638, 6.645, 5.641 42.7% = (5,948 / 13,944) * 100

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Community banks
    • Super-regional and national financial institutions
    • Credit unions
    • Savings and loan associations
    • Mortgage banking firms
    • Consumer finance companies
    • Securities brokerage firms
    • Insurance companies
    • Money market funds
    • Hedge funds
    • Private equity firms
    • FinTech companies

    Auditor

    NameStart DateEnd DateReason for Change
    Deloitte & Touche LLP2000 PresentCurrent auditor

    Latest news

    Recent developments and announcements about CFG.

    Financial Reporting

      Earnings Call

      ·
      Jan 17, 2025, 5:42 PM

      The recent earnings call for CFG provided several key insights into the company's financial performance and strategic direction as of the fourth quarter of 2024. Here are the highlights:

      Financial Performance

      • Earnings Per Share (EPS): CFG reported an underlying EPS of $3.24 for 2024, with a fourth-quarter EPS of $0.85.
      • Net Interest Income (NII): There was a sequential growth of 3% in NII, driven by a 10 basis points expansion in net interest margin (NIM).
      • Revenue and Profit: The company achieved a return on tangible common equity (ROTCE) of 10.7% in the fourth quarter.
      • Loan and Deposit Growth: The Private Bank contributed significantly, with $7 billion in deposits and $3.1 billion in loans by year-end.

      Management’s Forward Guidance

      • CFG expects solid growth in NII for 2025, with further NIM expansion and modest net loan growth.
      • The company anticipates positive operating leverage of around 1.5% for the full year.
      • Credit costs are projected to improve, with reserve releases expected throughout the year.

      Strategic Initiatives

      • CFG is focusing on expanding its Private Bank and Private Wealth initiatives, which have shown profitability and are expected to be 5% accretive to the bottom line in 2025.
      • The company is also investing in its payments platform and expanding its commercial middle-market coverage.

      Market Conditions and Analyst Questions

      • Analysts inquired about the impact of interest rate changes on deposit costs and NIM. Management indicated that they are well-positioned to benefit from higher rates due to their asset-sensitive balance sheet.
      • Questions were also raised about the strategic growth of the Private Bank and its impact on future earnings, to which management responded positively, highlighting ongoing investments and team expansions.

      Conclusion

      CFG ended 2024 with a strong financial position and is optimistic about its growth prospects in 2025, driven by strategic investments and favorable market conditions. The company is committed to maintaining financial discipline while pursuing growth opportunities in key areas such as private banking and commercial markets.

      This summary captures the key points from CFG's earnings call, focusing on financial performance, strategic initiatives, and market conditions as discussed by the management and analysts.