Why did earnings decline quarter-over-quarter, and was there a one-time item?

Diluted EPS fell from $0.83 to $0.77 mainly on seasonal and calendar factors rather than a one-time charge. There were no notable items in Q1 2025 (Q4 2024 had $0.02 of notable items). Net interest income fell $21 million, largely from a $28 million day-count effect, while Capital Markets fees fell $21 million on seasonal M&A softness, and expenses rose $22 million on seasonal payroll taxes. Underlying Q4 EPS was $0.85, so the sequential decline on an underlying basis is $0.08.

What is the Non-Core education loan sale and why does it matter?

CFG agreed to sell about $1.9 billion of purchased education loans from its Non-Core portfolio, with $200 million settled in Q1 and the rest settling through 2025. The sale includes a $25 million net charge-off, which was covered by an existing reserve. Management says the transaction is accretive to NIM, EPS and ROTCE after capital is redeployed into securities and buybacks, and that it accelerates the runoff of high-cost Non-Core funding.

Is the bank's credit quality deteriorating?

Not on the evidence in the release. Excluding the Non-Core transaction charge-off, net charge-offs were 51 bps, down slightly from the prior quarter. Nonaccrual loans fell 5% to $1.6 billion, and the commercial real estate General Office book continued to shrink, with ACL coverage of 12.3%. The total ACL ratio held at 1.61%, and the provision fell to $153 million from $162 million. Nonaccrual loans are still up 8% year over year, mainly in General Office, so the trend is improving sequentially but not uniformly.

What does the outlook imply for 2025, and what are the risks?

Management reaffirmed its full-year 2025 guidance and expects Q2 NII up about 3%, fee income up mid-to-high single digits, and broadly stable expenses. It also expects NIM to reach the 3.25%–3.50% medium-term target range over time. Risks flagged include continued market volatility hurting Capital Markets, slower second-half loan growth if uncertainty persists, and a possible rise in provisions if recession risk increases. Management noted that lower loan growth could support additional buybacks and lower deposit costs as offsets.

CFG 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed April 16, 2025. Cited figures are marked; the original filing is the authoritative source.

Citizens Financial Group (CFG) reported first quarter 2025 net income of $373 million^a and diluted EPS of $0.77, versus $0.83 in 4Q24 and $0.65 in 1Q24, with ROTCE of 9.6%.

There were no notable items in the quarter, so underlying and reported results were identical. Pre-provision profit was $621 million^b, down 9% quarter-over-quarter on an underlying basis, as net interest income fell 1.5% on a day-count impact while net interest margin widened 3 bps to 2.90%. Fees fell 3.5% on seasonal and market-driven weakness in Capital Markets, and expenses rose 1.7%, mainly from seasonal payroll taxes.

Credit and balance sheet items were mixed. Net charge-offs were 58 bps, but excluding a $25 million^c charge tied to the agreement to sell about $1.9 billion of Non-Core education loans, they were 51 bps and trending down, with nonaccrual loans down 5% quarter-over-quarter. The ACL ratio held at 1.61%.

Period-end loans fell 1% on the loan sale and reclassification to held-for-sale, while Core loans rose about 1%. Deposits grew 2%, led by Private Bank growth. CET1 was 10.6%, and tangible book value per share rose 5% to $33.97^d, driven by AOCI recovery from lower long-term rates.

The company repurchased $200 million of stock and declared a $0.42 quarterly dividend. Management guided to 2Q25 net interest income up about 3%, noninterest income up mid-to-high single digits, and broadly stable expenses, and reaffirmed its full-year 2025 guidance. It flagged heightened macro uncertainty from policy decisions and said that persistent volatility could weigh on Capital Markets and second-half loan growth.

02—Key points

Key Highlights

Q1 2025 EPS of $0.77 and net income of $373 million, down from $0.83 and $401 million in Q4 2024 but up from $0.65 and $334 million in Q1 2024; no notable items in the quarter, so underlying equals reported.
Net interest margin rose 3 bps QoQ to 2.90% (FTE), aided by lower deposit costs and Non-Core runoff; total deposit costs fell 15 bps to 1.87%.
Pre-provision profit of $621 million was down 9% QoQ on an underlying basis, as NII fell 1.5% on a $28 million day-count impact and fees fell 3.5%.
Agreement to sell ~$1.9 billion of Non-Core education loans: $200 million settled in Q1 with the remainder settling ratably through 2025, and the sale is accretive to NIM, EPS and ROTCE and already in the FY2025 guide.
Credit quality is stable: underlying NCO ratio of 51% excluding the $25 million Non-Core charge-off, nonaccrual loans down 5% QoQ, and ACL coverage at 1.61%.
Capital and liquidity remain strong: CET1 of 10.6%, TBV per share up 5% to $33.97, LCR of 122%, and $200 million of buybacks alongside a $0.42 quarterly dividend.
2Q25 outlook: NII up ~3%, NIM up ~5 bps, noninterest income up mid-to-high single digits, expenses broadly stable, and full-year 2025 guidance reaffirmed, with macro uncertainty flagged as a risk.

03—Questions

Frequently Asked Questions

Why did earnings decline quarter-over-quarter, and was there a one-time item?
Diluted EPS fell from $0.83 to $0.77 mainly on seasonal and calendar factors rather than a one-time charge. There were no notable items in Q1 2025 (Q4 2024 had $0.02 of notable items). Net interest income fell $21 million, largely from a $28 million day-count effect, while Capital Markets fees fell $21 million on seasonal M&A softness, and expenses rose $22 million on seasonal payroll taxes. Underlying Q4 EPS was $0.85, so the sequential decline on an underlying basis is $0.08.
What is the Non-Core education loan sale and why does it matter?
CFG agreed to sell about $1.9 billion of purchased education loans from its Non-Core portfolio, with $200 million settled in Q1 and the rest settling through 2025. The sale includes a $25 million net charge-off, which was covered by an existing reserve. Management says the transaction is accretive to NIM, EPS and ROTCE after capital is redeployed into securities and buybacks, and that it accelerates the runoff of high-cost Non-Core funding.
Is the bank's credit quality deteriorating?
Not on the evidence in the release. Excluding the Non-Core transaction charge-off, net charge-offs were 51 bps, down slightly from the prior quarter. Nonaccrual loans fell 5% to $1.6 billion, and the commercial real estate General Office book continued to shrink, with ACL coverage of 12.3%. The total ACL ratio held at 1.61%, and the provision fell to $153 million from $162 million. Nonaccrual loans are still up 8% year over year, mainly in General Office, so the trend is improving sequentially but not uniformly.
What does the outlook imply for 2025, and what are the risks?
Management reaffirmed its full-year 2025 guidance and expects Q2 NII up about 3%, fee income up mid-to-high single digits, and broadly stable expenses. It also expects NIM to reach the 3.25%–3.50% medium-term target range over time. Risks flagged include continued market volatility hurting Capital Markets, slower second-half loan growth if uncertainty persists, and a possible rise in provisions if recession risk increases. Management noted that lower loan growth could support additional buybacks and lower deposit costs as offsets.

04—Continue

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