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

June 30, 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 5.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E	CFG PrE	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 7.375% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series H	CFG PrH	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 448,300,466 shares of the registrant’s common stock ($0.01 par value) outstanding on July 26, 2024.

	Table of Contents
Glossary of Acronyms and Terms		3
Part I. Financial Information		5
Item 1. Financial Statements		39
Consolidated Balance Sheets (unaudited)		40
Consolidated Statements of Operations (unaudited)		41
Consolidated Statements of Comprehensive Income (unaudited)		42
Consolidated Statements of Changes in Stockholders’ Equity (unaudited)		43
Consolidated Statements of Cash Flows (unaudited)		45
Notes to Consolidated Financial Statements (unaudited)		46
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		5
Item 3. Quantitative and Qualitative Disclosures about Market Risk		81
Item 4. Controls and Procedures		81
Part II. Other Information		81
Item 1. Legal Proceedings		81
Item 1A. Risk Factors		81
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		81
Item 3. Defaults Upon Senior Securities		82
Item 4. Mine Safety Disclosures		82
Item 5. Other Information		82
Item 6. Exhibits		82
Signature		83

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
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	10
Net Interest Income	10
Noninterest Income	12
Noninterest Expense	13
Provision for Credit Losses	13
Income Tax Expense	13
Business Operating Segments	13
Analysis of Financial Condition	16
Securities	16
Loans and Leases	17
Credit Quality	17
Deposits	21
Borrowed Funds	21
Capital and Regulatory Matters	21
Liquidity	25
Critical Accounting Estimates	28
Accounting and Reporting Developments	30
Risk Governance	31
Market Risk	31
Non-GAAP Financial Measures and Reconciliations	37

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 and Commercial businesses, including our Private Bank;

•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 as well as new or amended regulations;

•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 $219.9 billion in assets as of June 30, 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 $86 million and $263 million for the three and six months ended June 30, 2024, respectively, with earnings per diluted common share down $0.14 to $0.78 and down $0.48 to $1.44 compared to the same periods in 2023.

Results reflect notable items of $16 million or $0.04 per diluted common share, net of tax benefit, for the three months ended June 30, 2024, compared to $53 million or $0.12 per diluted common share, net of tax benefit, for the same period in 2023. For the six months ended June 30, 2024, notable items were $77 million or $0.16 per diluted common share, net of tax benefit, as compared to $102 million or $0.22 per diluted common share, net of tax benefit, for the same period in 2023.

Table 1: Notable Items
	Three Months Ended June 30, 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	$553	$—	$4	$—	$549
Noninterest expense	1,301	3	28	5	1,265
Income tax expense	88	(1)	(14)	(1)	104

	Three Months Ended June 30, 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	$506	$—	$—	$—	$506
Noninterest expense	1,306	39	34	—	1,233
Income tax expense	134	(11)	(9)	—	154

	Six Months Ended June 30, 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	$1,070	$—	$7	$—	$1,063
Noninterest expense	2,659	6	75	40	2,538
Income tax expense	184	(2)	(25)	(10)	221

	Six Months Ended June 30, 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	$991	$—	$—	$—	$991
Noninterest expense	2,602	91	48	—	2,463
Income tax expense	287	(24)	(13)	—	324

(1) Includes integration related costs associated with acquisitions.

(2) Includes our TOP transformational and revenue and efficiency initiatives for the three and six months ended June 30, 2024 and 2023, and net fee-related components associated with a credit card processor arrangement and a one-time deferred tax benefit for the three and six months ended June 30, 2024.

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

Citizens Financial Group, Inc. | 8

•Net income available to common stockholders decreased $87 million and $271 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.

◦On an Underlying basis, which excludes notable items, net income available to common stockholders of $373 million and $738 million for the three and six months ended June 30, 2024, respectively, compared with $497 million and $1.0 billion for the same periods in 2023.

◦On an Underlying basis, earnings per diluted common share of $0.82 and $1.60 for the three and six months ended June 30, 2024, respectively, compared to $1.04 and $2.14 for the same periods in 2023.

•Total revenue decreased $131 million and $300 million for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023, driven by decreases of 11% and 12%, respectively, in net interest income.

•The efficiency ratio of 66.3% and 67.8% for the three and six months ended June 30, 2024, respectively, compared to 62.3% and 61.6% for the same periods in 2023.

◦On an Underlying basis, the efficiency ratio of 64.6% and 64.8% for the three and six months ended June 30, 2024, respectively, compared to 58.9% and 58.3% for the same periods in 2023.

•ROTCE of 10.6% and 9.7% for the three and six months ended June 30, 2024, respectively, compared to 12.4% and 13.4% for the same periods in 2023.

◦On an Underlying basis, ROTCE of 11.1% and 10.9% for the three and six months ended June 30, 2024, respectively, compared to 13.9% and 14.8% for the same periods in 2023.

•Tangible book value per common share of $30.61 decreased 1% from December 31, 2023.

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

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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 June 30,
	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	$9,650	$130	5.35	%	$7,768	$100	5.10	%	$1,882	25 bps
Taxable investment securities	44,691	417	3.73		38,000	267	2.81		6,691	92
Non-taxable investment securities	1	—	2.60		2	—	2.68		(1)	(8)
Total investment securities	44,692	417	3.73		38,002	267	2.81		6,690	92
Commercial and industrial	44,381	604	5.38		51,122	777	6.02		(6,741)	(64)
Commercial real estate	28,574	456	6.32		29,115	445	6.05		(541)	27
Total commercial	72,955	1,060	5.75		80,237	1,222	6.03		(7,282)	(28)
Residential mortgages	31,633	290	3.67		30,566	259	3.38		1,067	29
Home equity	15,343	305	7.99		14,340	264	7.38		1,003	61
Automobile	6,807	72	4.28		10,997	113	4.14		(4,190)	14
Education	11,447	154	5.40		12,430	155	5.00		(983)	40
Other retail	4,882	130	10.71		5,155	119	9.30		(273)	141
Total retail	70,112	951	5.45		73,488	910	4.96		(3,376)	49
Total loans and leases	143,067	2,011	5.60		153,725	2,132	5.52		(10,658)	8
Loans held for sale, at fair value	896	13	6.19		1,381	20	5.74		(485)	45
Other loans held for sale	160	4	9.34		622	12	7.90		(462)	144
Interest-earning assets	198,465	2,575	5.17		201,498	2,531	5.00		(3,033)	17
Noninterest-earning assets	20,757				20,875				(118)
Total assets	$219,222				$222,373				($3,151)
Liabilities and Stockholders’ Equity
Checking with interest	$33,659	$128	1.54	%	$34,586	$110	1.28	%	($927)	26
Money market	51,570	431	3.36		49,665	348	2.81		1,905	55
Savings	27,560	120	1.75		29,640	108	1.46		(2,080)	29
Term	24,676	286	4.66		17,180	157	3.68		7,496	98
Total interest-bearing deposits	137,465	965	2.82		131,071	723	2.21		6,394	61
Short-term borrowed funds	325	4	5.62		1,446	22	5.82		(1,121)	(20)
Long-term borrowed funds	15,092	196	5.18		16,795	198	4.70		(1,703)	48
Total borrowed funds	15,417	200	5.18		18,241	220	4.80		(2,824)	38
Total interest-bearing liabilities	152,882	1,165	3.06