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

Reports
Other Events·Exhibits & Filings
Filing Date
Filed July 18, 2024
Period End
July 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 July 18, 2024. Cited figures are marked; the original filing is the authoritative source.

Citizens Financial Group (CFG) reported second quarter 2024 results on July 17, 2024, disclosed in this 8-K.

Reported diluted EPS was $0.78a and net income was $392 million, up 17% sequentially. Underlying diluted EPS, which excludes notable items such as integration costs, TOP initiative costs, and the FDIC special assessment, was $0.82, up 4% from $0.79 in the prior quarter but down 21% from $1.04 a year earlier. Underlying ROTCE improved to 11.1% from 10.6% in the first quarter, though it remains well below the 13.9% reported in the year-ago quarter.

Underlying pre-provision profit rose 2% QoQ to $694 millionb, supported by a 7% sequential increase in fee income and a 1% decline in underlying expenses. The quarter's core earnings trend is mixed. Net interest income fell 2% QoQ to $1.41 billion, and net interest margin compressed 4 basis points to 2.87%, largely due to swap costs.

Year over year, NII declined 11%c as the margin fell 30 basis points. Total loans and leases declined 1% QoQ and 6% YoY, reflecting Non-Core run-off and commercial paydowns. Credit quality showed some pressure: net charge-offs rose to 52 basis points from 50, and nonaccrual loans increased to 1.08% of loans from 1.02% (up from 0.79% a year earlier), driven primarily by General Office commercial real estate.

The allowance for credit losses ratio edged up to 1.63%, though coverage of nonaccrual loans fell to 151%. Capital and liquidity strengthened. The CET1 ratio rose to 10.7% from 10.6%, and tangible book value per share increased 1.4% QoQ to $30.61d.

The company reduced FHLB advances to $553 million from $2.0 billion, lowered its period-end loan-to-deposit ratio to 80.4%, and reported a pro forma LCR of 119%. Citizens also declared a quarterly common dividend of $0.42 per share, payable August 14, 2024, to holders of record on July 31, 2024. Management continued to invest in the Private Bank, which grew deposits to $4 billion.

02—Key points

Key Highlights

  1. Reported diluted EPS of $0.78 (net income $392M), up 20% QoQ; underlying diluted EPS of $0.82, up 4% QoQ but down 21% YoY.
  2. Underlying ROTCE improved to 11.1% from 10.6% in Q1 2024, but remains below 13.9% in Q2 2023.
  3. Net interest income fell 2% QoQ to $1.41B and NIM declined 4 bps to 2.87%, mainly due to swap costs; NII is down 11% YoY.
  4. Fee income rose 7% QoQ to $553M (record Wealth and Card fees, higher Capital Markets fees), partly offsetting NII weakness.
  5. Credit quality softened: nonaccrual loans rose to 1.08% of loans (vs. 0.79% a year ago), driven by General Office CRE; net charge-offs were 52 bps.
  6. Capital and liquidity improved: CET1 at 10.7%, TBV per share up 1.4% to $30.61, FHLB advances cut to $553M, and loan-to-deposit ratio at 80.4%.
  7. Board declared a $0.42 quarterly common dividend payable August 14, 2024 (record date July 31, 2024).

03—Questions

Frequently Asked Questions

  1. What were Citizens' key earnings results for Q2 2024?

    Reported diluted EPS was $0.78 and net income was $392 million. Underlying diluted EPS, which excludes notable items, was $0.82. Underlying pre-provision profit was $694 million, up 2% from the prior quarter. Underlying EPS was down 21% from $1.04 a year earlier.

  2. Why did net interest income decline?

    Net interest income fell 2% QoQ to $1.41 billion, driven by a 4 bp decline in net interest margin to 2.87%. Management attributed the decline mainly to swap costs (about 6 bps) and higher funding costs (about 3 bps), partly offset by improved asset yields and the benefit of Non-Core run-off.

  3. Is credit quality deteriorating?

    Some metrics weakened. Nonaccrual loans rose to 1.08% of total loans from 1.02% in Q1 and 0.79% a year earlier, mainly in General Office commercial real estate. Net charge-offs rose to 52 bps from 50 bps. The allowance for credit losses ratio increased to 1.63%, although coverage of nonaccrual loans fell to 151%.

  4. What do the capital and balance sheet changes mean for investors?

    The CET1 ratio rose to 10.7% and tangible book value per share increased to $30.61. The company reduced FHLB advances to $553 million from $2.0 billion and lowered its period-end loan-to-deposit ratio to 80.4%, which points to a stronger liquidity position. Total loans declined 1% QoQ and 6% YoY, reflecting Non-Core run-off and commercial paydowns.

  5. What is the dividend announcement?

    Citizens declared a quarterly common stock dividend of $0.42 per share. It is payable on August 14, 2024, to shareholders of record at the close of business on July 31, 2024.

04—Continue

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