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CITIZENS FINANCIAL GROUP INC/RI 8-K Report, Corporate Update (Apr 18, 2024)

Reports
Other Events·Exhibits & Filings
Filing Date
Filed April 18, 2024
Period End
April 18, 2024
In the record · 2016–202610-K1210-Q328-K196

CFG filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 196 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Dec ’18Dec ’18
  2. Material agreement8-K · Jul ’21Jul ’21
  3. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 8-K filed April 18, 2024. Cited figures are marked; the original filing is the authoritative source.

Citizens Financial Group (CFG) reported first quarter 2024 results on April 17, 2024, disclosed in an 8-K filed April 18, 2024.

Reported net income was $334 milliona, or $0.65 diluted EPS, versus $189 million ($0.34) in 4Q23 and $511 million ($1.00) in 1Q23. Excluding notable items (primarily the FDIC special assessment, TOP efficiency-program costs, and integration costs), underlying diluted EPS was $0.79, down 7% from $0.85 in 4Q23 and 28% from $1.10 a year earlier. Underlying ROTCE was 10.6%, versus 11.8% in the prior quarter and 15.8% a year ago.

Underlying pre-provision profit was $683 millionb, down 5% sequentially and 24% year over year. Revenue pressure was the central theme. Net interest income fell 3% quarter over quarter to $1.44 billion, and was down 12% year over year as net interest margin compressed 39 basis points to 2.91% on higher funding costs and liquidity-building.

Management characterized NIM as stable sequentially, supported by improved asset yields and Non-Core run-off. Underlying noninterest income rose 3% sequentially to $514 millionc, led by a $31 million increase in capital markets fees. Underlying noninterest expense was broadly flat at $1.27 billion, with the Private Bank start-up investment continuing to weigh on costs.

Balance sheet and capital metrics were a relative bright spot. Period-end loans declined 2% sequentially to $143.2 billiond as the company pursued balance sheet optimization and ran off its Non-Core portfolio. Deposits were $176.4 billion, up 2% year over year but down 1% sequentially.

Management reduced FHLB advances to $2.0 billion, down 83% year over year, and the CET1 ratio held at 10.6%. Credit quality weakened modestly: the net charge-off ratio rose to 0.50% from 0.46%, and nonaccrual loans rose 8% to $1.47 billion, driven largely by General Office commercial real estate.

The board declared a quarterly dividend of $0.42 per share, payable May 15, 2024. Tangible book value per share fell 2% to $30.19, reflecting higher-rate AOCI impacts.

02—Key points

Key Highlights

  1. Reported diluted EPS of $0.65 versus $0.34 in 4Q23 and $1.00 in 1Q23; underlying diluted EPS of $0.79, down 7% QoQ and 28% YoY.
  2. Net interest margin held at 2.91% sequentially but fell 39 bps YoY; net interest income declined 3% QoQ and 12% YoY to $1.44 billion.
  3. Underlying pre-provision profit of $683 million, down 5% QoQ and 24% YoY, with underlying ROTCE at 10.6% versus 15.8% a year earlier.
  4. Underlying noninterest income rose 3% QoQ to $514 million, driven by capital markets fees (+$31 million QoQ) and card fees.
  5. Credit quality softened: nonaccrual loans up 8% QoQ to $1.47 billion (up 47% YoY), net charge-offs at 0.50% of average loans, and ACL coverage edged up to 1.61%.
  6. Liquidity and capital were solid: CET1 of 10.6%, spot loan-to-deposit ratio improved to 81%, and FHLB advances cut to $2.0 billion; TBV per share fell 2% to $30.19.
  7. Quarterly dividend of $0.42 per share declared, payable May 15, 2024; $300 million of share repurchases executed in the quarter.

03—Questions

Frequently Asked Questions

  1. Did Citizens beat or miss earnings expectations in Q1 2024?

    This 8-K does not include consensus estimates, so a beat or miss cannot be determined from the filing alone. On its own terms, underlying EPS of $0.79 declined from $0.85 in the prior quarter and $1.10 a year earlier, so the trend is weaker.

  2. Why is reported EPS ($0.65) different from underlying EPS ($0.79)?

    Underlying results exclude notable items totaling $82 million pre-tax ($0.14 per share). These include the $35 million FDIC special assessment, $44 million in TOP efficiency-program and other items, and $3 million in integration costs related to recent acquisitions.

  3. What is driving pressure on net interest income?

    Higher funding costs and the building of liquidity compressed margins year over year, with NIM down 39 bps to 2.91%. Sequentially, NIM was stable, supported by higher asset yields and the run-off of the Non-Core portfolio, offset by higher funding costs and swap impacts. Average loans declined 2% QoQ, which further reduced interest income.

  4. Is credit quality deteriorating?

    Modestly. Net charge-offs rose to 0.50% from 0.46% QoQ, and nonaccrual loans increased 8% to $1.47 billion, mainly from General Office commercial real estate. The allowance for credit losses to loans improved to 1.61%, but coverage of nonaccrual loans fell to 157% from 170%, which investors will watch closely.

  5. Is the dividend safe, and what about capital?

    The board declared a $0.42 quarterly dividend, unchanged for several quarters. The CET1 ratio of 10.6% is steady and the company repurchased $300 million of shares in the quarter. Underlying dividend payout was about 53% of underlying EPS, and the filing notes that future dividends and buybacks depend on capital, financial performance and regulatory considerations.

04—Continue

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