8-KOther EventsExhibits & Filings

CITIZENS FINANCIAL GROUP INC/RI 8-K Report, Corporate Update (Oct 22, 2018)

Filed October 22, 2018For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported strong third quarter 2018 financial results, demonstrating significant year-over-year growth. Net income available to common stockholders rose 28% to $436 million, translating to a 34% increase in diluted earnings per share to $0.91 compared to the third quarter of 2017. This performance was bolstered by an 8% increase in total revenue, driven by robust growth in both net interest income (8%) and noninterest income (9%). The company also saw a notable improvement in its efficiency ratio, which decreased by 121 basis points to 58.2% year-over-year, indicating effective cost management. The acquisition of Franklin American Mortgage Company (FAMC) on August 1, 2018, contributed positively to revenue, particularly in mortgage banking fees. While the acquisition added to noninterest expense, underlying results (excluding notable items and FAMC impacts) also showed strong growth, with net income up 30% and revenue up 7% compared to the prior year's third quarter. The company's capital position remains strong, with a Common Equity Tier 1 (CET1) ratio of 10.8%. Additionally, CFG demonstrated its commitment to returning capital to shareholders by increasing its dividend by 23% and repurchasing $400 million in common stock during the quarter.

Key Highlights

  • 1Net income available to common stockholders increased 28% year-over-year to $436 million.
  • 2Diluted earnings per share grew 34% year-over-year to $0.91.
  • 3Total revenue increased 8% year-over-year to $1.6 billion, driven by both net interest income (up 8%) and noninterest income (up 9%).
  • 4The efficiency ratio improved significantly, down 121 basis points year-over-year to 58.2%.
  • 5The acquisition of Franklin American Mortgage Company (FAMC) contributed positively to revenue, especially in mortgage banking fees.
  • 6Common Equity Tier 1 (CET1) ratio remained strong at 10.8%.
  • 7The company returned $529 million to stockholders through dividends and share repurchases.

Frequently Asked Questions

The acquisition of FAMC, completed on August 1, 2018, positively impacted third quarter results, particularly in noninterest income due to increased mortgage banking fees. It contributed to overall revenue growth but also increased noninterest expenses. The report provides segmented impacts, showing FAMC contributed $24 million to noninterest income and $25 million to noninterest expense in Q3 2018.

Profitability metrics showed strong improvement. Net income available to common stockholders increased by 28% year-over-year, and diluted earnings per share rose by 34%. Return on Average Tangible Common Equity (ROTCE) improved significantly to 13.3% from 10.1% in the prior year's third quarter, indicating enhanced profitability relative to tangible equity.

Citizens Financial Group demonstrated a commitment to returning capital to shareholders. In the third quarter of 2018, they increased their quarterly dividend by 23% and repurchased $400 million of common stock. The total capital returned to stockholders during the quarter was $529 million.

CFG made significant progress in managing expenses and improving efficiency. The efficiency ratio improved by 121 basis points year-over-year to 58.2%. Excluding the impact of the FAMC acquisition, the underlying efficiency ratio improved by 246 basis points to 57.0%, demonstrating effective cost discipline and execution of efficiency initiatives.