10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

June 30, 2017

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From

(Not Applicable)

Commission File Number 001-36636

(Exact name of the registrant as specified in its charter)

Delaware	05-0412693
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

One Citizens Plaza, Providence, RI 02903

(Address of principal executive offices, including zip code)

(401) 456-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

[ü] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[ü] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	[ü]	Accelerated filer	[ ]
Non-accelerated filer (Do not check if a smaller reporting company)	[ ]	Smaller reporting company	[ ]
		Emerging growth company	[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ü] No

There were 500,671,099 shares of Registrant’s common stock ($0.01 par value) outstanding on August 1, 2017.

	Table of Contents
Glossary of Acronyms and Terms		3
Part I. Financial Information		5
Item 1. Financial Statements		63
Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016 (unaudited)		64
Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016		65
Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016		66
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Six Months Ended June 30, 2017 and 2016		67
Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2017 and 2016		68
Notes to the Consolidated Financial Statements (unaudited)		69
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		5
Item 3. Quantitative and Qualitative Disclosures about Market Risk		114
Item 4. Controls and Procedures		114
Part II. Other Information		115
Item 1. Legal Proceedings		115
Item 1A. Risk Factors		115
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		115
Item 5. Other Information		115
Item 6. Exhibits		115
Signature		117

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CITIZENS FINANCIAL GROUP, INC.

GLOSSARY OF ACRONYMS AND TERMS

The following listing provides a comprehensive reference of common acronyms and terms we regularly use in our financial reporting:

AFS	Available for Sale
ALLL	Allowance for Loan and Lease Losses
AOCI	Accumulated Other Comprehensive Income (Loss)
ASU	Accounting Standards Update
ATM	Automated Teller Machine
Board of Directors	The Board of Directors of Citizens Financial Group, Inc.
bps	Basis Points
C&I	Commercial and Industrial
Capital Plan Rule	Federal Reserve’s Regulation Y Capital Plan Rule
CBNA	Citizens Bank, N.A.
CBPA	Citizens Bank of Pennsylvania
CCAR	Comprehensive Capital Analysis and Review
CCB	Capital Conservation Buffer
CCO	Chief Credit Officer
CET1	Common Equity Tier 1
CEO	Chief Executive Officer
Citizens or CFG or the Company	Citizens Financial Group, Inc. and its Subsidiaries
CLTV	Combined Loan to Value
CMO	Collateralized Mortgage Obligation
CRE	Commercial Real Estate
CRO	Chief Risk Officer
DFAST	Dodd-Frank Act Stress Test
Dodd-Frank Act	The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPS	Earnings Per Share
Exchange Act	The Securities Exchange Act of 1934
Fannie Mae (FNMA)	Federal National Mortgage Association
FASB	Financial Accounting Standards Board
FDIA	Federal Deposit Insurance Act
FDIC	Federal Deposit Insurance Corporation
FHLB	Federal Home Loan Bank
FICO	Fair Isaac Corporation (credit rating)
FRB	Federal Reserve Board of Governors and, as applicable, Federal Reserve Bank(s)
FTP	Funds Transfer Pricing
GAAP	Accounting Principles Generally Accepted in the United States of America
Ginnie Mae (GNMA)	Government National Mortgage Association
HELOC	Home Equity Line of Credit
HTM	Held To Maturity
LCR	Liquidity Coverage Ratio
LGD	Loss Given Default
LIBOR	London Interbank Offered Rate
LIHTC	Low Income Housing Tax Credit
LTV	Loan to Value
MBS	Mortgage-Backed Securities
Mid-Atlantic	District of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia
Midwest	Illinois, Indiana, Michigan, and Ohio

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CITIZENS FINANCIAL GROUP, INC.

MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
MSR	Mortgage Servicing Right
New England	Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
NSFR	Net Stable Funding Ratio
OCC	Office of the Comptroller of the Currency
OCI	Other Comprehensive Income (Loss)
Parent Company	Citizens Financial Group, Inc. (the Parent Company of Citizens Bank of Pennsylvania, Citizens Bank, N.A. and other subsidiaries)
PD	Probability of Default
ROTCE	Return on Average Tangible Common Equity
RPA	Risk Participation Agreement
SBO	Serviced by Others loan portfolio
SEC	United States Securities and Exchange Commission
SVaR	Stressed Value at Risk
TDR	Troubled Debt Restructuring
VaR	Value at Risk
VIE	Variable Interest Entities

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CITIZENS FINANCIAL GROUP, INC.

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Page
Forward-Looking Statements	6
Introduction	7
Financial Performance	8
Selected Consolidated Financial Data	9
Principal Components of Operations and Key Performance Metrics Used By Management	11
Results of Operations	17
Second Quarter 2017 vs. Second Quarter 2016	17
First Half 2017 vs. First Half 2016	18
Net Income	19
Net Interest Income	19
Noninterest Income	23
Provision for Credit Losses	24
Noninterest Expense	24
Income Tax Expense	25
Business Segments	26
Analysis of Financial Condition	34
Securities	34
Loans and Leases	35
Non-Core Assets	36
Allowance for Credit Losses and Nonperforming Assets	36
Derivatives	40
Deposits	41
Borrowed Funds	42
Capital and Regulatory Matters	43
Liquidity	49
Off-Balance Sheet Arrangements	53
Critical Accounting Estimates	53
Risk Governance	54
Market Risk	56

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CITIZENS FINANCIAL GROUP, INC.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends 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 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;

• Our ability to implement our strategic plan, including the cost savings and efficiency components, and achieve our indicative performance targets;

• Our ability to remedy regulatory deficiencies and meet supervisory requirements and expectations;

• Liabilities and business restrictions resulting from litigation and regulatory investigations;

• Our capital and liquidity requirements (including under regulatory capital standards, such as the U.S. Basel III capital rules) 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, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

• 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 amount and timing of any future common stock dividends or share repurchases will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries), and any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will pay any dividends to holders of our common stock, or as to the amount of any such dividends.

More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

INTRODUCTION

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions with $151.4 billionin assets as of June 30, 2017. Our mission is to help our customers, colleagues and communities reach their potential. Headquartered in Providence, Rhode Island, we offer a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. We help our customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, we provide an integrated experience that includes mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, we offer corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest rate products, and asset finance. More information is available at www.citizensbank.com.

The following MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements in Item 1 of this Form 10-Q, as well as other information contained in this document and our 2016 Annual Report on Form 10-K.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FINANCIAL PERFORMANCE

Second Quarter 2017 compared with Second Quarter 2016 - Key Highlights

Second quarter 2017 net income of $318 million, increased 31% from $243 million in second quarter 2016, with earnings per diluted common share of $0.63, up 37% from $0.46 per diluted common share in second quarter 2016. Second quarter 2017 ROTCE of 9.6% improved from 7.3% in second quarter 2016.

• Second quarter 2017 results reflect a 31% increase in net income available to common stockholders, led by revenue growth of 9%, as net interest income increased 11% given 6% average loan growth and a 13 basis point increase in net interest margin as well as noninterest income growth of 4%.

• Second quarter 2017 results reflect a $26 million pre-tax impact related to impairments on aircraft lease assets which, in addition to provision expense of $70 million, resulted in total credit-related costs of $96 million.* The lease impairments, which largely relate to a non-core runoff portfolio, reduced noninterest income by $11 million and increased noninterest expense by $15 million.

• Continued strong focus on top-line growth and expense management helped drive positive operating leverage of 5%, a 2.8% improvement in the efficiency ratio and a 2.3% improvement in ROTCE.

• Before the impact of the lease impairments, Underlying revenue increased 10% with Underlying noninterest income growth of 7%.* Underlying operating leverage was 7% and the efficiency ratio improved 4.4%.*

• The provision for credit losses of $70 million in second quarter 2017 decreased $20 million from $90 million in second quarter 2016, largely reflecting continued improvement in portfolio credit quality, partially offset by an increase tied to a retail runoff portfolio and an increase in commercial net charge-offs. Including the $26 million of lease impairments, total credit-related costs were $96 million* in the second quarter 2017, up modestly from the prior year quarter.

• The second quarter 2017 tax rate reflected a 1.5% benefit primarily related to investments in historic tax credits.

• Fully diluted average common shares outstanding decreased by 23 million shares.

First Half 2017 compared with First Half 2016 - Key Highlights

First half 2017 net income of $638 million, increased 37% from $466 million in first half 2016, with earnings per diluted common share of $1.24, up 43%from $0.87 per diluted common share in first half 2016. Our first half 2017 results include a $23 million benefit, or $0.05 per diluted common share, related to the settlement of certain state tax matters. First half 2017 ROTCE of9.6% improved from 7.0% in first half 2016.

On an Underlying basis*, excluding a $23 million benefit related to the settlement of certain state tax matters, first half 2017 net income of $615 million was up 32% from first half 2016. First half 2017 Underlying earnings per diluted common share of $1.19 was up 37% versus first half 2016.* First half 2017 Underlying ROTCE of 9.3% improved by 232 basis points relative to first half 2016.*

• First half results reflect a 37% increase in net income available to common stockholders, led by revenue growth of 11%, as net interest income increased 11%, given a 7% average loan growth and a 12 basis point increase in net interest margin, as well as noninterest income growth of 9%.

• Continued strong focus on top-line growth and expense management helped drive positive operating leverage of 6%, 3.4% improvement in the efficiency ratio from 65.2% to 61.8%, and a 2.7% improvement in ROTCE.  On an Underlying basis*, the efficiency ratio improved 4.2% from 65.2% to 61.0%.

• First half 2017 results included a $26 million pre-tax impact related to impairments on aircraft lease assets, which increased the efficiency ratio by 79 basis points on an Underlying basis.*

• The first half 2017 tax rate reflected a 3.9% benefit driven by the settlement of certain state tax matters and investments in historic tax credits.

• Fully diluted average common shares outstanding decreased by 21 million shares.

* “Underlying” results, as applicable, exclude a first quarter 2017 $23 million benefit related to the settlement of certain state tax matters and reclassify second quarter 2017 results for the pre-tax impact of $26 million of lease asset impairments to reflect their credit-related impact. For more information on the computation of key performance metrics and non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used by Management — Key Performance Metrics and Non-GAAP Financial Measures.”

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

SELECTED CONSOLIDATED FINANCIAL DATA

The summary Consolidated Operating Data for the three and six months ended June 30, 2017 and 2016 and the summary Consolidated Balance Sheet data as of June 30, 2017 and December 31, 2016 are derived from our unaudited interim Consolidated Financial Statements included in Part I, Item 1 — Financial Statements of this report. Our historical results are not necessarily indicative of the results expected for any future period.

Our unaudited interim Consolidated Financial Statements have been prepared on the same basis as the audited Consolidated Financial Statements and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information set forth herein. Our operating results for the three and six months ended June 30, 2017 are not necessarily indicative of those to be expected for the year ending December 31, 2017 or for any future period. The following selected consolidated financial data should be read in conjunction with our unaudited interim Consolidated Financial Statements and the Notes thereto.

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions, except per-share amounts)	2017			2016			2017			2016
OPERATING DATA:
Net interest income		$1,026			$923			$2,031			$1,827
Noninterest income	370			355			749			685
Total revenue	1,396			1,278			2,780			2,512
Provision for credit losses	70			90			166			181
Noninterest expense	864			827			1,718			1,638
Income before income tax expense	462			361			896			693
Income tax expense	144			118			258			227
Net income		$318			$243			$638			$466
Net income available to common stockholders		$318			$243			$631			$459
Net income per common share - basic		$0.63			$0.46			$1.24			$0.87
Net income per common share - diluted		$0.63			$0.46			$1.24			$0.87
OTHER OPERATING DATA:
Return on average common equity (1)	6.48		%	4.94		%	6.50		%	4.70		%
Return on average tangible common equity (1)	9.57			7.30			9.62			6.96
Return on average total assets (1)	0.85			0.69			0.86			0.67
Return on average total tangible assets (1)	0.89			0.72			0.90			0.70
Efficiency ratio (1)	61.94			64.71			61.81			65.18
Operating leverage (1) (2)	4.76			8.16			5.79			6.20
Net interest margin (1)	2.97			2.84			2.97			2.85

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

(dollars in millions)	June 30, 2017			December 31, 2016
BALANCE SHEET DATA:
Total assets		$151,407			$149,520
Loans and leases (3)	109,046			107,669
Allowance for loan and lease losses	(1,219		)	(1,236		)
Total securities	25,115			25,610
Goodwill	6,887			6,876
Total liabilities	131,343			129,773
Total deposits	113,613			109,804
Federal funds purchased and securities sold under agreements to repurchase	429			1,148
Other short-term borrowed funds	2,004			3,211
Long-term borrowed funds	13,154			12,790
Total stockholders’ equity	20,064			19,747
OTHER BALANCE SHEET DATA:
Asset Quality Ratios:
Allowance for loan and lease losses as a percentage of total loans and leases	1.12		%	1.15		%
Allowance for loan and lease losses as a percentage of nonperforming loans and leases	118.98			118.32
Nonperforming loans and leases as a percentage of total loans and leases	0.94			0.97
Capital Ratios:(4)
CET1 capital ratio (5)	11.2			11.2
Tier 1 capital ratio (6)	11.4			11.4
Total capital ratio (7)	14.0			14.0
Tier 1 leverage ratio (8)	9.9			9.9

⁽¹⁾ See “—Principal Components of Operations and Key Performance Metrics Used By Management” for definitions of our key performance metrics.

⁽²⁾ “Operating leverage” represents the period-over-period percent change in total revenue, less the period-over-period percent change in noninterest expense. For the purpose of the 2016 calculation, total revenue was $1.2 billion and $2.4 billion for the three and six months ended June 30, 2015, respectively, and noninterest expense was $841 million and $1.7 billion for the three and six months ended June 30, 2015, respectively.

⁽³⁾ Excludes loans held for sale of $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

⁽⁴⁾ U.S. Basel III transitional rules for institutions applying the Standardized approach to calculating risk-weighted assets became effective January 1, 2015. The

capital ratios and associated components as of June 30, 2017 and December 31, 2016 are prepared using the U.S. Basel III Standardized transitional approach.

⁽⁵⁾ “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁶⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital,

divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁷⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁸⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

PRINCIPAL COMPONENTS OF OPERATIONS AND KEY PERFORMANCE METRICS USED BY MANAGEMENT

As a banking institution, we manage and evaluate various aspects of our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our balance sheet and statement of operations, as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance and the financial condition and performance of comparable banking institutions in our region and nationally.

The primary line items we use in our key performance metrics to manage and evaluate our statement of operations include net interest income, noninterest income, total revenue, provision for credit losses, noninterest expense, net income and net income available to common stockholders. The primary line items we use in our key performance metrics to manage and evaluate our balance sheet data include loans and leases, securities, allowance for credit losses, deposits, borrowed funds and derivatives.

In first quarter 2017, certain prior period noninterest income amounts reported in the Consolidated Statement of Operations were reclassified to enhance transparency and provide additional granularity, particularly with regard to fee income related to customer activity. Additionally, student loans were renamed “education” loans to more closely align with the full range of services offered to borrowers, from loan origination to refinancing. These changes had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.

Key performance metrics and non-GAAP financial measures

We consider various measures when evaluating our performance and making day-to-day operating decisions, as well as evaluating capital utilization and adequacy, including:

• Return on average common equity, which we define as annualized net income available to common stockholders divided by average common equity;

• Return on average tangible common equity, which we define as annualized net income available to common stockholders divided by average common equity excluding average goodwill (net of related deferred tax liability) and average other intangibles;

• Return on average total assets, which we define as annualized net income divided by average total assets;

• Return on average total tangible assets, which we define as annualized net income divided by average total assets excluding average goodwill (net of related deferred tax liability) and average other intangibles;

• Efficiency ratio, which we define as the ratio of our total noninterest expense to the sum of net interest income and total noninterest income. We measure our efficiency ratio to evaluate the efficiency of our operations as it helps us monitor how costs are changing compared to our income. A decrease in our efficiency ratio represents improvement;

• Operating leverage, which we define as the percent change in total revenue, less the percent change in noninterest expense;

• Net interest margin, which we calculate by dividing annualized net interest income for the period by average total interest-earning assets, is a key measure that we use to evaluate our net interest income; and

• Common equity tier 1 capital ratio (U.S. Basel III Standardized fully phased-in basis), represents CET1 capital divided by total risk-weighted assets as defined under U.S Basel III Standardized approach.

“Underlying” results, which are non-GAAP measures, exclude certain items, as applicable, that may occur in a reporting period which management does not consider indicative of on-going financial performance.

We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our “Underlying” results in any period reflect our operational performance in that period and, accordingly, it is useful to consider our GAAP results and our “Underlying” results together. We believe this presentation also increases comparability of period-to-period results.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP.

Non-GAAP measures are denoted throughout “Management's Discussion and Analysis of Financial Condition and Results of Operations” by the use of the term “Underlying” and/or are followed by an asterisk (*).

The following table presents computations of key performance metrics used throughout “Management's Discussion and Analysis of Financial Condition and Results of Operations”:

		As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(dollars in millions)	Ref.	2017			2016			2017			2016
Total revenue (GAAP)	A		$1,396			$1,278			$2,780			$2,512
Noninterest expense (GAAP)	B	864			827			1,718			1,638
Net income (GAAP)	C	318			243			638			466
Net income available to common stockholders (GAAP)	D	318			243			631			459
Return on average common equity:
Average common equity (GAAP)	E		$19,659			$19,768			$19,560			$19,667
Return on average common equity	D/E	6.48		%	4.94		%	6.50		%	4.70		%
Return on average tangible common equity:
Average common equity (GAAP)	E		$19,659			$19,768			$19,560			$19,667
Less: Average goodwill (GAAP)		6,882			6,876			6,879			6,876
Less: Average other intangibles (GAAP)		2			2			1			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		534			496			533			488
Average tangible common equity	F		$13,309			$13,386			$13,213			$13,277
Return on average tangible common equity	D/F	9.57		%	7.30		%	9.62		%	6.96		%
Return on average total assets:
Average total assets (GAAP)	G		$149,878			$142,179			$149,335			$140,479
Return on average total assets	C/G	0.85		%	0.69		%	0.86		%	0.67		%
Return on average total tangible assets:
Average total assets (GAAP)	G		$149,878			$142,179			$149,335			$140,479
Less: Average goodwill (GAAP)		6,882			6,876			6,879			6,876
Less: Average other intangibles (GAAP)		2			2			1			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		534			496			533			488
Average tangible assets	H		$143,528			$135,797			$142,988			$134,089
Return on average total tangible assets	C/H	0.89		%	0.72		%	0.90		%	0.70		%
Efficiency ratio:
Efficiency ratio	B/A	61.94		%	64.71		%	61.81		%	65.18		%
Operating Leverage:
Increase in total revenue		9.23		%	6.50		%	10.67		%	5.41		%
Increase (decrease) noninterest expense		4.47			(1.66		)	4.88			(0.79		)
Operating Leverage		4.76		%	8.16		%	5.79		%	6.20		%

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table presents computations of non-GAAP financial measures used throughout “Management's Discussion and Analysis of Financial Condition and Results of Operations”:

		As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions, except share, per-share and ratio data)	Ref.	2017			2016			2017			2016
Noninterest income, Underlying:
Noninterest income (GAAP)			$370			$355			$749			$685
Less: Lease impairment credit-related costs		(11		)	—			(11		)	—
Noninterest income, Underlying (non-GAAP)			$381			$355			$760			$685
Total revenue, Underlying:
Total revenue (GAAP)	A		$1,396			$1,278			$2,780			$2,512
Less: Lease impairment credit-related costs		(11		)	—			(11		)	—
Total revenue, Underlying (non-GAAP)	I		$1,407			$1,278			$2,791			$2,512
Noninterest expense, Underlying:
Noninterest expense (GAAP)	B		$864			$827			$1,718			$1,638
Less: Lease impairment credit-related costs		15			—			15			—
Noninterest expense, Underlying (non-GAAP)	J		$849			$827			$1,703			$1,638
Pre-provision profit, Underlying:
Pre-provision profit (GAAP)			$532			$451			$1,062			$874
Less: Lease impairment credit-related costs		(26		)	—			(26		)	—
Pre-provision profit, Underlying (non-GAAP)			$558			$451			$1,088			$874
Total credit-related costs, Underlying:
Provision for credit losses (GAAP)			$70			$90			$166			$181
Add: Lease impairment credit-related costs		26			—			26			—
Total credit-related costs, Underlying (non-GAAP)			$96			$90			$192			$181
Income before income tax expense (GAAP)	K		$462			$361			$896			$693
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP)	L		$144			$118			$258			$227
Less: Settlement of certain state tax matters		—			—			(23		)	—
Income tax expense, Underlying (non-GAAP)	M		$144			$118			$281			$227
Effective income tax rate (GAAP)	L/K	31.13		%	32.61		%	28.82		%	32.73		%
Effective income tax rate, Underlying (non-GAAP)	M/K	31.13			32.61			31.34		%	32.73
Net income, Underlying:
Net income (GAAP)	C		$318			$243			$638			$466
Less: Settlement of certain state tax matters		—			—			23			—
Net income, Underlying (non-GAAP)	N		$318			$243			$615			$466
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)	D		$318			$243			$631			$459
Less: Settlement of certain state tax matters		—			—			23			—
Net income available to common stockholders, Underlying (non-GAAP)	O		$318			$243			$608			$459

13

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

		As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions, except share, per-share and ratio data)	Ref.	2017			2016			2017			2016
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio	B/A	61.94		%	64.71		%	61.81		%	65.18		%
Efficiency ratio, Underlying (non-GAAP)	J/I	60.36			64.71			61.02			65.18
Operating Leverage, Underlying
Increase in total revenue (GAAP)		9.23		%	6.50		%	10.67		%	5.41		%
Increase (decrease) noninterest expense (GAAP)		4.47			(1.66		)	4.88			(0.79		)
Operating Leverage		4.76		%	8.16		%	5.79		%	6.20		%
Increase in total revenue, Underlying (non-GAAP)		10.09		%	6.50		%	11.11		%	5.41		%
Increase (decrease) noninterest expense, Underlying (non-GAAP)		2.66			(1.66		)	3.97			(0.79		)
Operating Leverage, Underlying (non-GAAP)		7.43		%	8.16		%	7.14		%	6.20		%
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)	E		$19,659			$19,768			$19,560			$19,667
Return on average common equity	D/E	6.48		%	4.94		%	6.50		%	4.70		%
Return on average common equity, Underlying (non-GAAP)	O/E	6.48			4.94			6.27			4.70
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP)	E		$19,659			$19,768			$19,560			$19,667
Less: Average goodwill (GAAP)		6,882			6,876			6,879			6,876
Less: Average other intangibles (GAAP)		2			2			1			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		534			496			533			488
Average tangible common equity	F		$13,309			$13,386			$13,213			$13,277
Return on average tangible common equity	D/F	9.57		%	7.30		%	9.62		%	6.96		%
Return on average tangible common equity, Underlying (non-GAAP)	O/F	9.57			7.30			9.28			6.96
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)	G		$149,878			$142,179			$149,335			$140,479
Return on average total assets	C/G	0.85		%	0.69		%	0.86		%	0.67		%
Return on average total assets, Underlying (non-GAAP)	N/G	0.85			0.69			0.83			0.67
Return on average total tangible assets and return on average total tangible assets, Underlying:
Average total assets (GAAP)	G		$149,878			$142,179			$149,335			$140,479
Less: Average goodwill (GAAP)		6,882			6,876			6,879			6,876
Less: Average other intangibles (GAAP)		2			2			1			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		534			496			533			488
Average tangible assets	H		$143,528			$135,797			$142,988			$134,089
Return on average total tangible assets	C/H	0.89		%	0.72		%	0.90		%	0.70		%
Return on average total tangible assets, Underlying (non-GAAP)	N/H	0.89			0.72			0.87			0.70
Net income per average common share - basic and diluted, Underlying:
Average common shares outstanding - basic (GAAP)	P	506,371,846			528,968,330			507,903,141			528,519,489
Average common shares outstanding - diluted (GAAP)	Q	507,414,122			530,365,203			509,362,055			530,396,871
Net income available to common stockholders (GAAP)	D		$318			$243			$631			$459
Net income per average common share - basic (GAAP)	D/P	0.63			0.46			1.24			0.87
Net income per average common share - diluted (GAAP)	D/Q	0.63			0.46			1.24			0.87
Net income available to common stockholders, Underlying (non-GAAP)	O	318			243			608			459
Net income per average common share - basic, Underlying (non-GAAP)	O/P	0.63			0.46			1.20			0.87
Net income per average common share - diluted, Underlying (non-GAAP)	O/Q	0.63			0.46			1.19			0.87

14

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

		As of and for the Three Months Ended June 30,
		2017											2016
(dollars in millions)	Ref.	Consumer Banking			Commercial Banking			Other		Consolidated			Consumer Banking			Commercial Banking			Other			Consolidated
Net income available to common stockholders:
Net income (GAAP)	R		$118			$187			$13		$318			$90			$164			($11	)		$243
Less: Preferred stock dividends		—			—			—		—			—			—			—			—
Net income available to common stockholders (GAAP)	S		$118			$187			$13		$318			$90			$164			($11	)		$243
Efficiency ratio:
Total revenue (GAAP)	T		$886			$474			$36		$1,396			$821			$436			$21			$1,278
Noninterest expense (GAAP)	U	644			192			28		864			632			186			9			827
Efficiency ratio	U/T	72.64		%	40.48		%	NM		61.94		%	76.98		%	42.88		%	NM			64.71		%
Return on average total tangible assets:
Average total assets (GAAP)			$59,244			$49,731			$40,903		$149,878			$55,660			$47,388			$39,131			$142,179
Less: Average goodwill (GAAP)		—			—			6,882		6,882			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2		2			—			—			2			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			534		534			—			—			496			496
Average total tangible assets	V		$59,244			$49,731			$34,553		$143,528			$55,660			$47,388			$32,749			$135,797
Return on average total tangible assets	R/V	0.80		%	1.51		%	NM		0.89		%	0.65		%	1.39		%	NM			0.72		%
Return on average tangible common equity:
Average common equity (GAAP)(1)			$5,519			$5,617			$8,523		$19,659			$5,110			$5,040			$9,618			$19,768
Less: Average goodwill (GAAP)		—			—			6,882		6,882			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2		2			—			—			2			2
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			534		534			—			—			496			496
Average tangible common equity (1)	W		$5,519			$5,617			$2,173		$13,309			$5,110			$5,040			$3,236			$13,386
Return on average tangible common equity (1)	S/W	8.57		%	13.37		%	NM		9.57		%	7.09		%	13.04		%	NM			7.30		%

⁽¹⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital.

15

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

		As of and for the Six Months Ended June 30,
		2017											2016
(dollars in millions)	Ref.	Consumer Banking			Commercial Banking			Other		Consolidated			Consumer Banking			Commercial Banking			Other		Consolidated
Net income available to common stockholders:
Net income (GAAP)	R		$213			$367			$58		$638			$161			$297			$8		$466
Less: Preferred stock dividends		—			—			7		7			—			—			7		7
Net income available to common stockholders (GAAP)	S		$213			$367			$51		$631			$161			$297			$1		$459
Efficiency ratio:
Total revenue (GAAP)	T		$1,744			$954			$82		$2,780			$1,610			$835			$67		$2,512
Noninterest expense (GAAP)	U	1,291			382			45		1,718			1,248			373			17		1,638
Efficiency ratio	U/T	74.00		%	40.14		%	NM		61.81		%	77.52		%	44.73		%	NM		65.18		%
Return on average total tangible assets:
Average total assets (GAAP)			$58,954			$49,488			$40,893		$149,335			$55,388			$46,346			$38,745		$140,479
Less: Average goodwill (GAAP)		—			—			6,879		6,879			—			—			6,876		6,876
Less: Average other intangibles (GAAP)		—			—			1		1			—			—			2		2
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			533		533			—			—			488		488
Average total tangible assets	V		$58,954			$49,488			$34,546		$142,988			$55,388			$46,346			$32,355		$134,089
Return on average total tangible assets	R/V	0.73		%	1.50		%	NM		0.90		%	0.58		%	1.29		%	NM		0.70		%
Return on average tangible common equity:
Average common equity (GAAP)(1)			$5,490			$5,573			$8,497		$19,560			$5,099			$4,915			$9,653		$19,667
Less: Average goodwill (GAAP)		—			—			6,879		6,879			—			—			6,876		6,876
Less: Average other intangibles (GAAP)		—			—			1		1			—			—			2		2
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			533		533			—			—			488		488
Average tangible common equity (1)	W		$5,490			$5,573			$2,150		$13,213			$5,099			$4,915			$3,263		$13,277
Return on average tangible common equity (1)	S/W	7.83		%	13.28		%	NM		9.62		%	6.34		%	12.14		%	NM		6.96		%

⁽¹⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital.

16

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

Second Quarter 2017 vs. Second Quarter 2016

• Net income and net income available to common stockholders of $318 millionincreased $75 million, or 31%, from $243 million in second quarter 2016;

• Net income per average common share, diluted, of $0.63, compared to $0.46 in second quarter 2016;

• Second quarter 2017 results reflect a $26 million pre-tax impact related to impairments on aircraft lease assets which, in addition to provision expense of $70 million, resulted in total credit-related costs of $96 million.* The lease impairments, which largely relate to a non-core runoff portfolio, reduced noninterest income by $11 million and increased noninterest expense by $15 million;

• Total revenue of $1.4 billionincreased $118 million, or 9%, reflecting strong net interest income and noninterest income growth:

◦ Net interest income increased 11%, to $1.0 billion from $923 million in second quarter 2016, given 6% average loan growth and a 13 basis point improvement in net interest margin;

◦ Net interest margin of 2.97% reflected improved loan yields, driven by higher rates and balance sheet optimization initiatives, partially offset by higher funding costs and investment portfolio growth; and

◦ Noninterest income increased 4% from second quarter 2016, as strength in capital markets fees, card fees, mortgage banking fees and letter of credit and loan fees was partially offset by the $11 million impact of finance lease impairments. Before the impact of finance lease impairments, Underlying noninterest income was up 7%.*

• Noninterest expense of $864 millionincreased $37 million, or 4%, compared to $827 million in second quarter 2016, reflecting higher other operating expense, driven by the $15 million impact of operating lease impairments and higher FDIC expense, as well as an increase in advertising and public relations costs. Results also reflect stable salaries and employee benefits and equipment expense, as well as an increase in outside services, occupancy and amortization of software expense. Before the impact of operating lease impairments, Underlying noninterest expense increased 3%;*

• The provision for credit losses of $70 million in second quarter 2017 decreased $20 million from $90 million in second quarter 2016, largely reflecting continued improvement in portfolio credit quality, partially offset by an increase tied to a retail runoff portfolio and an increase in commercial net charge-offs.Including the $26 million of lease impairments, total credit-related costs were $96 million* in second quarter 2017, up modestly from the prior year quarter;

• Net charge-offs of $75 million increased $10 million, or 15%, from $65 million in second quarter 2016. Allowance for loan and lease losses (“ALLL”) of $1.2 billion remained stable compared to December 31, 2016. ALLL to total loans and leases ratio of 1.12% as of June 30, 2017, compared with 1.15% as of December 31, 2016. ALLL to nonperforming loans and leases ratio of 119% as of June 30, 2017, compared with 118% as of December 31, 2016;

• The effective tax rate for second quarter 2017 was 31.1%, compared with 32.6% in second quarter 2016, primarily due to investments in historic tax credits;

• Return on average common equity of 6.5% compared to 4.9% in second quarter 2016;

• Return on average tangible common equity of 9.6% improved 227 basis points, from 7.3% in second quarter 2016;

• Average interest-earning assets increased $8.1 billion, or 6%, reflecting 6% loan growth and a 7% increase in the investment portfolio; and

• Average deposits of $110.8 billionincreased$6.8 billion, or 7%, from $104.0 billion in second quarter 2016, reflecting strength in checking with interest, term, money market and savings.

17

First Half 2017 vs. First Half 2016

• Net income of $638 millionincreased $172 million compared to $466 million in first half 2016. Net income available to common stockholders of $631 millionincreased$172 million, compared to $459 million in first half 2016 as the benefit of an 11% increase in revenue and a reduction in the effective income tax rate from the settlement of certain state tax matters was partially offset by a 5% increase in noninterest expense;

• Net income per average common share was $1.24, diluted, compared to $0.87 in first half 2016. Excluding the impact related to settlement of certain state tax matters, Underlying net income per average common share for first half 2017, diluted, was $1.19;*

• First half 2017 results reflect a $26 million pre-tax impact related to impairments on aircraft lease assets. The lease impairments, which largely relate to a non-core runoff portfolio, reduced noninterest income by $11 million and increased noninterest expense by $15 million;

• Total revenue of $2.8 billion increased $268 million, or 11%, reflecting solid net interest income and noninterest income growth:

◦ Net interest income of $2.0 billionincreased $204 million, or 11%, compared to $1.8 billion in first half 2016, reflecting 7% average loan growth and a 12 basis point improvement in net interest margin;

◦ Net interest margin of 2.97%increased12 basis points, compared to 2.85% in first half 2016 reflecting improved loan growth, driven by higher rates and balance sheet optimization initiatives, partially offset by investment portfolio growth and higher funding costs; and

◦ Noninterest income of $749 millionincreased $64 million, or 9%, from first half 2016 levels largely driven by strength in capital markets fees, card fees, mortgage banking fees and foreign exchange and letter of credit and loan fees partially offset by the $11 million impact of finance lease impairments.

• Noninterest expense of$1.7 billion, which includes the $15 million impact of operating lease impairments,increased$80 million, or5%, compared to$1.6 billionin first half 2016. Results also reflect higher salaries and employee benefits expense largely tied to higher revenue-basedincentives and merit increase, and increases in other categories given continued investments in the franchise, as well as higher FDIC expense and fraud and regulatory costs;

• Provision for credit losses of $166 milliondecreased $15 million, or 8%, from $181 million in first half 2016.Total credit-related costs of $192 million* including lease impairments, were up modestly from first half 2016;

• Net charge-offs of $162 millionincreased$14 million, or 9%, from $148 million in first half 2016. Allowance for loan and lease losses (“ALLL”) of $1.2 billiondecreased $17 million compared to fourth quarter 2016. ALLL to total loans and leases was 1.12% as of June 30, 2017, compared with 1.15% as of December 31, 2016. ALLL to nonperforming loans and leases ratio was 119% as of June 30, 2017, compared with 118% as of December 31, 2016;

• Return on average common equity was 6.5% compared to 4.7% for first half 2016;

• Return on average tangible common equity was 9.6%,compared to 7.0% for first half 2016. Excluding the impact related to settlement of certain state tax matters, Underlying ROTCE was 9.3%*;

• Average loans and leases of $108.6 billionincreased$7.1 billion, or 7%, from $101.5 billion in first half 2016, driven by a $4.2 billion increase in commercial loans and a $3.0 billion increase in retail loans;

• Average interest-bearing deposits of $82.6 billionincreased$6.9 billion, or 9% from $75.7 billion in first half 2016, driven by strength in checking with interest, term, money market and savings; and

• The effective tax rate for first half 2017 of 28.8% compared with 32.7% in first half 2016. The first half 2017 tax rate reflected a $23 million benefit related to the settlement of certain state tax matters and investments in historic tax credits.

18

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net Income

Net income of $318 million, increased $75 million, or 31%, from $243 million in second quarter 2016. Net income totaled $638 million, up $172 million, or 37%, from $466 million in first half 2016.

The following table presents the significant components of our net income:

	Three Months Ended June 30,											Six Months Ended June 30,
(dollars in millions)	2017			2016			Change			Percent		2017			2016			Change			Percent
Operating Data:
Net interest income		$1,026			$923			$103		11	%		$2,031			$1,827			$204		11	%
Noninterest income	370			355			15			4		749			685			64			9
Total revenue	1,396			1,278			118			9		2,780			2,512			268			11
Provision for credit losses	70			90			(20		)	(22	)	166			181			(15		)	(8	)
Noninterest expense	864			827			37			4		1,718			1,638			80			5
Income before income tax expense	462			361			101			28		896			693			203			29
Income tax expense	144			118			26			22		258			227			31			14
Net income		$318			$243			$75		31			$638			$466			$172		37
Net income available to common stockholders		$318			$243			$75		31	%		$631			$459			$172		37	%
Return on average common equity	6.48		%	4.94		%	154		bps			6.50		%	4.70		%	180		bps
Return on average tangible common equity	9.57		%	7.30		%	227		bps			9.62		%	6.96		%	266		bps

Net Interest Income

Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (usually loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (usually deposits and borrowings). The level of net interest income is primarily a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities and the spread between the effective yield on such assets and the effective cost of such liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to “—Risk Governance” and “—Market Risk — Non-Trading Risk,” included in this report.

The cost of our deposits and short-term wholesale borrowings is largely based on short-term interest rates, which are primarily driven by the FRB’s actions. However, the yields generated by our loans and securities are typically driven by both short-term and long-term interest rates, which are set by the market or, at times, by the FRB’s actions. The level of net interest income is therefore influenced by movements in such interest rates and the pace at which such movements occur. In first half 2017, short-term and long-term interest rates have risen from very low levels by historical standards, with many benchmark rates, such as the federal funds rate and one- and three-month LIBOR, near 1.25%. Any declines in the yield curve or a decline in longer-term yields relative to short-term yields (a flatter yield curve) would have an adverse impact on our net interest margin and net interest income.

The FRB continued to follow its stated monetary policy during first half 2017 and increased the Fed Funds rate by 0.25% in both March and June 2017.The FRB targeted a 1.00% to 1.25% Fed Funds rate at June 2017, and interest rates are expected to gradually increase to more normal levels.

19

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table presents the major components of net interest income and net interest margin:

	Three Months Ended June 30,
	2017							2016							Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Yields/ Rates
Assets
Interest-bearing cash and due from banks and deposits in banks		$2,081			$5	0.88	%		$1,948			$2	0.39	%		$133		49 bps
Taxable investment securities	25,732			154		2.39		24,050			141		2.35		1,682			4
Non-taxable investment securities	7			—		2.60		9			—		2.60		(2		)	—
Total investment securities	25,739			154		2.39		24,059			141		2.35		1,680			4
Commercial	37,846			326		3.40		35,622			278		3.09		2,224			31
Commercial real estate	11,086			97		3.47		9,649			67		2.74		1,437			73
Leases	3,557			22		2.50		3,863			24		2.45		(306		)	5
Total commercial	52,489			445		3.35		49,134			369		2.97		3,355			38
Residential mortgages	15,646			140		3.57		13,491			122		3.61		2,155			(4)
Home equity loans	1,668			24		5.74		2,231			31		5.64		(563		)	10
Home equity lines of credit	13,765			126		3.68		14,477			115		3.18		(712		)	50
Home equity loans serviced by others	668			11		7.12		899			16		7.11		(231		)	1
Home equity lines of credit serviced by others	188			2		4.24		299			1		2.02		(111		)	222
Automobile	13,574			110		3.23		13,972			103		2.95		(398		)	28
Education(1)	7,490			98		5.26		5,407			69		5.07		2,083			19
Credit cards	1,693			45		10.71		1,600			44		11.18		93			(47)
Other retail	1,959			39		8.01		1,167			26		8.94		792			(93)
Total retail	56,651			595		4.21		53,543			527		3.95		3,108			26
Total loans and leases	109,140			1,040		3.80		102,677			896		3.48		6,463			32
Loans held for sale, at fair value	465			4		3.60		368			3		3.41		97			19
Other loans held for sale	162			2		5.51		440			4		4.00		(278		)	151
Interest-earning assets	137,587			1,205		3.49		129,492			1,046		3.22		8,095			27
Allowance for loan and lease losses	(1,223		)					(1,219		)					(4		)
Goodwill	6,882							6,876							6
Other noninterest-earning assets	6,632							7,030							(398		)
Total assets		$149,878							$142,179							$7,699
Liabilities and Stockholders’ Equity
Checking with interest		$21,751			$20	0.36	%		$19,003			$8	0.16	%		$2,748		20 bps
Money market accounts	36,912			45		0.49		36,187			31		0.35		725			14
Regular savings	9,458			1		0.04		8,762			1		0.04		696			—
Term deposits	15,148			36		0.97		12,581			23		0.74		2,567			23
Total interest-bearing deposits	83,269			102		0.49		76,533			63		0.33		6,736			16
Federal funds purchased and securities sold under agreements to repurchase(2)	808			—		0.37		974			—		0.19		(166		)	18
Other short-term borrowed funds	2,275			7		1.23		3,743			12		1.25		(1,468		)	(2)
Long-term borrowed funds	13,647			70		2.05		10,321			48		1.87		3,326			18
Total borrowed funds	16,730			77		1.86		15,038			60		1.60		1,692			26
Total interest-bearing liabilities	99,999			179		0.72		91,571			123		0.54		8,428			18
Demand deposits	27,521							27,448							73
Other liabilities	2,452							3,145							(693		)
Total liabilities	129,972							122,164							7,808
Stockholders’ equity	19,906							20,015							(109		)
Total liabilities and stockholders’ equity		$149,878							$142,179							$7,699
Interest rate spread						2.77	%						2.68	%				9
Net interest income					$1,026							$923
Net interest margin						2.97	%						2.84	%				13 bps
Memo: Total deposits (interest-bearing and demand)		$110,790			$102	0.37	%		$103,981			$63	0.24	%		$6,809		13 bps

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. For further information see Note 1 “Basis of Presentation” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable. Interest expense includes the full cost of the repurchase agreements and certain hedging costs. See “—Analysis of Financial Condition — Derivatives” for further information.

20

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net interest income of $1.0 billion increased $103 million, or 11%, compared to $923 million in second quarter 2016, driven by 6% average loan growth and a 13 basis point improvement in net interest margin.

Average interest-earning assets of $137.6 billion increased $8.1 billion, or 6%, from second quarter 2016, driven by a $3.4 billion increase in average commercial loans and leases, a $3.1 billion increase in average retail loans, and a $1.7 billion increase in total investment securities. Commercial loans and leases increased 7% on an average basis from the prior year quarter reflecting strength in commercial and commercial real estate partially offset by the $124 million average balance impact of the second quarter 2017 sale of $596 million of lower-return, non-strategic commercial loans and leases associated with our balance sheet optimization initiatives.Retail loans increased 6% from prior year quarter reflecting strong growth in education, mortgage and other unsecured retail loans, partially offset by lower home equity and auto balances.

Average deposits of $110.8 billion increased $6.8 billion from second quarter 2016 reflecting growth in all categories with particular strength in checking with interest and term. Total interest-bearing deposit costs increased 16 basis points compared to second quarter 2016. Total deposit costs increased 13 basis points reflecting the impact of higher short-term rates, partially offset by growth in lower cost deposits and continued pricing discipline.

Average borrowed funds of $16.7 billion increased $1.7 billion, or 11%, from second quarter 2016 as a $3.3 billion increase in long-term borrowings, which reflected growth in long-term senior debt and long-term FHLB borrowings as the term funding profile continues to be strengthened. These increases were partially offset by a $1.5 billion decrease in other short-term borrowed funds, mainly in short-term FHLB borrowed funds. Total borrowed funds costs of $77 million increased $17 million from second quarter 2016, primarily due to the issuance of long-term senior debt and rising interest rates.

Net interest margin of2.97%increased13basis points compared to2.84%in second quarter 2016, driven by improved loan yields, reflecting higher interest rates, improved loan mix and balance sheet optimization initiatives such as the second quarter 2017 sale of lower-return commercial loans and leases, and improvement in the portfolio mix toward more attractive risk-return asset categories. These benefits were partially offset by the impact of investment portfolio growth, higher amortization of securities premiums and higher deposit and funding costs, including new senior debt issuance.The average interest-earning asset yield of 3.49% increased 27 basis points from 3.22% in second quarter 2016, driven by the benefit of a 32 basis point improvement in loan yields and increases in short-term rates. The investment portfolio yield increased four basis points compared to the prior year quarter, reflecting an increase in long-term rates.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	Six Months Ended June 30,
	2017							2016							Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Yields/ Rates
Assets
Interest-bearing cash and due from banks and deposits in banks		$2,023			$8	0.76	%		$1,811			$4	0.40	%		$212		36 bps
Taxable investment securities	25,760			314		2.44		23,957			286		2.39		1,803			5
Non-taxable investment securities	8			—		2.60		9			—		2.60		(1		)	0
Total investment securities	25,768			314		2.44		23,966			286		2.39		1,802			5
Commercial	37,682			638		3.36		34,820			542		3.08		2,862			28
Commercial real estate	10,955			184		3.34		9,379			129		2.71		1,576			63
Leases	3,626			45		2.49		3,890			48		2.45		(264		)	4
Total commercial	52,263			867		3.30		48,089			719		2.96		4,174			34
Residential mortgages	15,466			276		3.56		13,478			248		3.68		1,988			(12)
Home equity loans	1,730			49		5.70		2,351			65		5.57		(621		)	13
Home equity lines of credit	13,860			244		3.55		14,554			228		3.15		(694		)	40
Home equity loans serviced by others	693			24		7.07		929			33		7.02		(236		)	5
Home equity lines of credit serviced by others	198			4		3.98		320			3		2.11		(122		)	187
Automobile	13,672			217		3.20		13,882			200		2.89		(210		)	31
Education(1)	7,165			186		5.25		5,130			129		5.05		2,035			20
Credit cards	1,679			91		10.93		1,600			89		11.24		79			(31)
Other retail	1,880			74		7.98		1,137			50		8.80		743			(82)
Total retail	56,343			1,165		4.16		53,381			1,045		3.93		2,962			23
Total loans and leases	108,606			2,032		3.75		101,470			1,764		3.47		7,136			28
Loans held for sale, at fair value	487			8		3.45		337			6		3.54		150			(9)
Other loans held for sale	118			3		5.86		245			5		4.26		(127		)	160
Interest-earning assets	137,002			2,365		3.46		127,829			2,065		3.23		9,173			23
Allowance for loan and lease losses	(1,229		)					(1,216		)					(13		)
Goodwill	6,879							6,876							3
Other noninterest-earning assets	6,683							6,990							(307		)
Total noninterest-earning assets	12,333							12,650							(317		)
Total assets		$149,335							$140,479							$8,856
Liabilities and Stockholders’ Equity
Checking with interest		$21,228			$33	0.31	%		$18,498			$15	0.15	%		$2,730		16 bps
Money market accounts	37,390			86		0.46		36,206			59		0.33		1,184			13
Regular savings	9,285			2		0.04		8,578			2		0.04		707			0
Term deposits	14,663			67		0.93		12,390			47		0.77		2,273			16
Total interest-bearing deposits	82,566			188		0.46		75,672			123		0.33		6,894			13
Federal funds purchased and securities sold under agreements to repurchase (2)	845			1		0.30		927			1		0.21		(82		)	9
Other short-term borrowed funds	2,617			15		1.13		3,421			23		1.32		(804		)	(19)
Long-term borrowed funds	13,033			130		2.00		10,108			91		1.81		2,925			19
Total borrowed funds	16,495			146		1.77		14,456			115		1.59		2,039			18
Total interest-bearing liabilities	99,061			334		0.68		90,128			238		0.53		8,933			15
Demand deposits	27,808							27,309							499
Other liabilities	2,659							3,128							(469		)
Total liabilities	129,528							120,565							8,963
Stockholders’ equity	19,807							19,914							(107		)
Total liabilities and stockholders’ equity		$149,335							$140,479							$8,856
Interest rate spread						2.78	%						2.68	%
Net interest income					$2,031							$1,827
Net interest margin						2.97	%						2.85	%				12 bps
Memo: Total deposits (interest-bearing and demand)		$110,374			$188	0.34	%		$102,981			$123	0.24	%		$7,393		10 bps

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. For further information see Note 1 “Basis of Presentation” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable. Interest expense includes the full cost of the repurchase agreements and certain hedging costs. See “—Analysis of Financial Condition — Derivatives” for further information.

22

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net interest income of $2.0 billion in first half 2017 increased $204 million, or 11%, compared to $1.8 billion in first half 2016, reflecting 7% average loan growth and a 12 basis point improvement in net interest margin.

Average interest-earning assets of $137.0 billion increased $9.2 billion, or 7%, from first half 2016, driven by a $4.2 billion increase in average commercial loans and leases, a $3.0 billion increase in average retail loans, and a $2.0 billion increase in average investments and interest-bearing cash and due from banks and deposits in banks. Commercial loan growth was driven by strength in commercial and commercial real estate. Retail loan growth was driven by strength in education, residential mortgage and other retail balances.

Average deposits of $110.4 billion increased $7.4 billion from first half 2016, reflecting growth in all categories with particular strength in checking with interest and term. Total interest-bearing deposit costs of $188 million increased $65 million, or 53%, from $123 million in 2016 and reflected a 13 basis point increase in interest-bearing deposit costs to 0.46%, primarily due to the impact of rising rates and a shift in mix toward commercial deposits. Checking with interest costs of 0.31% in 2017 compared with 0.15% in 2016, term deposit costs increased to 0.93% in 2017 from 0.77% in 2016, and money market account costs increased to 0.46% in 2017 from 0.33% in 2016.

Average total borrowed funds of $16.5 billion increased $2.0 billion from first half 2016, reflecting an increase in average long-term borrowed funds driven by issuances of senior notes. Total borrowed funds costs of $146 million increased $31 million from first half 2016. The total borrowed funds yield of 1.77% in first half 2017 increased 18 basis points from 1.59% in first half 2016 due to an increase in long-term rates.

Net interest margin of 2.97% increased 12 basis points compared to 2.85% in first half 2016, driven by improved loan yields reflecting both higher interest rates and balance sheet optimization initiatives. These results were partially offset by the impact of investment portfolio growth and higher deposit and funding costs. Average interest-earning asset yields of 3.46% increased 23 basis points from 3.23% in first half 2016, while average interest-bearing liability costs of 0.68% increased 15 basis points from 0.53% in first half 2016.

Noninterest Income

The following table presents the significant components of our noninterest income:

	Three Months Ended June 30,									Six Months Ended June 30,
(in millions)	2017		2016		Change			Percent		2017		2016		Change			Percent
Service charges and fees(1)		$129		$130		($1	)	(1	%)		$254		$256		($2	)	(1	%)
Card fees	59		51		8			16		119		101		18			18
Capital markets fees(1)	51		38		13			34		99		63		36			57
Trust and investment services fees	39		38		1			3		78		75		3			4
Letter of credit and loan fees(1)	31		28		3			11		60		55		5			9
Foreign exchange and interest rate products(1)	26		26		—			—		53		44		9			20
Mortgage banking fees	30		25		5			20		53		43		10			23
Securities gains, net	3		4		(1		)	(25	)	7		13		(6		)	(46	)
Other income (1)(2)	2		15		(13		)	(87	)	26		35		(9		)	(26	)
Noninterest income		$370		$355		$15		4	%		$749		$685		$64		9	%

⁽¹⁾In first quarter 2017, certain prior period noninterest income amounts reported in the Consolidated Statement of Operations were reclassified to enhance transparency and provide additional granularity, particularly with regard to fee income related to customer activity. These changes had no effect on net income as previously reported.

⁽²⁾ Includes net securities impairment losses on securities available for sale recognized in earnings, bank-owned life insurance income and other income. The three and six months ended June 30, 2017 include $11 million of finance lease impairment charges.

Noninterest income of $370 millionincreased$15 million, or4%, from$355 millionin second quarter 2016. Excluding the impact of $11 million in finance lease impairments recorded in other income, Underlying* noninterest income of $381 million increased 7% from second quarter 2016. Second quarter 2017 results reflect strength in capital markets fees, card fees and mortgage banking fees.Capital markets fees increased $13 million, reflecting strength in loan syndications, including the benefit of strong market volumes and expanded capabilities. Card fees increased $8 million, reflecting the benefit of revised contract terms for processing fees and an increase in purchase volume. Mortgage banking fees increased $5 million from second quarter 2016 levels, reflecting an increase in production fees. Trust and investment services fees remained relatively stable as the benefit of growth in managed money assets and an increase in investment sales was offset by the impact of a shift in transaction sales mix toward managed money assets.

23

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Noninterest income of $749 millionincreased $64 million, or 9%, compared to first half 2016 driven by capital market fees, card fees, mortgage banking fees, foreign exchange and interest rate products, letter of credit and loan fees and trust and investment service fees, partially offset by a reduction in securities gains, other income, including the impact of finance lease impairments, and service charges and fees. Before the impact of finance lease impairments, Underlying noninterest income was up 11%.* Capital markets fees increased $36 million, reflecting strength in loan syndications, given strong market volumes and investments made to broaden our capabilities. Card fees increased $18 million from first half 2016 results, reflecting the benefit of revised contract terms for processing fees and an increase in purchase volume. Mortgage banking fees increased $10 million from 2016 levels, reflecting improved MSR valuations and an increase in production fees. Foreign exchange and interest rate products increased $9 million from first half 2016 results.

Provision for Credit Losses

The provision for credit losses of $70 million in second quarter 2017 decreased $20 million from $90 million in second quarter 2016, largely reflecting continued improvement in portfolio credit quality, partially offset by an increase tied to a retail runoff portfolio and an increase in commercial net charge-offs. Second quarter 2017 net charge-offs of $75 million were $10 million higher than second quarter 2016. Total credit-related costs of $96 million,* including lease impairments, were up modestly from second quarter 2016.

The provision for credit losses was $166 million and $181 million for the six months endedJune 30, 2017 and 2016, respectively. The $15 milliondecrease was primarily due to improving credit trends, partially offset by loan growth and higher net charge-offs. The first half 2017 results reflected a $4 million reserve build, compared to a $33 million reserve build in first half 2016. The difference is principally due to improved portfolio credit quality, offset by loan volume and an increase tied to a retail runoff portfolio. Net charge-offs for the first six months of 2017 of $162 million were $14 million higher than first half 2016. Total credit-related costs of $192 million,* including lease impairments, were up modestly from first half 2016.

The provision for loan and lease losses is the result of a detailed analysis performed to estimate an appropriate and adequate ALLL. The total provision for credit losses includes the provision for loan and lease losses as well as the provision for unfunded commitments. Refer to “—Analysis of Financial Condition — Allowance for Credit Losses and Nonperforming Assets” for more information.

Noninterest Expense

The following table presents the significant components of our noninterest expense:

	Three Months Ended June 30,								Six Months Ended June 30,
(in millions)	2017		2016		Change		Percent		2017		2016		Change		Percent
Salaries and employee benefits		$432		$432		$—	—	%		$876		$857		$19	2	%
Outside services	96		86		10		12		187		177		10		6
Occupancy	79		76		3		4		161		152		9		6
Equipment expense	64		64		—		—		131		129		2		2
Amortization of software	45		41		4		10		89		80		9		11
Other operating expense(1)	148		128		20		16		274		243		31		13
Noninterest expense		$864		$827		$37	4	%		$1,718		$1,638		$80	5	%

⁽¹⁾ The three and six months ended June 30, 2017 include $15 million of operating lease impairments charges.

Noninterest expense of$864 millionincreased$37 million, or4%, from$827 millionin second quarter 2016, reflecting higher other operating expense driven by the $15 million impact of operating lease impairments. Underlying noninterest expense increased 3%* from second quarter 2016. Salaries and employee benefits and equipment expenses were stable as a decrease tied to the timing of incentive payments offset an increase in compensation costs and the impact of our growth initiatives. Outside services increased $10 million compared to the prior year quarter, largely reflecting an increase in retail loan origination and servicing costs and costs tied to our efficiency initiatives. Other operating expense increased $20 million, reflecting the impact of the operating lease impairments, and higher FDIC expense and advertising and public relations costs, partially offset by lower credit-collection costs.

Noninterest expense of $1.7 billion in first half 2017 increased $80 million, or 5%, compared to first half 2016, reflecting the$15 million impact of operating lease impairments, an increase in FDIC expense and higher fraud and regulatory costs. Results also reflected an increase in salaries and employee benefits driven by higher

24

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

revenue-based incentives and merit increase. First half 2017 results also reflected increases in outside services, occupancy, amortization of software and equipment expense.Before the impact of operating lease impairments, Underlying noninterest expense increased 4%* compared with first half 2016.

Income Tax Expense

Income tax expense was $144 million and $118 million in second quarter 2017 and 2016, respectively. This resulted in an effective tax rate of 31.1% and 32.6% in second quarter 2017 and 2016, respectively. The decrease in the effective tax rate was primarily attributable to the impact of investments in historic tax credits.

Income tax expense was $258 million and $227 million in first half 2017 and 2016, respectively. This resulted in an effective tax rate of28.8%and32.7%in first half2017and2016, respectively. The decrease in the effective income tax rate was driven by the impact of the settlement of certain state tax matters, investments in historic tax credits, and the accounting method change for share-based compensation (FASB Accounting Standards Update 2016-09) which we adopted in January 2017 on a prospective basis.

At June 30, 2017, our net deferred tax liability was $740 million, compared with $714 million at December 31, 2016. The increase in the net deferred tax liability was primarily attributable to the tax effect of net unrealized gains on securities and derivatives, partially offset by the tax effect of differences in the timing of deductions and income items for financial statement purposes versus taxable income purposes. For further discussion, see Note 9 “Income Taxes” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

The Trump administration has announced plans to introduce tax reform intended to lower corporate income tax rates. Any legislation affecting income tax rates could have an impact on our future effective tax rate, the significance of which would depend on the timing, nature and scope of any such legislation, as well as the level and composition of our earnings. If tax legislation is passed, a reduction in the corporate income tax rate could lower our annual effective income tax rate and result in a one-time tax benefit associated with a reduction in our net deferred tax liability.

25

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Business Segments

The following tables present certain financial data of our operating segments, Other and consolidated:

	As of and for the Three Months Ended June 30, 2017
(dollars in millions)	Consumer Banking			Commercial Banking			Other(4)			Consolidated
Net interest income		$657			$344			$25			$1,026
Noninterest income	229			130			11			370
Total revenue	886			474			36			1,396
Noninterest expense	644			192			28			864
Profit before provision for credit losses	242			282			8			532
Provision for credit losses	60			1			9			70
Income (loss) before income tax expense (benefit)	182			281			(1		)	462
Income tax expense (benefit)	64			94			(14		)	144
Net income		$118			$187			$13			$318
Loans and leases (period-end) (1)		$58,537			$48,363			$2,853			$109,753
Average Balances:
Total assets		$59,244			$49,731			$40,903			$149,878
Total loans and leases (1)	57,922			48,772			3,073			109,767
Deposits	75,107			28,744			6,939			110,790
Interest-earning assets	57,973			48,923			30,691			137,587
Key Performance Metrics:
Net interest margin (2)	4.54		%	2.82		%	NM			2.97		%
Efficiency ratio	72.64			40.48			NM			61.94
Average loans to average deposits ratio (1)	77.12			169.68			NM			99.08
Return on average total tangible assets (2)	0.80			1.51			NM			0.89
Return on average tangible common equity (2) (3)	8.57			13.37			NM			9.57

⁽¹⁾ Includes loans held for sale.

⁽²⁾ Ratios for the period ended June 30, 2017 are presented on an annualized basis.

⁽³⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁴⁾ Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments. For a description of non-core assets, see “—Analysis of Financial Condition — Non-Core Assets.”

26

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	As of and for the Three Months Ended June 30, 2016
(dollars in millions)	Consumer Banking			Commercial Banking			Other(4)			Consolidated
Net interest income		$602			$314			$7			$923
Noninterest income	219			122			14			355
Total revenue	821			436			21			1,278
Noninterest expense	632			186			9			827
Profit before provision for credit losses	189			250			12			451
Provision for credit losses	49			(1		)	42			90
Income (loss) before income tax expense (benefit)	140			251			(30		)	361
Income tax expense (benefit)	50			87			(19		)	118
Net income (loss)		$90			$164			($11	)		$243
Loans and leases (period-end) (1)		$54,999			$46,455			$2,947			$104,401
Average Balances:
Total assets		$55,660			$47,388			$39,131			$142,179
Total loans and leases (1)	54,353			46,073			3,059			103,485
Deposits	71,863			25,113			7,005			103,981
Interest-earning assets	54,400			46,170			28,922			129,492
Key Performance Metrics:
Net interest margin (2)	4.45		%	2.74		%	NM			2.84		%
Efficiency ratio	76.98			42.88			NM			64.71
Average loans to average deposits ratio (1)	75.63			183.46			NM			99.52
Return on average total tangible assets (2)	0.65			1.39			NM			0.72
Return on average tangible common equity (2) (3)	7.09			13.04			NM			7.30

⁽¹⁾ Includes loans held for sale.

⁽²⁾ Ratios for the period ended June 30, 2016 are presented on an annualized basis.

⁽³⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁴⁾ Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments. For a description of non-core assets, see “—Analysis of Financial Condition — Non-Core Assets.”

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	As of and for the Six Months Ended June 30, 2017
(dollars in millions)	Consumer Banking			Commercial Banking			Other(4)			Consolidated
Net interest income		$1,295			$690			$46			$2,031
Noninterest income	449			264			36			749
Total revenue	1,744			954			82			2,780
Noninterest expense	1,291			382			45			1,718
Profit before provision for credit losses	453			572			37			1,062
Provision for credit losses	124			20			22			166
Income before income tax expense (benefit)	329			552			15			896
Income tax expense (benefit)	116			185			(43		)	258
Net income		$213			$367			$58			$638
Loans and leases (period-end) (1)		$58,537			$48,363			$2,853			$109,753
Average Balances:
Total assets		$58,954			$49,488			$40,893			$149,335
Total loans and leases (1)	57,617			48,465			3,129			109,211
Deposits	74,623			28,858			6,893			110,374
Interest-earning assets	57,668			48,605			30,729			137,002
Key Performance Metrics:
Net interest margin (2)	4.53		%	2.86		%	NM			2.97		%
Efficiency ratio	74.00			40.14			NM			61.81
Average loans to average deposits ratio (1)	77.21			167.94			NM			98.95
Return on average total tangible assets (2)	0.73			1.50			NM			0.90
Return on average tangible common equity (2) (3)	7.83			13.28			NM			9.62

⁽¹⁾ Includes loans held for sale.

⁽²⁾ Ratios for the period ended June 30, 2017 are presented on an annualized basis.

⁽³⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁴⁾ Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments. For a description of non-core assets, see “—Analysis of Financial Condition — Non-Core Assets.”

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CITIZENS FINANCIAL GROUP, INC.

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	As of and for the Six Months Ended June 30, 2016
(dollars in millions)	Consumer Banking				Commercial Banking			Other(4)			Consolidated
Net interest income		$1,183				$614			$30			$1,827
Noninterest income	427				221			37			685
Total revenue	1,610				835			67			2,512
Noninterest expense	1,248				373			17			1,638
Profit before provision for credit losses	362				462			50			874
Provision for credit losses	112				8			61			181
Income (loss) before income tax expense (benefit)	250				454			(11		)	693
Income tax expense (benefit)	89				157			(19		)	227
Net income		$161				$297			$8			$466
Loans and leases (period-end) (1)		$54,999				$46,455			$2,947			$104,401
Average Balances:
Total assets		$55,388				$46,346			$38,745			$140,479
Total loans and leases (1)	54,049			—	44,986			3,017			102,052
Deposits	71,367				24,973			6,641			102,981
Interest-earning assets	54,097				45,078			28,654			127,829
Key Metrics
Net interest margin (2)	4.40		%		2.74		%	NM			2.85		%
Efficiency ratio	77.52				44.73			NM			65.18
Average loans to average deposits ratio (1)	75.73				180.14			NM			99.10
Return on average total tangible assets (2)	0.58				1.29			NM			0.70
Return on average tangible common equity (2) (3)	6.34				12.14			NM			6.96

⁽¹⁾ Includes loans held for sale.

⁽²⁾ Ratios for the period ended June 30, 2016 are presented on an annualized basis.

⁽³⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁴⁾ Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments. For a description of non-core assets, see “—Analysis of Financial Condition — Non-Core Assets.”

We operate our business through two operating segments: Consumer Banking and Commercial Banking. Segment results are derived by specifically attributing managed assets, liabilities, capital and their related revenues, provision for credit losses and expenses. Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, community development, non-core assets (including legacy Royal Bank of Scotland Group plc aircraft loan and leasing), and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses. For a description of non-core assets, see “—Analysis of Financial Condition — Non-Core Assets.” In addition, Other includes goodwill and any associated goodwill impairment charges. For impairment testing purposes, we allocate goodwill to Consumer Banking and Commercial Banking reporting units. For management reporting purposes, we present the goodwill balance (and any related impairment charges) in Other.

Our capital levels are evaluated and managed centrally, however, capital is allocated to the operating segments to support evaluation of business performance. Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital. Interest income and expense is determined based on the assets and liabilities managed by the business segment. Because funding and asset liability management is a central function, funds transfer-pricing methodologies are utilized to allocate a cost of funds used, or credit for the funds provided, to all business segment assets, liabilities and capital, respectively, using a matched-funding concept. The residual effect on net interest income of asset/liability management, including the residual net interest income related to the funds transfer pricing process, is included in Other.

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Provision for credit losses is allocated to each business segment based on actual net charge-offs that have been recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Noninterest income and expense directly managed by each business segment, including fees, service charges, salaries and benefits, and other direct revenues and costs are accounted for within each segment’s financial results in a manner similar to our unaudited interim Consolidated Financial Statements. Occupancy costs are allocated based on utilization of facilities by the business segment. Noninterest expenses incurred by centrally managed operations or business segments that directly support another business segment’s operations are charged to the applicable business segment based on its utilization of those services.

Income taxes are assessed to each business segment at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Developing and applying methodologies used to allocate items among the business segments is a dynamic process. Accordingly, financial results may be revised periodically as management systems are enhanced, methods of evaluating performance or product lines change, or our organizational structure changes.

Consumer Banking

	As of and for the Three Months Ended June 30,										As of and for the Six Months Ended June 30,
(dollars in millions)	2017			2016			Change		Percent		2017			2016			Change			Percent
Net interest income		$657			$602			$55	9	%		$1,295			$1,183			$112		9	%
Noninterest income	229			219			10		5		449			427			22			5
Total revenue	886			821			65		8		1,744			1,610			134			8
Noninterest expense	644			632			12		2		1,291			1,248			43			3
Profit before provision for credit losses	242			189			53		28		453			362			91			25
Provision for credit losses	60			49			11		22		124			112			12			11
Income before income tax expense	182			140			42		30		329			250			79			32
Income tax expense	64			50			14		28		116			89			27			30
Net income		$118			$90			$28	31			$213			$161			$52		32
Loans and leases (period-end) (1)		$58,537			$54,999			$3,538	6			$58,537			$54,999			$3,538		6
Average Balances:
Total assets		$59,244			$55,660			$3,584	6	%		$58,954			$55,388			$3,566		6	%
Total loans and leases (1)	57,922			54,353			3,569		7		57,617			54,049			3,568			7
Deposits	75,107			71,863			3,244		5		74,623			71,367			3,256			5
Interest-earning assets	57,973			54,400			3,573		7		57,668			54,097			3,571			7
Key Performance Metrics:
Net interest margin (2)	4.54		%	4.45		%	9 bps				4.53		%	4.40		%	13		bps
Efficiency ratio	72.64			76.98			(434) bps				74.00			77.52			(352		) bps
Average loans to average deposits ratio (1)	77.12			75.63			149 bps				77.21			75.73			148		bps
Return on average total tangible assets (2)	0.80			0.65			15 bps				0.73			0.58			15		bps
Return on average tangible common equity (2) (3)	8.57			7.09			148 bps				7.83			6.34			149		bps

⁽¹⁾  Includes loans held for sale.

⁽²⁾ Ratios for the periods ended June 30, 2017 and 2016 are presented on an annualized basis.

⁽³⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

Consumer Banking net income of $118 millionincreased$28 million, or 31%, from $90 million in second quarter 2016, reflecting a $65 millionincrease in total revenue relative to a $12 millionincrease in noninterest expense. Net interest income of $657 millionincreased$55 million, or 9%, from second quarter 2016, driven by a $3.6 billionincrease in average loans led by mortgage, education and retail unsecured with higher loan yields that included the benefit of mix shift and higher rates, partially offset by an increase in deposit costs.

Noninterest income of $229 millionincreased$10 million, or 5%, from second quarter 2016, driven by higher card fees, which reflected the benefit of revised contract terms for processing fees and an increase in purchase volumes, along with higher mortgage banking fees, which reflect an increase in production fees, and higher wealth

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fees, partially offset by lower service charges and fees. Noninterest expense of $644 millionincreased$12 million, or 2%, from $632 million in second quarter 2016, reflecting higher outside services, FDIC expense, software amortization and advertising expense as well as increased occupancy costs related to branch rationalization. These results were partially offset by a decrease in salaries and benefits, largely reflecting a change in timing of incentive payments, as well as lower credit collection costs and fraud expense. Provision for credit losses of $60 millionincreased$11 million, or 22%, from $49 million in second quarter 2016, primarily driven by higher net charge-offs in auto and retail unsecured.

Consumer Banking net income of $213 millionincreased$52 million, or 32%, from $161 million in first half 2016, as the benefit of a $134 millionincrease in revenue more than offset a $43 millionincrease in noninterest expense. Net interest income of $1.3 billionincreased$112 million, or 9% from first half 2016, driven by the benefit of a $3.6 billion increase in average loans led by mortgage, education and retail unsecured categories with improved loan yields which reflected the benefit of higher rates and improved mix, partially offset by an increase in deposit costs.

Noninterest income increased$22 million, or 5%, from first half 2016, driven by an increase in card fees and mortgage banking fees partially offset by lower service charges and fees. Noninterest expense of $1.3 billionincreased$43 million, or 3%, from first half 2016, driven by higher outside services, FDIC expense, salaries and benefits, occupancy costs, software amortization and advertising expense. These results were partially offset by lower credit collection costs. Provision for credit losses of $124 millionincreased$12 million, or 11%, from $112 million in first half 2016, largely driven by higher net charge-offs in auto.

Commercial Banking

	As of and for the Three Months Ended June 30,										As of and for the Six Months Ended June 30,
(dollars in millions)	2017			2016			Change		Percent		2017			2016			Change		Percent
Net interest income		$344			$314			$30	10	%		$690			$614			$76	12	%
Noninterest income	130			122			8		7		264			221			43		19
Total revenue	474			436			38		9		954			835			119		14
Noninterest expense	192			186			6		3		382			373			9		2
Profit before provision for credit losses	282			250			32		13		572			462			110		24
Provision for credit losses	1			(1		)	2		200		20			8			12		150
Income before income tax expense	281			251			30		12		552			454			98		22
Income tax expense	94			87			7		8		185			157			28		18
Net income		$187			$164			$23	14			$367			$297			$70	24
Loans and leases (period-end) (1)		$48,363			$46,455			$1,908	4			$48,363			$46,455			$1,908	4
Average Balances:
Total assets		$49,731			$47,388			$2,343	5	%		$49,488			$46,346			$3,142	7	%
Total loans and leases (1)	48,772			46,073			2,699		6		48,465			44,986			3,479		8
Deposits	28,744			25,113			3,631		14		28,858			24,973			3,885		16
Interest-earning assets	48,923			46,170			2,753		6		48,605			45,078			3,527		8
Key Performance Metrics:
Net interest margin (2)	2.82		%	2.74		%	8 bps				2.86		%	2.74		%	12 bps
Efficiency ratio	40.48			42.88			(240) bps				40.14			44.73			(459) bps
Average loans to average deposits ratio (1)	169.68			183.46			(1,378) bps				167.94			180.14			(1,220) bps
Return on average total tangible assets (2)	1.51			1.39			12 bps				1.50			1.29			21 bps
Return on average tangible common equity (2) (3)	13.37			13.04			33 bps				13.28			12.14			114 bps

⁽¹⁾  Includes loans held for sale.

⁽²⁾ Ratios for the periods ended June 30, 2017 and 2016 are presented on an annualized basis.

⁽³⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

Commercial Banking net income of $187 millionincreased$23 million, or 14%, from $164 million in second quarter 2016, driven by a $38 millionincrease in total revenue, partially offset by a $6 millionincrease in noninterest expense and a $2 millionincrease in provision for credit losses. Net interest income of $344 millionincreased$30 million, or 10%, from $314 million in second quarter 2016, driven by 6% average loan growth and improved loan yields, partially offset by higher deposit costs.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Average loans and leases increased $2.7 billion from second quarter 2016, driven by growth in Commercial Real Estate, Franchise Finance, Mid-corporate and Industry Verticals and Middle Market, partially offset by the impact of the third quarter 2016 transfer of loans and leases to non-core.Additionally, second quarter 2017 results include a $122 million decline in commercial average loans and leases resulting from the sale of $512 million of lower-return loan and leases related to balance sheet optimization efforts.

Noninterest income of $130 millionincreased$8 million, or 7%, from $122 million in second quarter 2016, reflecting strength in capital markets, letter of credit and loan fees as well as card fees, partially offset by the$4 million impact of the lease impairment. Noninterest expense of$192 millionincreased$6 million, or3%, from$186 million in second quarter 2016, reflecting higher FDIC expense and higher outside services, software amortization and equipment expense. Results also reflect stable salaries and employee benefits as a reduction tied to a change in timing of incentive payments offset higher compensation expense and the impact of growth initiatives.

Commercial Banking net income of $367 millionincreased$70 million, or 24%, from $297 million in first half 2016, as the benefit of a $119 millionincrease in total revenue was partially offset by a $9 millionincrease in noninterest expense and a $12 millionincrease in provision for credit losses. Net interest income of $690 millionincreased$76 million, or 12%, from $614 million in first half 2016, reflecting a $3.5 billionincrease in average loans and leases, improved loan and deposit spreads, and a $3.9 billion increase in average deposits.

Noninterest income of $264 millionincreased$43 million, or 19%, from first half 2016, reflecting strength in capital markets, foreign exchange and interest rate products and letter of credit and loan fees, partially offset by a $4 million impact related to finance lease impairments. Noninterest expense of$382 millionincreased$9 million, or2%, from$373 millionin first half 2016, largely driven by higher salaries and employee benefits, FDIC expense, software amortization and equipment expense, partially offset by a reduction in outside services. Provision for credit losses of $20 millionincreased$12 million from first half 2016, driven by higher net charge-offs.

Other

	As of and for the Three Months Ended June 30,											As of and for the Six Months Ended June 30,
(in millions)	2017			2016			Change			Percent		2017			2016			Change			Percent
Net interest income		$25			$7			$18		NM			$46			$30			$16		53	%
Noninterest income	11			14			(3		)	(21	)	36			37			(1		)	(3	)
Total revenue	36			21			15			71		82			67			15			22
Noninterest expense	28			9			19			211		45			17			28			165
Profit before provision for credit losses	8			12			(4		)	(33	)	37			50			(13		)	(26	)
Provision for credit losses	9			42			(33		)	(79	)	22			61			(39		)	(64	)
(Loss) income before income tax benefit	(1		)	(30		)	29			97		15			(11		)	26			236
Income tax benefit	(14		)	(19		)	5			26		(43		)	(19		)	(24		)	(126	)
Net income (loss)		$13			($11	)		$24		218			$58			$8			$50		NM
Loans and leases (period-end) (1)		$2,853			$2,947			($94	)	(3	)		$2,853			$2,947			($94	)	(3	)
Average Balances:
Total assets		$40,903			$39,131			$1,772		5	%		$40,893			$38,745			$2,148		6	%
Total loans and leases (1)	3,073			3,059			14			0		3,129			3,017			112			4
Deposits	6,939			7,005			(66		)	(1	)	6,893			6,641			252			4
Interest-earning assets	30,691			28,922			1,769			6		30,729			28,654			2,075			7

⁽¹⁾  Includes loans held for sale.

Other net income of $13 millionincreased$24 million from second quarter 2016. Net interest income increased$18 million, driven by higher residual funds transfer pricing and higher investment portfolio income, partially offset by higher funding costs. Noninterest incomedecreased$3 million, driven by a $7 million impact related to finance lease impairments. Noninterest expenseincreased$19 millionfrom second quarter 2016, driven by the $15 million impact of operating lease impairments. Provision for credit losses decreased$33 million, reflecting a second quarter 2017 reserve release compared to a reserve build in second quarter 2016 and lower net charge-offs.Additionally, second quarter 2017 results include the impact of the sale of $84 million lower-return loans and leases related to balance sheet optimization efforts.

Other net income of $58 millionincreasedfrom$8 millionin first half 2016, driven by a $23 million benefit related to settlement of state tax matters that lowered our consolidated effective tax rate by 2.5%. Results also

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reflect lower net charge-offs and a reserve build of $4 million in first half 2017, compared to a reserve build of $33 million in first half 2016.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Analysis of Financial Condition

Securities

Our securities portfolio is managed to maintain prudent levels of liquidity, credit quality and market risk while achieving appropriate returns. The following table presents our securities AFS and HTM:

	June 30, 2017				December 31, 2016
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Change in Fair Value
Securities Available for Sale:
U.S. Treasury and other		$12		$12		$30		$30		($18	)	(60	%)
State and political subdivisions	7		7		8		8		(1		)	(13	)
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	19,001		18,877		19,231		19,045		(168		)	(1	)
Other/non-agency	363		361		427		401		(40		)	(10	)
Total mortgage-backed securities	19,364		19,238		19,658		19,446		(208		)	(1	)
Total debt securities	19,383		19,257		19,696		19,484		(227		)	(1	)
Marketable equity securities	—		—		5		5		(5		)	(100	)
Other equity securities	—		—		12		12		(12		)	(100	)
Total equity securities	—		—		17		17		(17		)	(100	)
Total securities available for sale		$19,383		$19,257		$19,713		$19,501		($244	)	(1	%)
Securities Held to Maturity:
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$4,080		$4,072		$4,126		$4,094		($22	)	(1	%)
Other/non-agency	887		914		945		964		(50		)	(5	)
Total securities held to maturity		$4,967		$4,986		$5,071		$5,058		($72	)	(1	)
Total securities available for sale and held to maturity		$24,350		$24,243		$24,784		$24,559		($316	)	(1	%)

As of June 30, 2017, the fair value of the AFS and HTM securities portfolio decreased$316 million to $24.2 billion, compared with $24.6 billion as of December 31, 2016, primarily due to $530 million of securities that were sold at period-end.

As ofJune 30, 2017, our securities portfolio’s average effective duration was 4.0 years compared with 4.3 years as of December 31, 2016, given lower long-term rates that drove an increase in securities’ prepayment speeds.  We manage the securities portfolio duration and convexity risk through asset selection and securities structure, and maintain duration levels within our risk appetite in the context of the broader Interest Rate Risk in the Banking Book framework and limits.

The securities portfolio includes high-quality, highly-liquid investments reflecting our ongoing commitment to maintaining appropriate contingent liquidity levels and pledging capacity. U.S. government-guaranteed notes and government-sponsored entity-issued mortgage-backed securities represent the vast majority of the securities portfolio holdings. The portfolio composition is also dominated by holdings backed by mortgages to facilitate our ability to pledge them to the FHLBs. This has become increasingly important due to the enhanced liquidity requirements of the liquidity coverage ratio and the liquidity stress test. For further discussion of the liquidity coverage ratios, see “Regulation and Supervision — Liquidity Standards” in Part I — Business, included in the Annual Report on Form 10-K for the year ended December 31, 2016.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Loans and Leases

Our loans and leases are disclosed in portfolio segments and classes. Our loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity loans, home equity lines of credit, home equity loans serviced by others, home equity lines of credit serviced by others, automobile, education, credit cards and other retail. Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others, which we now service a portion of internally. The following table shows the composition of loans and leases, including non-core loans, as of:

(in millions)	June 30, 2017		December 31, 2016		Change			Percent
Commercial		$37,329		$37,274		$55		—	%
Commercial real estate	11,213		10,624		589			6
Leases	3,346		3,753		(407		)	(11	)
Total commercial	51,888		51,651		237			—
Residential mortgages	16,082		15,115		967			6
Home equity loans	1,606		1,858		(252		)	(14	)
Home equity lines of credit	13,696		14,100		(404		)	(3	)
Home equity loans serviced by others	647		750		(103		)	(14	)
Home equity lines of credit serviced by others	182		219		(37		)	(17	)
Automobile	13,449		13,938		(489		)	(4	)
Education (1)	7,720		6,610		1,110			17
Credit cards	1,711		1,691		20			1
Other retail	2,065		1,737		328			19
Total retail	57,158		56,018		1,140			2
Total loans and leases (2) (3)		$109,046		$107,669		$1,377		1	%

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. For further information see Note 1 “Basis of Presentation” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

⁽²⁾ Excluded from the table above are loans held for sale totaling $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

⁽³⁾ Mortgage loans serviced for others by our subsidiaries are not included above, and amounted to $17.6 billion and $17.3 billion at June 30, 2017 and December 31, 2016, respectively.

Total loans and leases of $109.0 billion as of June 30, 2017increased$1.4 billion from $107.7 billion as of December 31, 2016, reflecting growth in both commercial and retail products. Total commercial loans and leases of $51.9 billionincreased$237 million from $51.7 billion as of December 31, 2016, reflecting commercial real estate loan growth of$589 millionand commercial loan growth of$55 million, partially offset by a decline in leases. The change in commercial loans also reflects the impact of the second quarter 2017 sale of $596 million of lower-return, non-strategic commercial loans and leases associated with balance sheet optimization initiatives. Total retail loans of $57.2 billionincreased by $1.1 billion from $56.0 billion as of December 31, 2016, largely driven by a $1.1 billionincrease in education loans and a $967 millionincrease in residential mortgage loans, partially offset by lower home equity balances and auto loans.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Non-Core Assets    

The table below presents the composition of our non-core assets:

(in millions)	June 30, 2017		December 31, 2016		Change			Percent
Commercial		$74		$144		($70	)	(49	%)
Commercial real estate	36		59		(23		)	(39	)
Leases	778		874		(96		)	(11	)
Total commercial	888		1,077		(189		)	(18	)
Residential mortgages	158		173		(15		)	(9	)
Home equity loans	33		45		(12		)	(27	)
Home equity lines of credit	39		50		(11		)	(22	)
Home equity loans serviced by others	647		750		(103		)	(14	)
Home equity lines of credit serviced by others	182		219		(37		)	(17	)
Education	272		291		(19		)	(7	)
Total retail	1,331		1,528		(197		)	(13	)
Total non-core loans	2,219		2,605		(386		)	(15	)
Other assets	133		155		(22		)	(14	)
Total non-core assets		$2,352		$2,760		($408	)	(15	%)

Non-core assets are primarily liquidating loan and lease portfolios inconsistent with our strategic priorities, generally as a result of geographic location, industry, product type or risk level and are included in Other. Non-core assets of $2.4 billion as of June 30, 2017decreased $408 million, or 15%, from December 31, 2016.

Retail non-core loan balances of $1.3 billiondecreased$197 million, or 13%, compared to December 31, 2016. The largest component of our retail non-core portfolio is the home equity SBO portfolio, which totaled $829 million as of June 30, 2017, compared to $969 million as of December 31, 2016. The SBO portfolio represented less than 3% of the retail real estate secured portfolio and approximately 1% of the overall retail loan portfolio as of June 30, 2017. The SBO portfolio consists of pools of home equity loans and lines of credit purchased between 2003 and 2007. Although our SBO portfolio consists of loans that were initially serviced by others, we now service a portion of this portfolio internally. SBO balances serviced externally totaled $435 million and $505 million as of June 30, 2017 and December 31, 2016, respectively.

The credit profile of the SBO portfolio reflected a weighted-average refreshed FICO score of 710 and CLTV of 85% as of June 30, 2017. The proportion of the portfolio in a second lien position was 97% with 70% of the portfolio in out-of-footprint geographies. SBO net charge-offs were in a net recovery position of $2 million, a decrease of $9 million compared to the three months endedJune 30, 2016, driven by portfolio seasoning and balance liquidation. SBO net charge-offs were zero for the six months ended June 30, 2017, which was a decrease of $14 million compared to the six months endedJune 30, 2016, driven by continued portfolio seasoning, recoveries from aged charge-offs, and balance liquidation.

Commercial non-core loan and lease balances of$888 milliondecreased$189 million, or18%, from $1.1 billion as ofDecember 31, 2016. The largest component of our commercial non-core portfolio is an aircraft-related loan and lease portfolio tied to legacy-Royal Bank of Scotland Group aircraft leasing borrowers, which totaled $780 million as ofJune 30, 2017and $917 million as ofDecember 31, 2016. During second quarter 2017, we recorded a $26 million pre-tax impairment write-down largely related to certain large-cabin aircraft lease assets primarily in the non-core portfolio.

Allowance for Credit Losses and Nonperforming Assets

The allowance for credit losses, which consists of an ALLL and a reserve for unfunded lending commitments, is created through charges to the provision for credit losses in order to provide appropriate reserves to absorb future estimated credit losses in accordance with GAAP. For further information on our processes to determine our allowance for credit losses, see “—Critical Accounting Estimates — Allowance for Credit Losses” and Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2016 and Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

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The allowance for credit losses totaled $1.3 billion at June 30, 2017 and December 31, 2016. The ALLL represented 1.12% of total loans and leases and 119% of nonperforming loans and leases as of June 30, 2017 compared with 1.15% and 118%, respectively, as of December 31, 2016. The reserve for unfunded lending commitments increased $21 million from December 31, 2016 due to increased commitment volume and additional reserve requirements. There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments.

Overall credit quality continued to improve, reflecting growth in higher quality, lower risk retail loans and broadly stable asset quality in commercial categories. Nonperforming loans and leases of $1.0 billion as of June 30, 2017 decreased $20 million from December 31, 2016 as a $47 million decrease in retail, largely real-estate secured categories, was partially offset by a $27 million increase in commercial, largely driven by an increase in commodities-related credits which was partially offset by decreases in commercial real estate. Net charge-offs of $162 million for the six months ended June 30, 2017 increased$14 million, or 9%, from $148 million for the six months ended June 30, 2016, reflecting an increase in commercial net charge-offs, largely driven by an increase in commodities-related credits. Annualized net charge-offs as a percentage of total average loans of 0.30% for the six months ended June 30, 2017 was stable compared to the six months ended June 30, 2016.

Commercial Loan Asset Quality

Our commercial loan and lease portfolio consists of traditional commercial loans and commercial real estate loans and leases. The portfolio is predominantly focused on customers in our footprint and adjacent states in which we have a physical presence where our local delivery model provides for strong client connectivity. Additionally, we also do business in certain specialized industry sectors on a national basis.

For commercial loans and leases, we use regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that we believe will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness that indicates an increased probability of future loss. See Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

As of June 30, 2017, nonperforming commercial loans and leases increased$27 million to $414 million, compared to $387 million as of December 31, 2016, largely driven by an increase in commodities-related credits which was partially offset by decreases in commercial real estate. As of June 30, 2017, total commercial nonperforming loans were 0.8% of the commercial loan portfolio, compared to 0.7% as of December 31, 2016. Total commercial loan and lease portfolio net charge-offs of $14 million and $33 million for the three and six months ended June 30, 2017, compared to net charge-offs of $2 million and $11 million for the three and six months ended June 30, 2016. The commercial loan and lease portfolio annualized net charge-off rate of 10 and 13 basis points for the three and six months ended June 30, 2017, compared to one basis point and five basis points for the three and six months ended June 30, 2016.

Total commercial criticized loans and leases portfolio of $2.7 billion, or 5.3% of the portfolio, compared to $2.9 billion, or 5.6%, at December 31, 2016. Commercial criticized balances were $2.1 billion, or 5.5%, of commercial loans as of June 30, 2017, compared to $2.3 billion, or 6.1%, as of December 31, 2016. Commercial real estate criticized balances of $535 million, or 4.8% of the commercial real estate portfolio, compared to $478 million, or 4.5%, as of December 31, 2016. Commercial criticized loans to total criticized loans of 76% as of June 30, 2017 remained relatively stable compared to 78% as of December 31, 2016. Commercial real estate accounted for 20% of total criticized loans as of June 30, 2017, compared to 16% as of December 31, 2016.     

Retail Loan Asset Quality

For retail loans, we primarily utilize payment and delinquency status to regularly review and monitor credit quality trends. Historical experience indicates that the longer a loan is past due, the greater the likelihood of future credit loss. The largest portion of the retail portfolio is represented by borrowers located in the New England, Mid-Atlantic and Midwest regions, although we have continued to grow selectively in areas outside the footprint primarily in the auto finance, education lending and unsecured portfolios. Retail loans of $57.2 billionincreased$1.1 billion from December 31, 2016, driven by growth in unsecured retail loans, including merchant financed partnerships, education finance loans, including education refinance, and residential mortgages.

The credit composition of our retail loan portfolio at June 30, 2017 reflected an average refreshed FICO score of 760, which was relatively flat compared to December 31, 2016. The real estate secured portfolio CLTV ratio is calculated as the mortgage and second lien loan balance divided by the most recently available value of the

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property and was 61% as of June 30, 2017 and 62% as of December 31, 2016. Retail asset quality continued to improve with an annualized net charge-off rate of 0.44% and 0.47% for the three and six months ended June 30, 2017, respectively, compared to 0.48% and 0.51% for the three and six months ended June 30, 2016, respectively, driven by improving asset quality and a shift in the portfolio mix. Nonperforming retail loans as a percentage of total retail loans were 1.07% as of June 30, 2017, a decrease of ten basis points from December 31, 2016.

HELOC Payment Shock

We monitor the potential for increased exposure to credit losses associated with HELOCs that were originated during the period of rapid home price appreciation between 2003 and 2007. Industry wide, many of the HELOCs originated during this timeframe were structured with an extended interest-only payment period followed by a requirement to convert to a higher payment amount that would begin fully amortizing both principal and interest beginning at a certain date in the future. To help manage this potential exposure, in September 2013, we launched a comprehensive program designed to provide heightened customer outreach to inform, educate and assist customers through the reset process as well as to offer alternative financing and forbearance options. Results of this program indicate that our efforts to assist customers at risk of default have successfully reduced delinquency and charge-off rates compared to our original expectations.

As of June 30, 2017, for the $1.7 billion of our HELOC portfolio that reached the end of the interest-only draw period and entered repayment of principal and interest during 2014 and 2015, 94% of the balances had been refinanced, paid off or were current on payments, 3% were past due and 3% had been charged off. As of June 30, 2017, for the $738 million of our HELOC portfolio that reached the end of the interest-only draw period and entered repayment of principal and interest in 2016, 95% of the balances had been refinanced, paid off or were current on payments, 4% were past due and 1% had been charged off.

As of June 30, 2017, a total of $615 million of HELOC balances are scheduled to reach the end of the interest-only draw period and enter repayment of principal and interest for the remainder of 2017. For the $4.3 billion HELOC portfolio scheduled to reach the end of the interest-only draw period and enter repayment of principal and interest between July 1, 2017 and December 31, 2021, 46% was secured by a first lien, with a weighted average FICO score of the borrowers of 763 and a LTV ratio of 59%. Those results compare to the total HELOC portfolio of $13.9 billion that was 51% secured by a first lien, with a weighted average FICO score of the borrowers of 768 and a LTV ratio of 60%. Factors that affect our future expectations for continued relatively low charge-off risk in the face of rising interest rates for the portion of our HELOC portfolio subject to reset in future periods include a relatively high level of first lien collateral positions, improved loan-to-value ratios resulting from continued home price appreciation, relatively stable portfolio credit score profiles and continued robust loss mitigation efforts.

Troubled Debt Restructurings

TDR is the classification given to a loan that has been restructured in a manner that grants a concession to a borrower experiencing financial hardship that we would not otherwise make. TDRs typically result from our loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. Our loan modifications are handled on a case by case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet our borrower’s financial needs. The types of concessions include interest rate reductions, term extensions, principal forgiveness and other modifications to the structure of the loan that fall outside our lending policy. Depending on the specific facts and circumstances of the customer, restructuring can involve loans moving to nonaccrual, remaining on nonaccrual, or remaining on accrual status.

As of June 30, 2017, $804 million of retail loans were classified as retail TDRs, a stable trend compared with $799 million as of December 31, 2016. As of June 30, 2017, $225 million of retail TDRs were in nonaccrual status with 58% current with payments, a slight improvement compared to $233 million in nonaccrual status with 55% current on payments at December 31, 2016. TDRs generally return to accrual status once repayment capacity and appropriate payment history can be established. TDRs are individually evaluated for impairment. Loans are classified as TDRs until paid off, sold or refinanced at market terms.

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For additional information regarding TDRs, see “—Critical Accounting Estimates — Allowance for Credit Losses,” and Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016 and Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

The following tables present an aging of our retail TDRs:

	June 30, 2017
(in millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Recorded Investment:
Residential mortgages		$141		$3		$4		$40		$188
Home equity loans	116		3		2		19		140
Home equity lines of credit	179		4		3		24		210
Home equity loans serviced by others	49		1		1		3		54
Home equity lines of credit serviced by others	7		—		—		2		9
Automobile	19		2		1		—		22
Education	141		3		1		1		146
Credit cards	22		1		1		1		25
Other retail	10		—		—		—		10
Total		$684		$17		$13		$90		$804

	December 31, 2016
(in millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Recorded Investment:
Residential mortgages		$115		$12		$5		$46		$178
Home equity loans	116		8		3		18		145
Home equity lines of credit	164		7		4		21		196
Home equity loans serviced by others	53		3		1		3		60
Home equity lines of credit serviced by others	6		—		—		3		9
Automobile	17		1		1		—		19
Education	148		3		2		2		155
Credit cards	23		1		1		1		26
Other retail	11		—		—		—		11
Total		$653		$35		$17		$94		$799

The following tables present the accrual status of our retail TDRs:

	June 30, 2017
(in millions)	Accruing		Nonaccruing		Total
Recorded Investment:
Residential mortgages		$129		$59		$188
Home equity loans	102		38		140
Home equity lines of credit	135		75		210
Home equity loans serviced by others	40		14		54
Home equity lines of credit serviced by others	4		5		9
Automobile	12		10		22
Education	122		24		146
Credit cards	25		—		25
Other retail	10		—		10
Total		$579		$225		$804

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	December 31, 2016
(in millions)	Accruing		Nonaccruing		Total
Recorded Investment:
Residential mortgages		$117		$61		$178
Home equity loans	102		43		145
Home equity lines of credit	126		70		196
Home equity loans serviced by others	43		17		60
Home equity lines of credit serviced by others	4		5		9
Automobile	10		9		19
Education	128		27		155
Credit cards	25		1		26
Other retail	11		—		11
Total		$566		$233		$799

Derivatives

We use pay-fixed swaps to hedge floating rate wholesale funding and to offset duration in fixed-rate assets. Notional balances on wholesale funding hedges totaled $4.0 billion as of June 30, 2017 and $3.0 billion as of December 31, 2016, respectively. Pay-fixed rates on the swaps were 0.91% to 1.98% as of June 30, 2017and December 31, 2016, respectively. As of June 30, 2017, $1.0 billion were forward starting positions which begin accruing interest in January 2018.

We use receive-fixed swaps to minimize the exposure to variability in the interest cash flows on our floating-rate assets, and to hedge market risk on fixed-rate capital markets debt issuances. At June 30, 2017 and December 31, 2016, the notional amount of receive-fixed swap hedges totaled $12.8 billion and $10.4 billion, respectively. As of June 30, 2017 and December 31, 2016, the fixed-rate ranges were 0.88% to 1.87% and 0.88% to 1.84%, respectively. We paid one-month and three-month LIBOR on these swaps.

In second quarter 2017, we hedged $1.8 billion of floating-rate commercial loans with a three-year receive-fixed interest rate swaps in CBPA to hedge exposure to declining interest rates. An offsetting $1.5 billion of receive-fixed swaps hedging floating-rate commercial loans were terminated in CBNA. Our new hedges and terminations amounted to adding $250 million in three-year receive-fixed exposure. We also established a $500 million fair value hedge using a receive-fixed interest rate swap against the $500 million five-year fixed-rate senior debt, related to CBNA’s $1.5 billion senior note issuance in May 2017.

We also sell interest rate swaps and foreign exchange forwards to commercial customers. Interest rate and foreign exchange derivative contracts are transacted to effectively minimize our market risk associated with the customer derivative contracts.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The table below presents our derivative assets and liabilities. The assets and liabilities recorded for derivatives on our Consolidated Balance Sheets reflect the market value of these transactions. For additional information regarding our derivative instruments, see Note 10 “Derivatives” in our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

	June 30, 2017								December 31, 2016
(in millions)	Notional Amount(1)		Derivative Assets(2)			Derivative Liabilities(2)			Notional Amount(1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$16,800		$4			$3			$13,350		$52			$193
Derivatives not designated as hedging instruments:
Interest rate contracts	65,980		337			274			54,656		557			452
Foreign exchange contracts	10,120		132			121			8,039		134			126
Other contracts	1,380		11			5			1,498		16			7
Total derivatives not designated as hedging instruments			480			400					707			585
Gross derivative fair values			484			403					759			778
Less: Gross amounts offset in the Consolidated Balance Sheets (3)			(70		)	(70		)			(106		)	(106		)
Less: Cash collateral applied (3)			(6		)	(174		)			(26		)	(13		)
Total net derivative fair values presented in the Consolidated Balance Sheets				$408			$159					$627			$659

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. For interest rate derivatives, the notional amount is typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of our central counterparties that became effective January 3, 2017.

⁽³⁾ Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions.

At June 30, 2017, the overall derivative asset value decreased$219 million and the liability balance decreased by $500 million from December 31, 2016. These decreases were primarily due to a change in the presentation of variation margin payments in the Consolidated Balance Sheets in 2017. Effective January 3, 2017, the London Clearing House and Chicago Mercantile Exchange amended their respective rules to legally characterize the variation margin payments on centrally cleared derivative contracts as settlement of those derivatives (rather than the posting of collateral). As a result of this change, we modified our balance sheet presentation of centrally cleared interest rate swaps in 2017, such that the fair value of the swaps and the associated variation margin balances are reported as a single unit of account in derivative assets and/or derivative liabilities. At December 31, 2016, the variation margin balances were characterized as collateral and reported in interest-bearing cash and due from banks on the Consolidated Balance Sheets.

Deposits

The table below presents the major components of our deposits:

(in millions)	June 30, 2017		December 31, 2016		Change			Percent
Demand		$27,814		$28,472		($658	)	(2	%)
Checking with interest	22,497		20,714		1,783			9
Regular savings	9,542		8,964		578			6
Money market accounts	38,275		38,176		99			—
Term deposits	15,485		13,478		2,007			15
Total deposits		$113,613		$109,804		$3,809		3	%

Total deposits as of June 30, 2017increased$3.8 billion, or 3%, to $113.6 billion, compared to $109.8 billion as of December 31, 2016, as growth across term deposits, checking with interest, regular savings and money market products was partially offset by a decrease in demand deposits.

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Borrowed Funds

Short-term borrowed funds

A summary of our short-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016		Change			Percent
Federal funds purchased		$—		$533		($533	)	(100	%)
Securities sold under agreements to repurchase	429		615		(186		)	(30	)
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,004		3,211		(1,207		)	(38	)
Total short-term borrowed funds		$2,433		$4,359		($1,926	)	(44	%)

Short-term borrowed funds of $2.4 billiondecreased $1.9 billion from December 31, 2016, reflecting a $1.2 billion decline in other short-term borrowed funds (primarily short-term FHLB advances), a $533 million decrease in Fed funds purchased, and a $186 milliondecrease in securities sold under agreements to repurchase.

    As of June 30, 2017, our total contingent liquidity was $28.3 billion, consisting of $3.3 billion in net cash at the FRB (which is defined as cash less overnight Fed funds purchased), $18.5 billion in unencumbered high-quality and liquid securities, and $6.5 billion in unused FHLB borrowing capacity. Asset liquidity, a component of contingent liquidity, consisting of net cash at the FRB and unencumbered high-quality liquid securities assets, was $21.8 billion. Additionally, $12.5 billion in secured discount window capacity from the FRBs created total available liquidity of approximately $40.8 billion.

Key data related to short-term borrowed funds is presented in the following table:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,						As of and for the Year Ended December 31,
(dollars in millions)	2017			2016			2017			2016			2016
Weighted-average interest rate at period-end:(1)
Federal funds purchased and securities sold under agreements to repurchase	—		%	—		%	—		%	—		%	0.26		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.31			0.65			1.31			0.65			0.94
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$1,075			$968			$1,174			$1,274			$1,522
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,507			4,764			3,508			4,764			5,461
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$808			$974			$845			$927			$947
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,275			3,743			2,617			3,421			3,207
Weighted-average interest rate during the period:(1)
Federal funds purchased and securities sold under agreements to repurchase	0.36		%	0.08		%	0.28		%	0.07		%	0.09		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.22			0.61			1.14			0.60			0.64

⁽¹⁾ Rates exclude certain hedging costs.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable.

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Long-term borrowed funds

A summary of our long-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Citizens Financial Group, Inc.:
4.150% fixed-rate subordinated debt, due 2022		$347		$347
5.158% fixed-to-floating rate subordinated debt, due 2023, converting to floating at 3-month LIBOR + 3.56% and callable beginning June 2018	333		333
3.750% fixed-rate subordinated debt, due 2024	250		250
4.023% fixed-rate subordinated debt, due 2024	42		42
4.350% fixed-rate subordinated debt, due 2025	249		249
4.300% fixed-rate subordinated debt, due 2025	749		749
2.375% fixed-rate senior unsecured debt, due 2021	348		348
Banking Subsidiaries:
2.300% senior unsecured notes, due 2018	746		745
2.450% senior unsecured notes, due 2019	748		747
2.500% senior unsecured notes, due 2019	743		741
2.250% senior unsecured notes, due 2020	698		—
Floating-rate senior unsecured notes, due 2020	299		—
Floating-rate senior unsecured notes, due 2020	249		—
2.200% senior unsecured notes, due 2020	498		—
2.550% senior unsecured notes, due 2021	973		965
Floating-rate senior unsecured notes, due 2022	249		—
2.650% senior unsecured notes, due 2022	497		—
Federal Home Loan advances due through 2033	5,112		7,264
Other	24		10
Total long-term borrowed funds		$13,154		$12,790

Note: The balances above reflect the impact of unamortized deferred issuance costs and discounts. See Note 7 “Borrowed Funds” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

From an external issuance perspective, on February 24, 2017, we increased the size of CBNA’s Global Note Program from $5.0 billion to $8.0 billion. On March 2, 2017, CBNA issued $1.0 billion in three-year, senior bank debt, composed of $700 million in fixed-rate notes and $300 million in floating-rate notes indexed to 3-month LIBOR.On May 26, 2017, CBNA issued $1.5 billion in senior notes, consisting of $500 million of three-year fixed-rate notes, $250 million of three-year floating-rate notes, $500 million in five-year fixed-rate notes, and $250 million in five-year floating-rate notes. We also established a $500 million fair value hedge using a receive-fixed interest rate swap against the $500 million five-year fixed-rate senior debt, related to CBNA’s $1.5 billion senior note issuance in May 2017. Long-term borrowed funds of$13.2 billionas ofJune 30, 2017increased$364 millionfromDecember 31, 2016, reflecting a $2.5 billion increase in the aforementioned senior bank debt, offset by a decrease of $2.2 billion in long-term FHLB borrowings. Access to additional funding through repurchase agreements, collateralized borrowed funds or asset sales continues to be available. Additionally, capacity remains to grow deposits or issue senior or subordinated notes.

CAPITAL AND REGULATORY MATTERS

As a bank holding company and a financial holding company, we are subject to regulation and supervision by the FRB. Our primary subsidiaries are our two insured depository institutions, CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-charted savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Our regulation and supervision continues to evolve as the legal and regulatory framework governing our operations continues to change. The current operating environment reflects heightened regulatory expectations around many regulations including consumer compliance, the Bank Secrecy Act, anti-money laundering compliance, and increased internal audit activities. For more information, see “Regulation and Supervision” in Part I, Item 1 — Business included in our Annual Report on Form 10-K for the year ended December 31, 2016.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Dodd-Frank regulation

Under the Dodd-Frank requirements, we must submit our annual capital plan and the results of our annual company-run stress tests to the FRB by April 5^th of each year and disclose certain results within 15 days after the FRB discloses the results of its supervisory-run tests. On April 5, 2017, we submitted our 2017 Capital Plan and the results of the company-run stress tests to the FRB as part of the 2017 CCAR cycle.On June 28, 2017, the FRB did not object to our 2017 Capital Plan or to our proposed capital actions in the period beginning July 1, 2017 and ending June 30, 2018. Our 2017 Capital Plan includes proposed quarterly common dividends of $0.18 per share through the end of 2017 and $0.22 per share in 2018, and also includes a share repurchase plan of up to $850 million through second quarter 2018. The timing and exact amount of future dividends and share repurchases will depend on various factors, including capital position, financial performance and market conditions. On June 22, 2017, we published estimated DFAST results under the supervisory severely adverse scenario on our regulatory filings and disclosures page on http://investor.citizensbank.com.

The Dodd-Frank Act also requires each of our bank subsidiaries to conduct stress tests on an annual basis and to disclose the stress test results. CBNA submitted its 2017 annual stress tests to the OCC on April 5, 2017 and published a summary of those results along with the stress test results of the bank holding company parent on June 22, 2017. CBPA submitted the results of its 2017 annual stress tests to the FDIC on July 31, 2017 and will publish its summary results as an update to the Parent Company/CBNA Dodd-Frank Act Company-Run Stress Test Disclosure on our Investor Relations site between October 15 and October 31, 2017, as required by the FDIC for banks with $10 to $50 billion in total assets.

Capital Framework

Under the U.S. Basel III capital framework, we and our banking subsidiaries must meet specific minimum requirements for the following ratios: common equity tier 1 capital, tier 1 capital, total capital, and tier 1 leverage.

The U.S. adoption of the Basel III Standardized approach by the Federal bank regulators became effective for CFG, CBNA and CBPA, on January 1, 2015 subject to a phase-in period extending through January 2019 (the “U.S. Basel III Standardized Transitional rules”). Among other changes, these regulations introduced a new capital conservation buffer (“CCB”) on top of the following three minimum risk-based capital ratios: CET1 capital of 4.5%, tier 1 capital of 6.0%, and total capital of 8.0%. The implementation of the CCB began on January 1, 2016 at the 0.625% level and increases by 0.625% on each subsequent January 1, until the buffer reaches its fully phased-in level of 2.5% on January 1, 2019. As such, the CCB for 2017 increased to 1.250% on January 1, 2017. Banking institutions for which any risk-based capital ratio falls below its effective minimum (required minimum plus the applicable CCB) will be subject to constraints on capital distributions, including dividends, repurchases and certain executive compensation based on the amount of the shortfall.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The table below presents our actual regulatory capital ratios under the U.S. Basel III Standardized Transitional rules as well as pro forma U.S. Basel III Standardized ratios after full phase-in of all requirements by January 1, 2019:

	Transitional Basel III								Pro Forma Basel III Assuming Full Phase-in
(dollars in millions)	Actual Amount		Actual Ratio		Required Minimum plus Required CCB for Non-Leverage Ratios(6)(7)		FDIA Required Well-Capitalized Minimum for Purposes of Prompt Corrective Action(9)		Actual Ratio(1)		Required Minimum plus Required CCB for Non-Leverage Ratios(6)(8)		FDIA Required Well-Capitalized Minimum for Purposes of Prompt Corrective Action(9)
June 30, 2017
Common equity tier 1 capital(2)		$14,057	11.2	%	5.8	%	6.5	%	11.2	%	7.0	%	6.5	%
Tier 1 capital(3)	14,304		11.4		7.3		8.0		11.4		8.5		8.0
Total capital(4)	17,586		14.0		9.3		10.0		14.0		10.5		10.0
Tier 1 leverage(5)	14,304		9.9		4.0		5.0		9.9		4.0		5.0
Risk-weighted assets	125,774
Quarterly adjusted average assets	144,404
December 31, 2016
Common equity tier 1 capital(2)		$13,822	11.2	%	5.1	%	6.5	%	11.1	%	7.0	%	6.5	%
Tier 1 capital(3)	14,069		11.4		6.6		8.0		11.3		8.5		8.0
Total capital(4)	17,347		14.0		8.6		10.0		14.0		10.5		10.0
Tier 1 leverage(5)	14,069		9.9		4.0		5.0		9.9		4.0		5.0
Risk-weighted assets	123,857
Quarterly adjusted average assets	141,677

⁽¹⁾ Fully phased-in regulatory capital ratios are Key Performance Metrics. For more information on Key Performance Metrics, see “—Principal Components of Operations and Key Performance Metrics Used By Management.”

⁽²⁾ “Common equity tier 1 capital ratio” is CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁴⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁵⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

⁽⁶⁾ Required “Minimum Capital ratio” for 2016 and 2017 are: Common equity tier 1 capital of 4.5%; Tier 1 capital of 6.0%; Total capital of 8.0%; and Tier 1 leverage of 4.0%.

⁽⁷⁾ “Minimum Capital ratio” includes capital conservation buffer for Transitional Basel III of 1.250% for 2017 and 0.625 for 2016; N/A to Tier 1 leverage.

⁽⁸⁾ “Minimum Capital ratio” for 2016 and 2017 includes capital conservation buffer for Pro Forma Basel III of 2.5%; N/A to Tier 1 leverage.

⁽⁹⁾ Presented for informational purposes. Prompt corrective action provisions apply only to insured depository institutions - CBNA and CBPA.

At June 30, 2017, our CET1 capital, tier 1 capital and total capital ratios were 11.2%, 11.4% and 14.0%, respectively, consistent with 11.2%, 11.4% and 14.0%, respectively, as of December 31, 2016. These capital ratios remained unchanged as net income for the six months ended June 30, 2017 was offset by risk-weighted asset growth and our 2016 Capital Plan actions over the period, which included common dividends of $143 million, preferred dividends of $7 million and the repurchase of $260 million of our outstanding common stock. At June 30, 2017, our CET1 capital, tier 1 capital and total capital ratios were 4.2%, 2.9% and 3.5%, respectively, above their regulatory minimums plus the fully phased-in capital conservation buffer. Based on both current and fully phased-in Basel III requirements, all ratios remained well above Basel III minima.

Standardized Approach

CFG, CBNA and CBPA calculate regulatory ratios using the U.S. Basel III Standardized approach, as defined by U.S. Federal bank regulators, for determining risk-weighted assets. The U.S. Basel III Standardized approach for risk weighting assets expands the risk-weighting categories from the four Basel I-derived categories (0%, 20%, 50% and 100%) to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset classes. Under this approach, no distinction is made for variations in credit quality for corporate exposures. Additionally, the economic benefit of collateral is restricted to a limited list of eligible securities and cash. At June 30, 2017, we estimate our CET1 capital, CET1 capital ratio and total risk-weighted assets using the U.S. Basel III Standardized approach, on a fully phased-in basis, to be $14.1 billion, 11.2% and $126.0 billion, respectively. Our estimates may be refined over time because of further rulemaking or clarification by U.S. banking regulators or as our understanding and interpretation of these rules evolve.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table provides a reconciliation of regulatory ratios and ratio components using the U.S. Basel III Standardized Transitional rules and U.S. Basel III Standardized estimates on a fully phased-in basis for common equity tier 1 capital, total capital and risk-weighted assets:

(dollars in millions)	June 30, 2017			December 31, 2016
Common equity tier 1 capital		$14,057			$13,822
Impact of intangibles at 100%	—			—
Fully phased-in common equity tier 1 capital(1)		$14,057			$13,822
Total capital		$17,586			$17,347
Impact of intangibles at 100%	—			—
Fully phased-in total capital(1)		$17,586			$17,347
Risk-weighted assets		$125,774			$123,857
Impact of intangibles - 100% capital deduction	—			—
Impact of mortgage servicing assets at 250% risk weight	249			244
Fully phased-in risk-weighted assets(1)		$126,023			$124,101
Transitional common equity tier 1 capital ratio(2)	11.2		%	11.2		%
Fully phased-in common equity tier 1 capital ratio(1)(2)	11.2			11.1
Transitional total capital ratio(3)	14.0			14.0
Fully phased-in total capital ratio(1)(3)	14.0			14.0

⁽¹⁾ Fully phased-in regulatory capital ratios are Key Performance Metrics. For more information on Key Performance Metrics, see “—Principal Components of Operations and Key Performance Metrics Used By Management.”

⁽²⁾ “Common equity tier 1 capital ratio” is CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

Regulatory Capital Ratios and Capital Composition

CET1 capital under U.S. Basel III Standardized Transitional rules totaled $14.1 billion at June 30, 2017, and increased $235 million from $13.8 billion at December 31, 2016, as net income for the six months ended June 30, 2017 was partially offset by the impact of common share repurchases and dividend payments over the period. Tier 1 capital at June 30, 2017 totaled $14.3 billion, reflecting a $235 million increase from $14.1 billion at December 31, 2016, driven by the changes in CET1 capital noted above. At June 30, 2017, we had $247 million of 5.500% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock outstanding which qualified as additional tier 1 capital. Total capital of $17.6 billion at June 30, 2017, increased $239 million from December 31, 2016, as net income for the six months ended June 30, 2017 and a small increase in the allowance for credit losses were partially offset by the impact of common share repurchases and dividend payments over the period.

Risk-weighted assets (“RWA”) totaled $125.8 billion at June 30, 2017, based on U.S. Basel III Standardized Transitional rules, up $1.9 billion from December 31, 2016. This increase was driven by growth in retail loans, including education and residential mortgage, as well as commercial real estate loan RWA. Included within the commercial real estate loan RWA increase was approximately $700 million which was tied to a change in the RWA designation for certain commercial real estate loans in first quarter 2017. These increases were partially offset by the RWA impact of commercial loan sales, run-off in the auto portfolio and a reduction in market risk, as we did not meet the reporting threshold prescribed by Market Risk Capital Guidelines for the second quarter 2017. The tier 1 leverage ratio remained stable from December 31, 2016 to June 30, 2017.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table presents our capital composition under the U.S. Basel III capital framework:

	Transitional Basel III
(in millions)	June 30, 2017			December 31, 2016
Total common stockholders’ equity		$19,817			$19,499
Exclusions(1):
Net unrealized losses recorded in accumulated other comprehensive income, net of tax:
Debt and marketable equity securities available for sale	129			186
Derivatives	76			88
Unamortized net periodic benefit costs	389			394
Deductions:
Goodwill	(6,887		)	(6,876		)
Deferred tax liability associated with goodwill	535			532
Other intangible assets	(2		)	(1		)
Total common equity tier 1	14,057			13,822
Qualifying preferred stock	247			247
Total tier 1 capital	14,304			14,069
Qualifying long-term debt securities as tier 2	1,970			1,970
Allowance for loan and lease losses	1,219			1,236
Allowance for credit losses for off-balance sheet exposure	93			72
Total capital		$17,586			$17,347

⁽¹⁾ As a U.S. Basel III Standardized approach institution, we selected the one-time election to opt-out of the requirements to include all the components of AOCI.

Capital Adequacy Process

Our assessment of capital adequacy begins with our risk appetite and risk management framework. This framework provides for the identification, measurement and management of material risks. Capital requirements are determined for actual and forecasted risk portfolios using applicable regulatory capital methodologies. The assessment also considers the possible impacts of approved and proposed regulatory changes to future periods. Key analytical frameworks, which enable the assessment of capital adequacy versus unexpected loss, supplement our base case forecast. These supplemental frameworks include stress testing, as well as an internal capital adequacy requirement that builds on internally assessed economic capital requirements. A robust governance framework supports our capital planning process. This process includes capital management policies and procedures that document capital adequacy metrics and limits, as well as our comprehensive capital contingency plan and the active engagement of both the legal-entity boards and senior management in oversight and decision-making.

Forward-looking assessments of capital adequacy for us and for our banking subsidiaries feed development of capital plans that are submitted to the FRB and to bank regulators. We prepare these plans in full compliance with the FRB’s Capital Plan Rule and we participate annually in the FRB’s CCAR review process. In addition to the stress test requirements under CCAR, we also perform semi-annual company-run stress tests required by the Dodd-Frank Act.

All distributions proposed under our Capital Plan are subject to consideration and approval by our Board of Directors prior to execution. The timing and exact amount of future dividends and share repurchases will depend on various factors, including our capital position, financial performance and market conditions.

Capital Transactions

All of the following capital actions were part of our 2016 Capital Plan and completed during the six months ended June 30, 2017:

• Declared and paid quarterly common stock dividends of $0.14 per share for the first and second quarters of 2017, aggregating to dividend payments of $143 million;

• Declared and paid a semi-annual dividend of $27.50 per share on the 5.500% fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock, aggregating to a dividend payment of $7 million on April 6, 2017; and

• Repurchased $260 million of our outstanding common stock.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

During the four-quarter 2016 Capital Plan period ending June 30, 2017, we returned $957 million to our common shareholders, consisting of common stock dividends of $267 million and share repurchases of $690 million.

Consistent with our 2017 Capital Plan, on July 21, 2017, we announced that our Board of Directors declared a third quarter 2017 cash dividend of $0.18 per common share, an increase of $0.04 per share, or 29% compared with the second quarter 2017 dividend.    

Banking Subsidiaries’ Capital

The following table presents our banking subsidiaries’ capital ratios under U.S. Basel III Standardized Transitional rules:

	Transitional Basel III
	June 30, 2017				December 31, 2016
(dollars in millions)	Amount		Ratio		Amount		Ratio
Citizens Bank, N.A.
Common equity tier 1 capital(1)		$11,462	11.2	%		$11,248	11.2	%
Tier 1 capital (2)	11,462		11.2		11,248		11.2
Total capital(3)	13,665		13.4		13,443		13.4
Tier 1 leverage(4)	11,462		10.1		11,248		10.3
Risk-weighted assets	102,109				100,491
Quarterly adjusted average assets	112,991				109,530
Citizens Bank of Pennsylvania
Common equity tier 1 capital(1)		$3,045	12.6	%		$3,094	12.7	%
Tier 1 capital (2)	3,045		12.6		3,094		12.7
Total capital(3)	3,279		13.5		3,333		13.6
Tier 1 leverage(4)	3,045		8.7		3,094		8.8
Risk-weighted assets	24,228				24,426
Quarterly adjusted average assets	35,070				35,057

⁽¹⁾ “Common equity tier 1 capital ratio” is CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

CBNA CET1 capital under U.S. Basel III Standardized Transitional rules totaled $11.5 billion at June 30, 2017, up $214 million from $11.2 billion at December 31, 2016, reflecting the impact of net income partially offset by dividend payments for the six months ended June 30, 2017. At June 30, 2017, CBNA held minimal additional tier 1 capital. Total capital was $13.7 billion at June 30, 2017, an increase of $222 million from December 31, 2016, driven by the increases in CET1 capital and a small increase in the allowance for credit losses.

CBNA risk-weighted assets of $102.1 billion, based on U.S. Basel III Standardized Transitional rules at June 30, 2017, increased $1.6 billion from December 31, 2016, driven by growth in education, residential and commercial real estate loan RWA.Included within the commercial real estate loan RWA increase was approximately $400 million which was tied to a change in the RWA designation for certain commercial real estate loans in first quarter 2017. These increases were partially offset by the RWA impact of commercial loan sales and a reduction in market risk, as CBNA did not meet the reporting threshold prescribed by Market Risk Capital Guidelines for second quarter 2017.

As of June 30, 2017, the CBNA tier 1 leverage ratio decreased approximately 12 basis points to 10.1% from 10.3% as of December 31, 2016, driven by a $3.5 billion increase in adjusted quarterly average total assets that drove a 32 basis point decline in the ratio, partially offset by a 20 basis point increase for higher CET1 capital described above.

CBPA CET1 capital under U.S. Basel III Standardized Transitional rules totaled $3.0 billion at June 30, 2017, and decreased $49 million from $3.1 billion at December 31, 2016, as the dividend payments were greater than the net income and amortization of deferred tax related to goodwill for the six months ended June 30, 2017. At June 30, 2017, there was no additional tier 1 capital. CBPA total capital of $3.3 billion at June 30, 2017 has decreased $54 million from December 31, 2016, driven by the decrease in CET1 capital and a small decrease in allowance for credit losses.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

CBPA risk-weighted assets of $24.2 billion, based on U.S. Basel III Standardized Transitional rules at June 30, 2017, decreased $198 million from December 31, 2016, driven by decreases in residential mortgages, auto and commercial loans and mortgage-backed securities. These decreases were offset by an increase of approximately $300 million which was tied to a change of the RWA designation for certain commercial real estate loans in first quarter 2017, in addition to growth in education loan RWA.

As of June 30, 2017, the CBPA tier 1 leverage ratio decreased 14 basis points to 8.7% from 8.8% as of December 31, 2016, driven by the lower CET1 capital described above.

Liquidity

Liquidity is defined as our ability to meet our cash-flow and collateral obligations in a timely manner, at a reasonable cost. An institution must maintain current liquidity to meet its expected daily and forecasted cash-flow requirements, as well as contingent liquidity to meet unexpected (stress scenario) funding requirements. As noted earlier, reflecting the importance of meeting all unexpected and stress-scenario funding requirements, we identify and manage contingent liquidity (consisting of excess cash balances at the FRB, unencumbered high-quality and liquid securities, and unused FHLB borrowing capacity). Separately, we also identify and manage asset liquidity as a subset of contingent liquidity (consisting of excess cash balances at the FRB and unencumbered high-quality securities). We consider the effective and prudent management of liquidity to be fundamental to our health and strength.

We manage liquidity at the consolidated enterprise level and at each material legal entity, including at the Parent Company, CBNA and CBPA.

Parent Company Liquidity

Our Parent Company’s primary sources of cash are (i) dividends and interest received from our banking subsidiaries as a result of investing in bank equity and subordinated debt; and (ii) externally issued senior and subordinated debt. Uses of liquidity include the following: (i) routine cash flow requirements as a bank holding company, including periodic share repurchases and payments of dividends, interest and expenses; (ii) needs of subsidiaries, including banking subsidiaries, for additional equity and, as required, their needs for debt financing; and (iii) support for extraordinary funding requirements when necessary.

During the three month periods ended June 30, 2017 and 2016, the Parent Company paid dividends on common stock of $71 million and $64 million, respectively.In addition, during the three month period ended June 30, 2017, the Parent Company repurchased $130 million of its outstanding common stock. There were no share repurchases during the three month period ended June 30, 2016.

During the six month periods ended June 30, 2017 and 2016, the Parent Company paid dividends on common stock of $143 million and $117 million, respectively, and paid dividends on preferred stock of $7 million for both periods. During the six month period ended June 30, 2017 the Parent Company repurchased $260 million of its outstanding common stock. There were no share repurchases during the six month period ended June 30, 2016.

Our Parent Company’s cash and cash equivalents represent a source of liquidity that can be used to meet various needs and totaled $641 million as of June 30, 2017 compared with $551 million as of December 31, 2016.

Our Parent Company’s liquidity risk is low for the following reasons: (i) the Parent Company has no material non-banking subsidiaries, and its banking subsidiaries are self-funding; (ii) the capital structures of the Parent Company’s banking subsidiaries are similar to the Parent Company’s capital structure; and, (iii) other cash flow requirements, such as operating expenses, are relatively small. The Parent Company’s double-leverage ratio (the combined equity of Parent Company subsidiaries divided by Parent Company equity) is a measure of reliance on equity cash flows from subsidiaries. At June 30, 2017, the Parent Company’s double-leverage ratio was 101.7%.

Banking Subsidiaries’ Liquidity

In the ordinary course of business, the liquidity of CBNA and CBPA is managed by matching sources and uses of cash. The primary sources of bank liquidity include (i) deposits from our consumer and commercial franchise customers; (ii) payments of principal and interest on loans and debt securities; and (iii) wholesale borrowings, as needed, and as described under “—Liquidity Risk Management and Governance.” The primary uses of bank liquidity include (i) withdrawals and maturities of deposits; (ii) payment of interest on deposits; (iii) funding of loans and related commitments; and (iv) funding of securities purchases. To the extent that the banks have relied on wholesale borrowings, uses also include payments of related principal and interest.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our banking subsidiaries’ major businesses involve taking deposits and making loans. Hence, a key role of liquidity management is to ensure that customers have timely access to funds from deposits and loans. Liquidity management also involves maintaining sufficient liquidity to repay wholesale borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

From an external issuance perspective, on February 24, 2017, we increased the size of CBNA’s Global Note Program from $5.0 billion to $8.0 billion. On March 2, 2017, CBNA issued $1.0 billion in three-year senior notes, consisting of $700 million in fixed-rate notes and $300 million in floating-rate notes. On May 26, 2017, CBNA issued $1.5 billion in senior notes, consisting of $500 million of three-year fixed-rate notes, $250 million of three-year floating-rate notes, $500 million in five-year fixed-rate notes, and $250 million in five-year floating-rate notes.

Liquidity Risk

We define liquidity risk as the risk that an entity will be unable to meet its payment obligations in a timely manner, at a reasonable cost. We manage liquidity risk at the consolidated enterprise level, and at the legal entity level, including at the Parent Company, CBNA and CBPA. Liquidity risk can arise due to contingent liquidity risk and/or funding liquidity risk.

Contingent liquidity risk is the risk that market conditions may reduce an entity’s ability to liquidate, pledge and/or finance certain assets and thereby substantially reduce the liquidity value of such assets. Drivers of contingent liquidity risk include general market disruptions as well as specific issues regarding the credit quality and/or valuation of a security or loan, issuer or borrower and/or asset class.

Funding liquidity risk is the risk that market conditions and/or entity-specific events may reduce an entity’s ability to raise funds from depositors and/or wholesale market counterparties. Drivers of funding liquidity risk may be idiosyncratic or systemic, reflecting impediments to operations and/or damaged market confidence.

Factors Affecting Liquidity

Given the composition of their assets and borrowing sources, contingent liquidity risk at both CBNA and CBPA would be materially affected by such events as deterioration of financing markets for high-quality securities (e.g., mortgage-backed securities and other instruments issued by the GNMA, FNMA and the FHLMC), by any inability of the FHLBs to provide collateralized advances, and/or by a refusal of the FRB to act as lender of last resort in systemic stress.

Similarly, given the structure of their balance sheets, the funding liquidity risk of CBNA and CBPA would be materially affected by an adverse idiosyncratic event (e.g., a major loss, causing a perceived or actual deterioration in its financial condition), an adverse systemic event (e.g., default or bankruptcy of a significant capital markets participant), or a combination of both (e.g., the financial crisis of 2008-2010). However, during the financial crisis, our banking subsidiaries reduced their dependence on unsecured wholesale funding to virtually zero. Consequently, and despite ongoing exposure to a variety of idiosyncratic and systemic events, we view our contingent liquidity risk and our funding liquidity risk to be relatively modest.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

An additional variable affecting our access, and the access of our banking subsidiaries, to unsecured wholesale market funds and to large denomination (i.e., uninsured) customer deposits is the credit ratings assigned by such agencies as Moody’s, Standard & Poor’s and Fitch. The following table presents our credit ratings:

	June 30, 2017
	Moody’s	Standard and Poor’s	Fitch
Citizens Financial Group, Inc.:
Long-term issuer	NR	BBB+	BBB+
Short-term issuer	NR	A-2	F2
Subordinated debt	NR	BBB	BBB
Preferred Stock	NR	BB+	BB-
Citizens Bank, N.A.:
Long-term issuer	Baa1	A-	BBB+
Short-term issuer	P-2	A-2	F2
Long-term deposits	A1	NR	A-
Short-term deposits	P-1	NR	F2
Citizens Bank of Pennsylvania:
Long-term issuer	Baa1	A-	BBB+
Short-term issuer	P-2	A-2	F2
Long-term deposits	A1	NR	A-
Short-term deposits	P-1	NR	F2
NR = Not rated

Changes in our public credit ratings could affect both the cost and availability of our wholesale funding. As a result and in order to maintain a conservative funding profile, our banking subsidiaries continue to minimize reliance on unsecured wholesale funding. At June 30, 2017, our wholesale funding consisted primarily of secured borrowings from the FHLBs collateralized by high-quality residential mortgages.

Existing and evolving regulatory liquidity requirements, such as the LCR and NSFR, represent another key driver of systemic liquidity conditions and liquidity management practices. The FRB, the OCC, and the FDIC regularly evaluate our liquidity as part of the overall supervisory process.

The LCR was developed to ensure banks have sufficient high-quality liquid assets to cover expected net cash outflows over a 30-day liquidity stress period. In September 2014, the U.S. federal banking regulators published the final rule to implement the LCR. This rule also introduced a modified version of the LCR in the United States, which generally applies to Bank Holding Companies not active internationally (institutions with less than $10 billion of on-balance sheet foreign exposure), with total assets of greater than $50 billion but less than $250 billion. Under this definition we are designated as a modified LCR financial institution and were 100% compliant beginning in January 2017. Achieving sustainable LCR compliance may require changes in the size and/or composition of our investment portfolio, the configuration of our discretionary wholesale funding portfolio, and our average cash position. We remain fully compliant with the LCR as of June 30, 2017.

The U.S. federal bank regulatory agencies have issued a notice of proposed rulemaking to implement the NSFR, along with a modified version with similar parameters as the LCR, that would designate us as a modified NSFR financial institution. The NSFR is one of the two Basel III-based liquidity measures, distinctly separate from the LCR, and is designed to promote medium- and long-term stable funding of the assets and off-balance sheet activities of banks and bank holding companies over a one-year time horizon. Generally consistent with the Basel Committee’s framework, under the proposed rule banking organizations would be required to hold an amount of available stable funding (“ASF”) over a one-year time horizon that equals or exceeds the institution’s amount of required stable funding (“RSF”), with the ASF representing the numerator and the RSF representing the denominator of the NSFR. The banking organizations subject to the modified NSFR would multiply the RSF amount by 70%, such that the RSF amount required for these companies would be required to maintain ASF of at least 70% of its RSF. Generally, these modified NSFR companies are defined as institutions with total assets of greater than $50 billion but less than $250 billion and less than $10 billion of on-balance sheet foreign exposure. The proposed rule includes detailed descriptions of the items that would comprise ASF and RSF and standardized factors that would apply to ASF and RSF items, and would require any institution whose applicable modified NSFR falls under 100% to notify the appropriate federal regulator and develop a remediation plan. We are currently evaluating the impact of the U.S. federal bank regulatory

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MANAGEMENT’S DISCUSSION AND ANALYSIS

agencies’ NSFR framework. If ultimately adopted as currently proposed, the implementation of the NSFR could impact our liquidity and funding requirements and practices in the future.

We continue to review and monitor these liquidity requirements to develop appropriate implementation plans and liquidity strategies. We expect to be fully compliant with the final rules on or prior to their applicable effective date.

Liquidity Risk Management and Governance

Liquidity risk is measured and managed by the Funding and Liquidity Unit within our Treasury unit in accordance with policy guidelines promulgated by our Board and the Asset and Liability Management Committee. In managing liquidity risk, the Funding and Liquidity Unit delivers regular and comprehensive reporting, including current levels versus threshold limits for a broad set of liquidity metrics and early warning indicators, explanatory commentary relating to emerging risk trends and, as appropriate, recommended remedial strategies.

The mission of our Funding and Liquidity Unit is to deliver and otherwise maintain prudent levels of operating liquidity (to support expected and projected funding requirements), contingent liquidity (to support unexpected funding requirements resulting from idiosyncratic, systemic, and combination stress events), and regulatory liquidity (to address current and emerging requirements such as the LCR and the NSFR). Additionally, we will deliver this liquidity from stable funding sources, in a timely manner and at a reasonable cost, without significant adverse consequences.

We seek to accomplish this mission by funding loans with stable deposits; by prudently controlling dependence on wholesale funding, particularly short-term unsecured funding; and by maintaining ample available liquidity, including a contingent liquidity buffer of unencumbered high-quality loans and securities. As of June 30, 2017:

• Core deposits continued to be our primary source of funding and our consolidated period end loan-to-deposit ratio was 96.6%;

• Our net overnight position (which is defined as cash balance held at the FRB less any overnight borrowings) totaled $3.3 billion;

• Contingent liquidity was $28.3 billion, consisting of our net overnight position (defined above) of $3.3 billion, unencumbered high-quality liquid assets of $18.5 billion, and unused FHLB capacity of $6.5 billion. Asset liquidity (a component of contingent liquidity) was $21.8 billion consisting of our net overnight position of $3.3 billion and unencumbered high-quality and liquid securities of $18.5 billion; and

• Available discount window capacity, defined as available total borrowing capacity from the FRB based on identified collateral, is secured by non-mortgage commercial and retail loans and totaled $12.5 billion. Use of this borrowing capacity would likely be considered only during exigent circumstances.

The Funding and Liquidity Unit monitors a variety of liquidity and funding metrics and early warning indicators and metrics, including specific risk thresholds limits. These monitoring tools are broadly classified as follows:

• Current liquidity sources and capacities, including excess cash at the FRBs, free and liquid securities and available and secured FHLB borrowing capacity;

• Liquidity stress sources, including idiosyncratic, systemic and combined stresses, in addition to evolving regulatory requirements such as the LCR and the NSFR; and

• Current and prospective exposures, including secured and unsecured wholesale funding and spot and cumulative cash-flow gaps across a variety of horizons.

Further, certain of these metrics are monitored for each of us, our banking subsidiaries, and for our consolidated enterprise on a daily basis, including net overnight position, unencumbered securities, internal liquidity, and available FHLB borrowing capacity. In order to identify emerging trends and risks and inform funding decisions, specific metrics are also forecasted over a one-year horizon.

Money-fund reform and other factors have incrementally increased borrowing rates for short-term and unsecured bank liabilities. However, our utilization of unsecured and short-term wholesale funding continues to be de minimis, given our significant portfolio of high quality liquid assets, our access to alternative funding sources including the FHLBs and the long-term capital markets, and our strong franchise deposit base.

Cash flows from operating activities contributed $537 million in first half 2017, driven by net income of $638 million and a net decrease in loans held for sale activity of $95 million. Net cash used by investing activities was $1.9 billion, primarily reflecting purchases in securities available for sale portfolio purchases of $2.3 billion and

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a net increase in loans and leases of $1.8 billion, partially offset by proceeds from maturities, paydowns and sales of securities available for sale of $2.1 billion. Cash provided by financing activities was $1.8 billion, driven by proceeds from issuance of long-term borrowed funds of $10.1 billion and a net increase in deposits of $3.8 billion, partially offset by a net decrease in other short-term borrowed funds of $1.2 billion, and repayments of long-term FHLB advances of $9.8 billion. The $10.1 billion proceeds included $2.5 billion from issuances of medium-term debt and $7.6 billion in FHLB advances. These activities represented a cumulative increase in cash and cash equivalents of $463 million, which, when added to the cash and cash equivalents balance of $3.7 billion at the beginning of the year, resulted in an ending balance of cash and cash equivalents of $4.2 billion as of June 30, 2017.

Cash flows from operating activities contributed $704 million in first half 2016. Net cash used by investing activities was $5.6 billion, primarily reflecting a net increase in loans and leases of $5.0 billion and securities available for sale portfolio purchases of $2.4 billion, partially offset by proceeds from maturities, paydowns and sales of securities available for sale of $2.0 billion. Cash provided by financing activities was $5.5 billion, driven by net increase in deposits of $3.7 billion, and proceeds from issuance of long-term borrowed funds of $7.0 billion, partially offset by a net decrease in other short-term borrowed funds of $1.4 billion, and repayments of long-term borrowed funds of $3.6 billion. The $7.0 billion proceeds included $1.7 billion from issuances of medium term debt and $5.3 billion in FHLB advances. The $3.6 billion of repayments includes $3.5 billion repayments of FHLB advances and $125 million paid to repurchase subordinated debt. These activities represented a cumulative increase in cash and cash equivalents of $570 million, which, when added to the cash and cash equivalents balance of $3.1 billion at the beginning of the year, resulted in an ending balance of cash and cash equivalents of $3.7 billion as of June 30, 2016.

OFF-BALANCE SHEET ARRANGEMENTS

The following table presents our outstanding off-balance sheet arrangements. See Note 11 “Commitments and Contingencies” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included in this report.

(in millions)	June 30, 2017		December 31, 2016		Change			Percent
Undrawn commitments to extend credit		$61,988		$60,872		$1,116		2	%
Financial standby letters of credit	2,053		1,892		161			9
Performance letters of credit	41		40		1			3
Commercial letters of credit	66		43		23			53
Marketing rights	42		44		(2		)	(5	)
Risk participation agreements	22		19		3			16
Residential mortgage loans sold with recourse	8		8		—			—
Total		$64,220		$62,918		$1,302		2	%

In first quarter 2017, we entered into an agreement to purchase education loans on a quarterly basis beginning with the first quarter 2017 and ending with the fourth quarter 2017. The total minimum and maximum amount for 2017 of the aggregate purchase principal balance of loans under the terms of the agreement are $750 million and $1.5 billion, respectively, and we have a remaining maximum purchase commitment of $750 million. The agreement may be extended by written agreement of the parties for an additional four quarters. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. We may also terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of quarters remaining under the agreement.

In April 2017, we terminated our May 2014 agreement to purchase automobile loans after satisfying our final purchase commitment.

CRITICAL ACCOUNTING ESTIMATES

Our unaudited interim Consolidated Financial Statements, which are included in this report, are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our audited Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on our unaudited interim Consolidated Financial Statements. Estimates are made using facts and circumstances known at a point in time. Changes in those facts and circumstances could produce results substantially

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different from those estimates. Our most significant accounting policies and estimates are related to ALLL, fair value, goodwill, and income taxes. For additional information regarding these accounting policies and estimates and their related application, see “—Critical Accounting Estimates” to the audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016. No material changes were made to these valuation techniques or models during the six months ended June 30, 2017.

RISK GOVERNANCE

We are committed to maintaining a strong, integrated and proactive approach to the management of all risks to which we are exposed in pursuit of our business objectives. A key aspect of our Board’s responsibility as the main decision making body is setting our risk appetite to ensure that the levels of risk that we are willing to accept in the attainment of our strategic business and financial objectives are clearly understood.

To enable our Board to carry out its objectives, it has delegated authority for risk management activities, as well as governance and oversight of those activities, to a number of Board and executive management level risk committees. The Executive Risk Committee (“ERC”), chaired by the Chief Risk Officer, is responsible for oversight of risk across the enterprise and actively considers our inherent material risks, analyzes our overall risk profile and seeks confirmation that the risks are being appropriately identified, assessed and mitigated. Reporting to the ERC are the following additional committees, covering specific areas of risk: Compliance and Operational Risk Committee, Model Risk Committee, Credit Policy Committee, Asset/Liability Committee, Business Initiatives Review Committee, and the Ethics Oversight Committee.

Risk Framework

Our risk management framework is embedded in our business through a “Three Lines of Defense” model which defines responsibilities and accountabilities for risk management activities.

First Line of Defense

The business lines (including their associated support functions) are the first line of defense and are accountable for identifying, assessing, managing, and controlling the risks associated with the products and services they provide. The business lines are responsible for performing regular risk assessments to identify and assess the material risks that arise in their area of responsibility, complying with relevant risk policies, testing and certifying the adequacy and effectiveness of their operational and financial reporting controls on a regular basis, establishing and documenting operating procedures and establishing and owning a governance structure for identifying and managing risk.

Second Line of Defense

The second line of defense includes independent monitoring and control functions accountable for developing and ensuring implementation of risk and control frameworks and related policies. This centralized risk function is appropriately independent from the business and is accountable for overseeing and challenging our business lines on the effective management of their risks, including credit, market, operational, regulatory, reputational, interest rate, liquidity and strategic risks.

Third Line of Defense

Our Internal Audit function is the third line of defense providing independent assurance with a view of the effectiveness of Citizens’ internal controls, governance practices, and culture so that risk is managed appropriately for the size, complexity, and risk profile of the organization. Internal Audit has complete and unrestricted access to any and all Bank records, physical properties, and personnel. Internal Audit issues a report following each internal review and provides an audit opinion to Citizens’ Audit Committee on a quarterly basis.

Credit Quality Assurance also reports to the Chief Audit Executive and also provides the legal-entity boards, senior management and other stakeholders with independent assurance on the quality of credit portfolios and adherence to agreed Credit Risk Appetite and Credit Policies and processes. In line with its procedures and regulatory expectations, the Credit Quality Assurance function undertakes a program of portfolio testing, assessing and reporting through four Risk Pillars of Asset Quality, Rating and Data Integrity, Risk Management and Credit Risk Appetite.

Risk Appetite

Risk appetite is a strategic business and risk management tool. We define our risk appetite as the maximum limit of acceptable risk beyond which we could be unable to achieve our strategic objectives and capital adequacy obligations.

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Our principal non-market risks include: credit, operational, regulatory, reputational, liquidity, and strategic risks. We are also subject to certain market risks which include potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or prices. Market risk in our business arises from trading activities that serve customer needs, including hedging of interest rate, foreign exchange risk and non-trading activities within capital markets. We have established enterprise-wide policies and methodologies to identify, measure, monitor and report on market risk. We actively manage both trading and non-trading market risks. See “—Market Risk” for further information. Our risk appetite is reviewed and approved by the Board Risk Committee.

Credit Risk

Overview

Credit risk represents the potential for loss arising from a customer, counterparty, or issuer failing to perform in accordance with the contractual terms of the obligation. While the majority of our credit risk is associated with lending activities, we do engage with other financial counterparties for a variety of purposes including investing, asset and liability management, and trading activities. Given the financial impact of credit risk on our earnings and balance sheet, the assessment, approval, and management of credit risk represents a major part of our overall risk-management responsibility.

Objective

The independent Credit Risk Function is responsible for reviewing and approving credit risk appetite across all lines of business and credit products, approving larger and higher risk credit transactions, monitoring portfolio performance, identifying problem credit exposures, and ensuring remedial management.

Organizational Structure

Management and oversight of credit risk is the responsibility of both the line of business and the second line of defense. The second line of defense, the independent Credit Risk Function, is led by the Chief Credit Officer who oversees all of our credit risk. The CCO reports to the Chief Risk Officer. The CCO, acting in a manner consistent with Board policies, has responsibility for, among other things, the governance process around policies, procedures, risk acceptance criteria, credit risk appetite, limits, and authority delegation. The CCO and his team also have responsibility for credit approvals for larger and higher risk transactions and oversight of line of business credit risk activities. Reporting to the CCO are the heads of the second line of defense credit functions specializing in: Consumer Banking; Commercial Banking; Citizens Restructuring Management; Portfolio and Corporate Reporting; ALLL Analytics; and Credit Policy and Administration. Each team under these leaders is composed of highly experienced credit professionals.

Governance

The primary mechanisms used to govern our credit risk function are our consumer and commercial credit policies. These policies outline the minimum acceptable lending standards that align with our desired risk appetite. Material changes in our business model and strategies that identify a need to change our risk appetite or highlight a risk not previously contemplated are identified by the individual committees and presented to the Credit Policy Committee, Executive Risk Committee and the Board Risk Committee for approval, as appropriate.

Key Management Processes

We employ a comprehensive and integrated risk control program to proactively (1) identify, (2) measure, (3) monitor, and (4) mitigate existing and emerging credit risks across the credit lifecycle (origination, account management/portfolio management, and loss mitigation and recovery).

Consumer

On the consumer banking side of credit risk, our teams use models to evaluate consumer loans across the lifecycle of the loan. Starting at origination, credit scoring models are used to forecast the probability of default of an applicant. When approving customers for a new loan or extension of an existing credit line, credit scores are used in conjunction with other credit risk variables such as affordability, length of term, collateral value, collateral type, and lien subordination.

To ensure proper oversight of the underwriting teams, lending authority is granted by the second line of defense credit risk function to each underwriter. The amount of delegated authority depends on the experience of

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the individual. We periodically evaluate the performance of each underwriter and annually reauthorize their delegated authority. Only senior members of the second line of defense credit risk team are authorized to approve significant exceptions to credit policies. It is not uncommon to make exceptions to established policies when compensating factors are present. There are exception limits which, when reached, trigger a comprehensive analysis.

Once an account is established, credit scores and collateral values are refreshed at regular intervals to allow for proactive identification of increasing or decreasing levels of credit risk. Our approach to managing credit risk is highly analytical and, where appropriate, is automated, to ensure consistency and efficiency.

Commercial

On the commercial banking side of credit risk, the structure is broken into C&I loans and leases and CRE. Within C&I loans and leases there are separate verticals established for certain specialty products (e.g., asset-based lending, leasing, franchise finance, health care and technology, mid-corporate). A “specialty vertical” is a stand-alone team of industry or product specialists. Substantially all activity that falls under the ambit of the defined industry or product is managed through a specialty vertical when one exists. CRE also operates as a specialty vertical.

Commercial credit risk management begins with defined credit products and policies.

Commercial transactions are subject to individual analysis and approval at origination and, with few exceptions, are subject to a formal annual review requirement. The underwriting process includes the establishment and approval of credit grades that confirm the PD and LGD. Approval then requires both a business line approver and an independent credit approver with the requisite level of delegated authority. The approval level of a particular credit facility is determined by the size of the credit relationship as well as the PD. The checks and balances in the credit process and the independence of the credit approver function are designed to appropriately assess and sanction the level of credit risk being accepted, facilitate the early recognition of credit problems when they occur, and to provide for effective problem asset management and resolution. All authority to grant credit is delegated through the independent Credit Risk function and is closely monitored and regularly updated.

The primary factors considered in commercial credit approvals are the financial strength of the borrower, assessment of the borrower’s management capabilities, cash flows from operations, industry sector trends, type and sufficiency of collateral, type of exposure, transaction structure, and the general economic outlook. While these are the primary factors considered, there are a number of other factors that may be considered in the decision process. In addition to the credit analysis conducted during the approval process at origination and annual review, our Credit Quality Assurance group performs testing to provide an independent review and assessment of the quality of the portfolio and new originations. This group conducts portfolio reviews on a risk-based cycle to evaluate individual loans and validate risk ratings, as well as test the consistency of the credit processes and the effectiveness of credit risk management.

The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based on the perceived risk of each borrower or related group of borrowers. Concentration risk is managed through limits on industry asset class and loan quality factors. We focus predominantly on extending credit to commercial customers with existing or expandable relationships within our primary markets (for this purpose defined as our 11 state footprint plus contiguous states), although we do engage in lending opportunities outside our primary markets if we believe that the associated risks are acceptable and aligned with strategic initiatives.

Substantially all loans categorized as Classified are managed by a specialized group of credit professionals.

MARKET RISK

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or prices. Modest market risk arises from trading activities that serve customer needs, including hedging of interest rate and foreign exchange risk. As described below, more material market risk arises from our non-trading banking activities, such as loan origination and deposit-gathering. We have established enterprise-wide policies and methodologies to identify, measure, monitor and report market risk. We actively manage both trading and non-trading market risks.

Non-Trading Risk

We are exposed to market risk as a result of non-trading banking activities. This market risk is substantially composed of interest rate risk, as we have no direct currency or commodity risk and de minimis equity risk. We also have market risk related to capital markets loan originations, as well as the valuation of our mortgage servicing rights.

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Interest Rate Risk

Interest rate risk emerges from the balance sheet after the aggregation of our assets, liabilities and equity. We refer to this non-trading risk embedded in the balance sheet as “structural interest rate risk” or “interest rate risk in the banking book.” Our mortgage servicing rights assets also contain interest rate risk as the value of the fee stream is impacted by the level of long-term interest rates.

A major source of structural interest rate risk is a difference in the repricing of assets, on the one hand, and liabilities and equity, on the other. First, there are differences in the timing and drivers of rate changes reflecting the maturity and/or repricing of assets and liabilities. For example, the rate earned on a commercial loan may reprice monthly with changes in LIBOR while the rate paid on debt or certificates of deposit may be fixed for a longer period. There are differences in the drivers of rate changes as well. Loans may be tied to a specific index rate such as LIBOR or Prime, while deposits may be only loosely correlated with LIBOR and depend on competitive demand. Due to these basis differences, net interest income is sensitive to changes in spreads between certain indices or repricing rates.

Another important source of structural interest rate risk relates to the potential exercise of explicit or embedded options. For example, most consumer loans can be prepaid without penalty; and most consumer deposits can be withdrawn without penalty. The exercise of such options by customers can exacerbate the timing differences discussed above.

A primary source of our structural interest rate risk relates to faster repricing of floating rate loans relative to the retail deposit funding. This source of asset sensitivity is now fairly evenly split between the short and long ends of the yield curve. For the past eight years with the Federal Funds rate near zero, this risk had been asymmetrical with significantly more upside benefit than potential exposure. As interest rates have begun to rise, the risk position has become more symmetrical as rates can decline further before becoming floored at zero.

The secondary source of our interest rate risk is driven by longer term rates comprising the rollover or reinvestment risk on fixed rate loans as well as the prepayment risk on mortgage related loans and securities funded by non-rate sensitive deposits and equity.

The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board. These limits and guidelines reflect our tolerance for interest rate risk over both short-term and long-term horizons. To ensure that exposure to interest rate risk is managed within this risk appetite, we must both measure the exposure and, as necessary, hedge it. The Treasury Asset and Liability Management team is responsible for measuring, monitoring and reporting on the structural interest rate risk position. These exposures are reported on a monthly basis to the Asset and Liability Committee (“ALCO”) and at Board meetings.

We measure structural interest rate risk through a variety of metrics intended to quantify both short-term and long-term exposures. The primary method that we use to quantify interest rate risk is simulation analysis in which we model net interest income from assets, liabilities and hedge derivative positions under various interest rate scenarios over a three-year horizon. Exposure to interest rate risk is reflected in the variation of forecasted net interest income across scenarios.

Key assumptions in this simulation analysis relate to the behavior of interest rates and spreads, the changes in product balances and the behavior of loan and deposit clients in different rate environments. The most material of these behavioral assumptions relate to the repricing characteristics and balance fluctuations of deposits with indeterminate (i.e., non-contractual) maturities as well as the pace of mortgage prepayments. Assessments are periodically made by running sensitivity analysis of the impact of key assumptions. The results of these analyses are reported to ALCO.

As the future path of interest rates cannot be known in advance, we use simulation analysis to project net interest income under various interest rate scenarios including a “most likely” (implied forward) scenario as well as a variety of deliberately extreme and perhaps unlikely scenarios. These scenarios may assume gradual ramping of the overall level of interest rates, immediate shocks to the level of rates and various yield curve twists in which movements in short- or long-term rates predominate. Generally, projected net interest income in any interest rate scenario is compared to net interest income in a base case where market forward rates are realized.

The table below reports net interest income exposures against a variety of interest rate scenarios. Exposures are measured as a percentage change in net interest income over the next year due to either instantaneous or gradual parallel +/- 200 basis point moves in the market implied forward yield curve. The net interest income simulation analyses do not include possible future actions that management might undertake to mitigate this risk. The current limit is a decrease in net interest income of 13% related to an instantaneous +/- 200 basis point move.

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This limit was increased from -10.0% in March 2017. With rates rising from historically low levels due to FRB rate increases in December 2016 and March 2017, exposure to falling rates has increased. As the following table illustrates, our balance sheet is asset-sensitive: net interest income would benefit from an increase in interest rates. Exposure to a decline in interest rates is within limit. While an instantaneous and severe shift in interest rates was used in this analysis, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact as demonstrated in the following table.

The table below presents the sensitivity of net interest income to various parallel yield curve shifts from the market implied forward yield curve:

	Estimated % Change in Net Interest Income over 12 Months
Basis points	June 30, 2017		December 31, 2016
Instantaneous Change in Interest Rates
+200	10.4	%	11.3	%
+100	5.3		5.6
-100	(8.0	)	(6.9	)
-200	(11.8	)	(9.8	)
Gradual Change in Interest Rates
+200	5.5		5.9
+100	2.9		3.1
-100	(2.9	)	(3.0	)
-200	(7.3	)	(6.2	)

Asset sensitivity against a 200 basis point gradual increase in rates was5.5%atJune 30, 2017, a decline from 5.9% at December 31, 2016. The core asset sensitivity is the result of a faster repricing of the loan book relative to the deposit and equity funding.Economic growth over the past several years has led to a much improved labor market and the Fed has begun to slowly normalize interest rates. This upward trend in rates has benefited our net interest income and net interest margin as a result of the asset sensitivity. The risk position can be affected by changes in interest rates which impact the repricing sensitivity or beta of the deposit base as well as the cash flows on prepayable assets. The risk position is managed within our risk limits through occasional adjustments to securities investments, interest rate swaps and mix of funding.

We use a valuation measure of exposure to structural interest rate risk, Economic Value of Equity (“EVE”), as a supplement to net interest income simulations. EVE complements net interest income simulation analysis as it estimates risk exposure over a long-term horizon. EVE measures the extent to which the economic value of assets, liabilities and off-balance sheet instruments may change in response to fluctuation in interest rates. This analysis is highly dependent upon assumptions applied to assets and liabilities with non-contractual maturities. The change in value is expressed as a percentage of regulatory capital. The current risk limit is set at a decrease of 20% of regulatory capital given an instantaneous +/- 200 basis point change in interest rates. We are operating within that limit as of June 30, 2017.

Capital Markets

A key component of our capital markets activities is the underwriting and distribution of corporate credit facilities to partially finance mergers and acquisitions transactions for our clients.  We have a rigorous risk management process around these activities, including a limit structure capping our underwriting risk, our potential loss, and sub limits for specific asset classes.  Further, the ability to approve underwriting exposure is delegated only to senior level individuals in the credit risk management and capital markets organizations with each transaction adjudicated in a formal committee meeting.

Mortgage Servicing Rights

We have market risk associated with the value of the mortgage servicing right assets, which are impacted by the level of interest rates. As of June 30, 2017 and December 31, 2016, our mortgage servicing rights had a book value of $166 million and $162 million, respectively, and were carried at the lower of cost or fair value. As of June 30, 2017 and December 31, 2016, the fair value of the mortgage servicing rights was $184 million and $182 million, respectively. Depending on the interest rate environment, hedges may be used to stabilize the market value of the mortgage servicing right asset.

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Trading Risk

We are exposed to market risk primarily through client facilitation activities including derivatives and foreign exchange products as well as underwriting and market making activities. Exposure is created as a result of changes in interest rates and related basis spreads and volatility, foreign exchange rates, and credit spreads on a select range of interest rates, foreign exchange and secondary loan instruments. These trading activities are conducted through our two banking subsidiaries, CBNA and CBPA.

Client facilitation activities consist primarily of interest rate derivatives and foreign exchange contracts where we enter into offsetting trades with a separate counterparty or exchange to manage our market risk exposure. In addition to the aforementioned activities, we operate a secondary loan trading desk with the objective to meet secondary liquidity needs of our issuing clients’ transactions and investor clients. We do not engage in any trading activities with the intent to benefit from short term price differences.

We record interest rate derivatives and foreign exchange contracts as derivative assets and liabilities on our Consolidated Balance Sheets. Trading assets and liabilities are carried at fair value with income earned related to these activities included in net interest income. Changes in fair value of trading assets and liabilities are reflected in other income, a component of noninterest income on the unaudited interim Consolidated Statements of Operations.

Market Risk Governance

The market risk limit setting process is established in line with the formal enterprise risk appetite process and policy. This appetite reflects the strategic and enterprise level articulation of opportunities for creating franchise value set to the boundaries of how much market risk to take. Dealing authorities represent the key control tool in the management of market risk that allows the cascading of the risk appetite throughout the enterprise. A dealing authority sets the operational scope and tolerances within which a business and/or trading desk is permitted to operate and this is reviewed at least annually. Dealing authorities are structured to accommodate the client facing trades and hedges needed to manage the risk profile. Primary responsibility for keeping within established tolerances resides with the business. Key risk indicators, including VaR, open foreign currency positions, and single name risk, are monitored on a daily basis and reported against tolerances consistent with our risk appetite and business strategy to relevant business line management and risk counterparts.

Market Risk Measurement

We use VaR as a statistical measure for estimating potential exposure of our traded market risk in normal market conditions. Our VaR framework for risk management and regulatory reporting is the same. Risk management VaR is based on a one day holding period to a 99% confidence level, whereas regulatory VaR is based on a ten day holding period to the same confidence level. Additional to VaR, non-statistical measurements for measuring risk are employed, such as sensitivity analysis, market value and stress testing.

Our market risk platform and associated market risk and valuation models for our foreign exchange, interest rate products, and traded loans capture correlation effects and allow for aggregation of market risk across risk types, business lines and legal entities. We measure, monitor and report market risk for both management and regulatory capital purposes.

Value-at-Risk Overview

    The market risk measurement model is based on historical simulation. The VaR measure estimates the extent of any fair value losses on trading positions that may occur due to broad market movements (General VaR) such as changes in the level of interest rates, foreign exchange rates, equity prices and commodity prices. It is calculated on the basis that current positions remain broadly unaltered over the course of a given holding period. It is assumed that markets are sufficiently liquid to allow the business to close its positions, if required, within this holding period. VaR’s benefit is that it captures the historic correlations of a portfolio. Based on the composition of our “covered positions,” we also use a standardized add-on approach for the loan trading desk’s Specific Risk capital which estimates the extent of any losses that may occur from factors other than broad market movements. During the quarter ending March 31, 2017, we integrated our secondary traded loans into our enterprise wide market risk platform for the calculation of VaR on the general interest rate risk embedded within the traded loans. And thus retired the associated standalone model that replicated the general VaR methodology on the traded loans (the related capital was historically reflected on the “de minimis” line in the following section in prior quarters). The measured VaR on the trading portfolio is now comprised of three covered position sub-portfolios (interest rate derivatives, foreign exchange, and traded loans). The General VaR approach is expressed in terms of a confidence level over the past 500 trading days. The internal VaR measure (used as the basis of the main VaR trading limits) is

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a 99% confidence level with a one day holding period, meaning that a loss greater than the VaR is expected to occur, on average, on only one day in 100 trading days (i.e., 1% of the time). Theoretically, there should be a loss event greater than VaR two to three times per year. The regulatory measure of VaR is done at a 99% confidence level with a ten-day holding period. The historical market data applied to calculate the VaR is updated on a ten business day lag. Refer to “Market Risk Regulatory Capital” below for details of our ten-day VaR metrics for the quarters ended June 30, 2017 and 2016, including high, low, average and period end Value-at-Risk for interest rate and foreign exchange rate risks, as well as total VaR.

Market Risk Regulatory Capital

The U.S. banking regulators’ “Market Risk Rule” covers the calculation of market risk capital. The Market Risk Rule, commonly known as Basel 2.5, substantially modified the determination of market risk-weighted assets and implemented a more risk sensitive methodology for the risk inherent in certain trading positions categorized as “covered positions.” For the purposes of the Market Risk Rule, all of our client facing trades and associated hedges need to maintain a low risk profile to qualify, and do qualify, as “covered positions.” For the three months ended June 30, 2017, Citizens was not subject to the reporting threshold under the Market Risk Rule, as we did not meet the applicability threshold due to recent rule changes regarding recognition of variation margin, and as such, our covered trading activities were risk-weighted under U.S. Basel III Standardized credit risk rules. While not subject to the determination requirements of market risk-weighted assets, we nevertheless comply with the Market Risk Rule’s other requirements. The internal management VaR measure is calculated based on the same population of trades that is utilized for regulatory VaR. The following table presents, for information and comparison purposes, the results of our modeled and non-modeled measures for regulatory capital calculations as if we had met the threshold under the Market Risk Rule for both periods presented:

(in millions)	For the Three Months Ended June 30, 2017								For the Three Months Ended June 30, 2016
Market Risk Category	Period End		Average		High		Low		Period End		Average		High		Low
Interest Rate		$1		$1		$2		$—		$—		$—		$1		$—
Foreign Exchange Currency Rate	—		—		—		—		—		—		1		—
Credit Spread	3		2		3		2		—		—		—		—
General VaR	3		3		4		2		—		1		1		—
Specific Risk VaR	—		—		—		—		—		—		—		—
Total VaR		$3		$3		$4		$2		$—		$—		$—		$—
Stressed General VaR		$11		$9		$11		$8		$1		$1		$3		$1
Stressed Specific Risk VaR	—		—		—		—		—		—		—		—
Total Stressed VaR		$11		$9		$11		$8		$1		$1		$3		$1
Market Risk Regulatory Capital		$35								$7
Specific Risk Not Modeled Add-on	11								6
de Minimis Exposure Add-on	2								14
Total Market Risk Regulatory Capital		$48								$27
Market Risk-Weighted Assets (calculated)		$596								$336
Market Risk-Weighted Assets (included in regulatory filing) (1)		$—								$336

 ⁽¹⁾ For the three months ended June 30, 2017, we did not meet the reporting threshold prescribed by Market Risk Capital Guidelines.

Stressed VaR

SVaR is an extension of VaR, but uses a longer historical look-back horizon that is fixed from January 3, 2005. This is done not only to identify headline risks from more volatile periods, but also to provide a counter-balance to VaR which may be low during periods of low volatility. The holding period for profit and loss determination is ten days. In addition to risk management purposes, SVaR is also a component of market risk regulatory capital. We calculate SVaR daily under its own dynamic window regime. In a dynamic window regime, values of the ten-day, 99% VaR are calculated over all possible 260-day periods that can be obtained from the complete historical data set. Refer to “Market Risk Regulatory Capital” above for details of SVaR metrics, including high, low, average and period end SVaR for the combined portfolio.

Sensitivity Analysis

Sensitivity analysis is the measure of exposure to a single risk factor, such as a one basis point change in rates or credit spread. We conduct and monitor sensitivity on interest rates, basis spreads, foreign exchange

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

exposures, option prices, and credit spreads. Whereas VaR is based on previous moves in market risk factors over recent periods, it may not be an accurate predictor of future market moves. Sensitivity analysis complements VaR, as it provides an indication of risk relative to each factor irrespective of historical market moves, and is an effective tool in evaluating the appropriateness of hedging strategies and concentrations.

Stress Testing

Conducting a stress test of a portfolio consists of running risk models with the inclusion of key variables that simulate various historical or hypothetical scenarios. For historical stress tests, profit and loss results are simulated for selected time periods corresponding to the most volatile underlying returns while hypothetical stress tests aim to consider concentration risk, illiquidity under stressed market conditions and risk arising from our trading activities that may not be fully captured by our other models. Hypothetical scenarios also assume that market moves happen simultaneously and no repositioning or hedging activity takes place to mitigate losses as events unfold. We generate stress tests of our trading positions on a daily basis. For example, we currently include a stress test that simulates a “Lehman-type” crisis scenario by taking the worst 20-trading day peak to trough moves for the various risk factors that go into VaR from that period, and assumes they occurred simultaneously.

VaR Model Review and Validation

Market risk measurement models used are independently reviewed and subject to ongoing performance analysis by the model owner. The independent review and validation focuses on the model methodology, market data, and performance. Independent review of market risk measurement models is the responsibility of Citizens’ Model Risk Management and Validation team. Aspects covered include challenging the assumptions used, the quantitative techniques employed and the theoretical justification underpinning them, and an assessment of the soundness of the required data over time. Where possible, the quantitative impact of the major underlying modeling assumptions will be estimated (e.g., through developing alternative models). Results of such reviews are shared with the U.S. banking regulators. The market risk models may be periodically enhanced due to changes in market price levels and price action regime behavior. The Market Risk Management and Validation team will conduct internal validation before a new or changed model element is implemented and before a change is made to a market data mapping.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

VaR Backtesting

Backtesting is one form of validation of the VaR model and is run daily. The Market Risk Rule requires a comparison of our internal VaR measure to the actual net trading revenue (excluding fees, commissions, reserves, intra-day trading and net interest income) for each day over the preceding year (the most recent 250 business days). Any observed loss in excess of the VaR number is taken as an exception. The level of exceptions determines the multiplication factor used to derive the VaR and SVaR-based capital requirement for regulatory reporting purposes, when applicable. We perform sub-portfolio backtesting as required under the Market Risk Rule, and as approved by our banking regulators, for interest rate, credit spread, and foreign exchange positions. The following graph shows our daily net trading revenue and total internal, modeled VaR for the quarters ended June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016.

Daily VaR Backtesting

Note: As mentioned in the above “Value-at-Risk Overview” section, we migrated our secondary loan trading activities from our stand alone model to our enterprise market risk platform in first quarter 2017. The above back-testing graph reflects the impact of said inclusion and daily oscillations of the market making traded loan inventory.

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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 1. FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016 (unaudited)	64
Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016	65
Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2017 and 2016	66
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Six Months Ended June 30, 2017 and 2016	67
Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2017 and 2016	68
Notes to Consolidated Financial Statements (unaudited)	69
Note 1 - Basis of Presentation	69
Note 2 - Securities	71
Note 3 - Loans and Leases	75
Note 4 - Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk	76
Note 5 - Variable Interest Entities	88
Note 6 - Mortgage Banking	89
Note 7 - Borrowed Funds	91
Note 8 - Stockholders’ Equity	93
Note 9 - Income Taxes	93
Note 10 - Derivatives	94
Note 11 - Commitments and Contingencies	97
Note 12 - Fair Value Measurements	99
Note 13 - Regulatory Matters	107
Note 14 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss)	108
Note 15 - Business Segments	109
Note 16 - Earnings Per Share	112
Note 17 - Other Income	112
Note 18 - Other Operating Expense	113
Note 19 - Subsequent Events	113

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CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data)	June 30, 2017			December 31, 2016
ASSETS:
Cash and due from banks		$904			$955
Interest-bearing cash and due from banks	3,263			2,749
Interest-bearing deposits in banks	433			439
Securities available for sale, at fair value (including $100 and $256 pledged to creditors, respectively) (a)	19,257			19,501
Securities held to maturity (including fair value of $4,986 and $5,058, respectively)	4,967			5,071
Other investment securities, at fair value	97			96
Other investment securities, at cost	794			942
Loans held for sale, at fair value	520			583
Other loans held for sale	187			42
Loans and leases	109,046			107,669
Less: Allowance for loan and lease losses	(1,219		)	(1,236		)
Net loans and leases	107,827			106,433
Derivative assets	408			627
Premises and equipment, net	600			601
Bank-owned life insurance	1,636			1,612
Goodwill	6,887			6,876
Due from broker	530			—
Other assets	3,097			2,993
TOTAL ASSETS		$151,407			$149,520
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing		$27,814			$28,472
Interest-bearing	85,799			81,332
Total deposits	113,613			109,804
Federal funds purchased and securities sold under agreements to repurchase	429			1,148
Other short-term borrowed funds	2,004			3,211
Derivative liabilities	159			659
Deferred taxes, net	740			714
Long-term borrowed funds	13,154			12,790
Other liabilities	1,244			1,447
TOTAL LIABILITIES		$131,343			$129,773
Contingencies (refer to Note 11)
STOCKHOLDERS’ EQUITY:
Preferred stock, $25.00 par value, authorized 100,000,000 shares:
Series A, non-cumulative perpetual, $25 par value,(liquidation preference $1,000), 250,000 shares authorized and issued net of issuance costs and related premium at June 30, 2017 and December 31, 2016		$247			$247
Common stock:
$0.01 par value, 1,000,000,000 shares authorized, 565,684,331 shares issued and 505,880,851 shares outstanding at June 30, 2017 and 1,000,000,000 shares authorized, 564,630,542 shares issued and 511,954,871 shares outstanding at December 31, 2016	6			6
Additional paid-in capital	18,761			18,722
Retained earnings	3,191			2,703
Treasury stock, at cost, 59,803,480 and 52,675,671 shares at June 30, 2017 and December 31, 2016, respectively	(1,548		)	(1,263		)
Accumulated other comprehensive loss	(593		)	(668		)
TOTAL STOCKHOLDERS’ EQUITY		$20,064			$19,747
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$151,407			$149,520

^(a) Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

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CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except share and per-share data)	2017			2016			2017			2016
INTEREST INCOME:
Interest and fees on loans and leases		$1,040			$896			$2,032			$1,764
Interest and fees on loans held for sale, at fair value	4			3			8			6
Interest and fees on other loans held for sale	2			4			3			5
Investment securities	154			141			314			286
Interest-bearing deposits in banks	5			2			8			4
Total interest income	1,205			1,046			2,365			2,065
INTEREST EXPENSE:
Deposits	102			63			188			123
Federal funds purchased and securities sold under agreements to repurchase	—			—			1			1
Other short-term borrowed funds	7			12			15			23
Long-term borrowed funds	70			48			130			91
Total interest expense	179			123			334			238
Net interest income	1,026			923			2,031			1,827
Provision for credit losses	70			90			166			181
Net interest income after provision for credit losses	956			833			1,865			1,646
NONINTEREST INCOME:
Service charges and fees	129			130			254			256
Card fees	59			51			119			101
Capital markets fees	51			38			99			63
Trust and investment services fees	39			38			78			75
Letter of credit and loan fees	31			28			60			55
Foreign exchange and interest rate products	26			26			53			44
Mortgage banking fees	30			25			53			43
Securities gains, net	3			4			7			13
Net securities impairment losses recognized in earnings	(4		)	(7		)	(5		)	(8		)
Other income	6			22			31			43
Total noninterest income	370			355			749			685
NONINTEREST EXPENSE:
Salaries and employee benefits	432			432			876			857
Outside services	96			86			187			177
Occupancy	79			76			161			152
Equipment expense	64			64			131			129
Amortization of software	45			41			89			80
Other operating expense	148			128			274			243
Total noninterest expense	864			827			1,718			1,638
Income before income tax expense	462			361			896			693
Income tax expense	144			118			258			227
NET INCOME		$318			$243			$638			$466
Net income available to common stockholders	$318			$243			$631				$459
Weighted-average common shares outstanding:
Basic	506,371,846			528,968,330			507,903,141			528,519,489
Diluted	507,414,122			530,365,203			509,362,055			530,396,871
Per common share information:
Basic earnings		$0.63			$0.46			$1.24			$0.87
Diluted earnings	0.63			0.46			1.24			0.87
Dividends declared and paid	0.14			0.12			0.28			0.22

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

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CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Net income		$318			$243			$638			$466
Other comprehensive income:
Net unrealized derivative instrument gains arising during the periods, net of income tax expense of $16, $8, $14 and $29, respectively	26			13			23			46
Reclassification adjustment for net derivative gains included in net income, net of income taxes of ($2), ($4), ($6) and ($10), respectively	(5		)	(9		)	(11		)	(17		)
Net unrealized securities gains arising during the periods, net of income taxes of $33, $39, $36 and $131, respectively	56			64			61			218
Other-than-temporary impairment not recognized in earnings on securities, net of income taxes of $6, $2, ($1) and ($13), respectively	10			4			(2		)	(21		)
Reclassification of net securities losses (gains) to net income, net of income taxes of $0, $1, ($1) and ($2), respectively	1			2			(1		)	(3		)
Employee Benefit Plans: Amortization of actuarial loss, net of income taxes of $2, $1, $4 and $3, respectively	2			3			5			5
Total other comprehensive income, net of income taxes	90			77			75			228
Total comprehensive income		$408			$320			$713			$694

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

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CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

	Preferred  Stock				Common  Stock				Additional Paid-in Capital		Retained Earnings			Treasury Stock, at Cost			Accumulated Other Comprehensive Income (Loss)			Total
(in millions)	Shares	Amount			Shares		Amount
Balance at January 1, 2016	—		$247		528			$6		$18,725		$1,913			($858	)		($387	)		$19,646
Dividends to common stockholders	—	—			—		—		—		(117		)	—			—			(117		)
Dividends to preferred stockholders	—	—		—	—		—		—		(7		)	—			—			(7		)
Share-based compensation plans	—	—			1		—		5		—			—			—			5
Employee stock purchase plan shares purchased	—	—			—		—		5		—			—			—			5
Total comprehensive income:
Net income	—	—			—		—		—		466			—			—			466
Other comprehensive income	—	—			—		—		—		—			—			228			228
Total comprehensive income	—	—			—		—		—		466			—			228			694
Balance at June 30, 2016	—		$247		529			$6		$18,735		$2,255			($858	)		($159	)		$20,226
Balance at January 1, 2017	—		$247		512			$6		$18,722		$2,703			($1,263	)		($668	)		$19,747
Dividends to common stockholders	—	—			—		—		—		(143		)	—			—			(143		)
Dividends to preferred stockholders	—	—			—		—		—		(7		)	—			—			(7		)
Treasury stock purchased	—	—			(7	)	—		25		—			(285		)	—			(260		)
Share-based compensation plans	—	—			1		—		8		—			—			—			8
Employee stock purchase plan shares purchased	—	—			—		—		6		—			—			—			6
Total comprehensive income:
Net income	—	—			—		—		—		638			—			—			638
Other comprehensive income	—	—			—		—		—		—			—			75			75
Total comprehensive income	—	—			—		—		—		638			—			75			713
Balance at June 30, 2017	—		$247		506			$6		$18,761		$3,191			($1,548	)		($593	)		$20,064

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

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CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(in millions)	2017			2016
OPERATING ACTIVITIES
Net income		$638			$466
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	166			181
Originations of mortgage loans held for sale	(1,394		)	(1,135		)
Proceeds from sales of mortgage loans held for sale	1,544			1,022
Purchases of commercial loans held for sale	(1,001		)	(735		)
Proceeds from sales of commercial loans held for sale	946			739
Amortization of terminated cash flow hedges, net	1			16
Depreciation, amortization and accretion	257			245
Mortgage servicing rights valuation (recovery) charge-off	(1		)	4
Securities impairment	5			8
Deferred income taxes	(20		)	94
Share-based compensation	27			11
Net gain on sales of:
Debt securities	(7		)	(13		)
Other investment securities	(1		)	—
Premises and equipment	—			(2		)
Decrease (increase) in other assets	32			(450		)
(Decrease) increase in other liabilities	(655		)	253
Net cash provided by operating activities	537			704
INVESTING ACTIVITIES
Investment securities:
Purchases of securities available for sale	(2,282		)	(2,355		)
Proceeds from maturities and paydowns of securities available for sale	1,670			1,611
Proceeds from sales of securities available for sale	407			375
Purchases of securities held to maturity	(171		)	—
Proceeds from maturities and paydowns of securities held to maturity	277			290
Purchases of other investment securities, at fair value	(174		)	(114		)
Proceeds from sales of other investment securities, at fair value	172			109
Purchases of other investment securities, at cost	(243		)	(62		)
Proceeds from sales of other investment securities, at cost	409			52
Net decrease (increase) in interest-bearing deposits in banks	6			(371		)
Net increase in loans and leases	(1,785		)	(5,045		)
Net increase in bank-owned life insurance	(24		)	(23		)
Premises and equipment:
Purchases	(64		)	(22		)
Proceeds from sales	—			3
Capitalization of software	(83		)	(85		)
Net cash used in investing activities	(1,885		)	(5,637		)
FINANCING ACTIVITIES
Net increase in deposits	3,809			3,718
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(719		)	(85		)
Net decrease in other short-term borrowed funds	(1,208		)	(1,370		)
Proceeds from issuance of long-term borrowed funds	10,109			6,995
Repayments of long-term borrowed funds	(9,751		)	(3,631		)
Treasury stock purchased	(260		)	—
Dividends declared and paid to common stockholders	(143		)	(117		)
Dividends declared and paid to preferred stockholders	(7		)	(7		)
Payments of employee tax withholding for share-based compensation	(19		)	—
Net cash provided by financing activities	1,811			5,503
Increase in cash and cash equivalents (a)	463			570
Cash and cash equivalents at beginning of period (a)	3,704			3,085
Cash and cash equivalents at end of period (a)		$4,167			$3,655

^(a) Cash and cash equivalents includes cash and due from banks and interest-bearing cash and due from banks as reflected on the Consolidated Balance Sheets.

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2016. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

The unaudited interim Consolidated Financial Statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. The Company has evaluated its unconsolidated entities and does not believe that any entity in which it has an interest, but does not currently consolidate, meets the requirements to be consolidated as a variable interest entity.

The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, evaluation and measurement of impairment of goodwill, evaluation of unrealized losses on securities for other-than-temporary impairment, accounting for income taxes, the valuation of AFS and HTM securities, and derivatives.

Certain prior period noninterest income amounts reported in the Consolidated Statement of Operations have been reclassified to conform to the current period presentation and student loans were renamed “education” loans to more closely align with the full range of services offered to borrowers, from loan origination to refinancing. These changes had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.    

Adopted Accounting Pronouncements

In January 2017, the Company adopted ASU No. 2016-09 “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting” on a prospective basis. The ASU requires that all excess tax benefits and tax deficiencies that pertain to employee stock-based incentive payments be recognized within income tax expense in the Consolidated Statements of Operations, rather than within APIC. Adoption of this guidance did not have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

Accounting Pronouncements Pending Adoption

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting.” The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Modification accounting is required unless the fair value, vesting conditions, and classification of the modified award are the same as the original award immediately before the modification. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Sub-topic 310-20) – Premium Amortization on Purchased Callable Debt Securities.” The ASU shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The ASU is effective for the Company beginning on January 1, 2019. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU improves the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, “net periodic cost”) by disaggregating the service cost component from the other components of net periodic cost, limiting the capitalizable amount to the total service cost, and clarifying in the disclosures which line items in the income statement include the components of net periodic cost. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance will not have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” The ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test under current GAAP. Under the amendments, the goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. Any resulting impairment charge will be based on the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for the Company beginning on January 1, 2020. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured using a current expected credit losses model based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on debt securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company has begun its implementation efforts by establishing a company-wide, cross-discipline governance structure. The Company is currently identifying key interpretive issues, and is comparing existing credit loss forecasting models and processes with the new guidance to determine what modifications may be required. While the Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements, the Company expects the ASU will result in an earlier recognition of credit losses and an increase in the allowance for credit losses. The magnitude of the increase in the Company’s allowance for loan losses at the adoption date will be dependent upon the nature of the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The ASU generally requires lessees to recognize a right-of-use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU requires lessees and lessors to classify most leases using principles similar to existing lease accounting, but eliminates the “bright line” classification tests. It also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this ASU requires expanded disclosures about the nature and terms of lease agreements. The ASU is effective for the Company beginning on January 1, 2019, using a modified retrospective approach wherein the guidance is applied to all periods presented. The Company has begun its implementation efforts and is currently evaluating the potential impact on the Consolidated Financial Statements of its existing lease contracts. The Company expects an increase of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets; the extent of such increase is under evaluation. The Company does not expect material changes to the recognition of operating lease expense in its Consolidated Statements of Operations.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)”. The ASU requires that revenue from contracts with customers be recognized upon transfer of control of a good or service in the amount of consideration expected to be received. The ASU also requires new qualitative and quantitative disclosures, including information about disaggregation of revenue and performance obligations. The Company’s revenue is balanced between net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the ASU, and noninterest income. The Company’s implementation efforts include the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts and related accounting policies. Based on this effort, the Company has not identified material changes to the timing or amount of revenue recognition. The Company is in the process of evaluating the impact upon adoption of the ASU to existing disclosures.

70

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company will adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings.

Acquisition

In May 2017, Citizens Capital Markets, Inc., a wholly owned subsidiary of the Company, acquired Western Reserve Partners, LLC, a Cleveland-based merger and acquisition advisory firm. The acquisition resulted in an increase to goodwill of $11 million as of June 30, 2017.

NOTE 2 - SECURITIES

The following table presents the major components of securities at amortized cost and fair value:

	June 30, 2017									December 31, 2016
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$12		$—		$—			$12		$30		$—		$—			$30
State and political subdivisions	7		—		—			7		8		—		—			8
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	19,001		79		(203		)	18,877		19,231		78		(264		)	19,045
Other/non-agency	363		7		(9		)	361		427		2		(28		)	401
Total mortgage-backed securities	19,364		86		(212		)	19,238		19,658		80		(292		)	19,446
Total debt securities available for sale	19,383		86		(212		)	19,257		19,696		80		(292		)	19,484
Marketable equity securities	—		—		—			—		5		—		—			5
Other equity securities	—		—		—			—		12		—		—			12
Total equity securities available for sale	—		—		—			—		17		—		—			17
Total securities available for sale		$19,383		$86		($212	)		$19,257		$19,713		$80		($292	)		$19,501
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$4,080		$20		($28	)		$4,072		$4,126		$12		($44	)		$4,094
Other/non-agency	887		27		—			914		945		19		—			964
Total securities held to maturity		$4,967		$47		($28	)		$4,986		$5,071		$31		($44	)		$5,058
Other Investment Securities, at Fair Value
Money market mutual fund		$92		$—		$—			$92		$91		$—		$—			$91
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$97		$—		$—			$97		$96		$—		$—			$96
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$463		$—		$—			$463
Federal Home Loan Bank stock	324		—		—			324		479		—		—			479
Other equity securities	7		—		—			7		—		—		—			—
Total other investment securities, at cost		$794		$—		$—			$794		$942		$—		$—			$942

71

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following tables present securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2017
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	—		$—		$—		—		$—		$—		—		$—		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	301	13,613		(219		)	24	423		(12		)	325	14,036		(231		)
Other/non-agency	—	—		—			12	154		(9		)	12	154		(9		)
Total mortgage-backed securities	301	13,613		(219		)	36	577		(21		)	337	14,190		(240		)
Total	301		$13,613		($219	)	36		$577		($21	)	337		$14,190		($240	)

	December 31, 2016
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$8		$—		—		$—		$—		1		$8		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	323	15,387		(292		)	25	461		(16		)	348	15,848		(308		)
Other/non-agency	4	8		—			20	302		(28		)	24	310		(28		)
Total mortgage-backed securities	327	15,395		(292		)	45	763		(44		)	372	16,158		(336		)
Total	328		$15,403		($292	)	45		$763		($44	)	373		$16,166		($336	)

For each debt security identified with an unrealized loss, the Company reviews the expected cash flows to determine if the impairment in value is temporary or other-than-temporary. If the Company has determined that the present value of the debt security’s expected cash flows is less than its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of impairment loss that is recognized in current period earnings is dependent on the Company’s intent to sell (or not sell) the debt security.

If the Company intends to sell the impaired debt security, or if it is more likely than not it will be required to sell the security before recovery, the impairment loss recognized in current period earnings equals the difference between the amortized cost basis and the fair value of the security. If the Company does not intend to sell the impaired debt security, and it is not more likely than not that the Company will be required to sell the impaired security, the other-than-temporary impairment write-down is separated into an amount representing the credit loss which is recognized in current period earnings and the amount related to all other factors, which is recognized in OCI.

In addition to these cash flow projections, several other characteristics of each debt security are reviewed when determining whether a credit loss exists and the period over which the debt security is expected to recover. These characteristics include the type of investment, various market factors affecting the fair value of the security (e.g., interest rates, spread levels, liquidity in the sector, etc.), the length and severity of impairment, and the public credit rating of the instrument.

72

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company estimates the portion of loss attributable to credit using a collateral loss model and an integrated cash flow engine. The model calculates prepayment, default, and loss severity assumptions using collateral performance data. These assumptions are used to produce cash flows that generate loss projections. These loss projections are reviewed on a quarterly basis by a cross-functional governance committee to determine whether security impairments are other-than-temporary.

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017			2016
Cumulative balance at beginning of period		$75		$66		$75			$66
Credit impairments recognized in earnings on securities that have been previously impaired	4		7		5			8
Reductions due to increases in cash flow expectations on impaired securities(1)	—		—		(1		)	(1		)
Cumulative balance at end of period		$79		$73		$79			$73

⁽¹⁾ Reported in interest income from investment securities on the Consolidated Statements of Operations.

Cumulative credit losses recognized in earnings for impaired AFS debt securities held as of June 30, 2017 and 2016 were $79 million and $73 million, respectively. There were no credit losses recognized in earnings for the Company’s HTM portfolio as of June 30, 2017 and 2016.

For the three months endedJune 30, 2017 and 2016, the Company incurred non-agency MBS credit-related other-than-temporary impairment losses in earnings of $4 million and $7 million, respectively. The three months ended June 30, 2016 included a $5 million loss for a one-time adjustment from a new model implementation in the period. This adjustment is the result of the Company migrating in June 2016 from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment.

For the six months endedJune 30, 2017 and 2016, the Company incurred non-agency MBS credit-related other-than-temporary impairment losses in earnings of $5 million and $8 million, respectively. Other-than temporary impairment losses for the six months ended June 30, 2016 included the impact of the new model implementation discussed above. There were no credit impaired debt securities sold during the three and six months ended June 30, 2017 and 2016. The Company does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases.

The Company has determined that credit losses are not expected to be incurred on the remaining agency and non-agency MBS identified with unrealized losses as of June 30, 2017. The unrealized losses on these debt securities reflect non-credit-related factors such as changing interest rates and market liquidity. Therefore, the Company has determined that these debt securities are not other-than-temporarily impaired because the Company does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases. Any subsequent increases in the valuation of impaired debt securities do not impact their recorded cost bases.

73

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The amortized cost and fair value of debt securities by contractual maturity are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2017
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,109		17,718		19,001
Other/non-agency	—		26		2		335		363
Total debt securities available for sale	13		199		1,111		18,060		19,383
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,080		4,080
Other/non-agency	—		—		—		887		887
Total debt securities held to maturity	—		—		—		4,967		4,967
Total amortized cost of debt securities		$13		$199		$1,111		$23,027		$24,350
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,125		17,578		18,877
Other/non-agency	—		27		2		332		361
Total debt securities available for sale	13		200		1,127		17,917		19,257
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,072		4,072
Other/non-agency	—		—		—		914		914
Total debt securities held to maturity	—		—		—		4,986		4,986
Total fair value of debt securities		$13		$200		$1,127		$22,903		$24,243

Taxable interest income from investment securities as presented on the Consolidated Statements of Operations was $154 million and $141 million for the three months endedJune 30, 2017 and 2016, respectively, and was $314 million and $286 million for the six months endedJune 30, 2017 and 2016, respectively.

Realized gains and losses on securities are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Gains on sale of debt securities		$3		$4		$7		$13
Losses on sale of debt securities	—		—		—		—
Debt securities gains, net		$3		$4		$7		$13
Equity securities gains		$1		$—		$1		$—

74

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The amortized cost and fair value of securities pledged are presented below:

	June 30, 2017				December 31, 2016
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$432		$430		$631		$620
Pledged against FHLB borrowed funds	894		921		953		972
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,052		4,022		3,575		3,563

The Company regularly enters into security repurchase agreements with unrelated counterparties. Repurchase agreements are financial transactions that involve the transfer of a security from one party to another and a subsequent transfer of substantially the same security back to the original party. The Company’s repurchase agreements are typically short-term transactions, but they may be extended to longer terms to maturity. Such transactions are accounted for as secured borrowed funds on the Company’s Consolidated Balance Sheets. When permitted by GAAP, the Company offsets short-term receivables associated with its reverse repurchase agreements against short-term payables associated with its repurchase agreements. The Company recognized no offsetting of short-term receivables or payables as of June 30, 2017 or December 31, 2016. The Company offsets certain derivative assets and derivative liabilities on the Consolidated Balance Sheets. For further information see Note 10 “Derivatives.”

There were $22 million and $44 million in securitizations of mortgage loans retained in the investment portfolio for the three and six months ended June 30, 2017 and $5 million for the three and six months ended June 30, 2016. In both 2017 and 2016, the guarantors were Fannie Mae and Ginnie Mae and included a substantive guarantee by a third party. These securitizations were accounted for as a sale of the transferred loans and as a purchase of securities. The securities received from the guarantors are classified as AFS.

NOTE 3 - LOANS AND LEASES

The Company’s loans and leases are disclosed in portfolio segments and classes. The Company’s loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity loans, home equity lines of credit, home equity loans serviced by others, home equity lines of credit serviced by others, automobile, education, credit cards and other retail. The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others, which the Company now services a portion of internally. A summary of the loans and leases portfolio is presented below:

(in millions)	June 30, 2017		December 31, 2016
Commercial		$37,329		$37,274
Commercial real estate	11,213		10,624
Leases	3,346		3,753
Total commercial	51,888		51,651
Residential mortgages	16,082		15,115
Home equity loans	1,606		1,858
Home equity lines of credit	13,696		14,100
Home equity loans serviced by others	647		750
Home equity lines of credit serviced by others	182		219
Automobile	13,449		13,938
Education (1)	7,720		6,610
Credit cards	1,711		1,691
Other retail	2,065		1,737
Total retail	57,158		56,018
Total loans and leases (2) (3)		$109,046		$107,669

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. Refer to Note 1 “Basis of Presentation” for more information.

⁽²⁾ Excluded from the table above are loans held for sale totaling $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above, and amounted to $17.6 billion and $17.3 billion at June 30, 2017 and December 31, 2016, respectively.

75

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three months endedJune 30, 2017, the Company purchased approximately $407 million of education loans and $30 million of automobile loans. During the three months endedJune 30, 2016, the Company purchased $348 million of education loans, $200 million of automobile loans and $63 million of residential mortgages.

During the six months endedJune 30, 2017, the Company purchased approximately $732 million of education loans and $153 million of automobile loans. During the six months endedJune 30, 2016, the Company purchased $717 million of education loans, $334 million of automobile loans and $183 million of residential mortgages.

During thethree months endedJune 30, 2017, the Company sold$206 millionof residential mortgage loans and$596 millionof commercial loans.During the three months endedJune 30, 2016, the Company sold $108 million of residential mortgage loans and $45 million of commercial loans.

During the six months endedJune 30, 2017, the Company sold $206 million of residential mortgage loans and $596 million of commercial loans. During the six months endedJune 30, 2016, the Company sold $281 million of residential mortgage loans and $118 million of commercial loans.

Loans held for sale at fair value as of June 30, 2017 totaled $520 million and consisted of residential mortgages originated for sale of $386 million and loans in the commercial trading portfolio of $134 million. Loans held for sale at fair value as of December 31, 2016 totaled $583 million and consisted of residential mortgages originated for sale of $504 million and loans in the commercial trading portfolio of $79 million. Other loans held for sale totaled $187 million and $42 million as of June 30, 2017 and December 31, 2016, respectively, and consisted of commercial loan syndications.

Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages loans, totaled $24.3 billion and $24.0 billion at June 30, 2017 and December 31, 2016, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, totaled $17.4 billion and $16.8 billion at June 30, 2017 and December 31, 2016, respectively.

NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. It is increased through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan portfolio, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, for a detailed discussion of the ALLL reserve methodology and estimation techniques.

On a quarterly basis, the Company reviews and refines its estimate of the allowance for credit losses, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information. There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments.

A summary of changes in the allowance for credit losses is presented below:

	Three Months Ended June 30, 2017									Six Months Ended June 30, 2017
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$653			$571			$1,224			$663			$573			$1,236
Charge-offs	(24		)	(104		)	(128		)	(48		)	(213		)	(261		)
Recoveries	10			43			53			15			84			99
Net charge-offs	(14		)	(61		)	(75		)	(33		)	(129		)	(162		)
Provision (credited) charged to income	(25		)	95			70			(16		)	161			145
Allowance for loan and lease losses, end of period	614			605			1,219			614			605			1,219
Reserve for unfunded lending commitments, beginning of period	93			—			93			72			—			72
Provision for unfunded lending commitments	—			—			—			21			—			21
Reserve for unfunded lending commitments as of period end	93			—			93			93			—			93
Total allowance for credit losses as of period end		$707			$605			$1,312			$707			$605			$1,312

76

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Provision for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

The recorded investment in loans and leases based on the Company’s evaluation methodology is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$491		$804		$1,295		$424		$799		$1,223
Formula-based evaluation	51,397		56,354		107,751		51,227		55,219		106,446
Total		$51,888		$57,158		$109,046		$51,651		$56,018		$107,669

A summary of the allowance for credit losses by evaluation method is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$42		$43		$85		$63		$43		$106
Formula-based evaluation	665		562		1,227		672		530		1,202
Allowance for credit losses		$707		$605		$1,312		$735		$573		$1,308

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness or potential weakness that indicate an increased probability of future loss. “Criticized” loans are grouped into three categories, “special mention,” “substandard” and “doubtful.” Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date. Substandard loans are inadequately protected loans; these loans have well-defined weaknesses that could hinder normal repayment or collection of the debt. Doubtful loans have the same weaknesses as substandard, with the added characteristics that the possibility of loss is high and collection of the full amount of the loan is improbable. For retail loans, the Company primarily uses the loan’s payment and delinquency status to monitor credit quality. The further a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators for both commercial and retail loans are continually updated and monitored.

77

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The recorded investment in commercial loans and leases based on regulatory classification ratings is presented below:

	June 30, 2017
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,259		$1,169		$622		$279		$37,329
Commercial real estate	10,678		444		53		38		11,213
Leases	3,215		107		24		—		3,346
Total		$49,152		$1,720		$699		$317		$51,888

	December 31, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,010		$1,015		$1,027		$222		$37,274
Commercial real estate	10,146		370		58		50		10,624
Leases	3,583		52		103		15		3,753
Total		$48,739		$1,437		$1,188		$287		$51,651

The recorded investment in classes of retail loans, categorized by delinquency status is presented below:

	June 30, 2017
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$15,820		$99		$35		$10		$118		$16,082
Home equity loans	1,430		96		12		5		63		1,606
Home equity lines of credit	13,071		366		52		22		185		13,696
Home equity loans serviced by others	582		35		9		5		16		647
Home equity lines of credit serviced by others	135		22		3		1		21		182
Automobile	12,199		991		172		42		45		13,449
Education	7,537		117		18		10		38		7,720
Credit cards	1,636		43		10		7		15		1,711
Other retail	1,982		55		13		8		7		2,065
Total		$54,392		$1,824		$324		$110		$508		$57,158

	December 31, 2016
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$14,807		$108		$53		$12		$135		$15,115
Home equity loans	1,628		127		23		7		73		1,858
Home equity lines of credit	13,432		396		57		20		195		14,100
Home equity loans serviced by others	673		41		14		5		17		750
Home equity lines of credit serviced by others	158		25		3		2		31		219
Automobile	12,509		1,177		172		38		42		13,938
Education	6,379		151		24		13		43		6,610
Credit cards	1,611		43		12		9		16		1,691
Other retail	1,676		45		8		4		4		1,737
Total		$52,873		$2,113		$366		$110		$556		$56,018

78

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Nonperforming Assets

The following table presents nonperforming loans and leases and loans accruing and 90 days or more past due:

	Nonperforming				Accruing and 90 days or more past due
(in millions)	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016
Commercial		$376		$322		$4		$2
Commercial real estate	38		50		—		—
Leases	—		15		—		—
Total commercial	414		387		4		2
Residential mortgages (1)	135		144		12		18
Home equity loans	81		98		—		—
Home equity lines of credit	235		243		—		—
Home equity loans serviced by others	27		32		—		—
Home equity lines of credit serviced by others	25		33		—		—
Automobile	55		50		—		—
Education	35		38		3		5
Credit card	15		16		—		—
Other retail	3		4		5		1
Total retail	611		658		20		24
Total		$1,025		$1,045		$24		$26

⁽¹⁾ Nonperforming balances exclude first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration. These loans, which are accruing and 90 days or more past due, totaled $12 million and $18 million as of June 30, 2017 and December 31, 2016, respectively. Nonperforming balances also exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $28 million and $32 million as of June 30, 2017 and December 31, 2016, respectively. These loans are consolidated on the Company’s Consolidated Balance Sheets.

Other nonperforming assets consist primarily of other real estate owned and are presented in other assets on the Consolidated Balance Sheets. A summary of other nonperforming assets is presented below:

(in millions)	June 30, 2017		December 31, 2016
Nonperforming assets, net of valuation allowance:
Commercial		$—		$—
Retail	37		49
Nonperforming assets, net of valuation allowance		$37		$49

A summary of key performance indicators is presented below:

	June 30, 2017		December 31, 2016
Nonperforming commercial loans and leases as a percentage of total loans and leases	0.38	%	0.36	%
Nonperforming retail loans as a percentage of total loans and leases	0.56		0.61
Total nonperforming loans and leases as a percentage of total loans and leases	0.94	%	0.97	%
Nonperforming commercial assets as a percentage of total assets	0.26	%	0.26	%
Nonperforming retail assets as a percentage of total assets	0.44		0.47
Total nonperforming assets as a percentage of total assets	0.70	%	0.73	%

The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings are in process was $173 million and $177 million as of June 30, 2017 and December 31, 2016, respectively.

79

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

An analysis of the age of both accruing and nonaccruing loan and lease past due amounts is presented below:

	June 30, 2017								December 31, 2016
	Days Past Due								Days Past Due
(in millions)	30-59		60-89		90 or More		Total		30-59		60-89		90 or More		Total
Commercial		$9		$6		$380		$395		$36		$4		$324		$364
Commercial real estate	3		5		38		46		1		2		50		53
Leases	—		—		—		—		1		—		15		16
Total commercial	12		11		418		441		38		6		389		433
Residential mortgages	35		10		118		163		53		12		135		200
Home equity loans	12		5		63		80		23		7		73		103
Home equity lines of credit	52		22		185		259		57		20		195		272
Home equity loans serviced by others	9		5		16		30		14		5		17		36
Home equity lines of credit serviced by others	3		1		21		25		3		2		31		36
Automobile	172		42		45		259		172		38		42		252
Education	18		10		38		66		24		13		43		80
Credit cards	10		7		15		32		12		9		16		37
Other retail	13		8		7		28		8		4		4		16
Total retail	324		110		508		942		366		110		556		1,032
Total		$336		$121		$926		$1,383		$404		$116		$945		$1,465

Impaired loans include nonaccruing larger balance commercial loans (greater than $3 million carrying value) and commercial and retail TDRs (excluding loans held for sale). A summary of impaired loans by class is presented below:

	June 30, 2017
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$31		$237		$527		$453
Commercial real estate	35		11		3		39		38
Total commercial	251		42		240		566		491
Residential mortgages	46		3		142		247		188
Home equity loans	49		5		91		187		140
Home equity lines of credit	24		2		186		259		210
Home equity loans serviced by others	37		3		17		64		54
Home equity lines of credit serviced by others	4		—		5		13		9
Automobile	4		—		18		27		22
Education	146		22		—		146		146
Credit cards	25		7		—		26		25
Other retail	9		1		1		12		10
Total retail	344		43		460		981		804
Total		$595		$85		$700		$1,547		$1,295

80

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	December 31, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$247		$55		$134		$431		$381
Commercial real estate	39		8		4		44		43
Total commercial	286		63		138		475		424
Residential mortgages	37		2		141		235		178
Home equity loans	51		3		94		191		145
Home equity lines of credit	23		1		173		240		196
Home equity loans serviced by others	41		4		19		70		60
Home equity lines of credit serviced by others	2		—		7		13		9
Automobile	4		—		15		25		19
Education	154		25		1		155		155
Credit cards	26		6		—		26		26
Other retail	10		2		1		13		11
Total retail	348		43		451		968		799
Total		$634		$106		$589		$1,443		$1,223

Additional information on impaired loans is presented below:

	Three Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$1		$431		$2		$324
Commercial real estate	—		38		—		58
Total commercial	1		469		2		382
Residential mortgages	2		182		1		160
Home equity loans	1		141		1		158
Home equity lines of credit	1		203		2		184
Home equity loans serviced by others	1		54		1		66
Home equity lines of credit serviced by others	—		9		—		10
Automobile	—		20		—		15
Education	2		146		2		161
Credit cards	1		25		1		26
Other retail	—		10		—		13
Total retail	8		790		8		793
Total		$9		$1,259		$10		$1,175

81

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	Six Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$414		$3		$248
Commercial real estate	—		41		—		61
Total commercial	2		455		3		309
Residential mortgages	3		178		2		156
Home equity loans	3		140		3		154
Home equity lines of credit	3		197		3		182
Home equity loans serviced by others	2		54		2		67
Home equity lines of credit serviced by others	—		9		—		9
Automobile	—		18		—		14
Education	4		146		4		160
Credit cards	1		24		1		26
Other retail	—		10		—		13
Total retail	16		776		15		781
Total		$18		$1,231		$18		$1,090

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession for other than an insignificant time period to the borrower that it would not otherwise consider, the related loan is classified as a TDR. TDRs typically result from the Company’s loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans and leases may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. The financial effects of TDRs for all loan classes may include lower income (either due to a lower interest rate or a delay in the timing of cash flows), larger loan loss provisions, and accelerated charge-offs if the modification renders the loan collateral-dependent. In some cases, interest income throughout the term of the loan may increase if, for example, the loan is extended or the interest rate is increased as a result of the restructuring.

Because TDRs are impaired loans, the Company measures impairment by comparing the present value of expected future cash flows, or when appropriate, the fair value of collateral less costs to sell, to the loan’s recorded investment. Any excess of recorded investment over the present value of expected future cash flows or collateral value is included in the ALLL. Any portion of the loan’s recorded investment the Company does not expect to collect as a result of the modification is charged off at the time of modification. For Retail TDR accounts where the expected value of cash flows is utilized, any recorded investment in excess of the present value of expected cash flows is recognized by creating or increasing the ALLL. For Retail TDR accounts assessed based on the fair value of collateral, any portion of the loan’s recorded investment in excess of the collateral value is charged off at the time of modification or at the time of subsequent and regularly recurring valuations.

Commercial TDRs were $136 million and $120 million at June 30, 2017 and December 31, 2016, respectively. Retail TDRs totaled $804 million and $799 million at June 30, 2017 and December 31, 2016, respectively. Unfunded commitments tied to TDRs were $45 million and $42 million at June 30, 2017 and December 31, 2016, respectively.

82

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes how loans were modified during the three months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	2		$—		$—	11		$13		$13
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	2	—		—		11	13		13
Residential mortgages	25	4		3		25	5		5
Home equity loans	22	1		2		—	—		—
Home equity lines of credit	14	—		—		67	9		9
Home equity loans serviced by others	5	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		—	—		—
Automobile	25	—		—		7	—		—
Education	—	—		—		—	—		—
Credit cards	624	4		4		—	—		—
Other retail	—	—		—		—	—		—
Total retail	717	9		9		99	14		14
Total	719		$9		$9	110		$27		$27

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	32		31		1			—
Residential mortgages	44	6		6		—			—
Home equity loans	42	2		2		—			—
Home equity lines of credit	112	8		7		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	2	—		—		—			—
Automobile	349	6		6		—			1
Education	7	1		1		1			—
Credit cards	—	—		—		1			—
Other retail	2	—		—		(1		)	—
Total retail	574	23		22		1			1
Total	578		$55		$53		$2			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

83

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others	3	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Education	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	5	1		—		—			—
Automobile	348	7		6		—			1
Education	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

84

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes how loans were modified during the six months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	4		$1		$1	18		$14		$14
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	4	1		1		18	14		14
Residential mortgages	43	5		5		36	8		8
Home equity loans	43	2		3		1	—		—
Home equity lines of credit	30	1		1		118	15		15
Home equity loans serviced by others	11	1		1		—	—		—
Home equity lines of credit serviced by others	3	—		—		2	—		—
Automobile	65	1		1		15	—		—
Education	—	—		—		—	—		—
Credit cards	1,189	7		7		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,385	17		18		172	23		23
Total	1,389		$18		$19	190		$37		$37

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	1	4		4		—			—
Total commercial	5	36		35		1			—
Residential mortgages	92	10		10		—			—
Home equity loans	144	8		8		—			—
Home equity lines of credit	187	14		13		—			—
Home equity loans serviced by others	30	1		1		—			—
Home equity lines of credit serviced by others	13	1		1		—			—
Automobile	625	11		10		—			2
Education	22	2		2		1			—
Credit cards	—	—		—		2			—
Other retail	3	—		—		(1		)	—
Total retail	1,116	47		45		2			2
Total	1,121		$83		$80		$3			$2

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

85

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others	6	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Education	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others	34	1		1		—			—
Home equity lines of credit serviced by others	13	1		—		—			—
Automobile	539	10		9		—			1
Education	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

86

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes TDRs that defaulted during the three and six months ended June 30, 2017 and 2016, respectively, within 12 months of their modification date. For purposes of this table, a payment default refers to a loan that becomes 90 days or more past due under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2017 and 2016, respectively. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	4		$1	8		$3	5		$1	11		$3
Commercial real estate	—	—		1	—		1	4		1	—
Total commercial	4	1		9	3		6	5		12	3
Residential mortgages	41	4		35	4		86	10		89	12
Home equity loans	14	1		32	2		23	1		50	3
Home equity lines of credit	65	4		20	1		100	7		45	4
Home equity loans serviced by others	9	—		11	—		10	—		21	1
Home equity lines of credit serviced by others	1	—		6	—		4	—		11	—
Automobile	27	1		22	1		61	1		37	1
Education	9	—		18	1		16	—		31	1
Credit cards	102	1		85	—		228	2		206	1
Other retail	—	—		—	—		2	—		—	—
Total retail	268	11		229	9		530	21		490	23
Total	272		$12	238		$12	536		$26	502		$26

Concentrations of Credit Risk

Most of the Company’s lending activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of June 30, 2017 and December 31, 2016, the Company had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.

Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics.

87

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following tables present balances of loans with these characteristics:

	June 30, 2017
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$484		$370		$366		$—		$—		$1,220
Interest only/negative amortization	1,705		—		—		—		1		1,706
Low introductory rate	—		—		—		142		—		142
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,192		$370		$366		$142		$1		$3,071

	December 31, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$566		$550		$476		$—		$—		$1,592
Interest only/negative amortization	1,582		—		—		—		1		1,583
Low introductory rate	—		—		—		112		—		112
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,151		$550		$476		$112		$1		$3,290

NOTE 5 - VARIABLE INTEREST ENTITIES

The Company makes equity investments in various entities that are considered VIEs. These investments primarily include ownership interests in limited partnerships that sponsor affordable housing projects and ownership interests in limited liability companies that sponsor renewable energy projects. The Company’s maximum exposure to loss as a result of its involvement with these entities is limited to the balance sheet carrying amounts of its equity investments. A summary of these investments is presented below:

(in millions)	June 30, 2017		December 31, 2016
LIHTC investment included in other assets		$865		$793
LIHTC unfunded commitments included in other liabilities	484		428
Renewable energy investments included in other assets	266		220

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s equity investments is to assist in achieving goals of the Community Reinvestment Act and to earn an adequate return of capital. LIHTC partnerships are managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, the Company does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

The Company applies the proportional amortization method to account for its LIHTC investments. Under the proportional amortization method, the Company applies a practical expedient and amortizes the initial cost of the investment in proportion to the tax credits received in the current period as compared to the total tax credits expected to  be received over the life of the investment. The amortization and tax benefits are included as a component of income tax expense. The tax credits received are reported as a reduction of income tax expense (or increase to income tax benefit) related to these transactions.

88

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents other information related to the Company’s affordable housing tax credit investments:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Tax credits included in income tax expense		$22		$14		$43		$29
Amortization expense included in income tax expense	22		16		45		31
Other tax benefits included in income tax expense	8		7		15		13

No LIHTC investment impairment losses were recognized during the three and six months ended June 30, 2017 and 2016, respectively.

Renewable Energy Entities

The Company’s investments in renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation). As a tax equity investor, the Company does not have the power to direct the activities which most significantly affect the performance of these entities and therefore is not the primary beneficiary of any renewable energy entities. Accordingly, the Company does not consolidate these VIEs.

NOTE 6 - MORTGAGE BANKING

In its mortgage banking business, the Company sells residential mortgages to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. The Company retains no beneficial interests in these sales, but may retain the servicing rights for the loans sold. The Company is obligated to subsequently repurchase a loan if the purchaser discovers a standard representation or warranty violation such as noncompliance with eligibility requirements, customer fraud, or servicing violations. This primarily occurs during a loan file review.

The Company received proceeds from the sale of residential mortgages held for sale of $729 million and $543 million for the three months endedJune 30, 2017 and 2016, respectively, and $1.5 billion and $1.0 billion for the six months endedJune 30, 2017 and 2016, respectively.

The Company recognized gains on sales of residential mortgages held for sale of $19 million and $16 million for the three months endedJune 30, 2017 and 2016, respectively, and $29 million and $30 million for the six months endedJune 30, 2017 and 2016, respectively.

Pursuant to the standard representations and warranties obligations discussed above, the Company was not obligated to repurchase any residential mortgages for the three months endedJune 30, 2017, but did repurchase $2 million for the three months ended June 30, 2016. The Company repurchased $1 million and $4 million of residential mortgages for the six months endedJune 30, 2017 and 2016, respectively.

Mortgage servicing fees, a component of mortgage banking fees, were $14 million and $13 million for the three months endedJune 30, 2017 and 2016, respectively, and $27 million and $26 million for the six months endedJune 30, 2017 and 2016, respectively.

The Company recorded MSR valuation recoveries of $1 million for both the three months endedJune 30, 2017and 2016 and valuation recoveries of$1 million and charge-offs of $4 million for the six months endedJune 30, 2017 and 2016, respectively.

89

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MSRs are presented in other assets on the Consolidated Balance Sheets. Changes related to MSRs are presented below:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
MSRs:
Balance as of beginning of period		$170			$169			$168			$173
Amount capitalized	8			5			18			10
Amortization	(8		)	(8		)	(16		)	(17		)
Carrying amount before valuation allowance	170			166			170			166
Valuation allowance for servicing assets:
Balance as of beginning of period	5			14			5			9
Valuation (recoveries) charge-offs	(1		)	(1		)	(1		)	4
Balance at end of period	4			13			4			13
Net carrying value of MSRs		$166			$153			$166			$153

The fair value of MSRs is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market conditions. The valuation model uses a static discounted cash flow methodology incorporating current market interest rates. A static model does not attempt to forecast or predict the future direction of interest rates; rather it estimates the amount and timing of future servicing cash flows using current market interest rates. The current mortgage interest rate influences the expected prepayment rate and therefore, the length of the cash flows associated with the servicing asset, while the discount rate determines the present value of those cash flows. Expected mortgage loan prepayment assumptions are obtained using the QRM Multi Component prepayment model. The Company periodically obtains third-party valuations of its MSRs to assess the reasonableness of the fair value calculated by the valuation model.

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

	June 30, 2017			December 31, 2016
	Weighted			Weighted
(dollars in millions)	Average	Range		Average	Range
Fair value	$184	Min	Max	$182	Min	Max
Weighted average life (in years)	5.6	2.4	6.9	5.7	2.6	7.3
Weighted average constant prepayment rate	10.8%	9.4%	19.8%	10.8%	8.8%	22.3%
Weighted average discount rate	9.9%	9.1%	12.1%	9.7%	9.1%	12.1%

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period are presented below:

	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Weighted average life (in years)	6.2	5.9	6.6	6.0
Weighted average constant prepayment rate	11.1%	11.3%	9.9%	11.1%
Weighted average discount rate	9.9%	9.7%	9.9%	9.7%

90

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The sensitivity analysis below presents the impact to current fair value of an immediate 50 basis point and 100 basis point adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the mortgage servicing rights calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment rates, could result in changes in the discount rates), which may amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2017		December 31, 2016
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$9		$9
Decline in fair value from a 100 basis point decrease in interest rates		$18		$25
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$6		$6

NOTE 7 - BORROWED FUNDS

A summary of the Company’s short-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Federal funds purchased		$—		$533
Securities sold under agreements to repurchase	429		615
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,004		3,211
Total short-term borrowed funds		$2,433		$4,359

Key data related to short-term borrowed funds is presented in the following table:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,						As of and for the Year Ended December 31,
(dollars in millions)	2017			2016			2017			2016			2016
Weighted-average interest rate at period-end:(1)
Federal funds purchased and securities sold under agreements to repurchase	—		%	—		%	—		%	—		%	0.26		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.31			0.65			1.31			0.65			0.94
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$1,075			$968			$1,174			$1,274			$1,522
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,507			4,764			3,508			4,764			5,461
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$808			$974			$845			$927			$947
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,275			3,743			2,617			3,421			3,207
Weighted-average interest rate during the period:(1)
Federal funds purchased and securities sold under agreements to repurchase	0.36		%	0.08		%	0.28		%	0.07		%	0.09		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.22			0.61			1.14			0.60			0.64

⁽¹⁾ Rates exclude certain hedging costs.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable.

91

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of the Company’s long-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Citizens Financial Group, Inc.:
4.150% fixed-rate subordinated debt, due 2022 (1)		$347		$347
5.158% fixed-to-floating rate subordinated debt, due 2023, converting to floating at 3-month LIBOR + 3.56% and callable beginning June 2018	333		333
3.750% fixed-rate subordinated debt, due 2024	250		250
4.023% fixed-rate subordinated debt, due 2024	42		42
4.350% fixed-rate subordinated debt, due 2025 (2)	249		249
4.300% fixed-rate subordinated debt, due 2025 (3)	749		749
2.375% fixed-rate senior unsecured debt, due 2021 (4)	348		348
Banking Subsidiaries:
2.300% senior unsecured notes, due 2018 (5)(6)	746		745
2.450% senior unsecured notes, due 2019 (5)(7)	748		747
2.500% senior unsecured notes, due 2019 (5)(8)	743		741
2.250% senior unsecured notes, due 2020 (5)(9)	698		—
Floating-rate senior unsecured notes, due 2020 (5)(10)	299		—
Floating-rate senior unsecured notes, due 2020 (5)(11)	249		—
2.200% senior unsecured notes, due 2020 (5)(12)	498		—
2.550% senior unsecured notes, due 2021(5)(13)	973		965
Floating-rate senior unsecured notes, due 2022 (5)(14)	249		—
2.650% senior unsecured notes, due 2022(5)(15)	497		—
Federal Home Loan advances due through 2033	5,112		7,264
Other	24		10
Total long-term borrowed funds		$13,154		$12,790

⁽¹⁾ These balances are composed of: principal balances of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽²⁾ These balances are composed of: principal balances of $250 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽³⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁴⁾ These balances are composed of: principal balance of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁵⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁶⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($3) million at June 30, 2017 and December 31, 2016; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁷⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively.

⁽⁸⁾ These balances are composed of: principal balance of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($6) million and ($7) million at June 30, 2017 and December 31, 2016, respectively; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁹⁾ This balance is composed of: principal balance of $700 million at June 30, 2017; impact from interest rate swaps of $1 million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017. See Note 10 “Derivatives” for further information.

⁽¹⁰⁾ This balance is composed of: principal balance of $300 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹¹⁾ These balances are composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹²⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹³⁾ These balances are composed of: principal balance of $1.0 billion at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($23) million and ($30) million at June 30, 2017 and December 31, 2016, respectively; and ($4) million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽¹⁴⁾ This balance is composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹⁵⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact from interest rate swaps of ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

Advances, lines of credit, and letters of credit from the FHLB are collateralized by pledged mortgages and pledged securities at least sufficient to satisfy the collateral maintenance level established by the FHLB. The utilized borrowing capacity for FHLB advances and letters of credit was $10.0 billion and $13.4 billion at June 30, 2017 and December 31, 2016, respectively. The Company’s available FHLB borrowing capacity was $6.5 billionand $2.8 billion at June 30, 2017 and December 31, 2016, respectively. The Company can also borrow from the FRB discount window

92

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

to meet short-term liquidity requirements. Collateral, such as investment securities and loans, is pledged to provide borrowing capacity at the FRB. At June 30, 2017, the Company’s unused secured borrowing capacity was approximately $37.5 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.

A summary of maturities for the Company’s long-term borrowed funds at June 30, 2017 is presented below:

(in millions)	Parent Company		Banking Subsidiaries		Consolidated
Year
2018 or on demand		$—		$5,847		$5,847
2019	—		1,491		1,491
2020	—		1,762		1,762
2021	348		977		1,325
2022	347		752		1,099
2023 and thereafter	1,623		7		1,630
Total		$2,318		$10,836		$13,154

NOTE 8 - STOCKHOLDERS’ EQUITY

Preferred Stock

The Company had 100,000,000 shares authorized and 250,000 shares outstanding of $25.00 par value undesignated preferred stock as of June 30, 2017 and December 31, 2016, respectively. For further detail regarding the terms and conditions of the Company’s preferred stock see Note 13 “Stockholders’ Equity” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016.

Treasury Stock

During the six months ended June 30, 2017, as part of its 2016 Capital Plan, the Company repurchased$260 million, or7,127,809shares, of its outstanding common stock. The repurchased shares are held in treasury stock.

NOTE 9 - INCOME TAXES

Income Tax Expense

Income tax expense was $144 million and $118 million for the three months endedJune 30, 2017 and 2016, respectively, resulting in effective tax rates of31.1%and32.6%, respectively. Income tax expense was$258 millionand$227 millionfor thesix months endedJune 30, 2017and2016, respectively, resulting in effective tax rates of28.8%and32.7%, respectively. For thesix months endedJune 30, 2017, the effective tax rate compared favorably to the statutory rate of35%primarily as a result of the impact of the settlement of certain state tax matters and the permanent benefits from tax credits and tax-exempt income. The settlement of certain tax matters reduced income tax expense by$23 millionfor thesix months endedJune 30, 2017. For the six months endedJune 30, 2016, the effective tax rate compared favorably to the statutory rate of 35% primarily as a result of the permanent benefits from tax credits and tax-exempt income.

Deferred Tax Liability

At June 30, 2017, the Company reported a net deferred tax liability of $740 million, compared to $714 million as of December 31, 2016. The increase in the net deferred tax liability is primarily attributable to the tax effect of net unrealized gains on securities and derivatives arising during the period partially offset by the tax effect of differences in the timing of deductions and income items for financial statement purposes versus taxable income purposes.

Unrecognized Tax Benefits

As a result of the settlement of certain state tax matters, the total amount of unrecognized tax benefits was reduced from $42 million, as of December 31, 2016, to $7 million, as of June 30, 2017.

93

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10 - DERIVATIVES

In the normal course of business, the Company enters into a variety of derivative transactions in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company does not use derivatives for speculative purposes.

The Company’s derivative instruments are recognized on the Consolidated Balance Sheets at fair value. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 12 “Fair Value Measurements.”

At June 30, 2017, the overall derivative asset value decreased$219 million and the liability balance decreased by $500 million from December 31, 2016. These decreases were primarily due to a change in the presentation of variation margin payments in the Consolidated Balance Sheet in 2017. Effective January 3, 2017, the London Clearing House and Chicago Mercantile Exchange amended their respective rules to legally characterize the variation margin payments on centrally cleared derivative contracts as settlement of those derivatives (rather than the posting of collateral). As a result of this change, the Company modified its balance sheet presentation of centrally cleared interest rate swaps, such that the fair value of the swaps and the associated variation margin balances are reported as a single unit of account in derivative assets and/or derivative liabilities. At December 31, 2016, the variation margin balances were characterized as collateral and reported in interest-bearing cash and due from banks on the Consolidated Balance Sheets.

The following table presents derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2017								December 31, 2016
(in millions)	Notional Amount(1)		Derivative Assets(2)			Derivative Liabilities(2)			Notional Amount(1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$16,800		$4			$3			$13,350		$52			$193
Derivatives not designated as hedging instruments:
Interest rate contracts	65,980		337			274			54,656		557			452
Foreign exchange contracts	10,120		132			121			8,039		134			126
Other contracts	1,380		11			5			1,498		16			7
Total derivatives not designated as hedging instruments			480			400					707			585
Gross derivative fair values			484			403					759			778
Less: Gross amounts offset in the Consolidated Balance Sheets (3)			(70		)	(70		)			(106		)	(106		)
Less: Cash collateral applied (3)			(6		)	(174		)			(26		)	(13		)
Total net derivative fair values presented in the Consolidated Balance Sheets				$408			$159					$627			$659

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

⁽³⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

The Company’s derivative transactions are internally divided into three sub-groups: institutional, customer and residential loan.

Institutional derivatives

The institutional derivatives portfolio primarily consists of interest rate swap agreements that are used to hedge the interest rate risk associated with the Company’s loans and financing liabilities (i.e., borrowed funds, deposits, etc.). The goal of the Company’s interest rate hedging activity is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect net interest income.

The Company enters into certain interest rate swap agreements to hedge the risk associated with floating rate loans. By entering into pay-floating/receive-fixed interest rate swaps, the Company is able to minimize the variability in the cash flows of these assets due to changes in interest rates. The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s borrowed funds and deposit liabilities. By

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entering into a pay-fixed/receive-floating interest rate swap, a portion of these liabilities has been effectively converted to a fixed-rate liability for the term of the interest rate swap agreement.

The Company also uses receive-fixed/pay-floating interest rate swaps to manage the interest rate exposure on its medium-term borrowings.

Customer derivatives

The customer derivatives portfolio consists of interest rate swap agreements and option contracts that are transacted to meet the financing needs of the Company’s customers. Swap agreements and interest rate option agreements are transacted to effectively minimize the Company’s market risk associated with the customer derivative products. The customer derivatives portfolio also includes foreign exchange contracts that are entered into on behalf of customers for the purpose of hedging exposure related to cash orders and loans and deposits denominated in foreign currencies. The primary risks associated with these transactions arise from exposure to changes in foreign currency exchange rates and the ability of the counterparties to meet the terms of the contract. To manage this market risk, the Company simultaneously enters into offsetting foreign exchange contracts.

Residential loan derivatives

The Company enters into residential loan commitments that allow residential mortgage customers to lock in the interest rate on a residential mortgage while the loan undergoes the underwriting process. The Company also uses forward sales contracts to protect the value of residential mortgage loans and loan commitments that are being underwritten for future sale to investors in the secondary market.

Derivatives designated as hedging instruments

The Company’s institutional derivatives portfolio qualifies for hedge accounting treatment. This includes interest rate swaps that are designated in highly effective fair value and cash flow hedging relationships. The Company formally documents at inception all hedging relationships, as well as risk management objectives and strategies for undertaking various accounting hedges. Additionally, the Company uses dollar offset or regression analysis at the hedge’s inception, and monthly thereafter, to assess whether the derivatives are expected to be, or have been, highly effective in offsetting changes in the hedged item’s expected cash flows. The Company discontinues hedge accounting treatment when it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge and then reflects changes in fair value in earnings after termination of the hedge relationship.

The Company has certain derivative transactions that are designated as hedging instruments described as follows:

Fair value hedges

The Company has entered into interest rate swap agreements to manage the interest rate exposure on its medium-term borrowings. The change in value of fair value hedges, to the extent that the hedging relationship is effective, is recorded through earnings and offset against the change in the fair value of the hedged item.

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The following table presents the effect of fair value hedges on other income:

	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$16		($15	)		$1		$32		($31	)		$1

	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2017							Six Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$10		($9	)		$1		$84		($83	)		$1

Cash flow hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating rate assets, and financing liabilities (including its borrowed funds). All of these swaps have been deemed as highly effective cash flow hedges. The effective portion of the hedging gains and losses associated with these hedges are recorded in OCI; the ineffective portion of the hedging gains and losses is recorded in earnings (other income). Hedging gains and losses on derivative contracts reclassified from OCI to current period earnings are included in the line item in the accompanying Consolidated Statements of Operations in which the hedged item is recorded and in the same period that the hedged item affects earnings. During the next 12 months, there are $1 million in pre-tax net gains on derivative instruments included in OCI expected to be reclassified to net interest income in the Consolidated Statements of Operations.

Hedging gains and losses associated with the Company’s cash flow hedges are immediately reclassified from OCI to current period earnings (other income) if it becomes probable that the hedged forecasted transactions will not occur during the originally specified time period.

The following table presents the effect of cash flow hedges on net income and stockholders' equity:

	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Effective portion of gain recognized in OCI (1)		$42			$21			$37			$75
Amounts reclassified from OCI to interest income (2)	8			21			20			43
Amounts reclassified from OCI to interest expense (2)	(1		)	(8		)	(3		)	(16		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest income or expense of the underlying hedged item.

Economic hedges

The Company’s customer derivatives are recorded on the Consolidated Balance Sheets at fair value. These include interest rate and foreign exchange derivative contracts that are designed to meet the hedging and financing needs of the Company’s customers. Mark-to-market adjustments to the fair value of these contracts are included in foreign exchange and interest rate products on the Consolidated Statement of Operations. The mark-to-market gains and losses associated with the customer derivatives are mitigated by the mark-to-market gains and losses on the offsetting interest rate and foreign exchange derivative contracts transacted.

The Company’s residential loan derivatives (including residential loan commitments and forward sales contracts) are recorded on the Consolidated Balance Sheets at fair value. Mark-to-market adjustments to the fair value of residential loan commitments and forward sale contracts are included in noninterest income under mortgage banking fees.

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The following table presents the effect of customer derivatives and economic hedges on noninterest income:

	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Customer derivative contracts
Customer interest rate contracts (1)		$83			($2	)		$80			$95
Customer foreign exchange contracts (1)	78			(23		)	96			28
Residential loan commitments (2)	(2		)	3			3			7
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	(71		)	15			(56		)	(76		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (1)	(71		)	23			(85		)	(27		)
Forward sale contracts (2)	5			(5		)	(6		)	(10		)
Total		$22			$11			$32			$17

⁽¹⁾ Reported in foreign exchange and interest rate products on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

A summary of outstanding off-balance sheet arrangements is presented below:

(in millions)	June 30, 2017		December 31, 2016
Undrawn commitments to extend credit		$61,988		$60,872
Financial standby letters of credit	2,053		1,892
Performance letters of credit	41		40
Commercial letters of credit	66		43
Marketing rights	42		44
Risk participation agreements	22		19
Residential mortgage loans sold with recourse	8		8
Total		$64,220		$62,918

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

Letters of Credit

Standby letters of credit, both financial and performance, are issued by the Company for its customers. They are used as conditional guarantees of payment to a third party in the event the customer either fails to make specific payments (financial) or fails to complete a specific project (performance). Commercial letters of credit are used to facilitate the import of goods. The commercial letter of credit is used as the method of payment to the Company’s customers’ suppliers. The Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above instruments is represented by the contractual amount of those instruments, net of the value of collateral held. Standby letters of credit and commercial letters of credit are issued for terms of up to ten years and one year, respectively.

Generally, letters of credit are collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters of credit is considered in determining the appropriate amounts of reserves for unfunded commitments.

The Company recognizes a liability on the Consolidated Balance Sheets representing its obligation to stand ready to perform over the term of the standby letters of credit in the event that the specified triggering events occur. The liability for these guarantees was $3 million at both June 30, 2017 and December 31, 2016.

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Marketing Rights

During 2003, the Company entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania. The Company paid $2 million for the six months endedJune 30, 2017, paid $3 million for the year ended December 31, 2016, and is obligated to pay $42 million over the remainder of the contract.

Risk Participation Agreements

RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment.

RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The Company’s estimate of the credit exposure associated with its risk participations-in was $22 million at June 30, 2017 and $19 million at December 31, 2016. The current amount of credit exposure is spread out over 96 counterparties. RPAs generally have terms ranging from one to five years; however, certain outstanding agreements have terms as long as ten years.

Residential Loans Sold with Recourse

The Company is an originator and servicer of residential mortgages and routinely sells such mortgage loans in the secondary market and to government-sponsored entities. In the context of such sales, the Company makes certain representations and warranties regarding the characteristics of the underlying loans and, as a result, may be contractually required to repurchase such loans or indemnify certain parties against losses for certain breaches of those representations and warranties.

Other Commitments

In first quarter 2017, the Company entered into an agreement to purchase education loans on a quarterly basis beginning with the first quarter 2017 and ending with the fourth quarter 2017. The total minimum and maximum amount of the aggregate purchase principal balance of loans under the terms of the agreement are $750 million and $1.5 billion, respectively, and the remaining maximum purchase commitment is $750 million. The agreement may be extended by written agreement of the parties for an additional four quarters. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. The Company may also terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of quarters remaining under the agreement.

In April 2017, the Company terminated its May 2014 agreement to purchase automobile loans after satisfying its final purchase commitment.

The Company’s commercial loan trading desk provides ongoing secondary market support and liquidity to its clients. Unsettled loan trades (i.e., loan purchase contracts) represent firm commitments to purchase loans from a third party at an agreed-upon price. Principal amounts associated with unsettled commercial loan trades are off-balance sheet commitments until delivery of the loans has taken place. Fair value adjustments associated with each unsettled loan trade are recognized on the Consolidated Balance Sheets and classified within other assets or other liabilities, depending on whether the fair value of the unsettled trade represents an unrealized gain or unrealized loss. The principal balances of unsettled commercial loan trade purchases and sales were $185 million and $203 million, respectively, at June 30, 2017 and $127 million and $177 million, respectively, at December 31, 2016. Settled loans purchased by the trading desk are classified as loans held for sale, at fair value on the Consolidated Balance Sheets. Refer to Note 12 “Fair Value Measurements” for further information.

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Contingencies

The Company operates in a legal and regulatory environment that exposes it to potentially significant risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations, which, in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, mortgage-related issues, and mis-selling of certain products. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages, fines, penalties, public or private censure, increased costs, required remediation, restrictions on business activities, or other impacts on the Company.

In these disputes and proceedings, the Company contests liability and the amount of damages as appropriate. Given their complex nature, and based on the Company's experience, it may be years before some of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim, numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the proceedings in question.

The Company cannot predict with certainty if, how, or when such claims will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages. The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice, it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings, however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss. In each of the matters described below, the Company is unable to estimate the liability in excess of any provision accrued, if any, that might arise or its effects on the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows in any particular period.

Set out below is a description of significant legal matters involving the Company and its banking subsidiaries. Based on information currently available, the advice of legal counsel and other advisers, and established reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings will not have a materially adverse effect on the Company’s unaudited interim Consolidated Financial Statements.

Consumer Products Matters

The activities of the Company’s banking subsidiaries are subject to extensive laws and regulations concerning unfair or deceptive acts or practices in connection with customer products. Certain of the banking subsidiaries’ past practices have not met applicable standards, and they have implemented and are continuing to implement changes to improve and bring their practices in accordance with regulatory guidance. The Company and its banking subsidiaries have actively pursued resolution of the legacy regulatory enforcement matters set forth below.

As previously reported, the Company and its banking subsidiaries are currently subject to consent orders issued in 2015 by certain of their regulators in connection with past deposit reconciliation and billing practices, under which the applicable regulators have provided non-objections to, among other things, restitution plans for affected customers. All financial penalties associated with these regulatory enforcement matters have been paid, and substantially all remediation related to such legacy matters was resolved as of December 31, 2016.

NOTE 12 - FAIR VALUE MEASUREMENTS

As discussed in Note 1 “Significant Accounting Policies,” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, the Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. The Company also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities not required to be reported at fair value in the financial statements.

The Company elected to account for residential mortgage loans held for sale and certain commercial and commercial real estate loans held for sale at fair value. Applying fair value accounting to the residential mortgage loans held for sale better aligns the reported results of the economic changes in the value of these loans and their related hedge instruments. Certain commercial and commercial real estate held for sale loans are managed by a

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commercial secondary loan desk that provides liquidity to banks, finance companies and institutional investors. Applying fair value accounting to this portfolio is appropriate because the Company holds these loans with the intent to sell within short term periods.

Fair Value Option

Residential Mortgage Loans Held for Sale

The fair value of residential mortgage loans held for sale is derived from observable mortgage security prices and includes adjustments for loan servicing value, agency guarantee fees, and other loan level attributes which are mostly observable in the marketplace. Credit risk does not significantly impact the valuation since these loans are sold shortly after origination. Therefore, the Company classifies the residential mortgage loans held for sale in Level 2 of the fair value hierarchy.

The election of the fair value option for financial assets and financial liabilities is optional and irrevocable. The loans accounted for under the fair value option are initially measured at fair value (i.e., acquisition cost) when the financial asset is acquired. Subsequent changes in fair value are recognized in mortgage banking fees on the Consolidated Statements of Operations. The Company recognized changes in fair value in mortgage banking income of $3 million and $6 million for the three months ended June 30, 2017 and 2016, respectively. The Company recognized changes in fair value in mortgage banking income of $10 million and $12 million for the six months ended June 30, 2017 and 2016, respectively.

Interest income on residential mortgage loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income.

Commercial and Commercial Real Estate Loans Held for Sale

The fair value of commercial and commercial real estate loans held for sale is estimated using observable prices of similar loans that transact in the marketplace. In addition, the Company uses external pricing services that provide estimates of fair values based on quotes from various dealers transacting in the market, sector curves or benchmarking techniques. Therefore, the Company classifies the commercial and commercial real estate loans managed by the commercial secondary loan desk in Level 2 of the fair value hierarchy given the observable market inputs.

There were no loans in this portfolio that were 90 days or more past due or nonaccruing as of June 30, 2017 and December 31, 2016. The loans accounted for under the fair value option are initially measured at fair value when the financial asset is recognized. Subsequent changes in fair value are recognized in current earnings. Since all loans in the Company’s commercial trading portfolio consist of floating rate obligations, all changes in fair value are due to changes in credit risk. Such credit-related fair value changes may include observed changes in overall credit spreads and/or changes to the creditworthiness of an individual borrower. Unsettled trades within the commercial trading portfolio are not recognized on the Consolidated Balance Sheets and represent off-balance sheet commitments. Refer to Note 11 “Commitments and Contingencies” for further information.

Interest income on commercial and commercial real estate loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income. The Company recognized $1 million in other noninterest income related to its commercial trading portfolio for the three months ended June 30, 2017 and $2 million for the three months ended 2016. The Company recognized $3 million income in other noninterest income related to its commercial trading portfolio for the six months ended June 30, 2017 and $2 million for the six months ended June 30, 2016.

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The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale measured at fair value:

	June 30, 2017						December 31, 2016
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$386		$386		$—		$504		$505		($1	)
Commercial and commercial real estate loans held for sale, at fair value	134		134		—		79		79		—

Recurring Fair Value Measurements

The Company utilizes a variety of valuation techniques to measure its assets and liabilities at fair value. The valuation methodologies used for significant assets and liabilities carried on the balance sheet at fair value on a recurring basis are presented below:

Securities available for sale

The fair value of securities classified as AFS is based upon quoted prices, if available. Where observable quoted prices are available in an active market, securities are classified as Level 1 in the fair value hierarchy. Classes of instruments that are valued using this market approach include debt securities issued by the U.S. Treasury. If quoted market prices are not available, the fair value for the security is estimated under the market or income approach using pricing models. These instruments are classified as Level 2 because they currently trade in active markets and the inputs to the valuations are observable. The pricing models used to value securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds. Classes of instruments that are valued using this market approach include specified pool mortgage “pass-through” securities and other debt securities issued by U.S. government-sponsored entities and state and political subdivisions. The pricing models used to value securities under the income approach generally begin with the contractual cash flows of each security and make adjustments based on forecasted prepayment speeds, default rates, and other market-observable information. The adjusted cash flows are then discounted at a rate derived from observed rates of return for comparable assets or liabilities that are traded in the market. Classes of instruments that are valued using this market approach include residential and commercial CMOs.

A significant majority of the Company’s Level 1 and 2 securities are priced using an external pricing service. The Company verifies the accuracy of the pricing provided by its primary outside pricing service on a quarterly basis. This process involves using a secondary external vendor to provide valuations for the Company’s securities portfolio for comparison purposes. Any securities with discrepancies beyond a certain threshold are researched and, if necessary, valued by an independent outside broker.

In certain cases where there is limited activity or less transparency around inputs to the valuation model, securities are classified as Level 3.

Residential loans held for sale

See the “Fair Value Option, Residential Mortgage Loans Held for Sale” discussion above.

Commercial loans held for sale

See the “Fair Value Option, Commercial and Commercial Real Estate Loans Held for Sale” discussion above.

Derivatives

The vast majority of the Company’s derivatives portfolio is composed of “plain vanilla” interest rate swaps, which are traded in over-the-counter markets where quoted market prices are not readily available. For these interest rate derivatives, fair value is determined utilizing models that primarily use market observable inputs, such as swap rates and yield curves. The pricing models used to value interest rate swaps calculate the sum of each

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instrument’s fixed and variable cash flows, which are then discounted using an appropriate yield curve (i.e., LIBOR or Overnight Index Swap curve) to arrive at the fair value of each swap. The pricing models do not contain a high level of subjectivity as the methodologies used do not require significant judgment. The Company also considers certain adjustments to the modeled price that market participants would make when pricing each instrument, including a credit valuation adjustment that reflects the credit quality of the swap counterparty. The Company incorporates the effect of exposure to a particular counterparty’s credit by netting its derivative contracts with the collateral available and calculating a credit valuation adjustment on the basis of the net position with the counterparty where permitted. The determination of this adjustment requires judgment on behalf of Company management; however, the total amount of this portfolio-level adjustment is not material to the total fair value of the interest rate swaps in their entirety. Therefore, interest rate swaps are classified as Level 2 in the valuation hierarchy.

The Company’s other derivatives include foreign exchange contracts. The fair value of foreign exchange derivatives uses the mid-point of daily quoted currency spot prices. A valuation model estimates fair value based on the quoted spot rates together with interest rate yield curves and forward currency rates. Since all of these inputs are observable in the market, foreign exchange derivatives are classified as Level 2 in the fair value hierarchy.

Money Market Mutual Fund

Fair value is determined based upon unadjusted quoted market prices and is considered a Level 1 fair value measurement.

Other investments

The fair values of the Company’s other investments are based on security prices in markets that are not active; therefore, these investments are classified as Level 2 in the fair value hierarchy.

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2017:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,238		$—		$19,238		$—
State and political subdivisions	7		—		7		—
U.S. Treasury and other	12		12		—		—
Total securities available for sale	19,257		12		19,245		—
Loans held for sale, at fair value:
Residential loans held for sale	386		—		386		—
Commercial loans held for sale	134		—		134		—
Total loans held for sale, at fair value	520		—		520		—
Derivative assets1:
Interest rate swaps	341		—		341		—
Foreign exchange contracts	132		—		132		—
Other contracts	11		—		11		—
Total derivative assets	484		—		484		—
Other investment securities, at fair value:
Money market mutual fund	92		92		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	97		92		5		—
Total assets		$20,358		$104		$20,254		$—
Derivative liabilities1:
Interest rate swaps		$277		$—		$277		$—
Foreign exchange contracts	121		—		121		—
Other contracts	5		—		5		—
Total derivative liabilities	403		—		403		—
Total liabilities		$403		$—		$403		$—

⁽¹⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

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The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,446		$—		$19,446		$—
State and political subdivisions	8		—		8		—
Equity securities	17		—		17		—
U.S. Treasury	30		30		—		—
Total securities available for sale	19,501		30		19,471		—
Loans held for sale, at fair value:
Residential loans held for sale	504		—		504		—
Commercial loans held for sale	79		—		79		—
Total loans held for sale, at fair value	583		—		583		—
Derivative assets:
Interest rate swaps	609		—		609		—
Foreign exchange contracts	134		—		134		—
Other contracts	16		—		16		—
Total derivative assets	759		—		759		—
Other investment securities, at fair value:
Money market mutual fund	91		91		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	96		91		5		—
Total assets		$20,939		$121		$20,818		$—
Derivative liabilities:
Interest rate swaps		$645		$—		$645		$—
Foreign exchange contracts	126		—		126		—
Other contracts	7		—		7		—
Total derivative liabilities	778		—		778		—
Total liabilities		$778		$—		$778		$—

There were no Level 3 assets measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016.

Nonrecurring Fair Value Measurements

The following valuation techniques are utilized to measure significant assets for which the Company utilizes fair value on a nonrecurring basis:

Impaired Loans

The carrying amount of collateral-dependent impaired loans is compared to the appraised value of the collateral less costs to dispose and is classified as Level 2. Any excess of carrying amount over the appraised value is charged to the ALLL.

Mortgage Servicing Rights

MSRs do not trade in an active market with readily observable prices. MSRs are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs. The fair value was calculated using a discounted cash flow model which used assumptions, including weighted-average life, weighted-average constant prepayment rate and weighted-average discount rate. Refer to Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016 and Note 6 “Mortgage Banking” for more information.

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Foreclosed assets

Foreclosed assets consist primarily of residential properties. Foreclosed assets are carried at the lower of cost or fair value less costs to dispose. Fair value is based upon independent market prices or appraised values of the collateral and is classified as Level 2.

Leased assets

The fair value of assets under operating leases is determined using collateral specific pricing digests, external appraisals, broker opinions, recent sales data from industry equipment dealers, and discounted cash flows derived from the underlying lease agreement. As market data for similar assets and lease agreements is available and used in the valuation, these assets are classified as Level 2 fair value measurement.

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017				2016
Impaired collateral-dependent loans		($8	)		($6	)		($27	)			($11	)
MSRs	1			1			1				(4		)
Foreclosed assets	(1		)	(1		)	(2		)		(2		)
Leased assets	(15		)	—			(15		)	—	—

The following table presents assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2017								December 31, 2016
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$341		$—		$341		$—		$355		$—		$355		$—
MSRs	184		—		—		184		182		—		—		182
Foreclosed assets	33		—		33		—		44		—		44		—
Leased assets	137		—		137		—		158		—		158		—

Disclosures about Fair Value of Financial Instruments

Following is a description of valuation methodologies used to estimate the fair value of financial instruments for disclosure purposes (these instruments are not recorded in the financial statements at fair value):

Securities held to maturity

The fair values of securities classified as HTM are estimated under the market or income approach using the same pricing models as those used to measure the fair value of the Company’s securities AFS. For more information, see “Recurring Fair Value Measurements - Securities Available for Sale,” within this Note.

Other investment securities, at cost

The cost basis of other investment securities, at cost, such as FHLB stock and FRB stock, is assumed to approximate the fair value of these securities. As a member of the FHLB and FRB, the Company is required to hold FHLB and FRB stock. The stock can be sold only to the FHLB and FRB upon termination of membership, or redeemed at the FHLB’s or FRB’s sole discretion. The stock may only be sold or redeemed at par, and therefore the cost basis represents the best estimate of fair value.

Loans and leases

For loans and leases not recorded at fair value on a recurring basis that are not accounted for as collateral-dependent impaired loans, fair value is estimated by using one of two methods: a discounted cash flow method or a securitization method. The discounted cash flow method involves discounting the expected future cash flows using current rates which a market participant would likely use to value similar pools of loans. Inputs used in this method include observable information such as contractual cash flows (net of servicing cost) and unobservable information such as estimated prepayment speeds, credit loss exposures, and discount rates. The securitization method involves utilizing market securitization data to value the assets as if a securitization transaction had been executed. Inputs

104

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

used include observable market-based MBS data and pricing adjustments based on unobservable data reflecting the liquidity risk, credit loss exposure and other characteristics of the underlying loans. The internal risk-weighted balances of loans are grouped by product type for purposes of these estimated valuations. For nonaccruing loans, fair value is estimated by discounting management’s estimate of future cash flows with a discount rate commensurate with the risk associated with such assets. Fair value of collateral-dependent loans is primarily based on the appraised value of the collateral.

Other loans held for sale

Balances represent loans that were transferred to other loans held for sale and are reported at the lower of cost or fair value. When applicable, the fair value of other loans held for sale is estimated using one of two methods: a discounted cash flow method or a securitization method (as described above).

Deposits

The fair value of demand deposits, checking with interest accounts, regular savings, money market accounts and other deposits is the amount payable on demand at the balance sheet date. The fair value of term deposits is estimated by discounting the expected future cash flows using rates currently offered for deposits of similar remaining maturities.

Federal funds purchased and securities sold under agreements to repurchase, other short-term borrowed funds, and long-term borrowed funds

Rates currently available to the Company for debt of similar terms and remaining maturities are used to discount the expected cash flows of existing debt.

The following table presents the estimated fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2017
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$4,967		$4,986		$—		$—		$4,967		$4,986		$—		$—
Other investment securities, at cost	794		794		—		—		794		794		—		—
Other loans held for sale	187		187		—		—		—		—		187		187
Loans and leases	109,046		109,323		—		—		341		341		108,705		108,982
Financial Liabilities:
Deposits	113,613		113,582		—		—		113,613		113,582		—		—
Federal funds purchased and securities sold under agreements to repurchase	429		429		—		—		429		429		—		—
Other short-term borrowed funds	2,004		2,004		—		—		2,004		2,004		—		—
Long-term borrowed funds	13,154		13,275		—		—		13,154		13,275		—		—

105

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	December 31, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$5,071		$5,058		$—		$—		$5,071		$5,058		$—		$—
Other investment securities, at cost	942		942		—		—		942		942		—		—
Other loans held for sale	42		42		—		—		—		—		42		42
Loans and leases	107,669		107,537		—		—		355		355		107,314		107,182
Financial Liabilities:
Deposits	109,804		109,796		—		—		109,804		109,796		—		—
Federal funds purchased and securities sold under agreements to repurchase	1,148		1,148		—		—		1,148		1,148		—		—
Other short-term borrowed funds	3,211		3,211		—		—		3,211		3,211		—		—
Long-term borrowed funds	12,790		12,849		—		—		12,790		12,849		—		—

106

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 - REGULATORY MATTERS

As a bank holding company, the Company is subject to regulation and supervision by the FRB. The primary subsidiaries of the Company are its two insured depository institutions CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-chartered savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Under the U.S. Basel III capital framework, the Company and its banking subsidiaries must meet specific minimum requirements for the following ratios: common equity tier 1 capital, tier 1 capital, total capital, and tier 1 leverage. In addition, the Company must not be subject to a written agreement, order or capital directive with any of its regulators. Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken, could have a material effect on the Company’s Consolidated Financial Statements.

The following table presents the Company’s capital and capital ratios under U.S. Basel III Standardized Transitional rules. Certain Basel III requirements are subject to phase-in through 2019, and were applied to this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses included within AOCI for available for sale securities, accumulated net gains and losses on cash-flow hedges, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized(6)
(dollars in millions)	Amount		Ratio		Amount		Ratio (5)		Amount		Ratio
As of June 30, 2017
Common equity tier 1 capital (1)		$14,057	11.2	%		$7,232	5.750	%		$8,175	6.5	%
Tier 1 capital (2)	14,304		11.4		9,119		7.250		10,062		8.0
Total capital (3)	17,586		14.0		11,634		9.250		12,577		10.0
Tier 1 leverage (4)	14,304		9.9		5,776		4.000		7,220		5.0
As of December 31, 2016
Common equity tier 1 capital (1)		$13,822	11.2	%		$6,348	5.125	%		$8,051	6.5	%
Tier 1 capital (2)	14,069		11.4		8,206		6.625		9,909		8.0
Total capital (3)	17,347		14.0		10,683		8.625		12,386		10.0
Tier 1 leverage (4)	14,069		9.9		5,667		4.000		7,084		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” includes capital conservation buffer of 1.250% for 2017 and 0.625% for 2016; N/A to Tier 1 leverage.

⁽⁶⁾ Presented for informational purposes. Prompt corrective action provisions apply only to the Company’s insured depository institutions - CBNA and CBPA.

Under the Capital Plan Rule, the Company may only make capital distributions, including payment of dividends, in accordance with a capital plan that has been reviewed by the FRB with no objection.

Per the 2016 Capital Plan, which received a non-objection from the FRB, for the three months ended June 30, 2017, the Company paid common dividends of $71 million and repurchased $130 million of its outstanding common shares. For the six months ended June 30, 2017, the Company paid common dividends of $143 million, a semi-annual preferred dividend of $7 million and repurchased $260 million of its outstanding common shares. For the three and six months ended June 30, 2016, the Company paid common dividends of $64 million and $117 million, respectively. The Company also paid a semi-annual preferred dividend of $7 million in the six months ended June 30, 2016.

On April 5, 2017, the Company submitted its 2017 Capital Plan to the Federal Reserve under the annual CCAR process.On June 28, 2017, the FRB did not object to the Company’s 2017 Capital Plan or to its proposed capital actions in the period beginning July 1, 2017 and ending June 30, 2018. The Company’s 2017 Capital Plan includes proposed quarterly common dividends of$0.18per share through the end of 2017 and$0.22per share in 2018, and also includes a share repurchase plan of up to$850 millionthrough second quarter 2018. The timing and exact amount of future dividends and share repurchases will depend on various factors, including capital position, financial performance and market conditions.

107

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In accordance with federal and state banking regulations, dividends paid by the Company’s banking subsidiaries to the Company itself are generally limited to the retained earnings of the respective banking subsidiaries unless specifically approved by the appropriate bank regulator.

A financial subsidiary of a national bank is permitted to engage in a broader range of activities, similar to those of a financial holding company. CBNA has two financial subsidiaries, Citizens Securities, Inc., a registered broker-dealer, and RBS Citizens Insurance Agency, Inc., a dormant entity. On March 13, 2014, the OCC determined that CBNA no longer met the conditions to own a financial subsidiary — namely that CBNA must be both well capitalized and well managed. CBNA has entered into an agreement with the OCC pursuant to which it has developed and submitted to the OCC a remediation plan setting forth the specific actions it will take to bring itself back into compliance with the conditions to own a financial subsidiary. CBNA has completed its undertakings under the plan, which have been validated by the Company’s internal audit team and submitted to the OCC for review and validation. However, until the OCC has completed their validation efforts, CBNA will be subject to restrictions on its ability to acquire control or hold an interest in any new financial subsidiary and to commence new activities in any existing financial subsidiary without the prior consent of the OCC.

NOTE 14 - RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at April 1, 2017		($97	)		($195	)		($391	)		($683	)
Other comprehensive income before reclassifications	26			56			—			82
Other-than-temporary impairment not recognized in earnings on securities	—			10			—			10
Amounts reclassified from other comprehensive (loss) income	(5		)	1			2			(2		)
Net other comprehensive income	21			67			2			90
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

	As of and for the six months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at January 1, 2017		($88	)		($186	)		($394	)		($668	)
Other comprehensive income before reclassifications	23			61			—			84
Other-than-temporary impairment not recognized in earnings on securities	—			(2		)	—			(2		)
Amounts reclassified from other comprehensive (loss) income	(11		)	(1		)	5			(7		)
Net other comprehensive income	12			58			5			75
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

108

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$8			$21			$20			$43		Interest income
	(1		)	(8		)	(3		)	(16		)	Interest expense
	7			13			17			27			Income before income tax expense
	2			4			6			10			Income tax expense
		$5			$9			$11			$17		Net income
Reclassification of net securities gains (losses) to net income (loss):		$3			$4			$7			$13		Securities gains, net
	(4		)	(7		)	(5		)	(8		)	Net securities impairment losses recognized in earnings
	(1		)	(3		)	2			5			Income before income tax expense
	—			(1		)	1			2			Income tax expense
		($1	)		($2	)		$1			$3		Net income
Reclassification of changes related to the employee benefit plan:		($4	)		($4	)		($9	)		($8	)	Salaries and employee benefits
	(4		)	(4		)	(9		)	(8		)	Income before income tax expense
	(2		)	(1		)	(4		)	(3		)	Income tax expense
		($2	)		($3	)		($5	)		($5	)	Net income
Total reclassification gains		$2			$4			$7			$15		Net income

The following table presents the effects on net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Net interest income (includes $7, $13, $17 and $27 of AOCI reclassifications, respectively)		$1,026		$923		$2,031		$1,827
Provision for credit losses	70		90		166		181
Noninterest income (includes ($1), ($3), $2 and $5 of AOCI reclassifications, respectively)	370		355		749		685
Noninterest expense (includes $4, $4, $9 and $8 of AOCI reclassifications, respectively)	864		827		1,718		1,638
Income before income tax expense	462		361		896		693
Income tax expense (includes $0, $2, $3 and $9 income tax net expense from reclassification items, respectively)	144		118		258		227
Net income		$318		$243		$638		$466

NOTE 15 - BUSINESS SEGMENTS

The Company is managed by its CEO on a segment basis. The Company’s two business segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has one or more segment heads who report directly to the CEO. The CEO has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the CEO.

Reportable Segments

Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and statement of operations items to each of the business segments. The process is designed around the Company’s organizational and management structure and accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below:

109

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consumer Banking

The Consumer Banking segment focuses on retail customers and small businesses with annual revenues of up to $25 million. It offers traditional banking products and services, including checking, savings, home loans, education loans, credit cards, business loans, and unsecured product finance and personal loans in addition to financial management services. It also operates an indirect auto financing business, providing financing for both new and used vehicles through auto dealerships. The segment’s distribution channels include a branch network, ATMs and a work force of experienced specialists ranging from financial consultants, mortgage loan officers and business banking officers to private bankers. The Company’s Consumer Banking value proposition is based on providing simple, easy to understand product offerings and a convenient banking experience with a more personalized approach.

Commercial Banking

The Commercial Banking segment primarily targets companies with annual revenues from $25 million to $2.5 billion and provides a full complement of financial products and solutions, including loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on middle-market companies, large corporations and institutions and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, professionals, oil and gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity and sponsor finance. While the segment’s business development efforts are predominantly focused in the Company’s footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). A key component of Commercial Banking’s growth strategy is to bring ideas to clients that help their businesses thrive, and in doing so, expand the loan portfolio and ancillary product sales.

Non-segment Operations

Other

Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, community development, non-core assets (including legacy Royal Bank of Scotland Group plc aircraft loans and leases placed in runoff in the third quarter of 2016), and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses. In addition to non-segment operations, Other includes goodwill and any associated goodwill impairment charges. For impairment testing purposes, the Company allocates goodwill to its Consumer Banking and Commercial Banking reporting units. For management reporting purposes, the Company presents the goodwill balance (and any related impairment charges) in Other.

	As of and for the Three Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$657		$344		$25			$1,026
Noninterest income	229		130		11			370
Total revenue	886		474		36			1,396
Noninterest expense	644		192		28			864
Profit before provision for credit losses	242		282		8			532
Provision for credit losses	60		1		9			70
Income (loss) before income tax expense (benefit)	182		281		(1		)	462
Income tax expense (benefit)	64		94		(14		)	144
Net income		$118		$187		$13			$318
Total average assets		$59,244		$49,731		$40,903			$149,878

110

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Six Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,295		$690		$46			$2,031
Noninterest income	449		264		36			749
Total revenue	1,744		954		82			2,780
Noninterest expense	1,291		382		45			1,718
Profit before provision for credit losses	453		572		37			1,062
Provision for credit losses	124		20		22			166
Income before income tax expense (benefit)	329		552		15			896
Income tax expense (benefit)	116		185		(43		)	258
Net income		$213		$367		$58			$638
Total average assets		$58,954		$49,488		$40,893			$149,335

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

Management accounting practices utilized by the Company as the basis of presentation for segment results include the following:

FTP adjustments

The Company utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits (or charges) the segments with the economic value of the funds created (or used) by the segments. The FTP system provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The sum of the interest income/expense and FTP charges/credits for each segment is its designated net interest income. The variance between the Company’s cumulative FTP charges and cumulative FTP credits is offset in Other.

111

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Provision for credit losses allocations

Provision for credit losses is allocated to each business segment based on actual net charge-offs recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Income tax allocations

Income taxes are assessed to each line of business at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Expense allocations

Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services.

Substantially all revenues generated and long-lived assets held by the Company’s business segments are derived from clients that reside in the United States. Neither business segment earns revenue from a single external customer that represents ten percent or more of the Company’s total revenues.

NOTE 16 - EARNINGS PER SHARE

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except share and per-share data)	2017		2016		2017		2016
Numerator (basic and diluted):
Net income		$318		$243		$638		$466
Less: Preferred stock dividends	—		—		7		7
Net income available to common stockholders		$318		$243		$631		$459
Denominator:
Weighted-average common shares outstanding - basic	506,371,846		528,968,330		507,903,141		528,519,489
Dilutive common shares: share-based awards	1,042,276		1,396,873		1,458,914		1,877,382
Weighted-average common shares outstanding - diluted	507,414,122		530,365,203		509,362,055		530,396,871
Earnings per common share:
Basic		$0.63		$0.46		$1.24		$0.87
Diluted	0.63		0.46		1.24		0.87

Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. The diluted EPS computation for the three and six months endedJune 30, 2017 excluded 530,781 and 343,692 average share-based awards, respectively, because their inclusion would have been antidilutive. The Company did not have any antidilutive shares for the three and six months endedJune 30, 2016.

NOTE 17 - OTHER INCOME

The following table presents the details of other income:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2017			2016		2017		2016
Bank-owned life insurance income		$14			$13		$26		$26
Other	(8		)	9		5		17
Other income		$6			$22		$31		$43

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 18 - OTHER OPERATING EXPENSE

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Deposit insurance		$36		$29		$68		$55
Promotional expense	29		25		55		49
Settlements and operating losses	12		14		25		22
Other	71		60		126		117
Other operating expense		$148		$128		$274		$243

NOTE 19 - SUBSEQUENT EVENTS

The Company has evaluated the impacts of events that have occurred subsequent to June 30, 2017 through the filing date of the Consolidated Financial Statements with the SEC. Based on this evaluation, the Company has determined none of these events were required to be recognized or disclosed in the Consolidated Financial Statements and related Notes.

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CITIZENS FINANCIAL GROUP, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information presented in the “Market Risk” section of Part I, Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

114

CITIZENS FINANCIAL GROUP, INC.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In addition to the matters described in the Company's Form 10-K for the year ended December 31, 2016, information required by this item is set forth in Note 11 “Commitments and Contingencies” in the Notes to the unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements of this report, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should consider the risks described under the caption “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2016.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Details of the repurchases of the Company’s common stock during the three months ended June 30, 2017 are included in the following table:

Period	Total Number of Shares Repurchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Dollar Amount of Shares That May Yet Be Purchased As Part of Publicly Announced Plans or Programs (1)
April 1, 2017 - April 30, 2017	2,971,229	$34.86	2,971,229	$26,422,957
May 1, 2017 - May 31, 2017	—	$—	—	$26,422,957
June 1, 2017 - June 30, 2017	758,102	$34.86	758,102	$—

⁽¹⁾ On June 29, 2016, the Company announced that its 2016 Capital Plan, submitted as part of the CCAR process and not objected to by the FRB, included share repurchases of CFG common stock of up to $690 million for the four-quarter period ending with the second quarter of 2017. This share repurchase plan, which was approved by the Company’s Board of Directors at the time of the announcement, allows for share repurchases that may be executed in the open market or in privately negotiated transactions, including under Rule 10b5-1 plans. Shares repurchased by the Company during second quarter 2017 were executed pursuant to an accelerated share repurchase transaction, which was completed by June 30, 2017. The timing and exact amount of future share repurchases will be consistent with the 2017 Capital Plan and will be subject to various factors, including the Company’s capital position, financial performance and market conditions.

ITEM 5. OTHER INFORMATION

On August 1, 2017, the Compensation and Human Resources Committee of our Board of Directors approved amendments to employment agreements (the “Amended Agreements”) for certain Company executives to provide for severance in the event of a qualifying termination following a change of control. On August 2, 2017, the affected named executive officers executed their respective Amended Agreements.

The Amended Agreements provide that in the event of a qualifying termination by the Company without cause or resignation by the executive with good reason within 24 months following a change of control, the affected executives will receive severance consisting of: (i) two times the sum of current base salary and average cash bonus received during the prior three years, plus (ii) a pro-rata cash bonus for the year in which termination occurs, also based on the average cash bonus during the prior three years.

The Amended Agreements were provided to each of our named executive officers other than Bruce Van Saun, our Chief Executive Officer, whose provisions regarding change of control severance in his employment agreement will continue in effect. Also, the existing change of control severance for John F. Woods, our Chief Financial Officer, will be superseded by his Amended Agreement.

The description of the matters set forth above are qualified in all respects by reference to the Amended Agreements for affected named executive officers, which are filed with this Form 10-Q as exhibits 10.5 through 10.8.

ITEM 6. EXHIBITS

3.1 Amended and Restated Certificate of Incorporation of the Registrant as in effect on the date hereof (incorporated herein by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q, filed November 14, 2014)

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CITIZENS FINANCIAL GROUP, INC.

3.2 Bylaws of the Registrant (as amended and restated on October 20, 2016) (incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed October 24, 2016)

10.1 Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Policy (originally adopted as of September 29, 2014 and amended as of August 1, 2017) †*

10.2 Form of Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan Restricted Stock Unit Award Agreement†*

10.3 Citizens Financial Group, Inc. Amendment to Performance Stock Unit Award Agreement†*

10.4 Citizens Financial Group, Inc. Amendment to December 2014 Role-Based Allowance Share Award Agreement†*

10.5 Offer Letter, dated May 23, 2008, as amended on August 6, 2014 and August 2, 2017, between the Registrant and Brad Conner†*

10.6 Executive Employment Agreement dated July 1, 2014, as amended on August 2, 2017, between the Registrant and Stephen Gannon†*

10.7 Executive Employment Agreement, dated March 23, 2015, as amended on August 2, 2017, between the Registrant and Donald H. McCree III†*

10.8 Executive Employment Agreement, dated December 13, 2016, as amended on August 2, 2017, between the Registrant and John F. Woods†*

11.1 Statement re: computation of earnings per share (filed herewith as Note 16 to the unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements of this report, which is incorporated herein by reference)

12.1 Computation of Ratio of Earnings to Fixed Charges*

12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends*

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101 The following materials from the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements*

†Indicates management contract or compensatory plan or arrangement.

* Filed herewith.

116

CITIZENS FINANCIAL GROUP, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 3, 2017.

CITIZENS FINANCIAL GROUP, INC.
(Registrant)
By:	/s/ Randall J. Black
	Name: Randall J. Black
	Title: Executive Vice President and Controller
	(Principal Accounting Officer and Authorized Officer)

117

EX-10.1

EXHIBIT 10.1

CITIZENS FINANCIAL GROUP, INC.NON-EMPLOYEE DIRECTORS COMPENSATION POLICY

As Amended June 22, 2017, to be Effective as of August 1, 2017

The Board of Directors (the “Board”) of Citizens Financial Group, Inc. (the “Company”) has approved this director compensation policy (this “Policy”), which establishes compensation to be paid to each Non-Employee Director (as defined in the Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan (the “Plan”)), as an inducement to obtain and retain the services of persons qualified to serve as members of the Board. Capitalized terms used but not defined in this Policy will have the meanings set forth in the Plan.

This Policy is subject to annual review by the Compensation and Human Resources Committee of the Board (the “Committee”) to confirm continued alignment between the compensation of the Company’s Non-Employee Directors, the Company’s business and its shareholders’ interests, and to ensure that the Company’s director compensation program is competitive with those of its peers. During the course of its review, the Committee may consider the annual retainer, lead director and committee chair retainers, meeting fees and other benefits offered to Non-Employee Directors and payable under this Policy. The Committee may amend, revise, suspend, discontinue or terminate this Policy at any time.

The elements of compensation for the Company’s Non-Employee Directors below are expressed as annual amounts.

Cash Retainers

Board Retainer ............................................................................................	$80,000
Lead Director Retainer ................................................................................	$30,000
Audit Committee Chair Retainer .................................................................	$35,000
Risk Committee Chair Retainer ...................................................................	$30,000
Compensation and Human Resources Chair Retainer ...............................	$20,000
Nominating and Governance Chair Retainer ..............................................	$20,000
Audit Committee Member Retainer (including Chair) ..................................	$10,000

The cash retainers are payable quarterly in advance, with the first quarterly payment to occur as soon as practicable following the annual general meeting of stockholders (each such date, a “Payment Date”).

Equity Retainer

On the date of each annual general meeting of stockholders of the Company, each Non-Employee Director who at such meeting is elected to serve on the Board or whose term is scheduled to continue at least through the date of the next such meeting of stockholders will receive an annual award of restricted stock units (“RSUs”) pursuant to and subject to the Plan (and any applicable award agreement thereunder). The number of shares of Company common stock, par value $0.01 per share (“Common Stock”) covered by the annual RSU award will be determined by dividing $120,000 by the closing price of a share of Common Stock on the grant date. Each annual award will be subject to the terms and conditions of the Plan and applicable award agreement thereunder.

Any Non-Employee Director who commences service on the Board on a date other than the date of the Company’s annual general meeting of stockholders will receive on such start date a pro-rated annual award, with the number of shares of Common Stock covered by such award determined by dividing (i) the product of $120,000 and a fraction, the numerator of which is 365 minus the number of days that have elapsed between the date of such meeting and such start date, and the denominator of which is 365, by (ii) the closing price of a share of Common Stock on such start date.

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Other Director Benefits

• Charitable Matching Gift Program. The Company will match each Non-Employee Director’s contributions to qualifying charities up to an aggregate limit of $5,000 per year.

• Expenses Relating to Board Service. The Company will reimburse each Non-Employee Director for reasonable expenses incurred by such Non-Employee Director in connection with his or her Board service, including travel, lodging and meals, subject to the Company’s requirements for reporting and documentation of such expenses.

Deferred Compensation Plan

Non-Employee Directors are eligible to participate in the Deferred Compensation Plan for Directors of Citizens Financial Group, Inc., with such terms and conditions as are in effect from time to time.

Stock Ownership Guidelines

Non-Employee Directors are subject to stock ownership guidelines requiring ownership of a number of shares with a value equal to four times their annual cash retainer.

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EX-10.2

EXHIBIT 10.2

CITIZENS FINANCIAL GROUP, INC.
2014 NON-EMPLOYEE DIRECTORS COMPENSATION PLAN

Restricted Stock Unit Award Agreement
Terms and Conditions

Unless defined in this award agreement (this “Award Agreement”), capitalized terms will have the meanings assigned to them in the Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan (the “Plan”). In the event of a conflict among the provisions of the Plan, this Award Agreement and any descriptive materials provided in connection herewith, the provisions of the Plan will prevail.

Section 1.Grant of RSU Award. Citizens Financial Group, Inc. (the “Company”) hereby grants this award (this “Award”) of restricted share units (“RSUs”) on the date that appears in the “grant date” field in the Participant’s electronic account (the “Grant Date”), subject to the terms and conditions of the Plan and this Award Agreement. This Award is granted under the Plan, the provisions of which are incorporated herein by reference and made a part of this Award Agreement.

Section 2.Issuance of RSUs. Each RSU shall represent the right to receive one Share upon the settlement date of such RSU, as determined in accordance with and subject to the terms of this Award Agreement and the Plan.

Section 3.Restrictions on Transferability. The RSUs granted hereunder shall not be assigned, sold, exchanged, pledged, hypothecated, transferred, alienated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily, and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution, by the Participant. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3 will be null and void and any RSU which is hedged in any manner will immediately be forfeited. All of the terms and conditions of the Plan and this Award Agreement will be binding upon any permitted successors and assigns.

Section 4.Vesting. The RSUs shall be fully vested as of the Grant Date.

Section 5.Rights as a Shareholder; Dividends

(a)The Participant shall have no voting rights or any other rights as a shareholder of the Company with respect to the RSUs unless and until the Participant becomes the record owner of the Shares underlying such RSUs.

(b)If the Company declares a dividend during the period commencing on the Grant Date (including such date) and ending on the date on which the Shares underlying RSUs are distributed in accordance with Section 6, the Participant shall be entitled to receive dividend equivalents equal to the dividends the Participant would have received had he or she been the owner of a number of Shares on such dividend payment date (the “Dividend Payment Date”). To the extent that any such dividends are paid in cash, the Participant shall be entitled to receive additional RSUs on each Dividend Payment Date having a fair market value (based on the closing price of a Share on such Dividend Payment Date) equal to the amount of dividends paid on Shares represented by the RSUs. Any dividend equivalent deriving from a dividend of Shares shall be converted into additional RSUs on a one-for-one basis. Such additional RSUs shall be vested as of the payment date and shall be settled in accordance with Section 6.

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Section 6.Distribution upon Separation from Service. Subject to the provisions of this Award Agreement, the Company shall deliver to the Participant, on the earlier of (i) within 30 days after the date of the Participant’s “separation from service”, and (ii) upon a Change of Control, one Share for each such RSU. Upon such delivery, such Shares shall be fully assignable, saleable and transferable by the Participant, provided that any such assignment, sale, transfer or other alienation with respect to such Shares shall be in accordance with applicable securities laws.

Section 7.Tax Liability; Withholding Requirements. The Participant shall be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that the Participant incurs in connection with the receipt, vesting or settlement of any RSU granted hereunder.

Section 8.Recoupment/Clawback. This Award may be subject to recoupment or “clawback” as may be required by applicable law, stock exchange rules or by any applicable Company policy or arrangement, as it may be established or amended from time to time.

Section 9.No Right to Continued Service on the Board. Neither the Plan nor this Award Agreement shall confer upon the Participant any right to be retained as a Non-Employee Director of the Company or in any other capacity, and the receipt of this Award does not confer any rights on the Participant other than those expressly set forth in this Award Agreement or the Plan.

Section 10.Section 409A of the Code. This Award Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations thereunder, and the provisions of this Award Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and this Award Agreement shall be operated accordingly. If any provision of this Award Agreement or any term or condition of the RSUs would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything else in this Award Agreement, if the Board considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and the amount hereunder is “deferred compensation” subject to Section 409A of the Code any distribution that otherwise would be made to such Participant with respect to RSUs as a result of such separation from service shall not be made until the date that is six months after such separation from service, except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Participants’ right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment and if the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Participant’s right to the dividend equivalents shall be treated separately from the right to other amounts under the Award. Notwithstanding the foregoing, the tax treatment of the benefits provided under this Award Agreement is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code.

Section 11.Miscellaneous.

(a)Notices. All notices, requests and other communications under this Award Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:

2

if to the Company, to:

Citizens Financial Group, Inc.600 Washington Blvd.Stamford, CT 06901
Attention: Corporate Secretary

if to the Participant, to the address that the Participant most recently provided to the Company,

or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed received on the next succeeding business day in the place of receipt.

(b)Entire Agreement. This Award Agreement, the Plan and any other agreements, schedules, exhibits and other documents referred to herein or therein constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.

(c)Severability. If any provision of this Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or this Award Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the intent of this Award Agreement, such provision shall be stricken as to such jurisdiction, and the remainder of this Award Agreement shall remain in full force and effect.

(d)Amendment; Waiver. No amendment or modification of any provision of this Award Agreement that has a material adverse effect on the Participant shall be effective unless signed in writing by or on behalf of the Company and the Participant, provided that the Company may amend or modify this Award Agreement without the Participant’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Award Agreement. No waiver of any breach or condition of this Award Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature. Any amendment or modification of or to any provision of this Award Agreement, or any waiver of any provision of this Award Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

(e)Assignment. Neither this Award Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.

(f)Successors and Assigns; No Third-Party Beneficiaries. This Award Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Award Agreement, express or implied, is intended to confer on any Person other than the Company and

3

the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Award Agreement.

(g)Governing Law; Waiver of Jury Trial. This Award Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof. By acknowledging this Award Agreement electronically or signing it manually, as applicable, the Participant waives any right that the Participant may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this Award Agreement or the Plan.

(h)Discretionary Nature. The grant of the RSUs does not create any contractual right or other right in the Participant to receive any RSUs or other Awards in the future. Future grants of Awards, if any, will be at the sole discretion of the Company.

(i)Participant Undertaking; Acceptance. The Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or give effect to any of the obligations or restrictions imposed on either the Participant or the RSUs pursuant to this Award Agreement. The Participant acknowledges receipt of a copy of the Plan and this Award Agreement and understands that material definitions and provisions concerning the RSUs and the Participant’s rights and obligations with respect thereto are set forth in the Plan. The Participant has read carefully, and understands, the provisions of this Award Agreement and the Plan.

(j)Dispute Resolution. Except as provided in the last sentence of this paragraph to the fullest extent permitted by law, the Company and each Participant agree to waive their rights to seek remedies in court, including but not limited to rights to a trial by jury. The Company and each Participant agree that any dispute between or among them and/or their affiliates arising out of, relating to or in connection with this Plan will be resolved in accordance with a confidential two-step dispute resolution procedure involving: (a) Step One: non-binding mediation, and (b) Step Two: binding arbitration under the Federal Arbitration Act, 9 U.S.C. § 1, et. seq., or state law, whichever is applicable. Any such mediation or arbitration hereunder shall be under the auspices of the American Arbitration Association (“AAA”) pursuant to its then current AAA Commercial Arbitration Rules. No arbitration shall be initiated or take place with respect to a given dispute if the parties have successfully achieved a mutually agreed to resolution of the dispute as a result of the Step One mediation. The mediation session(s) and, if necessary, the arbitration hearing shall be held in the city/location selected by the Company in its sole discretion. The arbitration (if the dispute is not resolved by mediation) will be conducted by a single AAA arbitrator, selected by the Company in its sole discretion. Any award rendered by the arbitrator, including with respect to responsibility for AAA charges (including the costs of the mediator and arbitrator), will be final and binding, and judgment may be entered on it in any court of competent jurisdiction. In the unlikely event the AAA refuses to accept jurisdiction over a dispute, the Company and each Grantee agree to submit to JAMS (formerly known as Judicial Arbitration and Mediation Services) mediation and arbitration applying the JAMS equivalent of the AAA Commercial Arbitration Rules. If AAA and JAMS refuse to accept jurisdiction, the parties may litigate in a court of competent jurisdiction.

(k)Captions. Captions provided herein are for convenience only and shall not affect the scope, meaning, intent or interpretation of the provisions of this Award Agreement.

4

EX-10.3

EXHIBIT 10.3

CITIZENS FINANCIAL GROUP, INC.
2014 OMNIBUS INCENTIVE PLAN

Amendment to

Performance Stock Unit Award Agreement
Terms and Conditions

Unless defined in this amendment to the Award Agreement (this “Amendment”), capitalized terms shall have the meanings assigned to them in the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (the “Plan”).

Section 1. Change to Treatment of Awards upon Retirement or Disability. Effective as of August 1, 2017, provided the Participant remains employed by the Company through such date and has not provided notice to terminate employment, the terms and conditions of outstanding PSUs granted to the Participant are hereby amended as follows:

Section 6(c)(ii) of the performance stock unit (“PSU”) Award Agreements shall be amended and superseded in its entirety by the following:

Retirement; Disability. If the Participant's employment is terminated by reason of Retirement or Disability, the PSUs earned by the Participant as set forth in Section 5(b) shall vest on the Vesting Date in accordance with Section 6(a) as though the Participant was still employed by the Company on the Vesting Date; provided, however, that the Participant (A) does not engage in any Detrimental Activity and (B) does not become employed by any company in the financial services industry, in each case, during the Participant’s post-employment vesting period.

Section 6(c)(iv) of the PSU Award Agreements shall be amended and superseded in its entirety by the following:

Forfeiture. If the Participant is terminated by the Company with Cause or the Participant resigns for any reason (other than a Change of Control Termination), any unvested PSUs shall be forfeited in their entirety on the Participant’s termination date without any payment to the Participant. If the Participant’s employment is terminated by the Company without Cause (other than a Change of Control Termination) prior to the first anniversary of the Performance Period Start Date, any unvested PSUs shall be forfeited in their entirety on the Participant’s termination date without any payment to the Participant. In addition, if (A) the Participant’s employment is terminated by the Company without Cause (other than a Change of Control Termination) and the Participant engages in any Detrimental Activity during the Participant’s post-employment vesting period, or (B) the Participant’s employment is terminated due to Retirement or Disability and the Participant either (I) engages in any Detrimental Activity, or (II) becomes employed by any company in the financial services industry, in either case, during the Participant’s post-employment vesting period, any unvested PSUs shall be forfeited in their entirety on the date that the Participant engages in such Detrimental Activity or becomes employed by any company in the financial services industry, as applicable, without any payment to the Participant.

Section 2. Entire Agreement. The Award Agreement, the Plan and this Amendment, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and

1

understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.

Section 3. Governing Law. This Amendment shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

2

EX-10.4

EXHIBIT 10.4

CITIZENS FINANCIAL GROUP, INC.
2014 OMNIBUS INCENTIVE PLAN

Amendment to December 2014

Role-Based Allowance - Share Award Agreement
Terms and Conditions

Unless defined in this amendment to the award agreement (this “Amendment”), capitalized terms shall have the meanings assigned to them in the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (the “Plan”).

Section 1. Elimination of Retention Period for Awards Granted in December 2014. Effective as of June 15, 2017, the retention period has been eliminated for the awards of Shares granted on December 9, 2014. Any references to the retention period in the Award Agreement shall be null and void.

Section 2. Entire Agreement. The Award Agreement, the Plan and this Amendment, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.

Section 3. Governing Law. This Amendment shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

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EX-10.5

EXHIBIT 10.5

May 23, 2008

Brad Conner

Dear Brad:

On behalf of RBS Citizens, N.A. (“Citizens”) I am pleased to extend you an offer of employment on the following terms and conditions, including your commencing employment with Citizens on or before Monday, June 30, 2008.

I am pleased to confirm our offer for you to join Citizens as the Vice Chairman, Head of Consumer Lending reporting to Jim Connolly, President of RBS Citizens, or other such person as Citizens may specify from time to time. Citizens reserves the right to transfer your employment to any existing or future parent, subsidiary, affiliate, division, branch of Citizens or their respective successors (collectively “affiliates”). Your employee number will be determined when your start date is confirmed.

COMPENSATION

• You will be paid a biweekly salary of $23,076.92, which amounts to $600,000.00 on an annualized basis.

• In addition, you will be eligible for consideration for an annual discretionary bonus based on factors determined by Citizens in

its sole discretion, in accordance with Citizens policy. Such factors may include your performance and the performance of

Citizens. You will only be eligible for consideration to receive any such discretionary bonus for any year if you have not

received or given any notice of termination or resignation prior to the date on which such bonuses for the applicable year are

paid to employees. Currently, the target incentive award opportunity for your position is 160% percent of your annual base

salary. This payment is generally prorated based on your start date and the specific guidelines listed in the Plan, but as per our

conversation, we will guarantee your 2008 bonus to be $1,000,000. Guaranteed amounts are not eligible for deferral. Should you

leave the organization prior to the payment date in 2009, you will forfeit this bonus. Eligibility in a Plan does not guarantee

payment.

• You will also be eligible to participate at the sole discretion of the Royal Bank of Scotland Group (“RBS”) Remuneration

Committee, in RBS’ long-term incentive plans. Your eligibility for participation will be in line with the normal practice for

RBS’ North American businesses. Your target award is 68% of your current base salary ($408,000) for the calendar year of

2008. The opportunity range is 61 – 75% based on your annual performance rating. Eligibility does not guarantee payment.

• In consideration of your joining Citizens, we will pay you a one-time, sign-on bonus of $400,000. This amount will be grossed

up for tax purposes to off set your financial burden of the Forgiveness Loan you have received from JP Morgan Chase. This

will be paid on or around your first thirty days of employment. Please be advised that should you resign, give notice of

resignation or be terminated for cause from Citizens within twelve months of your start date, you will be required to re-pay this

bonus on a pro-rated basis.

• You will receive the equivalent of $1,850,000 of RBS Equity to off set the value of your unvested JP Morgan Chase portfolio.

We will base the number of shares on the stock price at the close of the market on the day you join the Bank. This stock will be

customized to reflect the vesting schedule of your current JP Morgan Chase portfolio.

• You are eligible to participate in the RBS Citizens, N.A. Nonqualified Deferred Compensation Plan. This plan is a tax deferred

savings program which allows you to defer, on a pre-tax basis, a percentage of your base salary as well as a percentage of

selected incentive awards earned for the period ending December 31, 2008. You will have thirty days from the start of your

employment to make a deferment decision.

• All amounts of compensation paid to you shall be paid subject to applicable taxes and deductions, and, if applicable, in

compliance with the provisions of Internal Revenue Code Section 409A.

BENEFITS

• You will be eligible to enroll in most of Citizens Financial Group, Inc.’s benefit plans on the first of the month following your

start date. You will receive a Notice to Enroll in your home mail with information on how to enroll online at

www.CFGConnections.com approximately two weeks from your start date. You can find detailed information online about your

eligibility (see “Benefit Highlights”) and all the benefits on CFGConnections.com.

• Based on the month in which you start you are eligible for a pro-rated maximum vacation allowance of ten days in 2008. Your

annualized amount is twenty days in addition to the ten paid holidays that Citizens recognizes annually. You are also eligible to

receive your birthday off which can be scheduled with your managers’ approval.

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• We will assist you with relocation expenses associated with your move from Arizona to Rhode Island. Other details of our

relocation package are enclosed. You will receive an additional $75,000 (less applicable taxes) to assist you with any out of

pocket relocation expenses. Please be advised that, should you voluntarily resign from Citizens within twelve months of your

start date, you will be responsible for reimbursing Citizens for all relocation costs previously paid under this relocation plan.

Should you be discharged for cause, eligibility for benefits under this policy will cease and no further reimbursements will

occur. This includes expenses incurred but. not yet reimbursed. By signing below you agree that we may deduct money from

your final paycheck to convey such repayment.

NOTICE OF INTENT TO LEAVE AND NON-SOLICITATION

You agree that you will provide Citizens with 60 days prior written notice of your intent to leave the employ of Citizens for any reason. During any period of required notice you will continue to be an employee and you will continue to be entitled to receive your base salary (but not a bonus). Your fiduciary duties and other obligations as an employee of Citizens will continue and you will cooperate in the transition of your responsibilities. Citizens shall, however, have the right, in its sole discretion, to direct that you no longer come in to work.

You also agree that during your employment and for 12 months following your termination of employment for any reason, you will not directly or indirectly solicit, hire, or assist in soliciting or hiring any person who is employed during such period by Citizens or its affiliates; nor will you directly or indirectly induce any such person to terminate his or her employment or accept employment with anyone other than Citizens or its affiliates. You also agree that during your employment and for 6 months following your termination of employment for any reason, you will not directly or indirectly solicit, or assist in soliciting for business any customer introduced to you by Citizens or its affiliates, or any customer of Citizens or its affiliates with whom you had contact during your employment by Citizens nor will you induce or encourage any such customer to terminate its relationship with Citizens or its affiliates or to divert business away from Citizens or its affiliates.

You agree that the foregoing provisions related to Notice of Intent to Leave and Non-Solicitation are reasonable and that in the event you violate any of them, you acknowledge that Citizens will be subject to irreparable harm entitling it, in addition to statutory or common law remedies, to immediate injunctive or other equitable relief. You also agree to reimburse Citizens for reasonable attorney’s fees and costs incurred by Citizens in any action to enforce its rights under this agreement in which Citizens prevails.

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EMPLOYEE REPRESENTATIONS

In accepting this offer, you represent and warrant to Citizens that you are not subject to any agreement or understanding with any

current or prior employer or business (or any other entity or person) which would in any manner preclude you from fulfilling any of the duties or obligations you would have with Citizens or which would result in any additional payment from Citizens. You further

recognize and agree that, to the extent you possess any confidential, proprietary or trade secret information of a third party, you may not and shall not use or disclose such information in performing your duties for Citizens.

You have provided Citizens with copies of certain documents relating to grants made to you under JP Morgan Chase’s 1996 and 2005 Long-Term Incentive Plans (“JP Morgan Documents”). Citizens has reviewed the JP Morgan Documents and the restrictive covenants contained therein that purport to restrict your post-employment activities. The JP Morgan Documents generally state that, for a period of one year following your termination of employment, you will not directly or indirectly, whether on your own behalf or on behalf of another party: (1) solicit, induce or encourage any JP Morgan Chase employee to leave JP Morgan Chase, (2) hire any employee or former employee of JP Morgan Chase who was employed on the date of your termination (unless that employee

was terminated due to a position elimination or terminated more than six months prior to their date of hire by Citizens), or (3) solicit, induce, divert or attempt to solicit induce or divert any of JP Morgan Chase’s current customers, suppliers or other entities or persons serviced by you or whose names became known to you during your employment with JP Morgan Chase, or otherwise interfere with JP Morgan Chase’s relationships with its current customers, supplier or other entities or persons. The JP Morgan Documents state that you are not prohibited from doing business with “publicly known institutional customers,” provided that you do not rely on JP Morgan Chase’s confidential information. The JP Morgan Documents also contain general prohibitions against your use of confidential information, and some of the JP Morgan Documents require you to provide Special Notice of your intent to resign. You have informed Citizens that you are subject to certain restrictions in other JP Morgan Documents that were not provided for review, but are similar to the restrictions described in this paragraph.

As a condition of your employment and during the course of your employment with Citizens, you must honor your obligations pursuant to the JP Morgan Documents for the relevant time periods. If at any time you find yourself in circumstances which you feel may lead to a breach of the restrictions contained in the JP Morgan Documents, you should contact, your Human Resources Business Partner immediately. Should you become aware that JP Morgan Chase or any other former employer alleges that you are violating the terms of an employment agreement or restrictive covenant, you must report such knowledge to your Human Resources Business Partner as soon as practicable.

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In reliance on the foregoing, to the extent permitted by law, Citizens shall indemnify and hold you harmless up to $2,125,00.00 against any forfeiture determinations made and communicated to you by JP Morgan Chase within one year of your termination of employment with JP Morgan Chase that arise out of or are based upon a purported violation of the JP Morgan Documents. This indemnification provision is contingent upon your compliance with the terms of this offer letter and Citizens’ reliance that your post-employment restrictions are consistent with those provided by you or described by you to Citizens. You also agree to give Citizens prompt notice of any forfeiture determination made by JP Morgan Chase.

When your start date is determined, we will arrange for your new hire orientation. Located on the On-Boarding site are the Fair

Lending Policy Statement, Code of Ethics, Corporate Bank Secrecy Compliance Policy, and detailed benefit information. You will

need to bring your completed On-Boarding paperwork to your new hire orientation session. The required documents can be accessed at https://www.cfgconnections.com if you use the directions to access the website as a guest. Please print, review and complete the required forms and policies. If you have any difficulty in completing these documents please contact your recruiter

Following orientation, you will report to Jim Connolly at the Citizens One Plaza Office. As a condition of your employment with

Citizens we will be verifying documentation that shows that you are legally eligible to work in the United States. You will find a list of documents acceptable for verifying your identity and employment eligibility on the back of the U.S. Department of Justice Immigration and Naturalization Form I-9. Please be prepared to provide this information on your first day of employment. Federal law requires that,if this documentation is not provided within 3 days of your start date, you must be removed from Citizens’ payroll. Additionally, your employment with Citizens is contingent upon satisfactorily meeting our pre-employment and background check requirements.

Please note that employment with Citizens is “at-will,” and can be terminated by either party at any time and for any reason, with or

without notice. The terms and conditions of your employment, including, but not limited to: duties; compensation; location and

employment may change at any time. By signing below, you agree that no representations or promises inconsistent with this paragraph have been made to you.

If your position is termed redundant, you will be treated similarly to other Vice Chairmans. Citizens has sole discretion to determine

whether a termination is “for cause,” however, typically the following will constitute cause for purposes of this Plan, as determined by Citizens or the Plan Sponsor:

(a) the Employee’s continued failure or refusal of the Employee to perform satisfactorily any duties reasonably required of the Employee;

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(b) the commission of any fraud, misappropriation, embezzlement, dishonesty, breach of trust or money laundering, or any other

conduct that can be deemed a breach of Citizens’ Code of Ethics or the Royal Bank of Scotland’s Code of Conduct;

(c) reporting to work under the influence of alcohol, narcotics or unlawful controlled substances, or any other material violation of any Citizens employment policies/procedures;

(d) conviction of a felony or misdemeanor, or conduct in violation of state or federal law that would constitute a basis for a criminal

charge or indictment of a felony, or of a misdemeanor involving dishonest or fraudulent conduct;

(e) violation of any securities or commodities laws, any rules or regulations pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which the Company is a member, or violation of any similar federal, state or local law, regulation, ordinance or licensing requirement applicable to employees of financial institutions; or

(f) conduct that may reasonably be expected to have a material adverse effect on the financial interest or business reputation of Citizens.

Following your start date, you may call the Human Resources Service Center at [—] with any benefits or other Human Resources related

questions.

This employment offer will expire five business days from the date of this letter.

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Brad, we are delighted with your decision to join RBS Citizens, N.A. and look forward to you becoming a member of the team. If you have any questions, please feel free to call me directly at [—] or my mobile number is [—].

Please sign below to acknowledge your acceptance, and return this letter to me.

Sincerely,

/s/ Susan M. Mason_________________________

Susan M. Mason

Director of Recruiting, RBS Americas

Human Resources

Accepted and agreed to:

/s/ Brad L. Conner__________________________                        5/28/2008___________________

Brad Conner                                         Date

Note: Please remember to visit our website at [—] to print, review and complete the required forms and policies. These documents will be

collected on your first day during new-hire orientation.

cc: Personnel File Folder

Requisition number [—]

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EXECUTIVE AGREEMENT ADDENDUM

This EXECUTIVE EMPLOYMENT AGREEMENT ADDENDUM (the "Addendum") is made as of August 6, 2014 by and between Citizens Financial Group, Inc. (the "Company") and Brad Conner ("Executive").

This Addendum is a supplement to your offer letter dated May 23, 2008. The terms of this Addendum shall be incorporated by reference therein and become terms and conditions of your continued employment. The terms of this Addendum shall supersede any conflicting terms found in your offer letter. This Addendum may not be altered, modified, or amended except by written instrument signed by the parties hereto.

TERMS AND CONDITIONS:

Section 1. At-Will Employment and Notice of Intent to Leave.

(a)Executive’s employment with the Company shall be strictly "at-will" and not for any fixed term. Executive understands and acknowledges that no statement, whether written or verbal, by the Company or any of its officers, employees or representatives may in any way modify, alter, or change the strictly "at-will" nature of his employment relationship with the Company. Both Executive and the Company retain the right to terminate Executive’s employment at any time, for any reason or no reason. Executive understands and agrees that, as an at-will employee, the Company may terminate his employment without advance notice. Executive may terminate his employment for any reason (a “Resignation”) effective 90 days following his delivery of written notice of termination to the Company's Board of Directors (the “Notice Period”).

(b)Upon receipt of a Resignation from Executive, the Company may, in its sole discretion, waive the Notice Period, in which case Executive will be permitted to terminate immediately. Under such circumstances the Company will not be obliged to pay in lieu of notice. Alternatively, the Company may direct Executive not to report to work unless otherwise requested by the Company (“Garden Leave”). During any period of Garden Leave:

(i)Executive will remain an employee of the Company and will continue to be paid his then base salary and continue to be eligible for employee benefits, excluding any discretionary award;

(ii)Executive will be expected to continue to undertake such duties and responsibilities as are assigned to Executive by the Company's Board or Chief Executive Officer, including duties to assist the Company with his transition from the Company and maintaining the Company’s business, business relationships, and goodwill. Notwithstanding the foregoing, the Company reserves the right to suspend any or all of Executive’s duties and powers and to relocate his office to his personal residence for all or part of his Garden Leave;

(iii) Executive will remain bound by all fiduciary duties and obligations owed to the Company and required to comply with all Company policies and practices; and

(iv)Executive may not, without the prior written consent of the Company or except in the discharge of duties and responsibilities in accordance with clause (ii) above, contact or attempt to contact any client, customer, agent, professional adviser, employee, supplier or broker of the Company or any of its parents or subsidiaries.

Section 2. Non-Solicitation.

(a)Non-Solicitation of Employees. Executive agrees that, at any time during his employment with the Company, its parents, subsidiaries, affiliates or any successor organization, and during the 12 month period following Executive's termination of employment for any reason ("Restricted Period"), Executive shall not, directly or indirectly, hire, employ, solicit for employment or hire, or attempt to solicit for employment or hire, any person who is employed by the Company or any of its parents, subsidiaries or affiliates during the Restricted Period, nor shall Executive directly or indirectly induce any Company employee to terminate his or her employment or accept employment with anyone other than the Company, or otherwise interfere with the relationship between the Company and any of its employees, during the Restricted Period.

(b)Non-Solicitation of, and Non-Interference with, Customers and Vendors. Executive agrees that during his employment with the Company and during the Restricted Period, Executive shall not, directly or indirectly, for any person or entity other than the Company, solicit or assist in soliciting for business any customer of the Company, its parents, subsidiaries or affiliates nor will Executive induce or encourage any such customer to terminate its relationship with the Company, its parents, subsidiaries or affiliates or to divert business away from the

Company, its parents, subsidiaries oraffiliates, provided, however, that general solicitation through advertisement shall not constitute solicitation for purposes of this provision.

(c)Representations. Executive agrees that all of the foregoing restrictions are reasonable and necessary to protect the Company’s business and its Confidential Information and that his employment by the Company, along with the benefits and attributes of that employment, is good and valuable consideration to compensate his for agreeing to all restrictions contained in this Addendum. Executive also acknowledges, represents and warrants that his knowledge, skills and abilities are sufficient to permit Executive to earn a satisfactory livelihood without violating these provisions.

(d)Blue Pencil. It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 2 to be reasonable, if a final judicial determination is made by an arbitrator or a court of competent jurisdiction that the time or territory or any other restriction contained in this Addendum is an unenforceable restriction against Executive, the provisions of this Addendum shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if an arbitrator or a court of competent jurisdiction finds that any restriction contained in this Addendum is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

Section 3. Confidentiality; Ownership of Materials; Duty to Return Company Property.

(a)Confidential Information. Executive may not at any time (whether during his employment with the Company or after termination for any reason) disclose to any unauthorized person, firm or corporation or use or attempt to use for his own advantage or to the advantage of any other person, firm or corporation, any confidential information relating to the business affairs or trade secrets of the Company or any of its parents, subsidiaries or affiliates, or any confidential information about (howsoever obtained) or provided by any third party received during the course of or as a result of his employment (the “Confidential Information”). Confidential Information includes, but is not limited to, information relating to employees, customers and suppliers (former, actual and potential), Company contracts, pricing structures, financial and marketing details, business plans, any technical data, designs, formulae, product lines, intellectual property, research activities and any Company or Company affiliate information which may be deemed to be commercially or price sensitive in nature, whether printed, typed, handwritten, videotaped, transmitted or transcribed on data files or on any other type of media, whether or not labeled as “confidential”. It also includes, without limitation, any information contained in documents marked “confidential” or documents of a higher security classification and other information which, because of its nature or the circumstances in which Executive receives it, Executive should reasonably consider to be confidential. The Company reserves the right to modify the categories of Confidential Information from time to time.

(b)Exclusions. The provisions of this Section 3 shall not apply to:

(i)information or knowledge which subsequently comes into the public domain other than by way of unauthorized use or disclosure by Executive;

(ii)the discharge by Executive of his duties hereunder or where his use or disclosure of the information has otherwise been properly authorized by the Company;

(iii) any information which Executive discloses in accordance with applicable public interest disclosure legislation; or

(iv) any disclosure required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction to order Executive to disclose or make accessible any information.

(c)Due Care. Executive shall exercise all due care and diligence and shall take all reasonable steps to prevent the publication or disclosure by Executive of any Confidential Information relating, in particular, but not limited to, actual or proposed transactions, of any employee, customer, client or supplier (whether former, actual or potential) of any member of the Company, including partnerships, companies, bodies, and corporations having accounts with or in any way connected to or in discussion with any member of the Company and all other matters relating to such customers, clients or suppliers and connections.

(d)    Duty to Return Confidential Information and Other Company Property. All reports, files, notes, memoranda, e-mails, accounts, documents or other material (including all notes and memoranda of any Confidential Information and any copies made or received by Executive in the course of his employment (whether during or after) are and shall remain the sole property of the Company and, following his termination of employment or at any other time upon the Company’s request, to the extent within his possession or control, shall be surrendered by Executive to the duly authorized representative of the Company.

(e)Reasonableness. Executive agrees that the undertakings set forth in this Section 3 are reasonable and necessary to protect the legitimate business interests of the Company and its members both during, and after the termination of, Executive's employment, and that the benefits Executive receives through continued employment are sufficient compensation for these restrictions.

Section 4. Intellectual Property and Developments.

(a)Executive agrees that all developments and intellectual property are the sole and exclusive property of the Company and hereby assigns all rights to such developments and intellectual property to the Company. Executive agrees, at the Company’s expense at any time during his employment or thereafter, to sign all appropriate documents and carry out all such reasonable acts as will be necessary to identify and preserve the legal protection of all developments and intellectual property; however, the Company will have no obligation to compensate Executive for his time spent in connection with any assistance provided unless otherwise required by law. Notwithstanding the foregoing, Executive understands that no provision in this Section is intended to require assignment of any of his rights in an invention for which Executive can prove no equipment, supplies, facilities or Confidential Information or trade secret information of the Company was used, which invention was developed entirely on his own time, and which invention Executive can prove: (i) does not relate to the business of the Company or the actual or demonstrably anticipated research or development of the Company; or (ii) does not result from any work performed by Executive for the Company.  To the extent compatible with applicable state law, these provisions do not apply to any invention which is required to be assigned by the Company to the United States Government.  Executive waives all moral rights in all Intellectual Property which is owned by the Company, or will be owned by the Company, pursuant to this Section 4.

(b)Executive agrees to promptly submit to the Company written disclosures of all inventions, whether or not patentable, which are made, conceived or authored by Executive, alone or jointly with others, while Executive is employed by the Company.

Section 5. Certain Agreements.

(a)Data Protection. Executive shall familiarize himself with the Company’s Data Protection policy, procedures and accountabilities. Executive acknowledges that any breach of these procedures may result in the immediate termination of his employment.

(b)Personal Information. Executive acknowledges and agrees that the Company is permitted to hold personal information about him as part of its personnel and other business records and, in accordance with applicable law, may use such information in the course of the Company’s business.

(c)Credit Data. The Company reserves the right, upon five (5) days prior written notice, to, and Executive agrees that the Company may, in accordance with applicable law, carry out searches about Executive through credit reference agencies or through the Company’s customer records at any time during his employment for purposes of identifying any serious debt or other significant financial difficulties of Executive for the purposes of detecting, eliminating or mitigating any particular risk of employee fraud or theft. The Company will only retain the information about Executive which the Company obtains from these searches in accordance with applicable law and for so long as is needed for the purposes set out above (subject to any legal (including any regulatory) obligation which requires the Company to retain that information for a longer period). The credit reference agency will record details of the search but these will not be available for use by lenders to assess the ability of Executive to obtain credit. Executive has the right of access to his personal records held by credit reference agencies. The Company will supply the names and addresses of such agencies upon request, to help Executive to exercise his right of access to such records.

(d)Indebtedness. For the reasons referred to above, the Company expects Executive to manage his personal finances responsibly. The Company requires that Executive draw to the attention of his manager any serious debt or significant financial difficulties that he may have, including those which result in court action being taken against Executive.

Section 6. Medical Exams.

Executive shall at any time (including during any period of incapacity) at the request and expense of the Company submit to medical examinations by a medical practitioner nominated by the Company, to the extent permitted by applicable federal and state law. Executive agrees, and hereby authorizes, that the results of any such medical examination be disclosed to the Company, subject to the provisions of the United States Health Insurance Portability and Accountability Act of 1996.

Section 7. Tax Compliance.

All compensation paid to Executive is intended to, and reasonably believed to, comply with Internal Revenue Code Section 409A as well as other tax related laws and regulations to the extent it does not fall into any applicable exclusion.

Section 8. Remedies.

The Company and Executive agree that it is impossible to measure solely in money the damages which will accrue to the Company by reason of his failure to observe any of his obligations of Sections 2, 3 or 4 of this Addendum. Therefore, if the Company shall institute any action or proceeding to enforce such provisions, Executive hereby waives the claim or defense that there is an adequate remedy at law and agrees in any such action or proceeding not to interpose the claim or defense that such remedy exists at law. Without limiting any other remedies that may be available to the Company, Executive hereby specifically affirms the appropriateness of injunctive or other equitable relief in any such action and acknowledges that nothing contained within this Addendum shall preclude the Company from seeking or receiving any other relief, including without limitation, any form of injunctive or equitable relief. Executive also agrees that, should he violate the provisions of Section 2 and its subsections such that the Company shall be forced to undertake any efforts to defend, confirm or declare the validity of the covenants contained within Section 2 of this Addendum, the time restrictions set forth therein shall be extended for a period of time equal to the pendency of any court proceedings, including appeals. Further, Executive agrees that, should the Company undertake any efforts to defend, confirm or declare the validity of any of the covenants contained in Sections 2, 3 and 4 of this Addendum, the Company shall be entitled to recover from Executive all of its reasonable attorneys’ fees and costs incurred in prosecuting or defending any such action or engaging in any such efforts.

Section 9. Dispute Resolution; Mediation and Arbitration.

Except as provided in the last sentence of this paragraph to the fullest extent permitted by law, the Company and Executive agree to waive their rights to seek remedies in court, including but not limited to rights to a trial by jury. The Company and Executive agree that any dispute between or among them or their subsidiaries, affiliates or related entities arising out of, relating to or in connection with this Addendum or his employment with the Company, including but not limited to claims for discrimination or other alleged violations of any federal, state or local employment and labor law statutes, ordinances or regulations, will be resolved in accordance with a confidential two-step dispute resolution procedure involving: (a) Step One: non-binding mediation, and (b) Step Two: binding arbitration under the Federal Arbitration Act, 9 U.S.C. § 1, et. seq., or state law, whichever is applicable. Any such mediation or arbitration hereunder shall be under the auspices of the American Arbitration Association (“AAA”) pursuant to its then current Labor Arbitration Rules and Mediation Procedures (the “AAA Labor Rules”). Disputes encompassed by this Section 9 include claims for discrimination arising under local, state or federal statutes or ordinances and claims arising under any state’s labor laws. Notwithstanding anything to the contrary in the AAA Labor Rules, the mediation process (Step One) may be ended by either party to the dispute upon notice to the other party that it desires to terminate the mediation and proceed to the Step Two arbitration; provided, however, that neither party may so terminate the mediation process prior to the occurrence of at least one mediation session with the mediator. No arbitration shall be initiated or take place with respect to a given dispute if the parties have successfully achieved a mutually agreed to resolution of the dispute as a result of the Step One mediation. The mediation session(s) and, if necessary, the arbitration hearing shall be held in the city nearest to Executive's office location during the course of Executive's employment with the Company or an alternative location mutually agreeable to Executive and the Company. The arbitration (if the dispute is not resolved by mediation) will be conducted by a single AAA arbitrator, mutually selected by the parties, as provided for by the AAA Labor Rules. The Company will be responsible for the arbitration charges, including the costs of the mediator and arbitrator. The Company and Executive agree that the arbitrator shall apply the substantive law of the State of New York to all state law claims and federal law to any federal law claims, that discovery shall be conducted in accordance with the AAA Labor Rules or as otherwise permitted by law as determined by the arbitrator. In accordance with the AAA Labor Rules (a copy of which is available through AAA’s website, www.adr.org), the arbitrator’s award shall consist of a written statement as to the disposition of each claim and the relief, if any, awarded on each claim. The Company and Executive understand that the right to appeal or to seek modification of any ruling or award by the arbitrator is limited under state and federal law. Any award rendered by the arbitrator will be final and binding, and judgment may be entered on it in any court of competent jurisdiction. Nothing contained herein shall restrict either party from seeking temporary injunctive relief in a court of law to the extent set forth in Section 6 hereof.

In the unlikely event the AAA refuses to accept jurisdiction over a dispute, Executive and the Company agree to submit to Judicial-Arbitration-Mediation Services (“JAMS”) mediation and arbitration applying the JAMS equivalent of the AAA Labor Rules. If AAA and JAMS refuse to accept jurisdiction, the parties may litigate in a court of competent jurisdiction.

Section 10. Severance. In the event Executive is made redundant or otherwise has his employment terminated without cause and for reasons unrelated to poor performance, Executive shall be entitled to receive a minimum severance payment amounting to 26 weeks of Executive's base salary at the time of Executive's exit contingent upon Executive executing, and not revoking, the Company's standard release agreement then in use.

Section 11. Miscellaneous.

(a)Governing Law. This Addendum shall be governed by and construed in accordance with the laws of the State of New York, without regard for the conflict of laws provisions thereof.

(b)No Waiver. The failure of a party to insist upon strict adherence to any term of this Addendum on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Addendum.

(c)Severability. In the event that any one or more of the provisions of this Addendum shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Addendum shall not be affected thereby.

(d)Counterparts; Effectiveness. This Addendum may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Addendum shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto including by fax or electronic pdf.

ACCEPTED AND AGREED:

/s/ Brad Conner

Brad Conner

SECOND ADDENDUM TO

EXECUTIVE EMPLOYMENT AGREEMENT

This SECOND ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Second Addendum”) is made as of August 2, 2017 by and between Citizens Financial Group, Inc., together with its subsidiaries and any and all successor entities (the “Company”) and Brad Conner (“Executive”).

This Second Addendum is a supplement to Executive’s offer letter dated May 23, 2008 (the “Offer Letter”) and the first addendum dated August 6, 2014 (the “First Addendum”, together with the Offer Letter, collectively, the “Original Agreement”), and the terms of this Second Addendum shall be incorporated by reference therein and shall become terms and conditions of Executive’s continued employment. The terms of this Second Addendum shall supersede any conflicting terms found in the Original Agreement. This Second Addendum may not be altered, modified, or amended except by written instrument signed by the parties hereto. To the extent capitalized terms are not defined herein, the definitions included in the Original Agreement, as applicable, shall govern.

Section 1. Notice Period

The parties agree that “Notice Period” as such term is used in the Original Agreement shall mean one hundred twenty (120) days; provided, that, the other terms of Section 1(a) of the First Addendum shall remain in full force and effect.

Section 2. Change of Control Severance

(a)In the event Executive's employment is terminated by the Company without Cause (other than by reason of Executive’s death or disability) or the Executive resigns with Good Reason, in each case within 24 months following a Change of Control, Executive shall receive a payment equivalent to: (i) two times the sum of (A) Executive’s Base Salary at the time of termination and (B) the average cash bonus paid to Executive during the prior three years; plus (ii) a pro-rata bonus for the year in which termination occurs, based on the average cash bonus paid to Executive during the prior three years (together, the “COC Severance Payment”).

(b)Any COC Severance Payment made in accordance with this section shall be in lieu of and not in addition to any payments to which Executive may otherwise have been entitled in accordance with other sections of this Second Addendum or the Original Agreement and shall be in full and final settlement of all claims Executive may have arising out of or in connection with his employment or its termination, other than with respect to any outstanding equity held by Executive, which shall be treated as provided for in the applicable Company stock plan and award agreements governing such awards.

Section 3. Payment of Severance

(a)The severance set forth in Section 10 of the First Addendum and the COC Severance Payment set forth in this Second Addendum shall be made in a lump sum, subject to execution and non-revocation of a Standard Release, within seventy (70) days of the termination of Executive’s employment. If the period between the termination of Executive’s employment and the latest possible effective date of the Standard Release spans two calendar years, the COC Severance Payment shall be paid by the Company in the second calendar year.

Section 4. Definitions

(a)    “Cause” means: (i) any conviction (including a plea of guilty or of nolo contendere or entry into a pre-trial diversion program) of Executive for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) Executive commits an act of gross misconduct, fraud, embezzlement, theft or material dishonesty in connection with the Executive’s duties or in the course of Executive’s employment with the Company or any of its affiliates; (iii) failure on the part of Executive to perform his employment duties in any material respect, which is not cured to the reasonable satisfaction of the Company within 30 days after Executive receives written notice of such failure; (iv) Executive violates Sections 2 or 3 of the First Addendum (non-solicitation of employees, customers and clients; confidentiality; ownership of materials; duty to return company property); or (v) Executive makes any material false or disparaging comments about the Company or any of its subsidiaries, affiliates, employees, officers,

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or directors, or engages in any activity which in the opinion of the Company is not consistent with providing an orderly handover of Executive's responsibilities.

(b) “Good Reason” means any of the following changes, as compared to Executive’s terms of employment prior to a Change of Control:

(i) a material diminution in Executive’s authority, duties, or responsibilities;

(ii) a material diminution in Executive’s base salary other than a general reduction in base salary that affects all similarly situated employees; or

(iii) a relocation of Executive’s principal place of employment by more than 50 miles from his or her current principal place of employment, unless the new principal place of employment is closer to Executive’s home address.

Provided, however, that Executive’s must give written notice to the Company within 30 days of the initial existence of any of the foregoing changes, the Company shall have 30 days upon receipt of such notice to remedy the condition so as to eliminate the Good Reason, and if not remedied, Executive’s employment must terminate no later than 60 days following the expiration of such cure period. Notwithstanding the foregoing, the Executive’s continued employment shall not constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good Reason under this Second Addendum.

(c)“Change of Control” means the occurrence of any one or more of the following events:

(i)    any Person (as defined in Section 3(a)(9) of the Exchange Act of 1934, as amended and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof), other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)    at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company (the “Board”) and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)    the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

Section 5. Section 280G

(a)If the aggregate of all amounts and benefits due to Executive under this Second Addendum or the Original Agreement or any other plan, program, agreement or arrangement of the Company or any of its Affiliates, which, if received by Executive in full, would constitute “parachute payments,” as such term is defined in and under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (collectively, “Change of Control Benefits”), reduced by

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all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount Executive would receive, after all such applicable taxes, if Executive received aggregate Change of Control Benefits equal to an amount which is $1.00 less than three (3) times Executive’s “base amount,” as defined in and determined under Section 280G of the Code, then such Change of Control Benefits shall be reduced or eliminated to the extent necessary so that the Change of Control Benefits received by the Executive will not constitute parachute payments. If a reduction in the Change of Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a different order, subject to the Company’s consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple of Base Salary and/or annual bonus; (ii) other cash payments; (iii) any annual incentive compensation paid as severance; (iv) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value, provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock options and equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.

(b)It is possible that after the determinations and selections made pursuant to Section 5(a) above, Executive will receive Change of Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by Section 5(a) above (hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, Executive shall promptly repay the Company an amount consistent with this Section 5(b). If there is an Underpayment, the Company shall pay Executive an amount consistent with this Section 5(b).

(c)The determinations with respect to this Section 5 shall be made by an independent auditor (the “Auditor”) compensated by the Company. The Auditor shall be the Company’s regular independent auditor, unless the regular independent auditor is unable or unwilling to makes such determinations, in which event the Auditor shall be a nationally-recognized United States public accounting firm chosen by the Company.

Section 6. Tax Compliance

All compensation paid to Executive is intended to, and is reasonably believed to, comply with Section 409A of the Code (“Section 409A”), as well as other tax related laws and regulations to the extent it does not fall into any applicable exclusion, and shall be interpreted and construed consistent with that intent. Notwithstanding the foregoing, the Company makes no representations that the terms of this Second Addendum or the Original Agreement (and any compensation payable thereunder) comply with Section 409A, and in no event shall the Company be liable for any taxes, interest, penalties or other expenses that may be incurred by Executive on account of non-compliance with Section 409A. No expenses eligible for reimbursement, or in-kind benefits to be provided, during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, to the extent subject to the requirements of Section 409A, and no such right to reimbursement or right to in-kind benefits shall be subject to liquidation or exchange for any other benefit. For purposes of Section 409A, each payment in a series of installment payments, if any, provided under this Second Addendum or the Original Agreement shall be treated as a separate payment. Any payments under this Second Addendum or the Original Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this Second Addendum or the Original Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing and any provision in this Second Addendum to the contrary, if on the date of his termination of employment, Executive is deemed to be a “specified employee” within the meaning of Section 409A and any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A, then such payment or benefit due upon, or within the six-month period following, a termination of Executive’s employment (whether under this Second Addendum, Executive’s Original Agreement, any other plan, program, payroll practice or any equity grant) and which do not otherwise qualify under the exemptions under Treas. Reg. Section 1.409A-1(including, without limitation, payments that constitute “separation pay” within the meaning of Section 409A), shall be paid or provided to Executive in a lump sum on the earlier of (a) the date which is six months and one day after Executive’s “separation from service” (as such term is defined in Section 409A) for any reason other than death, and (b) the date of Executive’s death, and any remaining payments and benefits shall be paid or provided in accordance with the payment dates specified in this Second Addendum for such payment or benefit.

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Section 7. Miscellaneous

(a)Governing Law. This Second Addendum shall be governed by and construed in accordance with New York law without giving effect to the conflict of laws provisions thereof.

(b)No Waiver. The failure of a party to insist upon strict adherence to any term of this Second Addendum on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Second Addendum.

(c)Severability. In the event that any one or more of the provisions of this Second Addendum shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Second Addendum shall not be affected thereby.

[signature page follows]

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IN WITNESS WHEREOF, Executive duly executed this Second Addendum as of the day and year first above written.

ACCEPTED AND AGREED:

/s/ Brad Conner

Brad Conner

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EX-10.6

Exhibit 10.6

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is made as ofJuly 1, 2014by and between Citizens Financial Group, Inc. (the “Company”) and Stephen Gannon (“Executive”) (certain capitalized terms used herein being defined in Section 17).

WHEREAS the Company desires to employ Executive and to enter into this Agreement embodying the terms of such employment; and

WHEREAS Executive desires to accept such employment and enter into this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Section 1. Employment At-Will.

(a)Executive’s employment with the Company shall be strictly "at-will" and not for any fixed term. Executive understands and acknowledges that no statement, whether written or verbal, by the Company or any of its officers, employees or representatives may in any way modify, alter, or change the strictly "at-will" nature of his employment relationship with the Company. Both Executive and the Company retain the right to terminate employment at any time, for any reason or no reason. Executive understands and agrees that, as an at-will employee, the Company may terminate his employment without advance notice. Executive may terminate his employment for any reason (a “Resignation”) effective ninety (90) days following his delivery of written Notice of Termination to the Board (the “Notice Period”).

(b)Upon receipt of a Resignation from Executive, the Company may, in its sole discretion, waive the Notice period, in which case Executive will be permitted to terminate immediately. Under such circumstances the Company will not be obliged to pay in lieu of notice. Alternatively, the Company may direct Executive not to report to work unless otherwise requested by the Company (the “Garden Leave”). During any period of Garden Leave, as within any Notice Period:

(i)Executive will remain an employee of the Company and will continue to be paid his then Base Salary and continue to be eligible for Employee Benefits excluding any Discretionary Deferred Award and/or other incentive compensation;

(ii)Executive will be expected to continue to undertake such duties and responsibilities as are assigned to Executive by the Company's Board or Chief Executive Officer, including duties to assist the Company with his transition from the Company and maintaining the Company’s business, business relationships, and goodwill. Notwithstanding the foregoing, the Company reserves the right to suspend any or all of Executive’s duties and powers and to relocate his office to his personal residence for all or part of his Garden Leave;

(iii)Executive will remain bound by all fiduciary duties and obligations owed to the Company and required to comply with all Company policies and practices and the provisions of this Agreement.

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(iv)Executive may not, without the prior written consent of the Company or except in the discharge of duties and responsibilities in accordance with clause (ii) above, contact or attempt to contact any client, customer, agent, professional adviser, employee, supplier or broker of the Company or of any subsidiary or Affiliate of the Company;

Section 2. Position.

(a)Position. During Executive’s employment, he shall serve as General Counsel for Citizens Financial Group or in such other capacity of like status as the Company requires. In this position, Executive shall report directly to Bruce Van Saun Chairman and CEO of Citizens Financial Group or to such other person as the Company or the Board may specify from time to time.Notwithstanding anything else contained within this Agreement, the Company shall be entitled from time to time to appoint one or more persons to act jointly with Executive, in its sole discretion. Additionally, Executive's role has been identified as a Material Risk Taker (“MRT”) under the European Banking Authority ("EBA") rules and, therefore, will be subject to the EBA rules so long as they shall apply.

(b)Best Efforts. During Executive’s employment, Executive shall: (i) devote his full professional time, attention, skill and energy to the performance of his duties for the Company and its affiliates, including The Royal Bank of Scotland, plc located in North America and The Royal Bank of Scotland Group Plc (collectively the “Group”); (ii) use his best efforts to dutifully, faithfully and efficiently perform his duties hereunder, comply with the Group’s policies, procedures, bylaws, rules, code of conduct and practices, as the same may be amended from time to time, and obey all reasonable and lawful directions given by or under the authority of the Board; (iii) refrain from engaging in any other business, profession or occupation for compensation or otherwise which would conflict, directly or indirectly, with the rendition of services to the Company, without the prior written consent of the Board; except that Executive may engage in charitable and community activities and manage his personal investments provided that such activities do not materially interfere with the performance of his duties hereunder or conflict with the conditions of his employment; and (iv) refrain from engaging in any conduct prejudicial to the interests and reputation of the Group but instead endeavor to promote and extend the business of the Group and protect and further its interests and reputation.

(c)Directorships. Executive may be required, in the sole discretion of the Company, to perform services for any Group Company and may be required to undertake the role and duties of an officer or non-executive director of other companies in the Group. No additional remuneration will be paid in respect of these appointments.

(d)Location. During the period of Executive’s employment, Executive shall be based in Boston, Massachusetts but may be relocated within a fifty (50) mile radius of the same location at the Company’s sole discretion. Additionally, Executive may be required to travel elsewhere in the world in the performance of his duties.     

Section 3. Compensation.

(a)Base Salary.The Company shall pay Executive a base salary (the “Base Salary”) at the initial annual rate of $600,000.00 in substantially equal installments as it is earned not less frequently than monthly in accordance with the Company’s usual payroll practices.

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Executive shall be entitled. to such increases in Executive’s Base Salary as may be determined from time to time in the sole discretion of the Remuneration Committee.

(b)Role Based Allowance. As your role has been identified as a MRT role under the EBA rules, you will also receive a Role Based Allowance of $550,000 (the “Allowance”), less any applicable tax and other statutory deductions. For 2014, the Allowance will be prorated based on your start date and paid in equal instalments in accordance with the Company’s regular payroll cycle. Thereafter, any Allowance amount above $500,000 payable in a single calendar year will be paid as follows: a) the first $500,000 payable in equal instalments in accordance with the Company’s regular payroll cycle and b) the remainder payable in four equal quarterly instalments of CFG stock. You will not be eligible for the Allowance if your employment terminates before the Allowance payment date for that period. The use of Allowances will be reviewed annually and may be changed or removed at the sole discretion of the Company, or as required by regulation. In the event the Allowance is removed, an appropriate adjustment to Executive’s variable compensation shall be made to increase the discretionary variable incentive award opportunity from $1,100,000.00 referenced in Section 3(c) below to a discretionary variable incentive award opportunity of $1,650,000.00.

(c)Variable Incentive Compensation. Executive will be eligible to take part in the discretionary incentive award program for the business unit (the “Discretionary Award Program”). The Discretionary Award Program rewards performance during the financial year from January 1 to December 31, and is based on achievement against a mix of targets, which may include personal, team, business, Company targets and external economic considerations. The Company may in its absolute discretion provide Executive an award of such amount, at such intervals and subject to such conditions as the Company may in its sole discretion determine appropriate from time to time. Any such award may be paid in cash, shares or any other form, may be deferred in full or in part as provided in accordance with the Company’s compensation plans as that plan may be in effect and amended from time to time (the “Deferral Plan”), and may be forfeited or reduced in such circumstances and on such terms as the Company, acting in good faith and in its sole discretion, determines appropriate. The exercise of discretion in one financial year shall not bind the Company or act as a precedent for its exercise of discretion in any other financial year. If, on or before the date when an award might otherwise have been payable, Executive’s employment has terminated or either party has given notice under this Agreement to terminate Executive’s employment, Executive will not be entitled to receive any such award (whether in cash, shares or any other form). The Company reserves the right to change the rules of any award schemes, or to cancel such schemes, at any time without prior notice. In the event of any conflict, the rules of any relevant award scheme and the Deferral Plan (both as they may be amended from time to time) shall take precedence over the terms of this Agreement. Currently the discretionary variable incentive award opportunity for Executive’s position is $1,100,000.00.

(d)Conditional Bonus. Subject to the below, for the performance year 2014 only, you will receive as part of your Variable Incentive Compensation a conditional performance bonus of $450,000.00, less any applicable tax and other statutory deductions (the “Conditional Bonus”), subject to you receiving a performance rating of 3 based on achieving the Objectives outlined below. In the event that you fail to achieve these Objectives, the Conditional Bonus will be reviewed for appropriate payout, if any.

• Review changes or developments in law, regulation or market practice to consider their impact on products, processes, transactions and our customers

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• Lead the legal work to contribute to a successful IPO of Citizens Financial Group and separation from RBS by actively participating in IPO related Core Working Group meetings, representing the Company in meetings with RBS, investment bankers and underwriters, and providing input into IPO related documentation and agreements

• Lead the legal function and provide advice and counsel to proactively manage and mitigate legal risk

• Manage legal spend within appropriate budget to achieve best value for the bank

• Complete an assessment of the organizational structure and staff by December 31, 2014

• Provide legal advice and support efforts to remediate regulatory issues by actively participating in the Company's Executive Risk Forum and Regulatory Executive Steering Committee meetings

• Take personal responsibility for adherence to policies and procedures designed to meet the spirit and letter of our regulatory obligations, for ensuring fair outcomes to our customers and supporting prompt identification, reporting and remediation of issues

The Company reserves the right to change (amend or replace) these Objectives at any time with prior consultation with you. In the event of any change, the objectives subsequently notified to you (the "New Objectives") will take precedence over these Objectives. All other terms and conditions, as set out in this letter, will remain unaffected unless advised to the contrary.

The Conditional Bonus will be paid in the form of a Deferred Award made under the RBS Deferral Planapplicable from time to time, or such other plan that may be in operation at that time (the “Deferral Plan”). The RBS Group reserves the right to change the rules of the Deferral Plan, or to cancel or replace it, at any time (including, for the avoidance of doubt, during any financial year) in its sole and absolute discretion and, for the avoidance of any doubt, such change may have a retrospective effect.

You will not be eligible to be paid the Conditional Bonus if your employment terminates or either party has given notice to terminate your employment on or before the Award Date of the relevant Deferred Award unless such termination falls within one of the following exceptional circumstances:

• ill-health, injury or disability, as established to the satisfaction of the RBS Group;

• death;

• retirement with the approval of the RBS Group;

• your employing company ceasing to be a member of the RBS Group, except via divestiture through Initial Public Offering ("IPO");

• the business in which you work being transferred to a person or entity which is not a member of the RBS Group; or

• redundancy with the approval of the RBS Group.

If the termination of your employment does fall within one of the above circumstances, you will remain eligible to receive the Conditional Bonus in the form of a Deferred Award.

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For your information, the Deferral Plan contains certain provisions in respect of when a Deferred Award, or a proportion of it, may be forfeited as a result of termination of employment. In particular, if before the date on which the Deferred Award or a part of it becomes payable or vests, your employment has terminated or the Company has given notice to terminate your employment for Cause (as defined in the Deferral Plan rules), or you have resigned in circumstances which would entitle the Company to summarily terminate your employment, you will not be entitled to receive your Deferred Award or any remaining part of it. If your employment has terminated (or either party has given notice to terminate your employment) for other reasons, in most cases, your Deferred Award will continue to become payable and vest (subject always to the below), unless you have engaged in Competitive or Detrimental Activity, in accordance with the rules of the Deferral Plan (as amended or replaced from time to time).

The rules of the Deferral Plan also contain provisions under which unvested elements of Deferred Awards can be delayed, reduced or forfeited and these will apply to any Deferred Award made to you. In the event of any conflict, the rules of the Deferral Plan shall take precedence over the terms of this letter whether implemented before or after your employment commences.

(e)Executive Long-Term Incentive Plans. Executive shall, at the absolute discretion of the Remuneration Committee, be eligible to participate to the same extent as other similarly-situated Company executives in Long-Term Incentive Plan as that plan may be in effect from time to time, subject to the rules of that plan as they may be amended from time to time in the Company’s sole discretion. For performance year 2014 only as part of your Variable Incentive Compensation you will eligible for a long-term incentive award of at least $650,000.00.

Section 4. Stock Buyout In Cash

To recognize that you will forfeit value in your previous employer's stock schemes as a result of joining the Company, you will receive a Cash Buyout payment using the RBS Group method of valuation.

Payment will be subject to you providing proof (in a form acceptable to the Company) of such entitlements and that they will be forfeited as a result of you leaving your current employer.

Please ensure you provide the following documents within 30 days of the commencement of your employment with the Company:

• proof (in a form acceptable to the Company) of award of such entitlements, for example original award statements; and

• confirmation from your current employer (in a form acceptable to the Company) that the awards have been forfeited together with details of the awards that have been forfeited as a result of you leaving your current employer.

The Cash Buyout, with a value estimated at$1,732,000.00 will be paid in cash (less any applicable tax and other statutory deductions). The amount will be valued using the RBS Group method of valuation for the 5-days prior to your Start Date.

The Award will be made no later than December 31, 2014 following commencement of your employment and receipt of all required documentation. Following receipt, a letter will be sent to you confirming the final valuation.

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Repayment of Cash Buyout Payment

If within 12 months of your start date with the Company either your employment terminates or notice to terminate your employment is given by either party, you will be responsible for repaying to the Company, within 14 calendar days of the date of termination of your employment, the net amount (following any applicable tax and other statutory deductions) of any installments of the Cash Buyout payment that you have received unless such termination falls within one of the following exceptional circumstances:

• ill-health, injury or disability, as established to the satisfaction of the RBS Group;

• death;

• retirement with the approval of the RBS Group;

• your employing company ceasing to be a member of the RBS Group, except via divestiture through IPO;

• the business in which you work being transferred to a person or entity which is not a member of the RBS Group; or

• redundancy/without cause termination with the approval of the RBS Group.

Forfeiture of Unpaid Cash Buyout Installments

If before the final installment is paid your employment terminates or either party has given notice to terminate your employment, you will not be entitled to receive any of the outstanding installments.

Clawback of Unpaid Cash Buyout Installments

The RBS Group Remuneration Committee (“the Committee”) may review unpaid installments of the Cash Buyout in the light of the performance of the Company, any member of the Company’s group and any business area or team, and your conduct, capability or performance. The review may take place at any time determined by the Committee.

Without prejudice to the generality of the foregoing, in carrying out a review, the Committee will consider in respect of the financial year in relation to which the Cash Buyout was made:

• whether the results announced for that financial year have subsequently appeared materially inaccurate or misleading;

• whether a business unit or profit centre in which you worked has subsequently made a loss out of business written in that year or from circumstances that could reasonably have been risk-managed in that year; and/or

• any other matter which appears relevant, and

• Your conduct, capability or performance, and the performance of any team, business area or profit centre, if the Committee deems that the circumstances warrant a review.

Following a review under the paragraphs above, the Committee may, in its sole discretion, make any determination in respect of any installment that has not been paid, including for example to:

• reduce the value of an installment; or

• determine that an installment of a Cash Buyout will not be paid.

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Disciplinary Investigations

The RBS Group also reserves the right to withhold payment of the Cash Buyout payment pending the outcome of any disciplinary procedures relating to any matter or matters which the RBS Group could treat as grounds for termination of employment, or any other internal or external investigation (which for the avoidance of doubt may extend beyond the date your employment terminates). If you are subsequently dismissed (or given notice of dismissal) or if you subsequently resign (or give notice of resignation) for any reason other than one of the exceptional circumstances set out above, you will not be entitled to receive any of the outstanding installments (including, for the avoidance of doubt, the installment that has been withheld pending the outcome of the disciplinary procedure or investigation) and may have to repay the full amount of any payment(s) already received by you as set out in the preceding paragraphs.

Where applicable, all amounts of compensation paid to you will be paid subject to applicable tax and other required withholdings.

Section 5. Relocation

The Company will reimburse Executive for reasonable relocation expenses associated with Executive’s move from Richmond, VA to Boston, MA, in accordance with the terms of the relocation package that has been forwarded separately.  All relocation expenses must be appropriately documented. Any relocation reimbursements will be treated as income to Executive, and are subject to appropriate tax gross-ups.  As a condition of this offer, Executive is also required to execute the Relocation Repayment Agreement.Executive will be bound by all terms of the relocation policy including repayment obligations.

Section 6. Other Employee Benefits, Vacation and Perquisites.

(a)Employee Benefits. Executive may participate in and receive benefits under any and all executive welfare and health benefit plans (including but not limited to group healthcare (medical, vision and dental), life insurance, and short-term and long-term disability plans) and other executive benefit plans (including but not limited to qualified pension plans, retirement, savings and 401(k) if any, that are offered to other similarly-situated executives of the Company based in the United States, to the extent he is eligible thereunder and in accordance with all other terms and conditions of such plans, policies, programs and practices (collectively, the “Employee Benefits”). Generally, Employee Benefits shall start on the first date of the month following 30 days of the Executive’s commencement of performance, unless otherwise provided in accordance with the terms of the applicable plan document, program, policy or practice.Copies of all pertinent plan, program or policy documents will be provided to Executive on request, to the extent the same are within the Company’s control. The Company will not have any liability to pay any benefit to Executive under any insurance plan or program unless it receives payment of the benefit from the insurer. All benefits and the plans, programs, policies, or practices relating to them may be changed at any time by the Company within its sole discretion.

(b)Paid Time Off. Executive shall be entitled to accrue 27 days of paid time off (“PTO”) annually, which may be scheduled as time off away from work in accordance with the Company’s current PTO policy as applicable in the United States. For 2014, Executive’s PTO will be pro-

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rated based on the 1^st of the month following his date of hire, provided that his date of hire occurs on or before September 30^th; if his date of hire is subsequent to September 30^th, Executive will not be eligible to earn PTO until the beginning of the next calendar year.

(c)Perquisites. Executive shall be provided such additional perquisites and fringe benefits as are generally made available to other similarly-situated executives of the Company who are based in the United States.

(d)Reimbursement of Business Expenses. Reasonable, customary and necessary travel, entertainment and other business expenses incurred by Executive in the performance of his duties hereunder shall be reimbursed by the Company in accordance with the Company’s policies, subject to such reasonable substantiation and documentation as may be required by the Company from time to time.

(e)Sickness. Executive will be eligible for all payments in respect of short and long-term disability generally made available from time to time to other similarly-situated executives in the United States. Unless required under applicable federal or state law, Executive does not have any contractual or other right to payment in respect of any period of absence due to sickness or incapacity and any such payments will be made at the Company’s sole discretion. Executive shall at any time (including during any period of incapacity) at the request and expense of the Company submit to medical examinations by a medical practitioner nominated by the Company, to the extent permitted by applicable federal and state law. Executive agrees, and hereby authorizes, that the results of any such medical examination be disclosed to the Company, subject to the provisions of the United States Health Insurance Portability and Accountability Act of 1996.

(f)Severance: In the event Executive is made redundant or otherwise has his employment terminated without cause and for reasons unrelated to poor performance, unless such circumstances relate to a Change in Control as described in Section 7 below, Executive shall be entitled to receive a minimum severance payment amounting to 26 weeks of Executive's base salary at the time of Executive's exit contingent upon Executive executing, and not revoking, the Company's standard release agreement then in use.

Section 7. Change in Control.

In the event that Executive is made redundant solely as a result of the sale of the Company, via means other than an IPO, prior to such time as RBS's ownership interest in the Company drops below 50%, Executive shall receive a payment equivalent to 150% of Executives fixed pay. For the purposes of this Section 7, "fixed pay" shall mean the sum total of the amounts described in Sections 3(a) and 3(b) above. Such payment is contingent upon Executive executing, and not revoking, the Company's standard release agreement then in use. Any payment pursuant to this Section 7 shall be in lieu of, not in addition to, any separation payment Executive may otherwise have been eligible for pursuant to Section 6(f) above or any Company policy or practice with respect to separation from employment which may be in effect from time to time. At such time as RBS's ownership interest in the Company drops below 50%, this Section 7becomes null and void by its own terms with immediate effect.

Section 8. Staff Dealing.

Executive is subject to the Company’s Staff Dealing Rules (and divisional rules where applicable) which may require prior permission be obtained before he is permitted to deal in most types of securities transactions. Requests must be submitted in writing on the appropriate Company

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form. The Company also operates a closed period during which Executive will not be permitted to deal in Company or RBS Group shares. Failure to abide by these rules will constitute serious misconduct and may lead to criminal proceedings and/or the immediate termination of Executive’s employment.

Section 9. Non-Solicitation.

(a)Non-Solicitation of Employees. Executive agrees that, at any time during his employment and the Restricted Period, Executive shall not, directly or indirectly, whether for his own account or for any other person or entity hire, employ, solicit for employment or hire, or attempt to solicit for employment or hire, any person who was employed by the Company or any of its parents, subsidiaries or affiliates, including any member of the RBS Group at any time within one year prior to the time of the act of solicitation (and who, in the case of the Restricted Period following the Executive’s termination of employment, was also employed by the Company or any of its subsidiaries or Affiliates on the date the Restricted Period begins) (“Covered Employee”). Executive further agrees not to otherwise interfere with the relationship between any Covered Employee and the Company. Anything to the contrary notwithstanding, the Company agrees that Executive shall not be deemed in violation of this subsection 9(a) if an entity with which Executive is associated hires or engages any employee of the Company or any of its subsidiaries, if Executive was not, directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee.

(b)Non-Solicitation of Customers and Prospective Clients. Executive agrees that during his employment and the Restricted Period, Executive shall not, directly or indirectly, whether for his own account or for any other person or entity, through any corporation, partnership or other business entity of any kind, solicit, assist in soliciting for business or entice away or in any manner attempt to persuade any client or customer or prospective client or customer to discontinue or diminish his, her or its relationship or prospective relationship with the Company, or otherwise provide business to any person, corporation, partnership or other business entity of any kind other than the Company; provided, however, that general solicitation through advertisement shall not constitute solicitation for purposes of this provision.

(c)Representations. Executive agrees that all of the foregoing restrictions are reasonable and necessary to protect the Company’s business and its Confidential Information and that his employment by the Company, along with the benefits and attributes of that employment, is good and valuable consideration to compensate him or her for agreeing to all restrictions contained in this Agreement. Executive also acknowledges, represents and warrants that his knowledge, skills and abilities are sufficient to permit Executive to earn a satisfactory livelihood without violating these provisions. Further, Executive agrees that he shall not, following the termination of his employment with the Company, represent or hold himself out as being in any way connected with the business of the Company.

(d)Blue Pencil. It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 9 to be reasonable, if a final judicial determination is made by an arbitrator or a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if an arbitrator or a court of competent jurisdiction finds that any restriction contained in this Agreement is

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unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

Section 10. Confidentiality; Ownership of Materials; Duty to Return Company Property.

(a)Confidential Information. Executive may not at any time (whether during his employment or after its termination) disclose to any unauthorized person, firm or corporation or use or attempt to use for his own advantage or to the advantage of any other person, firm or corporation, any confidential information relating to the business affairs or trade secrets of the Company or any member of the RBS Group, or any confidential information about (howsoever obtained) or provided by any third party received during the course of or as a result of his employment (the “Confidential Information”). Confidential Information includes, but is not limited to, information relating to employees, customers and suppliers (former, actual and potential), Company contracts, pricing structures, financial and marketing details, business plans, any technical data, designs, formulae, product lines, intellectual property, research activities and any Company and/or RBS Group information which may be deemed to be commercially or price sensitive in nature, whether printed, typed, handwritten, videotaped, transmitted or transcribed on data files or on any other type of media, whether or not labeled as “confidential”. It also includes, without limitation, any information contained in documents marked “confidential” or documents of a higher security classification and other information which, because of its nature or the circumstances in which Executive receives it, Executive should reasonably consider to be confidential. The Company reserves the right to modify the categories of Confidential Information from time to time.

(b)No Copies. Executive is not permitted to make any copy, abstract, summary or précis of the whole or any part of any document belonging to a member of the Group unless he has been authorized to do so by the Company, and shall not at any time use or permit to be used any such items otherwise than for the benefit of the Company in the performance of his services hereunder.

(c)Exclusions. The provisions of this Section 10 shall not apply to:

(i)    information or knowledge which subsequently comes into the public domain other than by way of unauthorized use or disclosure by Executive;

(ii)the discharge by Executive of his duties hereunder or where his use or disclosure of the information has otherwise been properly authorized by the Company;

(iii)any information which Executive discloses in accordance with applicable public interest disclosure legislation;

(iv)any disclosure required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction to order Executive to disclose or make accessible any information; or

(d)Due Care. Executive shall exercise all due care and diligence and shall take all reasonable steps to prevent the publication or disclosure by Executive of any Confidential

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Information relating, in particular, but not limited to, actual or proposed transactions, of any employee, customer, client or supplier (whether former, actual or potential) of the Company or any member of the RBS Group including partnerships, companies, bodies, and corporations having accounts with or in any way connected to or in discussion with any member of the Company or RBS Group and all other matters relating to such customers, clients or suppliers and connections.

(e)Duty to Return Confidential Information and Other Company Property.

(i)All reports, files, notes, memoranda, e-mails, accounts, documents or other material (including all notes and memoranda of any Confidential Information and any copies made or received by Executive in the course of his employment (whether during or after) are and shall remain the sole property of the Company or the appropriate member of the RBS Group and, following his termination of employment or at any other time upon the Company’s request, to the extent within his possession or control, shall be surrendered by Executive to the duly authorized representative of the Company.

(ii)Executive agrees that upon termination of his employment with the Company for any reason, or at any other time upon the Company’s request, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, all copies thereof or therefrom, in any way relating to the business of the Company or RBS Group, all other property of the Company (including, but not limited to, company car, credit cards, equipment, correspondence, data, disks, tapes, records, specifications, software, models, notes, reports and other documents together with any extracts or summaries, removable drives or other computer equipment, keys and security passes) or of any member of the RBS Group in his possession or under his control and Executive further agrees that Executive will not retain or use for his own account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its affiliates.

(f)Reasonableness. Executive agrees that the undertakings set forth in this Section 10 and in Section 9 are reasonable and necessary to protect the legitimate business interests of the Company and RBS Group both during, and after the termination of, his employment, and that the benefits Executive receives under this Agreement are sufficient compensation for these restrictions.

Section 11. Intellectual Property and Developments.

(a)Executive agrees that all Developments are the sole and exclusive property of the Company and hereby assigns all rights to such Developments to the Company in all countries. Executive agrees, at the Company’s expense at any time during his employment or thereafter, to sign all appropriate documents and carry out all such reasonable acts as will be necessary to identify and preserve the legal protection of all Developments; however, the Company will

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have no obligation to compensate Executive for his time spent in connection with any assistance provided unless otherwise required by law. Notwithstanding the foregoing, Executive understands that no provision in this Agreement is intended to require assignment of any of his rights in an invention for which Executive can prove no equipment, supplies, facilities or Confidential Information or trade secret information of the Company was used, which invention was developed entirely on his own time, and which invention Executive can prove: (a) does not relate to the business of the Company or the actual or demonstrably anticipated research or development of the Company; or (b) does not result from any work performed by Executive for the Company.  To the extent compatible with applicable state law, these provisions do not apply to any invention which is required to be assigned by the Company to the United States Government.  Executive waives all moral rights in all Intellectual Property which is owned by the Company, or will be owned by the Company, pursuant to this Section 11.

(b)    Executive agrees to promptly submit to the Company written disclosures of all inventions, whether or not patentable, which are made, conceived or authored by Executive, alone or jointly with others, while Executive is employed by the Company.

Section 12. Certain Agreements.

(a)Data Protection. Executive shall familiarize himself with and abide by the Company’s Data Protection policy, procedures and accountabilities. Executive acknowledges that any breach of these procedures may result in the immediate termination of his employment.

(b)Personal Information. Executive acknowledges and agrees that the Company is permitted to hold personal information about him as part of its personnel and other business records and, in accordance with applicable law, may use such information in the course of the Company’s business.

(c)Credit Data. The Company reserves the right, upon five (5) days prior written notice, to, and Executive agrees that the Company may, in accordance with applicable law, carry out searches about Executive through credit reference agencies or through the Company’s customer records at any time during his employment for purposes of identifying any serious debt or other significant financial difficulties of Executive for the purposes of detecting, eliminating or mitigating any particular risk of employee fraud or theft. The Company will only retain the information about Executive which the Company obtains from these searches in accordance with applicable law and for so long as is needed for the purposes set out above (subject to any legal (including any regulatory) obligation which requires the Company to retain that information for a longer period). The credit reference agency will record details of the search but these will not be available for use by lenders to assess the ability of Executive to obtain credit. Executive has the right of access to his personal records held by credit reference agencies. The Company will supply the names and addresses of such agencies upon request, to help Executive to exercise his right of access to such records.

(d)Indebtedness. For the reasons referred to above, the Company expects Executive to manage his personal finances responsibly. The Company requires that Executive draw to the attention of his manager any serious debt or significant financial difficulties that he may have, including those which result in court action being taken against Executive.

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Section 13. Remedies.

The Company and Executive agree that it is impossible to measure solely in money the damages which will accrue to the Company by reason of his failure to observe any of his obligations of Sections 9, 10 or 11 of this Agreement. Therefore, if the Company shall institute any action or proceeding to enforce such provisions, Executive hereby waives the claim or defense that there is an adequate remedy at law and agrees in any such action or proceeding not to interpose the claim or defense that such remedy exists at law. Without limiting any other remedies that may be available to the Company, Executive hereby specifically affirms the appropriateness of injunctive or other equitable relief in any such action and acknowledges that nothing contained within this Agreement shall preclude the Company from seeking or receiving any other relief, including without limitation, any form of injunctive or equitable relief. Executive also agrees that, should he violate the provisions of Section 9 and its subsections such that the Company shall be forced to undertake any efforts to defend, confirm or declare the validity of the covenants contained within Section 9 of this Agreement, the time restrictions set forth therein shall be extended for a period of time equal to the pendency of any court proceedings, including appeals. Further, Executive agrees that, should the Company undertake any efforts to defend, confirm or declare the validity of any of the covenants contained in Sections 9, 10 or 11 of this Agreement, the Company shall be entitled to recover from Executive all of its reasonable attorneys’ fees and costs incurred in prosecuting or defending any such action or engaging in any such efforts.

Section 14. No Conflicts.

(a)Executive represents and warrants to the Company that on the Commencement Date, to the best of Executive’s knowledge, Executive’s acceptance of employment with, and performance of Executive’s duties for, the Company will not conflict with or result in a violation or breach of, or constitute a default under, any contract, agreement or understanding to which Executive is, or was, a party or of which Executive is aware and that there are no restrictions, covenants, agreements or limitations on Executive’s right or ability to enter into and perform the terms of this Agreement.

Section 15. Dispute Resolution; Mediation and Arbitration.

Except as provided in the last sentence of this Section 15 to the fullest extent permitted by law, the Company and Executive agree to waive their rights to seek remedies in court, including but not limited to rights to a trial by jury. The Company and Executive agree that any dispute between or among them or their Subsidiaries, Affiliates or related entities arising out of, relating to or in connection with this Agreement or his employment with the Company, including but not limited to claims for discrimination or other alleged violations of any federal, state or local employment and labor law statutes, ordinances or regulations, will be resolved in accordance with a confidential two-step dispute resolution procedure involving: (1) Step One: non-binding mediation, and (2) Step Two: binding arbitration under the Federal Arbitration Act, 9 U.S.C. § 1, et. seq., or state law, whichever is applicable. Any such mediation or arbitration hereunder shall be under the auspices of the American Arbitration Association (“AAA”) pursuant to its then current Commercial Arbitration Rules and Mediation Procedures (the “AAA Commercial Rules”). Disputes encompassed by this Section include claims for discrimination arising under local, state or federal statutes or ordinances and claims arising under any state’s labor laws. Notwithstanding anything to the contrary in the AAA Commercial Rules, the mediation process (Step One) may be ended by either party to the dispute upon notice to the other party that it desires to terminate the mediation and proceed to the Step Two arbitration; provided, however, that neither party may so terminate the mediation process prior to the occurrence of at least one (1) mediation session with the mediator. No arbitration shall be initiated or take place with respect to a given dispute if the parties have successfully achieved a mutually

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agreed to resolution of the dispute as a result of the Step One mediation. The mediation session(s) and, if necessary, the arbitration hearing shall be held in the city nearest to Executive's office location during the course of Executive's employment with the Company or an alternative location mutually agreeable to Executive and the Company. The arbitration (if the dispute is not resolved by mediation) will be conducted by a single AAA arbitrator, mutually selected by the parties, as provided for by the AAA Commercial Rules. The Company will be responsible for the AAA charges, including the costs of the mediator and arbitrator. The Company and Executive agree that the arbitrator shall apply the substantive law of the State of New York to all state law claims and federal law to any federal law claims, that discovery shall be conducted in accordance with the AAA Commercial Rules or as otherwise permitted by law as determined by the arbitrator. In accordance with the AAA Commercial Rules (a copy of which is available through AAA’s website, www.adr.org), the arbitrator’s award shall consist of a written statement as to the disposition of each claim and the relief, if any, awarded on each claim. The Company and Executive understand that the right to appeal or to seek modification of any ruling or award by the arbitrator is limited under state and federal law. Any award rendered by the arbitrator will be final and binding, and judgment may be entered on it in any court of competent jurisdiction. Nothing contained herein shall restrict either party from seeking temporary injunctive relief in a court of law to the extent set forth in Section 13 hereof.

In the unlikely event the AAA refuses to accept jurisdiction over a dispute, Executive and the Company agree to submit to Judicial-Arbitration-Mediation Services (“JAMS”) mediation and arbitration applying the JAMS equivalent of the AAA Commercial Rules. If AAA and JAMS refuse to accept jurisdiction, the parties may litigate in a court of competent jurisdiction.

Section 16. Miscellaneous.

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard for the conflict of laws provisions thereof.

(b)Entire Agreement and Amendments; Survivorship; Strict Construction.

(i)This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto, which attaches a copy of this Agreement.

(ii)The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

(c)No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

(d)Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

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(e)Assignment. This Agreement shall not be assignable by Executive. This Agreement shall be freely assignable by the Company without restriction.

(f)Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and permitted assigns.

(g)Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or three (3) business days after mailing registered mail, return receipt requested, postage prepaid or by recognized courier, addressed to the respective addresses set forth on the execution page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, and with a copy to the Secretary of the Royal Bank of Scotland Group plc, 36 St Andrew Square, Edinburgh, EH2 2YB or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

(h)Withholding Taxes; Deductions. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. Executive agrees that the Company may, at any time during, or in any event upon termination of his employment, deduct from his remuneration, any monies due by his to the Company for any overpayment made and/or outstanding loans, advances, relocation expenses and/or salary paid in respect of excess Vacation that was taken but not earned, unless otherwise prohibited by law.

(i)Counterparts; Effectiveness. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto, including by fax or electronic pdf.

Section 17. Defined Terms.

“Affiliate” has the meaning accorded such term under Rule 12b-2 under the Securities Exchange Act of 1934, as in effect on the CommencementDate;

“Agreement” has the meaning set forth in the Recitals;

“Board" means the board of directors of the Company from time to time, or any duly authorized committee of the board of directors of the Company from time to time;

“Base Salary” has the meaning set forth in Section3;

“Commencement Date” has the meaning set forth in Section 1;

“Group” means the Company, and each of the Company’s Parent's Subsidiaries or Affiliates;

“Confidential Information” has the meaning set forth in Section 10;

“Covered Employee” has the meaning set forth in Section 9;

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“Deferral Plan” means The Royal Bank of Scotland Group plc Deferral Plan or any successor plans or other operative plan applicable to the Company from time to time;

“Developments” means all inventions, whether or not patentable, Confidential Information, computer programs, copyright works, mask works, trademarks and other intellectual property made, conceived or authored by Executive, alone or jointly with others, while employed by the Company, whether or not during normal business hours or on the Company’s premises, that are within the existing or contemplated scope of the Company’s business at the time such Developments are made, conceived, or authored or which result from or are suggested by any work Executive or others may do for or on behalf of the Company; 

“Employee Benefits” has the meaning set forth in Section 6;

“Person” means any individual, corporation, partnership, trust or any other entity or organization;

“RBSG” or "RBS Group" means the Royal Bank of Scotland Group Plc;

“Remuneration Committee" means the remuneration committee of the Board or any committee empowered by the Board in substitution for the Remuneration Committee;

“Restricted Period” means the twelve (12) month period following the date that Executive ceases employment with the Company; and

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

Executive

/s/ Stephen Gannon

Stephen Gannon

By:	/s/ Bruce Van Saun
	Bruce Van Saun
	Chairman and CEO Citizens Financial Group

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ADDENDUM TO

EXECUTIVE EMPLOYMENT AGREEMENT

This ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Addendum”) is made as of August 2, 2017 by and between Citizens Financial Group, Inc., together with its subsidiaries and any and all successor entities (the “Company”) and Stephen T. Gannon (“Executive”).

This Addendum is a supplement to Executive’s Executive Employment Agreement dated July 1, 2014 (the “Original Agreement”), and the terms of this Addendum shall be incorporated by reference therein and shall become terms and conditions of Executive’s continued employment. The terms of this Addendum shall supersede any conflicting terms found in the Original Agreement. This Addendum may not be altered, modified, or amended except by written instrument signed by the parties hereto. To the extent capitalized terms are not defined herein, the definitions included in the Original Agreement, as applicable, shall govern.

Section 1.     Change of Control Severance

(a)In the event Executive's employment is terminated by the Company without Cause (other than by reason of Executive’s death or disability) or the Executive resigns with Good Reason, in each case within 24 months following a Change of Control, Executive shall receive a payment equivalent to: (i) two times the sum of (A) Executive’s Base Salary at the time of termination and (B) the average cash bonus paid to Executive during the prior three years; plus (ii) a pro-rata bonus for the year in which termination occurs, based on the average cash bonus paid to Executive during the prior three years (together, the “COC Severance Payment”).

(b)Any COC Severance Payment made in accordance with this section shall be in lieu of and not in addition to any payments to which Executive may otherwise have been entitled in accordance with other sections of this Addendum or the Original Agreement and shall be in full and final settlement of all claims Executive may have arising out of or in connection with his employment or its termination, other than with respect to any outstanding equity held by Executive, which shall be treated as provided for in the applicable Company stock plan and award agreements governing such awards.

Section 2.     Payment of Severance

(a)The severance set forth in Section 6(f) of the Original Agreement and the COC Severance Payment set forth in this Addendum shall be made in a lump sum, subject to execution and non-revocation of a Standard Release, within seventy (70) days of the termination of Executive’s employment. If the period between the termination of Executive’s employment and the latest possible effective date of the Standard Release spans two calendar years, the COC Severance Payment shall be paid by the Company in the second calendar year.

Section 3.     Definitions

(a)“Cause” means: (i) any conviction (including a plea of guilty or of nolo contendere or entry into a pre-trial diversion program) of Executive for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) Executive commits an act of gross misconduct, fraud, embezzlement, theft or material dishonesty in connection with the Executive’s duties or in the course of Executive’s employment with the Company or any of its affiliates; (iii) failure on the part of Executive to perform his employment duties in any material respect, which is not cured to the reasonable satisfaction of the Company within 30 days after Executive receives written notice of such failure; (iv) Executive violates Sections 9 and 10

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of the Original Agreement (non-solicitation of employees, customers and clients; confidentiality; ownership of materials; duty to return company property); or (v) Executive makes any material false or disparaging comments about the Company or any of its subsidiaries, affiliates, employees, officers, or directors, or engages in any activity which in the opinion of the Company is not consistent with providing an orderly handover of Executive's responsibilities.

(b) “Good Reason” means any of the following changes, as compared to Executive’s terms of employment prior to a Change of Control:

(i)a material diminution in Executive’s authority, duties, or responsibilities;

(ii)a material diminution in Executive’s base salary other than a general reduction in base salary that affects all similarly situated employees; or

(iii)a relocation of Executive’s principal place of employment by more than 50 miles from his or her current principal place of employment, unless the new principal place of employment is closer to Executive’s home address.

Provided, however, that Executive’s must give written notice to the Company within 30 days of the initial existence of any of the foregoing changes, the Company shall have 30 days upon receipt of such notice to remedy the condition so as to eliminate the Good Reason, and if not remedied, Executive’s employment must terminate no later than 60 days following the expiration of such cure period. Notwithstanding the foregoing, the Executive’s continued employment shall not constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good Reason under this Addendum.

(c)“Change of Control” means the occurrence of any one or more of the following events:

(i)any Person (as defined in Section 3(a)(9) of the Exchange Act of 1934, as amended and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof), other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company (the “Board”) and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries

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(the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

Section 4.     Section 280G

(i)If the aggregate of all amounts and benefits due to Executive under this Addendum or the Original Agreement or any other plan, program, agreement or arrangement of the Company or any of its Affiliates, which, if received by Executive in full, would constitute “parachute payments,” as such term is defined in and under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) (collectively, “Change of Control Benefits”), reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount Executive would receive, after all such applicable taxes, if Executive received aggregate Change of Control Benefits equal to an amount which is $1.00 less than three (3) times Executive’s “base amount,” as defined in and determined under Section 280G of the Code, then such Change of Control Benefits shall be reduced or eliminated to the extent necessary so that the Change of Control Benefits received by the Executive will not constitute parachute payments. If a reduction in the Change of Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a different order, subject to the Company’s consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple of Base Salary and/or annual bonus; (ii) other cash payments; (iii) any annual incentive compensation paid as severance; (iv) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value, provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock options and equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.

(ii)It is possible that after the determinations and selections made pursuant to Section 4(a) above, Executive will receive Change of Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by Section 4(a) above (hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, Executive shall promptly repay the Company an amount consistent with this Section 4(b). If there is an Underpayment, the Company shall pay Executive an amount consistent with this Section 4(b).

(iii)The determinations with respect to this Section 4 shall be made by an independent auditor (the “Auditor”) compensated by the Company. The Auditor shall be the Company’s regular independent auditor, unless the regular independent auditor is unable or unwilling to makes such determinations, in which event the Auditor shall be a nationally-recognized United States public accounting firm chosen by the Company.

Section 5.     Tax Compliance

All compensation paid to Executive is intended to, and is reasonably believed to, comply with Section 409A of the Code (“Section 409A”), as well as other tax related laws and regulations to the extent it does not fall into any applicable exclusion, and shall be interpreted and construed consistent with that intent. Notwithstanding the foregoing, the Company makes no representations that the terms

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of this Addendum or the Original Agreement (and any compensation payable thereunder) comply with Section 409A, and in no event shall the Company be liable for any taxes, interest, penalties or other expenses that may be incurred by Executive on account of non-compliance with Section 409A. No expenses eligible for reimbursement, or in-kind benefits to be provided, during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, to the extent subject to the requirements of Section 409A, and no such right to reimbursement or right to in-kind benefits shall be subject to liquidation or exchange for any other benefit. For purposes of Section 409A, each payment in a series of installment payments, if any, provided under this Addendum or the Original Agreement shall be treated as a separate payment. Any payments under this Addendum or the Original Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this Addendum or the Original Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing and any provision in this Addendum to the contrary, if on the date of his termination of employment, Executive is deemed to be a “specified employee” within the meaning of Section 409A and any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A, then such payment or benefit due upon, or within the six-month period following, a termination of Executive’s employment (whether under this Addendum, Executive’s Original Agreement, any other plan, program, payroll practice or any equity grant) and which do not otherwise qualify under the exemptions under Treas. Reg. Section 1.409A-1(including, without limitation, payments that constitute “separation pay” within the meaning of Section 409A), shall be paid or provided to Executive in a lump sum on the earlier of (a) the date which is six months and one day after Executive’s “separation from service” (as such term is defined in Section 409A) for any reason other than death, and (b) the date of Executive’s death, and any remaining payments and benefits shall be paid or provided in accordance with the payment dates specified in this Addendum for such payment or benefit.

Section 6.    Miscellaneous

(a)Governing Law. This Addendum shall be governed by and construed in accordance with New York law without giving effect to the conflict of laws provisions thereof.

(b)No Waiver. The failure of a party to insist upon strict adherence to any term of this Addendum on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Addendum.

(c)Severability. In the event that any one or more of the provisions of this Addendum shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Addendum shall not be affected thereby.

[signature page follows]

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Exhibit 10.6

IN WITNESS WHEREOF, Executive duly executed this Addendum as of the day and year first above written.

ACCEPTED AND AGREED

/s/ Stephen T. Gannon
Stephen T. Gannon

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EX-10.7

Exhibit 10.7

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made as of March 23, 2015 by and between Citizens Financial Group, Inc. (the “Company”) and Donald H. McCree III (“Executive”).

WHEREAS the Company desires to employ Executive and to enter into this Agreement embodying the terms of such employment; and

WHEREAS Executive desires to accept such employment and enter into this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Section 1. Employment At-Will

(a)Executive's employment with the Company shall be "at-will" and not for a fixed term. Executive understands and acknowledges that no statement, whether written or verbal, by the Company or any of its officers, employees or representatives may in any way modify, alter, or change the "at-will" nature of Executive's employment by the Company. Executive and the Company each retains the right to terminate Executive's employment at any time, for any reason or no reason. Executive understands and agrees that, as an at-will employee, the Company may terminate Executive's employment without advance notice. Executive may terminate his employment for any reason (a “Resignation”) effective ninety (90) days following delivery of written notice of resignation to the Company's Chief Executive Officer (CEO) (the “Notice Period”).

(b)Upon receipt of Executive's written notice of Resignation, the Company may, in its sole discretion, waive or shorten the Notice Period, in which case Executive will be permitted to terminate employment immediately or at a time designated by the Company. If the Company waives or shortens the Notice

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Period, then under such circumstances, the Company will not be obliged to pay any amount in lieu of the waived or shortened Notice. Alternatively, the Company may direct Executive not to report to work unless otherwise requested by the Company (“Garden Leave”). During any period of Garden Leave, as during any Notice Period:

(i)Executive will remain an employee of the Company and will continue to be paid Executive's then base salary and be eligible for employee benefits. However, Executive shall not be entitled to receive incentive compensation.

(ii)Executive will be expected to continue to undertake such duties and responsibilities as are assigned to Executive by the Company's Board of Directors (the “Board”) or CEO, including duties to assist the Company with Executive's transition from the Company and maintaining the Company's business, business relationships, and goodwill. Notwithstanding the foregoing, the Company reserves the right to suspend any or all of Executive's duties and powers and to relocate Executive's office to Executive's personal residence for all or part of the Garden Leave.

(iii)Executive will remain bound by all fiduciary duties and obligations owed to the Company and remain required to comply with all Company policies and practices and the provisions of this Agreement.

(iv)Executive may not, without the prior written consent of the Company or except in the discharge of duties and responsibilities in accordance with clause (ii) above, contact or attempt to contact any client, customer, potential client or customer, agent, professional advisor, employee, supplier or broker of the Company or any of its parents, subsidiaries, affiliates or their respective successors.

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Section 2. Position

(a)Commencement Date. The Executive's employment with the Company shall commence on September 1, 2015 (the "Commencement Date").

(b)Position. During Executive's employment, Executive shall serve as the Vice Chairman, Head of Commercial Banking of the Company, with duties and responsibilities commensurate with such role. In this position, Executive shall report directly to the CEO or to such other person acting in that capacity on an interim basis as may be applicable.

(c)Best Efforts. During Executive's employment, Executive shall: (i) devote Executive's full professional time, attention, skill and energy to the performance of his duties for the Company and its parents, subsidiaries, affiliates or their respective successors (collectively, the "Company Affiliates" and each a "Company Affiliate"); (ii) use Executive's best efforts to dutifully, faithfully and efficiently perform his duties hereunder, comply with the policies, procedures, bylaws, rules, code of conduct and practices of the Company Affiliates, as the same may be amended from time to time, and of which he is given notice, and obey all reasonable and lawful directions given by or under the authority of the CEO; (iii) refrain from engaging in any other business, profession or occupation for compensation or otherwise which would conflict, directly or indirectly, with the rendition of services to the Company, without the prior written consent of the CEO of the Company; except that Executive may engage in charitable and community activities and manage Executive's personal investments provided that such activities do not materially interfere with the performance of his duties hereunder or conflict with the conditions of his employment; and (iv) refrain from engaging in any conduct he knows or reasonably should know is prejudicial to the interests and reputation of any Company Affiliate and endeavor to promote and extend the business of the Company Affiliates and protect and further their interests and reputation, all in a manner consistent with his duties and responsibilities.

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(d)Directorships. Executive may be required, in the sole discretion of the Company, to perform services for any Company Affiliate and may be required to undertake the role and duties of an officer or director of any Company Affiliate. No additional compensation will be paid in respect of these appointments.

(e)Location. During the period of Executive's employment, Executive shall be co-based in Stamford, Connecticut and Boston, Massachusetts but may be relocated within a fifty (50) mile radius of either of those locations at the Company's sole discretion. Executive is expected to spend three to four days per week in Boston, Massachusetts during routine weeks. Additionally, Executive may be required to travel internationally or domestically in the performance of his duties.     

Section 3. Compensation.

(a)Base Salary. The Company shall pay Executive a base salary at the initial annualized rate of $700,000 (“Base Salary”) in accordance with the Company's regular payroll schedule. Executive shall be entitled to increases in Base Salary as may be determined from time to time in the sole discretion of the Company.

(b)     Variable Compensation. Executive will be eligible to participate in the Company's discretionary variable compensation program, as amended from time to time. For performance year 2015 only, Executive shall receive a guaranteed award of $869,260 (the “2015 Guaranteed Award”). For years subsequent to 2015, Executive's initial target bonus opportunity shall be $2,500,000 ("Target Bonus Opportunity"), with the actual amount of any such award to be determined in the sole discretion of the Company, based on a mix of factors, including but not limited to individual, team and Company performance as well as external economic considerations.

Variable compensation awards may be awarded in cash, equity-based instruments, or in any other form and may also be deferred in full or in part, as determined by the Company; provided,

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thatthe form and the timing of payment of awards, as well as other terms and conditions for awards, will be consistent with awards granted to similarly situated colleagues. Any award Executive receives will be subject to applicable tax and other required withholdings.

Any cash portion of any award will be paid by March 15^th following the determination of awards and any deferred cash and equity-based instruments granted to Executive as part of his award will be granted as soon as practicable following the determination of awards, in each case, provided that Executive remains employed by the Company on the payment date or grant date (as applicable) and neither Executive nor the Company has given notice to terminate Executive's employment prior to the payment date or grant date (as applicable). However, with respect to the 2015 Guaranteed Award, if Executive is notified that his employment will be terminated without Cause, then, whether or not his employment terminates prior to the equity grant date or cash payment date (as applicable) under the following circumstances, Executive will remain entitled to, and shall, receive his award as if he had not given or received notice, and as if he had remained employed through the payment date:

•Death

•Disability (as defined in the Company's long-term disability plan)

•Retirement with the approval of the Company

• Termination of Executive's employment by the Company without Cause (as defined herein)

Any deferred cash and equity-based instruments granted to Executive as part of his award will be governed by the applicable equity plan document and award agreement, as applicable. In the event of any conflict between information contained in this document and the plan or award agreement provisions, the terms of the plan and award agreement shall control. Receiving an award under the discretionary award program in certain years does not guarantee payment or level of award in any subsequent year and any award may be forfeited or reduced (i.e. subject to clawback where legally

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permissible) as determined appropriate by the Company in its sole discretion. The Company reserves the right to change the rules of any compensation plan or program or to cancel any such plan or program at any time without prior notice in its sole and absolute discretion. 

(c)Applicability of European Remuneration Regulations. It is anticipated that the Company will no longer be subject to UK and European remuneration regulations as of Executive's Commencement Date. However, in the event such regulations do continue to apply to the Company as of the Commencement Date, Executive's compensation shall be adjusted to ensure compliance with applicable law; provided, however, that Executive's total compensation opportunity shall remain $3,200,000, pro-rated for 2015.

Section 4. Severance and Change in Control

(a)Severance. In the event the Executive is terminated without Cause, Executive shall receive the 2015 Guaranteed Award to the extent it has not been paid and 26 weeks of Executive's Base Salary at the time of Executive's termination of employment. Such amounts shall be payable following the date of termination of Executive's employment consistent with the Company's general payroll practices, and contingent upon Executive executing, and not revoking, a standard release agreement which shall not release Executive's right of indemnification and shall not release the right to enforce this Agreement (a “Standard Release”). The Standard Release must be effective and irrevocable within fifty-five (55) days after the date of termination of Executive's employment with the Company. The specific review and revocation period, if any, will be set forth in the Standard Release agreement.

(b)Change of Control. In the event Executive's employment is terminated during calendar year 2016 in connection with (a) the sale of the Company to a third-party purchaser or group of third-party purchasers acting as a single consortium (the “Purchaser”); or (b) an asset sale or change in the composition of the Board consistent with the change of control definition contained in IRC 409A or the regulations thereof ((a) and (b) collectively, a “Change of Control”), Executive

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shall receive a payment equivalent to 100% of Executive's Base Salary and Target Bonus Opportunity. The payment is contingent upon Executive executing, and not revoking, a Standard Release. Any payment pursuant to this Section 4(b) shall be in lieu of, not in addition to, any separation payment Executive may otherwise have been eligible for pursuant to Section 4(a) above or any Company policy or practice with respect to separation from employment which may be in effect from time to time. For avoidance of doubt, a sale of Company stock to the public through an IPO or further sell-down of Company stock to the public shall not trigger this Section 4(b). Effective January 1, 2017, this Section 4(b) becomes null and void by its own terms with immediate effect.

(c)“Cause” means: (i) any conviction (including a plea of guilty or of nolo contendere or entry into a pre-trial diversion program) of Executive for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) Executive commits an act of gross misconduct, fraud, embezzlement, theft or material dishonesty in connection with the Executive’s duties or in the course of Executive’s employment with the Company or any of its affiliates; (iii) failure on the part of Executive to perform his employment duties in any material respect, which is not cured to the reasonable satisfaction of the Company within 30 days after Executive receives written notice of such failure; (iv) Executive violates Section 7 or 8 of this Agreement; or (v) Executive makes any material false or disparaging comments about the Company or any of its subsidiaries, affiliates, employees, officers, or directors, or engages in any activity which in the opinion of the Company is not consistent with providing an orderly handover of Executive's responsibilities.

Section 5. Executive Benefits, Medical Exam, Paid Time Off, Reimbursement of Expenses

(a)Executive Benefits. Executive may participate in and receive benefits under any and all benefit plans offered to similarly-situated employees of the Company, subject to the terms and

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conditions of those plans, policies and programs that are in effect from time to time. The Company reserves the right to amend the terms and conditions of its employee benefits and the related plans, policies and programs at any time, in the Company's sole discretion.

(b)Retirement.      For the purpose of calculating retirement eligibility only, upon the Commencement Date Executive shall be credited with five years of service. This credit shall be applied and shall control over any contrary calculation contained in any applicable plan or award document, if any.

(c)Housing Allowance. Executive shall be provided an annual gross housing allowance of $100,000 for years 2015 through 2017, with the 2015 payment pro-rated for service during such year. This housing allowance shall be paid monthly in equal instalments. The housing allowance shall continue through December 31, 2017.

(d)Medical Exam. Executive shall at any time (including during any period of incapacity) at the request and expense of the Company submit to medical examinations by a medical practitioner nominated by the Company, to the extent permitted by applicable federal and state law.

(e)    Paid Time Off. Executive shall be entitled to accrue 27 days of paid time off (“PTO”) annually, which may be scheduled as time off away from work in accordance with the Company's current PTO policy. For 2015, Executive's PTO will be pro-rated based on the 1^st of the month following his date of hire.

(f)Reimbursement of Business Expenses. Reasonable, customary and necessary travel, entertainment and other business expenses incurred by Executive in the performance of his duties hereunder shall be reimbursed by the Company in accordance with the Company's policies, subject to the provision of documentation regarding such expenses.

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Section 6. Compliance with the Company's Personal Securities Transactions Policy

Executive is subject to the Company's Personal Securities Transactions Policy, which sets forth the required procedures and processes with respect to purchases and sales of Company securities.

Section 7. Non-Solicitation

(a) Non-Solicitation of Employees. Executive agrees that, at any time during Executive's employment and for twelve (12) months following the date Executive ceases to be employed by the Company for any reason (the "Restricted Period"), Executive shall not, directly or indirectly, whether for his own account or for any person or entity other than the Company hire, employ, solicit for employment or hire, or attempt to solicit for employment or hire, any person who is employed by any Company Affiliate during the Restricted Period (other than those employees terminated by the Company Affiliate), nor shall Executive directly or indirectly induce any such employee to terminate his or her employment or accept employment with anyone other than a Company Affiliate, or otherwise interfere with the relationship between any Company Affiliate and any of its employees during the Restricted Period. Anything to the contrary notwithstanding, the Company agrees that Executive shall not be deemed in violation of this Section 7(a) if an entity with which Executive is associated hires or engages any employee of a Company Affiliate, if Executive was not, directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee, other than signing an offer letter.

(b)Non-Solicitation of, and Non-Interference with, Customers and Prospective Clients. Executive agrees that during his employment and during the Restricted Period, Executive shall not, directly or indirectly, for any person or entity other than the Company, solicit or assist in soliciting for financial services related business any customer of any Company Affiliate, nor will Executive induce or encourage any such customer to discontinue or diminish his, her or its relationship or prospective relationship with any Company Affiliate, or divert business away from any Company Affiliate; provided, however, that

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general solicitation through advertisement shall not constitute solicitation for purposes of this provision. Additionally, solicitation for investment in financial services entities, such as private equity groups, shall not constitute a violation of this Section 7(b) as long as such solicitation does not directly compete with any Company Affiliate’s product or service or cause the investor to divert business or funds/investments away from any Company Affiliate.

(c)Representations. Executive agrees that all of the foregoing restrictions are reasonable and necessary to protect the Company's business and its Confidential Information and that Executive's employment by the Company, along with the benefits and attributes of that employment, is good and valuable consideration to compensate him for agreeing to all restrictions contained in this Agreement. Executive also acknowledges, represents and warrants that his knowledge, skills and abilities are sufficient to permit Executive to earn a satisfactory livelihood without violating these provisions. Further, Executive agrees that he shall not, following the termination of Executive's employment with the Company, represent or hold himself out as being in any way connected with the business of the Company.

(d)Blue Pencil. It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 7 to be reasonable, if a final judicial determination is made by an arbitrator or a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if an arbitrator or a court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

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Section 8. Confidentiality; Ownership of Materials; Duty to Return Company Property

(a)Confidential Information. Executive may not at any time (whether during his employment or after termination) disclose to any unauthorized person, firm or corporation or use or attempt to use for his own advantage or to the advantage of any other person, firm or corporation, any confidential information relating to the business affairs or trade secrets of any Company Affiliate, or any confidential information about (howsoever obtained) or provided by any third party received during the course of or as a result of his employment (the “Confidential Information”). Confidential Information includes, but is not limited to, information relating to employees, customers and suppliers (former, actual and potential), Company contracts, pricing structures, financial and marketing details, business plans, any technical data, designs, formulae, product lines, intellectual property, research activities and any information which may be deemed to be commercially or price sensitive in nature, whether printed, typed, handwritten, videotaped, transmitted or transcribed on data files or on any other type of media, including but not limited to electronic and digital media, whether or not labeled as “confidential”. It also includes, without limitation, any information contained in documents marked “confidential” or documents of a higher security classification and other information which, because of its nature or the circumstances in which Executive receives it, Executive should reasonably consider to be confidential. The Company reserves the right to modify the categories of Confidential Information from time to time.

(b)Exclusions. The provisions of this Section 8 shall not apply to:

(i)Information or knowledge which subsequently comes into the public domain other than by way of unauthorized use or disclosure by Executive;

(ii)The discharge by Executive of his duties hereunder or where his use or disclosure of the information has otherwise been properly authorized by the Company;

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(iii)Any information which Executive discloses in accordance with applicable public interest disclosure legislation; or

(iv)Any disclosure required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction to order Executive to disclose or make accessible any information.

(c)Due Care. Executive shall exercise all due care and diligence and shall take all reasonable steps to prevent the publication or disclosure by Executive of any Confidential Information relating, in particular, but not limited to, actual or proposed transactions, of any employee, customer, client or supplier (whether former, actual or potential) of any Company Affiliate including partnerships, companies, bodies, and corporations having accounts with or in any way connected to or in discussion with any Company Affiliate and all other matters relating to such customers, clients or suppliers and connections.

(d)Duty to Return Confidential Information and Other Company Property.

(i)All reports, files, notes, memoranda, e-mails, accounts, documents or other material (including all notes and memoranda of any Confidential Information and any copies made or received by Executive in the course of his employment (whether during or after)) in any form, including but not limited to electronic and digital media, which contain Confidential Information or were created in the scope of Executive's performance of services, are and shall remain the sole property of the Company and, following Executive's termination of employment or at any other time upon the Company's request, to the extent within his possession or control, Executive shall make every effort to surrender to the duly authorized representative of the Company or destroy in accordance with sub-section (ii) below.

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(ii)Executive agrees that upon termination of his employment with the Company for any reason, or at any other time upon the Company's request, he will make every effort to return (or, if contained electronically on a non-Company database or server, delete) to the Company immediately all memoranda, books, papers, plans, information, letters and other data in any form, including but not limited to electronic and digital media, all copies thereof or, in any way relating to the business of the Company, all other property of any Company Affiliate (including, but not limited to, company car, credit cards, equipment, correspondence, data, disks, tapes, records, specifications, software, models, notes, reports and other documents together with any extracts or summaries, removable drives or other computer equipment, keys and security passes) in his possession or under his control and Executive further agrees that Executive will not retain or use for his own account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of any Company Affiliate. To the extent the Company property in Executive’s possession is not an original, and the Company has copies of such Company property, Executive may destroy such Company property and attest to the Company that said property is destroyed as opposed to being returned. Nothing herein shall affect Executive's right to retain his employment and compensation related documentation.

(e)Reasonableness. Executive agrees that the undertakings set forth in this Section 8 and in Section 7 are reasonable and necessary to protect the legitimate business interests of the Company both during, and after the termination of, Executive's employment, and that the benefits Executive receives under this Agreement are sufficient compensation for these restrictions.

Section 9. Intellectual Property and Developments

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(a)Executive agrees that all Developments are the sole and exclusive property of the Company and hereby assigns all rights to such Developments to the Company in all countries. Executive agrees, at the Company's expense at any time during his employment or thereafter, to sign all appropriate documents and carry out all such reasonable acts as will be necessary to identify and preserve the legal protection of all Developments; however, the Company will have no obligation to compensate Executive for his time spent in connection with any assistance provided unless otherwise required by law. Notwithstanding the foregoing, Executive understands that no provision in this Agreement is intended to require assignment of any of his rights in an invention for which Executive can prove no equipment, supplies, facilities or Confidential Information or trade secret information of the Company was used, which invention was developed entirely on his own time, and which invention Executive can prove: (a) does not relate to the business of the Company or the actual or demonstrably anticipated research or development of the Company; or (b) does not result from any work performed by Executive for the Company.  To the extent compatible with applicable state law, these provisions do not apply to any invention which is required to be assigned by the Company to the United States Government.  Executive waives all moral rights in all Intellectual Property which is owned by the Company, or will be owned by the Company, pursuant to this Section 9.

For purposes of this section, “Developments” means all inventions, whether or not patentable, Confidential Information, computer programs, copyright works, mask works, trademarks and other intellectual property made, conceived or authored by Executive, alone or jointly with others, while employed by the Company, whether or not during normal business hours or on the Company's premises, that are within the existing or contemplated scope of the Company's business at the time such Developments are made, conceived, or authored or which result from or are suggested by any work Executive or others may do for or on behalf of the Company.

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(b)    Executive agrees to promptly submit to the Company written disclosures of all inventions, whether or not patentable, which are made, conceived or authored by Executive, alone or jointly with others, while Executive is employed by the Company.

Section 10. Certain Agreements

(a)Data Protection. Executive shall familiarize himself with and abide by the Company's data protection policy, procedures and accountabilities. Executive acknowledges that any material breach of these procedures may result in the immediate termination of his employment.

(b)Personal Information. Executive acknowledges and agrees that the Company is permitted to hold personal information about him as part of its personnel and other business records and, in accordance with applicable law, may use such information in the course of the Company's business.

(c)Credit Data. The Company reserves the right, upon five (5) days prior written notice, to, and Executive agrees that the Company may, in accordance with applicable law, carry out searches about Executive through credit reference agencies or through the Company's customer records at any time during his employment for purposes of identifying any serious debt or other significant financial difficulties of Executive for the purposes of detecting, eliminating or mitigating any particular risk of employee fraud or theft. The Company will only retain the information about Executive which the Company obtains from these searches in accordance with applicable law and for so long as is needed for the purposes set out above, subject to any legal or regulatory obligation which requires the Company to retain that information for a longer period. The credit reference agency will record details of the search but these will not be available for use by lenders to assess the ability of Executive to obtain credit. Executive has the right of access to his personal records held by credit reference agencies. The Company will supply the names and addresses of such agencies upon request, to help Executive to exercise his right of access to such records.

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(d)Indebtedness. For the reasons referred to above, the Company expects Executive to manage his personal finances responsibly. The Company requires that Executive draw to the attention of Executive's manager any serious debt or significant financial difficulties that he may have, including those which result in court action being taken against Executive.

Section 11.Remedies

The Company and Executive agree that it is impossible to measure solely in money the damages which will accrue to the Company by reason of his failure to observe any of the obligations of Sections 7, 8 or 9 of this Agreement. Therefore, if the Company shall institute any action or proceeding to enforce such provisions, Executive hereby waives the claim or defense that there is an adequate remedy at law and agrees in any such action or proceeding not to interpose the claim or defense that such remedy exists at law. Without limiting any other remedies that may be available to the Company, Executive hereby specifically affirms the appropriateness of injunctive or other equitable relief in any such action and acknowledges that nothing contained within this Agreement shall preclude the Company from seeking or receiving any other relief, including without limitation, any form of injunctive or equitable relief. Executive also agrees that, should he violate the provisions of Section 7 and its subsections such that the Company shall be forced to undertake any efforts to defend, confirm or declare the validity of the covenants contained within Section8 of this Agreement, the time restrictions set forth therein shall be extended for a period of time equal to the pendency of any court proceedings, including appeals. Further, Executive agrees that, should the Company undertake any efforts to defend, confirm or declare the validity of any of the covenants contained in Sections 7, 8 or 9 of this Agreement, the Company shall be entitled to recover from Executive all of its reasonable attorneys' fees and costs incurred in prosecuting or defending any such action or engaging in any such efforts.

Section 12. No Conflicts

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Executive represents and warrants to the Company that on the Commencement Date, to the best of Executive's knowledge, Executive's acceptance of employment with, and performance of Executive's duties for, the Company will not conflict with or result in a violation or breach of, or constitute a default under, any contract, agreement or understanding to which Executive is, or was, a party or of which Executive is aware and that there are no restrictions, covenants, agreements or limitations on Executive's right or ability to enter into and perform the terms of this Agreement, other than as expressly disclosed.

Section 13. Dispute Resolution; Mediation and Arbitration

Except as provided in the last sentence of this Section 13, to the fullest extent permitted by law, the Company and Executive agree to waive their rights to seek remedies in court, including but not limited to rights to a trial by jury. The Company and Executive agree that any dispute between or among them or their affiliates or related entities arising out of, relating to or in connection with this Agreement or Executive's employment with the Company, including but not limited to claims for discrimination or other alleged violations of any federal, state or local employment and labor law statutes, ordinances or regulations, will be resolved in accordance with a confidential two-step dispute resolution procedure involving: (1) Step One: non-binding mediation, and (2) Step Two: binding arbitration under the Federal Arbitration Act, 9 U.S.C. § 1, et. seq., or state law, whichever is applicable. Any such mediation or arbitration hereunder shall be under the auspices of the American Arbitration Association (“AAA”) pursuant to its then current Commercial Arbitration Rules and Mediation Procedures (the “AAA Commercial Rules”). Disputes encompassed by this Section 13 include claims for discrimination arising under local, state or federal statutes or ordinances and claims arising under any state's labor laws. Notwithstanding anything to the contrary in the AAA Commercial Rules, the mediation process (Step One) may be ended by either party to the dispute upon notice to the other party that it desires to terminate the mediation and proceed to the Step Two arbitration; provided, however, that neither party may so terminate the mediation process prior to the occurrence of at least one (1) mediation session with the

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mediator. No arbitration shall be initiated or take place with respect to a given dispute if the parties have successfully achieved a mutually agreed to resolution of the dispute as a result of the Step One mediation, other than as a result of breach of the agreement encompassing the resolution. The mediation session(s) and, if necessary, the arbitration hearing shall be held in the city nearest to Executive's office location during the course of Executive's employment with the Company or an alternative location mutually agreeable to Executive and the Company. The arbitration (if the dispute is not resolved by mediation) will be conducted by a single AAA arbitrator, mutually selected by the parties, as provided for by the AAA Commercial Rules. The Company will be responsible for the AAA charges, including the costs of the mediator and arbitrator. The Company and Executive agree that the arbitrator shall apply the substantive law of the State of New York to all state law claims and federal law to any federal law claims, that discovery shall be conducted in accordance with the AAA Commercial Rules or as otherwise permitted by law as determined by the arbitrator. In accordance with the AAA Commercial Rules (a copy of which is available through AAA's website, www.adr.org), the arbitrator's award shall consist of a written statement as to the disposition of each claim and the relief, if any, awarded on each claim. The Company and Executive understand that the right to appeal or to seek modification of any ruling or award by the arbitrator is limited under state and federal law. Any award rendered by the arbitrator will be final and binding, and judgment may be entered on it in any court of competent jurisdiction. Nothing contained herein shall restrict either party from seeking temporary injunctive relief in a court of law to the extent set forth in Section 11 hereof.

In the unlikely event the AAA refuses to accept jurisdiction over a dispute, Executive and the Company agree to submit to Judicial-Arbitration-Mediation Services (“JAMS”) mediation and arbitration applying the JAMS equivalent of the AAA Commercial Rules. If AAA and JAMS refuse to accept jurisdiction, the parties may litigate in a court of competent jurisdiction.

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Section 14. Miscellaneous

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard for the conflict of laws provisions thereof.

(b)Entire Agreement and Amendments; Survivorship; Strict Construction.

(i)This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto, which attaches a copy of this Agreement.

(ii)The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

(c)Tax Compliance. All compensation paid to Executive is intended to, and is reasonably believed to, comply with Internal Revenue Code Section 409A of the Internal Revenue Code of 1986 (“Section 409A”), as amended, as well as other tax related laws and regulations to the extent it does not fall into any applicable exclusion, and shall be interpreted and construed consistent with that intent. Notwithstanding the foregoing, the Company makes no representations that the terms of this Agreement (and any compensation payable thereunder) comply with Section 409A, and in no event shall the Company be liable for any taxes, interest, penalties or other expenses that may be incurred by Executive on account of non-compliance with Section 409A. No expenses eligible for reimbursement, or in-kind benefits to be provided, during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, to the extent subject to the requirements of Section 409A, and no such right

19

to reimbursement or right to in-kind benefits shall be subject to liquidation or exchange for any other benefit. For purposes of Section 409A, each payment in a series of installment payments, if any, provided under this Agreement shall be treated as a separate payment. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing and any provision in this Agreement to the contrary, if on the date of his termination of employment, Executive is deemed to be a “specified employee” within the meaning of Section 409A and any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A, then such payment or benefit due upon, or within the six-month period following, a termination of Executive's employment (whether under his Agreement, any other plan, program, payroll practice or any equity grant) and which do not otherwise qualify under the exemptions under Treas. Reg. Section 1.409A-1 (including, without limitation, payments that constitute “separation pay” within the meaning of Section 409A), shall be paid or provided to Executive in a lump sum on the earlier of (a) the date which is six months and one day after Executive's “separation from service” (as such term is defined in Section 409A) for any reason other than death, and (b) the date of Executive's death, and any remaining payments and benefits shall be paid or provided in accordance with the payment dates specified in this Agreement for such payment or benefit.

(d)No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

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(e)Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(f)Assignment. This Agreement shall not be assignable by Executive. This Agreement shall be freely assignable by the Company without restriction to any successor in interest.

(g)Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and permitted assigns.

Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or three (3) business days after mailing registered mail, return receipt requested, postage prepaid or by recognized courier, addressed to the respective addressees set forth on the execution page of this Agreement, provided that all notices to the Company shall also be directed to Neil Rosolinsky, Deputy General Counsel, Litigation & Employment, Citizens Bank, 30 Montgomery Street, 13^th floor, Jersey City, NJ 07302 or to such other address as either party may have furnished to the other in writing, except that notice of change of address shall be effective only upon receipt.

(h)Withholding Taxes; Deductions. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. Executive agrees that the Company may, at any time during, or in any event upon termination of his employment, deduct from Executive's compensation, any monies due by Executive to the Company for any overpayment made and/or outstanding loans, advances, relocation expenses and/or salary paid in respect of PTO that was taken but not earned, unless otherwise prohibited by law.

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(i)Indemnification. At all times subsequent to the Commencement Date, the executive and his estate shall be covered by any by-laws, policies, procedures, or otherwise regarding indemnification of senior executives or employees of the Company, and shall be a named insured on any Directors & Officers insurance policy which is held by the Company.

(j)Counterparts; Effectiveness. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto, including by fax or electronic pdf.

[intentionally blank]

22

Exhibit 10.7

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year that appears next to their signatures:

EXECUTIVE

/s/ Donald H. McCree IIIMarch 23, 2015

Donald H. McCree III     Date

COMPANY

/s/ Bruce Van SaunMarch 23, 2015

By:Bruce Van Saun Date

Chairman and CEO,                            Citizens Financial Group, Inc.

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Exhibit 10.7

ADDENDUM TO

EXECUTIVE EMPLOYMENT AGREEMENT

This ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Addendum”) is made as of August 2, 2017 by and between Citizens Financial Group, Inc., together with its subsidiaries and any and all successor entities (the “Company”) and Donald H. McCree III (“Executive”).

This Addendum is a supplement to Executive’s Executive Employment Agreement dated March 23, 2015 (the “Original Agreement”), and the terms of this Addendum shall be incorporated by reference therein and shall become terms and conditions of Executive’s continued employment. The terms of this Addendum shall supersede any conflicting terms found in the Original Agreement. This Addendum may not be altered, modified, or amended except by written instrument signed by the parties hereto. To the extent capitalized terms are not defined herein, the definitions included in the Original Agreement or Addendum, as applicable, shall govern.

Section 1.     Notice Period

The parties agree that “Notice Period” as such term is used in the Original Agreement shall mean one hundred twenty (120) days; provided, that, the other terms of Section 1(a) of the Original Agreement shall remain in full force and effect.

Section 2.     Change of Control Severance

(a)In the event Executive's employment is terminated by the Company without Cause (other than by reason of Executive’s death or disability) or the Executive resigns with Good Reason, in each case within 24 months following a Change of Control, Executive shall receive a payment equivalent to: (i) two times the sum of (A) Executive’s Base Salary at the time of termination and (B) the average cash bonus paid to Executive during the prior three years; plus (ii) a pro-rata bonus for the year in which termination occurs, based on the average cash bonus paid to Executive during the prior three years (together, the “COC Severance Payment”).

(b)Any COC Severance Payment made in accordance with this section shall be in lieu of and not in addition to any payments to which Executive may otherwise have been entitled in accordance with other sections of this Addendum or the Original Agreement and shall be in full and final settlement of all claims Executive may have arising out of or in connection with his employment or its termination, other than with respect to any outstanding equity held by Executive, which shall be treated as provided for in the applicable Company stock plan and award agreements governing such awards.

Section 3.     Payment of Severance

(a)The severance set forth in Section 4(a) of the Original Agreement and the COC Severance Payment set forth in this Addendum shall be made in a lump sum, subject to execution and non-revocation of a Standard Release, within seventy (70) days of the termination of Executive’s employment. If the period between the termination of Executive’s employment and the latest possible effective date of the Standard Release spans two calendar years, the COC Severance Payment shall be paid by the Company in the second calendar year.

24

Exhibit 10.7

Section 4.     Definitions

(a)“Good Reason” means any of the following changes, as compared to Executive’s terms of employment prior to a Change of Control:

(i)a material diminution in Executive’s authority, duties, or responsibilities;

(ii)a material diminution in Executive’s base salary other than a general reduction in base salary that affects all similarly situated employees; or

(iii)a relocation of Executive’s principal place of employment by more than 50 miles from his or her current principal place of employment, unless the new principal place of employment is closer to Executive’s home address.

Provided, however, that Executive’s must give written notice to the Company within 30 days of the initial existence of any of the foregoing changes, the Company shall have 30 days upon receipt of such notice to remedy the condition so as to eliminate the Good Reason, and if not remedied, Executive’s employment must terminate no later than 60 days following the expiration of such cure period. Notwithstanding the foregoing, the Executive’s continued employment shall not constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good Reason under this Addendum.

(b)“Change of Control” means the occurrence of any one or more of the following events:

(i)any Person (as defined in Section 3(a)(9) of the Exchange Act of 1934, as amended and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof), other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company (the “Board”) and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive

25

Exhibit 10.7

distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

Section 5.     Section 280G

(i)If the aggregate of all amounts and benefits due to Executive under this Addendum or the Original Agreement or any other plan, program, agreement or arrangement of the Company or any of its Affiliates, which, if received by Executive in full, would constitute “parachute payments,” as such term is defined in and under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (collectively, “Change of Control Benefits”), reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount Executive would receive, after all such applicable taxes, if Executive received aggregate Change of Control Benefits equal to an amount which is $1.00 less than three (3) times Executive’s “base amount,” as defined in and determined under Section 280G of the Code, then such Change of Control Benefits shall be reduced or eliminated to the extent necessary so that the Change of Control Benefits received by the Executive will not constitute parachute payments. If a reduction in the Change of Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a different order, subject to the Company’s consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple of Base Salary and/or annual bonus; (ii) other cash payments; (iii) any annual incentive compensation paid as severance; (iv) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value, provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock options and equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.

(ii)It is possible that after the determinations and selections made pursuant to Section 5(a) above, Executive will receive Change of Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by Section 5(a) above (hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, Executive shall promptly repay the Company an amount consistent with this Section 5(b). If there is an Underpayment, the Company shall pay Executive an amount consistent with this Section 5(b).

(iii)The determinations with respect to this Section 5 shall be made by an independent auditor (the “Auditor”) compensated by the Company. The Auditor shall be the Company’s regular independent auditor, unless the regular independent auditor is unable or unwilling to makes such determinations, in which event the Auditor shall be a nationally-recognized United States public accounting firm chosen by the Company.

Section 6.    Miscellaneous

(a)Governing Law. This Addendum shall be governed by and construed in accordance with New York law without giving effect to the conflict of laws provisions thereof.

26

Exhibit 10.7

(b)No Waiver. The failure of a party to insist upon strict adherence to any term of this Addendum on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Addendum.

(c)Severability. In the event that any one or more of the provisions of this Addendum shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Addendum shall not be affected thereby.

[signature page follows]

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Exhibit 10.7

IN WITNESS WHEREOF, Executive duly executed this Addendum as of the day and year first above written.

ACCEPTED AND AGREED

/s/ Donald H. McCree III

Donald H. McCree III

EX-10.8

Exhibit 10.8

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made as of December 13, 2016, by and between Citizens Financial Group, Inc. (the “Company”) and John Woods (“Executive”).

WHEREAS the Company desires to employ Executive and to enter into this Agreement embodying the terms of such employment; and

WHEREAS Executive desires to accept such employment and enter into this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Section 1.     Employment At-Will

(a)Executive’s employment with the Company shall be “at-will” and not for a fixed term. Executive understands and acknowledges that no statement, whether written or verbal, by the Company or any of its officers, employees or representatives may in any way modify, alter, or change the “at-will” nature of Executive’s employment by the Company. Executive and the Company each retains the right to terminate Executive’s employment at any time, for any reason or no reason. Executive understands and agrees that, as an at-will employee, the Company may terminate Executive’s employment without advance notice Executive may terminate his employment for any reason (a “Resignation”) effective one hundred twenty (120) days following delivery of written notice of resignation to the Company’s Chief Executive Officer (“CEO”) (the “Notice Period”).

(b)Upon receipt of Executive’s written notice of Resignation, the Company may, in its sole discretion, waive or shorten the Notice Period, in which case Executive will be permitted to terminate employment immediately or at a time designated by the Company. If the Company waives or shortens

1

the Notice Period, then under such circumstances, the Company will not be obliged to pay any amount in lieu of the waived or shortened Notice. Alternatively, the Company may direct Executive not to report to work unless otherwise requested by the Company (“Garden Leave”). During any period of Garden Leave, as during any Notice Period:

(i)Executive will remain an employee of the Company and will continue to be paid Executive’s then Base Salary (as defined below) and be eligible for employee benefits. However, Executive shall not be entitled to receive incentive compensation.

(ii)Executive will be expected to continue to undertake such duties and responsibilities as are assigned to Executive by the Company’s Board of Directors (the “Board”) or CEO, including duties to assist the Company with Executive’s transition from the Company and maintaining the Company’s business, business relationships, and goodwill. Notwithstanding the foregoing, the Company reserves the right to suspend any or all of Executive’s duties and powers and to relocate Executive’s office to Executive’s personal residence for all or part of the Garden Leave.

(iii)Executive will remain bound by all fiduciary duties and obligations owed to the Company and remain required to comply with all Company policies and practices and the provisions of this Agreement.

(iv)Executive may not, without the prior written consent of the Company or except in the discharge of duties and responsibilities in accordance with clause (ii) above, contact or attempt to contact any client, customer, potential client or customer, agent, professional advisor, employee, supplier or broker of the Company or any of its parents, subsidiaries, affiliates or their respective successors.

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Section 2.     Position

(a)Commencement Date. The Executive’s employment with the Company shall commence on February 13, 2017 (the “Commencement Date”).

(b)Position. During Executive’s employment, Executive shall serve as Executive Vice President, Chief Financial Officer of the Company, with duties and responsibilities commensurate with such role. In this position, Executive shall report directly to the CEO or to such other person acting in that capacity on an interim basis as may be applicable. Assuming expected levels of performance are achieved by Executive during his first 12 to 18 months of employment, Executive will be recommended to the Board of Directors for the title of Vice Chairman.

(c)Best Efforts. During Executive’s employment, Executive shall: (i) devote Executive’s full professional time, attention, skill and energy to the performance of his duties for the Company and its parents, subsidiaries, affiliates or their respective successors (collectively, the “Company Affiliates” and each a “Company Affiliate”); (ii) use Executive’s best efforts to dutifully, faithfully and efficiently perform his duties hereunder, comply with the policies, procedures, bylaws, rules, code of conduct and practices of the Company Affiliates, as the same may be amended from time to time, and of which he is given notice, and obey all reasonable and lawful directions given by or under the authority of the CEO; (iii) refrain from engaging in any other business, profession or occupation for compensation or otherwise which would conflict, directly or indirectly, with the rendition of services to the Company, without the prior written consent of the CEO of the Company; except that Executive may engage in charitable, professional, and community activities and manage Executive’s personal investments provided that such activities do not materially interfere with the performance of his duties hereunder or conflict with the conditions of his employment; and (iv) refrain from engaging in any conduct he knows or reasonably should know is prejudicial to the interests and reputation of any Company Affiliate and endeavor to

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promote and extend the business of the Company Affiliates and protect and further their interests and reputation, all in a manner consistent with his duties and responsibilities.

(d)Directorships. Executive may be required, in the sole discretion of the Company, to perform services for any Company Affiliate and may be required to undertake the role and duties of an officer or director of any Company Affiliate. No additional compensation will be paid in respect of these appointments.

(e)Location. During the period of Executive’s employment, Executive shall be based in Stamford, Connecticut but may be relocated within a fifty (50) mile radius of that location at the Company’s sole discretion. Executive is expected to spend three days per week in Rhode Island or Massachusetts during routine weeks. Additionally, Executive may be required to travel internationally or domestically in the performance of his duties.     

Section 3.     Compensation.

(a)Base Salary.The Company shall pay Executive a base salary at the initial annualized rate of $700,000 (“Base Salary”) in accordance with the Company’s regular payroll schedule. Executive shall be entitled to increases in Base Salary as may be determined from time to time in the sole discretion of the Company.

(b)     Variable Compensation. Executive will be eligible to participate in the Company’s discretionary variable compensation program, as amended from time to time. Executive’s initial target bonus opportunity shall be $2,700,000 (“Target Bonus Opportunity”), with the actual amount of any such award to be determined in the sole discretion of the Company, based on a mix of factors, including but not limited to individual, team and Company performance as well as external economic considerations. For years 2018 through and including 2020, assuming Executive is performing his CFO duties at the level expected by the Company, Executive’s baseline total compensation opportunity for each full year

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of service will be no less than $3,400,000, with the actual amount of any such award to be determined in the sole discretion of the Company, based on the mix of factors referenced immediately above.

Variable compensation awards may be awarded in cash, equity-based instruments, or in any other form and may also be deferred in full or in part, as determined by the Company; provided, thatthe form and the timing of payment of awards, as well as other terms and conditions for awards, will be consistent with awards granted to similarly situated colleagues. Any award Executive receives will be subject to applicable tax and other required withholdings.

Any cash portion of any award will be paid by March 15^th following the determination of awards and any deferred cash and equity-based instruments granted to Executive as part of his award will be granted as soon as practicable following the determination of awards, in each case, provided that Executive remains employed by the Company on the payment date or grant date (as applicable) and neither Executive nor the Company has given notice to terminate Executive’s employment prior to the payment date or grant date (as applicable). Any deferred cash and equity-based instruments granted to Executive as part of his award will be governed by the applicable equity plan document and award agreement, as applicable. In the event of any conflict between information contained in this document and the plan or award agreement provisions, the terms of the plan and award agreement shall control. Receiving an award under the discretionary award program in certain years does not guarantee payment or level of award in any subsequent year and any award may be forfeited or reduced (i.e., is subject to clawback where legally permissible) as determined appropriate by the Company in its sole discretion or where required by law. The Company reserves the right to change the rules of any compensation plan or program or to cancel any such plan or program at any time without prior notice in its sole and absolute discretion, provided however, that any such change or cancellation which would have a material adverse affect on any of Executive’s outstanding awards cannot be made without Executive’s written consent.

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Section 4.     Buy-Out Award

To recognize that you will forfeit awards granted or to be granted by your former employer as a result of joining Citizens, you will receive a cash award and a restricted stock unit award, with the equity award subject to approval by the Compensation and Human Resources Committee of the Board of Directors or its delegate.

The grant of these awards is subject to you providing the following documents to Citizens within 45 days of your start date: (1) Statement or other documentation reflecting the expectation or forfeiture of your award, as applicable; and (2) Documentation regarding the terms of your forfeited award (plan document and award agreement, or other applicable document). If satisfactory documentation is not provided within 45 days of your start date, you will forfeit the right to receive your award for no consideration.

(a)Cash Portion.You will receive a cash payment of $3,000,000, to be paid in a lump sum on or about March 31, 2017. Executive shall be entitled to this payment, without it being subject to forfeiture, unless he resigns or is terminated for Cause (as defined in Section 5(c) below) prior to payment being made. In the event Executive resigns or is terminated for Cause prior to payment being made, Executive will forfeit the unpaid amount.

(b)Equity Portion. Equity Portion. As of the date of this agreement, your equity buy-out award has been valued at $4,000,000 (the “Dollar Value Amount”). The Dollar Value Amount of your buy-out award will be re-valued prior to the grant date by first multiplying 635,431 (which is the aggregate number of shares or share equivalents of your former employer’s shares that were granted to you that you will forfeit) by the average closing price of your former employer's shares for the five trading days prior to your start date (the “Adjusted Dollar Value Amount”). The number of restricted stock units granted to you will then be determined by dividing the Adjusted Dollar Value Amount by the average closing price of Citizens shares for the five trading days prior to your start date. Your buy-out award will have the vesting schedule set forth below.

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Vesting Date	# RSUs Vesting
March 1, 2018	38%
March 1, 2019	34%
March 1, 2020	28%

Your restricted stock units award will be granted under the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan within 30 days of your start date pursuant to an award agreement which will include the terms and conditions of your award. You will be required to acknowledge the terms of your award agreement through Fidelity’s online system before your award is processed.

Among other terms, your award agreement will provide that if, within 12 months of your start date, your employment terminates or notice to terminate your employment is given by either party for any reason other than death, disability, Retirement (as defined in the award agreement) or termination by Citizens without cause (as defined in the award agreement), all outstanding unvested awards will lapse immediately and you will be responsible for repaying to Citizens the net value (following any applicable tax and other statutory deductions) of any Citizens shares that have been received by you. Repayment shall be due within 14 calendar days of the date of termination of your employment. If such termination occurs prior to the vesting of the final installment of your award, any unvested portion of your award will lapse immediately for no consideration.

Section 5.     Severance and Change in Control

(a)Severance. In the event the Executive is terminated without Cause, Executive shall receive 2 weeks of Executive’s Base Salary for each full year of service, with a minimum severance amount of 26 weeks of Executive’s Base Salary at the time of Executive’s termination of employment. Such amount shall be payable following the date of termination of Executive’s employment consistent with the Company’s general payroll practices, and contingent upon Executive executing, and not revoking, a standard release agreement which shall not release Executive’s right of indemnification and insurance coverage and shall not release the right to enforce this Agreement (a “Standard Release”).

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The Standard Release must be effective and irrevocable within fifty-five (55) days after the date of termination of Executive’s employment with the Company. The specific review and revocation period, if any, will be set forth in the Standard Release agreement If payable, the severance provided by this Section 5(a) shall commence to be paid upon a “separation from service” for purposes of Section 409A of the Internal Revenue Code (“Code”), including where Executive’s placement on Garden Leave constitutes a separation from service for purposes of Code Section 409A.

(b)Change of Control. In the event Executive's employment is terminated by the Company or if Executive’s resigns for Good Reason (a “Resignation for Good Reason”) within 18 months of the Commencement Date in connection with (a) the sale of the Company to a third-party purchaser or group of third-party purchasers acting as a single consortium (the “Purchaser”); or (b) an asset sale or change in the composition of the Board consistent with the change of control definition contained in IRC 409A or the regulations thereof ((a) and (b) collectively, a “Change of Control”), Executive shall receive a payment equivalent to 100% of Executive's Base Salary and Target Bonus Opportunity; a sum total to be no less than $3,400,000. The payment is contingent upon Executive executing, and not revoking, a Standard Release. Payment shall be made to Executive within two pay periods, based on the Company’s normal payroll cycles, following the Standard Release becoming effective and legally binding, provided however, that all payments shall be made within the applicable “short-term deferral” period described in Treas. Reg. 1.409A-1(b)(4) in order for the delivery of Shares to be within the short-term deferral exception set forth in the U.S. Income Tax Regulations for Code Section 409A. Any payment pursuant to this Section 5(b) shall be in lieu of, not in addition to, any separation payment Executive may otherwise have been eligible for pursuant to Section 5(a) above or any Company policy or practice with respect to separation from employment which may be in effect from time to time. Effective August 14, 2018, this Section 5(b) becomes null and void by its own terms with immediate effect.

(c) “Cause” means: (i) any conviction (including a plea of guilty or of nolo contendere or entry into a pre-trial diversion program) of Executive for the commission of a felony or any conviction

8

of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) Executive commits an act of gross misconduct, fraud, embezzlement, theft or material dishonesty in connection with the Executive’s duties or in the course of Executive’s employment with the Company or any of its affiliates; (iii) persistent or repeated failure on the part of Executive not due to any physical or mental incapacity to perform his employment duties in any material respect, which is not cured to the reasonable satisfaction of the Company within 30 days after Executive receives written notice of such failure; (iv) Executive materially violates Section 8 or 9 of this Agreement; (v) Executive makes any material false or disparaging comments about the Company or any of its subsidiaries, affiliates, employees, officers, or directors, or (vi) Executive engages in any activity which in the reasonable, good faith opinion of the Company is materially inconsistent with providing an orderly handover of Executive’s responsibilities. Nothing in clause (v) of this Section 5(c) shall prohibit or be deemed to prohibit Executive from making good faith criticisms of the performance of subordinates in the course of his duties for the Company or any of its subsidiaries or from making frank assessments or acknowledgments concerning the performance of the Company or any subsidiary in discussions with the media, analysts, shareholders, and others with whom Executive has contact in the course of his duties.

(d)“Good Reason” means (i) a material reduction in Executive’s annual compensation, (ii) a material diminution in Executive’s authority, duties, or responsibilities, (iii) the transfer of Executive’s principal office to a location that is greater than fifty (50) miles from the Company’s Stamford, Connecticut office without Executive’s written consent, or (iii) a material breach of this Agreement by the Company. For a Resignation with Good Reason, within sixty (60) days after the event constituting Good Reason, Executive shall give written notice to the Company of his intention to terminate his employment on account of a Good Reason. Such notice shall describe the particular act or acts or the failure or failures to act that constitute the grounds on which the Good Reason is based. The Company shall have thirty (30) days upon receipt of the notice in which to cure such conduct, to the extent such cure is possible.

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If such conduct is not cured or is incapable of cure, Executive’s termination date shall be the first day following the end of such thirty (30) day period.

Section 6.     Executive Benefits, Medical Exam, Paid Time Off, Reimbursement of Expenses,

D&O Insurance and Indemnification

(a)Executive Benefits. Executive may participate in and receive benefits under any and all benefit plans offered to similarly-situated employees of the Company, subject to the terms and conditions of those plans, policies and programs that are in effect from time to time. The Company reserves the right to amend the terms and conditions of its employee benefits and the related plans, policies and programs at any time, in the Company’s sole discretion.

(b)Medical Exam. Upon reasonable written notice,Executive shall at any time (including during any period of incapacity) at the request and expense of the Company submit to medical examinations by a medical practitioner nominated by the Company, to the extent permitted by applicable federal and state law.

(c)Retirement.      For the purpose of calculating retirement eligibility only, upon the Commencement Date Executive shall be credited with five years of service. This credit shall be applied and shall control over any contrary calculation contained in any applicable plan or award document, if any.

(d)Paid Time Off. Executive shall be entitled to accrue 27 days of paid time off (“PTO”) annually, which may be scheduled as time off away from work in accordance with the Company’s current PTO

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policy. For 2017, Executive’s PTO will be pro-rated based on the 1^st of the month following his date of hire.

(e)Reimbursement of Business Expenses. Reasonable, customary and necessary travel, entertainment and other business expenses incurred by Executive in the performance of his duties hereunder shall be reimbursed by the Company in accordance with the Company’s policies, subject to the provision of documentation regarding such expenses.

(f)D&O Insurance; Indemnification. In addition to any indemnification rights that Executive may have under the Company’s bylaws:

(i)D&O Insurance. While employed by the Company and continuing until the later of the sixth anniversary of the termination of Executive’s employment and the date on which all claims against Executive that would otherwise be covered by such policy (or policies) become fully time-barred, the Company shall purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage to Executive on terms that are no less favorable than the coverage provided to directors and senior executives of the Company.

(ii)Indemnification. The Company agrees that if Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (each, a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, in each case, whether on, prior to, or following the Effective Date, Executive shall be indemnified and held harmless by the Company to the fullest

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extent permitted or authorized by applicable law, against all cost, expense, liability and loss reasonably incurred or suffered by Executive in connection therewith, and such indemnification shall continue as to Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of Executive’s heirs, executors and administrators; provided, that such right to be indemnified and held harmless shall not apply to a Proceeding instituted by the Company against Executive. The Company shall promptly advance to Executive all reasonable costs and expenses incurred by Executive in connection with any such action, suit or proceeding provided that Executive furnishes the Company with a written undertaking, executed personally or on Executive’s behalf, to repay any advances if it is ultimately determined that Executive is not entitled to be indemnified by the Company.

Section 7.     Compliance with the Company’s Personal Securities Transactions Policy

Executive is subject to the Company’s Personal Securities Transactions Policy, which sets forth the required procedures and processes with respect to purchases and sales of Company securities.

Section 8.     Non-Solicitation

(a) Non-Solicitation of Employees. Executive agrees that, at any time during Executive’s employment and for twelve (12) months following the date Executive ceases to be employed by the Company for any reason (the “Restricted Period”), Executive shall not, directly or indirectly, whether for his own account or for any person or entity other than the Company hire, employ, solicit for employment or hire, or attempt to solicit for employment or hire, any person who is employed by any Company Affiliate during the Restricted Period (other than those employees terminated by the Company Affiliate), nor shall Executive directly or indirectly induce any such employee to terminate his or her employment or accept employment with anyone other than a Company Affiliate, or otherwise interfere with the relationship between any Company Affiliate and any of its employees during the Restricted

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Period. Anything to the contrary notwithstanding, the Company agrees that Executive shall not be deemed in violation of this Section 8(a) if an entity with which Executive is associated hires or engages any employee of a Company Affiliate, if Executive was not, directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee, other than signing an offer letter.

(b)Non-Solicitation of, and Non-Interference with, Customers and Prospective Clients. Executive agrees that during his employment and during the Restricted Period, Executive shall not, directly or indirectly, for any person or entity other than the Company, solicit or assist in soliciting for business any customer of any Company Affiliate, nor will Executive induce or encourage any such customer to discontinue or diminish his, her or its relationship or prospective relationship with any Company Affiliate, or divert business away from any Company Affiliate; provided, however, that general solicitation through advertisement shall not constitute solicitation for purposes of this provision.

(c)Representations. Executive agrees that all of the foregoing restrictions are reasonable and necessary to protect the Company’s business and its Confidential Information and that Executive’s employment by the Company, along with the benefits and attributes of that employment, is good and valuable consideration to compensate him for agreeing to all restrictions contained in this Agreement. Executive also acknowledges, represents and warrants that his knowledge, skills and abilities are sufficient to permit Executive to earn a satisfactory livelihood without violating these provisions. Further, Executive agrees that he shall not, following the termination of Executive’s employment with the Company, represent or hold himself out as being in any way connected with the business of the Company.

(d)Blue Pencil. It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 8 to be reasonable, if a final judicial determination is made by an arbitrator or a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this

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Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if an arbitrator or a court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

Section 9.     Confidentiality; Ownership of Materials; Duty to Return Company Property

(a)Confidential Information. Executive may not at any time (whether during his employment or after termination) disclose to any unauthorized person, firm or corporation or use or attempt to use for his own advantage or to the advantage of any other person, firm or corporation, any confidential information relating to the business affairs or trade secrets of any Company Affiliate, or any confidential information about (howsoever obtained) or provided by any third party received during the course of or as a result of his employment (the “Confidential Information”). Confidential Information includes, but is not limited to, information relating to employees, customers and suppliers (former, actual and potential), Company contracts, pricing structures, financial and marketing details, business plans, any technical data, designs, formulae, product lines, intellectual property, research activities and any information which may be deemed to be commercially or price sensitive in nature, whether printed, typed, handwritten, videotaped, transmitted or transcribed on data files or on any other type of media, including but not limited to electronic and digital media, whether or not labeled as “confidential”. It also includes, without limitation, any information contained in documents marked “confidential” or documents of a higher security classification and other information which, because of its nature or the circumstances in which Executive receives it, Executive should reasonably consider to be confidential. The Company reserves the right to modify the categories of Confidential Information from time to time.

(b)Exclusions. The provisions of this Section 9 shall not apply to:

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(i)Information or knowledge which subsequently comes into the public domain other than by way of unauthorized use or disclosure by Executive;

(ii)The discharge by Executive of his duties hereunder or where his use or disclosure of the information has otherwise been properly authorized by the Company;

(iii)Any information which Executive discloses in accordance with applicable public interest disclosure legislation; or

(iv)Any disclosure required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction to order Executive to disclose or make accessible any information.

(c)Due Care. Executive shall exercise all due care and diligence and shall take all reasonable steps to prevent the publication or disclosure by Executive of any Confidential Information relating, in particular, but not limited to, actual or proposed transactions, of any employee, customer, client or supplier (whether former, actual or potential) of any Company Affiliate including partnerships, companies, bodies, and corporations having accounts with or in any way connected to or in discussion with any Company Affiliate and all other matters relating to such customers, clients or suppliers and connections.

(d)Duty to Return Confidential Information and Other Company Property.

(i)All reports, files, notes, memoranda, e-mails, accounts, documents or other material (including all notes and memoranda of any Confidential Information and any copies made or received by Executive in the course of his employment (whether during or after)) in any form, including but not limited to electronic and digital media, which contain Confidential Information or were created in the scope of Executive’s performance of services, are and shall remain the

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sole property of the Company and, following Executive’s termination of employment or at any other time upon the Company’s request, to the extent within his possession or control, Executive shall make every effort to surrender to the duly authorized representative of the Company or destroy in accordance with sub-section (ii) below.

(ii)Executive agrees that upon termination of his employment with the Company for any reason, or at any other time upon the Company’s request, he will make every effort to return (or, if contained electronically on a non-Company database or server, delete) to the Company immediately all memoranda, books, papers, plans, information, letters and other data in any form, including but not limited to electronic and digital media, all copies thereof or, in any way relating to the business of the Company, all other property of any Company Affiliate (including, but not limited to, company car, credit cards, equipment, correspondence, data, disks, tapes, records, specifications, software, models, notes, reports and other documents together with any extracts or summaries, removable drives or other computer equipment, keys and security passes) in his possession or under his control and Executive further agrees that Executive will not retain or use for his own account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of any Company Affiliate. To the extent the Company property in Executive’s possession is not an original, and the Company has copies of such Company property, Executive may destroy such Company property and attest to the Company that said property is destroyed as opposed to being returned. Nothing herein shall affect Executive’s right to retain his personal contacts information and his employment and compensation related documentation.

(e)Reasonableness. Executive agrees that the undertakings set forth in this Section 9 and in Section 8 are reasonable and necessary to protect the legitimate business interests of the Company both during, and after the termination of, Executive’s employment, and that the benefits Executive receives under this Agreement are sufficient compensation for these restrictions.

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Section 10.     Intellectual Property and Developments

(a)Executive agrees that all Developments are the sole and exclusive property of the Company and hereby assigns all rights to such Developments to the Company in all countries. Executive agrees, at the Company’s expense at any time during his employment or thereafter, to sign all appropriate documents and carry out all such reasonable acts as will be necessary to identify and preserve the legal protection of all Developments; however, the Company will have no obligation to compensate Executive for his time spent in connection with any assistance provided unless otherwise required by law. Notwithstanding the foregoing, Executive understands that no provision in this Agreement is intended to require assignment of any of his rights in an invention for which Executive can prove no equipment, supplies, facilities or Confidential Information or trade secret information of the Company was used, which invention was developed entirely on his own time, and which invention Executive can prove: (a) does not relate to the business of the Company or the actual or demonstrably anticipated research or development of the Company; or (b) does not result from any work performed by Executive for the Company.  To the extent compatible with applicable state law, these provisions do not apply to any invention which is required to be assigned by the Company to the United States Government.  Executive waives all moral rights in all Intellectual Property which is owned by the Company, or will be owned by the Company, pursuant to this Section10.

For purposes of this section, “Developments” means all inventions, whether or not patentable, Confidential Information, computer programs, copyright works, mask works, trademarks and other intellectual property made, conceived or authored by Executive, alone or jointly with others, while employed by the Company, whether or not during normal business hours or on the Company’s premises, that are within the existing or contemplated scope of the Company’s business at the time such Developments are made, conceived, or authored or which result from or are suggested by any work Executive or others may do for or on behalf of the Company.

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(b)    Executive agrees to promptly submit to the Company written disclosures of all inventions, whether or not patentable, which are made, conceived or authored by Executive, alone or jointly with others, while Executive is employed by the Company.

Section 11.     Certain Agreements

(a)Data Protection. Executive shall familiarize himself with and abide by the Company’s data protection policy, procedures and accountabilities. Executive acknowledges that any material breach of these procedures may result in the immediate termination of his employment.

(b)Personal Information. Executive acknowledges and agrees that the Company is permitted to hold personal information about him as part of its personnel and other business records and, in accordance with applicable law, may use such information in the course of the Company’s business.

(c)Credit Data. The Company reserves the right, upon five (5) days prior written notice, to, and Executive agrees that the Company may, in accordance with applicable law, carry out searches about Executive through credit reference agencies or through the Company’s customer records at any time during his employment for purposes of identifying any serious debt or other significant financial difficulties of Executive for the purposes of detecting, eliminating or mitigating any particular risk of employee fraud or theft. The Company will only retain the information about Executive which the Company obtains from these searches in accordance with applicable law and for so long as is needed for the purposes set out above, subject to any legal or regulatory obligation which requires the Company to retain that information for a longer period. The credit reference agency will record details of the search but these will not be available for use by lenders to assess the ability of Executive to obtain credit. Executive has the right of access to his personal records held by credit reference agencies. The Company will supply the names and addresses of such agencies upon request, to help Executive to exercise his right of access to such records.

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(d)Indebtedness. For the reasons referred to above, the Company expects Executive to manage his personal finances responsibly. The Company requires that Executive draw to the attention of Executive’s manager any serious debt or significant financial difficulties that he may have, including those which result in court action being taken against Executive.

Section 12.Remedies

The Company and Executive agree that it is impossible to measure solely in money the damages which will accrue to the Company by reason of his failure to observe any of the obligations of Sections 8, 9 or 10 of this Agreement. Therefore, if the Company shall institute any action or proceeding to enforce such provisions, Executive hereby waives the claim or defense that there is an adequate remedy at law and agrees in any such action or proceeding not to interpose the claim or defense that such remedy exists at law. Without limiting any other remedies that may be available to the Company, Executive hereby specifically affirms the appropriateness of injunctive or other equitable relief in any such action and acknowledges that nothing contained within this Agreement shall preclude the Company from seeking or receiving any other relief, including without limitation, any form of injunctive or equitable relief. Executive also agrees that, should he violate the provisions of Section 8 and its subsections such that the Company shall be forced to undertake any efforts to defend, confirm or declare the validity of the covenants contained within Section8 of this Agreement, the time restrictions set forth therein shall be extended for a period of time equal to the pendency of any court proceedings, including appeals. Further, Executive agrees that, should the Company undertake any efforts to defend, confirm or declare the validity of any of the covenants contained in Sections 8, 9 and 10 of this Agreement, the Company shall be entitled to recover from Executive all of its reasonable attorneys’ fees and costs incurred in prosecuting or defending any such action or engaging in any such efforts.

Section 13.     No Conflicts

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Executive represents and warrants to the Company that on the Commencement Date, to the best of Executive’s knowledge, Executive’s acceptance of employment with, and performance of Executive’s duties for, the Company will not conflict with or result in a violation or breach of, or constitute a default under, any contract, agreement or understanding to which Executive is, or was, a party or of which Executive is aware and that there are no restrictions, covenants, agreements or limitations on Executive’s right or ability to enter into and perform the terms of this Agreement, other than as expressly disclosed.

Section 14.     Dispute Resolution; Mediation and Arbitration

Except as provided in the last sentence of this Section 14, to the fullest extent permitted by law, the Company and Executive agree to waive their rights to seek remedies in court, including but not limited to rights to a trial by jury. The Company and Executive agree that any dispute between or among them or their affiliates or related entities arising out of, relating to or in connection with this Agreement or Executive’s employment with the Company, including but not limited to claims for discrimination or other alleged violations of any federal, state or local employment and labor law statutes, ordinances or regulations, will be resolved in accordance with a confidential two-step dispute resolution procedure involving: (1) Step One: non-binding mediation, and (2) Step Two: binding arbitration under the Federal Arbitration Act, 9 U.S.C. § 1, et. seq., or state law, whichever is applicable. Any such mediation or arbitration hereunder shall be under the auspices of the American Arbitration Association (“AAA”) pursuant to its then current Commercial Arbitration Rules and Mediation Procedures (the “AAA Commercial Rules”). Disputes encompassed by this Section 14 include claims for discrimination arising under local, state or federal statutes or ordinances and claims arising under any state’s labor laws. Notwithstanding anything to the contrary in the AAA Commercial Rules, the mediation process (Step One) may be ended by either party to the dispute upon notice to the other party that it desires to terminate the mediation and proceed to the Step Two arbitration; provided, however, that neither party may so terminate the mediation process prior to the occurrence of at least one (1) mediation session with the

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mediator. No arbitration shall be initiated or take place with respect to a given dispute if the parties have successfully achieved a mutually agreed to resolution of the dispute as a result of the Step One mediation, other than as a result of breach of the agreement encompassing the resolution. The mediation session(s) and, if necessary, the arbitration hearing shall be held in the city nearest to Executive’s office location during the course of Executive’s employment with the Company or an alternative location mutually agreeable to Executive and the Company. The arbitration (if the dispute is not resolved by mediation) will be conducted by a single AAA arbitrator, mutually selected by the parties, as provided for by the AAA Commercial Rules. The Company will be responsible for the AAA charges, including the costs of the mediator and arbitrator. The Company and Executive agree that the arbitrator shall apply the substantive law of the State of New York to all state law claims and federal law to any federal law claims, that discovery shall be conducted in accordance with the AAA Commercial Rules or as otherwise permitted by law as determined by the arbitrator. In accordance with the AAA Commercial Rules (a copy of which is available through AAA’s website, www.adr.org), the arbitrator’s award shall consist of a written statement as to the disposition of each claim and the relief, if any, awarded on each claim. The Company and Executive understand that the right to appeal or to seek modification of any ruling or award by the arbitrator is limited under state and federal law. Any award rendered by the arbitrator will be final and binding, and judgment may be entered on it in any court of competent jurisdiction. Nothing contained herein shall restrict either party from seeking temporary injunctive relief in a court of law to the extent set forth in Section 12 hereof.

In the unlikely event the AAA refuses to accept jurisdiction over a dispute, Executive and the Company agree to submit to Judicial-Arbitration-Mediation Services (“JAMS”) mediation and arbitration applying the JAMS equivalent of the AAA Commercial Rules. If AAA and JAMS refuse to accept jurisdiction, the parties may litigate in a court of competent jurisdiction.

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Section 15.     Miscellaneous

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard for the conflict of laws provisions thereof.

(b)Entire Agreement and Amendments; Survivorship; Strict Construction.

(i)This Agreement contains the entire understanding and agreement of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto, which attaches a copy of this Agreement.

(ii)The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

(c)Tax Compliance. All compensation paid to Executive is intended to, and is reasonably believed to, comply with Internal Revenue Code Section 409A of the Internal Revenue Code of 1986 (“Section 409A”), as amended, as well as other tax related laws and regulations to the extent it does not fall into any applicable exclusion, and shall be interpreted and construed consistent with that intent. Notwithstanding the foregoing, the Company makes no representations that the terms of this Agreement (and any compensation payable thereunder) comply with Section 409A, and in no event shall the Company be liable for any taxes, interest, penalties or other expenses that may be incurred by Executive on account of non-compliance with Section 409A. No expenses eligible for reimbursement, or in-kind benefits to be provided, during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, to the extent subject to the requirements of Section 409A, and no such right

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to reimbursement or right to in-kind benefits shall be subject to liquidation or exchange for any other benefit. For purposes of Section 409A, each payment in a series of installment payments, if any, provided under this Agreement shall be treated as a separate payment. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this Agreement upon a termination of employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing and any provision in this Agreement to the contrary, if on the date of his termination of employment, Executive is deemed to be a “specified employee” within the meaning of Section 409A and any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A, then such payment or benefit due upon, or within the six-month period following, a termination of Executive’s employment (whether under his Agreement, any other plan, program, payroll practice or any equity grant) and which do not otherwise qualify under the exemptions under Treas. Reg. Section 1.409A-1 (including, without limitation, payments that constitute “separation pay” within the meaning of Section 409A), shall be paid or provided to Executive in a lump sum on the earlier of (a) the date which is six months and one day after Executive’s “separation from service” (as such term is defined in Section 409A) for any reason other than death, and (b) the date of Executive’s death, and any remaining payments and benefits shall be paid or provided in accordance with the payment dates specified in this Agreement for such payment or benefit.

(d)No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

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(e)Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

(f)Assignment. This Agreement shall not be assignable by Executive. This Agreement shall be freely assignable by the Company without restriction to any successor in interest.

(g)Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and permitted assigns.

Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or three (3) business days after mailing registered mail, return receipt requested, postage prepaid or by recognized courier, addressed to the respective addressees set forth on the execution page of this Agreement, provided that all notices to the Company shall also be directed to Neil Rosolinsky, Deputy General Counsel, Litigation & Employment, Citizens Bank, 30 Montgomery Street, Suite 1330, Jersey City, NJ 07302 or to such other address as either party may have furnished to the other in writing, except that notice of change of address shall be effective only upon receipt.

(h)Withholding Taxes; Deductions. The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. Executive agrees that the Company may, at any time during, or in any event upon termination of his employment, deduct from Executive’s compensation, any monies due by Executive to the Company for any overpayment made and/or outstanding loans, advances, relocation expenses and/or salary paid in respect of PTO that was taken but not earned, unless otherwise prohibited by law.

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(i)Indemnification. At all times subsequent to the Commencement Date, the executive and his estate shall be covered by any by-laws, policies, procedures, or otherwise regarding indemnification of senior executives or employees of the Company, and shall be a named insured on any Directors & Officers insurance policy which is held by the Company.

(j)  Counterparts; Effectiveness.This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto, including by fax or electronic pdf.

[intentionally blank]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year that appears next to their signatures:

EXECUTIVE

/s/ John WoodsDecember 13, 2016

John Woods                   Date

COMPANY

/s/ Bruce Van SaunDecember 13, 2016

Bruce Van Saun              Date

Chairman and Chief Executive Officer

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ADDENDUM TO

EXECUTIVE EMPLOYMENT AGREEMENT

This ADDENDUM TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Addendum”) is made as of August 2, 2017 by and between Citizens Financial Group, Inc. together with its subsidiaries and any and all successor entities (the “Company”) and John Woods (“Executive”).

This Addendum is a supplement to Executive’s Executive Employment Agreement dated December 13, 2016 (the “Original Agreement”), and the terms of this Addendum shall be incorporated by reference therein and shall become terms and conditions of Executive’s continued employment. The terms of this Addendum shall supersede any conflicting terms found in the Original Agreement. This Addendum may not be altered, modified, or amended except by written instrument signed by the parties hereto. To the extent capitalized terms are not defined herein, the definitions included in the Original Agreement, as applicable, shall govern.

Section 1.     Change of Control Severance

(a)Effective as of the date of this Addendum, Section 5(b) of the Original Agreement shall be superseded by the terms of this Section 1.

In the event Executive's employment is terminated by the Company without Cause (other than by reason of Executive’s death or disability) or the Executive resigns with Good Reason, in each case within 24 months following a Change of Control, Executive shall receive a payment equivalent to: (i) two times the sum of (A) Executive’s Base Salary at the time of termination and (B) the average cash bonus paid to Executive during the prior three years; plus (ii) a pro-rata bonus for the year in which termination occurs, based on the average cash bonus paid to Executive during the prior three years (together, the “COC Severance Payment”). If payment of the COC Severance Payment to Executive occurs prior to Executive receiving a bonus from the Company, the bonus amounts set forth in Sections 1(b)(i)(B) and

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1(b)(ii) shall be determined based on the variable compensation opportunity set forth in Section 3(b) of Executive’s Original Agreement ($2,700,000), with the cash bonus portion to be determined based on the variable pay mix applied by the Board for the immediately preceding performance year.

(b)Any COC Severance Payment made in accordance with this section shall be in lieu of and not in addition to any payments to which Executive may otherwise have been entitled in accordance with other sections of this Addendum or the Original Agreement and shall be in full and final settlement of all claims Executive may have arising out of or in connection with his employment or its termination, other than with respect to any outstanding equity held by Executive, which shall be treated as provided for in the applicable Company stock plan and award agreements governing such awards.

Section 2.     Payment of Severance

The severance set forth in Section 5(a) of the Original Agreement and the COC Severance Payment set forth in Section 1 of this Addendum shall each be paid in a lump sum, subject to execution and non-revocation of a Standard Release, within seventy (70) days of the termination of Executive’s employment. If the period between the termination of Executive’s employment and the latest possible effective date of the Standard Release spans two calendar years, the payment shall be made by the Company in the second calendar year.

Section 3.     Definitions

(a)“Cause” means: (i) any conviction (including a plea of guilty or of nolo contendere or entry into a pre-trial diversion program) of Executive for the commission of a felony or any conviction of any criminal offense within the scope of Section 19 of the Federal Deposit Insurance Act, 12 U.S.C. § 1829; (ii) Executive commits an act of gross misconduct, fraud, embezzlement, theft or material dishonesty in connection with the Executive’s duties or in the course of Executive’s employment with the Company or any of its affiliates; (iii) failure on the part of Executive to perform his employment duties

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in any material respect, which is not cured to the reasonable satisfaction of the Company within 30 days after Executive receives written notice of such failure; (iv) Executive violates Sections 8 and 9 of the Original Agreement (non-solicitation; confidentiality; ownership of materials; duty to return company property); or (v) Executive makes any material false or disparaging comments about the Company or any of its subsidiaries, affiliates, employees, officers, or directors, or engages in any activity which in the opinion of the Company is not consistent with providing an orderly handover of Executive's responsibilities.

(b) “Good Reason” means any of the following changes, as compared to Executive’s terms of employment prior to a Change of Control:

(i) a material diminution in Executive’s authority, duties, or responsibilities;

(ii) a material diminution in Executive’s base salary other than a general reduction in base salary that affects all similarly situated employees; or

(iii) a relocation of Executive’s principal place of employment by more than 50 miles from his or her current principal place of employment, unless the new principal place of employment is closer to Executive’s home address.

Provided, however, that Executive’s must give written notice to the Company within 30 days of the initial existence of any of the foregoing changes, the Company shall have 30 days upon receipt of such notice to remedy the condition so as to eliminate the Good Reason, and if not remedied, Executive’s employment must terminate no later than 60 days following the expiration of such cure period. Notwithstanding the foregoing, the Executive’s continued employment shall not constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good Reason under this Addendum.

(c)“Change of Control” means the occurrence of any one or more of the following events:

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(i)any Person (as defined in Section 3(a)(9) of the Exchange Act of 1934, as amended and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof), other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company (the “Board”) and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

30

Section 4.     Section 280G

(a)If the aggregate of all amounts and benefits due to Executive under this Addendum or the Original Agreement or any other plan, program, agreement or arrangement of the Company or any of its Affiliates, which, if received by Executive in full, would constitute “parachute payments,” as such term is defined in and under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) (collectively, “Change of Control Benefits”), reduced by all federal, state and local taxes applicable thereto, including the excise tax imposed pursuant to Section 4999 of the Code, is less than the amount Executive would receive, after all such applicable taxes, if Executive received aggregate Change of Control Benefits equal to an amount which is $1.00 less than three (3) times Executive’s “base amount,” as defined in and determined under Section 280G of the Code, then such Change of Control Benefits shall be reduced or eliminated to the extent necessary so that the Change of Control Benefits received by the Executive will not constitute parachute payments. If a reduction in the Change of Control Benefits is necessary, reduction shall occur in the following order unless the Executive elects in writing a different order, subject to the Company’s consent (which shall not be unreasonably withheld or delayed): (i) severance payment based on multiple of Base Salary and/or annual bonus; (ii) other cash payments; (iii) any annual incentive compensation paid as severance; (iv) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (v) any equity awards accelerated or otherwise valued at full value, provided such equity awards are not permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vi) acceleration of vesting of stock options with an exercise price that exceeds the then fair market value of stock subject to the option, provided such options are permitted to be valued under Treasury Regulations Section 1.280G-1 Q/A – 24(c); (vii) acceleration of vesting of all other stock options and equity awards; and (viii) within any category, reductions shall be from the last due payment to the first.

31

(b)It is possible that after the determinations and selections made pursuant to Section 4(a) above, Executive will receive Change of Control Benefits that are, in the aggregate, either more or less than the amounts contemplated by Section 4(a) above (hereafter referred to as an “Excess Payment” or “Underpayment,” respectively). If there is an Excess Payment, Executive shall promptly repay the Company an amount consistent with this Section 4(b). If there is an Underpayment, the Company shall pay Executive an amount consistent with this Section 4(b).

(c)The determinations with respect to this Section 4 shall be made by an independent auditor (the “Auditor”) compensated by the Company. The Auditor shall be the Company’s regular independent auditor, unless the regular independent auditor is unable or unwilling to makes such determinations, in which event the Auditor shall be a nationally-recognized United States public accounting firm chosen by the Company.

Section 5.    Miscellaneous

(a)Governing Law. This Addendum shall be governed by and construed in accordance with New York law without giving effect to the conflict of laws provisions thereof.

(b)No Waiver. The failure of a party to insist upon strict adherence to any term of this Addendum on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Addendum.

(c)Severability. In the event that any one or more of the provisions of this Addendum shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Addendum shall not be affected thereby.

32

IN WITNESS WHEREOF, Executive duly executed this Addendum as of the day and year first above written.

ACCEPTED AND AGREED:

/s/ John Woods            

John Woods

EX-12.1

EXHIBIT 12.1

CITIZENS FINANCIAL GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months			Six Months			Year Ended December 31,
(dollars in millions)	Ended June 30, 2017						2016			2015			2014			2013(2)			2012
Computation of Earnings:
Income (loss) from continuing operations before income tax expense		$462			$896			$1,534			$1,263			$1,268			($3,468	)		$1,024
Fixed charges	192			360			559			503			417			499			669
Total Adjusted Earnings		$654			$1,256			$2,093			$1,766			$1,685			($2,969	)		$1,693
Computation of Fixed Charges:
Interest expense		$179			$334			$508			$452			$363			$443			$619
Portion of net rental expense deemed representative of interest (1)	13			26			51			51			54			56			50
Total Fixed Charges		$192			$360			$559			$503			$417			$499			$669
Ratio of Earnings to Fixed Charges	3.4		%	3.5		%	3.7		%	3.5		%	4.0		%	(5.9		%)	2.5		%

⁽¹⁾ The portion of rents shown as representative of the interest factor is one-quarter of total net operating lease expenses.

⁽²⁾ The deficiency for this period was $3,468 million due in part to a goodwill impairment charge of $4,435 million ($4,080 million after tax).

EX-12.2

EXHIBIT 12.2

CITIZENS FINANCIAL GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

	Three Months			Six Months			Year Ended December 31,
(dollars in millions)	Ended June 30, 2017						2016			2015			2014			2013(2)			2012
Computation of Earnings:
Income (loss) from continuing operations before income tax expense		$462			$896			$1,534			$1,263			$1,268			($3,468	)		$1,024
Fixed charges	192			367			573			510			417			499			669
Total Adjusted Earnings		$654			$1,263			$2,107			$1,773			$1,685			($2,969	)		$1,693
Computation of Fixed Charges:
Interest expense		$179			$334			$508			$452			$363			$443			$619
Portion of net rental expense deemed representative of interest (1)	13			26			51			51			54			56			50
Preferred distribution	—			7			14			7			—			—			—
Total Fixed Charges		$192			$367			$573			$510			$417			$499			$669
Ratio of Earnings to Fixed Charges and Preferred Dividends	3.4		%	3.4		%	3.7		%	3.5		%	4.0		%	(5.9		%)	2.5		%

⁽¹⁾ The portion of rents shown as representative of the interest factor is one-quarter of total net operating lease expenses.

⁽²⁾ The deficiency for this period was $3,468 million due in part to a goodwill impairment charge of $4,435 million ($4,080 million after tax).

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

_________________________________________________________________________________________

I, Bruce Van Saun, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Citizens Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 3, 2017                

/s/ Bruce Van Saun

Bruce Van Saun

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

_________________________________________________________________________________________

I, John F. Woods, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Citizens Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 3, 2017                            

/s/ John F. Woods

John F. Woods

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

_________________________________________________________________________________________

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2017 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 3, 2017

/s/ Bruce Van Saun

Bruce Van Saun

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

_________________________________________________________________________________________

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2017 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 3, 2017

/s/ John F. Woods

John F. Woods

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 01, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Entity Central Index Key	0000759944
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	CFG
Entity Registrant Name	CITIZENS FINANCIAL GROUP INC/RI
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		500,671,099

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
ASSETS:
Cash and due from banks		$ 904	$ 955
Interest-bearing cash and due from banks		3,263	2,749
Interest-bearing deposits in banks		433	439
Securities available for sale, at fair value (including $100 and $256 pledged to creditors, respectively)	[1]	19,257	19,501
Securities held to maturity (including fair value of $4,986 and $5,058, respectively)		4,967	5,071
Other investment securities, at fair value		97	96
Other investment securities, at cost		794	942
Loans held for sale, at fair value		520	583
Other loans held for sale		187	42
Loans and leases		109,046	107,669
Less: Allowance for loan and lease losses		(1,219)	(1,236)
Net loans and leases		107,827	106,433
Derivative assets		408	627
Premises and equipment, net		600	601
Bank-owned life insurance		1,636	1,612
Goodwill		6,887	6,876
Due from broker		530	0
Other assets		3,097	2,993
TOTAL ASSETS		151,407	149,520
Deposits:
Noninterest-bearing		27,814	28,472
Interest-bearing		85,799	81,332
Total deposits		113,613	109,804
Federal funds purchased and securities sold under agreements to repurchase		429	1,148
Other short-term borrowed funds		2,004	3,211
Derivative liabilities		159	659
Deferred taxes, net		740	714
Long-term borrowed funds		13,154	12,790
Other liabilities		1,244	1,447
TOTAL LIABILITIES		131,343	129,773
Contingencies
Preferred stock, $25.00 par value, authorized 100,000,000 shares:
Series A, non-cumulative perpetual, $25 par value,(liquidation preference $1,000), 250,000 shares authorized and issued net of issuance costs and related premium at June 30, 2017 and December 31, 2016		247	247
Common stock:
$0.01 par value, 1,000,000,000 shares authorized, 565,684,331 shares issued and 505,880,851 shares outstanding at June 30, 2017 and 1,000,000,000 shares authorized, 564,630,542 shares issued and 511,954,871 shares outstanding at December 31, 2016		6	6
Additional paid-in capital		18,761	18,722
Retained earnings		3,191	2,703
Treasury stock, at cost, 59,803,480 and 52,675,671 shares at June 30, 2017 and December 31, 2016, respectively		(1,548)	(1,263)
Accumulated other comprehensive loss		(593)	(668)
TOTAL STOCKHOLDERS’ EQUITY		20,064	19,747
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$ 151,407	$ 149,520

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
ASSETS:
Securities held-to-maturity, fair value		$ 4,986	$ 5,058
STOCKHOLDERS’ EQUITY:
Preferred stock, par value (in dollars per share)		$ 25.00	$ 25.00
Preferred stock, authorized (in shares)		100,000,000	100,000,000
Common stock, par value (in dollars per share)		$ 0.01	$ 0.01
Common stock, authorized (in shares)		1,000,000,000	1,000,000,000
Common stock, issued (in shares)		565,684,331	564,630,542
Common stock, outstanding (in shares)		505,880,851	511,954,871
Treasury stock (in shares)		59,803,480	52,675,671
Series A Preferred Stock
STOCKHOLDERS’ EQUITY:
Preferred stock, par value (in dollars per share)		$ 25.00	$ 25.00
Preferred stock, liquidation preference (in dollars per share)		$ 1,000	$ 1,000
Preferred stock, authorized (in shares)		250,000	250,000
Preferred stock, issued (in shares)		250,000	250,000
Available-for-sale Securities
ASSETS:
Securities, pledged as collateral	[1]	$ 100	$ 256

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
INTEREST INCOME:
Interest and fees on loans and leases	$ 1,040	$ 896	$ 2,032	$ 1,764
Interest and fees on loans held for sale, at fair value	4	3	8	6
Interest and fees on other loans held for sale	2	4	3	5
Investment securities	154	141	314	286
Interest-bearing deposits in banks	5	2	8	4
Total interest income	1,205	1,046	2,365	2,065
INTEREST EXPENSE:
Deposits	102	63	188	123
Federal funds purchased and securities sold under agreements to repurchase	0	0	1	1
Other short-term borrowed funds	7	12	15	23
Long-term borrowed funds	70	48	130	91
Total interest expense	179	123	334	238
Net interest income	1,026	923	2,031	1,827
Provision for credit losses	70	90	166	181
Net interest income after provision for credit losses	956	833	1,865	1,646
NONINTEREST INCOME:
Service charges and fees	129	130	254	256
Card fees	59	51	119	101
Capital markets fees	51	38	99	63
Trust and investment services fees	39	38	78	75
Letter of credit and loan fees	31	28	60	55
Foreign exchange and interest rate products	26	26	53	44
Mortgage banking fees	30	25	53	43
Securities gains, net	3	4	7	13
Net securities impairment losses recognized in earnings	(4)	(7)	(5)	(8)
Other income	6	22	31	43
Total noninterest income	370	355	749	685
NONINTEREST EXPENSE:
Salaries and employee benefits	432	432	876	857
Outside services	96	86	187	177
Occupancy	79	76	161	152
Equipment expense	64	64	131	129
Amortization of software	45	41	89	80
Other operating expense	148	128	274	243
Total noninterest expense	864	827	1,718	1,638
Income before income tax expense	462	361	896	693
Income tax expense	144	118	258	227
NET INCOME	318	243	638	466
Net income available to common stockholders	$ 318	$ 243	$ 631	$ 459
Weighted-average common shares outstanding:
Basic (in Shares)	506,371,846	528,968,330	507,903,141	528,519,489
Diluted (in Shares)	507,414,122	530,365,203	509,362,055	530,396,871
Per common share information:
Basic earnings (in Dollars per Share)	$ 0.63	$ 0.46	$ 1.24	$ 0.87
Diluted earnings (in Dollars per Share)	0.63	0.46	1.24	0.87
Dividends declared and paid (in Dollars per Share)	$ 0.14	$ 0.12	$ 0.28	$ 0.22

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 318	$ 243	$ 638	$ 466
Other comprehensive income:
Net unrealized derivative instrument gains arising during the periods, net of income tax expense of $16, $8, $14 and $29, respectively	26	13	23	46
Reclassification adjustment for net derivative gains included in net income, net of income taxes of ($2), ($4), ($6) and ($10), respectively	(5)	(9)	(11)	(17)
Net unrealized securities gains arising during the periods, net of income taxes of $33, $39, $36 and $131, respectively	56	64	61	218
Other-than-temporary impairment not recognized in earnings on securities, net of income taxes of $6, $2, ($1) and ($13), respectively	10	4	(2)	(21)
Reclassification of net securities losses (gains) to net income, net of income taxes of $0, $1, ($1) and ($2), respectively	1	2	(1)	(3)
Employee Benefit Plans: Amortization of actuarial loss, net of income taxes of $2, $1, $4 and $3, respectively	2	3	5	5
Total other comprehensive income, net of income taxes	90	77	75	228
Total comprehensive income	$ 408	$ 320	$ 713	$ 694

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net unrealized derivative instrument gains arising during the periods, tax	$ 16	$ 8	$ 14	$ 29
Reclassification adjustment for net derivative gains included in net income, tax	(2)	(4)	(6)	(10)
Net unrealized securities available for sale gains arising during the periods, tax	33	39	36	131
Other-than-temporary impairment not recognized in earnings on securities, tax	6	2	(1)	(13)
Reclassification of net securities losses (gains) to net income, tax	0	1	(1)	(2)
Amortization of actuarial loss, tax	$ 2	$ 1	$ 4	$ 3

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Millions	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2015		0	528,000,000
Beginning balance at Dec. 31, 2015	$ 19,646	$ 247	$ 6	$ 18,725	$ 1,913	$ (858)	$ (387)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends to common stockholders	(117)				(117)
Dividends to preferred stockholders	(7)				(7)
Share-based compensation plans (in shares)			1,000,000
Share-based compensation plans	5			5		0
Employee stock purchase plan shares purchased	5			5
Total comprehensive income:
Net income	466				466
Other comprehensive income	228						228
Total comprehensive income	694				466		228
Ending balance (in shares) at Jun. 30, 2016		0	529,000,000
Ending balance at Jun. 30, 2016	20,226	$ 247	$ 6	18,735	2,255	(858)	(159)
Beginning balance at Mar. 31, 2016							(236)
Total comprehensive income:
Net income	243
Other comprehensive income	77
Total comprehensive income	320
Ending balance (in shares) at Jun. 30, 2016		0	529,000,000
Ending balance at Jun. 30, 2016	20,226	$ 247	$ 6	18,735	2,255	(858)	(159)
Beginning balance (in shares) at Dec. 31, 2016		0	512,000,000
Beginning balance at Dec. 31, 2016	19,747	$ 247	$ 6	18,722	2,703	(1,263)	(668)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends to common stockholders	(143)				(143)
Dividends to preferred stockholders	$ (7)				(7)
Treasury stock purchased (in shares)	(7,127,809)		(7,000,000)
Treasury stock purchased	$ (260)			25		(285)
Share-based compensation plans (in shares)			1,000,000
Share-based compensation plans	8			8		0
Employee stock purchase plan shares purchased	6			6
Total comprehensive income:
Net income	638				638
Other comprehensive income	75						75
Total comprehensive income	713				638		75
Ending balance (in shares) at Jun. 30, 2017		0	506,000,000
Ending balance at Jun. 30, 2017	20,064	$ 247	$ 6	18,761	3,191	(1,548)	(593)
Beginning balance at Mar. 31, 2017							(683)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock purchased	(130)
Total comprehensive income:
Net income	318
Other comprehensive income	90
Total comprehensive income	408
Ending balance (in shares) at Jun. 30, 2017		0	506,000,000
Ending balance at Jun. 30, 2017	$ 20,064	$ 247	$ 6	$ 18,761	$ 3,191	$ (1,548)	$ (593)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
OPERATING ACTIVITIES
Net income		$ 638	$ 466
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		166	181
Originations of mortgage loans held for sale		(1,394)	(1,135)
Proceeds from sales of mortgage loans held for sale		1,544	1,022
Purchases of commercial loans held for sale		(1,001)	(735)
Proceeds from sales of commercial loans held for sale		946	739
Amortization of terminated cash flow hedges, net		1	16
Depreciation, amortization and accretion		257	245
Mortgage servicing rights valuation (recovery) charge-off		(1)	4
Securities impairment		5	8
Deferred income taxes		(20)	94
Share-based compensation		27	11
Net gain on sales of:
Debt securities		(7)	(13)
Other investment securities		(1)	0
Premises and equipment		0	(2)
Decrease (increase) in other assets		32	(450)
(Decrease) increase in other liabilities		(655)	253
Net cash provided by operating activities		537	704
Investment securities:
Purchases of securities available for sale		(2,282)	(2,355)
Proceeds from maturities and paydowns of securities available for sale		1,670	1,611
Proceeds from sales of securities available for sale		407	375
Purchases of securities held to maturity		(171)	0
Proceeds from maturities and paydowns of securities held to maturity		277	290
Purchases of other investment securities, at fair value		(174)	(114)
Proceeds from sales of other investment securities, at fair value		172	109
Purchases of other investment securities, at cost		(243)	(62)
Proceeds from sales of other investment securities, at cost		409	52
Net decrease (increase) in interest-bearing deposits in banks		6	(371)
Net increase in loans and leases		(1,785)	(5,045)
Net increase in bank-owned life insurance		(24)	(23)
Premises and equipment:
Purchases		(64)	(22)
Proceeds from sales		0	3
Capitalization of software		(83)	(85)
Net cash used in investing activities		(1,885)	(5,637)
FINANCING ACTIVITIES
Net increase in deposits		3,809	3,718
Net decrease in federal funds purchased and securities sold under agreements to repurchase		(719)	(85)
Net decrease in other short-term borrowed funds		(1,208)	(1,370)
Proceeds from issuance of long-term borrowed funds		10,109	6,995
Repayments of long-term borrowed funds		(9,751)	(3,631)
Treasury stock purchased		(260)	0
Dividends declared and paid to common stockholders		(143)	(117)
Dividends declared and paid to preferred stockholders		(7)	(7)
Payments of employee tax withholding for share-based compensation		(19)	0
Net cash provided by financing activities		1,811	5,503
Increase in cash and cash equivalents	[1]	463	570
Cash and cash equivalents at beginning of period	[1]	3,704	3,085
Cash and cash equivalents at end of period	[1]	$ 4,167	$ 3,655

[1] Cash and cash equivalents includes cash and due from banks and interest-bearing cash and due from banks as reflected on the Consolidated Balance Sheets.

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2016. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

The unaudited interim Consolidated Financial Statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. The Company has evaluated its unconsolidated entities and does not believe that any entity in which it has an interest, but does not currently consolidate, meets the requirements to be consolidated as a variable interest entity.

The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, evaluation and measurement of impairment of goodwill, evaluation of unrealized losses on securities for other-than-temporary impairment, accounting for income taxes, the valuation of AFS and HTM securities, and derivatives.

Certain prior period noninterest income amounts reported in the Consolidated Statement of Operations have been reclassified to conform to the current period presentation and student loans were renamed “education” loans to more closely align with the full range of services offered to borrowers, from loan origination to refinancing. These changes had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.    

Adopted Accounting Pronouncements

In January 2017, the Company adopted ASU No. 2016-09 “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting” on a prospective basis. The ASU requires that all excess tax benefits and tax deficiencies that pertain to employee stock-based incentive payments be recognized within income tax expense in the Consolidated Statements of Operations, rather than within APIC. Adoption of this guidance did not have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

Accounting Pronouncements Pending Adoption

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting.” The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Modification accounting is required unless the fair value, vesting conditions, and classification of the modified award are the same as the original award immediately before the modification. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Sub-topic 310-20) – Premium Amortization on Purchased Callable Debt Securities.” The ASU shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The ASU is effective for the Company beginning on January 1, 2019. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU improves the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, “net periodic cost”) by disaggregating the service cost component from the other components of net periodic cost, limiting the capitalizable amount to the total service cost, and clarifying in the disclosures which line items in the income statement include the components of net periodic cost. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance will not have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” The ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test under current GAAP. Under the amendments, the goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. Any resulting impairment charge will be based on the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for the Company beginning on January 1, 2020. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured using a current expected credit losses model based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on debt securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company has begun its implementation efforts by establishing a company-wide, cross-discipline governance structure. The Company is currently identifying key interpretive issues, and is comparing existing credit loss forecasting models and processes with the new guidance to determine what modifications may be required. While the Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements, the Company expects the ASU will result in an earlier recognition of credit losses and an increase in the allowance for credit losses. The magnitude of the increase in the Company’s allowance for loan losses at the adoption date will be dependent upon the nature of the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The ASU generally requires lessees to recognize a right-of-use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU requires lessees and lessors to classify most leases using principles similar to existing lease accounting, but eliminates the “bright line” classification tests. It also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this ASU requires expanded disclosures about the nature and terms of lease agreements. The ASU is effective for the Company beginning on January 1, 2019, using a modified retrospective approach wherein the guidance is applied to all periods presented. The Company has begun its implementation efforts and is currently evaluating the potential impact on the Consolidated Financial Statements of its existing lease contracts. The Company expects an increase of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets; the extent of such increase is under evaluation. The Company does not expect material changes to the recognition of operating lease expense in its Consolidated Statements of Operations.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)”. The ASU requires that revenue from contracts with customers be recognized upon transfer of control of a good or service in the amount of consideration expected to be received. The ASU also requires new qualitative and quantitative disclosures, including information about disaggregation of revenue and performance obligations. The Company’s revenue is balanced between net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the ASU, and noninterest income. The Company’s implementation efforts include the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts and related accounting policies. Based on this effort, the Company has not identified material changes to the timing or amount of revenue recognition. The Company is in the process of evaluating the impact upon adoption of the ASU to existing disclosures. The Company will adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings.

Acquisition

In May 2017, Citizens Capital Markets, Inc., a wholly owned subsidiary of the Company, acquired Western Reserve Partners, LLC, a Cleveland-based merger and acquisition advisory firm. The acquisition resulted in an increase to goodwill of $11 million as of June 30, 2017.

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SECURITIES

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

The following table presents the major components of securities at amortized cost and fair value:

	June 30, 2017									December 31, 2016
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$12		$—		$—			$12		$30		$—		$—			$30
State and political subdivisions	7		—		—			7		8		—		—			8
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	19,001		79		(203		)	18,877		19,231		78		(264		)	19,045
Other/non-agency	363		7		(9		)	361		427		2		(28		)	401
Total mortgage-backed securities	19,364		86		(212		)	19,238		19,658		80		(292		)	19,446
Total debt securities available for sale	19,383		86		(212		)	19,257		19,696		80		(292		)	19,484
Marketable equity securities	—		—		—			—		5		—		—			5
Other equity securities	—		—		—			—		12		—		—			12
Total equity securities available for sale	—		—		—			—		17		—		—			17
Total securities available for sale		$19,383		$86		($212	)		$19,257		$19,713		$80		($292	)		$19,501
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$4,080		$20		($28	)		$4,072		$4,126		$12		($44	)		$4,094
Other/non-agency	887		27		—			914		945		19		—			964
Total securities held to maturity		$4,967		$47		($28	)		$4,986		$5,071		$31		($44	)		$5,058
Other Investment Securities, at Fair Value
Money market mutual fund		$92		$—		$—			$92		$91		$—		$—			$91
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$97		$—		$—			$97		$96		$—		$—			$96
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$463		$—		$—			$463
Federal Home Loan Bank stock	324		—		—			324		479		—		—			479
Other equity securities	7		—		—			7		—		—		—			—
Total other investment securities, at cost		$794		$—		$—			$794		$942		$—		$—			$942

The following tables present securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2017
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	—		$—		$—		—		$—		$—		—		$—		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	301	13,613		(219		)	24	423		(12		)	325	14,036		(231		)
Other/non-agency	—	—		—			12	154		(9		)	12	154		(9		)
Total mortgage-backed securities	301	13,613		(219		)	36	577		(21		)	337	14,190		(240		)
Total	301		$13,613		($219	)	36		$577		($21	)	337		$14,190		($240	)

	December 31, 2016
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$8		$—		—		$—		$—		1		$8		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	323	15,387		(292		)	25	461		(16		)	348	15,848		(308		)
Other/non-agency	4	8		—			20	302		(28		)	24	310		(28		)
Total mortgage-backed securities	327	15,395		(292		)	45	763		(44		)	372	16,158		(336		)
Total	328		$15,403		($292	)	45		$763		($44	)	373		$16,166		($336	)

For each debt security identified with an unrealized loss, the Company reviews the expected cash flows to determine if the impairment in value is temporary or other-than-temporary. If the Company has determined that the present value of the debt security’s expected cash flows is less than its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of impairment loss that is recognized in current period earnings is dependent on the Company’s intent to sell (or not sell) the debt security.

If the Company intends to sell the impaired debt security, or if it is more likely than not it will be required to sell the security before recovery, the impairment loss recognized in current period earnings equals the difference between the amortized cost basis and the fair value of the security. If the Company does not intend to sell the impaired debt security, and it is not more likely than not that the Company will be required to sell the impaired security, the other-than-temporary impairment write-down is separated into an amount representing the credit loss which is recognized in current period earnings and the amount related to all other factors, which is recognized in OCI.

In addition to these cash flow projections, several other characteristics of each debt security are reviewed when determining whether a credit loss exists and the period over which the debt security is expected to recover. These characteristics include the type of investment, various market factors affecting the fair value of the security (e.g., interest rates, spread levels, liquidity in the sector, etc.), the length and severity of impairment, and the public credit rating of the instrument.

The Company estimates the portion of loss attributable to credit using a collateral loss model and an integrated cash flow engine. The model calculates prepayment, default, and loss severity assumptions using collateral performance data. These assumptions are used to produce cash flows that generate loss projections. These loss projections are reviewed on a quarterly basis by a cross-functional governance committee to determine whether security impairments are other-than-temporary.

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017			2016
Cumulative balance at beginning of period		$75		$66		$75			$66
Credit impairments recognized in earnings on securities that have been previously impaired	4		7		5			8
Reductions due to increases in cash flow expectations on impaired securities(1)	—		—		(1		)	(1		)
Cumulative balance at end of period		$79		$73		$79			$73

⁽¹⁾ Reported in interest income from investment securities on the Consolidated Statements of Operations.

Cumulative credit losses recognized in earnings for impaired AFS debt securities held as of June 30, 2017 and 2016 were $79 million and $73 million, respectively. There were no credit losses recognized in earnings for the Company’s HTM portfolio as of June 30, 2017 and 2016.

For the three months endedJune 30, 2017 and 2016, the Company incurred non-agency MBS credit-related other-than-temporary impairment losses in earnings of $4 million and $7 million, respectively. The three months ended June 30, 2016 included a $5 million loss for a one-time adjustment from a new model implementation in the period. This adjustment is the result of the Company migrating in June 2016 from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment.

For the six months endedJune 30, 2017 and 2016, the Company incurred non-agency MBS credit-related other-than-temporary impairment losses in earnings of $5 million and $8 million, respectively. Other-than temporary impairment losses for the six months ended June 30, 2016 included the impact of the new model implementation discussed above. There were no credit impaired debt securities sold during the three and six months ended June 30, 2017 and 2016. The Company does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases.

The Company has determined that credit losses are not expected to be incurred on the remaining agency and non-agency MBS identified with unrealized losses as of June 30, 2017. The unrealized losses on these debt securities reflect non-credit-related factors such as changing interest rates and market liquidity. Therefore, the Company has determined that these debt securities are not other-than-temporarily impaired because the Company does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases. Any subsequent increases in the valuation of impaired debt securities do not impact their recorded cost bases.

The amortized cost and fair value of debt securities by contractual maturity are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2017
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,109		17,718		19,001
Other/non-agency	—		26		2		335		363
Total debt securities available for sale	13		199		1,111		18,060		19,383
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,080		4,080
Other/non-agency	—		—		—		887		887
Total debt securities held to maturity	—		—		—		4,967		4,967
Total amortized cost of debt securities		$13		$199		$1,111		$23,027		$24,350
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,125		17,578		18,877
Other/non-agency	—		27		2		332		361
Total debt securities available for sale	13		200		1,127		17,917		19,257
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,072		4,072
Other/non-agency	—		—		—		914		914
Total debt securities held to maturity	—		—		—		4,986		4,986
Total fair value of debt securities		$13		$200		$1,127		$22,903		$24,243

Taxable interest income from investment securities as presented on the Consolidated Statements of Operations was $154 million and $141 million for the three months endedJune 30, 2017 and 2016, respectively, and was $314 million and $286 million for the six months endedJune 30, 2017 and 2016, respectively.

Realized gains and losses on securities are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Gains on sale of debt securities		$3		$4		$7		$13
Losses on sale of debt securities	—		—		—		—
Debt securities gains, net		$3		$4		$7		$13
Equity securities gains		$1		$—		$1		$—

The amortized cost and fair value of securities pledged are presented below:

	June 30, 2017				December 31, 2016
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$432		$430		$631		$620
Pledged against FHLB borrowed funds	894		921		953		972
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,052		4,022		3,575		3,563

The Company regularly enters into security repurchase agreements with unrelated counterparties. Repurchase agreements are financial transactions that involve the transfer of a security from one party to another and a subsequent transfer of substantially the same security back to the original party. The Company’s repurchase agreements are typically short-term transactions, but they may be extended to longer terms to maturity. Such transactions are accounted for as secured borrowed funds on the Company’s Consolidated Balance Sheets. When permitted by GAAP, the Company offsets short-term receivables associated with its reverse repurchase agreements against short-term payables associated with its repurchase agreements. The Company recognized no offsetting of short-term receivables or payables as of June 30, 2017 or December 31, 2016. The Company offsets certain derivative assets and derivative liabilities on the Consolidated Balance Sheets. For further information see Note 10 “Derivatives.”

There were $22 million and $44 million in securitizations of mortgage loans retained in the investment portfolio for the three and six months ended June 30, 2017 and $5 million for the three and six months ended June 30, 2016. In both 2017 and 2016, the guarantors were Fannie Mae and Ginnie Mae and included a substantive guarantee by a third party. These securitizations were accounted for as a sale of the transferred loans and as a purchase of securities. The securities received from the guarantors are classified as AFS.

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LOANS AND LEASES

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

LOANS AND LEASES

LOANS AND LEASES

The Company’s loans and leases are disclosed in portfolio segments and classes. The Company’s loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity loans, home equity lines of credit, home equity loans serviced by others, home equity lines of credit serviced by others, automobile, education, credit cards and other retail. The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others, which the Company now services a portion of internally. A summary of the loans and leases portfolio is presented below:

(in millions)	June 30, 2017		December 31, 2016
Commercial		$37,329		$37,274
Commercial real estate	11,213		10,624
Leases	3,346		3,753
Total commercial	51,888		51,651
Residential mortgages	16,082		15,115
Home equity loans	1,606		1,858
Home equity lines of credit	13,696		14,100
Home equity loans serviced by others	647		750
Home equity lines of credit serviced by others	182		219
Automobile	13,449		13,938
Education (1)	7,720		6,610
Credit cards	1,711		1,691
Other retail	2,065		1,737
Total retail	57,158		56,018
Total loans and leases (2) (3)		$109,046		$107,669

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. Refer to Note 1 “Basis of Presentation” for more information.

⁽²⁾ Excluded from the table above are loans held for sale totaling $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above, and amounted to $17.6 billion and $17.3 billion at June 30, 2017 and December 31, 2016, respectively.

During the three months endedJune 30, 2017, the Company purchased approximately $407 million of education loans and $30 million of automobile loans. During the three months endedJune 30, 2016, the Company purchased $348 million of education loans, $200 million of automobile loans and $63 million of residential mortgages.

During the six months endedJune 30, 2017, the Company purchased approximately $732 million of education loans and $153 million of automobile loans. During the six months endedJune 30, 2016, the Company purchased $717 million of education loans, $334 million of automobile loans and $183 million of residential mortgages.

During thethree months endedJune 30, 2017, the Company sold$206 millionof residential mortgage loans and$596 millionof commercial loans.During the three months endedJune 30, 2016, the Company sold $108 million of residential mortgage loans and $45 million of commercial loans.

During the six months endedJune 30, 2017, the Company sold $206 million of residential mortgage loans and $596 million of commercial loans. During the six months endedJune 30, 2016, the Company sold $281 million of residential mortgage loans and $118 million of commercial loans.

Loans held for sale at fair value as of June 30, 2017 totaled $520 million and consisted of residential mortgages originated for sale of $386 million and loans in the commercial trading portfolio of $134 million. Loans held for sale at fair value as of December 31, 2016 totaled $583 million and consisted of residential mortgages originated for sale of $504 million and loans in the commercial trading portfolio of $79 million. Other loans held for sale totaled $187 million and $42 million as of June 30, 2017 and December 31, 2016, respectively, and consisted of commercial loan syndications.

Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages loans, totaled $24.3 billion and $24.0 billion at June 30, 2017 and December 31, 2016, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, totaled $17.4 billion and $16.8 billion at June 30, 2017 and December 31, 2016, respectively.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. It is increased through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan portfolio, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, for a detailed discussion of the ALLL reserve methodology and estimation techniques.

On a quarterly basis, the Company reviews and refines its estimate of the allowance for credit losses, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information. There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments.

A summary of changes in the allowance for credit losses is presented below:

	Three Months Ended June 30, 2017									Six Months Ended June 30, 2017
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$653			$571			$1,224			$663			$573			$1,236
Charge-offs	(24		)	(104		)	(128		)	(48		)	(213		)	(261		)
Recoveries	10			43			53			15			84			99
Net charge-offs	(14		)	(61		)	(75		)	(33		)	(129		)	(162		)
Provision (credited) charged to income	(25		)	95			70			(16		)	161			145
Allowance for loan and lease losses, end of period	614			605			1,219			614			605			1,219
Reserve for unfunded lending commitments, beginning of period	93			—			93			72			—			72
Provision for unfunded lending commitments	—			—			—			21			—			21
Reserve for unfunded lending commitments as of period end	93			—			93			93			—			93
Total allowance for credit losses as of period end		$707			$605			$1,312			$707			$605			$1,312

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Provision for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

The recorded investment in loans and leases based on the Company’s evaluation methodology is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$491		$804		$1,295		$424		$799		$1,223
Formula-based evaluation	51,397		56,354		107,751		51,227		55,219		106,446
Total		$51,888		$57,158		$109,046		$51,651		$56,018		$107,669

A summary of the allowance for credit losses by evaluation method is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$42		$43		$85		$63		$43		$106
Formula-based evaluation	665		562		1,227		672		530		1,202
Allowance for credit losses		$707		$605		$1,312		$735		$573		$1,308

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness or potential weakness that indicate an increased probability of future loss. “Criticized” loans are grouped into three categories, “special mention,” “substandard” and “doubtful.” Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date. Substandard loans are inadequately protected loans; these loans have well-defined weaknesses that could hinder normal repayment or collection of the debt. Doubtful loans have the same weaknesses as substandard, with the added characteristics that the possibility of loss is high and collection of the full amount of the loan is improbable. For retail loans, the Company primarily uses the loan’s payment and delinquency status to monitor credit quality. The further a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators for both commercial and retail loans are continually updated and monitored.

The recorded investment in commercial loans and leases based on regulatory classification ratings is presented below:

	June 30, 2017
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,259		$1,169		$622		$279		$37,329
Commercial real estate	10,678		444		53		38		11,213
Leases	3,215		107		24		—		3,346
Total		$49,152		$1,720		$699		$317		$51,888

	December 31, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,010		$1,015		$1,027		$222		$37,274
Commercial real estate	10,146		370		58		50		10,624
Leases	3,583		52		103		15		3,753
Total		$48,739		$1,437		$1,188		$287		$51,651

The recorded investment in classes of retail loans, categorized by delinquency status is presented below:

	June 30, 2017
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$15,820		$99		$35		$10		$118		$16,082
Home equity loans	1,430		96		12		5		63		1,606
Home equity lines of credit	13,071		366		52		22		185		13,696
Home equity loans serviced by others	582		35		9		5		16		647
Home equity lines of credit serviced by others	135		22		3		1		21		182
Automobile	12,199		991		172		42		45		13,449
Education	7,537		117		18		10		38		7,720
Credit cards	1,636		43		10		7		15		1,711
Other retail	1,982		55		13		8		7		2,065
Total		$54,392		$1,824		$324		$110		$508		$57,158

	December 31, 2016
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$14,807		$108		$53		$12		$135		$15,115
Home equity loans	1,628		127		23		7		73		1,858
Home equity lines of credit	13,432		396		57		20		195		14,100
Home equity loans serviced by others	673		41		14		5		17		750
Home equity lines of credit serviced by others	158		25		3		2		31		219
Automobile	12,509		1,177		172		38		42		13,938
Education	6,379		151		24		13		43		6,610
Credit cards	1,611		43		12		9		16		1,691
Other retail	1,676		45		8		4		4		1,737
Total		$52,873		$2,113		$366		$110		$556		$56,018

Nonperforming Assets

The following table presents nonperforming loans and leases and loans accruing and 90 days or more past due:

	Nonperforming				Accruing and 90 days or more past due
(in millions)	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016
Commercial		$376		$322		$4		$2
Commercial real estate	38		50		—		—
Leases	—		15		—		—
Total commercial	414		387		4		2
Residential mortgages (1)	135		144		12		18
Home equity loans	81		98		—		—
Home equity lines of credit	235		243		—		—
Home equity loans serviced by others	27		32		—		—
Home equity lines of credit serviced by others	25		33		—		—
Automobile	55		50		—		—
Education	35		38		3		5
Credit card	15		16		—		—
Other retail	3		4		5		1
Total retail	611		658		20		24
Total		$1,025		$1,045		$24		$26

⁽¹⁾ Nonperforming balances exclude first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration. These loans, which are accruing and 90 days or more past due, totaled $12 million and $18 million as of June 30, 2017 and December 31, 2016, respectively. Nonperforming balances also exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $28 million and $32 million as of June 30, 2017 and December 31, 2016, respectively. These loans are consolidated on the Company’s Consolidated Balance Sheets.

Other nonperforming assets consist primarily of other real estate owned and are presented in other assets on the Consolidated Balance Sheets. A summary of other nonperforming assets is presented below:

(in millions)	June 30, 2017		December 31, 2016
Nonperforming assets, net of valuation allowance:
Commercial		$—		$—
Retail	37		49
Nonperforming assets, net of valuation allowance		$37		$49

A summary of key performance indicators is presented below:

	June 30, 2017		December 31, 2016
Nonperforming commercial loans and leases as a percentage of total loans and leases	0.38	%	0.36	%
Nonperforming retail loans as a percentage of total loans and leases	0.56		0.61
Total nonperforming loans and leases as a percentage of total loans and leases	0.94	%	0.97	%
Nonperforming commercial assets as a percentage of total assets	0.26	%	0.26	%
Nonperforming retail assets as a percentage of total assets	0.44		0.47
Total nonperforming assets as a percentage of total assets	0.70	%	0.73	%

The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings are in process was $173 million and $177 million as of June 30, 2017 and December 31, 2016, respectively.

An analysis of the age of both accruing and nonaccruing loan and lease past due amounts is presented below:

	June 30, 2017								December 31, 2016
	Days Past Due								Days Past Due
(in millions)	30-59		60-89		90 or More		Total		30-59		60-89		90 or More		Total
Commercial		$9		$6		$380		$395		$36		$4		$324		$364
Commercial real estate	3		5		38		46		1		2		50		53
Leases	—		—		—		—		1		—		15		16
Total commercial	12		11		418		441		38		6		389		433
Residential mortgages	35		10		118		163		53		12		135		200
Home equity loans	12		5		63		80		23		7		73		103
Home equity lines of credit	52		22		185		259		57		20		195		272
Home equity loans serviced by others	9		5		16		30		14		5		17		36
Home equity lines of credit serviced by others	3		1		21		25		3		2		31		36
Automobile	172		42		45		259		172		38		42		252
Education	18		10		38		66		24		13		43		80
Credit cards	10		7		15		32		12		9		16		37
Other retail	13		8		7		28		8		4		4		16
Total retail	324		110		508		942		366		110		556		1,032
Total		$336		$121		$926		$1,383		$404		$116		$945		$1,465

Impaired loans include nonaccruing larger balance commercial loans (greater than $3 million carrying value) and commercial and retail TDRs (excluding loans held for sale). A summary of impaired loans by class is presented below:

	June 30, 2017
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$31		$237		$527		$453
Commercial real estate	35		11		3		39		38
Total commercial	251		42		240		566		491
Residential mortgages	46		3		142		247		188
Home equity loans	49		5		91		187		140
Home equity lines of credit	24		2		186		259		210
Home equity loans serviced by others	37		3		17		64		54
Home equity lines of credit serviced by others	4		—		5		13		9
Automobile	4		—		18		27		22
Education	146		22		—		146		146
Credit cards	25		7		—		26		25
Other retail	9		1		1		12		10
Total retail	344		43		460		981		804
Total		$595		$85		$700		$1,547		$1,295

	December 31, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$247		$55		$134		$431		$381
Commercial real estate	39		8		4		44		43
Total commercial	286		63		138		475		424
Residential mortgages	37		2		141		235		178
Home equity loans	51		3		94		191		145
Home equity lines of credit	23		1		173		240		196
Home equity loans serviced by others	41		4		19		70		60
Home equity lines of credit serviced by others	2		—		7		13		9
Automobile	4		—		15		25		19
Education	154		25		1		155		155
Credit cards	26		6		—		26		26
Other retail	10		2		1		13		11
Total retail	348		43		451		968		799
Total		$634		$106		$589		$1,443		$1,223

Additional information on impaired loans is presented below:

	Three Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$1		$431		$2		$324
Commercial real estate	—		38		—		58
Total commercial	1		469		2		382
Residential mortgages	2		182		1		160
Home equity loans	1		141		1		158
Home equity lines of credit	1		203		2		184
Home equity loans serviced by others	1		54		1		66
Home equity lines of credit serviced by others	—		9		—		10
Automobile	—		20		—		15
Education	2		146		2		161
Credit cards	1		25		1		26
Other retail	—		10		—		13
Total retail	8		790		8		793
Total		$9		$1,259		$10		$1,175

	Six Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$414		$3		$248
Commercial real estate	—		41		—		61
Total commercial	2		455		3		309
Residential mortgages	3		178		2		156
Home equity loans	3		140		3		154
Home equity lines of credit	3		197		3		182
Home equity loans serviced by others	2		54		2		67
Home equity lines of credit serviced by others	—		9		—		9
Automobile	—		18		—		14
Education	4		146		4		160
Credit cards	1		24		1		26
Other retail	—		10		—		13
Total retail	16		776		15		781
Total		$18		$1,231		$18		$1,090

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession for other than an insignificant time period to the borrower that it would not otherwise consider, the related loan is classified as a TDR. TDRs typically result from the Company’s loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans and leases may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. The financial effects of TDRs for all loan classes may include lower income (either due to a lower interest rate or a delay in the timing of cash flows), larger loan loss provisions, and accelerated charge-offs if the modification renders the loan collateral-dependent. In some cases, interest income throughout the term of the loan may increase if, for example, the loan is extended or the interest rate is increased as a result of the restructuring.

Because TDRs are impaired loans, the Company measures impairment by comparing the present value of expected future cash flows, or when appropriate, the fair value of collateral less costs to sell, to the loan’s recorded investment. Any excess of recorded investment over the present value of expected future cash flows or collateral value is included in the ALLL. Any portion of the loan’s recorded investment the Company does not expect to collect as a result of the modification is charged off at the time of modification. For Retail TDR accounts where the expected value of cash flows is utilized, any recorded investment in excess of the present value of expected cash flows is recognized by creating or increasing the ALLL. For Retail TDR accounts assessed based on the fair value of collateral, any portion of the loan’s recorded investment in excess of the collateral value is charged off at the time of modification or at the time of subsequent and regularly recurring valuations.

Commercial TDRs were $136 million and $120 million at June 30, 2017 and December 31, 2016, respectively. Retail TDRs totaled $804 million and $799 million at June 30, 2017 and December 31, 2016, respectively. Unfunded commitments tied to TDRs were $45 million and $42 million at June 30, 2017 and December 31, 2016, respectively.

The table below summarizes how loans were modified during the three months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	2		$—		$—	11		$13		$13
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	2	—		—		11	13		13
Residential mortgages	25	4		3		25	5		5
Home equity loans	22	1		2		—	—		—
Home equity lines of credit	14	—		—		67	9		9
Home equity loans serviced by others	5	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		—	—		—
Automobile	25	—		—		7	—		—
Education	—	—		—		—	—		—
Credit cards	624	4		4		—	—		—
Other retail	—	—		—		—	—		—
Total retail	717	9		9		99	14		14
Total	719		$9		$9	110		$27		$27

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	32		31		1			—
Residential mortgages	44	6		6		—			—
Home equity loans	42	2		2		—			—
Home equity lines of credit	112	8		7		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	2	—		—		—			—
Automobile	349	6		6		—			1
Education	7	1		1		1			—
Credit cards	—	—		—		1			—
Other retail	2	—		—		(1		)	—
Total retail	574	23		22		1			1
Total	578		$55		$53		$2			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others	3	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Education	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	5	1		—		—			—
Automobile	348	7		6		—			1
Education	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the six months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	4		$1		$1	18		$14		$14
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	4	1		1		18	14		14
Residential mortgages	43	5		5		36	8		8
Home equity loans	43	2		3		1	—		—
Home equity lines of credit	30	1		1		118	15		15
Home equity loans serviced by others	11	1		1		—	—		—
Home equity lines of credit serviced by others	3	—		—		2	—		—
Automobile	65	1		1		15	—		—
Education	—	—		—		—	—		—
Credit cards	1,189	7		7		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,385	17		18		172	23		23
Total	1,389		$18		$19	190		$37		$37

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	1	4		4		—			—
Total commercial	5	36		35		1			—
Residential mortgages	92	10		10		—			—
Home equity loans	144	8		8		—			—
Home equity lines of credit	187	14		13		—			—
Home equity loans serviced by others	30	1		1		—			—
Home equity lines of credit serviced by others	13	1		1		—			—
Automobile	625	11		10		—			2
Education	22	2		2		1			—
Credit cards	—	—		—		2			—
Other retail	3	—		—		(1		)	—
Total retail	1,116	47		45		2			2
Total	1,121		$83		$80		$3			$2

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others	6	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Education	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others	34	1		1		—			—
Home equity lines of credit serviced by others	13	1		—		—			—
Automobile	539	10		9		—			1
Education	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes TDRs that defaulted during the three and six months ended June 30, 2017 and 2016, respectively, within 12 months of their modification date. For purposes of this table, a payment default refers to a loan that becomes 90 days or more past due under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2017 and 2016, respectively. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	4		$1	8		$3	5		$1	11		$3
Commercial real estate	—	—		1	—		1	4		1	—
Total commercial	4	1		9	3		6	5		12	3
Residential mortgages	41	4		35	4		86	10		89	12
Home equity loans	14	1		32	2		23	1		50	3
Home equity lines of credit	65	4		20	1		100	7		45	4
Home equity loans serviced by others	9	—		11	—		10	—		21	1
Home equity lines of credit serviced by others	1	—		6	—		4	—		11	—
Automobile	27	1		22	1		61	1		37	1
Education	9	—		18	1		16	—		31	1
Credit cards	102	1		85	—		228	2		206	1
Other retail	—	—		—	—		2	—		—	—
Total retail	268	11		229	9		530	21		490	23
Total	272		$12	238		$12	536		$26	502		$26

Concentrations of Credit Risk

Most of the Company’s lending activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of June 30, 2017 and December 31, 2016, the Company had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.

Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics.

The following tables present balances of loans with these characteristics:

	June 30, 2017
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$484		$370		$366		$—		$—		$1,220
Interest only/negative amortization	1,705		—		—		—		1		1,706
Low introductory rate	—		—		—		142		—		142
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,192		$370		$366		$142		$1		$3,071

	December 31, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$566		$550		$476		$—		$—		$1,592
Interest only/negative amortization	1,582		—		—		—		1		1,583
Low introductory rate	—		—		—		112		—		112
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,151		$550		$476		$112		$1		$3,290

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

The Company makes equity investments in various entities that are considered VIEs. These investments primarily include ownership interests in limited partnerships that sponsor affordable housing projects and ownership interests in limited liability companies that sponsor renewable energy projects. The Company’s maximum exposure to loss as a result of its involvement with these entities is limited to the balance sheet carrying amounts of its equity investments. A summary of these investments is presented below:

(in millions)	June 30, 2017		December 31, 2016
LIHTC investment included in other assets		$865		$793
LIHTC unfunded commitments included in other liabilities	484		428
Renewable energy investments included in other assets	266		220

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s equity investments is to assist in achieving goals of the Community Reinvestment Act and to earn an adequate return of capital. LIHTC partnerships are managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, the Company does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

The Company applies the proportional amortization method to account for its LIHTC investments. Under the proportional amortization method, the Company applies a practical expedient and amortizes the initial cost of the investment in proportion to the tax credits received in the current period as compared to the total tax credits expected to  be received over the life of the investment. The amortization and tax benefits are included as a component of income tax expense. The tax credits received are reported as a reduction of income tax expense (or increase to income tax benefit) related to these transactions.

The following table presents other information related to the Company’s affordable housing tax credit investments:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Tax credits included in income tax expense		$22		$14		$43		$29
Amortization expense included in income tax expense	22		16		45		31
Other tax benefits included in income tax expense	8		7		15		13

No LIHTC investment impairment losses were recognized during the three and six months ended June 30, 2017 and 2016, respectively.

Renewable Energy Entities

The Company’s investments in renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation). As a tax equity investor, the Company does not have the power to direct the activities which most significantly affect the performance of these entities and therefore is not the primary beneficiary of any renewable energy entities. Accordingly, the Company does not consolidate these VIEs.

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MORTGAGE BANKING

6 Months Ended

Jun. 30, 2017

Mortgage Banking [Abstract]

MORTGAGE BANKING

MORTGAGE BANKING

In its mortgage banking business, the Company sells residential mortgages to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. The Company retains no beneficial interests in these sales, but may retain the servicing rights for the loans sold. The Company is obligated to subsequently repurchase a loan if the purchaser discovers a standard representation or warranty violation such as noncompliance with eligibility requirements, customer fraud, or servicing violations. This primarily occurs during a loan file review.

The Company received proceeds from the sale of residential mortgages held for sale of $729 million and $543 million for the three months endedJune 30, 2017 and 2016, respectively, and $1.5 billion and $1.0 billion for the six months endedJune 30, 2017 and 2016, respectively.

The Company recognized gains on sales of residential mortgages held for sale of $19 million and $16 million for the three months endedJune 30, 2017 and 2016, respectively, and $29 million and $30 million for the six months endedJune 30, 2017 and 2016, respectively.

Pursuant to the standard representations and warranties obligations discussed above, the Company was not obligated to repurchase any residential mortgages for the three months endedJune 30, 2017, but did repurchase $2 million for the three months ended June 30, 2016. The Company repurchased $1 million and $4 million of residential mortgages for the six months endedJune 30, 2017 and 2016, respectively.

Mortgage servicing fees, a component of mortgage banking fees, were $14 million and $13 million for the three months endedJune 30, 2017 and 2016, respectively, and $27 million and $26 million for the six months endedJune 30, 2017 and 2016, respectively.

The Company recorded MSR valuation recoveries of $1 million for both the three months endedJune 30, 2017and 2016 and valuation recoveries of$1 million and charge-offs of $4 million for the six months endedJune 30, 2017 and 2016, respectively.

MSRs are presented in other assets on the Consolidated Balance Sheets. Changes related to MSRs are presented below:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
MSRs:
Balance as of beginning of period		$170			$169			$168			$173
Amount capitalized	8			5			18			10
Amortization	(8		)	(8		)	(16		)	(17		)
Carrying amount before valuation allowance	170			166			170			166
Valuation allowance for servicing assets:
Balance as of beginning of period	5			14			5			9
Valuation (recoveries) charge-offs	(1		)	(1		)	(1		)	4
Balance at end of period	4			13			4			13
Net carrying value of MSRs		$166			$153			$166			$153

The fair value of MSRs is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market conditions. The valuation model uses a static discounted cash flow methodology incorporating current market interest rates. A static model does not attempt to forecast or predict the future direction of interest rates; rather it estimates the amount and timing of future servicing cash flows using current market interest rates. The current mortgage interest rate influences the expected prepayment rate and therefore, the length of the cash flows associated with the servicing asset, while the discount rate determines the present value of those cash flows. Expected mortgage loan prepayment assumptions are obtained using the QRM Multi Component prepayment model. The Company periodically obtains third-party valuations of its MSRs to assess the reasonableness of the fair value calculated by the valuation model.

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

	June 30, 2017			December 31, 2016
	Weighted			Weighted
(dollars in millions)	Average	Range		Average	Range
Fair value	$184	Min	Max	$182	Min	Max
Weighted average life (in years)	5.6	2.4	6.9	5.7	2.6	7.3
Weighted average constant prepayment rate	10.8%	9.4%	19.8%	10.8%	8.8%	22.3%
Weighted average discount rate	9.9%	9.1%	12.1%	9.7%	9.1%	12.1%

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period are presented below:

	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Weighted average life (in years)	6.2	5.9	6.6	6.0
Weighted average constant prepayment rate	11.1%	11.3%	9.9%	11.1%
Weighted average discount rate	9.9%	9.7%	9.9%	9.7%

The sensitivity analysis below presents the impact to current fair value of an immediate 50 basis point and 100 basis point adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the mortgage servicing rights calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment rates, could result in changes in the discount rates), which may amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2017		December 31, 2016
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$9		$9
Decline in fair value from a 100 basis point decrease in interest rates		$18		$25
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$6		$6

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BORROWED FUNDS

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

BORROWED FUNDS

BORROWED FUNDS

A summary of the Company’s short-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Federal funds purchased		$—		$533
Securities sold under agreements to repurchase	429		615
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,004		3,211
Total short-term borrowed funds		$2,433		$4,359

Key data related to short-term borrowed funds is presented in the following table:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,						As of and for the Year Ended December 31,
(dollars in millions)	2017			2016			2017			2016			2016
Weighted-average interest rate at period-end:(1)
Federal funds purchased and securities sold under agreements to repurchase	—		%	—		%	—		%	—		%	0.26		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.31			0.65			1.31			0.65			0.94
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$1,075			$968			$1,174			$1,274			$1,522
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,507			4,764			3,508			4,764			5,461
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$808			$974			$845			$927			$947
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,275			3,743			2,617			3,421			3,207
Weighted-average interest rate during the period:(1)
Federal funds purchased and securities sold under agreements to repurchase	0.36		%	0.08		%	0.28		%	0.07		%	0.09		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.22			0.61			1.14			0.60			0.64

⁽¹⁾ Rates exclude certain hedging costs.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable.

A summary of the Company’s long-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Citizens Financial Group, Inc.:
4.150% fixed-rate subordinated debt, due 2022 (1)		$347		$347
5.158% fixed-to-floating rate subordinated debt, due 2023, converting to floating at 3-month LIBOR + 3.56% and callable beginning June 2018	333		333
3.750% fixed-rate subordinated debt, due 2024	250		250
4.023% fixed-rate subordinated debt, due 2024	42		42
4.350% fixed-rate subordinated debt, due 2025 (2)	249		249
4.300% fixed-rate subordinated debt, due 2025 (3)	749		749
2.375% fixed-rate senior unsecured debt, due 2021 (4)	348		348
Banking Subsidiaries:
2.300% senior unsecured notes, due 2018 (5)(6)	746		745
2.450% senior unsecured notes, due 2019 (5)(7)	748		747
2.500% senior unsecured notes, due 2019 (5)(8)	743		741
2.250% senior unsecured notes, due 2020 (5)(9)	698		—
Floating-rate senior unsecured notes, due 2020 (5)(10)	299		—
Floating-rate senior unsecured notes, due 2020 (5)(11)	249		—
2.200% senior unsecured notes, due 2020 (5)(12)	498		—
2.550% senior unsecured notes, due 2021(5)(13)	973		965
Floating-rate senior unsecured notes, due 2022 (5)(14)	249		—
2.650% senior unsecured notes, due 2022(5)(15)	497		—
Federal Home Loan advances due through 2033	5,112		7,264
Other	24		10
Total long-term borrowed funds		$13,154		$12,790

⁽¹⁾ These balances are composed of: principal balances of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽²⁾ These balances are composed of: principal balances of $250 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽³⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁴⁾ These balances are composed of: principal balance of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁵⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁶⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($3) million at June 30, 2017 and December 31, 2016; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁷⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively.

⁽⁸⁾ These balances are composed of: principal balance of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($6) million and ($7) million at June 30, 2017 and December 31, 2016, respectively; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁹⁾ This balance is composed of: principal balance of $700 million at June 30, 2017; impact from interest rate swaps of $1 million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017. See Note 10 “Derivatives” for further information.

⁽¹⁰⁾ This balance is composed of: principal balance of $300 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹¹⁾ These balances are composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹²⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹³⁾ These balances are composed of: principal balance of $1.0 billion at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($23) million and ($30) million at June 30, 2017 and December 31, 2016, respectively; and ($4) million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽¹⁴⁾ This balance is composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹⁵⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact from interest rate swaps of ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

Advances, lines of credit, and letters of credit from the FHLB are collateralized by pledged mortgages and pledged securities at least sufficient to satisfy the collateral maintenance level established by the FHLB. The utilized borrowing capacity for FHLB advances and letters of credit was $10.0 billion and $13.4 billion at June 30, 2017 and December 31, 2016, respectively. The Company’s available FHLB borrowing capacity was $6.5 billionand $2.8 billion at June 30, 2017 and December 31, 2016, respectively. The Company can also borrow from the FRB discount window to meet short-term liquidity requirements. Collateral, such as investment securities and loans, is pledged to provide borrowing capacity at the FRB. At June 30, 2017, the Company’s unused secured borrowing capacity was approximately $37.5 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.

A summary of maturities for the Company’s long-term borrowed funds at June 30, 2017 is presented below:

(in millions)	Parent Company		Banking Subsidiaries		Consolidated
Year
2018 or on demand		$—		$5,847		$5,847
2019	—		1,491		1,491
2020	—		1,762		1,762
2021	348		977		1,325
2022	347		752		1,099
2023 and thereafter	1,623		7		1,630
Total		$2,318		$10,836		$13,154

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Preferred Stock

The Company had 100,000,000 shares authorized and 250,000 shares outstanding of $25.00 par value undesignated preferred stock as of June 30, 2017 and December 31, 2016, respectively. For further detail regarding the terms and conditions of the Company’s preferred stock see Note 13 “Stockholders’ Equity” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016.

Treasury Stock

During the six months ended June 30, 2017, as part of its 2016 Capital Plan, the Company repurchased$260 million, or7,127,809shares, of its outstanding common stock. The repurchased shares are held in treasury stock.

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INCOME TAXES

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Tax Expense

Income tax expense was $144 million and $118 million for the three months endedJune 30, 2017 and 2016, respectively, resulting in effective tax rates of31.1%and32.6%, respectively. Income tax expense was$258 millionand$227 millionfor thesix months endedJune 30, 2017and2016, respectively, resulting in effective tax rates of28.8%and32.7%, respectively. For thesix months endedJune 30, 2017, the effective tax rate compared favorably to the statutory rate of35%primarily as a result of the impact of the settlement of certain state tax matters and the permanent benefits from tax credits and tax-exempt income. The settlement of certain tax matters reduced income tax expense by$23 millionfor thesix months endedJune 30, 2017. For the six months endedJune 30, 2016, the effective tax rate compared favorably to the statutory rate of 35% primarily as a result of the permanent benefits from tax credits and tax-exempt income.

Deferred Tax Liability

At June 30, 2017, the Company reported a net deferred tax liability of $740 million, compared to $714 million as of December 31, 2016. The increase in the net deferred tax liability is primarily attributable to the tax effect of net unrealized gains on securities and derivatives arising during the period partially offset by the tax effect of differences in the timing of deductions and income items for financial statement purposes versus taxable income purposes.

Unrecognized Tax Benefits

As a result of the settlement of certain state tax matters, the total amount of unrecognized tax benefits was reduced from $42 million, as of December 31, 2016, to $7 million, as of June 30, 2017.

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DERIVATIVES

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

In the normal course of business, the Company enters into a variety of derivative transactions in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company does not use derivatives for speculative purposes.

The Company’s derivative instruments are recognized on the Consolidated Balance Sheets at fair value. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 12 “Fair Value Measurements.”

At June 30, 2017, the overall derivative asset value decreased$219 million and the liability balance decreased by $500 million from December 31, 2016. These decreases were primarily due to a change in the presentation of variation margin payments in the Consolidated Balance Sheet in 2017. Effective January 3, 2017, the London Clearing House and Chicago Mercantile Exchange amended their respective rules to legally characterize the variation margin payments on centrally cleared derivative contracts as settlement of those derivatives (rather than the posting of collateral). As a result of this change, the Company modified its balance sheet presentation of centrally cleared interest rate swaps, such that the fair value of the swaps and the associated variation margin balances are reported as a single unit of account in derivative assets and/or derivative liabilities. At December 31, 2016, the variation margin balances were characterized as collateral and reported in interest-bearing cash and due from banks on the Consolidated Balance Sheets.

The following table presents derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2017								December 31, 2016
(in millions)	Notional Amount(1)		Derivative Assets(2)			Derivative Liabilities(2)			Notional Amount(1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$16,800		$4			$3			$13,350		$52			$193
Derivatives not designated as hedging instruments:
Interest rate contracts	65,980		337			274			54,656		557			452
Foreign exchange contracts	10,120		132			121			8,039		134			126
Other contracts	1,380		11			5			1,498		16			7
Total derivatives not designated as hedging instruments			480			400					707			585
Gross derivative fair values			484			403					759			778
Less: Gross amounts offset in the Consolidated Balance Sheets (3)			(70		)	(70		)			(106		)	(106		)
Less: Cash collateral applied (3)			(6		)	(174		)			(26		)	(13		)
Total net derivative fair values presented in the Consolidated Balance Sheets				$408			$159					$627			$659

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

⁽³⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

The Company’s derivative transactions are internally divided into three sub-groups: institutional, customer and residential loan.

Institutional derivatives

The institutional derivatives portfolio primarily consists of interest rate swap agreements that are used to hedge the interest rate risk associated with the Company’s loans and financing liabilities (i.e., borrowed funds, deposits, etc.). The goal of the Company’s interest rate hedging activity is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect net interest income.

The Company enters into certain interest rate swap agreements to hedge the risk associated with floating rate loans. By entering into pay-floating/receive-fixed interest rate swaps, the Company is able to minimize the variability in the cash flows of these assets due to changes in interest rates. The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s borrowed funds and deposit liabilities. By entering into a pay-fixed/receive-floating interest rate swap, a portion of these liabilities has been effectively converted to a fixed-rate liability for the term of the interest rate swap agreement.

The Company also uses receive-fixed/pay-floating interest rate swaps to manage the interest rate exposure on its medium-term borrowings.

Customer derivatives

The customer derivatives portfolio consists of interest rate swap agreements and option contracts that are transacted to meet the financing needs of the Company’s customers. Swap agreements and interest rate option agreements are transacted to effectively minimize the Company’s market risk associated with the customer derivative products. The customer derivatives portfolio also includes foreign exchange contracts that are entered into on behalf of customers for the purpose of hedging exposure related to cash orders and loans and deposits denominated in foreign currencies. The primary risks associated with these transactions arise from exposure to changes in foreign currency exchange rates and the ability of the counterparties to meet the terms of the contract. To manage this market risk, the Company simultaneously enters into offsetting foreign exchange contracts.

Residential loan derivatives

The Company enters into residential loan commitments that allow residential mortgage customers to lock in the interest rate on a residential mortgage while the loan undergoes the underwriting process. The Company also uses forward sales contracts to protect the value of residential mortgage loans and loan commitments that are being underwritten for future sale to investors in the secondary market.

Derivatives designated as hedging instruments

The Company’s institutional derivatives portfolio qualifies for hedge accounting treatment. This includes interest rate swaps that are designated in highly effective fair value and cash flow hedging relationships. The Company formally documents at inception all hedging relationships, as well as risk management objectives and strategies for undertaking various accounting hedges. Additionally, the Company uses dollar offset or regression analysis at the hedge’s inception, and monthly thereafter, to assess whether the derivatives are expected to be, or have been, highly effective in offsetting changes in the hedged item’s expected cash flows. The Company discontinues hedge accounting treatment when it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge and then reflects changes in fair value in earnings after termination of the hedge relationship.

The Company has certain derivative transactions that are designated as hedging instruments described as follows:

Fair value hedges

The Company has entered into interest rate swap agreements to manage the interest rate exposure on its medium-term borrowings. The change in value of fair value hedges, to the extent that the hedging relationship is effective, is recorded through earnings and offset against the change in the fair value of the hedged item.

The following table presents the effect of fair value hedges on other income:

	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$16		($15	)		$1		$32		($31	)		$1

	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2017							Six Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$10		($9	)		$1		$84		($83	)		$1

Cash flow hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating rate assets, and financing liabilities (including its borrowed funds). All of these swaps have been deemed as highly effective cash flow hedges. The effective portion of the hedging gains and losses associated with these hedges are recorded in OCI; the ineffective portion of the hedging gains and losses is recorded in earnings (other income). Hedging gains and losses on derivative contracts reclassified from OCI to current period earnings are included in the line item in the accompanying Consolidated Statements of Operations in which the hedged item is recorded and in the same period that the hedged item affects earnings. During the next 12 months, there are $1 million in pre-tax net gains on derivative instruments included in OCI expected to be reclassified to net interest income in the Consolidated Statements of Operations.

Hedging gains and losses associated with the Company’s cash flow hedges are immediately reclassified from OCI to current period earnings (other income) if it becomes probable that the hedged forecasted transactions will not occur during the originally specified time period.

The following table presents the effect of cash flow hedges on net income and stockholders' equity:

	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Effective portion of gain recognized in OCI (1)		$42			$21			$37			$75
Amounts reclassified from OCI to interest income (2)	8			21			20			43
Amounts reclassified from OCI to interest expense (2)	(1		)	(8		)	(3		)	(16		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest income or expense of the underlying hedged item.

Economic hedges

The Company’s customer derivatives are recorded on the Consolidated Balance Sheets at fair value. These include interest rate and foreign exchange derivative contracts that are designed to meet the hedging and financing needs of the Company’s customers. Mark-to-market adjustments to the fair value of these contracts are included in foreign exchange and interest rate products on the Consolidated Statement of Operations. The mark-to-market gains and losses associated with the customer derivatives are mitigated by the mark-to-market gains and losses on the offsetting interest rate and foreign exchange derivative contracts transacted.

The Company’s residential loan derivatives (including residential loan commitments and forward sales contracts) are recorded on the Consolidated Balance Sheets at fair value. Mark-to-market adjustments to the fair value of residential loan commitments and forward sale contracts are included in noninterest income under mortgage banking fees.

The following table presents the effect of customer derivatives and economic hedges on noninterest income:

	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Customer derivative contracts
Customer interest rate contracts (1)		$83			($2	)		$80			$95
Customer foreign exchange contracts (1)	78			(23		)	96			28
Residential loan commitments (2)	(2		)	3			3			7
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	(71		)	15			(56		)	(76		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (1)	(71		)	23			(85		)	(27		)
Forward sale contracts (2)	5			(5		)	(6		)	(10		)
Total		$22			$11			$32			$17

⁽¹⁾ Reported in foreign exchange and interest rate products on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

A summary of outstanding off-balance sheet arrangements is presented below:

(in millions)	June 30, 2017		December 31, 2016
Undrawn commitments to extend credit		$61,988		$60,872
Financial standby letters of credit	2,053		1,892
Performance letters of credit	41		40
Commercial letters of credit	66		43
Marketing rights	42		44
Risk participation agreements	22		19
Residential mortgage loans sold with recourse	8		8
Total		$64,220		$62,918

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

Letters of Credit

Standby letters of credit, both financial and performance, are issued by the Company for its customers. They are used as conditional guarantees of payment to a third party in the event the customer either fails to make specific payments (financial) or fails to complete a specific project (performance). Commercial letters of credit are used to facilitate the import of goods. The commercial letter of credit is used as the method of payment to the Company’s customers’ suppliers. The Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above instruments is represented by the contractual amount of those instruments, net of the value of collateral held. Standby letters of credit and commercial letters of credit are issued for terms of up to ten years and one year, respectively.

Generally, letters of credit are collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters of credit is considered in determining the appropriate amounts of reserves for unfunded commitments.

The Company recognizes a liability on the Consolidated Balance Sheets representing its obligation to stand ready to perform over the term of the standby letters of credit in the event that the specified triggering events occur. The liability for these guarantees was $3 million at both June 30, 2017 and December 31, 2016.

Marketing Rights

During 2003, the Company entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania. The Company paid $2 million for the six months endedJune 30, 2017, paid $3 million for the year ended December 31, 2016, and is obligated to pay $42 million over the remainder of the contract.

Risk Participation Agreements

RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment.

RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The Company’s estimate of the credit exposure associated with its risk participations-in was $22 million at June 30, 2017 and $19 million at December 31, 2016. The current amount of credit exposure is spread out over 96 counterparties. RPAs generally have terms ranging from one to five years; however, certain outstanding agreements have terms as long as ten years.

Residential Loans Sold with Recourse

The Company is an originator and servicer of residential mortgages and routinely sells such mortgage loans in the secondary market and to government-sponsored entities. In the context of such sales, the Company makes certain representations and warranties regarding the characteristics of the underlying loans and, as a result, may be contractually required to repurchase such loans or indemnify certain parties against losses for certain breaches of those representations and warranties.

Other Commitments

In first quarter 2017, the Company entered into an agreement to purchase education loans on a quarterly basis beginning with the first quarter 2017 and ending with the fourth quarter 2017. The total minimum and maximum amount of the aggregate purchase principal balance of loans under the terms of the agreement are $750 million and $1.5 billion, respectively, and the remaining maximum purchase commitment is $750 million. The agreement may be extended by written agreement of the parties for an additional four quarters. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. The Company may also terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of quarters remaining under the agreement.

In April 2017, the Company terminated its May 2014 agreement to purchase automobile loans after satisfying its final purchase commitment.

The Company’s commercial loan trading desk provides ongoing secondary market support and liquidity to its clients. Unsettled loan trades (i.e., loan purchase contracts) represent firm commitments to purchase loans from a third party at an agreed-upon price. Principal amounts associated with unsettled commercial loan trades are off-balance sheet commitments until delivery of the loans has taken place. Fair value adjustments associated with each unsettled loan trade are recognized on the Consolidated Balance Sheets and classified within other assets or other liabilities, depending on whether the fair value of the unsettled trade represents an unrealized gain or unrealized loss. The principal balances of unsettled commercial loan trade purchases and sales were $185 million and $203 million, respectively, at June 30, 2017 and $127 million and $177 million, respectively, at December 31, 2016. Settled loans purchased by the trading desk are classified as loans held for sale, at fair value on the Consolidated Balance Sheets. Refer to Note 12 “Fair Value Measurements” for further information.

Contingencies

The Company operates in a legal and regulatory environment that exposes it to potentially significant risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations, which, in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, mortgage-related issues, and mis-selling of certain products. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages, fines, penalties, public or private censure, increased costs, required remediation, restrictions on business activities, or other impacts on the Company.

In these disputes and proceedings, the Company contests liability and the amount of damages as appropriate. Given their complex nature, and based on the Company's experience, it may be years before some of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim, numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the proceedings in question.

The Company cannot predict with certainty if, how, or when such claims will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages. The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice, it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings, however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss. In each of the matters described below, the Company is unable to estimate the liability in excess of any provision accrued, if any, that might arise or its effects on the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows in any particular period.

Set out below is a description of significant legal matters involving the Company and its banking subsidiaries. Based on information currently available, the advice of legal counsel and other advisers, and established reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings will not have a materially adverse effect on the Company’s unaudited interim Consolidated Financial Statements.

Consumer Products Matters

The activities of the Company’s banking subsidiaries are subject to extensive laws and regulations concerning unfair or deceptive acts or practices in connection with customer products. Certain of the banking subsidiaries’ past practices have not met applicable standards, and they have implemented and are continuing to implement changes to improve and bring their practices in accordance with regulatory guidance. The Company and its banking subsidiaries have actively pursued resolution of the legacy regulatory enforcement matters set forth below.

As previously reported, the Company and its banking subsidiaries are currently subject to consent orders issued in 2015 by certain of their regulators in connection with past deposit reconciliation and billing practices, under which the applicable regulators have provided non-objections to, among other things, restitution plans for affected customers. All financial penalties associated with these regulatory enforcement matters have been paid, and substantially all remediation related to such legacy matters was resolved as of December 31, 2016.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

As discussed in Note 1 “Significant Accounting Policies,” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, the Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. The Company also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities not required to be reported at fair value in the financial statements.

The Company elected to account for residential mortgage loans held for sale and certain commercial and commercial real estate loans held for sale at fair value. Applying fair value accounting to the residential mortgage loans held for sale better aligns the reported results of the economic changes in the value of these loans and their related hedge instruments. Certain commercial and commercial real estate held for sale loans are managed by a commercial secondary loan desk that provides liquidity to banks, finance companies and institutional investors. Applying fair value accounting to this portfolio is appropriate because the Company holds these loans with the intent to sell within short term periods.

Fair Value Option

Residential Mortgage Loans Held for Sale

The fair value of residential mortgage loans held for sale is derived from observable mortgage security prices and includes adjustments for loan servicing value, agency guarantee fees, and other loan level attributes which are mostly observable in the marketplace. Credit risk does not significantly impact the valuation since these loans are sold shortly after origination. Therefore, the Company classifies the residential mortgage loans held for sale in Level 2 of the fair value hierarchy.

The election of the fair value option for financial assets and financial liabilities is optional and irrevocable. The loans accounted for under the fair value option are initially measured at fair value (i.e., acquisition cost) when the financial asset is acquired. Subsequent changes in fair value are recognized in mortgage banking fees on the Consolidated Statements of Operations. The Company recognized changes in fair value in mortgage banking income of $3 million and $6 million for the three months ended June 30, 2017 and 2016, respectively. The Company recognized changes in fair value in mortgage banking income of $10 million and $12 million for the six months ended June 30, 2017 and 2016, respectively.

Interest income on residential mortgage loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income.

Commercial and Commercial Real Estate Loans Held for Sale

The fair value of commercial and commercial real estate loans held for sale is estimated using observable prices of similar loans that transact in the marketplace. In addition, the Company uses external pricing services that provide estimates of fair values based on quotes from various dealers transacting in the market, sector curves or benchmarking techniques. Therefore, the Company classifies the commercial and commercial real estate loans managed by the commercial secondary loan desk in Level 2 of the fair value hierarchy given the observable market inputs.

There were no loans in this portfolio that were 90 days or more past due or nonaccruing as of June 30, 2017 and December 31, 2016. The loans accounted for under the fair value option are initially measured at fair value when the financial asset is recognized. Subsequent changes in fair value are recognized in current earnings. Since all loans in the Company’s commercial trading portfolio consist of floating rate obligations, all changes in fair value are due to changes in credit risk. Such credit-related fair value changes may include observed changes in overall credit spreads and/or changes to the creditworthiness of an individual borrower. Unsettled trades within the commercial trading portfolio are not recognized on the Consolidated Balance Sheets and represent off-balance sheet commitments. Refer to Note 11 “Commitments and Contingencies” for further information.

Interest income on commercial and commercial real estate loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income. The Company recognized $1 million in other noninterest income related to its commercial trading portfolio for the three months ended June 30, 2017 and $2 million for the three months ended 2016. The Company recognized $3 million income in other noninterest income related to its commercial trading portfolio for the six months ended June 30, 2017 and $2 million for the six months ended June 30, 2016.

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale measured at fair value:

	June 30, 2017						December 31, 2016
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$386		$386		$—		$504		$505		($1	)
Commercial and commercial real estate loans held for sale, at fair value	134		134		—		79		79		—

Recurring Fair Value Measurements

The Company utilizes a variety of valuation techniques to measure its assets and liabilities at fair value. The valuation methodologies used for significant assets and liabilities carried on the balance sheet at fair value on a recurring basis are presented below:

Securities available for sale

The fair value of securities classified as AFS is based upon quoted prices, if available. Where observable quoted prices are available in an active market, securities are classified as Level 1 in the fair value hierarchy. Classes of instruments that are valued using this market approach include debt securities issued by the U.S. Treasury. If quoted market prices are not available, the fair value for the security is estimated under the market or income approach using pricing models. These instruments are classified as Level 2 because they currently trade in active markets and the inputs to the valuations are observable. The pricing models used to value securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds. Classes of instruments that are valued using this market approach include specified pool mortgage “pass-through” securities and other debt securities issued by U.S. government-sponsored entities and state and political subdivisions. The pricing models used to value securities under the income approach generally begin with the contractual cash flows of each security and make adjustments based on forecasted prepayment speeds, default rates, and other market-observable information. The adjusted cash flows are then discounted at a rate derived from observed rates of return for comparable assets or liabilities that are traded in the market. Classes of instruments that are valued using this market approach include residential and commercial CMOs.

A significant majority of the Company’s Level 1 and 2 securities are priced using an external pricing service. The Company verifies the accuracy of the pricing provided by its primary outside pricing service on a quarterly basis. This process involves using a secondary external vendor to provide valuations for the Company’s securities portfolio for comparison purposes. Any securities with discrepancies beyond a certain threshold are researched and, if necessary, valued by an independent outside broker.

In certain cases where there is limited activity or less transparency around inputs to the valuation model, securities are classified as Level 3.

Residential loans held for sale

See the “Fair Value Option, Residential Mortgage Loans Held for Sale” discussion above.

Commercial loans held for sale

See the “Fair Value Option, Commercial and Commercial Real Estate Loans Held for Sale” discussion above.

Derivatives

The vast majority of the Company’s derivatives portfolio is composed of “plain vanilla” interest rate swaps, which are traded in over-the-counter markets where quoted market prices are not readily available. For these interest rate derivatives, fair value is determined utilizing models that primarily use market observable inputs, such as swap rates and yield curves. The pricing models used to value interest rate swaps calculate the sum of each instrument’s fixed and variable cash flows, which are then discounted using an appropriate yield curve (i.e., LIBOR or Overnight Index Swap curve) to arrive at the fair value of each swap. The pricing models do not contain a high level of subjectivity as the methodologies used do not require significant judgment. The Company also considers certain adjustments to the modeled price that market participants would make when pricing each instrument, including a credit valuation adjustment that reflects the credit quality of the swap counterparty. The Company incorporates the effect of exposure to a particular counterparty’s credit by netting its derivative contracts with the collateral available and calculating a credit valuation adjustment on the basis of the net position with the counterparty where permitted. The determination of this adjustment requires judgment on behalf of Company management; however, the total amount of this portfolio-level adjustment is not material to the total fair value of the interest rate swaps in their entirety. Therefore, interest rate swaps are classified as Level 2 in the valuation hierarchy.

The Company’s other derivatives include foreign exchange contracts. The fair value of foreign exchange derivatives uses the mid-point of daily quoted currency spot prices. A valuation model estimates fair value based on the quoted spot rates together with interest rate yield curves and forward currency rates. Since all of these inputs are observable in the market, foreign exchange derivatives are classified as Level 2 in the fair value hierarchy.

Money Market Mutual Fund

Fair value is determined based upon unadjusted quoted market prices and is considered a Level 1 fair value measurement.

Other investments

The fair values of the Company’s other investments are based on security prices in markets that are not active; therefore, these investments are classified as Level 2 in the fair value hierarchy.

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2017:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,238		$—		$19,238		$—
State and political subdivisions	7		—		7		—
U.S. Treasury and other	12		12		—		—
Total securities available for sale	19,257		12		19,245		—
Loans held for sale, at fair value:
Residential loans held for sale	386		—		386		—
Commercial loans held for sale	134		—		134		—
Total loans held for sale, at fair value	520		—		520		—
Derivative assets1:
Interest rate swaps	341		—		341		—
Foreign exchange contracts	132		—		132		—
Other contracts	11		—		11		—
Total derivative assets	484		—		484		—
Other investment securities, at fair value:
Money market mutual fund	92		92		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	97		92		5		—
Total assets		$20,358		$104		$20,254		$—
Derivative liabilities1:
Interest rate swaps		$277		$—		$277		$—
Foreign exchange contracts	121		—		121		—
Other contracts	5		—		5		—
Total derivative liabilities	403		—		403		—
Total liabilities		$403		$—		$403		$—

⁽¹⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,446		$—		$19,446		$—
State and political subdivisions	8		—		8		—
Equity securities	17		—		17		—
U.S. Treasury	30		30		—		—
Total securities available for sale	19,501		30		19,471		—
Loans held for sale, at fair value:
Residential loans held for sale	504		—		504		—
Commercial loans held for sale	79		—		79		—
Total loans held for sale, at fair value	583		—		583		—
Derivative assets:
Interest rate swaps	609		—		609		—
Foreign exchange contracts	134		—		134		—
Other contracts	16		—		16		—
Total derivative assets	759		—		759		—
Other investment securities, at fair value:
Money market mutual fund	91		91		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	96		91		5		—
Total assets		$20,939		$121		$20,818		$—
Derivative liabilities:
Interest rate swaps		$645		$—		$645		$—
Foreign exchange contracts	126		—		126		—
Other contracts	7		—		7		—
Total derivative liabilities	778		—		778		—
Total liabilities		$778		$—		$778		$—

There were no Level 3 assets measured at fair value on a recurring basis as of June 30, 2017 and December 31, 2016.

Nonrecurring Fair Value Measurements

The following valuation techniques are utilized to measure significant assets for which the Company utilizes fair value on a nonrecurring basis:

Impaired Loans

The carrying amount of collateral-dependent impaired loans is compared to the appraised value of the collateral less costs to dispose and is classified as Level 2. Any excess of carrying amount over the appraised value is charged to the ALLL.

Mortgage Servicing Rights

MSRs do not trade in an active market with readily observable prices. MSRs are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs. The fair value was calculated using a discounted cash flow model which used assumptions, including weighted-average life, weighted-average constant prepayment rate and weighted-average discount rate. Refer to Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016 and Note 6 “Mortgage Banking” for more information.

Foreclosed assets

Foreclosed assets consist primarily of residential properties. Foreclosed assets are carried at the lower of cost or fair value less costs to dispose. Fair value is based upon independent market prices or appraised values of the collateral and is classified as Level 2.

Leased assets

The fair value of assets under operating leases is determined using collateral specific pricing digests, external appraisals, broker opinions, recent sales data from industry equipment dealers, and discounted cash flows derived from the underlying lease agreement. As market data for similar assets and lease agreements is available and used in the valuation, these assets are classified as Level 2 fair value measurement.

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017				2016
Impaired collateral-dependent loans		($8	)		($6	)		($27	)			($11	)
MSRs	1			1			1				(4		)
Foreclosed assets	(1		)	(1		)	(2		)		(2		)
Leased assets	(15		)	—			(15		)	—	—

The following table presents assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2017								December 31, 2016
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$341		$—		$341		$—		$355		$—		$355		$—
MSRs	184		—		—		184		182		—		—		182
Foreclosed assets	33		—		33		—		44		—		44		—
Leased assets	137		—		137		—		158		—		158		—

Disclosures about Fair Value of Financial Instruments

Following is a description of valuation methodologies used to estimate the fair value of financial instruments for disclosure purposes (these instruments are not recorded in the financial statements at fair value):

Securities held to maturity

The fair values of securities classified as HTM are estimated under the market or income approach using the same pricing models as those used to measure the fair value of the Company’s securities AFS. For more information, see “Recurring Fair Value Measurements - Securities Available for Sale,” within this Note.

Other investment securities, at cost

The cost basis of other investment securities, at cost, such as FHLB stock and FRB stock, is assumed to approximate the fair value of these securities. As a member of the FHLB and FRB, the Company is required to hold FHLB and FRB stock. The stock can be sold only to the FHLB and FRB upon termination of membership, or redeemed at the FHLB’s or FRB’s sole discretion. The stock may only be sold or redeemed at par, and therefore the cost basis represents the best estimate of fair value.

Loans and leases

For loans and leases not recorded at fair value on a recurring basis that are not accounted for as collateral-dependent impaired loans, fair value is estimated by using one of two methods: a discounted cash flow method or a securitization method. The discounted cash flow method involves discounting the expected future cash flows using current rates which a market participant would likely use to value similar pools of loans. Inputs used in this method include observable information such as contractual cash flows (net of servicing cost) and unobservable information such as estimated prepayment speeds, credit loss exposures, and discount rates. The securitization method involves utilizing market securitization data to value the assets as if a securitization transaction had been executed. Inputs used include observable market-based MBS data and pricing adjustments based on unobservable data reflecting the liquidity risk, credit loss exposure and other characteristics of the underlying loans. The internal risk-weighted balances of loans are grouped by product type for purposes of these estimated valuations. For nonaccruing loans, fair value is estimated by discounting management’s estimate of future cash flows with a discount rate commensurate with the risk associated with such assets. Fair value of collateral-dependent loans is primarily based on the appraised value of the collateral.

Other loans held for sale

Balances represent loans that were transferred to other loans held for sale and are reported at the lower of cost or fair value. When applicable, the fair value of other loans held for sale is estimated using one of two methods: a discounted cash flow method or a securitization method (as described above).

Deposits

The fair value of demand deposits, checking with interest accounts, regular savings, money market accounts and other deposits is the amount payable on demand at the balance sheet date. The fair value of term deposits is estimated by discounting the expected future cash flows using rates currently offered for deposits of similar remaining maturities.

Federal funds purchased and securities sold under agreements to repurchase, other short-term borrowed funds, and long-term borrowed funds

Rates currently available to the Company for debt of similar terms and remaining maturities are used to discount the expected cash flows of existing debt.

The following table presents the estimated fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2017
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$4,967		$4,986		$—		$—		$4,967		$4,986		$—		$—
Other investment securities, at cost	794		794		—		—		794		794		—		—
Other loans held for sale	187		187		—		—		—		—		187		187
Loans and leases	109,046		109,323		—		—		341		341		108,705		108,982
Financial Liabilities:
Deposits	113,613		113,582		—		—		113,613		113,582		—		—
Federal funds purchased and securities sold under agreements to repurchase	429		429		—		—		429		429		—		—
Other short-term borrowed funds	2,004		2,004		—		—		2,004		2,004		—		—
Long-term borrowed funds	13,154		13,275		—		—		13,154		13,275		—		—

	December 31, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$5,071		$5,058		$—		$—		$5,071		$5,058		$—		$—
Other investment securities, at cost	942		942		—		—		942		942		—		—
Other loans held for sale	42		42		—		—		—		—		42		42
Loans and leases	107,669		107,537		—		—		355		355		107,314		107,182
Financial Liabilities:
Deposits	109,804		109,796		—		—		109,804		109,796		—		—
Federal funds purchased and securities sold under agreements to repurchase	1,148		1,148		—		—		1,148		1,148		—		—
Other short-term borrowed funds	3,211		3,211		—		—		3,211		3,211		—		—
Long-term borrowed funds	12,790		12,849		—		—		12,790		12,849		—		—

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REGULATORY MATTERS

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

REGULATORY MATTERS

REGULATORY MATTERS

As a bank holding company, the Company is subject to regulation and supervision by the FRB. The primary subsidiaries of the Company are its two insured depository institutions CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-chartered savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Under the U.S. Basel III capital framework, the Company and its banking subsidiaries must meet specific minimum requirements for the following ratios: common equity tier 1 capital, tier 1 capital, total capital, and tier 1 leverage. In addition, the Company must not be subject to a written agreement, order or capital directive with any of its regulators. Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken, could have a material effect on the Company’s Consolidated Financial Statements.

The following table presents the Company’s capital and capital ratios under U.S. Basel III Standardized Transitional rules. Certain Basel III requirements are subject to phase-in through 2019, and were applied to this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses included within AOCI for available for sale securities, accumulated net gains and losses on cash-flow hedges, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized(6)
(dollars in millions)	Amount		Ratio		Amount		Ratio (5)		Amount		Ratio
As of June 30, 2017
Common equity tier 1 capital (1)		$14,057	11.2	%		$7,232	5.750	%		$8,175	6.5	%
Tier 1 capital (2)	14,304		11.4		9,119		7.250		10,062		8.0
Total capital (3)	17,586		14.0		11,634		9.250		12,577		10.0
Tier 1 leverage (4)	14,304		9.9		5,776		4.000		7,220		5.0
As of December 31, 2016
Common equity tier 1 capital (1)		$13,822	11.2	%		$6,348	5.125	%		$8,051	6.5	%
Tier 1 capital (2)	14,069		11.4		8,206		6.625		9,909		8.0
Total capital (3)	17,347		14.0		10,683		8.625		12,386		10.0
Tier 1 leverage (4)	14,069		9.9		5,667		4.000		7,084		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” includes capital conservation buffer of 1.250% for 2017 and 0.625% for 2016; N/A to Tier 1 leverage.

⁽⁶⁾ Presented for informational purposes. Prompt corrective action provisions apply only to the Company’s insured depository institutions - CBNA and CBPA.

Under the Capital Plan Rule, the Company may only make capital distributions, including payment of dividends, in accordance with a capital plan that has been reviewed by the FRB with no objection.

Per the 2016 Capital Plan, which received a non-objection from the FRB, for the three months ended June 30, 2017, the Company paid common dividends of $71 million and repurchased $130 million of its outstanding common shares. For the six months ended June 30, 2017, the Company paid common dividends of $143 million, a semi-annual preferred dividend of $7 million and repurchased $260 million of its outstanding common shares. For the three and six months ended June 30, 2016, the Company paid common dividends of $64 million and $117 million, respectively. The Company also paid a semi-annual preferred dividend of $7 million in the six months ended June 30, 2016.

On April 5, 2017, the Company submitted its 2017 Capital Plan to the Federal Reserve under the annual CCAR process.On June 28, 2017, the FRB did not object to the Company’s 2017 Capital Plan or to its proposed capital actions in the period beginning July 1, 2017 and ending June 30, 2018. The Company’s 2017 Capital Plan includes proposed quarterly common dividends of$0.18per share through the end of 2017 and$0.22per share in 2018, and also includes a share repurchase plan of up to$850 millionthrough second quarter 2018. The timing and exact amount of future dividends and share repurchases will depend on various factors, including capital position, financial performance and market conditions.

In accordance with federal and state banking regulations, dividends paid by the Company’s banking subsidiaries to the Company itself are generally limited to the retained earnings of the respective banking subsidiaries unless specifically approved by the appropriate bank regulator.

A financial subsidiary of a national bank is permitted to engage in a broader range of activities, similar to those of a financial holding company. CBNA has two financial subsidiaries, Citizens Securities, Inc., a registered broker-dealer, and RBS Citizens Insurance Agency, Inc., a dormant entity. On March 13, 2014, the OCC determined that CBNA no longer met the conditions to own a financial subsidiary — namely that CBNA must be both well capitalized and well managed. CBNA has entered into an agreement with the OCC pursuant to which it has developed and submitted to the OCC a remediation plan setting forth the specific actions it will take to bring itself back into compliance with the conditions to own a financial subsidiary. CBNA has completed its undertakings under the plan, which have been validated by the Company’s internal audit team and submitted to the OCC for review and validation. However, until the OCC has completed their validation efforts, CBNA will be subject to restrictions on its ability to acquire control or hold an interest in any new financial subsidiary and to commence new activities in any existing financial subsidiary without the prior consent of the OCC.

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at April 1, 2017		($97	)		($195	)		($391	)		($683	)
Other comprehensive income before reclassifications	26			56			—			82
Other-than-temporary impairment not recognized in earnings on securities	—			10			—			10
Amounts reclassified from other comprehensive (loss) income	(5		)	1			2			(2		)
Net other comprehensive income	21			67			2			90
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

	As of and for the six months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at January 1, 2017		($88	)		($186	)		($394	)		($668	)
Other comprehensive income before reclassifications	23			61			—			84
Other-than-temporary impairment not recognized in earnings on securities	—			(2		)	—			(2		)
Amounts reclassified from other comprehensive (loss) income	(11		)	(1		)	5			(7		)
Net other comprehensive income	12			58			5			75
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

The following table presents the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$8			$21			$20			$43		Interest income
	(1		)	(8		)	(3		)	(16		)	Interest expense
	7			13			17			27			Income before income tax expense
	2			4			6			10			Income tax expense
		$5			$9			$11			$17		Net income
Reclassification of net securities gains (losses) to net income (loss):		$3			$4			$7			$13		Securities gains, net
	(4		)	(7		)	(5		)	(8		)	Net securities impairment losses recognized in earnings
	(1		)	(3		)	2			5			Income before income tax expense
	—			(1		)	1			2			Income tax expense
		($1	)		($2	)		$1			$3		Net income
Reclassification of changes related to the employee benefit plan:		($4	)		($4	)		($9	)		($8	)	Salaries and employee benefits
	(4		)	(4		)	(9		)	(8		)	Income before income tax expense
	(2		)	(1		)	(4		)	(3		)	Income tax expense
		($2	)		($3	)		($5	)		($5	)	Net income
Total reclassification gains		$2			$4			$7			$15		Net income

The following table presents the effects on net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Net interest income (includes $7, $13, $17 and $27 of AOCI reclassifications, respectively)		$1,026		$923		$2,031		$1,827
Provision for credit losses	70		90		166		181
Noninterest income (includes ($1), ($3), $2 and $5 of AOCI reclassifications, respectively)	370		355		749		685
Noninterest expense (includes $4, $4, $9 and $8 of AOCI reclassifications, respectively)	864		827		1,718		1,638
Income before income tax expense	462		361		896		693
Income tax expense (includes $0, $2, $3 and $9 income tax net expense from reclassification items, respectively)	144		118		258		227
Net income		$318		$243		$638		$466

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BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

The Company is managed by its CEO on a segment basis. The Company’s two business segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has one or more segment heads who report directly to the CEO. The CEO has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the CEO.

Reportable Segments

Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and statement of operations items to each of the business segments. The process is designed around the Company’s organizational and management structure and accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below:

Consumer Banking

The Consumer Banking segment focuses on retail customers and small businesses with annual revenues of up to $25 million. It offers traditional banking products and services, including checking, savings, home loans, education loans, credit cards, business loans, and unsecured product finance and personal loans in addition to financial management services. It also operates an indirect auto financing business, providing financing for both new and used vehicles through auto dealerships. The segment’s distribution channels include a branch network, ATMs and a work force of experienced specialists ranging from financial consultants, mortgage loan officers and business banking officers to private bankers. The Company’s Consumer Banking value proposition is based on providing simple, easy to understand product offerings and a convenient banking experience with a more personalized approach.

Commercial Banking

The Commercial Banking segment primarily targets companies with annual revenues from $25 million to $2.5 billion and provides a full complement of financial products and solutions, including loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on middle-market companies, large corporations and institutions and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, professionals, oil and gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity and sponsor finance. While the segment’s business development efforts are predominantly focused in the Company’s footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). A key component of Commercial Banking’s growth strategy is to bring ideas to clients that help their businesses thrive, and in doing so, expand the loan portfolio and ancillary product sales.

Non-segment Operations

Other

Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, community development, non-core assets (including legacy Royal Bank of Scotland Group plc aircraft loans and leases placed in runoff in the third quarter of 2016), and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses. In addition to non-segment operations, Other includes goodwill and any associated goodwill impairment charges. For impairment testing purposes, the Company allocates goodwill to its Consumer Banking and Commercial Banking reporting units. For management reporting purposes, the Company presents the goodwill balance (and any related impairment charges) in Other.

	As of and for the Three Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$657		$344		$25			$1,026
Noninterest income	229		130		11			370
Total revenue	886		474		36			1,396
Noninterest expense	644		192		28			864
Profit before provision for credit losses	242		282		8			532
Provision for credit losses	60		1		9			70
Income (loss) before income tax expense (benefit)	182		281		(1		)	462
Income tax expense (benefit)	64		94		(14		)	144
Net income		$118		$187		$13			$318
Total average assets		$59,244		$49,731		$40,903			$149,878

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Six Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,295		$690		$46			$2,031
Noninterest income	449		264		36			749
Total revenue	1,744		954		82			2,780
Noninterest expense	1,291		382		45			1,718
Profit before provision for credit losses	453		572		37			1,062
Provision for credit losses	124		20		22			166
Income before income tax expense (benefit)	329		552		15			896
Income tax expense (benefit)	116		185		(43		)	258
Net income		$213		$367		$58			$638
Total average assets		$58,954		$49,488		$40,893			$149,335

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

Management accounting practices utilized by the Company as the basis of presentation for segment results include the following:

FTP adjustments

The Company utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits (or charges) the segments with the economic value of the funds created (or used) by the segments. The FTP system provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The sum of the interest income/expense and FTP charges/credits for each segment is its designated net interest income. The variance between the Company’s cumulative FTP charges and cumulative FTP credits is offset in Other.

Provision for credit losses allocations

Provision for credit losses is allocated to each business segment based on actual net charge-offs recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Income tax allocations

Income taxes are assessed to each line of business at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Expense allocations

Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services.

Substantially all revenues generated and long-lived assets held by the Company’s business segments are derived from clients that reside in the United States. Neither business segment earns revenue from a single external customer that represents ten percent or more of the Company’s total revenues.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except share and per-share data)	2017		2016		2017		2016
Numerator (basic and diluted):
Net income		$318		$243		$638		$466
Less: Preferred stock dividends	—		—		7		7
Net income available to common stockholders		$318		$243		$631		$459
Denominator:
Weighted-average common shares outstanding - basic	506,371,846		528,968,330		507,903,141		528,519,489
Dilutive common shares: share-based awards	1,042,276		1,396,873		1,458,914		1,877,382
Weighted-average common shares outstanding - diluted	507,414,122		530,365,203		509,362,055		530,396,871
Earnings per common share:
Basic		$0.63		$0.46		$1.24		$0.87
Diluted	0.63		0.46		1.24		0.87

Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. The diluted EPS computation for the three and six months endedJune 30, 2017 excluded 530,781 and 343,692 average share-based awards, respectively, because their inclusion would have been antidilutive. The Company did not have any antidilutive shares for the three and six months endedJune 30, 2016.

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OTHER INCOME

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

OTHER INCOME

OTHER INCOME

The following table presents the details of other income:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2017			2016		2017		2016
Bank-owned life insurance income		$14			$13		$26		$26
Other	(8		)	9		5		17
Other income		$6			$22		$31		$43

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OTHER OPERATING EXPENSE

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

OTHER OPERATING EXPENSE

OTHER OPERATING EXPENSE

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Deposit insurance		$36		$29		$68		$55
Promotional expense	29		25		55		49
Settlements and operating losses	12		14		25		22
Other	71		60		126		117
Other operating expense		$148		$128		$274		$243

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company has evaluated the impacts of events that have occurred subsequent to June 30, 2017 through the filing date of the Consolidated Financial Statements with the SEC. Based on this evaluation, the Company has determined none of these events were required to be recognized or disclosed in the Consolidated Financial Statements and related Notes.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2016. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

Consolidation

The unaudited interim Consolidated Financial Statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. The Company has evaluated its unconsolidated entities and does not believe that any entity in which it has an interest, but does not currently consolidate, meets the requirements to be consolidated as a variable interest entity.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for credit losses, evaluation and measurement of impairment of goodwill, evaluation of unrealized losses on securities for other-than-temporary impairment, accounting for income taxes, the valuation of AFS and HTM securities, and derivatives.

Reclassifications

Certain prior period noninterest income amounts reported in the Consolidated Statement of Operations have been reclassified to conform to the current period presentation and student loans were renamed “education” loans to more closely align with the full range of services offered to borrowers, from loan origination to refinancing. These changes had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.

Adopted and Pending Accounting Pronouncements

Adopted Accounting Pronouncements

In January 2017, the Company adopted ASU No. 2016-09 “Compensation - Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting” on a prospective basis. The ASU requires that all excess tax benefits and tax deficiencies that pertain to employee stock-based incentive payments be recognized within income tax expense in the Consolidated Statements of Operations, rather than within APIC. Adoption of this guidance did not have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

Accounting Pronouncements Pending Adoption

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting.” The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Modification accounting is required unless the fair value, vesting conditions, and classification of the modified award are the same as the original award immediately before the modification. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Sub-topic 310-20) – Premium Amortization on Purchased Callable Debt Securities.” The ASU shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument. The ASU is effective for the Company beginning on January 1, 2019. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The ASU improves the presentation of net periodic pension cost and net periodic postretirement benefit cost (collectively, “net periodic cost”) by disaggregating the service cost component from the other components of net periodic cost, limiting the capitalizable amount to the total service cost, and clarifying in the disclosures which line items in the income statement include the components of net periodic cost. The ASU is effective for the Company beginning on January 1, 2018. Adoption of this guidance will not have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” The ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test under current GAAP. Under the amendments, the goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount. Any resulting impairment charge will be based on the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU is effective for the Company beginning on January 1, 2020. Adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured using a current expected credit losses model based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on debt securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company has begun its implementation efforts by establishing a company-wide, cross-discipline governance structure. The Company is currently identifying key interpretive issues, and is comparing existing credit loss forecasting models and processes with the new guidance to determine what modifications may be required. While the Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements, the Company expects the ASU will result in an earlier recognition of credit losses and an increase in the allowance for credit losses. The magnitude of the increase in the Company’s allowance for loan losses at the adoption date will be dependent upon the nature of the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date.

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The ASU generally requires lessees to recognize a right-of-use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU requires lessees and lessors to classify most leases using principles similar to existing lease accounting, but eliminates the “bright line” classification tests. It also requires that for finance leases, a lessee recognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. In addition, this ASU requires expanded disclosures about the nature and terms of lease agreements. The ASU is effective for the Company beginning on January 1, 2019, using a modified retrospective approach wherein the guidance is applied to all periods presented. The Company has begun its implementation efforts and is currently evaluating the potential impact on the Consolidated Financial Statements of its existing lease contracts. The Company expects an increase of its Consolidated Balance Sheets as a result of recognizing lease liabilities and right of use assets; the extent of such increase is under evaluation. The Company does not expect material changes to the recognition of operating lease expense in its Consolidated Statements of Operations.

In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)”. The ASU requires that revenue from contracts with customers be recognized upon transfer of control of a good or service in the amount of consideration expected to be received. The ASU also requires new qualitative and quantitative disclosures, including information about disaggregation of revenue and performance obligations. The Company’s revenue is balanced between net interest income on financial assets and liabilities, which is explicitly excluded from the scope of the ASU, and noninterest income. The Company’s implementation efforts include the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts and related accounting policies. Based on this effort, the Company has not identified material changes to the timing or amount of revenue recognition. The Company is in the process of evaluating the impact upon adoption of the ASU to existing disclosures. The Company will adopt the revenue recognition guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings.

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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of securities held

The following table presents the major components of securities at amortized cost and fair value:

	June 30, 2017									December 31, 2016
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$12		$—		$—			$12		$30		$—		$—			$30
State and political subdivisions	7		—		—			7		8		—		—			8
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	19,001		79		(203		)	18,877		19,231		78		(264		)	19,045
Other/non-agency	363		7		(9		)	361		427		2		(28		)	401
Total mortgage-backed securities	19,364		86		(212		)	19,238		19,658		80		(292		)	19,446
Total debt securities available for sale	19,383		86		(212		)	19,257		19,696		80		(292		)	19,484
Marketable equity securities	—		—		—			—		5		—		—			5
Other equity securities	—		—		—			—		12		—		—			12
Total equity securities available for sale	—		—		—			—		17		—		—			17
Total securities available for sale		$19,383		$86		($212	)		$19,257		$19,713		$80		($292	)		$19,501
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$4,080		$20		($28	)		$4,072		$4,126		$12		($44	)		$4,094
Other/non-agency	887		27		—			914		945		19		—			964
Total securities held to maturity		$4,967		$47		($28	)		$4,986		$5,071		$31		($44	)		$5,058
Other Investment Securities, at Fair Value
Money market mutual fund		$92		$—		$—			$92		$91		$—		$—			$91
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$97		$—		$—			$97		$96		$—		$—			$96
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$463		$—		$—			$463
Federal Home Loan Bank stock	324		—		—			324		479		—		—			479
Other equity securities	7		—		—			7		—		—		—			—
Total other investment securities, at cost		$794		$—		$—			$794		$942		$—		$—			$942

Schedule of unrealized loss on investments

The following tables present securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2017
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	—		$—		$—		—		$—		$—		—		$—		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	301	13,613		(219		)	24	423		(12		)	325	14,036		(231		)
Other/non-agency	—	—		—			12	154		(9		)	12	154		(9		)
Total mortgage-backed securities	301	13,613		(219		)	36	577		(21		)	337	14,190		(240		)
Total	301		$13,613		($219	)	36		$577		($21	)	337		$14,190		($240	)

	December 31, 2016
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$8		$—		—		$—		$—		1		$8		$—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	323	15,387		(292		)	25	461		(16		)	348	15,848		(308		)
Other/non-agency	4	8		—			20	302		(28		)	24	310		(28		)
Total mortgage-backed securities	327	15,395		(292		)	45	763		(44		)	372	16,158		(336		)
Total	328		$15,403		($292	)	45		$763		($44	)	373		$16,166		($336	)

Schedule of credit losses recognized in earnings

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017			2016
Cumulative balance at beginning of period		$75		$66		$75			$66
Credit impairments recognized in earnings on securities that have been previously impaired	4		7		5			8
Reductions due to increases in cash flow expectations on impaired securities(1)	—		—		(1		)	(1		)
Cumulative balance at end of period		$79		$73		$79			$73

⁽¹⁾ Reported in interest income from investment securities on the Consolidated Statements of Operations.

Schedule of investments classified by maturity date

The amortized cost and fair value of debt securities by contractual maturity are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2017
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,109		17,718		19,001
Other/non-agency	—		26		2		335		363
Total debt securities available for sale	13		199		1,111		18,060		19,383
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,080		4,080
Other/non-agency	—		—		—		887		887
Total debt securities held to maturity	—		—		—		4,967		4,967
Total amortized cost of debt securities		$13		$199		$1,111		$23,027		$24,350
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$12		$—		$—		$—		$12
State and political subdivisions	—		—		—		7		7
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	1		173		1,125		17,578		18,877
Other/non-agency	—		27		2		332		361
Total debt securities available for sale	13		200		1,127		17,917		19,257
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,072		4,072
Other/non-agency	—		—		—		914		914
Total debt securities held to maturity	—		—		—		4,986		4,986
Total fair value of debt securities		$13		$200		$1,127		$22,903		$24,243

Schedule of income recognized on investment securities

Realized gains and losses on securities are presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Gains on sale of debt securities		$3		$4		$7		$13
Losses on sale of debt securities	—		—		—		—
Debt securities gains, net		$3		$4		$7		$13
Equity securities gains		$1		$—		$1		$—

Schedule of financial instruments owned and pledged as collateral

The amortized cost and fair value of securities pledged are presented below:

	June 30, 2017				December 31, 2016
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$432		$430		$631		$620
Pledged against FHLB borrowed funds	894		921		953		972
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,052		4,022		3,575		3,563

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LOANS AND LEASES (Tables)

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Schedule of loans and leases

A summary of the loans and leases portfolio is presented below:

(in millions)	June 30, 2017		December 31, 2016
Commercial		$37,329		$37,274
Commercial real estate	11,213		10,624
Leases	3,346		3,753
Total commercial	51,888		51,651
Residential mortgages	16,082		15,115
Home equity loans	1,606		1,858
Home equity lines of credit	13,696		14,100
Home equity loans serviced by others	647		750
Home equity lines of credit serviced by others	182		219
Automobile	13,449		13,938
Education (1)	7,720		6,610
Credit cards	1,711		1,691
Other retail	2,065		1,737
Total retail	57,158		56,018
Total loans and leases (2) (3)		$109,046		$107,669

⁽¹⁾ During first quarter 2017, student loans were renamed “education” loans. Refer to Note 1 “Basis of Presentation” for more information.

⁽²⁾ Excluded from the table above are loans held for sale totaling $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above, and amounted to $17.6 billion and $17.3 billion at June 30, 2017 and December 31, 2016, respectively.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK (Tables)

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Schedule of changes in the allowance for credit losses

A summary of changes in the allowance for credit losses is presented below:

	Three Months Ended June 30, 2017									Six Months Ended June 30, 2017
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$653			$571			$1,224			$663			$573			$1,236
Charge-offs	(24		)	(104		)	(128		)	(48		)	(213		)	(261		)
Recoveries	10			43			53			15			84			99
Net charge-offs	(14		)	(61		)	(75		)	(33		)	(129		)	(162		)
Provision (credited) charged to income	(25		)	95			70			(16		)	161			145
Allowance for loan and lease losses, end of period	614			605			1,219			614			605			1,219
Reserve for unfunded lending commitments, beginning of period	93			—			93			72			—			72
Provision for unfunded lending commitments	—			—			—			21			—			21
Reserve for unfunded lending commitments as of period end	93			—			93			93			—			93
Total allowance for credit losses as of period end		$707			$605			$1,312			$707			$605			$1,312

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Provision for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

Schedule of loans and leases based on evaluation method

The recorded investment in loans and leases based on the Company’s evaluation methodology is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$491		$804		$1,295		$424		$799		$1,223
Formula-based evaluation	51,397		56,354		107,751		51,227		55,219		106,446
Total		$51,888		$57,158		$109,046		$51,651		$56,018		$107,669

Schedule of allowance for credit losses by evaluation method

A summary of the allowance for credit losses by evaluation method is presented below:

	June 30, 2017						December 31, 2016
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$42		$43		$85		$63		$43		$106
Formula-based evaluation	665		562		1,227		672		530		1,202
Allowance for credit losses		$707		$605		$1,312		$735		$573		$1,308

Schedule of classes of commercial loans and leases based on regulatory classifications

The recorded investment in commercial loans and leases based on regulatory classification ratings is presented below:

	June 30, 2017
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,259		$1,169		$622		$279		$37,329
Commercial real estate	10,678		444		53		38		11,213
Leases	3,215		107		24		—		3,346
Total		$49,152		$1,720		$699		$317		$51,888

	December 31, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$35,010		$1,015		$1,027		$222		$37,274
Commercial real estate	10,146		370		58		50		10,624
Leases	3,583		52		103		15		3,753
Total		$48,739		$1,437		$1,188		$287		$51,651

Schedule of retail loan investments categorized by delinquency status

The recorded investment in classes of retail loans, categorized by delinquency status is presented below:

	June 30, 2017
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$15,820		$99		$35		$10		$118		$16,082
Home equity loans	1,430		96		12		5		63		1,606
Home equity lines of credit	13,071		366		52		22		185		13,696
Home equity loans serviced by others	582		35		9		5		16		647
Home equity lines of credit serviced by others	135		22		3		1		21		182
Automobile	12,199		991		172		42		45		13,449
Education	7,537		117		18		10		38		7,720
Credit cards	1,636		43		10		7		15		1,711
Other retail	1,982		55		13		8		7		2,065
Total		$54,392		$1,824		$324		$110		$508		$57,158

	December 31, 2016
			Days Past Due
(in millions)	Current		1-29		30-59		60-89		90 or More		Total
Residential mortgages		$14,807		$108		$53		$12		$135		$15,115
Home equity loans	1,628		127		23		7		73		1,858
Home equity lines of credit	13,432		396		57		20		195		14,100
Home equity loans serviced by others	673		41		14		5		17		750
Home equity lines of credit serviced by others	158		25		3		2		31		219
Automobile	12,509		1,177		172		38		42		13,938
Education	6,379		151		24		13		43		6,610
Credit cards	1,611		43		12		9		16		1,691
Other retail	1,676		45		8		4		4		1,737
Total		$52,873		$2,113		$366		$110		$556		$56,018

Schedule of nonperforming loans and leases by class

The following table presents nonperforming loans and leases and loans accruing and 90 days or more past due:

	Nonperforming				Accruing and 90 days or more past due
(in millions)	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016
Commercial		$376		$322		$4		$2
Commercial real estate	38		50		—		—
Leases	—		15		—		—
Total commercial	414		387		4		2
Residential mortgages (1)	135		144		12		18
Home equity loans	81		98		—		—
Home equity lines of credit	235		243		—		—
Home equity loans serviced by others	27		32		—		—
Home equity lines of credit serviced by others	25		33		—		—
Automobile	55		50		—		—
Education	35		38		3		5
Credit card	15		16		—		—
Other retail	3		4		5		1
Total retail	611		658		20		24
Total		$1,025		$1,045		$24		$26

⁽¹⁾ Nonperforming balances exclude first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration. These loans, which are accruing and 90 days or more past due, totaled $12 million and $18 million as of June 30, 2017 and December 31, 2016, respectively. Nonperforming balances also exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $28 million and $32 million as of June 30, 2017 and December 31, 2016, respectively. These loans are consolidated on the Company’s Consolidated Balance Sheets.

Schedule of nonperforming assets

A summary of other nonperforming assets is presented below:

(in millions)	June 30, 2017		December 31, 2016
Nonperforming assets, net of valuation allowance:
Commercial		$—		$—
Retail	37		49
Nonperforming assets, net of valuation allowance		$37		$49

Summary of key performance indicators

A summary of key performance indicators is presented below:

	June 30, 2017		December 31, 2016
Nonperforming commercial loans and leases as a percentage of total loans and leases	0.38	%	0.36	%
Nonperforming retail loans as a percentage of total loans and leases	0.56		0.61
Total nonperforming loans and leases as a percentage of total loans and leases	0.94	%	0.97	%
Nonperforming commercial assets as a percentage of total assets	0.26	%	0.26	%
Nonperforming retail assets as a percentage of total assets	0.44		0.47
Total nonperforming assets as a percentage of total assets	0.70	%	0.73	%

Analysis of age of past due amounts

An analysis of the age of both accruing and nonaccruing loan and lease past due amounts is presented below:

	June 30, 2017								December 31, 2016
	Days Past Due								Days Past Due
(in millions)	30-59		60-89		90 or More		Total		30-59		60-89		90 or More		Total
Commercial		$9		$6		$380		$395		$36		$4		$324		$364
Commercial real estate	3		5		38		46		1		2		50		53
Leases	—		—		—		—		1		—		15		16
Total commercial	12		11		418		441		38		6		389		433
Residential mortgages	35		10		118		163		53		12		135		200
Home equity loans	12		5		63		80		23		7		73		103
Home equity lines of credit	52		22		185		259		57		20		195		272
Home equity loans serviced by others	9		5		16		30		14		5		17		36
Home equity lines of credit serviced by others	3		1		21		25		3		2		31		36
Automobile	172		42		45		259		172		38		42		252
Education	18		10		38		66		24		13		43		80
Credit cards	10		7		15		32		12		9		16		37
Other retail	13		8		7		28		8		4		4		16
Total retail	324		110		508		942		366		110		556		1,032
Total		$336		$121		$926		$1,383		$404		$116		$945		$1,465

Schedule of impaired loans by class

A summary of impaired loans by class is presented below:

	June 30, 2017
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$31		$237		$527		$453
Commercial real estate	35		11		3		39		38
Total commercial	251		42		240		566		491
Residential mortgages	46		3		142		247		188
Home equity loans	49		5		91		187		140
Home equity lines of credit	24		2		186		259		210
Home equity loans serviced by others	37		3		17		64		54
Home equity lines of credit serviced by others	4		—		5		13		9
Automobile	4		—		18		27		22
Education	146		22		—		146		146
Credit cards	25		7		—		26		25
Other retail	9		1		1		12		10
Total retail	344		43		460		981		804
Total		$595		$85		$700		$1,547		$1,295

	December 31, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$247		$55		$134		$431		$381
Commercial real estate	39		8		4		44		43
Total commercial	286		63		138		475		424
Residential mortgages	37		2		141		235		178
Home equity loans	51		3		94		191		145
Home equity lines of credit	23		1		173		240		196
Home equity loans serviced by others	41		4		19		70		60
Home equity lines of credit serviced by others	2		—		7		13		9
Automobile	4		—		15		25		19
Education	154		25		1		155		155
Credit cards	26		6		—		26		26
Other retail	10		2		1		13		11
Total retail	348		43		451		968		799
Total		$634		$106		$589		$1,443		$1,223

Schedule of additional information on impaired loans

Additional information on impaired loans is presented below:

	Three Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$1		$431		$2		$324
Commercial real estate	—		38		—		58
Total commercial	1		469		2		382
Residential mortgages	2		182		1		160
Home equity loans	1		141		1		158
Home equity lines of credit	1		203		2		184
Home equity loans serviced by others	1		54		1		66
Home equity lines of credit serviced by others	—		9		—		10
Automobile	—		20		—		15
Education	2		146		2		161
Credit cards	1		25		1		26
Other retail	—		10		—		13
Total retail	8		790		8		793
Total		$9		$1,259		$10		$1,175

	Six Months Ended June 30,
	2017				2016
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$414		$3		$248
Commercial real estate	—		41		—		61
Total commercial	2		455		3		309
Residential mortgages	3		178		2		156
Home equity loans	3		140		3		154
Home equity lines of credit	3		197		3		182
Home equity loans serviced by others	2		54		2		67
Home equity lines of credit serviced by others	—		9		—		9
Automobile	—		18		—		14
Education	4		146		4		160
Credit cards	1		24		1		26
Other retail	—		10		—		13
Total retail	16		776		15		781
Total		$18		$1,231		$18		$1,090

Troubled debt restructurings on financing receivables

The table below summarizes how loans were modified during the three months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	2		$—		$—	11		$13		$13
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	2	—		—		11	13		13
Residential mortgages	25	4		3		25	5		5
Home equity loans	22	1		2		—	—		—
Home equity lines of credit	14	—		—		67	9		9
Home equity loans serviced by others	5	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		—	—		—
Automobile	25	—		—		7	—		—
Education	—	—		—		—	—		—
Credit cards	624	4		4		—	—		—
Other retail	—	—		—		—	—		—
Total retail	717	9		9		99	14		14
Total	719		$9		$9	110		$27		$27

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	32		31		1			—
Residential mortgages	44	6		6		—			—
Home equity loans	42	2		2		—			—
Home equity lines of credit	112	8		7		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	2	—		—		—			—
Automobile	349	6		6		—			1
Education	7	1		1		1			—
Credit cards	—	—		—		1			—
Other retail	2	—		—		(1		)	—
Total retail	574	23		22		1			1
Total	578		$55		$53		$2			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the three months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others	3	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Education	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others	16	—		—		—			—
Home equity lines of credit serviced by others	5	1		—		—			—
Automobile	348	7		6		—			1
Education	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the six months endedJune 30, 2017, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2017 and were paid off in full, charged off, or sold prior to June 30, 2017.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	4		$1		$1	18		$14		$14
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	4	1		1		18	14		14
Residential mortgages	43	5		5		36	8		8
Home equity loans	43	2		3		1	—		—
Home equity lines of credit	30	1		1		118	15		15
Home equity loans serviced by others	11	1		1		—	—		—
Home equity lines of credit serviced by others	3	—		—		2	—		—
Automobile	65	1		1		15	—		—
Education	—	—		—		—	—		—
Credit cards	1,189	7		7		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,385	17		18		172	23		23
Total	1,389		$18		$19	190		$37		$37

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$32		$31		$1			$—
Commercial real estate	—	—		—		—			—
Leases	1	4		4		—			—
Total commercial	5	36		35		1			—
Residential mortgages	92	10		10		—			—
Home equity loans	144	8		8		—			—
Home equity lines of credit	187	14		13		—			—
Home equity loans serviced by others	30	1		1		—			—
Home equity lines of credit serviced by others	13	1		1		—			—
Automobile	625	11		10		—			2
Education	22	2		2		1			—
Credit cards	—	—		—		2			—
Other retail	3	—		—		(1		)	—
Total retail	1,116	47		45		2			2
Total	1,121		$83		$80		$3			$2

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances can include loans that became TDRs during the six months endedJune 30, 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Leases	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others	6	—		—		—	—		—
Home equity lines of credit serviced by others	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Education	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (3)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Leases	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others	34	1		1		—			—
Home equity lines of credit serviced by others	13	1		—		—			—
Automobile	539	10		9		—			1
Education	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

Schedule of defaults

The table below summarizes TDRs that defaulted during the three and six months ended June 30, 2017 and 2016, respectively, within 12 months of their modification date. For purposes of this table, a payment default refers to a loan that becomes 90 days or more past due under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2017 and 2016, respectively. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	4		$1	8		$3	5		$1	11		$3
Commercial real estate	—	—		1	—		1	4		1	—
Total commercial	4	1		9	3		6	5		12	3
Residential mortgages	41	4		35	4		86	10		89	12
Home equity loans	14	1		32	2		23	1		50	3
Home equity lines of credit	65	4		20	1		100	7		45	4
Home equity loans serviced by others	9	—		11	—		10	—		21	1
Home equity lines of credit serviced by others	1	—		6	—		4	—		11	—
Automobile	27	1		22	1		61	1		37	1
Education	9	—		18	1		16	—		31	1
Credit cards	102	1		85	—		228	2		206	1
Other retail	—	—		—	—		2	—		—	—
Total retail	268	11		229	9		530	21		490	23
Total	272		$12	238		$12	536		$26	502		$26

Schedule of loans that may increase credit exposure

The following tables present balances of loans with these characteristics:

	June 30, 2017
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$484		$370		$366		$—		$—		$1,220
Interest only/negative amortization	1,705		—		—		—		1		1,706
Low introductory rate	—		—		—		142		—		142
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,192		$370		$366		$142		$1		$3,071

	December 31, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Education		Total
High loan-to-value		$566		$550		$476		$—		$—		$1,592
Interest only/negative amortization	1,582		—		—		—		1		1,583
Low introductory rate	—		—		—		112		—		112
Multiple characteristics and other	3		—		—		—		—		3
Total		$2,151		$550		$476		$112		$1		$3,290

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2017

Equity Method Investments and Joint Ventures [Abstract]

Schedule of variable interest entities

A summary of these investments is presented below:

(in millions)	June 30, 2017		December 31, 2016
LIHTC investment included in other assets		$865		$793
LIHTC unfunded commitments included in other liabilities	484		428
Renewable energy investments included in other assets	266		220

Schedule of Affordable Housing Tax Credit investments

The following table presents other information related to the Company’s affordable housing tax credit investments:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Tax credits included in income tax expense		$22		$14		$43		$29
Amortization expense included in income tax expense	22		16		45		31
Other tax benefits included in income tax expense	8		7		15		13

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MORTGAGE BANKING (Tables)

6 Months Ended

Jun. 30, 2017

Mortgage Banking [Abstract]

Schedule of valuation allowance for impairment of recognized servicing assets

Changes related to MSRs are presented below:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
MSRs:
Balance as of beginning of period		$170			$169			$168			$173
Amount capitalized	8			5			18			10
Amortization	(8		)	(8		)	(16		)	(17		)
Carrying amount before valuation allowance	170			166			170			166
Valuation allowance for servicing assets:
Balance as of beginning of period	5			14			5			9
Valuation (recoveries) charge-offs	(1		)	(1		)	(1		)	4
Balance at end of period	4			13			4			13
Net carrying value of MSRs		$166			$153			$166			$153

Servicing asset at amortized cost

Changes related to MSRs are presented below:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
MSRs:
Balance as of beginning of period		$170			$169			$168			$173
Amount capitalized	8			5			18			10
Amortization	(8		)	(8		)	(16		)	(17		)
Carrying amount before valuation allowance	170			166			170			166
Valuation allowance for servicing assets:
Balance as of beginning of period	5			14			5			9
Valuation (recoveries) charge-offs	(1		)	(1		)	(1		)	4
Balance at end of period	4			13			4			13
Net carrying value of MSRs		$166			$153			$166			$153

Schedule of fair value assumptions used to estimate the value of Mortgage Servicing Rights

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

	June 30, 2017			December 31, 2016
	Weighted			Weighted
(dollars in millions)	Average	Range		Average	Range
Fair value	$184	Min	Max	$182	Min	Max
Weighted average life (in years)	5.6	2.4	6.9	5.7	2.6	7.3
Weighted average constant prepayment rate	10.8%	9.4%	19.8%	10.8%	8.8%	22.3%
Weighted average discount rate	9.9%	9.1%	12.1%	9.7%	9.1%	12.1%

Schedule of fair value assumptions used to estimate the value of Mortgage Servicing Rights capitalized in current period

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period are presented below:

	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Weighted average life (in years)	6.2	5.9	6.6	6.0
Weighted average constant prepayment rate	11.1%	11.3%	9.9%	11.1%
Weighted average discount rate	9.9%	9.7%	9.9%	9.7%

Schedule of the impact to fair value of an adverse change in key economic assumptions

The sensitivity analysis below presents the impact to current fair value of an immediate 50 basis point and 100 basis point adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the mortgage servicing rights calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment rates, could result in changes in the discount rates), which may amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2017		December 31, 2016
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$9		$9
Decline in fair value from a 100 basis point decrease in interest rates		$18		$25
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$6		$6

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BORROWED FUNDS (Tables)

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Schedule of short-term borrowed funds

A summary of the Company’s short-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Federal funds purchased		$—		$533
Securities sold under agreements to repurchase	429		615
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,004		3,211
Total short-term borrowed funds		$2,433		$4,359

Key data related to short-term borrowed funds is presented in the following table:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,						As of and for the Year Ended December 31,
(dollars in millions)	2017			2016			2017			2016			2016
Weighted-average interest rate at period-end:(1)
Federal funds purchased and securities sold under agreements to repurchase	—		%	—		%	—		%	—		%	0.26		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.31			0.65			1.31			0.65			0.94
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$1,075			$968			$1,174			$1,274			$1,522
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,507			4,764			3,508			4,764			5,461
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase(2)		$808			$974			$845			$927			$947
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,275			3,743			2,617			3,421			3,207
Weighted-average interest rate during the period:(1)
Federal funds purchased and securities sold under agreements to repurchase	0.36		%	0.08		%	0.28		%	0.07		%	0.09		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	1.22			0.61			1.14			0.60			0.64

⁽¹⁾ Rates exclude certain hedging costs.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable.

Schedule of long-term borrowed funds

A summary of the Company’s long-term borrowed funds is presented below:

(in millions)	June 30, 2017		December 31, 2016
Citizens Financial Group, Inc.:
4.150% fixed-rate subordinated debt, due 2022 (1)		$347		$347
5.158% fixed-to-floating rate subordinated debt, due 2023, converting to floating at 3-month LIBOR + 3.56% and callable beginning June 2018	333		333
3.750% fixed-rate subordinated debt, due 2024	250		250
4.023% fixed-rate subordinated debt, due 2024	42		42
4.350% fixed-rate subordinated debt, due 2025 (2)	249		249
4.300% fixed-rate subordinated debt, due 2025 (3)	749		749
2.375% fixed-rate senior unsecured debt, due 2021 (4)	348		348
Banking Subsidiaries:
2.300% senior unsecured notes, due 2018 (5)(6)	746		745
2.450% senior unsecured notes, due 2019 (5)(7)	748		747
2.500% senior unsecured notes, due 2019 (5)(8)	743		741
2.250% senior unsecured notes, due 2020 (5)(9)	698		—
Floating-rate senior unsecured notes, due 2020 (5)(10)	299		—
Floating-rate senior unsecured notes, due 2020 (5)(11)	249		—
2.200% senior unsecured notes, due 2020 (5)(12)	498		—
2.550% senior unsecured notes, due 2021(5)(13)	973		965
Floating-rate senior unsecured notes, due 2022 (5)(14)	249		—
2.650% senior unsecured notes, due 2022(5)(15)	497		—
Federal Home Loan advances due through 2033	5,112		7,264
Other	24		10
Total long-term borrowed funds		$13,154		$12,790

⁽¹⁾ These balances are composed of: principal balances of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽²⁾ These balances are composed of: principal balances of $250 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽³⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁴⁾ These balances are composed of: principal balance of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

⁽⁵⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁶⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($3) million at June 30, 2017 and December 31, 2016; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁷⁾ These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively.

⁽⁸⁾ These balances are composed of: principal balance of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($6) million and ($7) million at June 30, 2017 and December 31, 2016, respectively; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽⁹⁾ This balance is composed of: principal balance of $700 million at June 30, 2017; impact from interest rate swaps of $1 million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017. See Note 10 “Derivatives” for further information.

⁽¹⁰⁾ This balance is composed of: principal balance of $300 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹¹⁾ These balances are composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹²⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹³⁾ These balances are composed of: principal balance of $1.0 billion at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($23) million and ($30) million at June 30, 2017 and December 31, 2016, respectively; and ($4) million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

⁽¹⁴⁾ This balance is composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

⁽¹⁵⁾ This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact from interest rate swaps of ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

Schedule of maturities of long-term borrowed funds

A summary of maturities for the Company’s long-term borrowed funds at June 30, 2017 is presented below:

(in millions)	Parent Company		Banking Subsidiaries		Consolidated
Year
2018 or on demand		$—		$5,847		$5,847
2019	—		1,491		1,491
2020	—		1,762		1,762
2021	348		977		1,325
2022	347		752		1,099
2023 and thereafter	1,623		7		1,630
Total		$2,318		$10,836		$13,154

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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of derivative instruments in consolidated balance sheets

The following table presents derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2017								December 31, 2016
(in millions)	Notional Amount(1)		Derivative Assets(2)			Derivative Liabilities(2)			Notional Amount(1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$16,800		$4			$3			$13,350		$52			$193
Derivatives not designated as hedging instruments:
Interest rate contracts	65,980		337			274			54,656		557			452
Foreign exchange contracts	10,120		132			121			8,039		134			126
Other contracts	1,380		11			5			1,498		16			7
Total derivatives not designated as hedging instruments			480			400					707			585
Gross derivative fair values			484			403					759			778
Less: Gross amounts offset in the Consolidated Balance Sheets (3)			(70		)	(70		)			(106		)	(106		)
Less: Cash collateral applied (3)			(6		)	(174		)			(26		)	(13		)
Total net derivative fair values presented in the Consolidated Balance Sheets				$408			$159					$627			$659

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

⁽³⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

Schedule of fair value hedges

The following table presents the effect of fair value hedges on other income:

	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2017							Three Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$16		($15	)		$1		$32		($31	)		$1

	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2017							Six Months Ended June 30, 2016
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$10		($9	)		$1		$84		($83	)		$1

Schedule of effect of cash flow hedges on net income and stockholders' equity

The following table presents the effect of cash flow hedges on net income and stockholders' equity:

	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Effective portion of gain recognized in OCI (1)		$42			$21			$37			$75
Amounts reclassified from OCI to interest income (2)	8			21			20			43
Amounts reclassified from OCI to interest expense (2)	(1		)	(8		)	(3		)	(16		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest income or expense of the underlying hedged item.

Schedule of effect of derivative Instruments on net income

The following table presents the effect of customer derivatives and economic hedges on noninterest income:

	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Customer derivative contracts
Customer interest rate contracts (1)		$83			($2	)		$80			$95
Customer foreign exchange contracts (1)	78			(23		)	96			28
Residential loan commitments (2)	(2		)	3			3			7
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	(71		)	15			(56		)	(76		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (1)	(71		)	23			(85		)	(27		)
Forward sale contracts (2)	5			(5		)	(6		)	(10		)
Total		$22			$11			$32			$17

⁽¹⁾ Reported in foreign exchange and interest rate products on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of outstanding off balance sheet arrangements

A summary of outstanding off-balance sheet arrangements is presented below:

(in millions)	June 30, 2017		December 31, 2016
Undrawn commitments to extend credit		$61,988		$60,872
Financial standby letters of credit	2,053		1,892
Performance letters of credit	41		40
Commercial letters of credit	66		43
Marketing rights	42		44
Risk participation agreements	22		19
Residential mortgage loans sold with recourse	8		8
Total		$64,220		$62,918

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Summary of difference between aggregated fair value and unpaid principal balance of loans held for sale

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale measured at fair value:

	June 30, 2017						December 31, 2016
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$386		$386		$—		$504		$505		($1	)
Commercial and commercial real estate loans held for sale, at fair value	134		134		—		79		79		—

Assets and liabilities measured on recurring basis

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2017:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,238		$—		$19,238		$—
State and political subdivisions	7		—		7		—
U.S. Treasury and other	12		12		—		—
Total securities available for sale	19,257		12		19,245		—
Loans held for sale, at fair value:
Residential loans held for sale	386		—		386		—
Commercial loans held for sale	134		—		134		—
Total loans held for sale, at fair value	520		—		520		—
Derivative assets1:
Interest rate swaps	341		—		341		—
Foreign exchange contracts	132		—		132		—
Other contracts	11		—		11		—
Total derivative assets	484		—		484		—
Other investment securities, at fair value:
Money market mutual fund	92		92		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	97		92		5		—
Total assets		$20,358		$104		$20,254		$—
Derivative liabilities1:
Interest rate swaps		$277		$—		$277		$—
Foreign exchange contracts	121		—		121		—
Other contracts	5		—		5		—
Total derivative liabilities	403		—		403		—
Total liabilities		$403		$—		$403		$—

⁽¹⁾ Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$19,446		$—		$19,446		$—
State and political subdivisions	8		—		8		—
Equity securities	17		—		17		—
U.S. Treasury	30		30		—		—
Total securities available for sale	19,501		30		19,471		—
Loans held for sale, at fair value:
Residential loans held for sale	504		—		504		—
Commercial loans held for sale	79		—		79		—
Total loans held for sale, at fair value	583		—		583		—
Derivative assets:
Interest rate swaps	609		—		609		—
Foreign exchange contracts	134		—		134		—
Other contracts	16		—		16		—
Total derivative assets	759		—		759		—
Other investment securities, at fair value:
Money market mutual fund	91		91		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	96		91		5		—
Total assets		$20,939		$121		$20,818		$—
Derivative liabilities:
Interest rate swaps		$645		$—		$645		$—
Foreign exchange contracts	126		—		126		—
Other contracts	7		—		7		—
Total derivative liabilities	778		—		778		—
Total liabilities		$778		$—		$778		$—

Gains (losses) on assets and liabilities measured on a nonrecurring basis included in earnings

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017				2016
Impaired collateral-dependent loans		($8	)		($6	)		($27	)			($11	)
MSRs	1			1			1				(4		)
Foreclosed assets	(1		)	(1		)	(2		)		(2		)
Leased assets	(15		)	—			(15		)	—	—

Fair value of assets and liabilities measured on a nonrecurring basis

The following table presents assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2017								December 31, 2016
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$341		$—		$341		$—		$355		$—		$355		$—
MSRs	184		—		—		184		182		—		—		182
Foreclosed assets	33		—		33		—		44		—		44		—
Leased assets	137		—		137		—		158		—		158		—

Assets and liabilities measured at fair value

The following table presents the estimated fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2017
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$4,967		$4,986		$—		$—		$4,967		$4,986		$—		$—
Other investment securities, at cost	794		794		—		—		794		794		—		—
Other loans held for sale	187		187		—		—		—		—		187		187
Loans and leases	109,046		109,323		—		—		341		341		108,705		108,982
Financial Liabilities:
Deposits	113,613		113,582		—		—		113,613		113,582		—		—
Federal funds purchased and securities sold under agreements to repurchase	429		429		—		—		429		429		—		—
Other short-term borrowed funds	2,004		2,004		—		—		2,004		2,004		—		—
Long-term borrowed funds	13,154		13,275		—		—		13,154		13,275		—		—

	December 31, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Assets:
Securities held to maturity		$5,071		$5,058		$—		$—		$5,071		$5,058		$—		$—
Other investment securities, at cost	942		942		—		—		942		942		—		—
Other loans held for sale	42		42		—		—		—		—		42		42
Loans and leases	107,669		107,537		—		—		355		355		107,314		107,182
Financial Liabilities:
Deposits	109,804		109,796		—		—		109,804		109,796		—		—
Federal funds purchased and securities sold under agreements to repurchase	1,148		1,148		—		—		1,148		1,148		—		—
Other short-term borrowed funds	3,211		3,211		—		—		3,211		3,211		—		—
Long-term borrowed funds	12,790		12,849		—		—		12,790		12,849		—		—

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REGULATORY MATTERS (Tables)

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

Schedule of compliance with regulatory capital requirements under banking regulations

The following table presents the Company’s capital and capital ratios under U.S. Basel III Standardized Transitional rules. Certain Basel III requirements are subject to phase-in through 2019, and were applied to this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses included within AOCI for available for sale securities, accumulated net gains and losses on cash-flow hedges, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized(6)
(dollars in millions)	Amount		Ratio		Amount		Ratio (5)		Amount		Ratio
As of June 30, 2017
Common equity tier 1 capital (1)		$14,057	11.2	%		$7,232	5.750	%		$8,175	6.5	%
Tier 1 capital (2)	14,304		11.4		9,119		7.250		10,062		8.0
Total capital (3)	17,586		14.0		11,634		9.250		12,577		10.0
Tier 1 leverage (4)	14,304		9.9		5,776		4.000		7,220		5.0
As of December 31, 2016
Common equity tier 1 capital (1)		$13,822	11.2	%		$6,348	5.125	%		$8,051	6.5	%
Tier 1 capital (2)	14,069		11.4		8,206		6.625		9,909		8.0
Total capital (3)	17,347		14.0		10,683		8.625		12,386		10.0
Tier 1 leverage (4)	14,069		9.9		5,667		4.000		7,084		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” includes capital conservation buffer of 1.250% for 2017 and 0.625% for 2016; N/A to Tier 1 leverage.

⁽⁶⁾ Presented for informational purposes. Prompt corrective action provisions apply only to the Company’s insured depository institutions - CBNA and CBPA.

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Schedule of other comprehensive income

The following table presents the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at April 1, 2017		($97	)		($195	)		($391	)		($683	)
Other comprehensive income before reclassifications	26			56			—			82
Other-than-temporary impairment not recognized in earnings on securities	—			10			—			10
Amounts reclassified from other comprehensive (loss) income	(5		)	1			2			(2		)
Net other comprehensive income	21			67			2			90
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

	As of and for the six months ended June 30,
(in millions)	Net Unrealized (Losses) Gains on Derivatives			Net Unrealized (Losses) Gains on Securities			Employee Benefit Plans			Total AOCI
Balance at January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at June 30, 2016		$39			$166			($364	)		($159	)
Balance at January 1, 2017		($88	)		($186	)		($394	)		($668	)
Other comprehensive income before reclassifications	23			61			—			84
Other-than-temporary impairment not recognized in earnings on securities	—			(2		)	—			(2		)
Amounts reclassified from other comprehensive (loss) income	(11		)	(1		)	5			(7		)
Net other comprehensive income	12			58			5			75
Balance at June 30, 2017		($76	)		($128	)		($389	)		($593	)

Schedule of reclassification out of accumulated other comprehensive income

The following table presents the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$8			$21			$20			$43		Interest income
	(1		)	(8		)	(3		)	(16		)	Interest expense
	7			13			17			27			Income before income tax expense
	2			4			6			10			Income tax expense
		$5			$9			$11			$17		Net income
Reclassification of net securities gains (losses) to net income (loss):		$3			$4			$7			$13		Securities gains, net
	(4		)	(7		)	(5		)	(8		)	Net securities impairment losses recognized in earnings
	(1		)	(3		)	2			5			Income before income tax expense
	—			(1		)	1			2			Income tax expense
		($1	)		($2	)		$1			$3		Net income
Reclassification of changes related to the employee benefit plan:		($4	)		($4	)		($9	)		($8	)	Salaries and employee benefits
	(4		)	(4		)	(9		)	(8		)	Income before income tax expense
	(2		)	(1		)	(4		)	(3		)	Income tax expense
		($2	)		($3	)		($5	)		($5	)	Net income
Total reclassification gains		$2			$4			$7			$15		Net income

The following table presents the effects on net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Net interest income (includes $7, $13, $17 and $27 of AOCI reclassifications, respectively)		$1,026		$923		$2,031		$1,827
Provision for credit losses	70		90		166		181
Noninterest income (includes ($1), ($3), $2 and $5 of AOCI reclassifications, respectively)	370		355		749		685
Noninterest expense (includes $4, $4, $9 and $8 of AOCI reclassifications, respectively)	864		827		1,718		1,638
Income before income tax expense	462		361		896		693
Income tax expense (includes $0, $2, $3 and $9 income tax net expense from reclassification items, respectively)	144		118		258		227
Net income		$318		$243		$638		$466

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BUSINESS SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Schedule of segment reporting information

	As of and for the Three Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$657		$344		$25			$1,026
Noninterest income	229		130		11			370
Total revenue	886		474		36			1,396
Noninterest expense	644		192		28			864
Profit before provision for credit losses	242		282		8			532
Provision for credit losses	60		1		9			70
Income (loss) before income tax expense (benefit)	182		281		(1		)	462
Income tax expense (benefit)	64		94		(14		)	144
Net income		$118		$187		$13			$318
Total average assets		$59,244		$49,731		$40,903			$149,878

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Six Months Ended June 30, 2017
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,295		$690		$46			$2,031
Noninterest income	449		264		36			749
Total revenue	1,744		954		82			2,780
Noninterest expense	1,291		382		45			1,718
Profit before provision for credit losses	453		572		37			1,062
Provision for credit losses	124		20		22			166
Income before income tax expense (benefit)	329		552		15			896
Income tax expense (benefit)	116		185		(43		)	258
Net income		$213		$367		$58			$638
Total average assets		$58,954		$49,488		$40,893			$149,335

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Schedule of earnings per share

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except share and per-share data)	2017		2016		2017		2016
Numerator (basic and diluted):
Net income		$318		$243		$638		$466
Less: Preferred stock dividends	—		—		7		7
Net income available to common stockholders		$318		$243		$631		$459
Denominator:
Weighted-average common shares outstanding - basic	506,371,846		528,968,330		507,903,141		528,519,489
Dilutive common shares: share-based awards	1,042,276		1,396,873		1,458,914		1,877,382
Weighted-average common shares outstanding - diluted	507,414,122		530,365,203		509,362,055		530,396,871
Earnings per common share:
Basic		$0.63		$0.46		$1.24		$0.87
Diluted	0.63		0.46		1.24		0.87

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OTHER INCOME (Tables)

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

Details of other income

The following table presents the details of other income:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2017			2016		2017		2016
Bank-owned life insurance income		$14			$13		$26		$26
Other	(8		)	9		5		17
Other income		$6			$22		$31		$43

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OTHER OPERATING EXPENSE (Tables)

6 Months Ended

Jun. 30, 2017

Other Income and Expenses [Abstract]

Schedule of other operating expense

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Deposit insurance		$36		$29		$68		$55
Promotional expense	29		25		55		49
Settlements and operating losses	12		14		25		22
Other	71		60		126		117
Other operating expense		$148		$128		$274		$243

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BASIS OF PRESENTATION (Details) $ in Millions	1 Months Ended
	May 31, 2017 USD ($)
Western Reserve Partners, LLC
Business Acquisition [Line Items]
Goodwill from acquisition	$ 11

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SECURITIES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Impaired debt securities sold	$ 0	$ 0	$ 0	$ 0
Taxable interest income from securities	154	141	314	286
Securities purchased under agreements to resell, gross	0		0			$ 0
Securities purchased under agreements to resell, offset	0		0			0
Securities purchased under agreements to resell	0		0			0
Securities sold under agreements to repurchase, gross	0		0			0
Securities sold under agreements to repurchase, offset	0		0			0
Securities sold under agreements to repurchase	0		0			0
Mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Securitizations of mortgage loans	22	5	44	5
Available-for-sale Securities
Schedule of Available-for-sale Securities [Line Items]
Cumulative credit losses recognized in earnings	79	73	79	73	$ 75	$ 75	$ 66	$ 66
OTTI in earnings	4	7	5	8
OTTI in earnings from an evaluation model update		5		5
Held-to-maturity Securities
Schedule of Available-for-sale Securities [Line Items]
Cumulative credit losses recognized in earnings	$ 0	$ 0	$ 0	$ 0

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SECURITIES - Schedule of Investments (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Securities Available-for-sale, Amortized Cost		$ 19,383	$ 19,713
Securities Available-for-sale, Gross Unrealized Gains		86	80
Securities Available-for-sale, Gross Unrealized Losses		(212)	(292)
Securities Available-for-sale, Fair Value	[1]	19,257	19,501
Securities Held-to-maturity, Amortized Cost		4,967	5,071
Securities Held-to-maturity, Gross Unrealized Gain		47	31
Securities Held-to-maturity, Gross Unrealized Losses		(28)	(44)
Securities held-to-maturity, Fair Value		4,986	5,058
Money market mutual fund, Amortized Cost		92	91
Money Market Mutual Fund, Gross Unrealized Gain		0	0
Money Market Mutual Fund, Gross Unrealized Loss		0	0
Money market mutual fund, Fair Value		92	91
Total other investment securities, at fair value, Amortized Cost		97	96
Total other investments securities, at fair value, at cost, Gross Unrealized Gains		0	0
Total other investments securities, at fair value, Gross Unrealized Losses		0	0
Total other investment securities, at fair value, Fair Value		97	96
Other Investment Securities, at Cost, Amortized Cost		7	0
Other Investment Securities, at Cost, Gross Unrealized Gain		0	0
Other Investment Securities, at Cost, Gross Unrealized Loss		0	0
Other Investment Securities, at Cost, Fair Value		7	0
Total other investment securities, at cost		794	942
Total other investment securities, at cost, Gross Unrealized Gain		0	0
Total other investment securities, at cost, Gross Unrealized Losses		0	0
Total other investment securities, at cost, Fair Value		794	942
U.S. Treasury and other
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		12	30
Debt Securities Available-for-sale, Gross Unrealized Gains		0	0
Debt Securities Available-for-sale, Gross Unrealized Losses		0	0
Debt Securities Available-for-sale, Fair Value		12	30
State and political subdivisions
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		7	8
Debt Securities Available-for-sale, Gross Unrealized Gains		0	0
Debt Securities Available-for-sale, Gross Unrealized Losses		0	0
Debt Securities Available-for-sale, Fair Value		7	8
Federal agencies and U.S. government sponsored entities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		19,001	19,231
Debt Securities Available-for-sale, Gross Unrealized Gains		79	78
Debt Securities Available-for-sale, Gross Unrealized Losses		(203)	(264)
Debt Securities Available-for-sale, Fair Value		18,877	19,045
Securities Held-to-maturity, Amortized Cost		4,080	4,126
Securities Held-to-maturity, Gross Unrealized Gain		20	12
Securities Held-to-maturity, Gross Unrealized Losses		(28)	(44)
Securities held-to-maturity, Fair Value		4,072	4,094
Other/non-agency
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		363	427
Debt Securities Available-for-sale, Gross Unrealized Gains		7	2
Debt Securities Available-for-sale, Gross Unrealized Losses		(9)	(28)
Debt Securities Available-for-sale, Fair Value		361	401
Securities Held-to-maturity, Amortized Cost		887	945
Securities Held-to-maturity, Gross Unrealized Gain		27	19
Securities Held-to-maturity, Gross Unrealized Losses		0	0
Securities held-to-maturity, Fair Value		914	964
Total mortgage-backed securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		19,364	19,658
Debt Securities Available-for-sale, Gross Unrealized Gains		86	80
Debt Securities Available-for-sale, Gross Unrealized Losses		(212)	(292)
Debt Securities Available-for-sale, Fair Value		19,238	19,446
Total debt securities available for sale
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		19,383	19,696
Debt Securities Available-for-sale, Gross Unrealized Gains		86	80
Debt Securities Available-for-sale, Gross Unrealized Losses		(212)	(292)
Debt Securities Available-for-sale, Fair Value		19,257	19,484
Marketable equity securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		0	5
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		0	5
Other equity securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		0	12
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		0	12
Total equity securities available for sale
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		0	17
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		0	17
Other investments
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Other Investments, Amortized Cost		5	5
Other Investments, Gross Unrealized Gain		0	0
Other Investments, Gross Unrealized Loss		0	0
Other Investments, Fair Value		5	5
Federal Reserve Bank stock
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Federal Reserve Bank stock, Amortized Cost		463	463
Federal Reserve Bank stock, Gross Unrealized Gains		0	0
Federal Reserve Bank stock, Gross Unrealized Losses		0	0
Federal Reserve Bank stock, Fair Value		463	463
Federal Home Loan Bank stock
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Federal Home Loan Bank stock, Amortized Cost		324	479
Federal Home Loan Bank stock, Gross Unrealized Gain		0	0
Federal Home Loan Bank stock, Gross Unrealized Losses		0	0
Federal Home Loan Bank stock, Fair Value		$ 324	$ 479

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

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SECURITIES - Schedule of Investments in Continuous Loss Positions (Details) $ in Millions	Jun. 30, 2017 USD ($) Securities	Dec. 31, 2016 USD ($) Securities
Number of Issues
Less than 12 Months | Securities	301	328
12 Months or Longer | Securities	36	45
Total | Securities	337	373
Fair Value
Less than 12 Months	$ 13,613	$ 15,403
12 Months or Longer	577	763
Total	14,190	16,166
Gross Unrealized Losses
Less than 12 Months	(219)	(292)
12 Months or Longer	(21)	(44)
Total	$ (240)	$ (336)
State and political subdivisions
Number of Issues
Less than 12 Months | Securities	0	1
12 Months or Longer | Securities	0	0
Total | Securities	0	1
Fair Value
Less than 12 Months	$ 0	$ 8
12 Months or Longer	0	0
Total	0	8
Gross Unrealized Losses
Less than 12 Months	0	0
12 Months or Longer	0	0
Total	$ 0	$ 0
Federal agencies and U.S. government sponsored entities
Number of Issues
Less than 12 Months | Securities	301	323
12 Months or Longer | Securities	24	25
Total | Securities	325	348
Fair Value
Less than 12 Months	$ 13,613	$ 15,387
12 Months or Longer	423	461
Total	14,036	15,848
Gross Unrealized Losses
Less than 12 Months	(219)	(292)
12 Months or Longer	(12)	(16)
Total	$ (231)	$ (308)
Other/non-agency
Number of Issues
Less than 12 Months | Securities	0	4
12 Months or Longer | Securities	12	20
Total | Securities	12	24
Fair Value
Less than 12 Months	$ 0	$ 8
12 Months or Longer	154	302
Total	154	310
Gross Unrealized Losses
Less than 12 Months	0	0
12 Months or Longer	(9)	(28)
Total	$ (9)	$ (28)
Total mortgage-backed securities
Number of Issues
Less than 12 Months | Securities	301	327
12 Months or Longer | Securities	36	45
Total | Securities	337	372
Fair Value
Less than 12 Months	$ 13,613	$ 15,395
12 Months or Longer	577	763
Total	14,190	16,158
Gross Unrealized Losses
Less than 12 Months	(219)	(292)
12 Months or Longer	(21)	(44)
Total	$ (240)	$ (336)

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SECURITIES - Schedule of Cumulative Credit Losses Recognized in Earnings (Details) - Available-for-sale Securities - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cumulative balance at beginning of period		$ 75	$ 66	$ 75	$ 66
Credit impairments recognized in earnings on securities that have been previously impaired		4	7	5	8
Reductions due to increases in cash flow expectations on impaired securities	[1]	0	0	(1)	(1)
Cumulative balance at end of period		$ 79	$ 73	$ 79	$ 73

[1] Reported in interest income from investment securities on the Consolidated Statements of Operations.

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SECURITIES - Schedule of Available for Sale Securities Debt Maturities (Details) $ in Millions	Jun. 30, 2017 USD ($)
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	$ 13
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	199
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	1,111
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	18,060
Amortized Cost, Debt securities available for sale, Total	19,383
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	4,967
Amortized Cost, Debt securities held to maturity, Total	4,967
Total amortized cost of debt securities, Maturity of 1 Year or Less	13
Total amortized cost of debt securities, Maturity of 1-5 Years	199
Total amortized cost of debt securities, Maturity of 5-10 Years	1,111
Total amortized cost of debt securities, Maturity After 10 Years	23,027
Total amortized cost of debt securities, Total	24,350
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	13
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	200
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	1,127
Fair Value, Debt securities available for sale, Maturity After 10 Years	17,917
Fair Value, Debt securities available for sale, Total	19,257
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	4,986
Fair Value, Debt securities held to maturity, Total	4,986
Total fair value of debt securities, Maturity of 1 Year or Less	13
Total fair value of debt securities, Maturity of 1-5 Years	200
Total fair value of debt securities, Maturity of 5-10 Years	1,127
Total fair value of debt securities, Maturity After 10 Years	22,903
Total fair value of debt securities, Total	24,243
U.S. Treasury and other
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	12
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	0
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	0
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	0
Amortized Cost, Debt securities available for sale, Total	12
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	12
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	0
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	0
Fair Value, Debt securities available for sale, Maturity After 10 Years	0
Fair Value, Debt securities available for sale, Total	12
State and political subdivisions
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	0
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	0
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	7
Amortized Cost, Debt securities available for sale, Total	7
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	0
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	0
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	0
Fair Value, Debt securities available for sale, Maturity After 10 Years	7
Fair Value, Debt securities available for sale, Total	7
Federal agencies and U.S. government sponsored entities
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	1
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	173
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	1,109
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	17,718
Amortized Cost, Debt securities available for sale, Total	19,001
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	4,080
Amortized Cost, Debt securities held to maturity, Total	4,080
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	1
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	173
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	1,125
Fair Value, Debt securities available for sale, Maturity After 10 Years	17,578
Fair Value, Debt securities available for sale, Total	18,877
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	4,072
Fair Value, Debt securities held to maturity, Total	4,072
Other/non-agency
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	26
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	2
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	335
Amortized Cost, Debt securities available for sale, Total	363
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	887
Amortized Cost, Debt securities held to maturity, Total	887
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	0
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	27
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	2
Fair Value, Debt securities available for sale, Maturity After 10 Years	332
Fair Value, Debt securities available for sale, Total	361
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	914
Fair Value, Debt securities held to maturity, Total	$ 914

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SECURITIES - Income Recognized from Investment Securities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Gain (Loss) on Sale of Investments [Abstract]
Gains on sale of debt securities	$ 3	$ 4	$ 7	$ 13
Losses on sale of debt securities	0	0	0	0
Debt securities gains, net	3	4	7	13
Equity securities gains	$ 1	$ 0	$ 1	$ 0

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SECURITIES - Schedule of Securities Pledged (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Pledged against repurchase agreements, Amortized Cost	$ 432	$ 631
Pledged against Federal Home Loan Bank borrowed funds, Amortized Cost	894	953
Pledged against derivatives to qualify for fiduciary powers, and to secure public and other deposits as required by law, Amortized Cost	4,052	3,575
Pledged against repurchase agreements, Fair Value	430	620
Pledged against Federal Home Loan Bank borrowed funds, Fair Value	921	972
Pledged against derivatives to qualify for fiduciary powers, and to secure public and other deposits as required by law, Fair Value	$ 4,022	$ 3,563

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LOANS AND LEASES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 520		$ 520		$ 583
Other loans held for sale	187		187		42
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans pledged as collateral for FHLB borrowed funds	24,300		24,300		24,000
Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window	17,400		17,400		16,800
Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	520		520		583
Other loans held for sale	0		0		0
Residential loans held for sale | Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	386		386		504
Commercial real estate loans held for sale | Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	134		134		$ 79
Education
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period	407	$ 348	732	$ 717
Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period	30	200	153	334
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period		63		183
Mortgage loans sold	206	108	206	281
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans sold during the period	$ 596	$ 45	$ 596	$ 118

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LOANS AND LEASES - Summary of Loans and Leases Portfolio (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial		$ 51,888	$ 51,651
Total retail		57,158	56,018
Loans and leases		109,046	107,669
Total loans receivable held for sale		707	625
Banking Subsidiaries
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans serviced for others		17,600	17,300
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial		37,329	37,274
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial		11,213	10,624
Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Leases		3,346	3,753
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential mortgages		16,082	15,115
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Home equity		1,606	1,858
Home equity lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Home equity		13,696	14,100
Home equity loans serviced by others
Accounts, Notes, Loans and Financing Receivable [Line Items]
Home equity		647	750
Home equity lines of credit serviced by others
Accounts, Notes, Loans and Financing Receivable [Line Items]
Home equity		182	219
Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Automobile		13,449	13,938
Education
Accounts, Notes, Loans and Financing Receivable [Line Items]
Education	[1]	7,720	6,610
Credit cards
Accounts, Notes, Loans and Financing Receivable [Line Items]
Credit cards		1,711	1,691
Other retail
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other retail		2,065	1,737
Total loans and leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	[2],[3]	$ 109,046	$ 107,669

[1] During first quarter 2017, student loans were renamed “education” loans. Refer to Note 1 “Basis of Presentation” for more information.

[2] Excluded from the table above are loans held for sale totaling $707 million and $625 million as of June 30, 2017 and December 31, 2016, respectively.

[3] Mortgage loans serviced for others by the Company’s subsidiaries are not included above, and amounted to $17.6 billion and $17.3 billion at June 30, 2017 and December 31, 2016, respectively.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Mortgage loans collateralized by OREO	$ 173	$ 177
Larger balance commercial loans minimum balance (greater than)	3
Commitments to lend additional funds to debtors owing receivables which were TDRs	$ 45	42
High loan to value criteria (exceeds)	90.00%
Total commercial
Financing Receivable, Modifications [Line Items]
TDR balance	$ 136	120
Total retail
Financing Receivable, Modifications [Line Items]
TDR balance	$ 804	$ 799

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Summary of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance			$ 1,236
Provision (credited) charged to income			166	$ 181
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	$ 1,219		1,219
Allowance for loan and lease losses
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	1,224	$ 1,224	1,236	1,216
Charge-offs	(128)	(113)	(261)	(239)
Recoveries	53	48	99	91
Net charge-offs	(75)	(65)	(162)	(148)
Provision (credited) charged to income	70	87	145	178
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	1,219	1,246	1,219	1,246
Allowance for loan and lease losses | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	653	633	663	596
Charge-offs	(24)	(7)	(48)	(20)
Recoveries	10	5	15	9
Net charge-offs	(14)	(2)	(33)	(11)
Provision (credited) charged to income	(25)	45	(16)	91
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	614	676	614	676
Allowance for loan and lease losses | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	571	591	573	620
Charge-offs	(104)	(106)	(213)	(219)
Recoveries	43	43	84	82
Net charge-offs	(61)	(63)	(129)	(137)
Provision (credited) charged to income	95	42	161	87
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	605	570	605	570
Reserve for unfunded lending commitments
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	93	58	72	58
Provision for unfunded lending commitments	0	3	21	3
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	93	61	93	61
Reserve for unfunded lending commitments | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	93	58	72	58
Provision for unfunded lending commitments	0	3	21	3
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	93	61	93	61
Reserve for unfunded lending commitments | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	0	0	0	0
Provision for unfunded lending commitments	0	0	0	0
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	0	0	0	0
Allowance for loan and lease losses and reserve for off-balance sheet activities, total
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	1,312	1,307	1,312	1,307
Allowance for loan and lease losses and reserve for off-balance sheet activities, total | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	707	737	707	737
Allowance for loan and lease losses and reserve for off-balance sheet activities, total | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	$ 605	$ 570	$ 605	$ 570

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Loan and Leases (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	$ 1,295	$ 1,223
Formula-based evaluation	107,751	106,446
Total	109,046	107,669
Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	491	424
Formula-based evaluation	51,397	51,227
Total	51,888	51,651
Retail
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	804	799
Formula-based evaluation	56,354	55,219
Total	$ 57,158	$ 56,018

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Summary of Allowance for Credit Losses by Evaluation Method (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	$ 85	$ 106
Formula-based evaluation	1,227	1,202
Allowance for credit losses	1,312	1,308
Commercial Banking
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	42	63
Formula-based evaluation	665	672
Allowance for credit losses	707	735
Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	43	43
Formula-based evaluation	562	530
Allowance for credit losses	$ 605	$ 573

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Commercial Loans and Leases by Regulatory Classification Ratings (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Total	$ 109,046	$ 107,669
Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	51,888	51,651
Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	37,329	37,274
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	11,213	10,624
Leases
Financing Receivable, Recorded Investment [Line Items]
Total	3,346	3,753
Pass | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	49,152	48,739
Pass | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	35,259	35,010
Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	10,678	10,146
Pass | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	3,215	3,583
Special Mention | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	1,720	1,437
Special Mention | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	1,169	1,015
Special Mention | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	444	370
Special Mention | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	107	52
Substandard | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	699	1,188
Substandard | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	622	1,027
Substandard | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	53	58
Substandard | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	24	103
Doubtful | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	317	287
Doubtful | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	279	222
Doubtful | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	38	50
Doubtful | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	$ 0	$ 15

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Retail Loans by Delinquency Status (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 1,383	$ 1,465
Total	109,046	107,669
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	15,820	14,807
Past Due	163	200
Total	16,082	15,115
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,430	1,628
Past Due	80	103
Total	1,606	1,858
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,071	13,432
Past Due	259	272
Total	13,696	14,100
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	582	673
Past Due	30	36
Total	647	750
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	135	158
Past Due	25	36
Total	182	219
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	12,199	12,509
Past Due	259	252
Total	13,449	13,938
Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	7,537	6,379
Past Due	66	80
Total	7,720	6,610
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,636	1,611
Past Due	32	37
Total	1,711	1,691
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,982	1,676
Past Due	28	16
Total	2,065	1,737
Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	54,392	52,873
Total	57,158	56,018
Financing Receivables, 1 to 29 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	99	108
Financing Receivables, 1 to 29 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	96	127
Financing Receivables, 1 to 29 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	366	396
Financing Receivables, 1 to 29 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	35	41
Financing Receivables, 1 to 29 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	22	25
Financing Receivables, 1 to 29 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	991	1,177
Financing Receivables, 1 to 29 Days Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	117	151
Financing Receivables, 1 to 29 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	43	43
Financing Receivables, 1 to 29 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	55	45
Financing Receivables, 1 to 29 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,824	2,113
Financing Receivables, 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	336	404
Financing Receivables, 30 to 59 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	35	53
Financing Receivables, 30 to 59 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	12	23
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	52	57
Financing Receivables, 30 to 59 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	9	14
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3	3
Financing Receivables, 30 to 59 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	172	172
Financing Receivables, 30 to 59 Days Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	18	24
Financing Receivables, 30 to 59 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	12
Financing Receivables, 30 to 59 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	13	8
Financing Receivables, 30 to 59 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	324	366
Financing Receivables 60 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	121	116
Financing Receivables 60 To 89 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	12
Financing Receivables 60 To 89 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5	7
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	22	20
Financing Receivables 60 To 89 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5	5
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1	2
Financing Receivables 60 To 89 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	42	38
Financing Receivables 60 To 89 Days Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	13
Financing Receivables 60 To 89 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	7	9
Financing Receivables 60 To 89 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	8	4
Financing Receivables 60 To 89 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	110	110
Financing Receivables 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	926	945
Financing Receivables 90 Days or More Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	118	135
Financing Receivables 90 Days or More Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	63	73
Financing Receivables 90 Days or More Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	185	195
Financing Receivables 90 Days or More Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	16	17
Financing Receivables 90 Days or More Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	21	31
Financing Receivables 90 Days or More Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	45	42
Financing Receivables 90 Days or More Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	38	43
Financing Receivables 90 Days or More Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	15	16
Financing Receivables 90 Days or More Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	7	4
Financing Receivables 90 Days or More Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 508	$ 556

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Nonperforming Loans and Leases by Class (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		$ 1,025	$ 1,045
Loans accruing and 90 days or more past due		24	26
GNMA
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans sold with right to repurchase		28	32
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		414	387
Loans accruing and 90 days or more past due		4	2
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		376	322
Loans accruing and 90 days or more past due		4	2
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		38	50
Loans accruing and 90 days or more past due		0	0
Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		0	15
Loans accruing and 90 days or more past due		0	0
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		611	658
Loans accruing and 90 days or more past due		20	24
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	135	144
Loans accruing and 90 days or more past due	[1]	12	18
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		81	98
Loans accruing and 90 days or more past due		0	0
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		235	243
Loans accruing and 90 days or more past due		0	0
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		27	32
Loans accruing and 90 days or more past due		0	0
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		25	33
Loans accruing and 90 days or more past due		0	0
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		55	50
Loans accruing and 90 days or more past due		0	0
Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		35	38
Loans accruing and 90 days or more past due		3	5
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		15	16
Loans accruing and 90 days or more past due		0	0
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		3	4
Loans accruing and 90 days or more past due		$ 5	$ 1

[1] Nonperforming balances exclude first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration. These loans, which are accruing and 90 days or more past due, totaled $12 million and $18 million as of June 30, 2017 and December 31, 2016, respectively. Nonperforming balances also exclude guaranteed residential mortgage loans sold to GNMA for which the Company has the right, but not the obligation, to repurchase. These loans totaled $28 million and $32 million as of June 30, 2017 and December 31, 2016, respectively. These loans are consolidated on the Company’s Consolidated Balance Sheets.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Other Nonperforming Assets (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming assets, net of valuation allowance	$ 37	$ 49
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming assets, net of valuation allowance	0	0
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming assets, net of valuation allowance	$ 37	$ 49

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Performance Indicators for Nonperforming Assets (Details)	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	0.94%	0.97%
Nonperforming assets as a percentage of total assets	0.70%	0.73%
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	0.38%	0.36%
Nonperforming assets as a percentage of total assets	0.26%	0.26%
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	0.56%	0.61%
Nonperforming assets as a percentage of total assets	0.44%	0.47%

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Accruing and Nonaccruing Past Due Amounts (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 1,383	$ 1,465
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	441	433
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	395	364
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	46	53
Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	16
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	942	1,032
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	163	200
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	80	103
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	259	272
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	30	36
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	25	36
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	259	252
Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	66	80
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	32	37
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	28	16
Financing Receivables, 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	336	404
Financing Receivables, 30 to 59 Days Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	12	38
Financing Receivables, 30 to 59 Days Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	9	36
Financing Receivables, 30 to 59 Days Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3	1
Financing Receivables, 30 to 59 Days Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	1
Financing Receivables, 30 to 59 Days Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	324	366
Financing Receivables, 30 to 59 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	35	53
Financing Receivables, 30 to 59 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	12	23
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	52	57
Financing Receivables, 30 to 59 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	9	14
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3	3
Financing Receivables, 30 to 59 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	172	172
Financing Receivables, 30 to 59 Days Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	18	24
Financing Receivables, 30 to 59 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	12
Financing Receivables, 30 to 59 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	13	8
Financing Receivables 60 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	121	116
Financing Receivables 60 To 89 Days Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	11	6
Financing Receivables 60 To 89 Days Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	6	4
Financing Receivables 60 To 89 Days Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5	2
Financing Receivables 60 To 89 Days Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Financing Receivables 60 To 89 Days Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	110	110
Financing Receivables 60 To 89 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	12
Financing Receivables 60 To 89 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5	7
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	22	20
Financing Receivables 60 To 89 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5	5
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1	2
Financing Receivables 60 To 89 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	42	38
Financing Receivables 60 To 89 Days Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	10	13
Financing Receivables 60 To 89 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	7	9
Financing Receivables 60 To 89 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	8	4
Financing Receivables 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	926	945
Financing Receivables 90 Days or More Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	418	389
Financing Receivables 90 Days or More Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	380	324
Financing Receivables 90 Days or More Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	38	50
Financing Receivables 90 Days or More Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	15
Financing Receivables 90 Days or More Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	508	556
Financing Receivables 90 Days or More Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	118	135
Financing Receivables 90 Days or More Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	63	73
Financing Receivables 90 Days or More Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	185	195
Financing Receivables 90 Days or More Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	16	17
Financing Receivables 90 Days or More Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	21	31
Financing Receivables 90 Days or More Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	45	42
Financing Receivables 90 Days or More Past Due | Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	38	43
Financing Receivables 90 Days or More Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	15	16
Financing Receivables 90 Days or More Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 7	$ 4

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Impaired Loans by Class (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	$ 595	$ 634
Allowance on Impaired Loans	85	106
Impaired Loans Without a Related Allowance	700	589
Unpaid Contractual Balance	1,547	1,443
Total Recorded Investment in Impaired Loans	1,295	1,223
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	251	286
Allowance on Impaired Loans	42	63
Impaired Loans Without a Related Allowance	240	138
Unpaid Contractual Balance	566	475
Total Recorded Investment in Impaired Loans	491	424
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	216	247
Allowance on Impaired Loans	31	55
Impaired Loans Without a Related Allowance	237	134
Unpaid Contractual Balance	527	431
Total Recorded Investment in Impaired Loans	453	381
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	35	39
Allowance on Impaired Loans	11	8
Impaired Loans Without a Related Allowance	3	4
Unpaid Contractual Balance	39	44
Total Recorded Investment in Impaired Loans	38	43
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	344	348
Allowance on Impaired Loans	43	43
Impaired Loans Without a Related Allowance	460	451
Unpaid Contractual Balance	981	968
Total Recorded Investment in Impaired Loans	804	799
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	46	37
Allowance on Impaired Loans	3	2
Impaired Loans Without a Related Allowance	142	141
Unpaid Contractual Balance	247	235
Total Recorded Investment in Impaired Loans	188	178
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	49	51
Allowance on Impaired Loans	5	3
Impaired Loans Without a Related Allowance	91	94
Unpaid Contractual Balance	187	191
Total Recorded Investment in Impaired Loans	140	145
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	24	23
Allowance on Impaired Loans	2	1
Impaired Loans Without a Related Allowance	186	173
Unpaid Contractual Balance	259	240
Total Recorded Investment in Impaired Loans	210	196
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	37	41
Allowance on Impaired Loans	3	4
Impaired Loans Without a Related Allowance	17	19
Unpaid Contractual Balance	64	70
Total Recorded Investment in Impaired Loans	54	60
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	4	2
Allowance on Impaired Loans	0	0
Impaired Loans Without a Related Allowance	5	7
Unpaid Contractual Balance	13	13
Total Recorded Investment in Impaired Loans	9	9
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	4	4
Allowance on Impaired Loans	0	0
Impaired Loans Without a Related Allowance	18	15
Unpaid Contractual Balance	27	25
Total Recorded Investment in Impaired Loans	22	19
Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	146	154
Allowance on Impaired Loans	22	25
Impaired Loans Without a Related Allowance	0	1
Unpaid Contractual Balance	146	155
Total Recorded Investment in Impaired Loans	146	155
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	25	26
Allowance on Impaired Loans	7	6
Impaired Loans Without a Related Allowance	0	0
Unpaid Contractual Balance	26	26
Total Recorded Investment in Impaired Loans	25	26
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	9	10
Allowance on Impaired Loans	1	2
Impaired Loans Without a Related Allowance	1	1
Unpaid Contractual Balance	12	13
Total Recorded Investment in Impaired Loans	$ 10	$ 11

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Additional Impaired Loan Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	$ 9	$ 10	$ 18	$ 18
Average Recorded Investment	1,259	1,175	1,231	1,090
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	2	2	3
Average Recorded Investment	469	382	455	309
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	2	2	3
Average Recorded Investment	431	324	414	248
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	0	0	0	0
Average Recorded Investment	38	58	41	61
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	8	8	16	15
Average Recorded Investment	790	793	776	781
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	2	1	3	2
Average Recorded Investment	182	160	178	156
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	1	3	3
Average Recorded Investment	141	158	140	154
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	2	3	3
Average Recorded Investment	203	184	197	182
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	1	2	2
Average Recorded Investment	54	66	54	67
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	0	0	0	0
Average Recorded Investment	9	10	9	9
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	0	0	0	0
Average Recorded Investment	20	15	18	14
Education
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	2	2	4	4
Average Recorded Investment	146	161	146	160
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	1	1	1	1
Average Recorded Investment	25	26	24	26
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	0	0	0	0
Average Recorded Investment	$ 10	$ 13	$ 10	$ 13

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Troubled Debt Restructuring (Details) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017 USD ($) contract	Jun. 30, 2016 USD ($) contract	Jun. 30, 2017 USD ($) contract	Jun. 30, 2016 USD ($) contract
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		$ 2	$ 1	$ 3	$ 1
Charge-offs Resulting from Modification		1	1	2	1
Commercial Banking
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	0	1	(1)
Charge-offs Resulting from Modification		0	0	0	0
Commercial
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	0	1	(1)
Charge-offs Resulting from Modification		0	0	0	0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Leases
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Retail
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	1	2	2
Charge-offs Resulting from Modification		1	1	2	1
Residential mortgages
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Home equity loans
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	(1)	0	(1)
Charge-offs Resulting from Modification		0	0	0	0
Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Automobile
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		1	1	2	1
Education
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	1	1	2
Charge-offs Resulting from Modification		0	0	0	0
Credit cards
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	1	2	1
Charge-offs Resulting from Modification		0	0	0	0
Other retail
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		(1)	0	(1)	0
Charge-offs Resulting from Modification		$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	719	615	1,389	1,216
Pre-Modification Outstanding Recorded Investment	[1]	$ 9	$ 5	$ 18	$ 15
Post-Modification Outstanding Recorded Investment	[1]	$ 9	$ 5	$ 19	$ 15
Interest Rate Reduction | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	2	3	4	8
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Interest Rate Reduction | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	2	3	4	8
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Interest Rate Reduction | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction | Leases
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	717	612	1,385	1,208
Pre-Modification Outstanding Recorded Investment	[1]	$ 9	$ 5	$ 17	$ 14
Post-Modification Outstanding Recorded Investment	[1]	$ 9	$ 5	$ 18	$ 14
Interest Rate Reduction | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	25	3	43	25
Pre-Modification Outstanding Recorded Investment	[1]	$ 4	$ 1	$ 5	$ 4
Post-Modification Outstanding Recorded Investment	[1]	$ 3	$ 1	$ 5	$ 4
Interest Rate Reduction | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	22	15	43	29
Pre-Modification Outstanding Recorded Investment	[1]	$ 1	$ 1	$ 2	$ 2
Post-Modification Outstanding Recorded Investment	[1]	$ 2	$ 1	$ 3	$ 2
Interest Rate Reduction | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	14	6	30	13
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Interest Rate Reduction | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	5	3	11	6
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 0
Interest Rate Reduction | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	2	2	3	2
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	25	30	65	51
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 1	$ 1
Interest Rate Reduction | Education
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	624	552	1,189	1,081
Pre-Modification Outstanding Recorded Investment	[1]	$ 4	$ 3	$ 7	$ 6
Post-Modification Outstanding Recorded Investment	[1]	$ 4	$ 3	$ 7	$ 6
Interest Rate Reduction | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	0	1	1	1
Pre-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1]	$ 0	$ 0	$ 0	$ 0
Maturity Extension
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	110	73	190	146
Pre-Modification Outstanding Recorded Investment	[2]	$ 27	$ 10	$ 37	$ 19
Post-Modification Outstanding Recorded Investment	[2]	$ 27	$ 10	$ 37	$ 19
Maturity Extension | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	11	28	18	54
Pre-Modification Outstanding Recorded Investment	[2]	$ 13	$ 4	$ 14	$ 8
Post-Modification Outstanding Recorded Investment	[2]	$ 13	$ 4	$ 14	$ 8
Maturity Extension | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	11	28	18	54
Pre-Modification Outstanding Recorded Investment	[2]	$ 13	$ 4	$ 14	$ 8
Post-Modification Outstanding Recorded Investment	[2]	$ 13	$ 4	$ 14	$ 8
Maturity Extension | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Leases
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	99	45	172	92
Pre-Modification Outstanding Recorded Investment	[2]	$ 14	$ 6	$ 23	$ 11
Post-Modification Outstanding Recorded Investment	[2]	$ 14	$ 6	$ 23	$ 11
Maturity Extension | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	25	10	36	16
Pre-Modification Outstanding Recorded Investment	[2]	$ 5	$ 2	$ 8	$ 3
Post-Modification Outstanding Recorded Investment	[2]	$ 5	$ 2	$ 8	$ 3
Maturity Extension | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	21	1	37
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 2	$ 0	$ 4
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 2	$ 0	$ 4
Maturity Extension | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	67	8	118	27
Pre-Modification Outstanding Recorded Investment	[2]	$ 9	$ 1	$ 15	$ 3
Post-Modification Outstanding Recorded Investment	[2]	$ 9	$ 1	$ 15	$ 3
Maturity Extension | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	3	2	4
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 0	$ 1
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 0	$ 1
Maturity Extension | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	7	3	15	8
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Education
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Other
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	578	742	1,121	1,336
Pre-Modification Outstanding Recorded Investment	[3]	$ 55	$ 48	$ 83	$ 93
Post-Modification Outstanding Recorded Investment	[3]	$ 53	$ 47	$ 80	$ 91
Other | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	4	4	5	9
Pre-Modification Outstanding Recorded Investment	[3]	$ 32	$ 20	$ 36	$ 41
Post-Modification Outstanding Recorded Investment	[3]	$ 31	$ 21	$ 35	$ 41
Other | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	4	4	4	9
Pre-Modification Outstanding Recorded Investment	[3]	$ 32	$ 20	$ 32	$ 41
Post-Modification Outstanding Recorded Investment	[3]	$ 31	$ 21	$ 31	$ 41
Other | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Other | Leases
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0	0	1	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 4	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 4	$ 0
Other | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	574	738	1,116	1,327
Pre-Modification Outstanding Recorded Investment	[3]	$ 23	$ 28	$ 47	$ 52
Post-Modification Outstanding Recorded Investment	[3]	$ 22	$ 26	$ 45	$ 50
Other | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	44	67	92	131
Pre-Modification Outstanding Recorded Investment	[3]	$ 6	$ 7	$ 10	$ 15
Post-Modification Outstanding Recorded Investment	[3]	$ 6	$ 7	$ 10	$ 15
Other | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	42	94	144	181
Pre-Modification Outstanding Recorded Investment	[3]	$ 2	$ 5	$ 8	$ 11
Post-Modification Outstanding Recorded Investment	[3]	$ 2	$ 5	$ 8	$ 11
Other | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	112	92	187	124
Pre-Modification Outstanding Recorded Investment	[3]	$ 8	$ 6	$ 14	$ 8
Post-Modification Outstanding Recorded Investment	[3]	$ 7	$ 6	$ 13	$ 8
Other | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	16	16	30	34
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 1	$ 1
Other | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	2	5	13	13
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 1	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 1	$ 0
Other | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	349	348	625	539
Pre-Modification Outstanding Recorded Investment	[3]	$ 6	$ 7	$ 11	$ 10
Post-Modification Outstanding Recorded Investment	[3]	$ 6	$ 6	$ 10	$ 9
Other | Education
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	7	111	22	297
Pre-Modification Outstanding Recorded Investment	[3]	$ 1	$ 2	$ 2	$ 6
Post-Modification Outstanding Recorded Investment	[3]	$ 1	$ 2	$ 2	$ 6
Other | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Other | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	2	5	3	8
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0

[1] Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

[2] Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

[3] Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Default of Modified Debt Agreements (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($) contract	Jun. 30, 2016 USD ($) contract	Jun. 30, 2017 USD ($) contract	Jun. 30, 2016 USD ($) contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	272	238	536	502
Balance Defaulted | $	$ 12	$ 12	$ 26	$ 26
Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	4	9	6	12
Balance Defaulted | $	$ 1	$ 3	$ 5	$ 3
Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	4	8	5	11
Balance Defaulted | $	$ 1	$ 3	$ 1	$ 3
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	0	1	1	1
Balance Defaulted | $	$ 0	$ 0	$ 4	$ 0
Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	268	229	530	490
Balance Defaulted | $	$ 11	$ 9	$ 21	$ 23
Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	41	35	86	89
Balance Defaulted | $	$ 4	$ 4	$ 10	$ 12
Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	14	32	23	50
Balance Defaulted | $	$ 1	$ 2	$ 1	$ 3
Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	65	20	100	45
Balance Defaulted | $	$ 4	$ 1	$ 7	$ 4
Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	9	11	10	21
Balance Defaulted | $	$ 0	$ 0	$ 0	$ 1
Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1	6	4	11
Balance Defaulted | $	$ 0	$ 0	$ 0	$ 0
Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	27	22	61	37
Balance Defaulted | $	$ 1	$ 1	$ 1	$ 1
Education
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	9	18	16	31
Balance Defaulted | $	$ 0	$ 1	$ 0	$ 1
Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	102	85	228	206
Balance Defaulted | $	$ 1	$ 0	$ 2	$ 1
Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	0	0	2	0
Balance Defaulted | $	$ 0	$ 0	$ 0	$ 0

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Loans with Indicators of High Credit Risk (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
High loan-to-value
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,220	$ 1,592
High loan-to-value | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	484	566
High loan-to-value | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	370	550
High loan-to-value | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	366	476
High loan-to-value | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
High loan-to-value | Education
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization
Financing Receivable, Recorded Investment [Line Items]
Total	1,706	1,583
Interest only/negative amortization | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	1,705	1,582
Interest only/negative amortization | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Education
Financing Receivable, Recorded Investment [Line Items]
Total	1	1
Low introductory rate
Financing Receivable, Recorded Investment [Line Items]
Total	142	112
Low introductory rate | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Low introductory rate | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Low introductory rate | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Low introductory rate | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	142	112
Low introductory rate | Education
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other
Financing Receivable, Recorded Investment [Line Items]
Total	3	3
Multiple characteristics and other | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	3	3
Multiple characteristics and other | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Education
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Credit risk, loans with increased credit exposure
Financing Receivable, Recorded Investment [Line Items]
Total	3,071	3,290
Credit risk, loans with increased credit exposure | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	2,192	2,151
Credit risk, loans with increased credit exposure | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	370	550
Credit risk, loans with increased credit exposure | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	366	476
Credit risk, loans with increased credit exposure | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	142	112
Credit risk, loans with increased credit exposure | Education
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1	$ 1

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VARIABLE INTEREST ENTITIES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
LIHTC Investments
Variable Interest Entity
Net impairment losses recognized in earnings	$ 0	$ 0	$ 0	$ 0

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VARIABLE INTEREST ENTITIES - Schedule of Variable Interest Entities (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
LIHTC Investments
Variable Interest Entity
LIHTC investment included in other assets	$ 865	$ 793
LIHTC unfunded commitments included in other liabilities	484	428
Renewable Energy
Variable Interest Entity
Renewable energy investments included in other assets	$ 266	$ 220

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VARIABLE INTEREST ENTITIES - Schedule of Affordable Housing Tax Credit Investments (Details) - LIHTC Investments - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Variable Interest Entity
Tax credits included in income tax expense	$ 22	$ 14	$ 43	$ 29
Amortization expense included in income tax expense	22	16	45	31
Other tax benefits included in income tax expense	$ 8	$ 7	$ 15	$ 13

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MORTGAGE BANKING - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from sale of residential mortgages			$ 1,544	$ 1,022
Repurchased mortgage loans	$ 0	$ 2	1	4
Mortgage servicing fees	14	13	27	26
Mortgage servicing rights valuation (recovery) charge-off			(1)	4
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from sale of residential mortgages	729	543	1,500	1,000
Gain on sale of residential mortgages	19	16	29	30
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage servicing rights valuation (recovery) charge-off	$ (1)	$ (1)	$ (1)	$ 4

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MORTGAGE BANKING - Changes Related to MSRs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Valuation allowance for servicing assets:
Valuation (recoveries) charge-offs			$ (1)	$ 4
Residential mortgages
MSRs:
Balance as of beginning of period	$ 170	$ 169	168	173
Amount capitalized	8	5	18	10
Amortization	(8)	(8)	(16)	(17)
Carrying amount before valuation allowance	170	166	170	166
Valuation allowance for servicing assets:
Balance at beginning of period	5	14	5	9
Valuation (recoveries) charge-offs	(1)	(1)	(1)	4
Balance at end of period	4	13	4	13
Net carrying value of MSRs	$ 166	$ 153	$ 166	$ 153

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MORTGAGE BANKING - Economic Assumptions Used to Estimate Value of MSRs (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Residential mortgages
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Fair value	$ 184	$ 182
Weighted average life (in years)	5 years 7 months 6 days	5 years 8 months 12 days
Weighted average constant prepayment rate	10.80%	10.80%
Weighted average discount rate	9.90%	9.70%
Minimum
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Weighted average life (in years)	2 years 4 months 24 days	2 years 7 months 6 days
Weighted average constant prepayment rate	9.40%	8.80%
Weighted average discount rate	9.10%	9.10%
Maximum
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Weighted average life (in years)	6 years 10 months 24 days	7 years 3 months 18 days
Weighted average constant prepayment rate	19.80%	22.30%
Weighted average discount rate	12.10%	12.10%

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MORTGAGE BANKING - Economic Assumptions Used to Estimate Value of MSRs Capitalized (Details) - Residential mortgages	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Servicing Assets at Fair Value [Line Items]
Weighted average life (in years)	6 years 2 months 12 days	5 years 10 months 24 days	6 years 7 months 6 days	6 years
Weighted average constant prepayment rate	11.10%	11.30%	9.90%	11.10%
Weighted average discount rate	9.90%	9.70%	9.90%	9.70%

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MORTGAGE BANKING - Sensitivity Analysis (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Minimum
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Adverse change in basis points	0.50%	0.50%
Maximum
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Adverse change in basis points	1.00%	1.00%
Prepayment rate
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Decline in fair value from a 50 basis point decrease in interest rates	$ 9	$ 9
Decline in fair value from a 100 basis point decrease in interest rates	18	25
Weighted average discount rate
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Decline in fair value from a 50 basis point increase in weighted average discount rate	3	3
Decline in fair value from a 100 basis point increase in weighted average discount rate	$ 6	$ 6

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BORROWED FUNDS - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Short-term borrowed funds	$ 2,433	$ 4,359
Federal Home Loan Bank Advances and Letters of Credit | Secured Debt
Debt Instrument [Line Items]
Short-term borrowed funds	10,000	13,400
Federal Home Loan advances
Debt Instrument [Line Items]
Available borrowing capacity	6,500	$ 2,800
Federal Reserve Bank advances
Debt Instrument [Line Items]
Available borrowing capacity	$ 37,500

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BORROWED FUNDS - Short Term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Short-term Debt [Line Items]
Total short-term borrowed funds	$ 2,433	$ 4,359
Federal funds purchased
Short-term Debt [Line Items]
Total short-term borrowed funds	0	533
Securities sold under agreements to repurchase
Short-term Debt [Line Items]
Total short-term borrowed funds	429	615
Other short-term borrowed funds (primarily current portion of FHLB advances)
Short-term Debt [Line Items]
Total short-term borrowed funds	$ 2,004	$ 3,211

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BORROWED FUNDS - Short Term Borrowed Debt Key Data (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Federal funds purchased and securities sold under agreements to repurchase
Short-term Debt [Line Items]
Weighted-average interest rate at period end	[1]	0.00%	0.00%	0.00%	0.00%	0.26%
Maximum amount outstanding at month-end during the period	[2]	$ 1,075	$ 968	$ 1,174	$ 1,274	$ 1,522
Average amount outstanding during the period	[2]	$ 808	$ 974	$ 845	$ 927	$ 947
Weighted-average interest rate during the period	[1]	0.36%	0.08%	0.28%	0.07%	0.09%
Other short-term borrowed funds (primarily current portion of FHLB advances)
Short-term Debt [Line Items]
Weighted-average interest rate at period end	[1]	1.31%	0.65%	1.31%	0.65%	0.94%
Maximum amount outstanding at month-end during the period		$ 2,507	$ 4,764	$ 3,508	$ 4,764	$ 5,461
Average amount outstanding during the period		$ 2,275	$ 3,743	$ 2,617	$ 3,421	$ 3,207
Weighted-average interest rate during the period	[1]	1.22%	0.61%	1.14%	0.60%	0.64%

[1] Rates exclude certain hedging costs.

[2] Balances are net of certain short-term receivables associated with reverse repurchase agreements, as applicable.

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BORROWED FUNDS - Long Term Debt (Details) - USD ($) $ in Millions		Jun. 30, 2017		Dec. 31, 2016
Debt Instrument [Line Items]
Long-term borrowed funds		$ 13,154		$ 12,790
Interest rate swaps		(484)	[1],[2]	(759)
Interest rate swaps
Debt Instrument [Line Items]
Interest rate swaps		(341)	[2]	(609)
Citizens Financial Group, Inc.
Debt Instrument [Line Items]
Long-term borrowed funds		2,318
Citizens Financial Group, Inc. | Subordinated Debt | 4.150% fixed-rate subordinated debt, due 2022
Debt Instrument [Line Items]
Long-term borrowed funds	[3]	$ 347		347
Interest rate		4.15%
Principal balance		$ 350		350
Unamortized deferred issuance costs and discount		(3)		(3)
Citizens Financial Group, Inc. | Subordinated Debt | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023
Debt Instrument [Line Items]
Long-term borrowed funds		$ 333		333
Interest rate		5.158%
Citizens Financial Group, Inc. | Subordinated Debt | 3.750% fixed-rate subordinated debt, due 2024
Debt Instrument [Line Items]
Long-term borrowed funds		$ 250		250
Interest rate		3.75%
Citizens Financial Group, Inc. | Subordinated Debt | 4.023% fixed-rate subordinated debt, due 2024
Debt Instrument [Line Items]
Long-term borrowed funds		$ 42		42
Interest rate		4.023%
Citizens Financial Group, Inc. | Subordinated Debt | 4.350% fixed-rate subordinated debt, due 2025
Debt Instrument [Line Items]
Long-term borrowed funds	[4]	$ 249		249
Interest rate		4.35%
Principal balance		$ 250		250
Unamortized deferred issuance costs and discount		(1)		(1)
Citizens Financial Group, Inc. | Subordinated Debt | 4.300% fixed-rate subordinated debt, due 2025
Debt Instrument [Line Items]
Long-term borrowed funds	[5]	$ 749		749
Interest rate		4.30%
Principal balance		$ 750		750
Unamortized deferred issuance costs and discount		$ (1)		(1)
Citizens Financial Group, Inc. | Subordinated Debt | LIBOR | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023
Debt Instrument [Line Items]
Interest rate		3.56%
Citizens Financial Group, Inc. | Senior Unsecured Notes | 2.375% fixed-rate subordinated debt, due 2021
Debt Instrument [Line Items]
Long-term borrowed funds	[6]	$ 348		348
Interest rate		2.375%
Principal balance		$ 350		350
Unamortized deferred issuance costs and discount		(2)		(2)
Banking Subsidiaries
Debt Instrument [Line Items]
Long-term borrowed funds		10,836
Banking Subsidiaries | Senior Unsecured Notes | 2.300% senior unsecured notes, due 2018
Debt Instrument [Line Items]
Long-term borrowed funds	[7],[8]	$ 746		745
Interest rate		2.30%
Principal balance		$ 750		750
Unamortized deferred issuance costs and discount		(1)		(2)
Banking Subsidiaries | Senior Unsecured Notes | 2.450% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[9]	$ 748		747
Interest rate		2.45%
Principal balance		$ 750		750
Unamortized deferred issuance costs and discount		(2)		(3)
Banking Subsidiaries | Senior Unsecured Notes | 2.500% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[10]	$ 743		741
Interest rate		2.50%
Principal balance		$ 750		750
Unamortized deferred issuance costs and discount		(1)		(2)
Banking Subsidiaries | Senior Unsecured Notes | 2.250% senior unsecured notes, due 2020
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[11]	$ 698		0
Interest rate		2.25%
Principal balance		$ 700
Unamortized deferred issuance costs and discount		(3)
Banking Subsidiaries | Senior Unsecured Notes | Floating-rate senior unsecured notes, due 2020
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[12]	299		0
Principal balance		300
Unamortized deferred issuance costs and discount		(1)
Banking Subsidiaries | Senior Unsecured Notes | Floating-rate senior unsecured notes, due 2020
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[13]	249		0
Principal balance		250
Unamortized deferred issuance costs and discount		(1)
Banking Subsidiaries | Senior Unsecured Notes | 2.200% senior unsecured notes, due 2020
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[14]	$ 498		0
Interest rate		2.20%
Principal balance		$ 500
Unamortized deferred issuance costs and discount		(2)
Banking Subsidiaries | Senior Unsecured Notes | 2.550% senior unsecured notes, due 2021
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[15]	$ 973		965
Interest rate		2.55%
Principal balance		$ 1,000		1,000
Unamortized deferred issuance costs and discount		(4)		(5)
Banking Subsidiaries | Senior Unsecured Notes | Floating-rate senior unsecured notes, due 2022
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[16]	249		0
Principal balance		250
Unamortized deferred issuance costs and discount		(1)
Banking Subsidiaries | Senior Unsecured Notes | 2.650% senior unsecured notes, due 2022
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[17]	$ 497		0
Interest rate		2.65%
Principal balance		$ 500
Unamortized deferred issuance costs and discount		(2)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.300% senior unsecured notes, due 2018
Debt Instrument [Line Items]
Interest rate swaps		(3)		(3)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.500% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Interest rate swaps		(6)		(7)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.250% senior unsecured notes, due 2020
Debt Instrument [Line Items]
Interest rate swaps		1
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.550% senior unsecured notes, due 2021
Debt Instrument [Line Items]
Interest rate swaps		(23)		(30)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.650% senior unsecured notes, due 2022
Debt Instrument [Line Items]
Interest rate swaps		(1)
Banking Subsidiaries | Federal Home Loan advances
Debt Instrument [Line Items]
Long-term borrowed funds		5,112		7,264
Banking Subsidiaries | Other
Debt Instrument [Line Items]
Long-term borrowed funds		$ 24		$ 10

[1] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

[2] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

[3] These balances are composed of: principal balances of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

[4] These balances are composed of: principal balances of $250 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

[5] These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

[6] These balances are composed of: principal balance of $350 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016.

[7] These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($3) million at June 30, 2017 and December 31, 2016; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

[8] These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

[9] These balances are composed of: principal balances of $750 million at June 30, 2017 and December 31, 2016, as well as the impact of ($2) million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively.

[10] These balances are composed of: principal balance of $750 million at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($6) million and ($7) million at June 30, 2017 and December 31, 2016, respectively; and ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

[11] This balance is composed of: principal balance of $700 million at June 30, 2017; impact from interest rate swaps of $1 million and ($3) million of unamortized deferred issuance costs and discount at June 30, 2017. See Note 10 “Derivatives” for further information.

[12] This balance is composed of: principal balance of $300 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

[13] These balances are composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

[14] This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact of ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

[15] These balances are composed of: principal balance of $1.0 billion at June 30, 2017 and December 31, 2016, as well as the impact from interest rate swaps of ($23) million and ($30) million at June 30, 2017 and December 31, 2016, respectively; and ($4) million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2017 and December 31, 2016, respectively. See Note 10 “Derivatives” for further information.

[16] This balance is composed of: principal balance of $250 million at June 30, 2017, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2017.

[17] This balance is composed of: principal balance of $500 million at June 30, 2017, as well as the impact from interest rate swaps of ($1) million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2017.

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BORROWED FUNDS - Maturities of Long-term Borrowed Funds (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
2018 or on demand	$ 5,847
2019	1,491
2020	1,762
2021	1,325
2022	1,099
2023 and thereafter	1,630
Total	13,154	$ 12,790
Citizens Financial Group, Inc.
Debt Instrument [Line Items]
2018 or on demand	0
2019	0
2020	0
2021	348
2022	347
2023 and thereafter	1,623
Total	2,318
Banking Subsidiaries
Debt Instrument [Line Items]
2018 or on demand	5,847
2019	1,491
2020	1,762
2021	977
2022	752
2023 and thereafter	7
Total	$ 10,836

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STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Preferred Stock
Preferred stock, authorized (in shares)	100,000,000	100,000,000	100,000,000
Preferred stock, outstanding (in shares)	250,000	250,000	250,000
Preferred stock, par value (in dollars per share)	$ 25.00	$ 25.00	$ 25.00
Treasury Stock
Treasury stock purchased	$ 130	$ 260
Treasury stock purchased (in shares)		7,127,809

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INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Income tax expense	$ 144	$ 118	$ 258	$ 227
Effective income tax rate	31.10%	32.60%	28.80%	32.70%
U.S. Federal income tax expense and tax rate			35.00%	35.00%
Tax settlement			$ 23
Deferred taxes, net	$ 740		740		$ 714
Unrecognized tax benefits	$ 7		$ 7		$ 42

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DERIVATIVES - Narrative (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($)
Derivative [Line Items]
Net gain (pre-tax) on derivatives expected to be reclassified in next 12 months	$ 1
Derivative liabilities
Derivative [Line Items]
Increase (decrease) in derivative liabilities	(500)
Derivative assets
Derivative [Line Items]
Increase (decrease) in derivative assets	$ (219)

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DERIVATIVES - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions		Jun. 30, 2017		Dec. 31, 2016
Derivative Assets
Derivative assets		$ 484	[1],[2]	$ 759
Less: Gross amounts offset in the Consolidated Balance Sheets	[3]	(70)	[1]	(106)
Less: Cash collateral applied	[3]	(6)	[1]	(26)
Total net derivative fair values presented in the Consolidated Balance Sheets		408	[1]	627
Derivative Liabilities
Derivative Liabilities		403	[1],[2]	778
Less: Gross amounts offset in the Consolidated Balance Sheets	[3]	(70)	[1]	(106)
Less: Cash collateral applied	[3]	(174)	[1]	(13)
Total net derivative fair values presented in the Consolidated Balance Sheets		159	[1]	659
Derivatives not designated as hedging instruments:
Derivative Assets
Derivative assets		480	[1]	707
Derivative Liabilities
Derivative Liabilities		400	[1]	585
Interest rate swaps
Derivative Assets
Derivative assets		341	[2]	609
Derivative Liabilities
Derivative Liabilities		277	[2]	645
Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[4]	16,800		13,350
Derivative Assets
Derivative assets		4	[1]	52
Derivative Liabilities
Derivative Liabilities		3	[1]	193
Interest rate swaps | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[4]	65,980		54,656
Derivative Assets
Derivative assets		337	[1]	557
Derivative Liabilities
Derivative Liabilities		274	[1]	452
Foreign exchange contracts
Derivative Assets
Derivative assets		132	[2]	134
Derivative Liabilities
Derivative Liabilities		121	[2]	126
Foreign exchange contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[4]	10,120		8,039
Derivative Assets
Derivative assets		132	[1]	134
Derivative Liabilities
Derivative Liabilities		121	[1]	126
Other contracts
Derivative Assets
Derivative assets		11	[2]	16
Derivative Liabilities
Derivative Liabilities		5	[2]	7
Other contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[4]	1,380		1,498
Derivative Assets
Derivative assets		11	[1]	16
Derivative Liabilities
Derivative Liabilities		$ 5	[1]	$ 7

[1] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

[2] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

[3] Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

[4] The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

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DERIVATIVES - Schedule of Fair Value Hedges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Derivative	$ 22	$ 11	$ 32	$ 17
Hedge of interest rate risk | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative	16	32	10	84
Hedged Item	(15)	(31)	(9)	(83)
Hedge Ineffectiveness	$ 1	$ 1	$ 1	$ 1

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DERIVATIVES - Effect of Derivative Instruments on Net Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI to interest expense		$ (179)	$ (123)	$ (334)	$ (238)
Amount Reclassified from AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of gain recognized in OCI	[1]	42	21	37	75
Amount Reclassified from AOCI | Net Unrealized (Losses) Gains on Derivatives
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI to interest income	[2]	8	21	20	43
Amounts reclassified from OCI to interest expense	[2]	$ (1)	$ (8)	$ (3)	$ (16)

[1] The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

[2] This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest income or expense of the underlying hedged item.

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DERIVATIVES - Effect of Customer Derivatives and Economic Hedges on Net Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income		$ 22	$ 11	$ 32	$ 17
Customer derivative contracts | Foreign Exchange and Interest Rate Products | Interest rate swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	83	(2)	80	95
Customer derivative contracts | Foreign Exchange and Interest Rate Products | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	78	(23)	96	28
Customer derivative contracts | Mortgage Banking Fees | Residential loan commitments
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[2]	(2)	3	3	7
Economic hedges | Foreign Exchange and Interest Rate Products | Interest rate swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	(71)	15	(56)	(76)
Economic hedges | Foreign Exchange and Interest Rate Products | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	(71)	23	(85)	(27)
Economic hedges | Mortgage Banking Fees | Forward sale contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[2]	$ 5	$ (5)	$ (6)	$ (10)

[1] Reported in foreign exchange and interest rate products on the Consolidated Statements of Operations.

[2] Reported in mortgage banking fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($) counterparty	Dec. 31, 2016 USD ($)	Dec. 31, 2003
Letters of Credit [Abstract]
Letters of credit outstanding	$ 3	$ 3
Risk Participation Agreements [Abstract]
Risk participation agreements	$ 22	19
Risk participation agreements number of counterparties | counterparty	96
Risk participation agreements, Maximum term	10 years
Commercial real estate loans held for sale | Purchase commitment
Commitments [Abstract]
Unsettled commercial loan trade purchases	$ 185	127
Unsettled commercial loan trade sales	$ 203	177
Minimum
Risk Participation Agreements [Abstract]
Risk participation agreements, Average term	1 year
Maximum
Risk Participation Agreements [Abstract]
Risk participation agreements, Average term	5 years
Marketing rights
Marketing Rights [Abstract]
Commitment period			25 years
Payments made	$ 2	$ 3
Remaining obligation due	42
Education
Commitments [Abstract]
Aggregate purchase principal balance	$ 750
Extension period	1 year
Termination fee	$ 1
Education | Minimum
Commitments [Abstract]
Aggregate purchase principal balance	750
Education | Maximum
Commitments [Abstract]
Aggregate purchase principal balance	$ 1,500
Financial standby letters of credit
Letters of Credit [Abstract]
Letters of credit terms	10 years
Commercial letters of credit
Letters of Credit [Abstract]
Letters of credit terms	1 year

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COMMITMENTS AND CONTINGENCIES - Schedule of Outstanding Off-balance sheet Arrangements (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Other Commitments [Line Items]
Commitment amount	$ 64,220	$ 62,918
Undrawn commitments to extend credit
Other Commitments [Line Items]
Commitment amount	61,988	60,872
Financial standby letters of credit
Other Commitments [Line Items]
Commitment amount	2,053	1,892
Performance letters of credit
Other Commitments [Line Items]
Commitment amount	41	40
Commercial letters of credit
Other Commitments [Line Items]
Commitment amount	66	43
Marketing rights
Other Commitments [Line Items]
Commitment amount	42	44
Risk participation agreements
Other Commitments [Line Items]
Commitment amount	22	19
Residential mortgage loans sold with recourse
Other Commitments [Line Items]
Commitment amount	$ 8	$ 8

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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other income	$ 6	$ 22	$ 31	$ 43
Commercial real estate loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans in this portfolio that were 90 days or more past due or nonaccruing	0		0		$ 0
Other income	1	2	3	2
Mortgage Banking Fees | Residential loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Changes in fair value	$ 3	$ 6	$ 10	$ 12

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FAIR VALUE MEASUREMENTS - Residential and Commercial Mortgage Loans Held For Sale (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	$ 520	$ 583
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	520	583
Level 2 | Residential loans held for sale
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	386	504
Aggregate Unpaid Principal	386	505
Aggregate Fair Value Less Aggregate Unpaid Principal	0	(1)
Level 2 | Commercial real estate loans held for sale
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	134	79
Aggregate Unpaid Principal	134	79
Aggregate Fair Value Less Aggregate Unpaid Principal	$ 0	$ 0

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value Measurements (Details) - USD ($) $ in Millions		Jun. 30, 2017		Dec. 31, 2016
Assets
Securities available for sale	[1]	$ 19,257		$ 19,501
Loans held for sale, at fair value		520		583
Derivative assets		484	[2],[3]	759
Money market mutual fund		92		91
Other investments		5		5
Total other investment securities, at fair value		97		96
Total assets		20,358		20,939
Liabilities
Total derivative liabilities		403	[2],[3]	778
Total liabilities		403		778
Interest rate swaps
Assets
Derivative assets		341	[3]	609
Liabilities
Total derivative liabilities		277	[3]	645
Foreign exchange contracts
Assets
Derivative assets		132	[3]	134
Liabilities
Total derivative liabilities		121	[3]	126
Other contracts
Assets
Derivative assets		11	[3]	16
Liabilities
Total derivative liabilities		5	[3]	7
Mortgage-backed securities
Assets
Securities available for sale		19,238		19,446
State and political subdivisions
Assets
Securities available for sale		7		8
Equity securities
Assets
Securities available for sale				17
U.S. Treasury and other
Assets
Securities available for sale		12		30
Residential loans held for sale
Assets
Loans held for sale, at fair value		386		504
Commercial loans held for sale
Assets
Loans held for sale, at fair value		134		79
Level 1
Assets
Securities available for sale		12		30
Loans held for sale, at fair value		0		0
Derivative assets		0	[3]	0
Money market mutual fund		92		91
Other investments		0		0
Total other investment securities, at fair value		92		91
Total assets		104		121
Liabilities
Total derivative liabilities		0	[3]	0
Total liabilities		0		0
Level 1 | Interest rate swaps
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 1 | Foreign exchange contracts
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 1 | Other contracts
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 1 | Mortgage-backed securities
Assets
Securities available for sale		0		0
Level 1 | State and political subdivisions
Assets
Securities available for sale		0		0
Level 1 | Equity securities
Assets
Securities available for sale				0
Level 1 | U.S. Treasury and other
Assets
Securities available for sale		12		30
Level 1 | Residential loans held for sale
Assets
Loans held for sale, at fair value		0		0
Level 1 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		0		0
Level 2
Assets
Securities available for sale		19,245		19,471
Loans held for sale, at fair value		520		583
Derivative assets		484	[3]	759
Money market mutual fund		0		0
Other investments		5		5
Total other investment securities, at fair value		5		5
Total assets		20,254		20,818
Liabilities
Total derivative liabilities		403	[3]	778
Total liabilities		403		778
Level 2 | Interest rate swaps
Assets
Derivative assets		341	[3]	609
Liabilities
Total derivative liabilities		277	[3]	645
Level 2 | Foreign exchange contracts
Assets
Derivative assets		132	[3]	134
Liabilities
Total derivative liabilities		121	[3]	126
Level 2 | Other contracts
Assets
Derivative assets		11	[3]	16
Liabilities
Total derivative liabilities		5	[3]	7
Level 2 | Mortgage-backed securities
Assets
Securities available for sale		19,238		19,446
Level 2 | State and political subdivisions
Assets
Securities available for sale		7		8
Level 2 | Equity securities
Assets
Securities available for sale				17
Level 2 | U.S. Treasury and other
Assets
Securities available for sale		0		0
Level 2 | Residential loans held for sale
Assets
Loans held for sale, at fair value		386		504
Level 2 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		134		79
Level 3
Assets
Securities available for sale		0		0
Loans held for sale, at fair value		0		0
Derivative assets		0	[3]	0
Money market mutual fund		0		0
Other investments		0		0
Total other investment securities, at fair value		0		0
Total assets		0		0
Liabilities
Total derivative liabilities		0	[3]	0
Total liabilities		0		0
Level 3 | Interest rate swaps
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 3 | Foreign exchange contracts
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 3 | Other contracts
Assets
Derivative assets		0	[3]	0
Liabilities
Total derivative liabilities		0	[3]	0
Level 3 | Mortgage-backed securities
Assets
Securities available for sale		0		0
Level 3 | State and political subdivisions
Assets
Securities available for sale		0		0
Level 3 | Equity securities
Assets
Securities available for sale				0
Level 3 | U.S. Treasury and other
Assets
Securities available for sale		0		0
Level 3 | Residential loans held for sale
Assets
Loans held for sale, at fair value		0		0
Level 3 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		$ 0		$ 0

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

[2] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

[3] Amounts reflect variation margin payments that are characterized as settlement per the rules of the Company’s central counterparties that became effective January 3, 2017.

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FAIR VALUE MEASUREMENTS - Schedule of Gain (Loss) on Assets and Liabilities Measured on Nonrecurring Basis Included in Earnings (Details) - Nonrecurring measurement basis - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Impaired collateral-dependent loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	$ (8)	$ (6)	$ (27)	$ (11)
MSRs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	1	1	1	(4)
Foreclosed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	(1)	(1)	(2)	(2)
Leased assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	$ (15)	$ 0	$ (15)	$ 0

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value Measurements on a Nonrecurring Basis (Details) - Nonrecurring measurement basis - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	$ 341	$ 355
MSRs	184	182
Foreclosed assets	33	44
Leased assets	137	158
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	0	0
MSRs	0	0
Foreclosed assets	0	0
Leased assets	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	341	355
MSRs	0	0
Foreclosed assets	33	44
Leased assets	137	158
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	0	0
MSRs	184	182
Foreclosed assets	0	0
Leased assets	$ 0	$ 0

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FAIR VALUE MEASUREMENTS - Schedule of Financial Instruments not Recorded at Fair Value (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value	$ 4,967	$ 5,071
Securities held-to-maturity, fair value	4,986	5,058
Other investment securities, at cost, carrying value	794	942
Other investment securities, at cost, fair value	794	942
Other loans held for sale, carrying value	187	42
Other loans held for sale, fair value	187	42
Loans and leases, carrying value	109,046	107,669
Loans and leases, fair value	109,323	107,537
Deposits, carrying value	113,613	109,804
Deposits, fair value	113,582	109,796
Federal funds purchased and securities sold under agreements to repurchase, carrying value	429	1,148
Federal funds purchased and securities sold under agreements to repurchase, fair value	429	1,148
Other short-term borrowed funds, carrying value	2,004	3,211
Other short-term borrowed funds, fair value	2,004	3,211
Long-term borrowed funds, carrying value	13,154	12,790
Long-term borrowed funds, fair value	13,275	12,849
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value	0	0
Securities held-to-maturity, fair value	0	0
Other investment securities, at cost, carrying value	0	0
Other investment securities, at cost, fair value	0	0
Other loans held for sale, carrying value	0	0
Other loans held for sale, fair value	0	0
Loans and leases, carrying value	0	0
Loans and leases, fair value	0	0
Deposits, carrying value	0	0
Deposits, fair value	0	0
Federal funds purchased and securities sold under agreements to repurchase, carrying value	0	0
Federal funds purchased and securities sold under agreements to repurchase, fair value	0	0
Other short-term borrowed funds, carrying value	0	0
Other short-term borrowed funds, fair value	0	0
Long-term borrowed funds, carrying value	0	0
Long-term borrowed funds, fair value	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value	4,967	5,071
Securities held-to-maturity, fair value	4,986	5,058
Other investment securities, at cost, carrying value	794	942
Other investment securities, at cost, fair value	794	942
Other loans held for sale, carrying value	0	0
Other loans held for sale, fair value	0	0
Loans and leases, carrying value	341	355
Loans and leases, fair value	341	355
Deposits, carrying value	113,613	109,804
Deposits, fair value	113,582	109,796
Federal funds purchased and securities sold under agreements to repurchase, carrying value	429	1,148
Federal funds purchased and securities sold under agreements to repurchase, fair value	429	1,148
Other short-term borrowed funds, carrying value	2,004	3,211
Other short-term borrowed funds, fair value	2,004	3,211
Long-term borrowed funds, carrying value	13,154	12,790
Long-term borrowed funds, fair value	13,275	12,849
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value	0	0
Securities held-to-maturity, fair value	0	0
Other investment securities, at cost, carrying value	0	0
Other investment securities, at cost, fair value	0	0
Other loans held for sale, carrying value	187	42
Other loans held for sale, fair value	187	42
Loans and leases, carrying value	108,705	107,314
Loans and leases, fair value	108,982	107,182
Deposits, carrying value	0	0
Deposits, fair value	0	0
Federal funds purchased and securities sold under agreements to repurchase, carrying value	0	0
Federal funds purchased and securities sold under agreements to repurchase, fair value	0	0
Other short-term borrowed funds, carrying value	0	0
Other short-term borrowed funds, fair value	0	0
Long-term borrowed funds, carrying value	0	0
Long-term borrowed funds, fair value	$ 0	$ 0

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REGULATORY MATTERS - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($) subsidiary $ / shares	Jun. 30, 2016 USD ($) $ / shares	Jun. 30, 2018 $ / shares	Dec. 31, 2017 $ / shares	Jun. 30, 2017 USD ($) subsidiary $ / shares	Jun. 30, 2016 USD ($) $ / shares	Jun. 28, 2017 USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common share dividends	$ 71,000,000	$ 64,000,000			$ 143,000,000	$ 117,000,000
Treasury stock purchased	$ 130,000,000				260,000,000
Preferred share dividends					$ 7,000,000	$ 7,000,000
Common share dividends (in Dollars per Share) | $ / shares	$ 0.14	$ 0.12			$ 0.28	$ 0.22
Share repurchase plan, authorized amount							$ 850,000,000
Banking Subsidiaries
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Number of financial subsidiaries | subsidiary	2				2
CBNA subsidiaries
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Number of financial subsidiaries | subsidiary	2				2
Scenario, Forecast
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Common share dividends (in Dollars per Share) | $ / shares			$ 0.22	$ 0.18

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REGULATORY MATTERS - Capital and Capital Ratio Information (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Common Equity Tier 1 to Risk-Weighted Assets (Amount)
Actual	[1]	$ 14,057	$ 13,822
Minimum Capital Adequacy	[1]	7,232	6,348
Classification as Well-capitalized	[1]	$ 8,175	$ 8,051
Common Equity Tier 1 to Risk-Weighted Assets (Ratio)
Actual	[1]	11.20%	11.20%
Minimum Capital Adequacy	[1],[2]	5.75%	5.125%
Classification as Well-capitalized	[1],[3]	6.50%	6.50%
Tier 1 Capital to Risk-Weighted Assets (Amount)
Actual	[4]	$ 14,304	$ 14,069
Minimum Capital Adequacy	[4]	9,119	8,206
Classification as Well-capitalized	[4]	$ 10,062	$ 9,909
Tier 1 Capital to Risk-Weighted Assets (Ratio)
Actual	[4]	11.40%	11.40%
Minimum Capital Adequacy	[2],[4]	7.25%	6.625%
Classification as Well-capitalized	[3],[4]	8.00%	8.00%
Total Capital to Risk-Weighted Assets (Amount)
Actual	[5]	$ 17,586	$ 17,347
Minimum Capital Adequacy	[5]	11,634	10,683
Classification as Well-capitalized	[5]	$ 12,577	$ 12,386
Total Capital to Risk-Weighted Assets (Ratio)
Actual	[5]	14.00%	14.00%
Minimum Capital Adequacy	[2],[5]	9.25%	8.625%
Classification as Well-capitalized	[3],[5]	10.00%	10.00%
Tier 1 Capital to Average Assets (Leverage) (Amount)
Actual	[6]	$ 14,304	$ 14,069
Minimum Capital Adequacy	[6]	5,776	5,667
Classification as Well-capitalized	[6]	$ 7,220	$ 7,084
Tier 1 Capital to Average Assets (Leverage) (Ratio)
Actual	[6]	9.90%	9.90%
Minimum Capital Adequacy	[2],[6]	4.00%	4.00%
Classification as Well-capitalized	[3],[6]	5.00%	5.00%
Capital Conservation Buffer		1.25%	0.625%

[1] “Common equity tier 1 capital ratio” represents CET1 capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

[2] “Minimum Capital ratio” includes capital conservation buffer of 1.250% for 2017 and 0.625% for 2016; N/A to Tier 1 leverage.

[3] Presented for informational purposes. Prompt corrective action provisions apply only to the Company’s insured depository institutions - CBNA and CBPA.

[4] “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

[5] “Total capital ratio” is total capital divided by total risk-weighted assets as defined under U.S. Basel III Standardized approach.

[6] “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under U.S. Basel III Standardized approach.

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			$ 19,747	$ 19,646
Other-than-temporary impairment not recognized in earnings on securities	$ 10	$ 4	(2)	(21)
Ending balance	20,064	20,226	20,064	20,226
Total AOCI
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(683)	(236)	(668)	(387)
Other comprehensive income before reclassifications	82	77	84	264
Other-than-temporary impairment not recognized in earnings on securities	10	4	(2)	(21)
Amounts reclassified from other comprehensive (loss) income	(2)	(4)	(7)	(15)
Net other comprehensive income	90	77	75	228
Ending balance	(593)	(159)	(593)	(159)
Net Unrealized (Losses) Gains on Derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(97)	35	(88)	10
Other comprehensive income before reclassifications	26	13	23	46
Other-than-temporary impairment not recognized in earnings on securities	0	0	0	0
Amounts reclassified from other comprehensive (loss) income	(5)	(9)	(11)	(17)
Net other comprehensive income	21	4	12	29
Ending balance	(76)	39	(76)	39
Net Unrealized (Losses) Gains on Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(195)	96	(186)	(28)
Other comprehensive income before reclassifications	56	64	61	218
Other-than-temporary impairment not recognized in earnings on securities	10	4	(2)	(21)
Amounts reclassified from other comprehensive (loss) income	1	2	(1)	(3)
Net other comprehensive income	67	70	58	194
Ending balance	(128)	166	(128)	166
Employee Benefit Plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(391)	(367)	(394)	(369)
Other comprehensive income before reclassifications	0	0	0	0
Other-than-temporary impairment not recognized in earnings on securities	0	0	0	0
Amounts reclassified from other comprehensive (loss) income	2	3	5	5
Net other comprehensive income	2	3	5	5
Ending balance	$ (389)	$ (364)	$ (389)	$ (364)

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense		$ (179)	$ (123)	$ (334)	$ (238)
Net securities impairment losses recognized in earnings		(4)	(7)	(5)	(8)
Salaries and employee benefits		(432)	(432)	(876)	(857)
Income before income tax expense		462	361	896	693
Income tax expense		144	118	258	227
NET INCOME		318	243	638	466
Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense		0	2	3	9
NET INCOME		2	4	7	15
Reclassification adjustment for net derivative gains (losses) included in net income: | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income	[1]	8	21	20	43
Interest expense	[1]	(1)	(8)	(3)	(16)
Income before income tax expense		7	13	17	27
Income tax expense		2	4	6	10
NET INCOME		5	9	11	17
Reclassification of net securities gains (losses) to net income (loss): | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Securities gains, net		3	4	7	13
Net securities impairment losses recognized in earnings		(4)	(7)	(5)	(8)
Income before income tax expense		(1)	(3)	2	5
Income tax expense		0	(1)	1	2
NET INCOME		(1)	(2)	1	3
Reclassification of changes related to the employee benefit plan: | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits		(4)	(4)	(9)	(8)
Income before income tax expense		(4)	(4)	(9)	(8)
Income tax expense		(2)	(1)	(4)	(3)
NET INCOME		$ (2)	$ (3)	$ (5)	$ (5)

[1] This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest income or expense of the underlying hedged item.

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Effects to Net Income of Amounts Reclassified Out of OCI (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net interest income	$ 1,026	$ 923	$ 2,031	$ 1,827
Provision for credit losses	70	90	166	181
Noninterest income	370	355	749	685
Noninterest expense	864	827	1,718	1,638
Income before income tax expense	462	361	896	693
Income tax expense	144	118	258	227
NET INCOME	318	243	638	466
Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net interest income	7	13	17	27
Noninterest income	(1)	(3)	2	5
Noninterest expense	4	4	9	8
Income tax expense	0	2	3	9
NET INCOME	$ 2	$ 4	$ 7	$ 15

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BUSINESS SEGMENTS - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) segment	Jun. 30, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of segments | segment			2
Revenues	$ 1,396	$ 1,278	$ 2,780	$ 2,512
Consumer Banking
Segment Reporting Information [Line Items]
Revenues	886	821	1,744	1,610
Consumer Banking | Maximum
Segment Reporting Information [Line Items]
Revenues			25
Commercial Banking
Segment Reporting Information [Line Items]
Revenues	$ 474	$ 436	954	$ 835
Commercial Banking | Minimum
Segment Reporting Information [Line Items]
Revenues			25
Commercial Banking | Maximum
Segment Reporting Information [Line Items]
Revenues			$ 2,500

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BUSINESS SEGMENTS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Information [Line Items]
Net interest income	$ 1,026	$ 923	$ 2,031	$ 1,827
Noninterest income	370	355	749	685
Total revenue	1,396	1,278	2,780	2,512
Noninterest expense	864	827	1,718	1,638
Profit before provision for credit losses	532	451	1,062	874
Provision for credit losses	70	90	166	181
Income before income tax expense	462	361	896	693
Income tax expense	144	118	258	227
NET INCOME	318	243	638	466
Total average assets	149,878	142,179	149,335	140,479
Consumer Banking
Segment Reporting Information [Line Items]
Net interest income	657	602	1,295	1,183
Noninterest income	229	219	449	427
Total revenue	886	821	1,744	1,610
Noninterest expense	644	632	1,291	1,248
Profit before provision for credit losses	242	189	453	362
Provision for credit losses	60	49	124	112
Income before income tax expense	182	140	329	250
Income tax expense	64	50	116	89
NET INCOME	118	90	213	161
Total average assets	59,244	55,660	58,954	55,388
Commercial Banking
Segment Reporting Information [Line Items]
Net interest income	344	314	690	614
Noninterest income	130	122	264	221
Total revenue	474	436	954	835
Noninterest expense	192	186	382	373
Profit before provision for credit losses	282	250	572	462
Provision for credit losses	1	(1)	20	8
Income before income tax expense	281	251	552	454
Income tax expense	94	87	185	157
NET INCOME	187	164	367	297
Total average assets	49,731	47,388	49,488	46,346
Other
Segment Reporting Information [Line Items]
Net interest income	25	7	46	30
Noninterest income	11	14	36	37
Total revenue	36	21	82	67
Noninterest expense	28	9	45	17
Profit before provision for credit losses	8	12	37	50
Provision for credit losses	9	42	22	61
Income before income tax expense	(1)	(30)	15	(11)
Income tax expense	(14)	(19)	(43)	(19)
NET INCOME	13	(11)	58	8
Total average assets	$ 40,903	$ 39,131	$ 40,893	$ 38,745

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator (basic and diluted):
Net income	$ 318	$ 243	$ 638	$ 466
Less: Preferred stock dividends	0	0	7	7
Net income available to common stockholders	$ 318	$ 243	$ 631	$ 459
Denominator:
Weighted-average common shares outstanding - basic (in Shares)	506,371,846	528,968,330	507,903,141	528,519,489
Dilutive common shares: share-based awards (in Shares)	1,042,276	1,396,873	1,458,914	1,877,382
Weighted-average common shares outstanding - diluted (in Shares)	507,414,122	530,365,203	509,362,055	530,396,871
Earnings per common share:
Basic (in Dollars per Share)	$ 0.63	$ 0.46	$ 1.24	$ 0.87
Diluted (in Dollars per Share)	$ 0.63	$ 0.46	$ 1.24	$ 0.87
Share-based awards excluded from diluted earnings per share computation (in Shares)	530,781	0	343,692	0

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OTHER INCOME (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Income and Expenses [Abstract]
Bank-owned life insurance income	$ 14	$ 13	$ 26	$ 26
Other	(8)	9	5	17
Other income	$ 6	$ 22	$ 31	$ 43

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OTHER OPERATING EXPENSE (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Other Income and Expenses [Abstract]
Deposit insurance	$ 36	$ 29	$ 68	$ 55
Promotional expense	29	25	55	49
Settlements and operating losses	12	14	25	22
Other	71	60	126	117
Other operating expense	$ 148	$ 128	$ 274	$ 243