CITIZENS FINANCIAL GROUP INCRI

For the period ended Sep 30, 2024. Filed Nov 4, 2024.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Sep 30, 2024 · Filed Nov 4, 2024

CFG$65.10+2.9%Stored close · as of Nov 9, 2026

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Contents

Credit Quality

See Note 1 for a description of changes made to the Company’s loans and leases presentation during the first quarter of 2024.

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 4, and Note 6 in our 2023 Form 10-K.

The ACL as of September 30, 2024 compared to December 31, 2023 reflects a decrease of $32 million. For further information see Note 4.

Table 8: ACL and Related Coverage Ratios by Portfolio
September 30, 2024 · December 31, 2023
(dollars in millions) · Loans and Leases · Allowance · Coverage · Loans and Leases · Allowance · Coverage
Allowance for Loan and Lease Losses
Commercial and industrial	$43,825		$506		1.15%		$44,974	$587	1.31%
Commercial real estate	27,983		681		2.43		29,471	663	2.25
Total commercial	71,808		1,187		1.65		74,445	1,250	1.68
Residential mortgages	32,379		164		0.51		31,332	181	0.58
Home equity	15,992		102		0.64		15,040	100	0.66
Automobile	5,540		29		0.52		8,258	57	0.69
Education	11,118		288		2.59		11,834	259	2.18
Other retail	4,795		309		6.44		5,050	251	4.98
Total retail	69,824		892		1.28		71,514	848	1.19
Total loans and leases	$141,632		$2,079		1.47%		$145,959	$2,098	1.44%
Allowance for Unfunded Lending Commitments
Commercial(1)		$164		1.88%			$175	1.91%
Retail(2)		43		1.34			45	1.25
Total allowance for unfunded lending commitments		207				220
Allowance for credit losses	$141,632		$2,286		1.61%		$145,959	$2,318	1.59%

(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.

Table 9: Nonaccrual Loans and Leases
(dollars in millions) · September 30, 2024 · December 31, 2023 · Change · Percent
Commercial and industrial	$219	$297	($78)		(26%)
Commercial real estate	852	477	375		79
Total commercial	1,071	774	297		38
Residential mortgages	169	177	(8)		(5)
Home equity	281	285	(4)		(1)
Automobile	46	61	(15)		(25)
Education	59	28	31		111
Other retail	61	39	22		56
Total retail	616	590	26		4
Nonaccrual loans and leases	$1,687	$1,364	$323		24%
Nonaccrual loans and leases to total loans and leases	1.19%	0.93%	26	bps
Allowance for loan and lease losses to nonaccrual loans and leases	123	154	(31%)
Allowance for credit losses to nonaccrual loans and leases	136	170	(34%)

Table 10: Ratio of Net Charge-Offs to Average Loans and Leases
	Three Months Ended September 30,
	2024			2023
(dollars in millions)	Net Charge-Offs	Average Balance	Ratio	Net Charge-Offs	Average Balance	Ratio
Commercial and industrial	$54	$44,071	0.49%	$22	$48,908	0.18%
Commercial real estate	44	28,209	0.62	48	29,353	0.65
Total commercial	98	72,280	0.54	70	78,261	0.35
Residential mortgages	—	32,117	—	(1)	30,838	(0.02)
Home equity	(1)	15,733	(0.03)	(3)	14,589	(0.08)
Automobile	13	5,942	0.81	15	9,849	0.60
Education	24	11,155	0.85	22	12,147	0.72
Other retail	58	4,776	4.93	50	5,107	3.95
Total retail	94	69,723	0.54	83	72,530	0.46
Total loans and leases	$192	$142,003	0.54%	$153	$150,791	0.40%

	Nine Months Ended September 30,
	2024			2023
(dollars in millions)	Net Charge-Offs	Average Balance	Ratio	Net Charge-Offs	Average Balance	Ratio
Commercial and industrial	$61	$44,342	0.18%	$85	$51,136	0.22%
Commercial real estate	218	28,681	1.02	113	29,122	0.52
Total commercial	279	73,023	0.51	198	80,258	0.33
Residential mortgages	1	31,713	—	—	30,496	—
Home equity	(6)	15,387	(0.05)	(9)	14,336	(0.08)
Automobile	31	6,832	0.60	38	10,920	0.47
Education	77	11,472	0.90	62	12,455	0.66
Other retail	175	4,866	4.82	149	5,184	3.87
Total retail	278	70,270	0.53	240	73,391	0.44
Total loans and leases	$557	$143,293	0.52%	$438	$153,649	0.38%

For the three and nine months ended September 30, 2024, net charge-offs increased $39 million and $119 million, respectively, compared to the same periods in 2023. The net charge-off ratio increased 14 basis points compared to the same periods.

For the three months ended September 30, 2024, the increase in retail net charge-offs was driven by other retail. For the nine months ended September 30, 2024, the increase in retail net charge-offs was driven by other retail and education, partially offset by a decline in auto. For the three months ended September 30, 2024, the increase in commercial net charge-offs was driven by the resolution of several nonperforming credits in commercial and industrial. For the nine months ended September 30, 2024, the increase was primarily driven by the office segment of CRE, partially offset by a decline in commercial and industrial.

Commercial Loan Asset Quality

Our commercial portfolio consists of traditional commercial and industrial loans, commercial leases, and commercial real estate loans. As discussed in our 2023 Form 10-K, we utilize internal risk ratings to monitor credit quality for commercial loans and leases.

Total commercial criticized balances of $8.6 billion at September 30, 2024 increased $136 million compared to December 31, 2023.

Commercial and industrial criticized balances of $3.1 billion at September 30, 2024 decreased from $3.5 billion at December 31, 2023, primarily driven by declines in the healthcare and wholesale trade sectors.

Commercial real estate criticized balances of $5.5 billion at September 30, 2024 increased from $5.0 billion at December 31, 2023, attributable to the continued impacts of interest rates and return-to-office dynamics on the Office sector and the continued impacts of interest rates on the Multi-family sector. Approximately 96% of commercial real estate loans remain current on payments as of September 30, 2024.

For more information on the distribution of commercial loans by vintage date and regulatory classification rating, see Note 4.

Table 11: Commercial and Industrial Loans by Industry Sector
	September 30, 2024		December 31, 2023
(dollars in millions)	Balance	% of Total Loans and Leases	Balance	% of Total Loans and Leases
Industry sector
Finance and insurance
Capital call facilities	$5,853	4%	$5,780	4%
Other finance and insurance	5,993	4	6,021	4
Other manufacturing	3,766	3	3,748	2
Technology	3,400	2	3,351	2
Accommodation and food services	2,586	2	2,948	2
Health, pharma, and social assistance	2,327	2	2,598	2
Wholesale trade	2,212	1	2,467	2
Retail trade	2,238	1	2,379	2
Professional, scientific, and technical services	2,325	2	2,339	2
Other services	2,418	2	2,168	1
Energy and related	2,113	1	2,034	1
Arts, entertainment, and recreation	1,545	1	1,602	1
Administrative and waste management	1,336	1	1,599	1
Rental and leasing	1,050	1	1,073	1
Consumer products manufacturing	840	1	984	1
Automotive	1,016	1	898	1
Other	2,807	2	2,985	2
Total commercial and industrial	$43,825	31%	$44,974	31%

Table 12: Commercial Real Estate by Property Type and State
	September 30, 2024		December 31, 2023
(dollars in millions)	Balance	% of Total Loans and Leases	Balance	% of Total Loans and Leases
Property type
Multi-family	$9,952	7%	$9,367	6%
Office
Credit tenant lease and life sciences(1)	2,220	2	2,268	2
Other general office	3,156	2	3,648	3
Retail	2,987	2	3,407	2
Industrial	3,744	3	3,981	3
Co-op	1,807	1	1,796	1
Data center	991	1	841	1
Hospitality	423	—	608	—
Other	2,703	2	3,555	2
Total commercial real estate	$27,983	20%	$29,471	20%
State
New York	$6,869	5%	$7,035	5%
New Jersey	3,433	2	3,829	3
Pennsylvania	2,503	2	2,613	2
California	2,465	2	2,314	1
Texas	1,400	1	2,163	1
Massachusetts	1,769	1	1,897	1
Florida	1,185	1	1,087	1
Other Southeast(2)	2,939	2	3,056	2
Other	5,420	4	5,477	4
Total commercial real estate	$27,983	20%	$29,471	20%

(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.

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 13: Retail Loan Portfolio Analysis
September 30, 2024 · December 31, 2023
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	98.59%		0.29%		0.15%	0.45%		0.52%			97.34%	0.90%	0.38%	0.82%	0.56%
Home equity	97.49		0.58		0.17	—		1.76			97.34	0.55	0.22	—	1.89
Automobile	96.51		1.97		0.69	—		0.83			96.94	1.74	0.58	—	0.74
Education	98.84		0.39		0.22	0.02		0.53			99.14	0.41	0.19	0.02	0.24
Other retail	97.14		0.92		0.65	0.02		1.27			97.02	0.97	0.67	0.57	0.77
Total retail	98.12%		0.55%		0.24%	0.21%		0.88%			97.56%	0.85%	0.36%	0.40%	0.83%

Table 14: Retail Asset Quality Metrics
	September 30, 2024	December 31, 2023
Average refreshed FICO for total portfolio	774	772
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 4.

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