Citizens Financial Group · Earnings release

Citizens Financial Group, Inc. Reports First Quarter 2025 Net Income of

Key Financial Data

First Quarter 2025 Highlights

Income

Statement

($s in millions)

■PPNR of $621 million, down 9% QoQ on an Underlying basis

–NII down 1.5%, driven by day count; NIM of 2.90%, up 3 bps

–Fees down 3.5%, primarily reflecting seasonality and uncertain market conditions impact on Capital Markets; strong growth in Wealth fees and FX and derivatives revenue

–Expenses up 1.7%, primarily driven by seasonal impacts

■Entered agreement to sell ~$1.9 billion of Non-Core education loans (“Non-Core transaction”); $200 million settled in 1Q25, remainder to settle ratably each quarter through 2025

■Net charge-offs of 58 bps, reflects the impact of the Non-Core transaction; excluding this transaction, net charge-offs are 51 bps, down slightly QoQ, with favorable trends in NPAs

■Strong ACL coverage of 1.61%, broadly stable QoQ and reflects improving loan mix

■Period-end loans down 1% QoQ, reflects the ~$1.9 billion Non-Core transaction and reclassification to loans held for sale; Core loans up ~1% QoQ

■Spot deposits up 2% QoQ; Private Bank deposits up $1.7 billion to $8.7 billion

■Strong liquidity profile; spot LDR of 77.5%; pro forma LCR of 122% exceeds Category 1 Bank requirement of 100%

■TBV/share of $33.97, up 5% QoQ, reflects the AOCI impact of lower long-term rates

Total revenue

$

$

$

Pre-provision profit

Underlying pre-provision profit

Provision for credit losses

Net income

Underlying net income

Balance Sheet

&

Credit Quality

($s in billions)

Period-end loans and leases

$

$

$

Average loans and leases

Period-end deposits

Average deposits

Period-end loan-to-deposit ratio

%

%

%

NCO ratio

%

%

%

Financial Metrics

Diluted EPS

$

$

$

Underlying Diluted EPS

ROTCE

%

%

%

Underlying ROTCE

Net interest margin, FTE

Efficiency ratio

Underlying efficiency ratio

CET1

%

%

%

TBV/Share

$

$

$

Notable Items

($s in millions except per share data)

Pre-tax $

EPS

Pre-tax $

EPS

Pre-tax $

EPS

Integration-related

$

—

$

—

$

(2)

$

—

$

(3)

$

TOP/FDIC-related/Other

—

—

Total

$

—

$

—

$

$

$

$

*Results presented on an Underlying basis are non-GAAP Financial Measures. See page 15 for additional information on our use of Non-GAAP Financial Measures.

Citizens Financial Group, Inc.

Comments from Chairman and CEO Bruce Van Saun

“We were pleased with our execution in Q1 as we delivered financial results in line with our expectations, as well as strong progress on our strategic initiatives like the Private Bank/Private Wealth buildout,” said Chairman and CEO Bruce Van Saun. “We struck an agreement to sell our purchased student loan portfolio, accelerating Non-Core rundown and freeing capital and liquidity. Our balance sheet remains robust. While the second quarter has seen heightened uncertainty given policy decisions in Washington, we believe we will be able to successfully navigate through the challenges given our strong business positioning and our financial and operating discipline.”

Citizens also announced today that its board of directors declared a quarterly common stock dividend of $0.42 per share. The dividend is payable on May 14, 2025 to shareholders of record at the close of business on April 30, 2025.

2

Citizens Financial Group, Inc.

Earnings highlights(1):

Quarterly Trends

($s in millions, except per share data)

Earnings

$/bps

%

$/bps

%

Net interest income

$

$

$

$

(1)

%

$

(4)

%

Noninterest income

(5)

5

Total revenue

(3)

(1)

Noninterest expense

(2)

—

(3)

Pre-provision profit

(7)

3

Provision for credit losses

(9)

(6)

Net income

(7)

Preferred dividends

(1)

(3)

3

Net income available to common stockholders

$

$

$

$

(7)

%

$

%

After-tax notable Items

—

Underlying net income

$

$

$

$

(9)

%

$

(6)

%

Underlying net income available to common stockholders

(7)

Average common shares outstanding

Basic (in millions)

(1)

(5)

Diluted (in millions)

(1)

(5)

Diluted earnings per share

$

$

$

$

(7)

%

$

%

Underlying diluted earnings per share

(9)

(3)

Performance metrics

Net interest margin

%

%

%

3

bps

(1)

bp

Net interest margin, FTE

3

(1)

Effective income tax rate

Efficiency ratio

Underlying efficiency ratio

Return on average tangible common equity

Underlying return on average tangible common equity

Return on average total tangible assets

(3)

Underlying return on average total tangible assets

%

%

%

(5)

bps

(2)

bps

Capital adequacy(2,3)

Common equity tier 1 capital ratio

%

%

%

Total capital ratio

Tier 1 leverage ratio

Tangible common equity ratio

Allowance for credit losses to loans and leases

%

%

%

(1)

bp

—

bps

Asset quality(3)

Nonaccrual loans and leases to loans and leases

%

%

%

(5)

bps

bps

Allowance for credit losses to nonaccrual loans and leases

4

Net charge-offs as a % of average loans and leases

%

%

%

5

bps

8

bps

(1) Unless otherwise noted, references to balance sheet items are on an average basis, loans exclude loans held for sale, earnings per share

represent fully diluted per common share and references to NIM are on a FTE basis.

(2) Current reporting-period regulatory capital ratios are preliminary.

(3) Capital adequacy and asset-quality ratios calculated on a period-end basis, except net charge-offs.

3

Citizens Financial Group, Inc.

The following table provides information on Underlying results which exclude the impact of notable items.

Underlying results:

Quarterly Trends

($s in millions, except per share data)

$/bps

%

$/bps

%

Net interest income

$

$

$

$

(1)

%

$

(4)

%

Noninterest income

(4)

6

Total revenue

$

$

$

$

(2)

%

$

(1)

%

Noninterest expense

2

3

Provision for credit losses

(9)

(6)

Net income available to common stockholders

$

$

$

$

%

$

(7)

%

Performance metrics

EPS

$

$

$

$

(9)

%

$

(3)

%

Efficiency ratio

%

%

%

bps

bps

Return on average tangible common equity

%

%

%

bps

bps

Consolidated balance sheet summary(1):

($s in millions)

$/bps

%

$/bps

%

Total assets

$

$

$

$

1

%

$

—

%

Total loans and leases

(1)

(4)

Total loans held for sale

NM

Deposits

2

1

Stockholders' equity

3

5

Stockholders' common equity

3

5

Tangible common equity

$

$

$

$

4

%

$

7

%

Loan-to-deposit ratio (period-end)(2)

%

%

%

bps

bps

Loan-to-deposit ratio (average)(2)

%

%

%

1

bp

bps

(1) Represents period-end unless otherwise noted.

(2) Excludes loans held for sale.

4

Citizens Financial Group, Inc.

Notable items:

There are no notable items in first quarter 2025, as our intention going forward is to limit these to those items of greatest significance. Fourth quarter 2024 and first quarter 2024 results reflect notable items primarily related to integration costs associated with recent acquisitions, as well as TOP revenue and efficiency initiatives and a notable item for an industry-wide FDIC special assessment. These notable items have been excluded from reported results to better reflect Underlying operating results.

Notable items - Integration-related

($s in millions, except per share data)

Pre-tax

After-tax

Pre-tax

After-tax

Pre-tax

After-tax

Salaries & benefits

$

—

$

—

$

(2)

$

(1)

$

(2)

$

(1)

Equipment and software

—

—

—

—

—

—

Outside services

—

—

—

—

(1)

(1)

Occupancy

—

—

—

—

—

—

Other expense

—

—

—

—

—

—

Noninterest expense

$

—

$

—

$

(2)

$

(1)

$

(3)

$

(2)

EPS Impact - Noninterest expense

$

—

$

—

$

Total Integration-related

$

—

$

—

$

(2)

$

(1)

$

(3)

$

(2)

EPS Impact - Total Integration-related

$

—

$

—

$

Other notable items - TOP & Other

($s in millions, except per share data)

Pre-tax

After-tax

Pre-tax

After-tax

Pre-tax

After-tax

Tax notable items

$

—

$

—

$

—

$

—

$

—

$

—

Noninterest income

—

—

8

3

2

Salaries & benefits

—

—

Equipment and software

—

—

(3)

(2)

(8)

(6)

Outside services

—

—

(4)

(3)

(9)

Occupancy

—

—

(5)

(4)

(7)

(5)

FDIC special assessment(1)

—

—

9

6

Other expense

—

—

(4)

(3)

(6)

(4)

Noninterest expense

$

—

$

—

$

$

$

$

Total Other Notable Items

$

—

$

—

$

$

$

$

EPS Impact - Other Notable Items

$

—

$

$

Total Notable Items

$

—

$

—

$

$

$

$

Total EPS Impact

$

—

$

$

(1) The FDIC special assessment earnings per share impact is $0.01 and $(0.06) for fourth quarter 2024 and first 2024 respectively.

5

Citizens Financial Group, Inc.

Discussion of results:

Net interest income

($s in millions)

$/bps

%

$/bps

%

Interest income:

Interest and fees on loans and leases and loans held for sale

$

$

$

$

(4)

%

$

%

Investment securities

(1)

—

5

Interest-bearing deposits in banks

Total interest income

$

$

$

$

(4)

%

$

%

Interest expense:

Deposits

$

$

$

$

%

$

%

Short-term borrowed funds

8

1

7

7

NM

1

Long-term borrowed funds

(8)

(5)

(9)

Total interest expense

$

$

$

$

(8)

%

$

%

Net interest income

$

$

$

$

(1)

%

$

(4)

%

Net interest margin, FTE

%

%

%

3

bps

(1)

bp

vs.

Net interest income of $1.4 billion decreased 1.5%, reflecting day count impact of $28 million and slightly lower interest-earning assets, partially offset by the benefit of higher net interest margin.

•Net interest margin of 2.90% increased 3 basis points, given the benefit of lower deposit costs, including improved deposit mix, Non-Core runoff, and lower terminated swap impact, partially offset by the impact of variable-rate asset repricing, net of receive-fixed swaps.

•Interest-bearing deposit costs were down 18 basis points; total deposit costs were down 15 basis points, and total cost of funds were down 14 basis points to 2.09%.

vs.

Net interest income of $1.4 billion decreased 4%, primarily reflecting a 3% decline in average interest-earning assets.

•Net interest margin of 2.90% decreased 1 basis point, as the impact of variable-rate asset repricing was largely offset by the benefit of lower funding costs, Non-Core runoff and fixed-rate asset repricing.

6

Citizens Financial Group, Inc.

Noninterest Income

($s in millions)

$

%

$

%

Service charges and fees

$

$

$

$

—

—

%

$

%

Capital markets fees

Card fees

(3)

(3)

Wealth fees(1)

6

8

Mortgage banking fees

(1)

(2)

Foreign exchange and derivative products

4

3

8

Letter of credit and loan fees

(1)

(2)

2

5

Securities gains, net

7

4

5

3

2

Other income(2)

(6)

5

Noninterest income

$

$

$

$

(5)

%

$

5

%

Underlying, as applicable

Card fees

$

$

$

$

(3)

(3)

$

—

—

Other income(2)

$

$

$

$

(7)

$

5

Underlying noninterest income

$

$

$

$

(4)

%

$

6

%

(1) Effective for 2Q24, Trust and Investment services fees was renamed to Wealth Fees to better reflect the broad range of wealth-related management fees and services provided to our customers.

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

vs.

Underlying noninterest income of $544 million decreased $20 million, or 3.5%.

•Capital markets fees decreased $21 million, primarily driven by seasonality in M&A, with some deals pushed out given market conditions, and lower loan syndication fees, partially offset by increased bond and equity underwriting fees. M&A pipeline is at all time highs in terms of number and volume of transactions.

•Wealth fees increased $6 million, reflecting higher sales of annuity products.

•Foreign exchange and derivative products revenue increased $4 million, driven by increased client hedging activity in commodities.

•Card fees decreased $3 million, given lower seasonal volumes.

vs.

Underlying noninterest income of $544 million increased $30 million, or 6%.

•Service charges and fees increased $13 million, primarily driven by higher cash management and overdraft fees.

•Capital markets fees decreased $18 million, reflecting lower M&A fees partially offset by higher loan syndication and bond underwriting fees.

•Wealth fees increased $13 million, reflecting growth in Private Bank AUM.

•Mortgage banking fees increased $10 million, driven by higher MSR valuation, net of hedging.

•Foreign exchange and derivative products revenue increased $3 million, given increased client activity in commodities and foreign exchange hedging, partially offset by lower interest rate hedging.

7

Citizens Financial Group, Inc.

Noninterest Expense

($s in millions)

$

%

$

%

Salaries and employee benefits

$

$

$

$

3

%

$

5

1

%

Equipment and software

1

1

2

1

Outside services

(9)

(3)

(2)

Occupancy

—

—

(2)

(2)

Other operating expense

(6)

Noninterest expense

$

$

$

$

(2)

—

%

$

(3)

%

Notable items

$

—

$

$

$

%

$

Underlying, as applicable

Salaries and employee benefits

$

$

$

$

6

%

$

3

%

Equipment and software

4

2

5

Outside services

(7)

9

6

Occupancy

5

5

5

5

Other operating expense

(9)

(5)

(3)

Underlying noninterest expense

$

$

$

$

2

%

$

3

%

vs.

Underlying noninterest expense of $1.3 billion increased 1.7%.

•Salaries and employee benefits increased $39 million, primarily reflecting a seasonal increase in payroll taxes.

•Equipment and software expense increased $4 million, given increased platform costs tied to higher volumes.

•Outside services decreased $11 million, reflecting lower vendor-related costs from elevated levels.

•Occupancy increased $5 million, primarily due to seasonal increase in branch maintenance and utilities.

•Other operating expense decreased $15 million, primarily reflecting lower marketing-related costs.

The effective tax rate was 20.3% in first quarter 2025, compared with 21.2% on an Underlying basis in fourth quarter 2024, primarily reflecting a higher benefit from tax-advantage investments.

vs.

Underlying noninterest expense of $1.3 billion increased 3%.

•Salaries and employee benefits increased $22 million, reflecting hiring related to the Private Bank and Private Wealth build-out, as well as a broader increase in salaries and benefits.

•Equipment and software increased $10 million, given increased platform costs tied to higher volumes as well as continued technology investment.

•Outside services increased $9 million, largely driven by investments across Consumer and the Private Bank.

•Occupancy increased $5 million, primarily driven by branch transformation efforts and the build-out of Private Bank offices.

•Other operating expense decreased $5 million, primarily reflecting lower fraud losses.

The effective tax rate was 20.3% in first quarter 2025 compared with 22.8% on an Underlying basis in first quarter 2024, primarily given lower stock-related compensation.

8

Citizens Financial Group, Inc.

Interest-earning assets

($s in millions)

Period-end interest-earning assets

$

%

$

%

Investments

$

$

$

$

3

%

$

6

%

Interest-bearing deposits in banks

2

Commercial loans and leases

1

(3)

Retail loans

(3)

(5)

Total loans and leases

(1)

(4)

Loans held for sale, at fair value

NM

Total loans and leases and loans held for sale

—

(2)

Total period-end interest-earning assets

$

$

$

$

2

%

$

—

%

Average interest-earning assets

Investments(1)

$

$

$

$

3

%

$

5

%

Interest-bearing deposits in banks

Commercial loans and leases

(1)

(4)

Retail loans

(1)

(3)

Total loans and leases

(1)

(4)

Loans held for sale, at fair value

Total loans and leases and loans held for sale

(1)

(3)

Total average interest-earning assets

$

$

$

$

(1)

%

$

(3)

%

(1) Total average interest-earning assets excludes the mark-to-market on investment securities and unsettled purchases or sales of loans and investments.

vs.

Period-end interest-earning assets of $195.1 billion were up 2% reflecting a $1.3 billion increase in investments in securities and $1.3 billion increase in cash held in interest-bearing deposits. Total loans and leases were down $1.6 billion, reflecting an agreement entered into during the first quarter to sell ~$1.9 billion of Non-Core education loans (“Non-Core transaction”) and the reclassification of these loans to held for sale. Excluding the impact of this transaction, loans and leases were broadly stable, as growth in the Private Bank, higher line utilization in Commercial, and growth in mortgage and home equity was largely offset by runoff in Non-Core loans and commercial real estate paydowns.

Average interest-earning assets of $195.1 billion decreased $1.6 billion, largely driven by a $1.2 billion decrease in total loans and leases, reflecting a decline in Commercial of $743 million, driven primarily by market conditions impacting client demand. In addition, retail decreased $494 million, given the impact of Non-Core runoff, with growth in the Private Bank providing a partial offset. The $1.4 billion decrease in cash held in interest-bearing deposits was largely offset by a $1.2 billion increase in investments.

The average effective duration of the securities portfolio was 3.6 years, compared with 3.7 years at December 31, 2024 and 3.8 years at March 31, 2024.

vs.

Period-end interest-earning assets of $195.1 billion was broadly stable, as a $3.3 billion decrease in total loans and leases and loans held for sale was largely offset by a $2.4 billion increase in investments in securities and a $251 million increase in investments in cash held in interest-bearing deposits. The decrease in loans and leases is driven by a $3.2 billion decrease in retail reflecting the continued Non-Core portfolio runoff and the Non-Core transaction, partially offset by growth in home equity and mortgage, including in the Private Bank. Results also include a decrease in Commercial loans of $2.3 billion reflecting paydowns in commercial real estate, balance sheet optimization and market conditions impacting client demand, partially offset by growth in the Private Bank.

Average interest-earning assets of $195.1 billion decreased $5.0 billion, or 3%, reflecting a $5.0 billion decrease in total loans and leases and loans held for sale. A $2.2 billion increase in investments in securities was offset by a $2.2 billion decrease in cash held in interest-bearing deposits.

9

Citizens Financial Group, Inc.

Deposits

($s in millions)

Period-end deposits

$

%

$

%

Non-interest bearing demand

$

$

$

$

2

%

$

3

%

Money market

1

7

Checking with interest

4

—

Savings

(1)

(8)

Time

2

(6)

Total period-end deposits

$

$

$

$

2

%

$

1

%

Average deposits

Non-interest bearing demand

$

$

$

$

—

%

$

—

%

Money market

—

3

Checking with interest

—

1

Savings

(2)

(7)

Time

(3)

Total average deposits

$

$

$

$

(1)

%

$

(2)

%

vs.

Total period-end deposits of $177.6 billion are up 2%, reflecting $1.7 billion of growth in the Private Bank and a $1.4 billion increase in Consumer deposits, partially offset by a decline in Commercial given seasonality. Non-interest bearing demand deposits increased $636 million, largely reflecting growth in the Private Bank partially offset by seasonal decline in Commercial.

Average deposits of $172.7 billion decreased 1%, driven by seasonally lower Commercial deposits and a reduction in higher-cost Treasury deposits largely offset by the increase in Private Bank and Consumer deposits.

vs.

Total period-end deposits of $177.6 billion increased 1%, driven by growth in the Private Bank of $6.3 billion, and increase in Consumer deposits, partially offset by a reduction in higher-cost Treasury deposits and lower Commercial balances.

Average deposits of $172.7 billion decreased 2%.

Citizens Financial Group, Inc.

Borrowed Funds

($s in millions)

Period-end borrowed funds

$

%

$

%

Short-term borrowed funds

$

$

—

$

9

$

$

NM

Long-term borrowed funds

FHLB advances

Senior debt

6

Subordinated debt and other debt

(2)

(3)

Auto collateralized borrowings

Total borrowed funds

$

$

$

$

(1)

%

$

%

Average borrowed funds

Short-term borrowed funds

$

$

$

$

NM

$

%

Long-term borrowed funds

FHLB advances

NM

Senior debt

(3)

Subordinated debt and other debt

1

—

(1)

Auto collateralized borrowings

Total average borrowed funds

$

$

$

$

3

%

$

(6)

%

vs.

Period-end borrowed funds were down slightly reflecting a decrease in collateralized borrowings on auto loans of $490 million given runoff of the associated portfolio, largely offset by an increase in senior debt of $400 million, reflecting a $750 million issuance and $350 million redemption in the quarter. FHLB advances were stable at low levels.

Average borrowed funds increased $402 million, reflecting a $634 million increase in short-term borrowed funds and $423 million increase in FHLB advances, partially offset by a $473 million decrease in auto collateralized borrowings.

vs.

Period-end borrowed funds decreased by $1.5 billion, given a decrease of $2.0 billion in FHLB advances and $644 million in auto collateralized borrowings, partially offset by a $1.2 billion increase in senior debt given issuances.

Average borrowed funds decreased by $830 million, reflecting a decrease of $1.7 billion in FHLB advances and $338 million in auto collateralized borrowings, given runoff of the Non-Core portfolio, partially offset by a $1.0 billion increase in senior debt issuances.

Citizens Financial Group, Inc.

Capital

($s and shares in millions, except per share data)

Period-end capital

$

%

$

%

Stockholders' equity

$

$

$

$

3

%

$

5

%

Stockholders' common equity

3

5

Tangible common equity

4

7

Tangible book value per common share

$

$

$

$

5

%

$

%

Common shares - at end of period

(1)

(5)

Common shares - average (diluted)

(1)

%

(5)

%

Common equity tier 1 capital ratio(1)

%