CITIZENS FINANCIAL GROUP INCRI

For the period ended Dec 31, 2023. Filed Feb 16, 2024.

About this filing

A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2023 · Filed Feb 16, 2024

CFG$63.24-0.9%Stored close · as of Nov 6, 2026

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Contents

Credit Quality

The ACL is a reserve to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see “Critical Accounting Estimates — Allowance for Credit Losses” and Note 6.

The ACL as of December 31, 2023 compared to December 31, 2022 reflects a reserve increase of $78 million. For further information see Note 6.

Table 11: Allocation of the ALLL
	December 31,
(dollars in millions) · 2023 · 2022
Commercial and industrial	$561	30%	$581	33%
Commercial real estate	663	20	456	18
Leases	26	1	23	1
Total commercial	1,250	51	1,060	52
Residential mortgages	181	22	207	19
Home equity	100	10	89	9
Automobile	57	6	131	8
Education	259	8	268	8
Other retail	251	3	228	4
Total retail	848	49	923	48
Total loans and leases	$2,098	100%	$1,983	100%

Table 12: ACL and Related Coverage Ratios by Portfolio
	December 31,
2023 · 2022
(dollars in millions) · Loans and Leases · Allowance · Coverage · Loans and Leases · Allowance · Coverage
Allowance for Loan and Lease Losses
Commercial and industrial	$43,826		$561		1.28%		$51,836	$581	1.12%
Commercial real estate	29,471		663		2.25		28,865	456	1.58
Leases	1,148		26		2.24		1,479	23	1.59
Total commercial	74,445		1,250		1.68		82,180	1,060	1.29
Residential mortgages	31,332		181		0.58		29,921	207	0.69
Home equity	15,040		100		0.66		14,043	89	0.63
Automobile	8,258		57		0.69		12,292	131	1.07
Education	11,834		259		2.18		12,808	268	2.09
Other retail	5,050		251		4.98		5,418	228	4.21
Total retail	71,514		848		1.19		74,482	923	1.24
Total loans and leases	$145,959		$2,098		1.44%		$156,662	$1,983	1.27%
Allowance for Unfunded Lending Commitments
Commercial(1)		$175		1.91%			$207	1.54%
Retail(2)		45		1.25			50	1.31
Total allowance for unfunded lending commitments		220				257
Allowance for credit losses	$145,959		$2,318		1.59%		$156,662	$2,240	1.43%

(1)Coverage ratio includes total commercial allowance for unfunded lending commitments and total commercial allowance for loan and lease losses in the numerator and total commercial loans and leases in the denominator.

(2) Coverage ratio includes total retail allowance for unfunded lending commitments and total retail allowance for loan losses in the numerator and total retail loans in the denominator.

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Table 13: Nonaccrual Loans and Leases
	December 31,
(dollars in millions) · 2023 · 2022 · Change · Percent
Commercial and industrial	$294	$249	$45		18%
Commercial real estate	477	103	374		NM
Leases	3	—	3		100
Total commercial	774	352	422		120
Residential mortgages	177	234	(57)		(24)
Home equity	285	241	44		18
Automobile	61	56	5		9
Education	28	33	(5)		(15)
Other retail	39	28	11		39
Total retail	590	592	(2)		—
Nonaccrual loans and leases	$1,364	$944	$420		44%
Nonaccrual loans and leases to total loans and leases	0.93%	0.60%	33	bps
Allowance for loan and lease losses to nonaccrual loans and leases	154	210	(56%)
Allowance for credit losses to nonaccrual loans and leases	170	237	(67%)

Table 14: Ratio of Net Charge-Offs to Average Loans and Leases
	Year Ended December 31,
	2023			2022
(dollars in millions)	Net Charge-Offs	Average Balance	Ratio	Net Charge-Offs	Average Balance	Ratio
Commercial and industrial	$110	$48,693	0.23%	$51	$50,002	0.10%
Commercial real estate	161	29,206	0.56	1	24,746	—
Leases	(4)	1,305	(0.29)	—	1,521	(0.03)
Total commercial	267	79,204	0.34	52	76,269	0.07
Residential mortgages	2	30,660	—	(1)	27,759	—
Home equity	(10)	14,475	(0.07)	(28)	13,057	(0.22)
Automobile	55	10,374	0.53	36	13,729	0.26
Education	92	12,333	0.74	59	13,047	0.45
Other retail	203	5,171	3.93	152	5,483	2.77
Total retail	342	73,013	0.47	218	73,075	0.30
Total loans and leases	$609	$152,217	0.40%	$270	$149,344	0.18%

For the year ended December 31, 2023, net charge-offs increased $339 million and the net charge-off ratio increased 22 basis points compared to 2022.

For the year ended December 31, 2023, the increase in net charge-offs reflects a $124 million increase in retail, primarily other retail and education, and a $215 million increase in commercial, with increases in commercial real estate and commercial and industrial. The increase in commercial real estate was driven by Commercial Real Estate Office while the commercial and industrial increase reflects company-specific idiosyncratic charge-offs. Retail is increasing from pandemic lows as expected.

Commercial Loan Asset Quality

Our commercial portfolio consists of traditional commercial and industrial loans, commercial leases, and commercial real estate loans. We utilize internal risk ratings to monitor credit quality for commercial loans and leases. For more information on internal risk ratings see Note 6.

Total commercial criticized balances of $8.4 billion at December 31, 2023 increased $2.9 billion compared to December 31, 2022, and declined $524 million compared to September 30, 2023.

Commercial and industrial criticized balances of $3.4 billion at December 31, 2023 increased from $3.1 billion at December 31, 2022, primarily driven by the impact of rising interest rates and certain sector-specific labor challenges in the Arts, entertainment and recreation sector, as well as the trade sectors.

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Commercial real estate criticized balances of $5.0 billion at December 31, 2023 increased from $2.4 billion at December 31, 2022, primarily driven by the combined impacts of interest rates and return-to-office dynamics on the Office sector and the impacts of interest rates on the Multi-family sector. Approximately 98% of commercial real estate loans remain current on payments as of December 31, 2023.

For more information on the distribution of commercial loans by vintage date and internal risk rating, see Note 6.

Table 15: Commercial and Industrial Loans by Industry Sector
	December 31, 2023		December 31, 2022
(dollars in millions)	Balance	% of Total Commercial and Industrial	Balance	% of Total Commercial and Industrial
Finance and insurance
Capital call facilities	$5,780	13%	$6,753	13%
Other finance and insurance	5,991	14	5,310	10
Other manufacturing	3,616	8	4,474	9
Technology	3,307	8	4,367	8
Accommodation and food services	2,917	7	3,572	7
Health, pharma, and social assistance	2,562	6	3,056	6
Professional, scientific, and technical services	2,313	4	3,067	6
Wholesale trade	2,391	5	2,955	6
Retail trade	2,366	5	2,391	5
Other services	2,081	5	2,713	5
Energy and related	1,973	5	2,299	4
Rental and leasing	1,069	2	1,542	3
Consumer products manufacturing	893	2	1,511	3
Administrative and waste management	1,549	4	1,710	3
Arts, entertainment, and recreation	1,602	4	1,587	3
Automotive	894	2	1,316	3
Other	2,522	6	3,091	6
Total commercial and industrial(1)	$43,826	100%	$51,715	100%

(1) Excludes PPP loans of $121 million as of December 31, 2022.

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Table 16: Commercial Real Estate by Property Type and State
	December 31, 2023		December 31, 2022
(dollars in millions)	Balance	% of Total CRE	Balance	% of Total CRE
Property type
Multi-family	$9,367	32%	$8,696	30%
Office
Credit tenant lease and life sciences(1)	2,268	8	2,205	8
Other general office	3,648	12	4,048	14
Retail	3,407	12	3,208	11
Industrial	3,981	14	3,344	12
Co-op	1,796	6	1,824	6
Data center	841	3	870	3
Hospitality	608	2	638	2
Other	3,555	11	4,032	14
Total commercial real estate	$29,471	100%	$28,865	100%
State
New York	$7,035	24%	$7,224	25%
New Jersey	3,829	13	4,300	15
Pennsylvania	2,613	9	2,819	10
California	2,314	8	1,878	7
Texas	2,163	7	1,844	6
Massachusetts	1,897	6	1,688	6
Florida	1,087	4	799	3
Other Southeast(2)	3,056	10	3,042	10
Other	5,477	19	5,271	18
Total commercial real estate	$29,471	100%	$28,865	100%

(1) Credit tenant lease includes loans to nationally recognized tenants with high credit ratings and life sciences includes loans to provide lab and office space for tenants involved in the study and development of scientific discoveries.

(2) Includes Georgia, Maryland, North Carolina, South Carolina and Virginia.

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Table 17: Commercial Real Estate by Geography
	As of December 31, 2023
	Office
(dollars in millions)	Multi-Family	Credit Tenant Lease and Life Sciences(1)	Other General Office	Retail	Industrial	Co-op	Other	Total
New York City
Brooklyn	$1,177	$18	$69	$161	$38	$57	$109	$1,629
Manhattan	645	47	118	85	—	1,374	336	2,605
Other NYC	600	3	196	126	85	217	178	1,405
New York - ex. NYC	387	23	125	304	107	148	302	1,396
New Jersey	1,741	98	362	719	444	—	465	3,829
Pennsylvania	1,272	247	200	665	129	—	100	2,613
California	274	479	344	—	635	—	582	2,314
Texas	550	128	311	23	398	—	753	2,163
Massachusetts	252	679	127	246	129	—	464	1,897
Florida	409	—	39	115	381	—	143	1,087
Other Southeast(2)	724	185	930	239	352	—	626	3,056
Other	1,336	361	827	724	1,283	—	946	5,477
Total commercial real estate	$9,367	$2,268	$3,648	$3,407	$3,981	$1,796	$5,004	$29,471

(2) Includes Georgia, Maryland, North Carolina, South Carolina and Virginia.

Retail Loan Asset Quality

We utilize credit scores provided by FICO, which are generally refreshed on a quarterly basis, and payment and delinquency status, among other data points, to monitor credit quality for retail loans. FICO credit scores represent current and historical national industry-wide consumer level credit performance data, which management believes are the strongest indicator of potential credit losses over the contractual life of the loan and a good predictor of a borrower’s future payment performance.

Table 18: Retail Loan Portfolio Analysis
December 31, 2023 · December 31, 2022
Days Past Due and Accruing · Days Past Due and Accruing
	Current	30-59	60-89	90+	Nonaccrual	Current	30-59	60-89	90+	Nonaccrual
Residential mortgages(1)	97.34%		0.90%		0.38%	0.82%		0.56%			97.68%	0.32%	0.15%	1.07%	0.78%
Home equity	97.34		0.55		0.22	—		1.89			97.68	0.46	0.14	—	1.72
Automobile	96.94		1.74		0.58	—		0.74			97.93	1.24	0.37	—	0.46
Education	99.14		0.41		0.19	0.02		0.24			99.30	0.28	0.13	0.03	0.26
Other retail	97.02		0.97		0.67	0.57		0.77			97.71	0.81	0.55	0.41	0.52
Total retail	97.56%		0.85%		0.36%	0.40%		0.83%			98.02%	0.52%	0.21%	0.46%	0.79%

Table 19: Retail Asset Quality Metrics
	December 31, 2023	December 31, 2022
Average refreshed FICO for total portfolio	772	770
CLTV ratio for secured real estate(1)	50%	50%

(1) The real estate secured portfolio CLTV is calculated as the mortgage and second lien loan balance divided by the most recently available value of the property.

For more information on the aging of accruing and nonaccrual retail loans, and the distribution of retail loans by vintage date and FICO score, see Note 6.

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