cfg-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

March 31, 2024

☐ 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)

(203) 900-6715

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	CFG	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 6.350% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D	CFG PrD	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 5.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E	CFG PrE	New York Stock Exchange

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.

☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

☑ 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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	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 ☑ No

There were 455,019,971 shares of the registrant’s common stock ($0.01 par value) outstanding on April 26, 2024.




	Table of Contents


Glossary of Acronyms and Terms		3

Part I. Financial Information		5

Item 1. Financial Statements		37

Consolidated Balance Sheets (unaudited)		38
Consolidated Statements of Operations (unaudited)		39
Consolidated Statements of Comprehensive Income (unaudited)		40
Consolidated Statements of Changes in Stockholders’ Equity (unaudited)		41
Consolidated Statements of Cash Flows (unaudited)		42
Notes to Consolidated Financial Statements (unaudited)		43

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		5

Item 3. Quantitative and Qualitative Disclosures about Market Risk		75

Item 4. Controls and Procedures		75


Part II. Other Information		75

Item 1. Legal Proceedings		75
Item 1A. Risk Factors		75
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		76
Item 3. Defaults Upon Senior Securities		76
Item 4. Mine Safety Disclosures		76
Item 5. Other Information		76
Item 6. Exhibits		76


Signature		78

Citizens Financial Group, Inc. | 2

GLOSSARY OF ACRONYMS AND TERMS

The following is a list of common acronyms and terms used regularly in our financial reporting:


2023 Form 10-K						Annual Report on Form 10-K for the year ended December 31, 2023
AACL						Adjusted Allowance for Credit Losses
ACL						Allowance for Credit Losses: Allowance for Loan and Lease Losses plus Allowance for Unfunded Lending Commitments
AFS						Available for Sale
ALM						Asset and Liability Management
AOCI						Accumulated Other Comprehensive Income (Loss)
ASU						Accounting Standards Update
ATM						Automated Teller Machine
Board or Board of Directors						The Board of Directors of Citizens Financial Group, Inc.
bps						Basis Points
CBNA						Citizens Bank, National Association
CCAR						Comprehensive Capital Analysis and Review
CCB						Capital Conservation Buffer
CECL						Current Expected Credit Losses (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1						Common Equity Tier 1
CET1 capital ratio						Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Citizens, CFG, the Company, we, us, or our						Citizens Financial Group, Inc. and its Subsidiaries
CLTV						Combined Loan-to-Value
COVID						Coronavirus Disease
CRE						Commercial Real Estate
EPS						Earnings Per Share
EVE						Economic Value of Equity
Exchange Act						The Securities Exchange Act of 1934, as amended
Fannie Mae (FNMA)						Federal National Mortgage Association
FDIC						Federal Deposit Insurance Corporation
FDM						Financially Distressed Modification
FHA						Federal Housing Administration
FHLB						Federal Home Loan Bank
FICO						Fair Isaac Corporation (credit rating)
FRB or Federal Reserve						Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
Freddie Mac (FHLMC)						Federal Home Loan Mortgage Corporation
FTE						Fully Taxable Equivalent
FTP						Funds Transfer Pricing
GAAP						Accounting Principles Generally Accepted in the United States of America
GDP						Gross Domestic Product
Ginnie Mae (GNMA)						Government National Mortgage Association
GSE						Government Sponsored Entity
HTM						Held To Maturity
Investors						Investors Bancorp, Inc. and its subsidiaries
JMP						JMP Group LLC
LHFS						Loans Held for Sale
LIHTC						Low Income Housing Tax Credit
M&A						Merger and Acquisition

Citizens Financial Group, Inc. | 3


MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations
Mid-Atlantic						District of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia
Midwest						Illinois, Indiana, Michigan, and Ohio
Modified AACL transition						The Day-1 CECL adoption entry booked to ACL plus 25% of subsequent CECL ACL reserve build
Modified CECL transition						The Day-1 CECL adoption entry booked to retained earnings plus 25% of subsequent CECL ACL reserve build
MSRs						Mortgage Servicing Rights
New England						Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
NMTC						New Markets Tax Credit
OCC						Office of the Comptroller of the Currency
OCI						Other Comprehensive Income (Loss)
Operating Leverage						Period-over-period percent change in total revenue, less the period-over-period percent change in noninterest expense
Parent Company						Citizens Financial Group, Inc. (the Parent Company of Citizens Bank, National Association and other subsidiaries)
PCD						Purchased Credit Deteriorated
ROTCE						Return on Average Tangible Common Equity
RPA						Risk Participation Agreement
RWA						Risk-Weighted Assets
SBA						United States Small Business Administration
SCB						Stress Capital Buffer
SEC						United States Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate
SVaR						Stressed Value at Risk
TBAs						To-Be-Announced Mortgage Securities
Tier 1 capital ratio						Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Tier 1 leverage ratio						Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by quarterly adjusted average assets as defined under the U.S. Basel III Standardized approach
TOP						Tapping Our Potential
Total capital ratio						Total capital, which includes Common Equity Tier 1 capital, tier 1 capital, and allowance for credit losses and qualifying subordinated debt that qualifies as tier 2 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
USDA						United States Department of Agriculture
VA						United States Department of Veterans Affairs
VaR						Value at Risk
VIE						Variable Interest Entity

Citizens Financial Group, Inc. | 4

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
Results of Operations						9
Net Interest Income						9
Noninterest Income						10
Noninterest Expense						11
Provision for Credit Losses						11
Income Tax Expense						11
Business Operating Segments						11
Analysis of Financial Condition						14
Securities						14
Loans and Leases						15
Credit Quality						15
Deposits						19
Borrowed Funds						19
Capital and Regulatory Matters						19
Liquidity						23
Critical Accounting Estimates						26
A ccounting and Reporting Developments						28
Risk Governance						29
Market Risk						29
Non-GAAP Financial Measures and Reconciliations						35

Citizens Financial Group, Inc. | 5

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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,” “guidance” 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, business and political conditions, including as a result of the interest rate environment, supply chain disruptions, inflationary pressures and labor shortages, that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits;

•The general state of the economy and employment, as well as general business and economic conditions, and changes in the competitive environment;

•Our capital and liquidity requirements under regulatory standards and our ability to generate capital and liquidity on favorable terms;

•The effect of changes in our credit ratings on our cost of funding, access to capital markets, ability to market our securities, and overall liquidity position;

•The effect of changes in the level of commercial and consumer deposits on our funding costs and net interest margin;

•Our ability to execute on our strategic business initiatives and achieve our financial performance goals across our Consumer, Commercial and Private Bank businesses;

•The effects of geopolitical instability, including the wars in Ukraine and the Middle East, on economic and market conditions, inflationary pressures and the interest rate environment, commodity price and foreign exchange rate volatility, and heightened cybersecurity risks;

•Our ability to comply with heightened supervisory requirements and expectations;

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

•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;

•Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;

•Environmental risks, such as physical or transition risks associated with climate change, and social and governance risks, that could adversely affect our reputation, operations, business, and customers;

•A failure in or breach of our compliance with laws, as well as 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.

Citizens Financial Group, Inc. | 6

In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares from or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.

More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” section in Part I, Item 1A of our 2023 Form 10-K.

INTRODUCTION

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $220.4 billion in assets as of March 31, 2024. 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 full-service customer contact center and the convenience of approximately 3,300 ATMs and more than 1,000 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, we offer a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com.

The following MD&A is intended to assist readers in their analysis of the accompanying unaudited interim Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the unaudited interim Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and our 2023 Form 10-K.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures denoted as “Underlying” results and “including AOCI impact.” Underlying results for any given reporting period exclude certain items that may occur in that period which management does not consider indicative of our on-going financial performance. We believe these non-GAAP financial measures provide useful information to investors because they are used by management to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our Underlying results in any given reporting period reflect our on-going financial performance in that period and, accordingly, are useful to consider in addition to our GAAP financial results. We further believe the presentation of Underlying results increases comparability of period-to-period results.

Other companies may use similarly titled non-GAAP financial measures that may be calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by such companies. We caution investors not to place undue reliance on such non-GAAP financial measures, but to consider them with the most directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our results reported under GAAP.

Non-GAAP measures are denoted throughout our MD&A by the use of the term “Underlying.” Where there is a reference to these metrics in that paragraph, all measures that follow are on the same basis when applicable. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”

Citizens Financial Group, Inc. | 7

FINANCIAL PERFORMANCE

Key Highlights

Net income decreased $177 million for the three months ended March 31, 2024, with earnings per diluted common share down $0.35 to $0.65 compared to the same period in 2023.

Results reflect notable items of $61 million or $0.14 per diluted common share, net of tax benefit, for the three months ended March 31, 2024, compared to $49 million or $0.10 per diluted common share, net of tax benefit, for the same period in 2023.


Table 1: Notable Items
	Three Months Ended March 31, 2024
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment(3)	Underlying results (non-GAAP)

Noninterest income	$517	$—	$3	$—	$514
Noninterest expense	1,358	3	47	35	1,273
Income tax expense	96	(1)	(11)	(9)	117


	Three Months Ended March 31, 2023
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment	Underlying results (non-GAAP)

Noninterest income	$485	$—	$—	$—	$485
Noninterest expense	1,296	52	14	—	1,230
Income tax expense	153	(13)	(4)	—	170

(1) Includes integration related costs associated with acquisitions.

(2) Includes our TOP transformational and revenue and efficiency initiatives for the three months ended March 31, 2024 and 2023, and net fee-related components associated with a credit card processor arrangement for the three months ended March 31, 2024.

(3) Represents an industry-wide FDIC special assessment. For more information, see “Regulation and Supervision - Deposit Insurance” in our 2023 Form 10-K.

•Net income available to common stockholders decreased $184 million for the three months ended March 31, 2024, compared to the same period in 2023.

◦On an Underlying basis, which excludes notable items, net income available to common stockholders of $365 million for the three months ended March 31, 2024, compared with $537 million for the same period in 2023.

◦On an Underlying basis, earnings per diluted common share of $0.79 for the three months ended March 31, 2024, compared to $1.10 for the same period in 2023.

•Total revenue decreased $169 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by a decrease of 12% in net interest income.

•The efficiency ratio of 69.3% for the three months ended March 31, 2024, compared to 60.9% for the same period in 2023.

◦On an Underlying basis, the efficiency ratio of 65.1% for the three months ended March 31, 2024, compared to 57.8% for the same period in 2023.

•ROTCE of 8.9% for the three months ended March 31, 2024, compared to 14.4% for the same period in 2023.

◦On an Underlying basis, ROTCE of 10.6% for the three months ended March 31, 2024, compared to 15.8% for the same period in 2023.

•Tangible book value per common share of $30.19 decreased 2% from December 31, 2023.

For additional information regarding our financial performance, see “Results of Operations.”

Citizens Financial Group, Inc. | 8

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest income is primarily a function of the difference between the effective yield on our average interest-earning assets and the effective cost of our interest-bearing 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 economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to the “Market Risk” and “Risk Governance” sections of our 2023 Form 10-K.


Table 2: Major Components of Net Interest Income
	Three Months Ended March 31,
	2024				2023				Change
(dollars in millions)	Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Yields/ Rates (bps)
Assets
Interest-bearing cash and due from banks and deposits in banks	$10,268	$140	5.39	%	$5,899	$69	4.65	%	$4,369	74 bps
Taxable investment securities	43,904	399	3.63		38,953	266	2.74		4,951	89
Non-taxable investment securities	1	—	2.60		2	—	2.68		(1)	(8)
Total investment securities	43,905	399	3.63		38,955	266	2.74		4,950	89
Commercial and industrial	44,577	635	5.64		53,429	747	5.60		(8,852)	4
Commercial real estate	29,265	468	6.32		28,892	416	5.75		373	57

Total commercial	73,842	1,103	5.91		82,321	1,163	5.65		(8,479)	26
Residential mortgages	31,384	283	3.60		30,075	250	3.33		1,309	27
Home equity	15,080	298	7.94		14,073	240	6.92		1,007	102
Automobile	7,758	82	4.25		11,937	119	4.04		(4,179)	21
Education	11,816	156	5.31		12,796	154	4.88		(980)	43
Other retail	4,942	129	10.54		5,290	121	9.25		(348)	129
Total retail	70,980	948	5.36		74,171	884	4.81		(3,191)	55
Total loans and leases	144,822	2,051	5.64		156,492	2,047	5.25		(11,670)	39
Loans held for sale, at fair value	850	14	6.37		1,009	15	5.87		(159)	50
Other loans held for sale	223	6	10.72		197	5	9.98		26	74
Interest-earning assets	200,068	2,610	5.20		202,552	2,402	4.76		(2,484)	44
Noninterest-earning assets	20,702				20,159				543
Total assets	$220,770				$222,711				($1,941)
Liabilities and Stockholders’ Equity
Checking with interest	$32,302	$109	1.35	%	$35,974	$97	1.09	%	($3,672)	26
Money market	52,926	445	3.38		49,942	287	2.33		2,984	105
Savings	27,745	121	1.76		29,460	79	1.09		(1,715)	67
Term	26,447	312	4.74		12,839	87	2.72		13,608	202
Total interest-bearing deposits	139,420	987	2.85		128,215	550	1.74		11,205	111
Short-term borrowed funds	498	7	5.53		542	6	4.97		(44)	56
Long-term borrowed funds	13,664	174	5.08		17,780	203	4.55		(4,116)	53
Total borrowed funds	14,162	181	5.09		18,322	209	4.57		(4,160)	52
Total interest-bearing liabilities	153,582	1,168	3.05		146,537	759	2.09		7,045	96
Demand deposits	36,684				46,135				(9,451)
Other noninterest-bearing liabilities	6,791				6,323				468
Total liabilities	197,057				198,995				(1,938)
Stockholders’ equity	23,713				23,716				(3)
Total liabilities and stockholders’ equity	$220,770				$222,711				($1,941)
Interest rate spread			2.15	%			2.67	%		(52)
Net interest income and net interest margin		$1,442	2.90	%		$1,643	3.29	%		(39)
Net interest income and net interest margin, FTE(1)		$1,446	2.91	%		$1,647	3.30	%		(39)
Memo: Total deposits (interest-bearing and demand)	$176,104	$987	2.25	%	$174,350	$550	1.28	%	$1,754	97	bps

(1) Net interest income and net interest margin is presented on a FTE basis using the federal statutory tax rate of 21%. The FTE impact is predominantly attributable to commercial and industrial loans for the periods presented.

Citizens Financial Group, Inc. | 9

Net interest income decreased $201 million, or 12%, for the three months ended March 31, 2024, compared to the same period in 2023, reflecting lower net interest margin and a 1% decline in average interest-earning assets.

Net interest margin on a FTE basis decreased 39 basis points for the three months ended March 31, 2024, compared to the same period in 2023, reflecting higher funding costs, swap impacts and the impact of building liquidity, partially offset by higher interest-earning-asset yields and the benefit of Non-Core portfolio runoff.

Average interest-earning assets decreased $2.5 billion, or 1%, for the three months ended March 31, 2024, compared to the same period in 2023, driven by a decline in total loans and leases, partially offset by an increase in investment securities and cash held in interest-bearing deposits.

Average deposits increased $1.8 billion, or 1%, for the three months ended March 31, 2024, compared to the same period in 2023, reflecting growth in retail and Private Bank deposits.

Average total borrowed funds decreased $4.2 billion for the three months ended March 31, 2024, compared to the same period in 2023, reflecting a decline in FHLB advances driven by Non-Core portfolio runoff, partially offset by an increase in secured borrowings collateralized by auto loans.

Noninterest Income


Table 3: Noninterest Income
	Three Months Ended March 31,
(dollars in millions)	2024	2023	Change	Percent
Service charges and fees	$96	$100	($4)	(4	%)
Capital markets fees	118	83	35	42
Card fees	86	72	14	19
Trust and investment services fees	68	63	5	8
Mortgage banking fees	49	57	(8)	(14)
Foreign exchange and derivative products	36	48	(12)	(25)
Letter of credit and loan fees	42	40	2	5
Securities gains, net	5	5	—	—
Other income(1)	17	17	—	—
Noninterest income	$517	$485	$32	7	%

(1) Includes bank-owned life insurance income and other income for all periods presented.

The primary drivers for the change in noninterest income for the three months ended March 31, 2024, compared to the same period in 2023, are highlighted below.

•Capital markets fees increased reflecting higher bond and equity underwriting fees, and M&A advisory fees.

•Card fees increased primarily reflecting higher credit card fees, including favorable vendor contract negotiations.

•Trust and investment services fees reflect increased sales activity and asset management fees.

•Foreign exchange and derivative products revenue decreased given reduced client activity related to interest rate and commodities hedging.

•Mortgage banking fees declined reflecting lower servicing and production fees.

Citizens Financial Group, Inc. | 10

Noninterest Expense


Table 4: Noninterest Expense
	Three Months Ended March 31,
(dollars in millions)	2024	2023	Change	Percent
Salaries and employee benefits	$691	$658	$33	5	%
Equipment and software	192	169	23	14
Outside services	158	176	(18)	(10)
Occupancy	114	124	(10)	(8)
Other operating expense	203	169	34	20
Noninterest expense	$1,358	$1,296	$62	5	%

The increase in noninterest expense for the three months ended March 31, 2024, compared to the same period in 2023, was driven by salaries and employee benefits reflecting our Private Bank start-up investment, partially offset by lower headcount, equipment and software reflecting technology investments, and other operating expense largely associated with FDIC deposit insurance, reflecting an estimate of CBNA’s incremental special assessment of $35 million recognized in the first quarter of 2024. For more information regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in our 2023 Form 10-K.

Provision for Credit Losses

The provision for credit losses is the result of a detailed analysis performed to estimate our ACL. The total provision for credit losses includes the provision for loan and lease losses and the provision for unfunded commitments. Refer to “Analysis of Financial Condition — Credit Quality” for more information.

Provision expense of $171 million for the three months ended March 31, 2024, compared to $168 million for the same period in 2023. The provision expense for the three months ended March 31, 2024 reflects higher reserves against the CRE Office portfolio primarily driven by elevated interest rates and return-to-office dynamics.

Income Tax Expense

Income tax expense of $96 million decreased $57 million for the three months ended March 31, 2024, compared to the same period in 2023. The effective income tax rate of 22.3% for the three months ended March 31, 2024 decreased from 23.0% compared to the same period in 2023. These decreases were driven by lower pre-tax income, partially offset by higher tax expense associated with stock compensation. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusting for discrete items that occurred during the period.

Business Operating Segments

We have three business operating segments: Consumer Banking, Commercial Banking, and Non-Core. See Note 1 for a description of segment changes made during the third quarter of 2023 and Note 16 for more information regarding our business operating segments.

Citizens Financial Group, Inc. | 11

The following tables present certain financial data of our business operating segments. Total business operating segment financial results differ from total consolidated financial results. These differences are reflected in Other non-segment operations. See Note 16 for additional information.


Table 5: Selected Financial Data for Business Operating Segments
	Three Months Ended March 31,
	Consumer Banking		Commercial Banking		Non-Core
(dollars in millions)	2024	2023	2024	2023	2024	2023
Net interest income	$1,093	$1,011	$514	$597	($37)	($15)
Noninterest income	258	256	227	201	—	—
Total revenue	1,351	1,267	741	798	(37)	(15)
Noninterest expense	903	857	317	331	25	32
Profit (loss) before credit losses	448	410	424	467	(62)	(47)
Net charge-offs	81	63	81	47	19	21
Income (loss) before income tax expense (benefit)	367	347	343	420	(81)	(68)
Income tax expense (benefit)	95	90	84	101	(21)	(18)
Net income (loss)	$272	$257	$259	$319	($60)	($50)
Average Balances:
Total assets	$73,833	$71,872	$70,100	$78,891	$10,554	$15,686
Total loans and leases(1)	67,448	65,570	67,187	75,734	10,507	15,620
Deposits	120,019	115,578	45,912	48,966	—	—
Interest-earning assets	68,050	66,251	67,536	76,130	10,507	15,620

(1) Includes LHFS.

Consumer Banking

Net interest income increased $82 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by higher net interest margin reflecting higher interest-earning asset yields and growth in average interest-earning assets. This increase was partially offset by higher funding costs.

Noninterest income increased $2 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by trust and investment services fees reflecting increased sales activity and asset management fees, and higher credit card fees. This increase was partially offset by mortgage banking fees reflecting lower servicing and production fees and service charges and fees given seasonality and lower overdraft fees.

Noninterest expense increased $46 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by salaries and benefits reflecting our Private Bank start-up investment and equipment and software driven by technology investments. This increase was partially offset by reductions in other operating expense associated with lower fraud and travel.

Net charge-offs increased $18 million for the three months ended March 31, 2024, compared to the same period in 2023, driven primarily by other retail and education.

Commercial Banking

Net interest income decreased $83 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by lower net interest margin, a decline in average interest-earning assets and higher funding costs, partially offset by higher interest-earning asset yields.

Noninterest income increased $26 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by capital markets fees reflecting higher bond and equity underwriting fees, and M&A advisory fees. This increase was partially offset by foreign exchange and derivative products revenue given reduced client activity related to interest rate and commodities hedging.

Noninterest expense decreased $14 million for the three months ended March 31, 2024, compared to the same period in 2023, driven primarily by salaries and employee benefits reflecting lower headcount.

Net charge-offs increased $34 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by the general office segment of CRE.

Citizens Financial Group, Inc. | 12

Non-Core

Net interest income decreased $22 million for the three months ended March 31, 2024, compared to the same period in 2023, driven by the highest-cost implied marginal funding sources during 2024, including secured borrowings collateralized by auto loans and FHLB advances.

Average loans and leases decreased $5.1 billion for the three months ended March 31, 2024, compared to the same period in 2023, driven by planned Non-Core portfolio runoff.

Citizens Financial Group, Inc. | 13

ANALYSIS OF FINANCIAL CONDITION

Securities


Table 6: Amortized Cost and Fair Value of Securities
	March 31, 2024		December 31, 2023
(dollars in millions)	Amortized Cost(1)	Fair Value	Amortized Cost(1)	Fair Value
U.S. Treasury and other	$4,944	$4,770	$4,493	$4,380
State and political subdivisions	1	1	1	1
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	27,989	25,865	26,289	24,477
Other/non-agency	278	257	279	255
Total mortgage-backed securities	28,267	26,122	26,568	24,732

Collateralized loan obligations	293	294	667	664
Total debt securities available for sale	$33,505	$31,187	$31,729	$29,777
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	$8,587	$7,682	$8,696	$7,887

Total mortgage-backed securities	8,587	7,682	8,696	7,887
Asset-backed securities	467	450	488	463
Total debt securities held to maturity	$9,054	$8,132	$9,184	$8,350
Total debt securities available for sale and held to maturity	$42,559	$39,319	$40,913	$38,127
Equity securities, at cost(2)	$791	$791	$869	$869
Equity securities, at fair value(2)	178	178	173	173

(1) Excludes portfolio level basis adjustments of $(74) million and $60 million, respectively, for securities designated in active fair value hedge relationships at March 31, 2024 and December 31, 2023.

(2) Included in other assets in the Consolidated Balance Sheets.

The primary objective of the securities portfolio is to provide a readily available source of liquidity. The portfolio primarily includes high quality, highly liquid investments reflecting our ongoing commitment to maintain strong contingent liquidity levels and pledging capacity.

As of March 31, 2024, U.S. Treasuries and mortgage-backed securities issued by GNMA and GSEs represented 97% of the fair value of our debt securities portfolio, with approximately $31.5 billion of unencumbered high-quality liquid securities serving as potential collateral for borrowings from the FHLB, FRB discount window, and the Fixed Income Clearing Corporation bilateral repurchase agreement market.

For further discussion of the use of our securities as liquidity collateral see the “Liquidity Risk Management and Governance” section in this document. For further discussion of liquidity requirements, see “Regulation and Supervision — Liquidity Requirements” in our 2023 Form 10-K.

We manage our 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 framework and limits. As of March 31, 2024, the portfolio’s average effective duration, including recent hedging actions to reduce duration, was 3.8 years compared with 3.9 years as of December 31, 2023.

Citizens Financial Group, Inc. | 14

Loans and Leases


Table 7: Composition of Loans and Leases, Excluding LHFS
(dollars in millions)	March 31, 2024	December 31, 2023	Change	Percent
Commercial and industrial	$43,951	$44,974	($1,023)	(2)	%
Commercial real estate	28,872	29,471	(599)	(2)

Total commercial	72,823	74,445	(1,622)	(2)
Residential mortgages	31,512	31,332	180	1
Home equity	15,113	15,040	73	—
Automobile	7,277	8,258	(981)	(12)
Education	11,646	11,834	(188)	(2)
Other retail	4,817	5,050	(233)	(5)
Total retail	70,365	71,514	(1,149)	(2)
Total loans and leases	$143,188	$145,959	($2,771)	(2)	%

See Note 1 for a description of changes made to the Company’s loans and leases presentation during the first quarter of 2024.

The decrease in total loans and leases as of March 31, 2024 compared to December 31, 2023 reflects a $1.6 billion decrease in commercial given balance sheet optimization actions, paydowns and market conditions driving lower client demand. Retail decreased $1.1 billion, primarily driven by planned Non-Core portfolio runoff.

Credit Quality

See Note 1 for a description of changes made to the Company’s loans and leases presentation during the first quarter of 2024.

The ACL is a reserve to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see “Critical Accounting Estimates — Allowance for Credit Losses” and Note 4, and Note 6 in our 2023 Form 10-K.

The ACL as of March 31, 2024 compared to December 31, 2023 reflects a reserve decrease of $10 million. For further information see Note 4.


Table 8: ACL and Related Coverage Ratios by Portfolio
	March 31, 2024				December 31, 2023
(dollars in millions)	Loans and Leases	Allowance	Coverage		Loans and Leases	Allowance	Coverage
Allowance for Loan and Lease Losses
Commercial and industrial	$43,951	$592	1.35	%	$44,974	$587	1.31	%
Commercial real estate	28,872	642	2.22		29,471	663	2.25

Total commercial	72,823	1,234	1.69		74,445	1,250	1.68
Residential mortgages	31,512	171	0.54		31,332	181	0.58
Home equity	15,113	98	0.65		15,040	100	0.66
Automobile	7,277	42	0.57		8,258	57	0.69
Education	11,646	267	2.29		11,834	259	2.18
Other retail	4,817	274	5.70		5,050	251	4.98
Total retail	70,365	852	1.21		71,514	848	1.19
Total loans and leases	$143,188	$2,086	1.46	%	$145,959	$2,098	1.44	%
Allowance for Unfunded Lending Commitments
Commercial(1)		$191	1.96	%		$175	1.91	%
Retail(2)		31	1.25