BUSINESS OPERATING SEGMENTS

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

BUSINESS OPERATING SEGMENTS

NOTE 17 - BUSINESS OPERATING SEGMENTS

Citizens is managed by its Chief Executive Officer on a segment basis. The Company’s three business operating segments are Consumer Banking, Commercial Banking, and Non-Core. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has a segment head who reports directly to the Chief Executive Officer, who 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 Chief Executive Officer.

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

See Note 1 for a description of segment changes made during the third quarter of 2023. Prior period results have been revised to conform to the new segment presentation. For more information on the Company’s business operating segments, as well as Other non-segment operations, see Note 26 in the Company’s 2022 Form 10-K.

	Three Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$1,067	$560	($41)	($64)	$1,522
Noninterest income	278	180	—	34	492
Total revenue	1,345	740	(41)	(30)	2,014
Noninterest expense	905	325	30	33	1,293
Profit (loss) before provision (benefit) for credit losses	440	415	(71)	(63)	721
Provision (benefit) for credit losses	67	67	20	18	172
Income (loss) before income tax expense (benefit)	373	348	(91)	(81)	549
Income tax expense (benefit)	97	88	(24)	(42)	119
Net income (loss)	$276	$260	($67)	($39)	$430
Total average assets	$72,964	$74,997	$13,113	$59,088	$220,162

	Three Months Ended September 30, 2022
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$989	$558	$70	$48	$1,665
Noninterest income	270	213	—	29	512
Total revenue	1,259	771	70	77	2,177
Noninterest expense	828	325	36	52	1,241
Profit (loss) before provision (benefit) for credit losses	431	446	34	25	936
Provision (benefit) for credit losses	47	12	14	50	123
Income (loss) before income tax expense (benefit)	384	434	20	(25)	813
Income tax expense (benefit)	98	100	4	(25)	177
Net income (loss)	$286	$334	$16	$—	$636
Total average assets	$71,631	$80,067	$17,929	$55,846	$225,473

	Nine Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$3,101	$1,741	($84)	($5)	$4,753
Noninterest income	802	588	—	93	1,483
Total revenue	3,903	2,329	(84)	88	6,236
Noninterest expense	2,637	971	95	192	3,895
Profit (loss) before provision (benefit) for credit losses	1,266	1,358	(179)	(104)	2,341
Provision (benefit) for credit losses	198	185	54	79	516
Income (loss) before income tax expense (benefit)	1,068	1,173	(233)	(183)	1,825
Income tax expense (benefit)	278	289	(61)	(100)	406
Net income (loss)	$790	$884	($172)	($83)	$1,419
Total average assets	$72,477	$77,130	$14,409	$57,723	$221,739

	Nine Months Ended September 30, 2022
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$2,635	$1,508	$359	($185)	$4,317
Noninterest income	807	647	—	50	1,504
Total revenue	3,442	2,155	359	(135)	5,821
Noninterest expense	2,424	905	105	218	3,652
Profit (loss) before provision (benefit) for credit losses	1,018	1,250	254	(353)	2,169
Provision (benefit) for credit losses	117	34	33	158	342
Income (loss) before income tax expense (benefit)	901	1,216	221	(511)	1,827
Income tax expense (benefit)	230	270	56	(149)	407
Net income (loss)	$671	$946	$165	($362)	$1,420
Total average assets	$66,793	$73,344	$18,582	$53,003	$211,722

In connection with business segment changes made during the quarter the Company revised one of its management accounting practices utilized to measure the performance and compile the results of its segments as outlined below.

Funds Transfer Pricing

The Company’s FTP, a component of net interest income, ensures consistent business segment pricing behavior by removing interest rate risk from business performance. This risk is centrally managed within the Treasury function and reported in Other non-segment operations. Segments are provided an interest credit for funding it generates and an interest charge for assets it holds. The sum of interest income/expense and FTP charges/credits for each segment is its designated net interest income. The offset to FTP charges and credits is recorded in Other non-segment operations.

The Company continues to employ a matched maturity FTP methodology for the Consumer Banking and Commercial Banking business segments with rates based on a product’s repricing frequency and interest sensitivity, as well as other factors. The FTP charge for the Non-Core segment is based on an implied reference pool of high-cost funding sources. This method applies a waterfall marginal funding approach referencing the Company’s secured borrowings collateralized by auto loans, FHLB advances, and various other higher-cost deposit sources as are needed to fully debt-fund the assets.

There have been no other significant changes in the management accounting practices utilized by the Company to measure the performance and compile the results of its segments as discussed in Note 26 in the Company’s 2022 Form 10-K.