8-KOther EventsExhibits & Filings

CITIZENS FINANCIAL GROUP INC/RI 8-K Report, Corporate Update (Jan 22, 2019)

Filed January 22, 2019For Securities:CFGCFG-PHCFG-PECFG-PI

Summary

Citizens Financial Group, Inc. (CFG) reported its fourth quarter and full-year 2018 financial results on January 22, 2019. The company announced a 19% increase in its quarterly cash dividend to $0.32 per common share, signaling confidence in its financial health and commitment to returning capital to shareholders. While reported net income for Q4 2018 saw a decrease compared to Q4 2017, primarily due to significant one-time benefits in the prior year related to tax legislation, the company highlighted strong underlying performance. On an "Underlying" basis, which excludes notable items, CFG demonstrated robust growth. Fourth quarter 2018 Underlying net income increased 32% year-over-year, driven by a 9% rise in total revenue. Full-year 2018 Underlying net income also increased by 32%. This performance was supported by solid loan growth, particularly in the commercial segment, and improvements in net interest margin and efficiency ratios when adjusted for acquisition costs and notable items. The acquisition of Franklin American Mortgage Company (FAMC) was integrated, with its impact detailed in the filing.

Key Highlights

  • 1Citizens Financial Group declared a 19% increase in its quarterly cash dividend to $0.32 per common share.
  • 2Fourth quarter 2018 Underlying net income available to common stockholders increased 32% year-over-year, reaching $459 million.
  • 3Full-year 2018 Underlying net income available to common stockholders increased 32% year-over-year, reaching $1.7 billion.
  • 4Total revenue grew 9% year-over-year on an Underlying basis in Q4 2018, driven by net interest income and noninterest income.
  • 5The efficiency ratio improved on an Underlying basis, reaching 55.8% in Q4 2018, reflecting strong expense management.
  • 6Loan growth was solid, with average total loans and leases increasing 5% year-over-year in Q4 2018.
  • 7The Common Equity Tier 1 (CET1) capital ratio remained strong at 10.6% as of December 31, 2018.

Frequently Asked Questions

Citizens Financial Group reported a net income of $465 million, or $0.96 per diluted common share, for the fourth quarter of 2018. This is a decrease compared to the fourth quarter of 2017, which saw a net income of $666 million, or $1.35 per diluted common share. The decrease is largely attributed to significant one-time benefits in Q4 2017 related to tax legislation, which are excluded from 'Underlying' results.

On an 'Underlying' basis, which excludes notable items, Citizens Financial Group showed strong performance. Fourth quarter 2018 net income available to common stockholders increased 32% year-over-year to $459 million, or $0.98 per diluted share. For the full year 2018, underlying net income available to common stockholders increased 32% to $1.7 billion, with underlying diluted EPS of $3.56.

The acquisition of Franklin American Mortgage Company (FAMC) was completed on August 1, 2018. The filing details the integration costs associated with FAMC and provides 'Underlying excluding FAMC' results to show performance without the acquisition's impact. The acquisition contributed to loan growth, particularly in loans held for sale and mortgage banking fees, but also increased noninterest expense due to integration costs.

Citizens Financial Group maintained robust capital strength, with a Common Equity Tier 1 (CET1) capital ratio of 10.6% at the end of 2018, well above regulatory requirements. The company also demonstrated its commitment to returning capital by increasing its quarterly cash dividend by 19% to $0.32 per common share. In 2018, the company returned a total of $1.5 billion to shareholders through dividends and share repurchases, a 31% increase from 2017.