UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended
December 31, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From
(Not Applicable)
Commission File Number 001-36636
(Exact name of the registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
05-0412693
(I.R.S. Employer
Identification Number)
One Citizens Plaza, Providence, RI 02903
(Address of principal executive offices, including zip code)
(203) 900-6715
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $0.01 par value per share
Depositary Shares, each representing a 1/40th interest in a share of 6.350%
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D
Depositary Shares, each representing a 1/40th interest in a share of 5.000%
Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E
CFG
CFG PrD
CFG PrE
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☑ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
the Exchange Act:
Large accelerated filer
Non-accelerated filer
☑
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
The aggregate market value of voting stock held by non-affiliates of the registrant was $12,304,245,801 (based on the June 30, 2023 closing price of Citizens
Financial Group, Inc. common shares of $26.08 as reported on the New York Stock Exchange). There were 458,756,723 shares of the registrant’s common stock
($0.01 par value) outstanding on February 1, 2024.
Documents incorporated by reference
Portions of Citizens Financial Group, Inc.’s proxy statement to be filed with the United States Securities and Exchange Commission in connection with Citizens
Financial Group, Inc.’s 2024 annual meeting of stockholders (the “Proxy Statement”) are incorporated by reference into Part III hereof. Such Proxy Statement will be
filed within 120 days of Citizens Financial Group, Inc.’s fiscal year ended December 31, 2023.
Table of Contents
Glossary of Acronyms and Terms ...............................................................................................................................................
Forward-looking Statements .......................................................................................................................................................
Part I.
Item 1. Business ....................................................................................................................................................................
Item 1A. Risk Factors ..............................................................................................................................................................
Item 1B. Unresolved Staff Comments .................................................................................................................................
Item 1C. Cybersecurity ..........................................................................................................................................................
Item 2. Properties .................................................................................................................................................................
Item 3. Legal Proceedings ...................................................................................................................................................
Item 4. Mine Safety Disclosures .........................................................................................................................................
Part II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities .......................................................................................................................................................................
Item 6. Reserved ...................................................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ......................................................................
Item 8. Financial Statements and Supplementary Data ..............................................................................................
Consolidated Balance Sheets .................................................................................................................................
Consolidated Statements of Operations ..............................................................................................................
Consolidated Statements of Comprehensive Income .......................................................................................
Consolidated Statements of Changes in Stockholders’ Equity ......................................................................
Consolidated Statements of Cash Flows ..............................................................................................................
Notes to Consolidated Financial Statements .....................................................................................................
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...............
Item 9A. Controls and Procedures ......................................................................................................................................
Item 9B. Other Information ..................................................................................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ......................................................
Part III.
Item 10. Directors, Executive Officers and Corporate Governance ...........................................................................
Item 11. Executive Compensation ......................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.........................................................................................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence .......................................
Item 14. Principal Accountant Fees and Services ...........................................................................................................
Part IV.
Item 15. Exhibits and Financial Statement Schedules ...................................................................................................
Item 16. Form 10-K Summary ..............................................................................................................................................
Signatures ........................................................................................................................................................................................
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Citizens Financial Group, Inc. | 1
GLOSSARY OF ACRONYMS AND TERMS
The following is a list of common acronyms and terms used regularly in our financial reporting:
AACL
ACL
AFS
ALLL
ALM
AOCI
ASU
ATM
Adjusted Allowance for Credit Losses
Allowance for Credit Losses: Allowance for Loan and Lease Losses plus
Allowance for Unfunded Lending Commitments
Available for Sale
Allowance for Loan and Lease Losses
Asset and Liability Management
Accumulated Other Comprehensive Income (Loss)
Accounting Standards Update
Automated Teller Machine
Bank Holding Company Act
BHC
Board or Board of Directors
The Bank Holding Company Act of 1956
Bank Holding Company
The Board of Directors of Citizens Financial Group, Inc.
bps
Basis Points
Capital Plan Rule
Federal Reserve Regulation Y Capital Plan Rule
CBNA
CCAR
CCB
CECL
CET1
CEO
Citizens Bank, National Association
Comprehensive Capital Analysis and Review
Capital Conservation Buffer
Current Expected Credit Losses (ASU 2016-13, Financial Instruments-Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
Common Equity Tier 1
Chief Executive Officer
CET1 capital ratio
Common Equity Tier 1 capital divided by total risk-weighted assets as defined
under the U.S. Basel III Standardized approach
CFPB
Consumer Financial Protection Bureau
Citizens, CFG, the
Company, we, us, or our
CLTV
CMO
COVID
CRA
CRE
DE&I
DIF
Citizens Financial Group, Inc. and its Subsidiaries
Combined Loan-to-Value
Collateralized Mortgage Obligation
Coronavirus Disease
Community Reinvestment Act
Commercial Real Estate
Diversity, Equity and Inclusion
Deposit Insurance Fund
Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EAD
EEO-1 report
EPS
ESG
ESPP
EVE
Exposure at Default
Mandatory report on workforce demographics submitted annually to the U.S.
Equal Employment Opportunity Commission
Earnings Per Share
Environmental, Social, and Governance
Employee Stock Purchase Plan
Economic Value of Equity
Exchange Act
The Securities Exchange Act of 1934, as amended
Fannie Mae (FNMA)
Federal National Mortgage Association
FASB
FCA
Financial Accounting Standards Board
Financial Conduct Authority
Citizens Financial Group, Inc. | 2
FDIA
FDIC
Federal Deposit Insurance Act
Federal Deposit Insurance Corporation
FDM
Federal Banking Regulators
FFIEC
FHA
FHC
FHLB
FICO
FINRA
Financially Distressed Modification
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation and Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council
Federal Housing Administration
Financial Holding Company
Federal Home Loan Bank
Fair Isaac Corporation (credit rating)
Financial Industry Regulation Authority
FRB or Federal Reserve
Freddie Mac (FHLMC)
Board of Governors of the Federal Reserve System and, as applicable, Federal
Reserve Bank(s)
Federal Home Loan Mortgage Corporation
FTE
FTP
GAAP
GDP
GLBA
Fully Taxable Equivalent
Funds Transfer Pricing
Accounting Principles Generally Accepted in the United States of America
Gross Domestic Product
Gramm-Leach-Bliley Act of 1999
Ginnie Mae (GNMA)
Government National Mortgage Association
GSE
HSBC
Government Sponsored Entity
HSBC Bank U.S.A., N.A.
HSBC transaction
HTM
Acquisition of HSBC East Coast branches and national online deposit business
Held To Maturity
IDI
Investors
IPO
JMP
Last-of-Layer
LHFS
LGD
LIBOR
LIHTC
LTV
M&A
MD&A
Mid-Atlantic
Midwest
Modified AACL transition
Modified CECL transition
MSRs
New England
NM
NMTC
Insured Depository Institution
Investors Bancorp, Inc. and its subsidiaries
Initial Public Offering of Citizens Financial Group, Inc. in 2014
JMP Group LLC
Last-of-layer is a fair value hedge of the interest rate risk of a portfolio of
similar prepayable assets whereby the last dollar amount within the portfolio of
assets is identified as the hedged item
Loans Held for Sale
Loss Given Default
London Interbank Offered Rate
Low Income Housing Tax Credit
Loan to Value
Merger and Acquisition
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
District of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania,
Virginia, and West Virginia
Illinois, Indiana, Michigan, and Ohio
The Day-1 CECL adoption entry booked to ACL plus 25% of subsequent CECL ACL
reserve build
The Day-1 CECL adoption entry booked to retained earnings plus 25% of
subsequent CECL ACL reserve build
Mortgage Servicing Rights
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
Not meaningful
New Markets Tax Credit
Citizens Financial Group, Inc. | 3
NSFR
OCC
OCI
OFAC
Operating Leverage
OTC
Parent Company
PCD
PD
peers or peer regional
banks
PPP
REIT
Net Stable Funding Ratio
Office of the Comptroller of the Currency
Other Comprehensive Income (Loss)
U.S. Treasury Department Office of Foreign Assets Control
Period-over-period percent change in total revenue, less the period-over-period
percent change in noninterest expense
Over the Counter
Citizens Financial Group, Inc. (the Parent Company of Citizens Bank, National
Association and other subsidiaries)
Purchased Credit Deteriorated
Probability of Default
Comerica, Fifth Third, Huntington, KeyCorp, M&T, PNC, Regions, Truist and U.S.
Bancorp
The U.S. Small Business Administration’s Paycheck Protection Program
Real estate investment trust
ROTCE
RPA
RWA
SBA
SCB
SEC
SOFR
SVaR
TBAs
TDR
Return on Average Tangible Common Equity
Risk Participation Agreement
Risk-Weighted Assets
United States Small Business Administration
Stress Capital Buffer
United States Securities and Exchange Commission
Secured Overnight Financing Rate
Stressed Value at Risk
To-Be-Announced Mortgage Securities
Troubled Debt Restructuring
Tier 1 capital ratio
Tier 1 leverage ratio
TOP
Total capital ratio
USDA
VA
VaR
VIE
Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative
perpetual preferred equity that qualifies as additional tier 1 capital, divided by
total risk-weighted assets as defined under the U.S. Basel III Standardized
approach
Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative
perpetual preferred equity that qualifies as additional tier 1 capital, divided by
quarterly adjusted average assets as defined under the U.S. Basel III
Standardized approach
Tapping Our Potential
Total capital, which includes Common Equity Tier 1 capital, tier 1 capital and
allowance for credit losses and qualifying subordinated debt that qualifies as
tier 2 capital, divided by total risk-weighted assets as defined under the U.S.
Basel III Standardized approach
United States Department of Agriculture
United States Department of Veterans Affairs
Value at Risk
Variable Interest Entity
Citizens Financial Group, Inc. | 4
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-
looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,”
“intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook,”
“guidance” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and
“could.”
Forward-looking statements are based upon the current beliefs and expectations of management, and on
information currently available to management. Our statements speak as of the date hereof, and we do not
assume any obligation to update these statements or to update the reasons why actual results could differ from
those contained in such statements in light of new information or future events. We caution you, therefore,
against relying on any of these forward-looking statements. They are neither statements of historical fact nor
guarantees or assurances of future performance. While there is no assurance that any list of risks and
uncertainties or risk factors is complete, important factors that could cause actual results to differ materially
from those in the forward-looking statements include the following, without limitation:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Negative economic, business and political conditions, including as a result of the interest rate
environment, supply chain disruptions, inflationary pressures and labor shortages, that adversely
affect the general economy, housing prices, the job market, consumer confidence and spending
habits;
The general state of the economy and employment, as well as general business and economic
conditions, and changes in the competitive environment;
Our capital and liquidity requirements under regulatory standards and our ability to generate
capital and liquidity on favorable terms;
The effect of changes in our credit ratings on our cost of funding, access to capital markets,
ability to market our securities, and overall liquidity position;
The effect of changes in the level of commercial and consumer deposits on our funding costs and
net interest margin;
Our ability to implement our business strategy, including the cost savings and efficiency
components, and achieve our financial performance goals, including the anticipated benefits of
the Private Bank start-up investment and Investors acquisition;
The effects of geopolitical instability, including the wars in Ukraine and the Middle East, on
economic and market conditions, inflationary pressures and the interest rate environment,
commodity price and foreign exchange rate volatility, and heightened cybersecurity risks;
Our ability to comply with heightened supervisory requirements and expectations;
Liabilities and business restrictions resulting from litigation and regulatory investigations;
The effect of changes in interest rates on our net interest income, net interest margin and our
mortgage originations, mortgage servicing rights and mortgages held for sale;
Changes in interest rates and market liquidity, as well as the magnitude of such changes, which
may reduce interest margins, impact funding sources and affect the ability to originate and
distribute financial products in the primary and secondary markets;
Financial services reform and other current, pending or future legislation or regulation that could
have a negative effect on our revenue and businesses;
Environmental risks, such as physical or transition risks associated with climate change, and
social and governance risks, that could adversely affect our reputation, operations, business, and
customers;
A failure in or breach of our compliance with laws, as well as operational or security systems or
infrastructure, or those of our third-party vendors or other service providers, including as a result
of cyber-attacks; and
Management’s ability to identify and manage these and other risks.
Citizens Financial Group, Inc. | 5
In addition to the above factors, we also caution that the actual amounts and timing of any future
common stock dividends or share repurchases will be subject to various factors, including our capital position,
financial performance, capital impacts of strategic initiatives, market conditions, and regulatory considerations,
as well as any other factors that our Board of Directors deems relevant in making such a determination.
Therefore, there can be no assurance that we will repurchase shares from or pay any dividends to holders of our
common stock, or as to the amount of any such repurchases or dividends.
More information about factors that could cause actual results to differ materially from those described
in the forward-looking statements can be found under Item 1A “Risk Factors.”
ITEM 1. BUSINESS
PART I
Citizens Financial Group, Inc. is headquartered in Providence, Rhode Island. We offer a broad range of
retail and commercial banking products and services to individuals, small businesses, middle-market companies,
large corporations and institutions. Our products and services are offered through more than 1,100 branches in 14
states and the District of Columbia and 105 retail and commercial non-branch offices, though certain lines of
business serve national markets. At December 31, 2023, we had total assets of $222.0 billion, total deposits of
$177.3 billion and total stockholders’ equity of $24.3 billion.
We are a BHC incorporated under Delaware state law in 1984 and our primary federal regulator is the
FRB. CBNA is our banking subsidiary, whose primary federal regulator is the OCC.
Business Segments
We manage our business through two primary business segments: Consumer Banking and Commercial
Banking. Our activities outside these segments are classified as Non-Core or Other. Non-Core includes our indirect
auto and certain purchased consumer loan portfolios that we discontinued the origination of as part of our
recently announced balance sheet optimization strategy. Other includes treasury activities, wholesale funding,
the securities portfolio, community development assets, and other unallocated assets, liabilities, capital,
revenues, provision (benefit) for credit losses and expenses, including income tax expense. For additional
information regarding our business segments see the “Business Operating Segments” section of Item 7 and Note
26 in Item 8.
Consumer Banking Segment
Consumer Banking serves consumer customers and small businesses with annual revenues of up to $25
million, with products and services that include deposits, mortgage and home equity lending, credit cards, small
business loans, wealth management and investment services largely across our 14-state traditional banking
footprint. We also offer education and point-of-sale finance loans in addition to select digital deposit products
nationwide. Citizens Private Bank, launched during 2023, integrates wealth management and banking services to
serve high net-worth individuals and families, as well as businesses.
Consumer Banking operates a multi-channel distribution network with a workforce of approximately
5,300 branch colleagues, approximately 1,100 branches, including 187 in-store locations, and approximately
3,200 ATMs. Our network includes approximately 1,100 specialists covering lending, savings and investment needs
as well as a broad range of small business products and services. We serve customers on a national basis through
telephone service centers as well as through our online and mobile platforms where we offer customers the
convenience of depositing funds, paying bills and transferring money between accounts and from person to
person, as well as a host of other everyday transactions.
Commercial Banking Segment
Commercial Banking primarily serves companies and institutions with annual revenues of $25 million to
more than $3.0 billion and strives to be a trusted advisor to our clients and preferred provider for their banking
needs. We offer a broad complement of financial products and solutions, including lending and leasing, deposit
and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as
well as syndicated loans, corporate finance, mergers and acquisitions, and debt and equity capital markets
capabilities.
Citizens Financial Group, Inc. | 6
Commercial Banking is organized around client segments and their banking needs. Corporate Banking,
Commercial Real Estate, Capital Markets and Advisory, and Treasury Solutions work together to understand client
needs and provide comprehensive solutions to meet those needs. We acquire new clients through a coordinated
approach to the market, leveraging deep industry knowledge in specialized banking groups and a geographic
coverage model.
Corporate Banking serves commercial and industrial clients with annual gross revenues of $25 million to
$500 million, and corporate clients with annual revenues of $500 million to more than $3.0 billion in the United
States. In several areas, such as Aerospace, Defense and Government Services, Communications, Transportation
and Logistics, Food and Restaurants, Human Capital Management, and Gaming we offer a more dedicated and
tailored approach to better meet the unique needs of these client segments.
Commercial Real Estate provides customized debt capital solutions for middle-market operators,
institutional developers, investors, and REITs. Commercial Real Estate provides financing for projects primarily in
the multi-family, office, industrial, retail, healthcare and hospitality sectors.
Capital Markets and Advisory serves clients through key product groups including Corporate Finance,
Capital Markets, and Global Markets. Corporate Finance provides advisory services to middle-market and mid-
corporate clients, including mergers and acquisitions and capital structure advice. The team works closely with
industry-sector specialists within capital markets to advise our clients. Corporate Finance also provides
acquisition and follow-on financing for new and recapitalized portfolio companies of key sponsors, with services
meeting the unique and time-sensitive needs of private equity firms, management companies and funds, and
underwriting and portfolio management expertise for leveraged transactions and relationships. Capital Markets
originates, structures and underwrites credit and equity facilities targeting middle-market, mid-corporate and
private equity sponsors. They focus on offering value-added ideas to optimize their capital structures, including
advising on and facilitating mergers and acquisitions, valuations, tender offers, financial restructurings, bond and
equity underwriting, asset sales, divestitures and other corporate reorganizations and business combinations.
Capital Markets also provides sales and trading across loan, fixed income and equity products, as well as other
brokerage services including equity research. Global Markets provides foreign exchange, interest rate and
commodities risk management services.
The Treasury Solutions product group supports Commercial Banking and certain small business clients
with treasury management solutions, including domestic and international products and services related to
receivables, payables, information reporting and liquidity management, as well as commercial credit cards and
trade finance.
Business Strategy
Our mission is to help our customers, colleagues and communities reach their potential, and our vision is
to become a top-performing bank distinguished by our customer-centric culture, mindset of continuous
improvement, product innovation, and excellent capabilities. We strive to understand customer and client needs,
so we can tailor advice and solutions to help make them more successful. Our business strategy is designed to
maximize the full potential of our businesses, drive sustainable growth and enhance profitability. Our success
rests on our ability to distinguish ourselves as follows:
Maintain a high-performing, customer-centric organization: We continually strive to enhance our
“customer-first” culture by emphasizing the “voice of the customer” to deliver the best possible banking
experience. We seek to deepen relationships with our customers by offering a full suite of products designed to
meet their unique needs. In addition, we are taking talent management to the next level, with a goal of
attracting, developing and retaining great people, while ensuring strong leadership, teamwork, and a sense of
empowerment, accountability and urgency.
Develop differentiated value propositions to acquire, deepen, and retain core customer segments: Our
focus is on select customer segments where we believe we are well positioned to compete. In Consumer Banking,
we focus on serving mass affluent and affluent customers, small businesses and high-net-worth individuals and
families. In 2023, we launched the Private Bank, which seeks to serve high-net-worth individuals and families, as
well as commercial clients, to integrate our wealth management and banking services. In Commercial Banking,
we focus on serving customers in the middle-market, mid-corporate, and select industry verticals. We have
integrated the Investors acquisition and HSBC transaction and are focused on improving branch productivity and
deepening relationships with those customers. By developing differentiated and targeted value propositions,
building our fee-based businesses and developing innovative product solutions, we believe we can attract new
customers, deepen relationships with existing customers and deliver an enhanced customer experience.
Citizens Financial Group, Inc. | 7
Build excellent capabilities designed to help us stand out from competitors: We strive to deliver
seamless, multi-channel experiences that allow customers to interact with us when, where and how they choose.
We are enhancing capabilities in key areas including consumer lending, wealth, capital markets and payments.
We are on a multi-year digital transformation journey across our Consumer and Commercial organizations to
digitize end-to-end customer experiences and transform our marketing to drive consumer-direct acquisition in
order to satisfy rapidly changing customer preferences. We strive to use advanced data analytics and artificial
intelligence for personalization and to provide timely, insight-driven, tailored advice in order to deliver solutions
to consumer and commercial customers throughout their lifecycles.
Operate with financial discipline and a mindset of continuous improvement to self-fund investments: We
believe that continued focus on operational efficiency is critical to our future profitability and ability to continue
to reinvest to drive future growth. We launched the first Tapping our Potential (“TOP”) initiative in 2014 and
have launched additional programs in subsequent years. These programs are designed to transform how we
operate and to improve the effectiveness, efficiency, and competitiveness of our franchise. Our TOP 8 program
was completed in 2023, and we launched a TOP 9 program to allow us to continue to self-fund investments.
Prudently grow and optimize our balance sheet: We operate with a strong balance sheet with regard to
capital and liquidity, coupled with a well-defined and prudent risk appetite. We continue to focus on thoughtfully
growing our balance sheet by actively managing capital and resource allocations towards relationships-oriented
growth to generate attractive risk-adjusted returns. Our goal is to be good stewards of our resources and
continue to rigorously evaluate our execution.
Modernize our technology and operational models to improve delivery, organizational agility and speed
to market: We are continuing to modernize our technology environment by strengthening our infrastructure and
migrating applications to the cloud. We have deployed and scaled an agile operating model to improve our speed-
to-market, deliver innovative products and services and strengthen collaboration across teams. We will also
continue to actively incubate new innovative ideas and harness external innovation through FinTech partnerships
to help deliver differentiated value-added experiences for our customers.
Embed risk management within our culture and operations: Given that the quality of our risk
management program directly affects our ability to execute our strategy, we continue to work to further
strengthen our risk management culture. Moreover, we are committed to continuously enhancing our processes
and talent, and to making improvements in the platform including ongoing investments in risk technology and
frameworks. These actions are designed to support and enhance our risk management capabilities and regulatory
profile.
Competition
The financial services industry is highly competitive. Our branch footprint is predominantly in the New
England, Mid-Atlantic and Midwest regions, though certain lines of business serve national markets. Within these
markets, we face competition from community banks, super-regional and national financial institutions, credit
unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage
firms, insurance companies, money market funds, hedge funds and private equity firms. Some of our larger
competitors may make available to their customers a broader array of products, pricing and structure
alternatives while some smaller competitors may have more liberal lending policies and processes. In addition,
some of our competitors may not be subject to the same regulatory requirements as we are and, therefore, may
have lower costs they can pass on to customers in the form of more favorable terms. Competition among
providers of financial products and services continues to increase, with consumers having the opportunity to
select from a growing variety of traditional and nontraditional alternatives. The ability of non-banking financial
institutions, including FinTech companies, to provide services previously limited to commercial banks has also
intensified competition.
In Consumer Banking, the industry has become increasingly dependent on and oriented toward
technology-driven delivery systems, permitting transactions to be conducted through online and mobile channels.
In addition, technology has lowered barriers to entry and made it possible for non-bank institutions to attract
funds and provide lending and other financial products and services. The emergence of digital-only banking
models has increased and we expect this trend to continue. Given their lower cost structure, these models are
often, on average, able to offer higher rates on deposit products than retail banking institutions with a
traditional branch footprint. The primary factors driving competition for loans and deposits are interest rates,
fees charged, tailored value propositions to different customer segments, customer service levels, convenience,
including branch locations and hours of operation, and the range of products and services offered.
Citizens Financial Group, Inc. | 8
leasing companies, other non-bank
In Commercial Banking, we face competition in all our client segments from a variety of industry
participants including traditional banking institutions, particularly large regional banks, as well as commercial
including
finance companies,
collateralized loan obligation managers, hedge funds and private equity firms. Some larger competitors, including
certain national banks that compete in our market area, may offer a broader array of products and, due to their
asset size, may be in a position to hold more exposure on their balance sheet. We compete on a number of
factors including providing innovative corporate finance solutions, quality of customer service and execution,
range of products offered, price and reputation.
lenders, and
institutional
investors,
Human Capital Management
We believe that our long-term success depends on our ability to attract, develop, and retain a high-
performing workforce. Our goal is to create an environment where colleagues can thrive personally and
professionally and can maximize their potential. As of December 31, 2023, Citizens had 17,570 full-time
equivalent employees, primarily across New England and the Mid-Atlantic. Our Board of Directors and its
Compensation and Human Resources Committee are responsible for overseeing our human capital management
strategy, with senior management providing regular updates to facilitate that oversight.
Leadership, Talent Development, and Talent Acquisition and Mobility
Our leaders are the catalysts to achieve the culture we want to foster. During 2023, we continued
tailored leadership training and coaching for senior management following the detailed talent assessments
conducted the prior year. We aim to equip all colleagues with the skills necessary to excel in their current roles
and to build capabilities that will enable them to be highly valuable contributors in the future. We expanded our
learning academies as well as badging and bootcamp programs focusing on critical skills such as Innovation, Agile,
Next Gen Tech, Banking and Credit, and Data & Analytics. Our culture is one of continuous learning, which we
believe is crucial for colleagues to thrive as part of our organization and to feel a sense of accomplishment and
purpose.
The talent market remains competitive, particularly in emerging skill areas, and we implemented a
strategy to fill critical gaps that utilizes a combination of external hiring in critical areas (e.g., technology,
digital, cyber, risk, marketing, and data), a strong internal mobility program made possible by the expanded
learning and development offerings provided to colleagues, and reliance on temporary workers for short-term or
technical projects.
Employee Engagement
As part of our ongoing efforts to develop a high performing workforce and make Citizens a great place to
work and build a career, we conduct an annual organizational health survey (“OHS”). The results of our survey
are instrumental in helping management prioritize areas of change that are most important to colleagues. Survey
results are used to refine our focus, address gaps, and strengthen efforts to improve our organizational
effectiveness and colleague experience. Between our initial public offering and 2022, we had a 19-point increase
in our overall survey score and achieved top quartile status within McKinsey’s global benchmarks. In 2023, with
an eye toward continuing to evolve our strategy and culture, we transitioned to a new OHS tool. In 2023, 87% of
colleagues participated in the OHS, which is our all-time highest participation rate.
Diversity, Equity and Inclusion
We foster a culture where all stakeholders feel respected, valued, and heard. Our DE&I strategy is
focused on creating an environment of inclusion and belonging, building a more diverse workforce and evaluating
the effectiveness of our initiatives.
Citizens Financial Group, Inc. | 9
Development programs are designed to build a strong pipeline of emerging talent, including diverse
talent, internally, and have been effective in increasing the development of our overall colleague base as well as
increasing the number of women and people of color in senior leader roles. We also partner with external
organizations to offer additional resources for reskilling and upskilling colleagues, including diverse colleagues.
We acknowledge that there are opportunities to further increase the representation of women and people of
color, particularly in leadership roles, and we continue to develop strong partnerships with business and
community organizations to help identify diverse candidates for roles within every segment of our organization.
In addition, we ensure that interview slates for senior openings include candidates with diverse backgrounds and
perspectives. An internal dashboard is used to monitor our progress across multiple DE&I metrics. Information
regarding our workforce demographics can be found in our Environmental Social Governance Report and on our
website, which includes a link to our most recently filed EEO-1 report.
Various resources are used by management to understand what drives a sense of inclusion and belonging
and to identify what actions will be effective in attracting and retaining diverse colleagues. Analytics are used to
help prioritize initiatives, including responses to our OHS, which we segment by various colleague populations to
provide additional insights. In addition, we have seven business resource groups (“BRGs”), which are integral to
identifying and formulating solutions to DE&I issues that are most important to customers, colleagues, and the
community. Our BRGs include Citizens WIN (Women’s Impact Network), Citizens Elev8 (Rising Professionals),
Prism (Multicultural), Citizens Pride (LGBTQ+), Citizens Veterans, and Citizens Awake (Disability Awareness). In
2023, we launched an additional BRG, Caring for Citizens (Caregivers). Each BRG is sponsored by a member of the
executive team and approximately 3,500 colleagues belonged to at least one BRG as of December 31, 2023. We
also offer education programs focused on embedding inclusive behaviors in our culture designed for colleagues at
all levels of leadership.
Health, Well-Being, and Flexibility
We prioritize the health and well-being of our colleagues and their loved ones. Our benefit programs are
designed to support colleagues’ physical, mental, and financial well-being and we have added several resources
in recent years. In an effort to greater support each colleague’s unique journey, we enhanced our partnership
with our BRGs by providing subject matter experts to share their experience and expertise with all BRG
members, as well as increasing awareness of available tools and resources.
In late 2022, we enhanced our Parental Leave Policy to six weeks of paid time off for all permanent
colleagues who become parents; birth mothers are eligible for an additional 10 weeks, for a total of 16 weeks. In
2023, we increased paid bereavement leave, added several mental health resources, and provided each
colleague an extra day of paid time-off to be used as a wellness day. In recognition of the impact of inflation on
colleagues there were also no increases to colleague premiums, co-pays or deductibles for medical, dental, and
vision coverage for 2023.
We continue to embrace flexibility and manage our hybrid workforce in a manner that ensures colleagues
are working in ways that best support our customers, foster engagement and innovation, and maintain our
company culture.
Fair and Equitable Compensation
We strive to compensate our colleagues fairly based on market data, experience, and performance, and
we compare our compensation to other companies in our peer group as well as others in the financial services
industry.
Part of our commitment to building and fostering a diverse, inclusive, high-performing culture includes
ensuring our compensation and benefits are fair and competitive for all colleagues. We engage an independent
third-party expert firm to conduct an annual pay equity analysis, accounting for factors that appropriately
explain differences in pay such as role, performance, and experience. Additional information about this analysis,
including our most recent results, can be found in our Environmental Social Governance Report and on our
website.
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Sustainability
Our efforts relative to ESG matters are aligned with the needs, interests, and expectations of our
stakeholders and are divided into four focus areas: Leading with Robust Corporate Governance, Driving Positive
Climate Impact, Building the Workforce of the Future, and Fostering Strong Communities. These areas speak to
the strengths of our company, align with our business priorities, and define how we can have an outsized impact
on our business, society, and the planet.
In 2023, we announced a $50 billion Sustainable Finance Target, including $5 billion in green financing,
by 2030. As part of this announcement, we committed to engage corporate clients in high-emitting sectors on
climate-related topics, beginning with a target to engage 100% of our Oil & Gas clients by the end of 2024. In
addition, we committed to achieving carbon neutrality by 2035.
For more details regarding ESG and other corporate responsibility matters, go to our website.
Regulation and Supervision
Our operations are subject to extensive regulation, supervision and examination under federal and state
laws and regulations. These laws and regulations cover all aspects of our business, including lending practices,
deposit insurance, customer privacy and cybersecurity, capital adequacy and planning, liquidity, safety and
soundness, consumer protection and disclosure, permissible activities and investments, and certain transactions
with affiliates. These laws and regulations are intended primarily for the protection of customers, depositors, the
DIF and the banking system as a whole and not for the protection of shareholders or other investors. The
discussion below outlines the material elements of selected laws and regulations applicable to us and our
subsidiaries. Changes in applicable law or regulation, and in their interpretation and application by regulatory
agencies and other governmental authorities, cannot be predicted, but may have a material effect on our
business, financial condition or results of operations.
We are subject to examinations by federal banking regulators, as well as the SEC, FINRA and various state
insurance and securities regulators. In some cases, regulatory agencies may take supervisory actions that may not
be publicly disclosed, and such actions may restrict or limit our activities or activities of our subsidiaries. As part
of our regular examination process, regulators may advise us to operate under various restrictions as a prudential
matter. We have periodically received requests for information from regulatory authorities at the federal and
state level, including from banking, securities and insurance regulators, state attorneys general, federal agencies
or law enforcement authorities, and other regulatory authorities, concerning our business practices. Such
requests are considered incidental to the normal conduct of business. For a further discussion of how regulatory
actions may impact our business, see Item 1A “Risk Factors.” For additional information regarding regulatory
matters, see Note 25 in Item 8.
Overview
We are a BHC under the Bank Holding Company Act and have elected to be treated as a FHC under
amendments to this Act as effected by GLBA. As such, we are subject to the supervision, examination and
reporting requirements of the Bank Holding Company Act and the regulations of the FRB, including through the
Federal Reserve Bank of Boston. Under the system of “functional regulation” established under the Bank Holding
Company Act, the FRB serves as the primary regulator of our consolidated organization. The OCC serves as the
primary regulator for CBNA, and the SEC and FINRA serve as the primary regulators of our broker-dealer
subsidiaries.
The federal banking regulators have authority to approve or disapprove mergers, acquisitions,
consolidations, the establishment of branches and similar corporate actions. These banking regulators also have
the power to prevent the continuance or development of unsafe or unsound banking practices or other violations
of law. Federal law governs the activities in which CBNA engages, including the investments it makes and the
aggregate amount of available credit that it may grant to one borrower. Various consumer and compliance laws
and regulations also affect its operations. The actions the FRB takes to implement monetary policy also affect us.
In addition, CBNA is subject to regulation, supervision and examination by the CFPB with respect to
consumer protection laws and regulations. The CFPB has broad authority to regulate the offering and provision of
consumer financial products by depository institutions, such as CBNA, with more than $10 billion in total assets.
The CFPB may promulgate rules under a variety of consumer financial protection statutes, including the Truth in
Lending Act, the Equal Credit Opportunity Act, the Electronic Funds Transfer Act and the Real Estate Settlement
Procedures Act.
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Enhanced Prudential Standards and Regulatory Tailoring Rules
As a BHC with over $100 billion in total consolidated assets, we are currently subject to enhanced
prudential standards and associated capital and liquidity rules (“Tailoring Rules”). The Tailoring Rules assign each
BHC, including its bank subsidiaries, to one of four categories based on its size and certain risk-based indicators.
CFG and CBNA are each subject to Category IV standards, the least restrictive of the requirements under the
Tailoring Rules. As discussed in greater detail in “Capital and Stress Testing Requirements” and “Long-Term Debt
Requirements”, the federal banking regulators proposed sweeping changes to the regulatory capital and liquidity
rules that would significantly impact the application of those rules to the Company.
Bank and Financial Holding Company Regulation
As a FHC, we may engage in a broader range of activities than a BHC that is not also a FHC. These
activities include securities underwriting and dealing, insurance underwriting and brokerage, merchant banking
and other activities that are determined by the FRB, in coordination with the Treasury Department, to be
“financial in nature or incidental thereto” or that the FRB determines unilaterally to be “complementary” to
financial activities. In addition, a FHC may commence new permissible financial activities or acquire non-bank
financial companies engaged in such activities, in either case, with after-the-fact notice to the FRB.
To maintain FHC status, a BHC and all of its depository institution subsidiaries must remain “well
capitalized” and “well managed,” as described below under “Federal Deposit Insurance Act.” If a BHC fails to
meet these regulatory standards, the FRB could place limitations on its ability to conduct the broader financial
activities permissible for FHCs or impose limitations or conditions on the conduct or activities of the BHC or its
affiliates. If the deficiencies persisted, the FRB could order the BHC to divest any subsidiary bank or to cease
engaging in any activities permissible for FHCs that are not permissible for BHCs, or the BHC could elect to
conform its non-banking activities to those permissible for a BHC that is not also a FHC. In addition, the CRA
requires U.S. banks to help serve the needs of their communities. If a depository institution subsidiary of a BHC
were to receive a CRA rating of less than “satisfactory”, the BHC would be prohibited from engaging in certain
activities or acquisitions (see “Community Reinvestment Act” below).
Federal and state laws impose notice and approval requirements for mergers and acquisitions of other
depository institutions or BHCs. As noted above, FRB approval is generally not required for BHCs to acquire a
company engaged in activities that are financial in nature or incidental to activities that are financial in nature,
as determined by the FRB. Prior regulatory approval is required, however, before a BHC may acquire or control
more than 5% of any class of voting shares or substantially all of the assets of a BHC, including a FHC, or a bank.
In considering applications for approval of acquisitions, the banking regulators may take several factors into
account, including the competitive effects of the transaction in the relevant geographic markets; the financial
and managerial resources and future prospects of companies involved in the transaction; the effect of the
transaction on the financial stability of the U.S. banking or financial system; the companies’ compliance with
anti-money laundering laws and regulations; the convenience and needs of the communities to be served; and
the performance record of the IDIs involved in the transaction under the CRA.
Capital and Stress Testing Requirements
We are required to comply with the U.S. Basel III rules, which establish risk-based and leverage capital
requirements. The risk-based requirements are based on a banking organization’s RWA, which is inclusive of the
organization’s on- and off-balance sheet exposures. We calculate RWA using the standardized approach and have
made the AOCI opt-out election, permitting us to exclude components of AOCI from regulatory capital. The
leverage requirements are based on a banking organization’s average consolidated on-balance sheet assets.
Under the U.S. Basel III rules, the minimum capital ratios are:
•
•
•
•
CET1 capital ratio of 4.5%;
Tier 1 capital ratio of 6.0%;
Total capital ratio of 8.0%; and
Tier 1 leverage ratio of 4.0%.
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For BHCs with $100 billion or more in assets, such as us, the FRB’s capital rules impose an institution-
specific SCB on top of each of the three minimum risk-based capital ratios listed above. Banking institutions that
fail to meet the effective minimum ratios including the SCB will be subject to constraints on capital distributions,
including dividends and share repurchases, and certain discretionary executive compensation. The severity of the
constraints depends on the amount of the shortfall and the institution’s “eligible retained income”, defined as
the greater of four quarter trailing net income net of distributions and tax effects not reflected in net income, or
the average four quarter trailing net income.
On January 1, 2020, we adopted the CECL accounting standard. In reaction to the COVID disruption, on
September 30, 2020, the federal banking regulators adopted a final rule relative to regulatory capital treatment
of the ACL under CECL. This rule allowed electing banking organizations to delay the estimated impact of CECL
on regulatory capital for a two-year period ending December 31, 2021, followed by a three-year transition period
ending December 31, 2024. The three-year transition period will phase-in the reversal of the aggregate amount
of the capital benefit provided during the initial two-year delay.
As a Category IV firm under the Tailoring Rules, we are subject to biennial supervisory stress testing and
are exempt from company-run stress testing and related disclosure requirements. The FRB supervises Category IV
firms on an ongoing basis, including evaluating the capital adequacy and capital planning processes of firms
during off-cycle years. We are required to develop, maintain and submit an annual capital plan for review and
approval by our Board of Directors, or one of its committees, as well as FR Y-14 reporting requirements.
On July 27, 2023, the federal banking regulators issued a proposal to implement the Basel Committee on
Banking Supervision’s finalization of the post-crisis bank regulatory capital reforms. The proposal, commonly
referred to as Basel III “Endgame,” would significantly revise the capital requirements applicable to large
banking organizations with total assets of $100 billion or more, including the Company. Under the proposal,
Category III and IV firms, including the Company as a Category IV firm, would become subject to the same capital
treatment regarding the inclusion of AOCI, deductions, and rules for minority interest as Category I and II firms.
The proposal would also replace the existing models-based approaches for credit and operational risk, which
currently apply only to Category I and II firms, with two new approaches applicable to Category I through IV
firms. The first would use the existing standardized approach and a proposed revised market risk capital rule.
The second would use a new expanded risk-based approach, consisting of new non-models-based approaches for
credit risk, operational risk and credit valuation adjustment risk, as well as the proposed revised market risk
capital rule. The approach resulting in the lower ratio would establish the binding ratio for purposes of satisfying
regulatory capital requirements and buffers, including the SCB. Category III and IV firms would also be required
to calculate counterparty credit exposure relating to derivative transactions using the standardized approach for
counterparty credit risk. Additionally, Category IV firms would become subject to the supplementary leverage
ratio and the countercyclical capital buffer. The Company estimates a pro forma CET1 ratio, adjusted for the
AOCI opt-out removal, of 9.0% as of December 31, 2023. In addition, the proposal is estimated to modestly
increase our RWA on a fully phased-in basis. Under the proposal, the rule would take effect on July 1, 2025, with
a three-year phase-in of the capital impact through June 30, 2028. Comments on the proposal were due by
January 16, 2024. We continue to evaluate the full impact of the proposal.
For more details regarding our regulatory capital and SCB, see the “Capital and Regulatory Matters”
section of Item 7. We are also subject to the FRB's risk-based capital requirements for market risk. See the
“Market Risk” section of Item 7 for additional details.
Liquidity Requirements
The liquidity coverage ratio (“LCR”) is designed to ensure that a covered bank or BHC maintains an
adequate level of unencumbered high-quality liquid assets to cover expected net cash outflows over a 30-day
time horizon under an acute liquidity stress scenario. The NSFR is designed to promote more medium- and long-
term funding of the assets and activities of banking organizations over a one-year time horizon. Under the
Tailoring Rules, Category IV firms with less than $50 billion in weighted short-term wholesale funding, such as us,
are not subject to any LCR or NSFR requirement.
We are subject to certain liquidity requirements under the Tailoring Rules including liquidity buffer,
stress testing, risk management and reporting requirements. In addition, as a Category IV firm, we are required
to calculate collateral positions monthly, establish a set of liquidity risk limits, and monitor certain elements of
intraday liquidity risk exposures.
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Resolution Planning
Category IV firms such as CFG are no longer required to submit resolution plans under section 165(d) of
the Dodd-Frank Act. However, CBNA is required to periodically file an IDI resolution plan with the FDIC. This plan
enables the FDIC, as receiver, to resolve the institution under applicable receivership provisions of the FDIA in a
manner that ensures that depositors receive access to their insured deposits within one business day of the
institution’s failure, maximizes the net present value return from the sale or disposition of the institution’s
assets and minimizes the amount of any loss to the institution’s creditors. In 2021, the FDIC issued a Statement
on Resolution Plans for IDIs that, among other things, established a three-year filing cycle for banks with $100
billion or more in total assets, such as CBNA, and provided details regarding the content of the resolution plans
that filers are required to prepare. CBNA submitted its most recent resolution plan to the FDIC on December 1,
2022.
On August 29, 2023, the FDIC issued a proposal that would require IDIs with total assets of $100 billion or
more, including CBNA, to submit a more robust resolution plan biennially that includes a comprehensive strategy
from the point of failure to liquidation or return of the institution to the private sector. The identified strategy
must ensure timely access to insured deposits, maximize value from the sale or disposition of assets, minimize
losses realized by creditors, and address potential risks of adverse effects on U.S. economic conditions or
financial stability. In addition, the strategy generally expects, but does not require, a default scenario whereby
the FDIC, as receiver of the failed institution, operates the institution under a bridge bank. The proposal also
enhances how the credibility of resolution plans will be assessed, expands expectations regarding engagement
and capabilities testing, and requires IDIs to demonstrate the capability to promptly establish a virtual data room
in the run-up to or upon failure. The proposal provides that IDIs submit their initial resolution plan no earlier than
270 days from the effective date of the amended rule. Comments on the proposal were due by November 30,
2023. We are in the process of evaluating the impact of the proposal on our business.
Long-Term Debt Requirements
On August 29, 2023, the federal banking regulators issued a proposal that would require large bank
holding companies and IDIs with total assets of $100 billion or more, such as CFG and CBNA, to maintain a
minimum amount of long-term debt. The joint agency proposal aims to increase the resolvability and resiliency of
large banking organizations by mandating a long-term debt requirement to provide the regulatory agencies
additional resources to resolve failed banking organizations, foster depositor confidence, and decrease costs to
the DIF in the event of a large banking organization failure. Under the proposal, large bank holding companies
and IDIs would each be required to maintain a minimum amount of eligible long-term debt equal to the greater of
6 percent of RWA, 3.5 percent of average total consolidated assets, and 2.5 percent of total leverage exposure
for those banks subject to the supplementary leverage ratio. The proposal also prohibits large banking
organizations from engaging in certain activities that could complicate their resolution and discourages them
from holding long-term debt issued by other banks to reduce interconnectedness. The proposal provides for a
three-year transition period, with 25 percent of the long-term debt requirement to be met one year after the
rule is finalized, 50 percent after two years, and 100 percent after three years. Comments on the proposal were
due by January 16, 2024. We continue to evaluate the full impact of the proposal.
Standards for Safety and Soundness
The FDIA requires the federal banking regulators to prescribe operational and managerial standards for
all IDIs, including CBNA. Regulations and interagency guidelines adopted by these agencies set forth the safety
and soundness standards used to identify and address problems at IDIs before capital becomes impaired. If an
agency determines that a bank fails to satisfy any standard, it may require the bank to submit an acceptable plan
to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness
compliance plans. If, after being notified to submit a compliance plan, an institution fails to submit an
acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the
agency must issue an order directing action to correct the deficiency and may issue an order directing other
types of actions that an undercapitalized institution is subject to under the FDIA as discussed in “Federal Deposit
Insurance Act” below. If an institution fails to comply with such an order, the agency may seek to enforce such
order in judicial proceedings and to impose civil money penalties.
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Federal Deposit Insurance Act
The FDIA requires, among other things, that federal banking regulators take “prompt corrective action”
with respect to IDIs that do not meet minimum capital requirements, as described above in “Capital and Stress
Testing Requirements.” The FDIA sets forth the following five capital categories: “well-capitalized,” “adequately
capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” An IDI’s
capital category is determined based on how its capital levels compare with various relevant capital measures
and certain other factors that are established by regulation. The federal banking regulators must take certain
mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to
institutions that are undercapitalized, significantly undercapitalized or critically undercapitalized, with the
actions becoming more restrictive and punitive the lower the institution’s capital category. Under existing rules,
an IDI that is not an advanced approaches institution, such as CBNA, is deemed to be “well capitalized” if it has a
CET1 ratio of at least 6.5%, a tier 1 capital ratio of at least 8%, a total capital ratio of at least 10%, and a tier 1
leverage ratio of at least 5%.
The FRB’s regulations which are applicable to BHCs, such as the Parent Company, separately define “well
capitalized”as having a tier 1 capital ratio of at least 6% and a total capital ratio of at least 10%. As described
above under “Bank and Financial Holding Company Regulation”, a FHC that is not well capitalized and well
managed (or whose bank subsidiaries are not well capitalized and well managed) under applicable prompt
corrective action standards may be restricted in certain of its activities and ultimately may lose FHC status. As of
December 31, 2023, both the Parent Company and CBNA were well-capitalized.
The FDIA prohibits insured banks from accepting brokered deposits or offering interest rates on any
deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally, depending
upon where the deposits are solicited, unless it is “well-capitalized,” or it is “adequately capitalized” and
receives a waiver from the FDIC. A bank that is “adequately capitalized” and accepts brokered deposits under a
waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain
prevailing market rates. The FDIA imposes no such restrictions on a bank that is “well-capitalized.”
Deposit Insurance
The DIF provides insurance coverage for certain deposits, up to a standard maximum deposit insurance
amount of $250,000 per depositor based on ownership right and capacity category codes and is funded through
assessments on IDIs based on the risk each institution poses to the DIF. CBNA accepts customer deposits insured
by the DIF and, therefore, must pay insurance premiums. The FDIC may increase CBNA’s insurance premiums
based on various factors, including the FDIC’s assessment of its risk profile. The FDIC also requires large
depository institutions, including CBNA, to maintain enhanced deposit account recordkeeping and related
information technology system capabilities to facilitate prompt calculation of insured deposits if such an
institution was taken into FDIC receivership.
The FDIC, as required under the FDIA, established a plan in September 2020 to restore the DIF reserve
ratio, 1.13% as of September 30, 2023, to meet or exceed the statutory minimum of 1.35% within eight years.
This plan did not include an increase in the deposit insurance assessment rate. During 2022, the FDIC determined
that the DIF reserve ratio was at risk of not reaching the statutory minimum by the statutory deadline of
September 30, 2028, absent an increase in assessment rates. In October 2022, the FDIC adopted a final rule to
increase initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly
assessment period of 2023. This increase in assessment rates was intended to improve the likelihood that the DIF
reserve ratio will reach the required minimum by the statutory deadline of September 30, 2028.
In November 2023, the FDIC approved a final rule to impose special assessments to recover the loss to the
DIF arising from the protection of uninsured depositors in connection with the systemic risk determination
announced on March 12, 2023, following the closures of Silicon Valley Bank and Signature Bank, as required by
the FDIA. Under the final rule, the special assessment is levied on an IDI’s assessment base, which is equal to
estimated uninsured deposits as reported on the institution’s December 31, 2022 Call Report, excluding the first
$5 billion in estimated uninsured deposits. The special assessment is imposed at an annual rate of approximately
13.4 basis points and will be collected over eight quarterly assessment periods beginning with the first quarter of
2024.
Citizens Financial Group, Inc. | 15
The FDIC’s current estimate of the loss attributable to this systemic risk determination is $16.3 billion.
This estimate will be periodically adjusted as assets are sold, liabilities are satisfied, and receivership expenses
are incurred. The FDIC would cease collection of special assessments before the end of the initial eight-quarter
collection period if they expect the loss to be less than expected assessment collections. The FDIC also reserves
the right to impose an extended special assessment collection period after the initial eight-quarter period to
collect the difference between losses and amounts collected, and impose a one-time final shortfall special
assessment after both receiverships terminate.
Based on the final rule and related accounting guidance, CBNA’s special assessment is approximately
$225 million and was recognized in other operating expense in the Company’s Consolidated Statement of
Operations for the year ended December 31, 2023. CBNA’s special assessment is subject to change if the eventual
loss to the DIF differs from the FDIC’s current estimate.
Dividends
Various federal statutory provisions and regulations, as well as regulatory expectations, limit the amount
of dividends that we and our subsidiaries may pay.
Our payment of dividends to our stockholders is subject to oversight by the FRB. In particular, the FRB
reviews the dividend policies and share repurchases of a large BHC based on capital plans submitted as part of
the CCAR process and the results of stress tests, as discussed above. In addition to other limitations, our ability
to make any capital distributions, including dividends and share repurchases, is subject to the prior approval of
the FRB if we are required to resubmit our capital plan. See “Capital and Stress Testing Requirements” above.
Dividends payable by CBNA, as a national bank subsidiary, are limited to the lesser of the amount
calculated under a “recent earnings” test and an “undivided profits” test. Under the recent earnings test, a
dividend may not be paid if the total of all dividends declared during any calendar year exceeds the sum of
current year net income and retained net income of the two preceding years, less any required transfers to
surplus, unless the national bank obtains the approval of the OCC. Under the undivided profits test, a dividend
may not be paid in excess of the entity’s “undivided profits” (generally accumulated net profits that have not
been paid out as dividends or transferred to surplus). Federal banking regulatory agencies have issued policy
statements that provide that FDIC-insured depository institutions and their holding companies should generally
pay dividends only out of current operating earnings.
Support of Subsidiary Bank
The Parent Company is required to serve as a source of financial and managerial strength to CBNA and,
under appropriate conditions, to commit resources to support CBNA. This support may be required by the FRB at
times when the Parent Company may not have the financial resources to do so, or when doing so may not serve
our interests or those of our shareholders or creditors. In addition, any capital loans by a BHC to a subsidiary
bank are subordinate in right of payment to deposits and certain other indebtedness of such subsidiary bank. In
the event of a BHC’s bankruptcy, any commitment by the BHC to a federal bank regulatory agency to maintain
the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Transactions with Affiliates and Insiders
Sections 23A and 23B of the Federal Reserve Act establish certain quantitative limits and other prudential
requirements for loans, purchases of assets, and certain other transactions between a member bank or its
subsidiaries and its affiliates. The term “member bank” includes national banks such as CBNA.
Section 23A prohibits a bank from entering a “covered transaction” with an affiliate if, after the
transaction, the aggregate amount of the bank’s covered transactions with that affiliate would exceed 10% of the
bank’s capital stock and surplus, or the aggregate amount of the bank’s covered transactions with all of its
affiliates would exceed 20% of the bank’s capital stock and surplus. Covered transactions include loans and other
extensions of credit to an affiliate, investments in the securities of an affiliate, purchases of assets from an
affiliate, and certain other transactions that expose the bank to the credit risks of its affiliates.
Section 23B of the Federal Reserve Act requires that transactions, including all covered transactions, be
on terms substantially the same, or at least as favorable to the bank, as those prevailing at the time for
comparable transactions with non-affiliates (the “Market Terms Requirement”). In addition to covered
transactions, the Market Terms Requirement applies to certain other transactions between CBNA and its
affiliates, including services between CBNA and the Parent Company and loans to CBNA from the Parent
Company.
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Under sections 22(g) and (h) of the Federal Reserve Act and the FRB’s Regulation O, we are also subject
to quantitative restrictions on extensions of credit to executive officers, directors, principal stockholders and
their related interests. These extensions of credit may not exceed certain quantitative limits, must be made on
substantially the same terms as those currently prevailing in the market for comparable transactions with third
parties, and must not involve more than the normal risk of repayment or present other unfavorable features.
Certain extensions of credit also require the approval of our Board.
Volcker Rule
The Dodd-Frank Act prohibits banks and their affiliates from engaging in proprietary trading and investing
in, sponsoring and having certain relationships with private funds such as certain hedge funds or private equity
funds. This statutory provision is commonly called the “Volcker Rule.” Under this rule, we are viewed as having
“moderate” trading assets and liabilities, which subjects us to a simplified compliance program requirement that
is appropriate for our activities, size, scope, and complexity. This Volcker Rule does not have a material impact
on Citizens.
Consumer Financial Protection Regulations
The retail activities of banks are subject to a variety of statutes and regulations designed to protect
consumers and promote lending to various sectors of the economy and population. These laws include, but are
not limited to, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Fair Credit Reporting
Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Service Members Civil Relief Act, the
Expedited Funds Availability Act, the Right to Financial Privacy Act, the Truth in Savings Act, the Electronic Funds
Transfer Act, and their respective federal regulations and state law counterparts.
In addition to these federal laws and regulations, the guidance and interpretations of the various federal
agencies charged with the responsibility of implementing such regulations also influence loan and deposit
operations.
The CFPB has broad rulemaking, supervisory, examination and enforcement authority over various
consumer financial protection laws, including those referenced above, fair lending laws and certain other
statutes. The CFPB also has examination and primary enforcement authority with respect to depository
institutions with $10 billion or more in assets, including the authority to prevent unfair, deceptive or abusive acts
or practices in connection with the offering of consumer financial products. The OCC also examines our retail
activities.
The Dodd-Frank Act permits states to adopt stricter consumer protection laws and standards than those
adopted at the federal level, and in certain circumstances allows state attorneys general to enforce compliance
with both the state and federal laws and regulations on banks like us.
Protection of Customer Personal Information and Cybersecurity
The privacy provisions of GLBA generally prohibit financial institutions, including us, from disclosing
nonpublic personal financial information of consumer customers to third parties for certain purposes unless
customers have the opportunity to opt out of the disclosure. The Fair Credit Reporting Act restricts information
sharing among affiliates for marketing purposes. Both the Fair Credit Reporting Act and Regulation V, which are
issued by the FRB, govern the use and provision of information to consumer reporting agencies.
The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance
cyber risk management standards among financial institutions. Financial institutions are expected to design
multiple layers of security controls to establish lines of defense and to ensure that their risk management
processes also address the risk posed by compromised customer credentials, including security measures to
reliably authenticate customers when accessing internet-based services of the financial institution. Further, a
financial institution’s management is expected to maintain sufficient business continuity planning processes to
ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack
involving destructive malware or other compromise of customer data and/or systems. A financial institution is
also expected to develop appropriate processes to enable recovery of data and business operations and address
rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to
this type of cyber-attack or compromise. If we fail to observe the regulatory guidance, we could be subject to
various regulatory sanctions, including financial penalties. For a further discussion of risks related to
cybersecurity, see Item 1A “Risk Factors.”
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A financial institution is also required to notify its primary banking regulator within 36 hours of computer-
security incidents that have materially disrupted or degraded, or is reasonably likely to materially disrupt or
degrade its:
•
•
•
ability to carry out banking operations, activities, or processes, or deliver banking products and
services to a material portion of its customer base;
business lines, including associated operations, services, functions, and support, that upon failure
would result in a material loss of revenue, profit, or franchise value; or
operations, including associated services, functions, and support, the failure or discontinuance of
which would pose a threat to the financial stability of the United States.
In addition, in August 2023, the SEC adopted a final rule that requires the disclosure of material
cybersecurity incidents on Form 8-K. Registrants must describe the material aspects of the nature, scope and
timing of the incident, as well as the impact of the incident on the registrant. The final rule also requires
registrants to describe, on Form 10-K, their processes for assessing, identifying and managing material risks from
cybersecurity threats and whether such risks have materially affected the registrant. Registrants must also
describe Board oversight of risks from cybersecurity threats and management’s role and expertise in assessing
and managing material risks from such threats. See Item 1C “Cybersecurity” for more information.
State regulators have also been active in implementing privacy and cybersecurity standards and
regulations. Recently, several states have adopted laws and regulations requiring certain financial institutions to
implement cybersecurity programs and provide details with respect to these programs. In addition, many states
have recently implemented or modified their data breach notification and data privacy requirements. We expect
this trend of state-level activity to continue and are continually monitoring developments in the states in which
we operate.
Community Reinvestment Act
The CRA requires CBNA’s primary federal bank regulatory agency, the OCC, to evaluate the bank’s record
in meeting the credit needs of the communities it serves, including low- and moderate-income neighborhoods
and individuals. Institutions are assigned one of four ratings: “Outstanding,” “Satisfactory,” “Needs to Improve,”
or “Substantial Noncompliance.” A bank’s CRA record is considered by regulatory agencies in evaluating mergers,
acquisitions and applications to open a branch or facility. In addition, the CRA record of a subsidiary bank of a
FHC is considered if a FHC wishes to commence certain new financial activities or to acquire a company engaged
in such activities, which requires a rating of at least “satisfactory.” CBNA received an “Outstanding” rating on its
most recent CRA evaluation.
On October 24, 2023, the federal banking regulators issued a joint final rule that revises the agencies’
CRA regulations. The primary provisions of the final rule, along with the most significant changes from the
existing CRA regulatory framework, are outlined below:
•
•
•
•
a tiered evaluation framework is established based on a bank’s asset size, similar to the existing CRA
regulatory framework;
the geographic area in which banks may be evaluated for performance is expanded to include areas
outside of where they have physical locations in order to capture the varied activities a bank
conducts, such as online and mobile banking, and the communities in which it operates;
bank retail lending and community development financing will be evaluated using a new metrics-
based approach; and
clarifies eligible CRA activities, such as affordable housing.
The final rule takes effect on April 1, 2024, with staggered compliance dates of January 1, 2026, and
January 1, 2027 for certain reporting requirements. We are in the process of evaluating the impact of the final
rule on our business.
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Compensation
Our compensation practices are subject to oversight by the federal banking regulators. Guidance issued
by the federal banking regulators is designed to ensure that incentive compensation arrangements take into
account risk and are consistent with safe and sound practices. The guidance sets forth the following three key
principles with respect to incentive compensation arrangements:
•
•
•
the arrangements should provide employees with incentives that appropriately balance risk and
financial results in a manner that does not encourage employees to expose their organizations to
imprudent risk;
the arrangements should be compatible with effective controls and risk management; and
the arrangements should be supported by strong corporate governance.
The U.S. financial regulators, including the FRB, the OCC and the SEC, jointly proposed regulations in
2011 and again in 2016 to implement the incentive compensation requirements of Section 956 of the Dodd-Frank
Act. These regulations have not been finalized.
Anti-Money Laundering
The Bank Secrecy Act (“BSA”) and the Patriot Act contain anti-money laundering (“AML”) and financial
transparency provisions intended to detect and prevent the use of the U.S. financial system for money laundering
and terrorist financing activities. The BSA, as amended by the Patriot Act, requires depository institutions and
their holding companies to maintain an AML program, verify the identity of customers and certain beneficial
owners for legal entity customers, monitor for and report suspicious transactions, report on cash transactions
exceeding specified thresholds, and respond to requests for information by regulatory authorities and law
enforcement agencies. We are also required to provide our employees with AML training, designate an AML
compliance officer, and undergo an annual, independent audit to assess the effectiveness of our AML program.
We have implemented policies, procedures, and internal controls that are designed to comply with these AML
requirements. Financial services regulators are focusing their examinations on AML compliance, and we continue
to monitor and augment, where necessary, our AML compliance programs. The federal banking agencies are
required, when reviewing bank and bank holding company acquisition or merger applications, to take into
account the effectiveness of the AML activities of the applicants.
The Anti-Money Laundering Act of 2020 (“AMLA”), enacted in January 2021 as part of the National
Defense Authorization Act, requires the U.S. Treasury Department to issue National Anti-Money Laundering and
Countering the Financing of Terrorism Priorities and conduct studies and issue regulations that may, over the
next few years, significantly alter some of the due diligence, recordkeeping and reporting requirements that the
BSA and the Patriot Act impose on financial institutions. The AMLA also increases penalties for violations of the
BSA and significantly expands a whistleblower award program both of which could increase the prospect of
regulatory enforcement. In 2021, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S.
Treasury Department, issued the priorities for AML and countering the financing of terrorism policy, as required
under the AMLA. These priorities include corruption, cybercrime, terrorist financing, fraud, transnational crime,
drug trafficking, human trafficking and proliferation financing.
Office of Foreign Assets Control Regulation
The U.S. has imposed economic sanctions that affect transactions with designated foreign countries,
nationals and others, that are administered by OFAC. OFAC-administered sanctions targeting countries take many
different forms and generally contain one or more of the following elements:
•
•
restrictions on trade with or investment in a sanctioned country, including prohibitions against direct
or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons
engaging in financial transactions relating to, making investments in, or providing investment-related
advice or assistance to, a sanctioned country; and
a blocking of assets in which the government or specially designated nationals of the sanctioned
country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction, including
property in the possession or control of U.S. persons. Blocked assets (e.g., property and bank
deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from
OFAC.
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Lists including the names of individuals and organizations suspected of aiding, harboring or engaging in
terrorist acts, including the Specially Designated Nationals and Blocked Persons, is published and routinely
updated by OFAC. We are responsible for, among other things, blocking accounts of, and transactions with, such
targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked
transactions after they occur. If we identify a name on any transaction, account or wire transfer that is on an
OFAC list we must freeze the associated account, file a suspicious activity report and notify the appropriate
authorities. Failure to comply with these sanctions could have serious legal and reputational consequences.
Regulation of Broker-Dealers
Our subsidiaries, Citizens Securities, Inc., and Citizens JMP Securities, LLC are registered broker-dealers
with the SEC and subject to regulation and examination by the SEC as well as FINRA and other self-regulatory
organizations. These regulations cover a broad range of matters, including capital requirements; sales and
trading practices; use of client funds and securities; the conduct of directors, officers and employees; record-
keeping and recording; supervisory procedures to prevent improper trading on material nonpublic information;
qualification and licensing of sales personnel; and limitations on the extension of credit in securities transactions.
In addition to federal registration, state securities commissions require the registration of certain broker-dealers.
Heightened Risk Governance Standards
CBNA is subject to OCC guidelines that impose heightened risk governance standards on large national
banks with average total consolidated assets of $50 billion or more. The guidelines set forth minimum standards
for the design and implementation of a bank’s risk governance framework and its associated oversight by a bank’s
board of directors. The guidelines are intended to protect the safety and soundness of covered banks and
improve the ability of bank examiners to assess compliance with the OCC’s expectations. Under the guidelines, a
bank may use the risk governance framework of its parent company if it meets the minimum standards and the
risk profiles of the parent company and the covered bank are substantially the same, along with certain other
conditions. CBNA has elected to use the Parent Company’s risk governance framework. A bank’s board of
directors is required to have two members who are independent of bank and parent company management,
ensure that the risk governance framework meets the appropriate standards, provide active oversight and a
credible challenge to management’s recommendations and decisions, and ensure that decisions made by the
parent company do not jeopardize the safety and soundness of the bank.
Intellectual Property
In the highly competitive banking industry in which we operate, trademarks, service marks and logos are
important to the success of our business. We own and license a variety of trademarks, service marks, logos and
pending registrations and are spending significant resources to develop our stand-alone brands.
Website Access to Citizens’ Filings with the SEC and Corporate Governance Information
We maintain a website at investor.citizensbank.com. We make available on our website, free of charge,
our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including
exhibits, and amendments to those reports that are filed or furnished to the SEC pursuant to Section 13(a) of the
Securities Exchange Act of 1934. These documents are made available on our website as soon as reasonably
practicable after they are electronically filed with or furnished to the SEC. The SEC also maintains an internet
site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. Information about our Board and its committees and corporate
governance,
is available on our website at
investor.citizensbank.com/about-us/investor-relations/corporate-governance.
including our Code of Business Conduct and Ethics,
ITEM 1A. RISK FACTORS
We are subject to a number of risks potentially impacting our business, financial condition, results of
operations and cash flows. As a financial services organization, certain elements of risk are inherent in our
transactions and operations and the business decisions we make. Therefore, we encounter risk as part of the
normal course of our business and design a risk management framework and associated processes to help manage
these risks.
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Our success is dependent on our ability to identify, understand and manage the risks presented by our
business activities so that we can appropriately balance risk taking with revenue generation and profitability. We
discuss the primary risks we face and our risk management framework and associated processes and strategies in
the “Risk Governance” section in Item 7.
You should carefully consider the following risk factors that may affect our business, financial condition,
results of operations or cash flows. Other factors that could affect us are discussed in the “Forward-Looking
Statements” section above. However, there may be additional risks that are not currently material or known, and
factors besides those discussed below, or in this or other reports that we file or furnish with the SEC, that could
adversely affect us. Therefore, the risks described in the risk factors below should not be considered a complete
list of risks that we may encounter.
Risks Related to Our Business
We may not be able to successfully execute our business strategy.
Our business strategy is designed to maximize the full potential of our business and drive sustainable
growth and enhanced profitability, with our success resting on our ability to distinguish ourselves. Our future
success and the value of our stock depends, in part, on our ability to effectively implement our business strategy,
including the cost savings and efficiency components, and achieve our financial performance goals, including the
anticipated benefits of the Private Bank start-up investment and Investors acquisition. There are risks and
uncertainties, many of which are not within our control, associated with each element of our strategy. If we are
not able to successfully execute our business strategy, we may not achieve our financial performance goals and
any shortfall may be material. See the “Business Strategy” section in Item 1 for further information.
Supervisory requirements and expectations on us as a financial holding company and a bank
holding company and any regulator-imposed limits on our activities could adversely affect our ability to
implement our strategic plan, expand our business, continue to improve our financial performance and
make capital distributions to our stockholders.
Our operations are subject to extensive regulation, supervision and examination by the federal banking
regulators, as well as the CFPB. As part of the supervisory and examination process, if we are unsuccessful in
meeting the requirements and expectations that apply to us, regulatory agencies may from time to time take
supervisory actions against us that may not be publicly disclosed. Such actions may include restrictions on our
activities or the activities of our subsidiaries, informal (nonpublic) or formal (public) supervisory actions or public
enforcement actions, including the payment of civil money penalties, which could increase our costs and limit
our ability to implement our strategic plans and expand our business, and as a result could have a material
adverse effect on our business, financial condition or results of operations. See the “Regulation and Supervision”
section in Item 1 for further information.
Difficult economic conditions, including inflationary pressures, would likely have an adverse effect
on our business, financial position and results of operations.
From March 2022 to July 2023, the FRB raised its benchmark interest rate eleven times in response to
inflationary pressures throughout the economy. Financial markets remain volatile amidst the uncertainty of
economic conditions, including potential recessionary conditions. Changes in interest rates can affect numerous
aspects of our business and may impact our future performance. Also, see “Changes in interest rates may have an
adverse effect on our profitability” below for more information on the risks associated with changes in interest
rates.
Prolonged periods of inflation may impact our profitability by negatively impacting our costs and
expenses, including increasing funding costs and expense related to talent acquisition and retention, and
negatively impacting consumer demand and client purchasing power for our products and services. If significant
inflation continues, our business could be negatively affected by, among other things, increased default rates
leading to credit losses which could adversely impact our earnings and capital.
Any of the effects of these adverse economic conditions would likely have an adverse impact on our
earnings, with the significance of the impact generally depending on the nature and severity of the economic
conditions.
Citizens Financial Group, Inc. | 21
Our ability to meet our obligations, and the cost of funds to do so, depend on our ability to access
identified sources of liquidity at a reasonable cost.
Liquidity risk is the risk arising from the inability to meet our obligations when they come due. We must
maintain adequate funding to meet current and future obligations, including customer loan requests, customer
deposit maturities and withdrawals, debt service, equipment and premises leases, and other cash commitments,
under both normal operating conditions and under periods of company-specific and/or market stress.
We primarily rely on customer deposits to be a relatively stable and low-cost source of funding. In
addition to customer deposits, our funding sources also include our ability to securitize loans in secondary
markets, raise funds in the debt and equity capital markets, pledge loans and/or securities for borrowing from
the FHLB, pledge securities as collateral for borrowing under repurchase agreements, and sell AFS securities.
Our ability to meet our obligations and support our operations could be materially affected by a variety
of conditions, including market-wide illiquidity or disruption, a loss of market or customer confidence in the
financial services industry generally or in the Company specifically, or reductions in one or more of our credit
ratings. This could limit our ability to retain our deposits, securitize or sell assets, access the debt or equity
capital markets, or otherwise borrow money at a reasonable cost. Additionally, these conditions, among others,
if severe enough, could create unanticipated material outflows of cash due to, among other factors, draws on
unfunded commitments or deposit attrition, which could have significant adverse impact on our liquidity.
Further, changes to the FHLB’s or the FRB’s underwriting guidelines for wholesale borrowings or lending policies
may limit or restrict our ability to borrow, and therefore could have a significant adverse impact on our liquidity.
Changes in interest rates may have an adverse effect on our liquidity and profitability.
Changes in interest rates can have a material impact on the value of our securities, a primary objective
of which is to provide a ready source of contingent liquidity. An increase in rates could lower the collateral value
of these securities, reducing the amount we could borrow, and lead to losses in the event of their sale.
Since our earning assets are primarily in the form of loans and debt securities, changes in interest rates
can have a material impact our net interest income, net interest margin, fee income, and credit costs. Changes
in interest rates can affect our net interest income and margin as our asset yields and funding costs may not rise
or fall in parallel, causing our net interest income to increase or decrease and our margin to expand or contract.
If our funding costs rise faster than our asset yields, or if our asset yields fall faster than our funding costs, our
net interest income could decrease, and our margin could contract.
An increase in interest rates could cause lower demand for loans by customers, reducing our net interest
income due to lower loan balances and origination-related fee income due to lower production volume, and could
also have an adverse impact on our credit costs, as borrowers may have difficulty in making higher interest
payments. Additionally, an increase in rates could cause recognition of losses on the debt securities in our AFS
portfolio if the securities needed to be sold.
Similarly, a decrease in interest rates could lower our net interest income, net interest margin and fee
income. We may be adversely affected by a prolonged period of low interest rates as it may result in us holding
lower yielding loans and securities should rates rise rapidly after the period of low interest rates.
Changes in the spread between short-term and long-term interest rates (i.e., the yield curve) can also
have a material impact on our net interest income and net interest margin. Typically, the yield curve is upward
sloping, with short-term rates being lower than long-term rates. When the yield curve flattens or inverts, our net
interest income and net interest margin may decrease if the cost of our short-term funding increases relative to
the yield we can earn on our long-term assets.
Interest rates and the yield curve are highly sensitive to many factors that are beyond our control,
including general economic conditions and the policies of various governmental and regulatory agencies and, in
particular, the Federal Open Market Committee. Although we have policies and procedures designed to manage
our interest rate risks, as further discussed in the “Risk Governance” section in Item 7, there can be no assurance
that these policies and procedures will be effective in avoiding material adverse effects on our profitability.
Citizens Financial Group, Inc. | 22
We could fail to attract, retain or motivate highly-skilled and qualified personnel, including our
senior management, other key employees or members of our Board, which could impair our ability to
successfully execute our strategic plan and otherwise adversely affect our business.
Our ability to implement our strategic plan and our future success depends on our ability to attract,
retain and motivate highly-skilled and qualified personnel, including our senior management and other key
employees and directors. The marketplace for skilled personnel continues to be competitive, which means the
cost of hiring, incentivizing and retaining skilled personnel may continue to rise. The failure to attract and retain
highly skilled and qualified personnel could place us at a significant competitive disadvantage and impair our
ability to implement our strategic plan successfully and achieve our performance targets, which could have a
material adverse effect on our business, financial condition and results of operations.
Limitations on the manner in which regulated financial institutions, such as us, can compensate their
officers and employees, including those contained in pending rule proposals implementing the requirements of
Section 956 of the Dodd-Frank Act, may make it more difficult for such institutions to compete for talent with
financial institutions and other companies not subject to these or similar limitations. If we are unable to compete
effectively, our business, financial condition and results of operations could be adversely affected, perhaps
materially.
A reduction in our credit ratings could have a material adverse effect on our business, financial
condition and results of operations.
Credit ratings affect the cost and other terms upon which we are able to obtain funding. Rating agencies
regularly evaluate us, and their ratings are based on a number of factors, including our financial strength and
conditions affecting the financial services industry generally. Any downgrade in our ratings would likely increase
our borrowing costs and could limit our access to capital markets, which would adversely affect our business. For
example, a ratings downgrade could adversely affect our ability to sell or market our securities, including long-
term debt, engage in certain longer-term derivatives transactions and retain our customers, particularly
corporate customers who may require a minimum rating threshold in order to place funds with us. In addition,
under the terms of our derivatives contracts, we may be required to maintain a minimum credit rating, post
additional collateral or terminate such contracts. Any of these results of a ratings downgrade could increase our
cost of funding, reduce our liquidity and have adverse effects on our business, financial condition and results of
operations. For more information regarding our credit ratings, see the “Liquidity” section in Item 7.
Our financial performance may be adversely affected by deterioration in borrower credit quality.
Risks arising from actual or perceived changes in credit quality and uncertainty over the recoverability of
amounts due from borrowers is inherent in our businesses. If the economic environment were to deteriorate,
more of our borrowers may have difficulty in repaying their loans which could result in higher credit losses and
increased loan loss provision expense. Further, our credit risk and credit losses may increase to the extent our
loans are concentrated by loan type, industry segment, collateral type, borrower type, or location of the
collateral or borrower.
A significant portion of our earnings assets are in the form of loans to borrowers across the U.S.,
primarily for residential, commercial and industrial, commercial real estate, education, auto and other retail
purposes. A deterioration in economic conditions or changes in consumer or business behavior that negatively
impacts home property or commercial property values could, in event of the borrower’s default, result in
materially higher credit losses. Similarly, higher unemployment levels and higher interest rates can adversely
affect our customers’ ability to repay their loans, which can negatively impact our credit performance.
The credit quality of our borrowers may deteriorate for a number of reasons that are outside our control,
including prevailing economic and market conditions and collateral valuations. The trends and risks affecting
borrower credit quality have caused, and in the future may cause, us to experience credit losses, impairment
charges, increased repurchase demands, higher recovery costs, and an inability to engage in routine funding
transactions, which could have a material adverse effect on our business, financial condition and results of
operations.
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Our framework for managing risks may not be effective in mitigating risk and loss.
Our risk management framework is made up of various processes and strategies to manage our risk
exposure. The framework to manage risk, including the framework’s underlying assumptions, may not be
effective under all conditions and circumstances. If the risk management framework proves ineffective, we could
suffer unexpected losses and could be materially adversely affected.
One of the main types of risks inherent in our business is credit risk. An important feature of our credit
risk management system is to employ an internal credit risk control system through which we identify, measure,
monitor and mitigate the existing and emerging credit risk of our customers. This process involves a detailed
analysis of the customer or credit risk, taking into account both quantitative and qualitative factors, and is
inherently subject to human error. In exercising their judgment, our employees may not always be able to assign
an accurate credit rating to a customer or credit risk, which may result in our exposure to higher credit risks than
indicated by our risk rating system.
In addition, we have undertaken certain actions to enhance our credit policies and guidelines to address
potential risks associated with particular industries or types of customers. However, we may not be able to
effectively implement these initiatives, or consistently follow and refine our credit risk management system. If
any of the foregoing were to occur, it may result in an increase in the level of nonaccrual loans and a higher risk
exposure for us, which could have a material adverse effect on us.
Changes in our accounting policies or in accounting standards could materially affect how we
report our financial results and condition.
The FASB and SEC periodically change the financial accounting and reporting standards that govern the
accounting for our financial results and the preparation of our consolidated financial statements. These changes
can be hard to predict and can materially impact how we record and report our financial condition and results of
operations. In some cases, we could be required to apply a new or revised standard retroactively, which would
result in the recasting of our prior period financial statements.
Our financial and accounting estimates and risk management framework rely on analytical
forecasting and models.
The processes we use to estimate loan losses, measure the fair value of financial instruments and
estimate the effects of changing interest rates and other market measures on our financial condition and results
of operations are reliant upon the use of analytical and forecasting models. Some of our tools and metrics for
managing risk are based on observed historical market behavior, and we rely on quantitative models to measure
risks and to estimate certain financial values. Models may be used in processes such as determining the pricing of
various products, grading loans and extending credit, measuring interest rate and other market risks, predicting
losses, assessing capital adequacy and calculating regulatory capital levels, as well as estimating the value of
financial instruments and balance sheet items. Poorly designed or implemented models could adversely affect
our business decisions if the information is inadequate. In addition, our models may fail to predict future risk
exposures if the information used is inaccurate, obsolete or not sufficiently comparable to actual events as they
occur. We seek to incorporate appropriate historical data in our models, but the range of market values and
behaviors reflected in any period of historical data is not always predictive of future developments in any
particular period and the period of data we incorporate into our models may turn out to be inappropriate for the
future period being modeled. In these instances, our ability to manage risk would be limited and our risk
exposure and losses could be significantly greater than our models indicated, which could harm our reputation
and adversely affect our revenues and profits. Finally, information provided to our regulators based on poorly
designed or implemented models could be inaccurate or insufficient. Some of the decisions that our regulators
make, including those related to capital distributions to our stockholders, could be adversely affected due to
their perception that the quality of the models used to generate the relevant information is insufficient.
Citizens Financial Group, Inc. | 24
The preparation of our financial statements requires us to make subjective determinations and use
estimates that may vary from actual results and materially impact our financial condition and results of
operations.
The preparation of consolidated financial statements in conformity with GAAP requires management to
make significant estimates that affect the financial statements. Our accounting policies and methods are
fundamental to how we record and report our financial condition and results of operations and, at times, require
management to exercise judgment in their application so as to report our financial condition and results of
operations in the most appropriate manner. Certain accounting policies are critical because they require
management to make difficult, subjective or complex judgments about matters that are inherently uncertain and
the likelihood that materially different estimates would result under different conditions or through the
utilization of different assumptions. Our critical accounting estimates include the ACL, estimations of fair value
and review of goodwill for impairment. If our estimates are inaccurate or need to be adjusted periodically, our
financial condition and results of operations could be materially impacted. For more information regarding our
use of estimates in the preparation of our consolidated financial statements, see Note 1 in Item 8 and the
“Critical Accounting Estimates” section in Item 7.
Operational risks are inherent in our businesses.
Our operations depend on our ability to process a very large number of transactions efficiently and
accurately while complying with applicable laws and regulations. Operational risk and losses can result from
internal and external fraud; improper conduct or errors by employees or third parties; failure to document
transactions properly or to obtain proper authorization; failure to comply with applicable legal and regulatory
requirements and business conduct rules; equipment failures, including those caused by natural disasters or by
electrical, telecommunications or other essential utility outages; business continuity and data security system
failures, including those caused by computer viruses, cyber-attacks against us or our vendors, or unforeseen
problems encountered while implementing new computer systems or upgrades to existing systems; or the
inadequacy or failure of systems and controls, including those of our suppliers or counterparties. Although we
implement risk controls and loss mitigation actions and devote substantial resources to developing efficient
procedures, identifying and rectifying weaknesses in existing procedures and training staff, it is not possible to be
certain that such actions have been or will be effective in controlling each of the operational risks we face. Any
weakness in these systems or controls, or any breaches or alleged breaches of such laws or regulations, could
result in increased regulatory supervision, enforcement actions and other disciplinary action, and have an
adverse impact on our business, applicable authorizations and licenses, reputation and results of operations.
The financial services industry, including the banking sector, continues to make technological
enhancements to meet customer preferences, as well as meet legal and regulatory requirements, and we
may not be able to compete effectively as a result of these changes.
Technology within the financial services industry continues to evolve and new, unexpected technological
changes could have a transformative effect on the way banks offer products and services. We believe our success
depends, to a great extent, on our ability to utilize technology to offer products and services that address the
needs of our customers and to create efficiencies in our operations. However, we may not be able to, among
other things, keep up with the rapid pace of technological changes, effectively implement new technology-driven
products and services, or be successful in marketing these products and services to our customers. As a result,
our ability to compete effectively to attract or retain business may be impaired, and our business, financial
condition or results of operations may be adversely affected.
In addition, changes in the legal and regulatory framework under which we operate require us to update
our information systems to ensure compliance. Our need to review and evaluate the impact of ongoing rule
proposals, final rules and implementation guidance from regulators further complicates the development and
implementation of new information systems for our business. Regulatory guidance continues to be focused on the
need for financial institutions to perform appropriate due diligence and ongoing monitoring of third-party vendor
relationships, thus increasing the scope of management involvement and decreasing the efficiency otherwise
resulting from our relationships with third-party technology providers. Given the significant number of ongoing
regulatory reform initiatives, it is possible that we incur higher than expected information technology costs in
order to comply with current and impending regulations. Also, see “Supervisory requirements and expectations
on us as a financial holding company and a bank holding company and any regulator-imposed limits on our
activities could adversely affect our ability to implement our strategic plan, expand our business, continue to
improve our financial performance and make capital distributions to our stockholders.”
Citizens Financial Group, Inc. | 25
We are subject to a variety of cybersecurity risks that, if realized, could adversely affect how we
conduct our business.
Evolving technologies and the increased sophistication and activities of organized crime, hackers,
terrorists, nation-states, activists and other external parties present a significant information security risk to
large financial institutions such as us. Third parties with whom we or our customers do business also present
operational and information security risks to us, including security breaches or failures of their own systems.
Risks related to cyber-attacks on our vendors and other third parties, including supply chain attacks affecting our
software and information technology service providers, are on the rise as such attacks become more frequent and
severe. Employee error, failure to follow security procedures, or malfeasance also present these risks. Our
operations rely on the secure processing, transmission and storage of confidential information in our computer
systems and networks as well as in the third-party computer systems and networks used to provide products and
services on our behalf. Although we believe that we have appropriate information security procedures and
controls based on our adherence to applicable laws and regulations and industry standards, our technologies,
systems, and networks may be the target of cyber-attacks or information security breaches that could result in
the unauthorized release, gathering, monitoring, misuse, theft, sale or loss or destruction of the confidential
and/or proprietary information of CFG, and our customers, vendors, counterparties, or employees. We and our
third-party vendors are under continuous threat of loss or network degradation due to cyber-attacks, such as
computer viruses, malicious or destructive code, phishing attacks, ransomware, and Distributed Denial of Service
(“DDoS”) attacks (collectively, “fraudulent schemes”). Also, our customers are routinely the target of fraudulent
schemes. This is especially true as we continue to expand customer capabilities to utilize the Internet and other
remote channels to transact business. Two of the most significant cyber-attack risks that we face as a result of
these fraudulent schemes are potential loss of funds resulting from customers falling victim to cybercriminal
communications directed to them or unauthorized access to sensitive customer data. Cybercriminals can use
fraudulent schemes directly targeting our customers or our own systems to compromise and directly extract
funds from a customer’s account or access sensitive customer data. Certain technology protections such as
Customer Profiling and Step-Up Authentications are implemented so that we are compliant with the FFIEC
Authentication and Access to Financial Institution Services and Systems guidelines.
As cyber threats continue to evolve, we may be required to expend significant additional resources to
continue to modify or enhance our layers of defense, to investigate and remediate any information security
vulnerabilities internally, to assess and mitigate issues associated with customers that have fallen victim to
fraudulent schemes, and perform additional due diligence with respect to our third-party vendors. System
enhancements and updates may also create risks associated with implementing new systems and integrating
them with existing ones. Due to the complexity and interconnectedness of information technology systems, the
process of enhancing our layers of defense can itself create a risk of system disruptions and security issues. In
addition, addressing certain information security vulnerabilities, such as hardware-based vulnerabilities, may
affect the performance of our information technology systems. The ability of our hardware and software
providers to deliver patches and updates to mitigate vulnerabilities in a timely manner can introduce additional
risks, particularly when a vulnerability is being actively exploited by threat actors. Cyber-attacks against the
patches themselves have also proven to be a significant risk that companies will have to address going forward.
Despite our efforts to prevent a cyber-attack, a successful cyber-attack could persist for an extended
period of time before being detected, and, following detection, could take considerable time for us to obtain full
and reliable information about the cybersecurity incident and the extent, amount and type of information
compromised. During the course of an investigation, we may not necessarily know the full effects of the incident
or how to remediate it, and actions and decisions that are taken or made in an effort to mitigate risk may further
increase the costs and other negative consequences of the incident. Moreover, new regulations may require us to
disclose information about a cybersecurity event before it has been resolved or fully investigated.
The techniques used by cyber criminals change frequently, may not be recognized until launched and can
be initiated from a variety of sources, including terrorist organizations and hostile foreign governments. These
actors may attempt to fraudulently induce employees, customers or other third-party users of our systems to
disclose sensitive information in order to gain access to data or our systems. In the event that a cyber-attack is
successful, our business, financial condition or results of operations may be adversely affected. For a discussion
of the guidance that regulators have released regarding cybersecurity and cyber risk management standards, see
the “Regulation and Supervision” section of Item 1.
Citizens Financial Group, Inc. | 26
We rely heavily on communications and information systems to conduct our business.
Any failure, interruption or breach in the security of our communication and information systems,
including due to cyber-attacks or our failure to adequately maintain and manage our systems or implement
system changes and upgrades, could result in failures or disruptions in our customer relationship management,
general ledger, deposit, loan and other systems. Although our policies and procedures are designed to prevent or
limit the effect of the possible failure, interruption or security breach of our information systems, there can be
no assurance that these policies and procedures will be successful and that any such failure, interruption or
security breach will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any
failure, interruption or security breach of our information systems could require us to devote substantial
resources to recovery and response efforts, damage our reputation, result in a loss of customer business, subject
us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability. Although we
maintain insurance coverage for information security events, we may incur losses as a result of such events that
are not insured against or not fully covered by our insurance.
We rely on third parties for the performance of a significant portion of our information technology.
We rely on third parties for the performance of a significant portion of our information technology
functions and the provision of information technology and business process services including, but not limited to,
the operation of our data communications networks, hosted services, and a wide range of other support services.
The success of our business depends in part on the continuing ability of third parties to perform these functions
and services in a timely and satisfactory manner, which performance could be disrupted or otherwise adversely
affected due to failures or other information security events originating at the third parties or at the third
parties’ suppliers or vendors (so-called “fourth party risk”). We may not be able to effectively monitor or
mitigate third or fourth-party risk, in particular as it relates to the use of common suppliers or vendors by the
third parties that perform functions and services for us. If we experience a disruption in the provision of any
functions or services performed by third parties, we may have difficulty in finding alternate providers on terms
favorable to us and in reasonable time frames. If these services are not performed in a satisfactory manner, we
would not be able to adequately serve our customers. In either situation, our business could incur significant
costs and be adversely affected.
We are exposed to reputational risk and the risk of damage to our brands and the brands of our
affiliates.
Our success and results depend on our reputation and the strength of our brands. We are vulnerable to
adverse market perception as we operate in an industry where integrity, customer trust and confidence are
paramount. We are exposed to the risk that litigation, employee misconduct, operational failures, the outcome
of regulatory or other investigations or actions, press speculation and negative publicity, perception of our
environmental, social and governance practices and disclosures, among other factors, could damage our brands
or reputation. Our brands and reputation could also be harmed if we sell products or services that do not perform
as expected or customers’ expectations for the product are not satisfied.
Unpredictable catastrophic events, including pandemics, terrorist attacks, extreme weather events
and other large-scale catastrophes, could have an adverse effect on our business, financial position and
results of operations.
The occurrence of catastrophic events, including pandemics, terrorists attacks, extreme weather events,
such as hurricanes, tropical storms, or tornadoes, and other large-scale catastrophes could adversely affect our
business, financial condition or results of operations. Such events could affect the stability of our deposit base,
impair the ability of our borrowers to repay outstanding loans, impair the value of collateral securing loans, and
cause significant property damage or operational disruptions, resulting in loss of revenue or causing us to incur
additional expenses.
Furthermore, although we maintain both business continuity and disaster recovery plans, if a terrorist
attack, extreme weather event, or other catastrophe rendered our production and recovery data unusable, there
can be no assurance that these plans and related capabilities will adequately protect us from such events, and
our business, financial condition or results of operations could be adversely affected.
While the U.S. economy has generally recovered since the onset of the COVID disruption, a resurgence of
pandemic conditions could reintroduce, or intensify, these impacts and adversely affect our business, financial
condition and results of operations, as well as our liquidity and capital profile.
Citizens Financial Group, Inc. | 27
The effects of geopolitical instability may adversely affect us and create significant risks and
uncertainties for our business, with the ultimate impact dependent on future developments, which are
highly uncertain and unpredictable.
Ongoing geopolitical instability, such as the wars in Ukraine and the Middle East, has negatively
impacted, and could in the future negatively impact, the global and U.S. economies, including by causing supply
chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign currency
exchange rates, rising interest rates and heightened cybersecurity risks. The extent to which such geopolitical
instability adversely affects our business, financial condition and results of operations, as well as our liquidity
and capital profile, will depend on future developments, which are highly uncertain and unpredictable, including
the extent and duration of the wars and the associated immeasurable humanitarian toll inflicted as a result. If
geopolitical instability adversely affects us, it may also have the effect of heightening other risks related to our
business.
Risks Related to Our Industry
Any deterioration in national economic conditions could have a material adverse effect on our
business, financial condition and results of operations.
Our business is affected by national economic conditions, as well as perceptions of those conditions and
future economic prospects. Changes in such economic conditions are not predictable and cannot be controlled.
Adverse economic conditions, such as recent inflationary pressures, could require us to charge off a higher
percentage of loans and increase the provision for credit losses, which would reduce our net income and
otherwise have a material adverse effect on our business, financial condition and results of operations.
We operate in an industry that is highly competitive, which could result in losing business or margin
declines and have a material adverse effect on our business, financial condition and results of operations.
We operate in a highly competitive industry, which could become even more competitive as a result of
legislative, regulatory and technological changes, as well as continued consolidation. We face aggressive
competition from other domestic and foreign lending institutions and from numerous other providers of financial
services, including non-banking financial institutions that are not subject to the same regulatory restrictions as
banks and BHCs, securities firms and insurance companies, and competitors that may have greater financial
resources.
With respect to non-banking financial institutions, technology and other changes have lowered barriers to
entry and made it possible for non-banks to offer products and services traditionally provided by banks. For
example, consumers can maintain funds that would have historically been held as bank deposits in brokerage
accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring
funds directly without the assistance of banks. In addition, the emergence, adoption and evolution of new
technologies that do not require intermediation, including distributed ledgers such as digital assets and
blockchain, as well as advances in robotic process automation, could significantly affect the competition for
financial services. The process of eliminating banks as intermediaries, known as “disintermediation,” could result
in the loss of fee income, as well as the loss of customer deposits and the related income generated from those
deposits. Some of our non-bank competitors are not subject to the same extensive regulations we are and,
therefore, may have greater flexibility in competing for business. As a result of these and other sources of
competition, we could lose business to competitors or be forced to price products and services on less
advantageous terms to retain or attract clients, either of which would adversely affect our profitability.
Climate change manifesting as physical or transition risks could adversely affect our operations,
businesses and customers.
There is increasing global concern over the risks of climate change and related environmental
sustainability matters. The physical risks of climate change include discrete events, such as flooding and
wildfires, and longer-term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and
prolonged drought. Such events could disrupt our operations or those of our clients, customers, or service
providers, including through direct damage to assets and indirect impacts from supply chain disruption and
market volatility.
Citizens Financial Group, Inc. | 28
We are also exposed to risks associated with the transition to a lower-carbon economy in response to
concerns around climate change. Such risks may result from changes in policies, laws and regulations,
technologies, or market preferences that are intended to address climate change. These changes could
materially and negatively impact our or our customers’ business, results of operations, financial condition and
reputation. This could occur as a result of our or our customers’ involvement in, or decision not to participate in,
certain industries or projects associated with exacerbating climate change, as well as any decisions we make to
continue to conduct or change our activities in response to considerations related to climate change. Ongoing
legislative or regulatory uncertainties and changes regarding climate risk management and practices may result
in higher regulatory, compliance, credit and reputational risks and costs.
The conditions of other financial institutions or of the financial services industry could adversely
affect our operations and financial condition.
Financial services institutions are typically interconnected as a result of trading, investment, liquidity
management, clearing, counterparty and other relationships. Within the financial services industry, the default
by any one institution could lead to defaults by other institutions. Concerns about, or a default by, one
institution could lead to significant market and customer perception of the risk of similar problems at other
institutions. This perception of risk could, in and of itself, lead to adverse impacts on liquidity. Liquidity
problems and losses or defaults by other institutions, as the financial soundness of financial institutions is closely
related as a result of these credit, trading, clearing and other relationships. Even the perceived lack of
creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or
defaults by various institutions. This systemic risk may adversely affect financial intermediaries, such as clearing
agencies, banks and exchanges with which we interact on a daily basis, or key funding providers such as the
FHLBs, any of which could have a material adverse effect on our access to liquidity or otherwise have a material
adverse effect on our business, financial condition and results of operations.
Risks Related to Regulations Governing Our Industry
As a financial holding company and a bank holding company, we are subject to comprehensive
regulation that could have a material adverse effect on our business and results of operations.
As a FHC and a BHC, we are subject to comprehensive regulation, supervision and examination by the
FRB. In addition, CBNA is subject to comprehensive regulation, supervision and examination by the OCC. Our
regulators supervise us through regular examinations and other means that allow them to gauge management’s
ability to identify, assess and control risk in all areas of operations in a safe and sound manner and to ensure
compliance with laws and regulations. In the course of their supervision and examinations, our regulators may
require improvements in various areas. We may be required to devote substantial resources to meet supervisory
expectations or remediate supervisory findings. In addition, the failure to meet supervisory expectations can
result in practical limitations on the ability of a bank, BHC or FHC to engage in new activities, pursue growth
opportunities, engage in acquisitions, return capital to shareholders through repurchases or dividends, or
continue to conduct existing activities. If we are unable to implement and maintain any required actions in a
timely and effective manner, we could become subject to informal (nonpublic) or formal (public) supervisory
actions and public enforcement orders that could lead to significant restrictions on our existing business or on our
ability to engage in any new business. Such forms of supervisory action could include, without limitation, written
agreements, cease and desist orders, and consent orders and may, among other things, result in restrictions on
our ability to pay dividends, requirements to increase capital, restrictions on our activities, the imposition of civil
monetary penalties, and enforcement of such actions through injunctions or restraining orders. We could also be
required to dispose of certain assets and liabilities within a prescribed period. The terms of any such supervisory
or enforcement action could have a material adverse effect on our business, financial condition and results of
operations.
We are a BHC that has elected to become a FHC pursuant to the Bank Holding Company Act. FHCs are
allowed to engage in certain financial activities in which a BHC is not otherwise permitted to engage. However,
to maintain FHC status, a BHC and all of its depository institution subsidiaries must be “well capitalized” and
“well managed.” If a BHC ceases to meet these capital and management requirements, there are many penalties
it would be faced with, including the imposition of limitations or conditions on the conduct of its activities by the
FRB, as well as the inability to undertake any of the broader financial activities permissible for FHCs or to
acquire a company engaged in such financial activities without prior approval of the FRB. If a company does not
return to compliance within 180 days, which period may be extended, the FRB may require divestiture of the
company’s depository institutions. If we fail to meet FHC requirements and remediate deficiencies in a timely
manner, there could be a material adverse effect on our business, financial condition and results of operations.
Citizens Financial Group, Inc. | 29
Our regulators may impose restrictions or limitations on our operations.
From time to time, bank regulatory agencies take supervisory actions that restrict or limit a financial
institution’s activities and lead it to raise capital or subject it to other requirements. In addition, as part of our
regular examination process, our regulators may advise us to conduct significant remediation activities or
operate under various restrictions as a prudential matter. Any such actions or restrictions, if and in whatever
manner imposed, could adversely affect our costs and revenues. Moreover, efforts to comply with any such
nonpublic supervisory actions or restrictions may require material investments in additional resources and
systems, as well as a significant commitment of managerial time and attention. As a result, such supervisory
actions or restrictions, if and in whatever manner imposed, could have a material adverse effect on our business
and results of operations.
The regulatory environment in which we operate continues to be subject to significant and evolving
regulatory requirements that could have a material adverse effect on our business and earnings.
We are heavily regulated by multiple banking, consumer protection, securities and other regulatory
authorities at the federal and state levels. This regulatory oversight is primarily established to protect
depositors, the DIF, consumers of financial products, and the financial system as a whole, not for the protection
of shareholders or other investors. Changes to statutes, regulations, rules or policies, including their
interpretation, implementation or enforcement, could affect us in substantial and unpredictable ways, including
by, for example, subjecting us to additional costs, limiting the types of financial services and other products we
may offer, limiting our ability to pursue acquisitions and increasing the ability of third parties, including non-
banks, to offer competing financial services and products. In recent years, we, together with the rest of the
financial services industry, have faced particularly intense scrutiny, with many new regulatory initiatives and
vigorous oversight and enforcement on the part of numerous regulatory and governmental authorities.
Legislatures and regulators have pursued a broad array of initiatives intended to promote the safety and
soundness of financial institutions, financial market stability, the transparency and liquidity of financial markets,
and consumer and investor protection. Certain regulators and law enforcement authorities have also recently
required admissions of wrongdoing and, in some cases, criminal pleas as part of the resolutions of matters
brought by them against financial institutions. Any such resolution of a matter involving us could lead to
increased exposure to civil litigation, could adversely affect our reputation, could result in penalties or
limitations on our ability to do business or engage in certain activities and could have other negative effects. In
addition, a single event or issue may give rise to numerous and overlapping investigations and proceedings,
including by multiple federal and state regulators and other governmental authorities.
We are also subject to laws and regulations relating to the privacy of the information of our customers,
employees, counterparties and others, and any failure to comply with these laws and regulations could expose us
to liability and/or reputational damage. As new privacy-related laws and regulations are implemented, the time
and resources needed for us to comply with those laws and regulations, as well as our potential liability for non-
compliance and our reporting obligations in the case of data breaches, may significantly increase.
While there have been significant revisions to the laws and regulations applicable to us that have been
finalized in recent years, there are other rules to implement changes that have yet to be proposed or enacted by
our regulators. The final timing, scope and impact of these changes to the regulatory framework applicable to
financial institutions remains uncertain. For more information on regulations to which we are subject and recent
initiatives to reform financial institution regulation, see the “Regulation and Supervision” section in Item 1.
We are subject to capital adequacy and liquidity standards, and if we fail to meet these standards
our financial condition and operations would be adversely affected.
We are subject to several capital adequacy and liquidity standards. To the extent that we are unable to
meet these standards, our ability to make distributions of capital will be limited and we may be subject to
additional supervisory actions and limitations on our activities. See “Regulation and Supervision” in Item 1 and
the “Capital and Regulatory Requirements” and “Liquidity” sections in Item 7, for further discussion of the
regulations to which we are subject.
Citizens Financial Group, Inc. | 30
The Parent Company could be required to act as a “source of strength” to CBNA, which would have
a material adverse effect on our business, financial condition and results of operations.
FRB policy historically required BHCs to act as a source of financial and managerial strength to their
subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement. This support may be
required by the FRB at times when we might otherwise determine not to provide it or when doing so is not
otherwise in the interests of CFG or our stockholders or creditors, and may include one or more of the following:
•
•
•
The Parent Company may be compelled to contribute capital to CBNA, including by engaging in a public
offering to raise such capital. Furthermore, any extensions of credit from the Parent Company to CBNA
that are included in CBNA’s capital would be subordinate in right of payment to depositors and certain
other indebtedness of CBNA.
In the event of a BHC’s bankruptcy, any commitment that the BHC had been required to make to a
federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the
bankruptcy trustee and entitled to priority of payment.
In the event of impairment of the capital stock of CBNA, the Parent Company, as CBNA’s stockholder,
could be required to pay such deficiency.
The Parent Company depends on CBNA for substantially all of its revenue, and restrictions on
dividends and other distributions by CBNA could affect its liquidity and ability to fulfill our obligations.
As a BHC, the Parent Company is a separate and distinct legal entity from CBNA, our banking subsidiary.
The Parent Company typically receives substantially all of its revenue from dividends from CBNA. These dividends
are the principal source of funds to pay dividends on our equity and interest and principal on our debt. Various
federal and/or state laws and regulations, as well as regulatory expectations, limit the amount of dividends that
CBNA may pay to the Parent Company. Also, our right to participate in a distribution of assets upon a subsidiary’s
liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. In the event CBNA is
unable to pay dividends to the Parent Company, it may not be able to service debt, pay obligations or pay
dividends on its common stock. The inability to receive dividends from CBNA could have a material adverse
effect on our business, financial condition and results of operations. See the “Regulation and Supervision” section
in Item 1 and the “Capital and Regulatory Matters” section in Item 7.
From time-to-time, we may become or are subject to regulatory actions that may have a material
impact on our business.
We may become or are involved, from time to time, in reviews, investigations and proceedings (both
formal and informal) by governmental and self-regulatory agencies regarding our business. These regulatory
actions involve accounting, compliance and operational matters, among others, some of which may result in
adverse judgments, settlements, fines, penalties, injunctions or other relief that may require changes to our
business or otherwise materially impact our business.
In regulatory actions, such as those referred to above, it is inherently difficult to determine whether any
loss is probable or whether it is possible to reasonably estimate the amount of any loss. We cannot predict with
certainty if, how or when such proceedings will be resolved or what the eventual fine, penalty or other relief,
conditions or restrictions, if any, may be, particularly for actions that are in their early stages of investigation.
We may be required to make significant restitution payments to CBNA customers arising from certain compliance
issues and also may be required to pay civil money penalties in connection with certain of these issues. This
uncertainty makes it difficult to estimate probable losses which, in turn, can lead to substantial disparities
between the reserves we may establish for such proceedings and the eventual settlements, fines, or penalties.
Adverse regulatory actions could have a material adverse effect on our business, financial condition and results
of operations.
Citizens Financial Group, Inc. | 31
We are and may be subject to litigation that may have a material impact on our business.
Our operations are diverse and complex and we operate in legal and regulatory environments that expose
us to potentially significant litigation risk. In the normal course of business, we have been named, from time to
time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in
connection with our activities as a financial services institution, including with respect to alleged unfair or
deceptive business practices, mis-selling of certain products, violations of contract or intellectual property
rights, and other compliance or operational failures. Certain of the actual or threatened legal actions include
claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In
some cases, the entities that would otherwise be the primary defendants in such cases are bankrupt or in
financial distress. Moreover, a number of recent judicial decisions have upheld the right of borrowers to sue
lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.”
Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or
contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the
borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or stockholders.
This could increase the amount of private litigation to which we are subject. For more information regarding
ongoing significant legal proceedings in which we may be involved, see Note 19 in Item 8.
Compliance with anti-money laundering and anti-terrorism financing rules involves significant cost
and effort.
We are subject to rules and regulations regarding money laundering and the financing of terrorism.
Monitoring compliance with anti-money laundering and anti-terrorism financing rules can put a significant
financial burden on banks and other financial institutions and poses significant technical challenges. Although we
believe our current policies and procedures are sufficient to comply with applicable rules and regulations, we
cannot guarantee that our anti-money laundering and anti-terrorism financing policies and procedures completely
prevent situations of money laundering or terrorism financing. Any such failure events may have severe
consequences, including sanctions, fines and reputational consequences, which could have a material adverse
effect on our business, financial condition or results of operations.
Risks Related to our Common Stock
Our stock price may be volatile, and you could lose all or part of your investment as a result.
You should consider an investment in our common stock to be risky, and you should invest in our common
stock only if you can withstand a significant loss and wide fluctuation in the market value of your investment.
The market price of our common stock could be subject to wide fluctuations in response to, among other things,
the factors described in this “Risk Factors” section, and other factors, some of which are beyond our control.
These factors include:
•
•
•
•
•
•
•
•
•
quarterly variations in our results of operations or the quarterly financial results of companies
perceived to be similar to us;
changes in expectations as to our future financial performance, including financial estimates by
securities analysts and investors;
our announcements or our competitors’ announcements regarding new products or services,
enhancements, significant contracts, acquisitions or strategic investments;
fluctuations in the market valuations of companies perceived by investors to be comparable to us;
failures of financial institutions perceived to be similar to us;
future sales of our common stock;
additions or departures of members of our senior management or other key personnel;
changes in industry conditions or perceptions; and
changes in applicable laws, rules or regulations and other dynamics.
Furthermore, the stock markets have experienced price and volume fluctuations that have affected and
continue to affect the market price of equity securities of many companies. These fluctuations have often been
unrelated or disproportionate to the operating performance of these companies. These broad market
fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of
investor confidence, interest rate changes or international currency fluctuations, may negatively affect the
market price of our common stock.
If any of the foregoing occurs, it could cause our stock price to fall and may expose us to securities class
action litigation that, even if unsuccessful, could be costly to defend and a distraction to management.
Citizens Financial Group, Inc. | 32
We may not repurchase shares or pay cash dividends on our common stock.
Holders of our common stock are only entitled to receive such dividends as our Board may declare out of
funds legally available for such payments. Although we have historically declared cash dividends on our common
stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future, which
could adversely affect the market price of our common stock. Also, as a BHC, our ability to repurchase shares
and declare and pay dividends is dependent on certain federal regulatory considerations, including the rules of
the FRB regarding capital adequacy and dividends. Additionally, we are also generally required to receive the
FRB’s approval for any dividends, share repurchases, or redemption of capital securities if we are required to
resubmit our capital plan. Further, if we are unable to satisfy the capital requirements applicable to us for any
reason, we may be limited in our ability to repurchase shares and declare and pay dividends on our capital stock.
See the “Regulation and Supervision” section in Item 1 and the “Capital and Regulatory Matters” section in Item
7 for further discussion of the regulations to which we are subject.
“Anti-takeover” provisions and the regulations to which we are subject may make it more difficult
for a third party to acquire control of us, even if the change in control would be beneficial to stockholders.
We are a BHC incorporated in the state of Delaware. Anti-takeover provisions in Delaware law and our
restated certificate of incorporation and amended and restated bylaws, as well as regulatory approvals that
would be required under federal law, could make it more difficult for a third party to take control of us and may
prevent stockholders from receiving a premium for their shares of our common stock. These provisions could
adversely affect the market price of our common stock and could reduce the amount that stockholders might get
if we are sold.
Furthermore, banking laws impose notice, approval and ongoing regulatory requirements on any
stockholder or other party that seeks to acquire direct or indirect “control” of an FDIC-insured depository
institution. These laws include the Bank Holding Company Act and the Change in Bank Control Act.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
The Company’s Cybersecurity Program (“CSP”) drives an end-to-end, continuous process that protects our
customers, colleagues, assets, premises, systems, and information (electronic and non-electronic), and is
designed to ensure compliance with current and emerging federal and state laws and regulations. The CSP is
designed to ensure the effective implementation of the Corporate Security and Resilience Operating Model across
all business lines of the Company and is under the supervision of the Chief Security Officer (“CSO”).
Non-Financial Risk Management coordinates the development, maintenance, and day-to-day oversight of
the Company’s Enterprise Risk Management Governance Framework (“the Framework”), which defines an
integrated enterprise-wide approach to risk management. This centrally managed program is designed to ensure
that all business lines play a role in the successful implementation of the CSP. The CSP aligns with the
Framework, enabling the CSO to provide risk oversight to and drive accountability from the business lines.
The CSP is designed to assess and mitigate threats and risks to the Company. New and emerging threats
are assessed through an intelligence lifecycle, which includes threat modeling. In addition, risk assessment
processes drive risk identification and measurement related to security. Once risks are identified and measured,
the Framework is leveraged to track and mitigate them. Control testing is utilized to demonstrate that risks are
managed effectively, identify gaps in expected control operation, and develop appropriate remediation plans, in
order to manage risk to the Company within tolerable limits.
As part of the Company’s Third Party Risk Management Program and in support of the CSP, reviews for
cybersecurity, business continuity, fraud, and other policy-related topics are performed for the onboarding of
new vendors and ongoing monitoring of existing vendors. Ratings assigned to a vendor determine review
frequency and scope. Results are reported to key stakeholders and identified issues are tracked and monitored.
Citizens Financial Group, Inc. | 33
The Company regularly reviews the nature of its business activities and modifies the CSP as appropriate.
Many of the elements of the CSP are cyber defense related and are in place to reduce our risk to a wide range of
potential cyber threats that may target our assets and information daily. The effectiveness of the CSP is assessed
and measured periodically by various lines of defense within the Company and is conducted primarily through risk
assessments, assurance testing, and an independent audit. External organizations are also routinely engaged to
assess our CSP and test our perimeter defenses. The effectiveness of the CSP is reported periodically to the
appropriate governance committees.
Governance
Under the guidance of our CSO, we maintain a comprehensive CSP designed to protect our employees,
customers, assets, premises, systems, and information against unauthorized access, misuse, alteration, or
destruction that could result in substantial harm or inconvenience to our customers, and loss or reputational
damage. The CSP incorporates all of our security policies and covers the core elements of access control,
infrastructure security, cybersecurity event and incident management, data protection, third-party vendor cyber
risk oversight, payment security, and training and awareness. Independent assessment and benchmarking of the
CSP are regularly completed, and the CSP is reviewed and assessed by federal regulators. While we look to
numerous frameworks to ensure the CSP is maintained in line with regulatory expectations and industry best
practices, the National Institute of Standards and Technology cybersecurity framework is the primary standard
against which we benchmark ourselves.
Both the Risk and Audit Committees have oversight of the management of our cybersecurity risk. The
Audit Committee is responsible for overseeing the CSP under its risk oversight responsibilities as it relates to
financial controls. The Risk Committee is responsible for oversight of the management of cybersecurity risk
consistent with the Framework.
The CSP is presented by the CSO to the Risk Committee annually for approval in conjunction with an
annual cybersecurity briefing. This briefing provides an overall assessment of the effectiveness of the CSP and an
outlook for the upcoming year. In addition to the annual cybersecurity briefing, the CSO provides updates on
cybersecurity to the Risk Committee at each of its meetings. The Audit Committee and Board also receive regular
cybersecurity updates as part of the reporting provided by the Technology/Cyber Oversight Committee, a
management committee chaired by the CEO which provides executive oversight, guidance and transparency to
key transformative initiatives designed to enhance our technology stability, cyber defenses and risk management
capabilities. Further, to ensure the Board maintains the appropriate knowledge for providing effective oversight,
it is provided with relevant cybersecurity training on an annual basis, with any additional training provided as
requested.
ITEM 2. PROPERTIES
We lease five operations centers in Boston, Medford, and Westwood, Massachusetts; Pittsburgh,
Pennsylvania; and Glen Allen, Virginia. We own two principal operations centers in Johnston and East Providence,
Rhode Island. At December 31, 2023, our subsidiaries owned and operated a total of 60 facilities and leased an
additional 1,193 facilities. We believe our current facilities are adequate to meet our needs. See Note 7 and Note
9 in Item 8 for more information regarding our premises and equipment, and leases, respectively.
ITEM 3. LEGAL PROCEEDINGS
Information required by this item is presented in Note 19 in Item 8 and is incorporated herein by
reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the New York Stock Exchange under the symbol “CFG.” As of February 1,
2024, our common stock was owned by 7,086 holders of record (including Cede & Co.) and approximately 445,000
beneficial shareholders whose shares were held in “street name” through a broker or bank. Information relating
to compensation plans under which our equity securities are authorized for issuance is presented in Item 12.
Citizens Financial Group, Inc. | 34
The following graph compares the cumulative total stockholder returns for our performance during the
five-year period ended December 31, 2023 relative to the performance of the Standard & Poor’s 500® index, a
commonly referenced U.S. equity benchmark consisting of leading companies from diverse economic sectors; the
KBW Nasdaq Bank Index (“BKX”), composed of 24 leading national money centers, regional banks and thrifts; and
a group of other banks that constitute our peer regional banks. The graph assumes a $100 investment at the
closing price on December 31, 2018 in each of CFG common stock, the S&P 500 index, the BKX and the peer
market-capitalization weighted average and assumes all dividends were reinvested on the date paid. The points
on the graph represent the fiscal quarter-end amounts based on the last trading day in each subsequent fiscal
quarter.
This graph shall not be deemed “soliciting material” or be filed with the Securities and Exchange
Commission for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that
Section, and shall not be deemed to be incorporated by reference into any filing of Citizens Financial Group, Inc.
under the Securities Act of 1933, as amended, or the Exchange Act.
CFG
S&P 500 Index
KBW BKX Index
Peer Regional Bank Average
12/31/2023
12/31/2022 12/31/2021 12/31/2020 12/31/2019 12/31/2018
$140
$157
$181
$132
$142
$100
207
132
133
164
133
134
200
169
162
156
122
120
131
136
134
100
100
100
Citizens Financial Group, Inc. | 35
CFGS&P 500 IndexBKX IndexPeer Bank Average12/31/1812/31/1912/31/2012/31/2112/31/2212/31/23$60$80$100$120$140$160$180$200$220
Issuer Purchase of Equity Securities
Details of the repurchases of the Company’s common stock during the three months ended December 31,
2023 are included below:
Period
October 1, 2023 - October 31, 2023
November 1, 2023 - November 30, 2023
December 1, 2023 - December 31, 2023
Total Number of
Shares
Repurchased(1)
329
335
691
Average
Price Paid
Per Share
$16.82
$23.43
$12.41
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs(2)
—
Maximum Dollar Amount of
Shares That May Yet Be
Purchased as Part of Publicly
Announced Plans or Programs(2)
$1,094,000,058
—
—
$1,094,000,058
$1,094,000,058
(1) Reflects shares repurchased to satisfy applicable tax withholding obligations in connection with an employee share-based compensation plan and the forfeiture
of unvested restricted stock awards.
(2) On February 17, 2023, the Company announced that its Board of Directors increased the capacity under its common share repurchase program by an additional
$1.15 billion, which was incremental to the $850 million of capacity remaining as of December 31, 2022 under the prior June 2022 authorization.
Common stock share repurchases may be executed in the open market or in privately negotiated
transactions, including under Rule 10b5-1 plans and accelerated share repurchase and other structured
transactions. The timing and exact amount of future share repurchases will be subject to various factors,
including the Company’s capital position, financial performance, capital impacts of strategic initiatives, market
conditions, and regulatory considerations.
ITEM 6. RESERVED
Not applicable.
Citizens Financial Group, Inc. | 36
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction ..............................................................................................................................................................................
Financial Performance ...........................................................................................................................................................
Results of Operations - 2023 compared with 2022 ........................................................................................................
Net Interest Income .....................................................................................................................................................
Noninterest Income .....................................................................................................................................................
Noninterest Expense ...................................................................................................................................................
Provision for Credit Losses ........................................................................................................................................
Income Tax Expense ....................................................................................................................................................
Business Operating Segments ....................................................................................................................................
Results of Operations - 2022 compared with 2021 ........................................................................................................
Analysis of Financial Condition ............................................................................................................................................
Securities ........................................................................................................................................................................
Loans and Leases ..........................................................................................................................................................
Credit Quality ................................................................................................................................................................
Deposits ..........................................................................................................................................................................
Borrowed Funds ............................................................................................................................................................
Capital and Regulatory Matters ............................................................................................................................................
Liquidity .....................................................................................................................................................................................
Critical Accounting Estimates ...............................................................................................................................................
Accounting and Reporting Developments .........................................................................................................................
Risk Governance ......................................................................................................................................................................
Market Risk ................................................................................................................................................................................
Non-GAAP Financial Measures and Reconciliations ........................................................................................................
Page
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39
40
40
42
42
43
43
43
44
45
45
46
48
53
53
54
58
61
63
64
66
75
Citizens Financial Group, Inc. | 37
INTRODUCTION
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $222.0
billion in assets as of December 31, 2023. Headquartered in Providence, Rhode Island, we offer a broad range of
retail and commercial banking products and services to individuals, small businesses, middle-market companies,
large corporations and institutions. We help our customers reach their potential by listening to them and by
understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, we provide
an integrated experience that includes mobile and online banking, a full-service customer contact center and the
convenience of approximately 3,200 ATMs and more than 1,100 branches in 14 states and the District of
Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth
management and small business offerings. In Commercial Banking, we offer a broad complement of financial
products and solutions, including lending and leasing, deposit and treasury management services, foreign
exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate
finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available
at www.citizensbank.com.
The following MD&A is intended to assist readers in their analysis of the accompanying Consolidated
Financial Statements and supplemental financial information. It should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial Statements in Item 8, as well as other
information contained in this document.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures denoted as “Underlying” results and “including
AOCI impact.” Underlying results for any given reporting period exclude certain items that may occur in that
period which management does not consider indicative of our on-going financial performance. We believe these
non-GAAP financial measures provide useful information to investors because they are used by management to
evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our
Underlying results in any given reporting period reflect our on-going financial performance in that period and,
accordingly, are useful to consider in addition to our GAAP financial results. We further believe the presentation
of Underlying results increases comparability of period-to-period results.
Other companies may use similarly titled non-GAAP financial measures that may be calculated differently
from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable
to similar measures used by such companies. We caution investors not to place undue reliance on such non-GAAP
financial measures, but to consider them with the most directly comparable GAAP measures. Non-GAAP financial
measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our
results reported under GAAP.
Non-GAAP measures are denoted throughout our MD&A by the use of the term “Underlying.” Where there
is a reference to these metrics in that paragraph, all measures that follow are on the same basis when
applicable. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial
Measures and Reconciliations.”
Citizens Financial Group, Inc. | 38
FINANCIAL PERFORMANCE
Key Highlights
Net income decreased $465 million, with earnings per diluted common share down $0.97 to $3.13
compared to 2022.
Results reflect notable items of $357 million or $0.75 per diluted common share, net of tax benefit,
compared to $352 million or $0.74 per diluted common share, net of tax benefit, in 2022.
Table 1: Notable Items
(dollars in millions)
Noninterest expense
Income tax expense
(dollars in millions)
Provision for credit losses
Noninterest income
Noninterest expense
Income tax expense
Year Ended December 31, 2023
Less: notable items
Reported
results
(GAAP)
Integration
related
costs(1)
TOP and
other(2)
FDIC special
assessment(3)
Provision
Underlying
results
(non-GAAP)
$5,507
422
$104
(28)
$177
(63)
$225
(58)
$—
—
$5,001
571
Year Ended December 31, 2022
Less: notable items
Reported
results
(GAAP)
Integration
related
costs(1)
TOP and
other(2)
FDIC special
assessment
Provision(4)
Underlying
results
(non-GAAP)
$474
2,009
4,892
582
$—
(31)
213
(58)
$—
—
49
(9)
$—
$169
—
—
—
—
—
(43)
$305
2,040
4,630
692
(1) Includes integration related costs associated with acquisitions for the years ended December 31, 2023 and 2022, and mark-to-market losses on loans acquired
from Investors classified as LHFS for the year ended December 31, 2022.
(2) Includes our TOP transformational and revenue and efficiency initiatives for the years ended December 31, 2023 and 2022, a one-time deferred tax benefit for
the year ended December 31, 2023 and income tax impacts related to legacy tax matters for the year ended December 31, 2022.
(3) Represents an industry-wide FDIC special assessment. For more information, see “Regulation and Supervision - Deposit Insurance” in Item 1.
(4) Includes the initial provision for credit losses tied to the HSBC transaction and Investors acquisition. As required by purchase accounting, a fair value mark for
performing loans including both credit and interest rate components is recorded in addition to the provision for credit losses expense, thus the credit exposure
has been “double counted.”
•
Net income available to common stockholders decreased $469 million to $1.5 billion compared to 2022.
◦
◦
On an Underlying basis, which excludes notable items, net income available to common stockholders
of $1.8 billion compared to $2.3 billion in 2022.
On an Underlying basis, earnings per diluted common share of $3.88 compared to $4.84 in 2022.
Total revenue increased $203 million to $8.2 billion compared to 2022, driven by an increase of 4% in net
interest income, including the impacts of the HSBC transaction and Investors acquisition.
The efficiency ratio of 67.0% compared to 61.0% in 2022.
◦
On an Underlying basis, the efficiency ratio of 60.8% compared to 57.5% in 2022.
•
•
•
ROTCE of 10.9% compared to 13.9% in 2022.
◦
On an Underlying basis, ROTCE of 13.5% compared to 16.4%.
•
Tangible book value per common share of $30.91 increased 11% from 2022.
For additional information regarding our financial performance, see “Results of Operations — 2023
compared with 2022” included in this report.
Citizens Financial Group, Inc. | 39
RESULTS OF OPERATIONS — 2023 compared with 2022
Net Interest Income
Net interest income is our largest source of revenue and is the difference between the interest earned on
interest-earning assets (generally loans, leases and investment securities) and the interest expense incurred in
connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of net interest
income is primarily a function of the difference between the effective yield on our average interest-earning
assets and the effective cost of our interest-bearing liabilities. These factors are influenced by the pricing and
mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors
such as economic conditions, competition for loans and deposits, the monetary policy of the FRB and market
interest rates. For further discussion, refer to “Market Risk — Non-Trading Risk” and “Risk Governance.”
Table 2: Major Components of Net Interest Income
(dollars in millions)
Assets
Interest-bearing cash and due from banks and deposits
in banks
Taxable investment securities
Non-taxable investment securities
Total investment securities
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home Equity
Automobile
Education
Other retail
Total retail
Total loans and leases
Loans held for sale, at fair value
Other loans held for sale
Interest-earning assets
Noninterest-earning assets
Total assets
Liabilities and Stockholders’ Equity
Checking with interest
Money market
Savings
Term
Total interest-bearing deposits
Short-term borrowed funds
Long-term borrowed funds
Total borrowed funds
Total interest-bearing liabilities
Demand deposits
Other noninterest-bearing liabilities
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Interest rate spread
Net interest income and net interest margin
Net interest income and net interest margin, FTE(1)
Memo: Total deposits (interest-bearing and demand)
Year Ended December 31,
2023
2022
Change
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Yields/
Rates (bps)
1,305
$8,531 $451
39,437 1,162
2
—
39,439 1,162
48,693 2,956
29,206 1,804
46
79,204 4,806
30,660 1,052
14,475 1,092
429
10,374
621
12,333
489
5,171
73,013 3,683
152,217 8,489
73
1,160
339
29
201,686 10,204
20,535
$222,221
1,521
5.22 %
2.94
2.68
2.94
5.99
6.09
3.53
5.99
3.43
7.54
4.13
5.04
9.46
5.04
5.53
6.26
8.43
5.02
$6,195 $128
840
35,639
—
3
35,642
840
50,002 1,942
24,746 1,026
46
76,269 3,014
876
27,759
555
13,057
507
13,729
560
13,047
456
5,483
73,075 2,954
149,344 5,968
67
57
194,136 7,060
1,767
1,188
20,925
$215,061
$33,960 $446
51,178 1,494
433
29,266
772
19,320
133,724 3,145
43
746
775
15,853
818
16,599
150,323 3,963
1.31 % $36,127 $142
320
2.92
100
1.48
89
4.00
651
2.35
23
5.70
374
4.86
4.89
397
134,053 1,048
2.63
48,410
27,524
8,330
120,391
1,584
12,078
13,662
41,581
6,711
198,615
23,606
$222,221
51,717
5,553
191,323
23,738
$215,061
$6,241
$6,258
$175,305 $3,145
2.39 %
$6,012
3.09 %
3.10 %
$6,023
1.79 % $172,108 $651
2.04 % $2,336
3,798
2.35
2.33
(1)
3,797
2.35
(1,309)
3.83
4,460
4.09
3.00
(216)
2,935
3.90
2,901
3.16
1,418
4.25
(3,355)
3.69
(714)
4.29
(312)
8.31
(62)
4.04
2,873
3.97
(607)
3.77
4.71
(849)
7,550
3.61
(390)
$7,160
0.39 % ($2,167)
2,768
0.66
1,742
0.37
10,990
1.07
13,333
0.54
(838)
1.47
3,775
3.07
2,937
2.88
16,270
0.78
(10,136)
1,158
7,292
(132)
$7,160
2.83 %
3.10 %
3.10 %
0.38 % $3,197
318 bps
59
35
59
216
200
53
209
27
329
44
75
115
100
156
249
372
141
92
226
111
293
181
423
179
201
185
(44)
(1)
—
141
(1) Net interest income and net interest margin is presented on a FTE basis using the federal statutory tax rate of 21%. The FTE impact is predominantly
attributable to commercial and industrial loans for the periods presented.
Citizens Financial Group, Inc. | 40
Net interest income increased $229 million, or 4%, compared to 2022, reflecting stable net interest
margin and growth of 4% in average interest-earning assets, including the impacts of the HSBC transaction and
Investors acquisition.
Net interest margin on a FTE basis was neutral compared to 2022, reflecting higher interest-earning asset
growth and associated yields, offset by increased funding costs.
Average interest-earning assets increased $7.6 billion, or 4%, compared to 2022, primarily attributable to
growth in loans and leases reflecting the impacts of the HSBC transaction and Investors acquisition, and growth in
investments.
Average deposits increased $3.2 billion, or 2%, compared to 2022, primarily attributable to the impacts of
the HSBC transaction and Investors acquisition.
Average total borrowed funds increased $2.9 billion compared to 2022, driven by an increase in FHLB
advances and secured borrowings collateralized by auto loans.
Table 3: Changes in Net Interest Income Due to Average Volume and Average Rate
(dollars in millions)
Interest Income
Interest-bearing cash and due from banks and deposits in banks
Taxable investment securities
Non-taxable investment securities
Total investment securities
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home Equity
Automobile
Education
Other retail
Total retail
Total loans and leases
Loans held for sale, at fair value
Other loans held for sale
Total interest income
Interest Expense
Checking with interest
Money market
Savings
Term
Total interest-bearing deposits
Short-term borrowed funds
Long-term borrowed funds
Total borrowed funds
Total interest expense
Net interest income
Year Ended December 31,
2023 Versus 2022
Average
Volume(1)
Average
Rate(1)
Net Change
$47
91
—
91
(49)
182
(7)
126
92
60
(124)
(31)
(26)
(29)
97
(23)
(41)
$276
231
—
231
$323
322
—
322
1,063
1,014
596
7
778
—
1,666
1,792
84
477
46
92
59
758
176
537
(78)
61
33
729
2,424
2,521
29
13
6
(28)
$171
$2,973
$3,144
($9)
19
7
117
134
(12)
128
116
250
($79)
$313
1,155
326
566
$304
1,174
333
683
2,360
2,494
32
273
305
2,665
$308
20
401
421
2,915
$229
(1) Volume and rate changes are allocated on a consistent basis using the respective percentage changes in average balances and average rates.
Citizens Financial Group, Inc. | 41
Noninterest Income
Table 4: Noninterest Income
(dollars in millions)
Service charges and fees
Capital markets fees
Card fees
Trust and investment services fees
Mortgage banking fees
Foreign exchange and derivative products
Letter of credit and loan fees
Securities gains, net
Other income(1)
Noninterest income
Year Ended
December 31,
2023
2022
Change
Percent
$410
$420
319
296
259
242
183
168
28
78
368
273
249
261
188
159
9
82
($10)
(49)
23
10
(19)
(5)
9
19
(4)
$1,983
$2,009
($26)
(2%)
(13)
8
4
(7)
(3)
6
211
(5)
(1%)
(1) Includes bank-owned life insurance income and other income for all periods presented.
The primary drivers for the change in noninterest income for the year ended December 31, 2023,
compared to 2022, are highlighted below.
•
The decline in capital markets fees reflects lower loan syndication, underwriting and M&A advisory fees.
• Mortgage banking fees declined driven by lower production and servicing fees and a decline in MSR
valuation, net of hedge impact.
•
•
•
The decline in service charges and fees reflects the elimination of the non-sufficient funds fee in
Consumer Banking.
Card fees increased given higher transaction volumes.
Trust and investment services fees reflect increased sales activity and asset management fees.
Noninterest Expense
Table 5: Noninterest Expense
(dollars in millions)
Salaries and employee benefits
Equipment and software
Outside services
Occupancy
Other operating expense
Noninterest expense
Year Ended
December 31,
2023
2022
Change
Percent
$2,599
$2,549
756
687
492
973
648
700
410
585
$50
108
(13)
82
388
$5,507
$4,892
$615
2%
17
(2)
20
66
13%
The increase in noninterest expense for the year ended December 31, 2023, compared to 2022, was
driven by salaries and employee benefits reflecting the Private Bank start-up investment, equipment and
software driven by software maintenance and amortization costs, and other operating expense associated with
FDIC deposit insurance, fraud losses, advertising, and pension costs. The increase in FDIC deposit insurance
reflects CBNA’s special assessment of $225 million and an increase in the deposit insurance assessment rate of
two basis points that commenced with the first quarterly assessment period in 2023. For more information
regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in Item 1.
Citizens Financial Group, Inc. | 42
Provision for Credit Losses
The provision for credit losses is the result of a detailed analysis performed to estimate our ACL. The
total provision for credit losses includes the provision for loan and lease losses and the provision for unfunded
commitments. Refer to “Analysis of Financial Condition — Credit Quality” for more information.
Provision expense of $687 million for 2023 compares to $474 million for 2022. The provision expense for
2023 reflects higher reserves against the Commercial Real Estate Office portfolio primarily driven by rising
interest rates and return to office dynamics.
Income Tax Expense
Income tax expense of $422 million decreased $160 million and our effective income tax rate of 20.8%
decreased from 21.9% compared to 2022. These decreases were driven by lower pre-tax income, the favorable
impact of certain tax matters and additional benefits from tax-advantaged investments, partially offset by the
adoption of the proportional amortization method for qualified investments in tax credit structures in 2023 and
increased non-deductible FDIC premium expense.
Business Operating Segments
We have three business operating segments: Consumer Banking, Commercial Banking, and Non-Core.
During the third quarter of 2023, our indirect auto and certain purchased consumer loan portfolios were
transferred from the Consumer Banking segment into a new Non-Core segment to reflect the manner in which
management is currently assessing performance and allocating resources. This new segment structure aligns with
our recently announced balance sheet optimization strategy to discontinue the origination of certain non-
strategic lending portfolios. Prior period results have been revised to conform to the new segment presentation.
For more information regarding our business operating segments see Note 26.
The following table presents certain financial data of our business operating segments. Total business
operating segment financial results differ from total consolidated financial results. These differences are
reflected in Other non-segment operations. See Note 26 for additional information.
Table 6: Selected Financial Data for Business Operating Segments
(dollars in millions)
Net interest income
Noninterest income
Total revenue
Noninterest expense
Profit (loss) before credit losses
Net charge-offs
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Average Balances:
Total assets
Total loans and leases(1)
Deposits
Interest-earning assets
(1) Includes LHFS.
Consumer Banking
Consumer Banking
Commercial Banking
Non-Core
Year Ended December 31,
Year Ended December 31, Year Ended December 31,
2023
2022
2023
2022
2023
2022
$4,187
$3,649
$2,292
$2,103
($129)
$378
1,067
5,254
3,542
1,712
280
1,432
373
$1,059
$72,693
66,356
116,980
66,999
1,063
4,712
3,255
1,457
174
1,283
328
$955
784
3,076
1,295
1,781
250
1,531
378
845
2,948
1,223
1,725
46
1,679
375
—
(129)
123
(252)
78
(330)
(86)
—
378
136
242
52
190
48
$1,153
$1,304
($244)
$142
$68,027
62,523
114,482
63,289
$76,028
$74,919
72,937
47,155
73,321
70,992
49,898
71,276
$13,745
13,669
—
$18,121
18,048
—
13,675
18,048
Net interest income increased $538 million compared to 2022, driven by higher net interest margin
reflecting higher interest-earning asset yields given higher market interest rates and growth in average interest-
earning assets, including the impacts of the HSBC transaction and Investors acquisition. This increase was
partially offset by higher funding costs.
Citizens Financial Group, Inc. | 43
Noninterest income increased $4 million compared to 2022, driven by card fees given higher transaction
volumes and trust and investment services fees reflecting increased sales activity and asset management fees.
This increase was partially offset by mortgage banking fees reflecting lower servicing and production fees and a
decline in MSR valuation, net of hedge impact, and service charges and fees given the elimination of the non-
sufficient funds fees.
Noninterest expense increased $287 million compared to 2022, driven by salaries and benefits reflecting
the Private Bank start-up investment, equipment and software driven by software maintenance and amortization
costs, and other operating expense associated with advertising and fraud losses.
Net charge-offs increased $106 million compared to 2022, driven by other retail and education as credit
losses continue to gradually normalize from pandemic-era lows.
Commercial Banking
Net interest income increased $189 million compared to 2022, driven by higher net interest margin
reflecting higher interest-earning asset yields given higher market interest rates and growth in average interest-
earning assets, including the impact of the Investors acquisition. This increase was partially offset by higher
funding costs.
Noninterest income decreased $61 million compared to 2022, driven by capital markets fees reflecting
lower loan syndication, underwriting and M&A advisory fees, and foreign exchange and derivative products
revenue reflecting lower client hedging activity. This decline was partially offset by service charges and fees
reflecting the benefit of acquisitions and improvement in Treasury Solutions fees and card fees given higher
transaction volumes.
Noninterest expense increased $72 million compared to 2022, driven primarily by salaries and employee
benefits, and equipment and software driven by software maintenance and amortization costs.
Net charge-offs increased $204 million compared to 2022, reflecting an increased net charge-off level in
the Commercial Real Estate Office portfolio primarily driven by rising interest rates and return to office
dynamics, and the normalization of credit losses from pandemic-era lows.
Non-Core
Net interest income decreased $507 million compared to 2022, driven by the highest-cost implied
marginal funding sources during 2023, including secured borrowings collateralized by auto loans, FHLB advances
and, to the extent necessary to fully fund the Non-Core segment, brokered certificates of deposit.
Net charge-offs increased $26 million compared to 2022, driven by auto as credit losses continue to
gradually normalize from pandemic-era lows.
RESULTS OF OPERATIONS — 2022 compared with 2021
For a description of our results of operations for 2022, see the “Results of Operations — 2022 compared
with 2021” section of Item 7 in our 2022 Form 10-K.
Citizens Financial Group, Inc. | 44
ANALYSIS OF FINANCIAL CONDITION
Securities
Table 7: Amortized Cost and Fair Value of Securities
(dollars in millions)
U.S. Treasury and other
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Other/non-agency
Total mortgage-backed securities
Collateralized loan obligations
Total debt securities available for sale
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Total mortgage-backed securities
Asset-backed securities
Total debt securities held to maturity
Total debt securities available for sale and held to maturity
December 31, 2023
December 31, 2022
Amortized
Cost(1)
Fair Value
Amortized
Cost
Fair Value
$4,493
$4,380
$3,678
$3,486
1
1
2
2
26,289
24,477
21,250
19,062
279
255
280
251
26,568
24,732
21,530
19,313
667
664
1,248
1,206
$31,729
$29,777
$26,458
$24,007
$8,696
$7,887
$9,253
$8,506
8,696
7,887
9,253
8,506
488
463
581
536
$9,184
$8,350
$9,834
$9,042
$40,913
$38,127
$36,292
$33,049
Equity securities, at cost(2)
Equity securities, at fair value(2)
(1) Excludes portfolio level basis adjustments of $60 million for securities designated in active fair value hedge relationships. The basis adjustments represent a
$1,058
$1,058
$869
153
173
$869
173
153
reduction to the amortized cost of the securities being hedged.
(2) Included in other assets in the Consolidated Balance Sheets.
The primary objective of the securities portfolio is to provide a ready source of liquidity. The portfolio
primarily includes high quality, highly liquid investments reflecting our ongoing commitment to maintain strong
contingent liquidity levels and pledging capacity.
As of December 31, 2023, U.S. Treasuries and mortgage-backed securities issued by GNMA and GSEs
represent 96% of the fair value of our debt securities portfolio, with approximately $31.4 billion of
unencumbered high-quality liquid securities serving as potential collateral for borrowings from the FHLB, FRB
discount window, the Fixed Income Clearing Corporation bilateral repurchase agreement market, and the Bank
Term Funding Program. The Bank Term Funding Program expires in March 2024 and we have not participated in
this program through December 31, 2023. Securities are pledged at par value instead of fair value under this
program.
For further discussion of the use of our securities as liquidity collateral see the “Regulation and
Supervision — Liquidity Requirements” and “Liquidity Risk Management and Governance” sections in this
document.
We manage our securities portfolio duration and convexity risk through asset selection and securities
structure, and maintain duration levels within our risk appetite in the context of the broader interest rate risk
framework and limits. As of December 31, 2023, the portfolio’s average effective duration, including recent
hedging actions to reduce duration, was 3.9 years compared to 5.8 years as of December 31, 2022.
Citizens Financial Group, Inc. | 45
Table 8: Amortized Cost of AFS and HTM Securities by Contractual Maturity
1 Year or Less
Amount Yield(2)
After 1 Year
Through 5 Years
Amount Yield(2)
After 10 Years
Amount Yield(2)
Total
Amount Yield(2)
As of December 31, 2023
Distribution of Maturities(1)
After 5 Years
Through 10
Years
Amount Yield(2)
$—
—
—
—
—
—
—
—
—
— % $3,015
2.65 % $1,478
3.30 %
$—
— % $4,493
2.87 %
—
—
—
—
—
—
—
—
—
—
—
—
1
2.60
1
2.60
1,599
3.28
2,157
2.91
22,533
—
—
—
—
—
100
4,614
2.87
3,735
—
7.11
3.18
279
567
23,380
3.90
2.63
6.97
3.96
26,289
279
667
31,729
—
488
488
—
4.01
4.01
—
—
—
—
—
—
8,696
2.31
8,696
—
—
488
8,696
2.31
9,184
3.78
2.63
6.99
3.71
2.31
4.01
2.40
(dollars in millions)
Amortized cost:
U.S. Treasury and other
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government
sponsored entities
Other/non-agency
Collateralized loan obligations
Total debt securities available for sale
Mortgage-backed securities:
Federal agencies and U.S. government
sponsored entities
Asset-backed securities
Total debt securities held to maturity
Total debt securities
$—
— % $5,102
2.98 % $3,735
3.18 % $32,076
3.51 % $40,913
3.41 %
(1) Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.
(2) The weighted-average yield is computed based on a constant effective interest rate over the contractual life of each security and considers the contractual
coupon, amortization of premiums and accretion of discounts. Yields exclude the impact of related hedging derivatives.
Loans and Leases
Table 9: Composition of Loans and Leases, Excluding LHFS
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
December 31,
2023
2022
Change
Percent
$43,826
$51,836
($8,010)
29,471
1,148
74,445
31,332
15,040
8,258
11,834
5,050
71,514
28,865
1,479
82,180
29,921
14,043
12,292
12,808
5,418
74,482
606
(331)
(7,735)
1,411
997
(4,034)
(974)
(368)
(2,968)
(15) %
2
(22)
(9)
5
7
(33)
(8)
(7)
(4)
Total loans and leases
$145,959
$156,662
($10,703)
(7%)
The decrease in total loans and leases as of December 31, 2023 compared to December 31, 2022 reflects
a $7.7 billion decrease in commercial due to loans sold as part of balance sheet optimization actions and market
conditions driving lower client demand. Retail declined $3.0 billion, driven by planned Non-Core portfolio runoff
in auto, education and other retail, partially offset by growth in mortgage and home equity.
Citizens Financial Group, Inc. | 46
Table 10: Fixed and Variable Rate Loans and Leases by Maturity
(dollars in millions)
Fixed rate:
Commercial and industrial
Commercial real estate
Leases
Total commercial fixed rate
Variable rate:
Commercial and industrial
Commercial real estate
Leases
Total commercial variable rate(2)
Total commercial
Fixed rate:
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail fixed rate
Variable rate:
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail variable rate
Total retail
Total loans and leases
December 31, 2023
1 Year or
Less(1)
After 1 Year
Through 5
Years(1)
After 5 Years
Through 15
Years(1)
After 15
Years(1)
Total Loans
and Leases
$716
1,139
407
2,262
9,610
8,360
15
17,985
20,247
642
91
2,400
825
1,128
5,086
171
383
—
127
2,168
2,849
7,935
$1,812
2,894
609
5,315
28,723
12,355
25
41,103
46,418
2,588
171
5,731
3,424
1,559
$555
2,786
92
3,433
2,346
1,867
—
4,213
7,646
$17
28
—
45
47
42
—
89
134
6,882
9,980
200
127
6,031
99
12
—
408
83
13,473
13,339
10,483
712
2,955
—
433
13
4,113
17,586
3,000
10,877
—
563
—
14,440
27,779
7,357
351
—
23
—
7,731
18,214
$3,100
6,847
1,108
11,055
40,726
22,624
40
63,390
74,445
20,092
474
8,258
10,688
2,869
42,381
11,240
14,566
—
1,146
2,181
29,133
71,514
$28,182
$64,004
$35,425
$18,348
$145,959
(1) Maturity is based on scheduled principal repayment date.
(2) Includes floating-rate commercial loans hedged to fixed rate to manage our exposure to the variability in interest cash flows. See “Market Risk” for additional
information regarding our use of interest rate derivatives to hedge our loan portfolio.
Citizens Financial Group, Inc. | 47
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
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total loans and leases
December 31,
2023
2022
$561
663
26
1,250
181
100
57
259
251
848
$2,098
30%
20
1
51
22
10
6
8
3
49
100%
$581
456
23
1,060
207
89
131
268
228
923
$1,983
33%
18
1
52
19
9
8
8
4
48
100%
Table 12: ACL and Related Coverage Ratios by Portfolio
(dollars in millions)
Allowance for Loan and Lease Losses
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
December 31,
2023
2022
Loans and
Leases
Allowance Coverage
Loans and
Leases
Allowance Coverage
$43,826
$561
1.28 %
$51,836
$581
1.12 %
29,471
1,148
663
26
74,445
1,250
31,332
15,040
8,258
11,834
5,050
71,514
181
100
57
259
251
848
2.25
2.24
1.68
0.58
0.66
0.69
2.18
4.98
1.19
28,865
1,479
456
23
82,180
1,060
29,921
14,043
12,292
12,808
5,418
74,482
207
89
131
268
228
923
1.58
1.59
1.29
0.69
0.63
1.07
2.09
4.21
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)
Retail(2)
Total allowance for unfunded lending commitments
$175
1.91 %
$207
1.54 %
1.25
45
220
1.31
50
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.
Citizens Financial Group, Inc. | 48
Table 13: Nonaccrual Loans and Leases
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Nonaccrual loans and leases
Nonaccrual loans and leases to total loans and leases
Allowance for loan and lease losses to nonaccrual loans and leases
Allowance for credit losses to nonaccrual loans and leases
December 31,
2023
2022
Change
Percent
$294
477
3
774
177
285
61
28
39
590
$1,364
0.93 %
154
170
18%
NM
100
120
(24)
18
9
(15)
39
—
44%
$249
103
—
352
234
241
56
33
28
592
$45
374
3
422
(57)
44
5
(5)
11
(2)
$944
$420
0.60 %
33 bps
210
237
(56%)
(67%)
Table 14: Ratio of Net Charge-Offs to Average Loans and Leases
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Year Ended December 31,
Net Charge-
Offs
2023
Average
Balance
Ratio
Net Charge-
Offs
2022
Average
Balance
Ratio
$110
$48,693
0.23 %
$51
$50,002
0.10 %
161
(4)
267
2
(10)
55
92
203
342
29,206
1,305
79,204
30,660
14,475
10,374
12,333
5,171
73,013
0.56
(0.29)
0.34
—
(0.07)
0.53
0.74
3.93
0.47
1
—
52
(1)
(28)
36
59
152
218
24,746
1,521
76,269
27,759
13,057
13,729
13,047
5,483
73,075
—
(0.03)
0.07
—
(0.22)
0.26
0.45
2.77
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.
Citizens Financial Group, Inc. | 49
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
(dollars in millions)
Finance and insurance
Capital call facilities
Other finance and insurance
Other manufacturing
Technology
Accommodation and food services
Health, pharma, and social assistance
Professional, scientific, and technical services
Wholesale trade
Retail trade
Other services
Energy and related
Rental and leasing
Consumer products manufacturing
Administrative and waste management
Arts, entertainment, and recreation
Automotive
Other
Total commercial and industrial(1)
(1) Excludes PPP loans of $121 million as of December 31, 2022.
December 31, 2023
December 31, 2022
% of
Total
Commercial
and
Industrial
% of
Total
Commercial
and
Industrial
Balance
Balance
$5,780
13 %
$6,753
5,991
3,616
3,307
2,917
2,562
2,313
2,391
2,366
2,081
1,973
1,069
893
1,549
1,602
894
2,522
14
8
8
7
6
4
5
5
5
5
2
2
4
4
2
6
5,310
4,474
4,367
3,572
3,056
3,067
2,955
2,391
2,713
2,299
1,542
1,511
1,710
1,587
1,316
3,091
13 %
10
9
8
7
6
6
6
5
5
4
3
3
3
3
3
6
$43,826
100 %
$51,715
100 %
Citizens Financial Group, Inc. | 50
Table 16: Commercial Real Estate by Property Type and State
(dollars in millions)
Property type
Multi-family
Office
Credit tenant lease and life sciences(1)
Other general office
Retail
Industrial
Co-op
Data center
Hospitality
Other
December 31, 2023
December 31, 2022
Balance
% of
Total CRE
Balance
% of
Total CRE
$9,367
32 %
$8,696
30 %
2,268
3,648
3,407
3,981
1,796
841
608
3,555
8
12
12
14
6
3
2
11
2,205
4,048
3,208
3,344
1,824
870
638
4,032
Total commercial real estate
$29,471
100 %
$28,865
State
New York
New Jersey
Pennsylvania
California
Texas
Massachusetts
Florida
Other Southeast(2)
Other
$7,035
24 %
$7,224
3,829
2,613
2,314
2,163
1,897
1,087
3,056
5,477
13
9
8
7
6
4
10
19
4,300
2,819
1,878
1,844
1,688
799
3,042
5,271
8
14
11
12
6
3
2
14
100 %
25 %
15
10
7
6
6
3
10
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.
Citizens Financial Group, Inc. | 51
Table 17: Commercial Real Estate by Geography
As of December 31, 2023
Office
Credit
Tenant
Lease and
Life
Sciences(1)
Other
General
Office
Multi-
Family
Retail
Industrial
Co-op
Other
Total
$1,177
645
600
387
1,741
1,272
274
550
252
409
724
1,336
$18
47
3
23
98
247
479
128
679
—
185
361
$69
118
196
125
362
200
344
311
127
39
930
827
$161
85
126
304
719
665
—
23
246
115
239
724
$38
—
85
107
444
129
635
398
129
381
352
1,283
$57
1,374
217
148
—
—
—
—
—
—
—
—
$109
$1,629
336
178
302
465
100
582
753
464
143
626
946
2,605
1,405
1,396
3,829
2,613
2,314
2,163
1,897
1,087
3,056
5,477
$9,367
$2,268
$3,648
$3,407
$3,981
$1,796
$5,004
$29,471
(dollars in millions)
New York City
Brooklyn
Manhattan
Other NYC
New York - ex. NYC
New Jersey
Pennsylvania
California
Texas
Massachusetts
Florida
Other Southeast(2)
Other
Total commercial
real estate
(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 18: Retail Loan Portfolio Analysis
December 31, 2023
December 31, 2022
Days Past Due and Accruing
Days Past Due and Accruing
Residential mortgages(1)
Home equity
Automobile
Education
Other retail
Current
30-59
60-89
90+
Nonaccrual
Current
30-59
60-89
90+
Nonaccrual
97.34 %
0.90 %
0.38 %
0.82 %
0.56 %
97.68 %
0.32 %
0.15 %
1.07 %
0.78 %
97.34
96.94
99.14
97.02
0.55
1.74
0.41
0.97
0.22
0.58
0.19
0.67
—
—
0.02
0.57
1.89
0.74
0.24
0.77
97.68
97.93
99.30
97.71
0.46
1.24
0.28
0.81
0.14
0.37
0.13
0.55
—
—
0.03
0.41
1.72
0.46
0.26
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
CLTV ratio for secured real estate(1)
(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.
50 %
50 %
770
772
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.
Citizens Financial Group, Inc. | 52
Deposits
Table 20: Composition of Deposits
(dollars in millions)
Demand
Money market
Checking with interest
Savings
Term
Total deposits
December 31,
2023
% of Total
Deposits
December 31,
2022
% of Total
Deposits
$37,107
21%
$49,283
27%
53,812
31,876
27,983
26,564
30
18
16
15
49,905
39,721
29,805
12,010
28
22
16
7
$177,342
100%
$180,724
100%
Total deposits as of December 31, 2023 decreased compared to December 31, 2022, driven by our
balance sheet optimization efforts. In addition, as rates rose 100 basis points during 2023, we saw continued
migration of lower cost deposits to higher-yielding products, with non-interest bearing deposits now representing
approximately 21% of our total deposits.
Table 21: Uninsured and Insured/Secured Deposits
(dollars in millions)
Total deposits
Estimated uninsured deposits(1)
Less: Uninsured affiliate deposits eliminated in consolidation
Less: Preferred deposits(1)(2)
CFG adjusted estimated uninsured deposits, excluding preferred deposits
Total estimated insured/secured deposits
Insured/secured deposits to total deposits
December 31,
2023
December 31,
2022
$177,342
$180,724
73,584
14,650
7,486
51,448
88,883
6,479
9,635
72,769
$125,894
$107,955
71%
60%
(1) As reported on CBNA’s Call Report.
(2) Represents uninsured deposits of states and political subdivisions that are secured or collateralized as required under state law.
Table 22: Term Deposits in Excess of the FDIC Insurance Limit by Remaining Maturity
(dollars in millions)
December 31, 2023
Three months or less
After three months through six months
After six months through twelve months
After twelve months
Total term deposits(1)
(1) Includes term deposits per account in excess of $250,000.
Borrowed Funds
$1,591
550
515
83
$2,739
Total borrowed funds of $14.0 billion as of December 31, 2023 decreased $1.9 billion compared to
December 31, 2022, driven by a decline in FHLB advances, partially offset by the issuance of secured borrowings
collateralized by auto loans. For more information regarding our borrowed funds see “Liquidity” and Note 13.
Citizens Financial Group, Inc. | 53
CAPITAL AND REGULATORY MATTERS
As a BHC and FHC, we are subject to regulation and supervision by the FRB. Our banking subsidiary,
CBNA, is a national banking association primarily regulated by the OCC. Our regulation and supervision continues
to evolve as the legal and regulatory frameworks governing our operations continue to change. For more
information, see the “Regulation and Supervision” section in Item 1.
Capital Adequacy Process
Our assessment of capital adequacy begins with our Board-approved risk appetite and risk management
framework. This framework provides for the identification, measurement and management of material risks.
Capital requirements are determined for actual and forecasted risk portfolios using applicable regulatory capital
methodologies. The assessment also considers the possible impacts of approved and proposed changes to
regulatory capital requirements. Key analytical frameworks, including scenario analysis and stress testing,
supplement our base line forecast to help inform a range of potential outcomes. A governance framework
supports our capital planning process, including capital management policies and procedures that document
capital adequacy metrics and limits, as well as our Capital Contingency Plan and the active engagement of both
the Board and senior management in oversight and decision-making.
Forward-looking assessments of capital adequacy provide for the development of a single capital plan,
which is periodically submitted to the FRB, that covers both us and our banking subsidiary. We prepare this plan
in accordance with the Capital Plan Rule and we participate annually in the FRB’s horizontal capital review as
part of their normal supervisory process, which includes an assessment of specific capital planning areas.
The FRB regularly supervises and evaluates our capital adequacy and capital planning processes, including
the submission of an annual capital plan approved by our Board of Directors or one of its committees. Under the
FRB’s capital requirements we must maintain capital ratios above the sum of the regulatory minimum and SCB
requirement to avoid restrictions on capital distributions and discretionary bonus payments. The FRB utilizes the
supervisory stress test to determine our SCB, which is re-calibrated with each biennial supervisory stress test and
updated annually to reflect our planned common stock dividends. As an institution subject to Category IV
standards, we are subject to biennial supervisory stress testing in even-numbered years; however, the FRB
required us to participate in the 2023 CCAR supervisory stress test to incorporate the effects of the Investors
acquisition. Our SCB associated with the 2023 supervisory stress test was 4.0%, effective October 1, 2023 through
September 30, 2024.
Regulations relating to capital planning, regulatory reporting, stress testing and capital buffer
requirements applicable to firms like us are presently subject to rule-making and potential further guidance and
interpretation by the applicable federal regulators. We will continue to evaluate the impact of these and any
other prudential regulatory changes, including their potential resultant changes in our regulatory and compliance
costs and expenses.
Regulatory Capital Ratios and Capital Composition
Under the current U.S. Basel III capital framework, we and our banking subsidiary, CBNA, must meet the
following specific minimum requirements: CET1 capital ratio of 4.5%, tier 1 capital ratio of 6.0%, total capital
ratio of 8.0% and tier 1 leverage ratio of 4.0%. As a BHC, our SCB of 4.0% is imposed on top of the three minimum
risk-based capital ratios listed above and a CCB of 2.5% is imposed on top of the three minimum risk-based
capital ratios listed above for CBNA.
Citizens Financial Group, Inc. | 54
For additional discussion of the U.S. Basel III capital framework and its related application, see the
“Regulation and Supervision” section in Item 1. The table below presents the regulatory capital ratios for CFG
and CBNA under the U.S. Basel III Standardized rules:
Table 23: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules
(dollars in millions)
CET1 capital
CFG
CBNA
Tier 1 capital
CFG
CBNA
Total capital
CFG
CBNA
Tier 1 leverage
CFG
CBNA
Risk-weighted assets
CFG
CBNA
Quarterly adjusted average assets(2)
CFG
CBNA
December 31, 2023
December 31, 2022
Amount
Ratio
Amount
Ratio
Required Minimum
Capital Ratio(1)
$18,358
10.6 % $18,574
19,411
11.3
20,669
10.0 %
11.2
11.1
11.2
12.8
12.7
9.3
9.4
20,372
19,411
23,608
22,453
20,372
19,411
172,601
172,094
219,591
218,974
11.8
11.3
13.7
13.0
9.3
8.9
20,588
20,669
23,755
23,534
20,588
20,669
185,224
184,781
220,779
220,182
8.5 %
7.0
10.0
8.5
12.0
10.5
4.0
4.0
(1) Represents minimum requirement under the current capital framework plus the SCB of 4.0% and CCB of 2.5% for CFG and CBNA, respectively. The SCB and CCB
are not applicable to the Tier 1 leverage ratio.
(2) Represents total average assets less certain amounts deducted from Tier 1 capital.
At December 31, 2023, CFG’s CET1 and tier 1 capital ratios increased compared to December 31, 2022,
primarily driven by net income and a $12.6 billion decrease in RWA, partially offset by dividends, common share
repurchases, and a decrease in the modified CECL transition amount as we entered the second year of the CECL
three-year transition period. Lower commercial and auto loans were the key drivers for the decline in RWA.
At December 31, 2023, CBNA’s CET1 and tier 1 capital ratios increased slightly compared to December
31, 2022. Net income and a $12.7 billion decrease in RWA, primarily driven by lower commercial and auto loans,
was partially offset by dividend payments to the Parent Company and a decrease in the modified CECL transition
amount as we entered the second year of the CECL three-year transition period.
At December 31, 2023, CFG’s and CBNA’s total capital ratios increased driven by their respective changes
in CET1 and tier 1 capital described above and a reduction in the modified AACL transition amount.
At December 31, 2023, CFG’s tier 1 leverage ratio was stable compared to December 31, 2022, whereas
CBNA’s tier 1 leverage ratio decreased. CBNA’s tier 1 leverage ratio reflects a decline in quarterly adjusted
average assets and changes in tier 1 capital described above.
Citizens Financial Group, Inc. | 55
Table 24: Capital Composition Under the U.S. Basel III Capital Framework
(dollars in millions)
Total common stockholders’ equity
Exclusions:
Modified CECL transitional amount
Net unrealized (gains)/losses recorded in accumulated other comprehensive income (loss), net of tax:
Debt securities
Derivatives
Unamortized net periodic benefit costs
Deductions:
Goodwill, net of deferred tax liability
Other intangible assets, net of deferred tax liability
Deferred tax assets that arise from tax loss and credit carryforwards
Total common equity tier 1 capital
Qualifying preferred stock
Total tier 1 capital
Qualifying subordinated debt(1)
Allowance for credit losses
Exclusions from tier 2 capital:
Modified AACL transitional amount
Allowance on PCD assets
Adjusted allowance for credit losses
Total capital
December 31,
2023
December 31,
2022
$22,328
$21,676
192
288
2,338
1,087
333
(7,779)
(134)
(7)
18,358
2,014
20,372
1,319
2,318
(249)
(152)
1,917
$23,608
2,771
1,416
373
(7,780)
(170)
—
18,574
2,014
20,588
1,427
2,240
(374)
(126)
1,740
$23,755
(1) As of December 31, 2023 and 2022, the amount of non-qualifying subordinated debt excluded from regulatory capital was $482 million and $367 million,
respectively. See Note 13 for more details on our outstanding subordinated debt.
Capital Transactions
•
•
•
We completed the following capital transactions during 2023:
Repurchased $906 million of our outstanding common stock;
Declared quarterly common stock dividends of $0.42 per share, aggregating to $808 million; and
Declared preferred stock dividends aggregating to $117 million.
For additional detail regarding our common and preferred stock dividends see Note 17.
In February 2023, our Board of Directors increased our common share repurchase authorization to $2.0
billion, which was an increase of $1.15 billion above the $850 million of capacity remaining as of December 31,
2022 under the prior June 2022 authorization. See “Issuer Purchase of Equity Securities” in Item 5 above for
information regarding our available capacity to repurchase shares at December 31, 2023. All future capital
distributions are subject to consideration and approval by our Board of Directors prior to execution. The timing
and amount of future dividends and share repurchases will depend on various factors, including our capital
position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory
considerations.
Citizens Financial Group, Inc. | 56
Recent Regulatory Developments
Bank Failures
On April 28, 2023, the FRB issued a report relative to its review of the supervision and regulation of
Silicon Valley Bank (“SVB”). The report details the FRB’s assessment of the primary causes for SVB’s failure and
emphasizes the FRB’s view that supervision and regulation need to be strengthened based on its findings. As a
result, the FRB stated it intends to evaluate its supervisory and regulatory framework, with a focus on the
following areas:
•
Regulatory tailoring framework, including a reassessment of a range of rules for banks with $100 billion
or more in assets;
• Management of interest rate risk;
•
•
Liquidity risk, commencing with the risks of uninsured deposits; and
Capital requirements.
Proposals addressing the regulatory tailoring framework and capital requirements were issued by the
regulatory agencies during the third quarter of 2023. See the “Regulation and Supervision” section in Item 1 for
more information.
We will continue to monitor and address changes to the FRB’s supervisory and regulatory framework that
may result from this targeted review by the FRB and their associated impact on our business, financial condition
or results of operations.
AOCI Impact on Regulatory Capital
Under the current applicable regulatory capital rules we have made the AOCI opt-out election, which
enables us to exclude components of AOCI from regulatory capital. As noted in the “Capital and Stress Testing
Requirements” section of “Regulation and Supervision” in Item 1, the regulatory agencies are considering the
inclusion of AOCI components in regulatory capital for Category IV firms like us, notably the AOCI relative to
securities and pension.
The following table presents our regulatory capital ratios including the AOCI impact from securities and
pension, which we believe provides useful information in light of recent events and the potential for change in
the regulatory capital framework.
Table 25: AOCI Impact on Regulatory Capital
(dollars in millions)
Regulatory capital, including AOCI impact:
Regulatory capital (as reported)
CET1
CFG
Tier 1
December 31, 2023
Total
CET1
CBNA
Tier 1
Total
$18,358
$20,372
$23,608
$19,411
$19,411
$22,453
Unrealized gains (losses) on securities and pension
Deferred tax assets - securities and pension AOCI
(2,671)
(15)
(2,671)
(15)
(2,671)
(15)
(2,649)
(16)
(2,649)
(16)
(2,649)
(16)
Regulatory capital, including AOCI impact (non-GAAP)
$15,672
$17,686
$20,922
$16,746
$16,746
$19,788
Risk-weighted assets, including AOCI impact:
Risk-weighted assets (as reported)
$172,601
$172,601
$172,601
$172,094
$172,094
$172,094
Unrealized gains (losses) on securities and pension
Deferred tax assets - securities and pension AOCI
(722)
2,188
(722)
2,188
(722)
2,188
(701)
2,168
(701)
2,168
(701)
2,168
Risk-weighted assets, including AOCI impact (non-GAAP)
$174,067
$174,067
$174,067
$173,561
$173,561
$173,561
Ratio:
Regulatory capital ratio (as reported)
Regulatory capital ratio, including AOCI impact (non-GAAP)
10.6 %
9.0 %
11.8 %
10.2 %
13.7 %
12.0 %
11.3 %
9.6 %
11.3 %
9.6 %
13.0 %
11.4 %
Citizens Financial Group, Inc. | 57
LIQUIDITY
We consider the effective and prudent management of liquidity fundamental to our safety and
soundness. We define liquidity as our ability to meet our obligations when they come due. As a financial
institution, we must maintain operating liquidity to meet expected daily and forecasted cash-flow requirements,
as well as contingent liquidity to meet unexpected (stress scenario) funding requirements. Reflecting the
importance of meeting all unexpected and stress-scenario funding requirements, we identify and manage
contingent liquidity, consisting of cash balances at the FRB, unencumbered high-quality liquid securities and
unused FHLB borrowing capacity. Separately, we also identify and manage asset liquidity as a subset of
contingent liquidity, consisting of cash balances at the FRB and unencumbered high-quality liquid securities. We
maintain additional secured borrowing capacity at the FRB discount window, but do not view this as a primary
means of funding, but rather a potential source in a stressed environment or during a market disruption. We
manage liquidity at the consolidated enterprise level and at each material legal entity.
Parent Company Liquidity
Our Parent Company’s primary sources of cash are dividends and interest received from CBNA resulting
from investing in bank equity and subordinated debt as well as externally issued preferred stock, senior debt and
subordinated debt. Uses of cash include the routine cash flow requirements as a bank holding company, including
periodic share repurchases and payments of dividends, interest and expenses; the needs of subsidiaries, including
CBNA for additional equity and, as required, its need for debt financing; and the support for extraordinary
funding requirements when necessary. To the extent the Parent Company has relied on wholesale borrowings,
uses also include payments of related principal and interest.
Our Parent Company’s cash and cash equivalents represent a source of liquidity that can be used to meet
various needs and totaled $2.9 billion and $1.6 billion as of December 31, 2023 and 2022, respectively.
During the years ended December 31, 2023 and 2022, the Parent Company declared dividends on common
stock of $808 million and $779 million, respectively, and declared dividends on preferred stock of $117 million
and $113 million, respectively.
During the years ended December 31, 2023 and 2022, the Parent Company repurchased $906 million and
$153 million, respectively, of its outstanding common stock.
On January 23, 2024, CFG issued $1.25 billion in six-year 5.841% fixed-to-floating rate senior notes.
CBNA Liquidity
As CBNA’s primary business involves taking deposits and making loans, a key role of liquidity management
is to ensure that customers have timely access to funds. Liquidity management also involves maintaining
sufficient liquidity to repay wholesale borrowings, pay operating expenses and support extraordinary funding
requirements when necessary. In the ordinary course of business the liquidity of CBNA is managed by matching
sources and uses of cash. The primary sources of bank liquidity include deposits from our consumer and
commercial customers; payments of principal and interest on loans and debt securities; and wholesale
borrowings, as needed, and as described under “Liquidity Risk Management and Governance.” The primary uses
of bank liquidity include withdrawals and maturities of deposits; payment of interest on deposits; funding of
loans and related commitments; and funding of securities purchases. To the extent that CBNA has relied on
wholesale borrowings, uses also include payments of related principal and interest. For further information on
CBNA’s outstanding debt see Note 13.
During the year ended December 31, 2023, CBNA completed the following transactions:
Issued $450 million of 5.284% fixed-to-floating rate senior notes;
Redeemed $750 million of senior notes due March 2023; and
Issued $3.5 billion of secured borrowings collateralized by auto loans.
On January 23, 2024, CBNA issued approximately $1.5 billion of secured borrowings collateralized by auto
•
•
•
loans.
Citizens Financial Group, Inc. | 58
Liquidity Risk
Liquidity risk is the risk arising from the inability to meet our obligations when they come due. We must
maintain adequate funding to meet current and future obligations, including customer loan requests, customer
deposit maturities and withdrawals, debt service, equipment and premises leases, and other cash commitments,
under both normal operating conditions and under periods of company-specific and/or market stress.
We primarily rely on customer deposits to be a relatively stable and low-cost source of funding. In
addition to customer deposits, our funding sources also include our ability to securitize loans in secondary
markets, raise funds in the debt and equity capital markets, pledge loans and/or securities for borrowing from
the FHLB, pledge securities as collateral for borrowing under repurchase agreements, and sell AFS securities.
Credit ratings assigned by agencies such as Moody’s, Standard and Poor’s, and Fitch impact our access to
unsecured wholesale market funds and to large uninsured customer deposits and are presented in the table
below.
Table 26: Credit Ratings
Citizens Financial Group, Inc.:
Long-term issuer
Short-term issuer
Subordinated debt
Preferred Stock
Citizens Bank, National Association:
Long-term issuer
Short-term issuer
Long-term deposits
Short-term deposits
NR = Not Rated
Moody’s
December 31, 2023
Standard and
Poor’s
Baa1
NR
Baa1
Baa3
Baa1
NR
A1
P-1
BBB+
A-2
BBB
BB+
A-
A-2
NR
NR
Fitch
BBB+
F1
BBB
BB
BBB+
F1
A-
F1
We currently have a “stable” outlook at Standard & Poor’s, a “negative” outlook at Moody’s and a
“stable” outlook at Fitch. Changes in our public credit ratings could affect both the cost and availability of our
wholesale funding.
Existing and evolving regulatory liquidity requirements represent another key driver of systemic liquidity
conditions and liquidity management practices. The FRB and OCC regularly evaluate our liquidity as part of the
overall supervisory process. In addition, we are subject to existing and evolving regulatory liquidity
requirements, some of which are subject to further rulemaking, guidance and interpretation by the applicable
federal regulators. For further discussion, see the “Liquidity Requirements” section under “Regulation and
Supervision” in Item 1.
Liquidity Risk Management and Governance
Liquidity risk is measured and managed by the Funding and Liquidity unit within our Treasury group in
accordance with policy guidelines promulgated by our Board and the Asset Liability Committee. The Funding and
Liquidity unit is responsible for maintaining a liquidity management framework that effectively manages liquidity
risk. Processes within this framework include, but are not limited to, regular and comprehensive reporting,
including current levels versus threshold limits for a broad set of liquidity metrics and early warning indicators,
explanatory commentary relating to emerging risk trends and, as appropriate, recommended remedial strategies,
liquidity stress testing, contingency funding plans, and collateral management.
Our Funding and Liquidity unit’s primary goals are to deliver and maintain prudent levels of operating
liquidity to support expected and projected funding requirements, contingent liquidity to support unexpected
funding requirements resulting from idiosyncratic, systemic, and combination stress events, and regulatory
liquidity requirements in a timely manner from stable and cost-efficient funding sources. We seek to accomplish
these goals by funding loans with stable deposits, by prudently controlling dependence on wholesale funding,
particularly short-term unsecured funding, and by maintaining ample available liquidity, including a contingent
liquidity buffer of unencumbered high-quality loans and securities.
Citizens Financial Group, Inc. | 59
We maintain a contingency funding plan designed to ensure that liquidity sources are sufficient to meet
ongoing obligations and commitments, particularly in a stressed environment or during a market disruption. The
plan identifies members of the liquidity contingency team and provides a framework for management to follow,
including notification and escalation of potential liquidity stress events.
In response to the recent U.S. bank failures, the FRB established the Bank Term Funding Program to make
additional funding available to eligible depository institutions to ensure the ability to meet the needs of all
depositors. This program was designed to provide another source of liquidity against the par value of high-quality
securities, eliminating the need to sell these securities during times of stress. The Company is eligible to borrow
under this program, which expires in March 2024, based on its existing eligibility for primary credit under the FRB
discount window. The Company has taken steps to support readiness but has not participated in the program
through December 31, 2023.
As of December 31, 2023:
• Organically generated deposits continue to be our primary source of funding, resulting in a consolidated
period-end loans-to-deposits ratio, excluding LHFS, of 82.3%;
◦
Estimated insured/secured deposits comprise 71% of our consolidated deposit base of $177.3
billion.
• Our total available liquidity, comprised of contingent liquidity and available discount window capacity,
was approximately $78.8 billion;
◦
◦
Contingent liquidity was $57.1 billion, consisting of unencumbered high-quality liquid securities
of $31.4 billion, unused FHLB capacity of $15.9 billion, and our cash balances at the FRB of $9.8
billion; and
Available discount window capacity was $21.7 billion, defined as available total borrowing
capacity from the FRB based on identified collateral, which is primarily secured by non-mortgage
commercial and retail loans.
For a summary of our sources and uses of cash by type of activity for the years ended December 31, 2023,
2022 and 2021, see the Consolidated Statements of Cash Flows in Item 8.
The Funding and Liquidity unit monitors a variety of liquidity and funding metrics and early warning
indicators and metrics, including specific risk thresholds limits. These monitoring tools are broadly classified as
follows:
•
•
•
Current liquidity sources and capacities, including cash balances at the FRB, free and liquid securities,
and secured borrowing capacity at the FHLB and FRB discount window;
Liquidity stress sources, including idiosyncratic, systemic and combined stresses, in addition to evolving
regulatory requirements; and
Current and prospective exposures, including secured and unsecured wholesale funding, and spot and
cumulative cash-flow gaps across a variety of horizons.
Further, certain of these metrics are monitored individually for CBNA and for our consolidated enterprise
on a daily basis, including cash position, unencumbered securities, asset liquidity and available FHLB borrowing
capacity. In order to identify emerging trends and risks and inform funding decisions, specific metrics are also
forecasted over a one-year horizon.
Contractual Obligations
In the ordinary course of business, we enter into contractual obligations that may require future cash
payments, including customer deposit maturities and withdrawals, debt service, lease obligations and other cash
commitments. For more information regarding these obligations, see Notes 9, 12 and 13.
Off-Balance Sheet Arrangements
We engage in a variety of activities that are not reflected in our Consolidated Balance Sheets that are
generally referred to as “off-balance sheet arrangements.” For more information on these types of activities, see
Note 19.
Citizens Financial Group, Inc. | 60
CRITICAL ACCOUNTING ESTIMATES
Our audited Consolidated Financial Statements included in this Report are prepared in accordance with
GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting
policies and make estimates that affect amounts reported in our audited Consolidated Financial Statements.
An accounting estimate requires assumptions and judgments about uncertain matters that could have a
material effect on our audited Consolidated Financial Statements. Estimates are made using facts and
circumstances known at a point in time. Changes in those facts and circumstances could produce results
substantially different from those estimates. Our most significant accounting policies and estimates and their
related application are discussed below. See Note 1 for further discussion of our significant accounting policies.
Allowance for Credit Losses
The ACL increased from $2.2 billion at December 31, 2022 to $2.3 billion at December 31, 2023.
Our ACL as of December 31, 2023 accounts for an economic forecast over our two-year reasonable and
supportable period with peak unemployment of approximately 5% and peak-to-trough GDP decline of
approximately 0.4%. This forecast reflects a mild recession over the two-year reasonable and supportable period.
This compares to our December 31, 2022 forecast which reflected peak unemployment of approximately 6% with
a more adverse peak-to-trough GDP decline of approximately 1.4%.
Our determination of the ACL is sensitive to changes in forecasted macroeconomic conditions during the
reasonable and supportable forecast period. To illustrate the sensitivity, we applied a more pessimistic scenario
than that described above which reflects deeper real GDP contraction across our two-year reasonable and
supportable forecast period, resulting in a 1.7% peak-to-trough decline in real GDP. Excluding consideration of
qualitative adjustments, this scenario would result in a quantitative lifetime loss estimate of approximately 1.10x
our modeled period-end ACL, or an increase of approximately $233 million. This analysis relates only to the
modeled credit loss estimate and not to the overall period-end ACL, which includes qualitative adjustments.
Because several quantitative and qualitative factors are considered in determining the ACL, this
sensitivity analysis does not necessarily reflect the nature and extent of future changes in the ACL or even what
the ACL would be under these economic circumstances. The sensitivity is intended to provide insights into the
impact of adverse changes in the macroeconomic environment and the corresponding impact to modeled loss
estimates. The hypothetical determination does not incorporate the impact of management judgment or other
qualitative factors that could be applied in the actual estimation of the ACL and does not imply any expectation
of future deterioration in our loss rates.
It remains difficult to estimate how changes in economic forecasts might affect our ACL because such
forecasts consider a wide variety of variables and inputs, and changes in the variables and inputs may not occur
at the same time or in the same direction, and such changes may have differing impacts by product type. The
variables and inputs may be idiosyncratically affected by risks to the economy, including changing monetary and
fiscal policies, impacts from the recent stress on the banking industry, and their impact on inflationary trends.
Changes in one or multiple of the key macroeconomic variables may have a material impact to our estimation of
expected credit losses.
For additional information regarding the ACL, see Note 6.
Goodwill
The acquisition method of accounting requires that assets acquired and liabilities assumed in business
combinations are recorded at their fair values. Business combinations typically result in goodwill, which is
subject to ongoing periodic impairment tests based on the fair values of the reporting units to which the
goodwill has been attributed. We review the goodwill of each reporting unit for impairment on an annual basis as
of October 31st or more frequently if events or circumstances change that indicate an impairment may exist.
When assessing goodwill for impairment, a qualitative assessment may be made to determine whether it is more-
likely-than-not that the fair value of a reporting unit is below its carrying value. Alternatively, a quantitative
assessment may be performed without performing a qualitative assessment. At December 31, 2023, goodwill
totaled $8.2 billion, including $6.9 billion from pre-IPO acquisitions, and is assigned to our reporting units as
follows: $5.5 billion to Commercial Banking, including $4.7 billion from pre-IPO acquisitions, and $2.7 billion to
Consumer Banking, including $2.2 billion from pre-IPO acquisitions.
Citizens Financial Group, Inc. | 61
The process of evaluating the fair value of a reporting unit is subjective, involving management
assumptions and estimates and the use of external or internal valuations. Valuation techniques include
discounted cash flow and market approach analysis. In the fourth quarter of 2023, the quantitative impairment
test estimated the fair value of the reporting units using an equal weighting of an income approach (i.e.,
discounted cash flows method) and market-based approach (i.e., the guideline public company method). The
guideline public company method utilizes comparable public company information and key valuation multiples,
and considers a market control premium associated with cost synergies and other cash flow benefits that arise
from obtaining control over a reporting unit, and guideline transactions, when applicable.
Under the income approach, cash flow projections are based on multi-year financial forecasts developed
for each reporting unit that consider key business drivers such as new business initiatives, customer retention
standards, market share changes, anticipated loan and deposit growth, fees and expenses, forward interest
rates, historical performance, credit performance, and
industry and economic trends, among other
considerations. The projection of net interest income and noninterest expense are the most significant inputs to
the financial projections of the Commercial Banking and Consumer Banking reporting units. The long-term
earnings growth rate used in determining the terminal value of each reporting unit was 3% as of October 31,
2023, based on management’s assessment of the minimum expected terminal growth rate of each reporting unit.
Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest
rate, market risk premium, beta, and unsystematic risk adjustments specific to a particular reporting unit. The
discount rates are also calibrated based on risks related to the projected cash flows of each reporting unit. A
discount rate of 13% was utilized for the Commercial Banking and Consumer Banking reporting units as of October
31, 2023.
We performed a quantitative goodwill impairment assessment in the fourth quarter of 2023 as part of our
annual impairment assessment. Based on this quantitative assessment, we concluded that the estimated fair
value of the Consumer Banking and Commercial Banking reporting units exceeded their carrying value. The
Commercial Banking reporting unit’s fair value exceeded its carrying value by approximately 10%. Circumstances
that could negatively impact the future fair value of the Commercial Banking reporting unit include a sustained
decrease in our stock price, decline in industry peer multiples, deterioration in the reporting unit’s forecasts,
and an increase in the discount rate driven by an increase in the risk-free rate or the risk we may not achieve our
forecasted cash flows.
We monitored events and circumstances during the period from October 31, 2023 through December 31,
2023, including macroeconomic and market factors, industry and banking sector events, Company-specific
performance indicators, a comparison of management’s forecast and assumptions to those used in its October 31,
2023 quantitative impairment test, and the sensitivity of the October 31, 2023 quantitative test results to
changes in assumptions through December 31, 2023. Based on these considerations, management concluded that
it was not more-likely-than-not that the fair value of either of its reporting units is below its respective carrying
amount as of December 31, 2023.
For additional information regarding Goodwill, see Note 10.
Fair Value
We asses the fair value of assets and liabilities by applying various valuation methodologies which may
involve a significant degree of judgment, particularly when active markets do not exist for the items being
valued. Quoted market prices are used to estimate the fair value of certain assets such as trading assets,
investment securities and residential real estate loans held for sale. Assumptions are used to estimate the fair
value of items for which an observable active market does not exist and include discount rates, rates of return on
assets, repayment rates, cash flows, default rates, costs of servicing and liquidation values. The use of different
assumptions could produce significantly different fair value estimates, which could have a material impact on our
results of operations, financial condition or fair value disclosures.
We also assess whether there are any declines in fair value below the carrying value of assets that
require recognition of a loss in the Consolidated Statements of Operations, including certain investments,
capitalized servicing assets, goodwill, and core deposit and other intangible assets.
For additional information regarding our fair value measurements, see Note 20.
Citizens Financial Group, Inc. | 62
ACCOUNTING AND REPORTING DEVELOPMENTS
Accounting standards issued but not adopted as of December 31, 2023
Pronouncement
Improvements to Reportable
Segment Disclosures
Issued November 2023
Improvements to Income Tax
Disclosures
Issued December 2023
Accounting for and Disclosure of
Crypto Assets
Issued December 2023
Summary of Guidance
Effects on Financial Statements
•
•
•
•
•
•
•
•
•
•
•
•
•
Requires disclosure of significant segment
expenses regularly provided to the chief
operating decision maker (“CODM”)
Requires disclosure of an amount for other
segment items by reportable segment and a
description of its composition
Requires disclosure of the title and position of
the CODM
Requires an annual income tax rate
reconciliation table that includes specific
categories and other significant categories,
disaggregated by nature, that exceed 5% of
income tax expense at the statutory tax rate
Requires a qualitative description of the states
and local jurisdictions that make up more than
50% of the effect of the state and local income
tax category
Requires description of the nature, effect and
underlying causes of the reconciling items and
the judgment used in categorizing these items
Requires annual disclosure of income taxes
paid, net of refunds received, disaggregated by
federal, state, and foreign taxes, and further
disaggregated by individual jurisdictions that
exceed 5% of total income taxes paid, net of
refunds received
Requires disclosure of 1) income (or loss) from
continuing operations before income tax
expense (or benefit) disaggregated between
domestic and foreign, and 2) income tax
expense (or benefit) from continuing
operations disaggregated by federal, state and
foreign
Eliminates the requirement to disclose the
nature and estimate of the change in
unrecognized tax benefits expected in the next
twelve months
Eliminates the requirement to disclose the
cumulative amount of each type of temporary
difference when a deferred tax liability is not
recognized because of the exceptions to
comprehensive recognition of deferred taxes
related to subsidiaries and corporate joint
ventures
Applies to assets that meet the definition of
intangible assets, do not provide the asset
holder with enforceable rights to goods,
services or other assets, reside on a distributed
ledger, are secured through cryptography, are
fungible, and are not created or issued by the
reporting entity or its related parties
Required to subsequently measure these assets
at fair value
Required to present crypto assets measured at
fair value separately from other intangible
assets and changes from the remeasurement of
crypto assets separately from changes in the
carrying amounts of other intangible assets
•
•
•
•
Required effective date: January 1,
2024 for our annual disclosures and
January 1, 2025 for our interim
disclosures. Early adoption is
permitted.
Adoption is not expected to have a
material impact on our Consolidated
Financial Statements, but is
expected to have a meaningful
impact on our required disclosures in
the Business Operating Segments
Note to the Consolidated Financial
Statements.
Required effective date: January 1,
2025 for our annual disclosures and
January 1, 2026 for our interim
disclosures. Early adoption is
permitted.
Adoption is not expected to have a
material impact on our Consolidated
Financial Statements, but is
expected to have a meaningful
impact on our required disclosures in
the Income Taxes Note to the
Consolidated Financial Statements.
•
•
Required effective date: January 1,
2025, with early adoption permitted.
Adoption is not expected to have an
impact on our Consolidated Financial
Statements.
Citizens Financial Group, Inc. | 63
RISK GOVERNANCE
We are committed to maintaining a strong, integrated and proactive approach to the management of all
risks to which we are exposed in pursuit of our business objectives. A key aspect of our Board’s responsibility as
the main decision-making body is setting our risk appetite to ensure that the levels of risk that we are willing to
accept in the attainment of our strategic business and financial objectives are clearly understood.
To enable our Board to carry out its objectives, it has delegated authority for risk management activities,
as well as governance and oversight of those activities, to a number of Board and executive management level
risk committees. The Executive Risk Committee, chaired by the Chief Risk Officer, is responsible for oversight of
risk across the enterprise and actively considers our inherent material risks, analyzes our overall risk profile and
seeks confirmation that the risks are being appropriately identified, assessed and mitigated. Reporting to the
Executive Risk Committee are the following committees covering specific areas of risk: Compliance and
Operational Risk, Model Risk, Credit Policy, Asset Liability, Business Initiatives Review, and Conduct and Ethics.
Risk Framework
Our risk management framework is embedded in our business through a “Three Lines of Defense” model
which defines responsibilities and accountabilities for risk management activities.
First Line of Defense
The business lines, including their associated support functions, are the first line of defense and are
accountable for identifying, assessing, managing, and controlling the risks associated with the products and
services they provide. The business lines are responsible for performing regular risk assessments to identify and
assess the material risks that arise in their area of responsibility, complying with relevant risk policies, testing
and certifying the adequacy and effectiveness of their operational and financial reporting controls on a regular
basis, establishing and documenting operating procedures, and establishing a governance structure for identifying
and managing risk.
Second Line of Defense
The second line of defense includes independent monitoring and control functions accountable for the
development of risk and control frameworks and related policies, and their associated implementation. This
centralized risk function is independent from the business and is accountable for overseeing and challenging our
business lines on the effective management of their risks, including, but not limited to, credit, market,
operational, regulatory, reputational, interest rate, liquidity, legal and strategic risks.
Third Line of Defense
Our Internal Audit function is the third line of defense providing independent assurance of the
effectiveness of our internal controls, governance practices, and culture so that risk is managed appropriately for
the size, complexity, and risk profile of the organization. Internal Audit has complete and unrestricted access to
all of our records, physical properties and personnel. Internal Audit issues a report following each internal review
and provides an audit opinion to the Board’s Audit Committee on a quarterly basis.
Credit Review reports to the Chief Audit Executive and provides the Board, senior management and other
stakeholders with independent assurance on the quality of credit portfolios and adherence to agreed Credit Risk
Appetite and Credit Policies and processes. In line with its procedures and regulatory expectations, the Credit
Review function undertakes a program of portfolio testing, assessing and reporting through four Risk Pillars of
Asset Quality, Rating and Data Integrity, Risk Management and Credit Risk Appetite.
Risk Appetite
Risk appetite is a strategic business and risk management tool. We define our risk appetite as the
maximum limit of acceptable risk beyond which we could be unable to achieve our strategic objectives and
capital adequacy obligations.
Citizens Financial Group, Inc. | 64
Our principal non-market risks include credit, operational, regulatory, reputational, liquidity and
strategic risks. We are also subject to certain market risks which include potential losses arising from changes in
interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or
prices. Market risk in our business arises from trading activities that serve customer needs, including hedging of
interest rates, foreign exchange risk and non-trading activities within capital markets. We have established
enterprise-wide policies and methodologies to identify, measure, monitor and report on market risk. We actively
manage both trading and non-trading market risks. See “Market Risk” for further information. Our risk appetite is
reviewed and approved annually by the Board Risk Committee.
Credit Risk
Overview
Credit risk represents the potential for loss arising from a customer, counterparty, or issuer failing to
perform in accordance with the contractual terms of the obligation. While the majority of our credit risk is
associated with lending activities, we do engage with other financial counterparties for a variety of purposes
including investing, asset and liability management, and trading activities. Given the financial impact of credit
risk on our earnings and balance sheet, the assessment, approval and management of credit risk represents a
major part of our overall risk-management responsibility.
Objective
The independent Credit Risk Function is responsible for reviewing and approving credit risk appetite
across all lines of business and credit products, approving larger and higher-risk credit transactions, monitoring
portfolio performance, identifying problem credit exposures, and ensuring remedial management.
Organizational Structure
Management and oversight of credit risk is the responsibility of both the business line and the second line
of defense. The second line of defense, the independent Credit Risk Function, is led by the Chief Credit Officer
who oversees all credit risk and reports to the Chief Risk Officer. The Chief Credit Officer, acting in a manner
consistent with Board policies, has responsibility for, among other things, the governance process around
policies, procedures, risk acceptance criteria, credit risk appetite, limits and authority delegation. The Chief
Credit Officer and team also have responsibility for credit approvals for larger and higher-risk transactions and
oversight of line of business credit risk activities. Reporting to the Chief Credit Officer are the heads of the
second line of defense credit functions specializing in: Consumer Banking, Commercial Banking, Citizens
Restructuring Management, Portfolio and Corporate Reporting, ALLL Analytics, Current Expected Credit Loss, and
Credit Policy and Administration. Each team under these leaders is composed of experienced credit professionals.
Governance
The primary mechanisms used to govern our credit risk function are our consumer and commercial credit
policies. These policies outline the minimum acceptable lending standards that align with our desired risk
appetite. Material changes in our business model and strategies that identify a need to change our risk appetite
or highlight a risk not previously contemplated are identified by the individual committees and presented to the
Credit Policy Committee, Executive Risk Committee and the Board Risk Committee for approval, as appropriate.
Key Management Processes
We employ a comprehensive and integrated risk control program to proactively identify, measure,
monitor, and mitigate existing and emerging credit risks across the credit life cycle including origination,
account/portfolio management, and loss mitigation and recovery.
Consumer
On the Consumer Banking side of credit risk, our teams use models to evaluate consumer loans across the
life cycle of the loan. Credit scoring models are used to forecast the probability of default of an applicant at
origination. When approving customers for a new loan or extension of an existing credit line, credit scores are
used in conjunction with other credit risk variables such as affordability, length of term, collateral value,
collateral type, and lien subordination.
Citizens Financial Group, Inc. | 65
Lending authority is granted by the second line of defense credit risk function to each underwriter to
ensure proper oversight of the underwriting teams. The amount of delegated authority depends on the
experience of the individual. We periodically evaluate the performance of each underwriter and annually
reauthorize their delegated authority. Only senior members of the second line of defense credit risk team are
authorized to approve significant exceptions to credit policies. It is not uncommon to make exceptions to
established policies when compensating factors are present. There are exception limits which, when reached,
trigger a comprehensive analysis.
Credit scores and collateral values are refreshed at regular intervals once an account is established to
allow for proactive identification of increasing or decreasing levels of credit risk. Our approach to managing
credit risk is highly analytical and, where appropriate, is automated to ensure consistency and efficiency.
Commercial
On the Commercial Banking side of credit risk, risk management begins with defined credit products and
policies and is separated into commercial and industrial loans, CRE and leases. Within commercial and industrial
loans and leases there are separate verticals established for certain specialty products (e.g., asset-based lending,
leasing, franchise finance, health care, technology and mid-corporate). A “specialty vertical” is a stand-alone
team of industry or product specialists. Substantially all activity that falls under the ambit of the defined
industry or product is managed through a specialty vertical when one exists. CRE also operates as a specialty
vertical.
Commercial transactions are subject to individual analysis and approval at origination and, with few
exceptions, are subject to a formal annual review requirement. The underwriting process includes the
establishment and approval of credit grades that establish the PD and LGD. All material transactions require the
approval of both a business line approver and an independent credit approver with the requisite level of
delegated authority. The approval level of a particular credit facility is determined by the size of the credit
relationship as well as the PD. The checks and balances in the credit process and the independence of the credit
approver function are designed to appropriately assess and sanction the level of credit risk being accepted,
facilitate the early recognition of credit problems when they occur, and to provide for effective problem asset
management and resolution. All authority to grant credit is delegated through the independent Credit Risk
function and is closely monitored and updated annually at a minimum.
The primary factors considered in commercial credit approvals are the financial strength of the borrower,
assessment of the borrower’s management capabilities, cash flows from operations, industry sector trends, type
and sufficiency of collateral, type of exposure, transaction structure, and the general economic outlook. While
these are the primary factors considered, there are a number of other factors that may be considered in the
decision process. In addition to the credit analysis conducted during the approval process at origination and
annual review, our Credit Review group performs testing to provide an independent review and assessment of the
quality of the portfolio and new originations. This group conducts portfolio reviews on a risk-based cycle to
evaluate individual loans and validate risk ratings, as well as test the consistency of the credit processes and the
effectiveness of credit risk management.
The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based
on the perceived risk of each borrower or related group of borrowers. Concentration risk is managed through
limits on industry asset class and loan quality factors. We focus predominantly on extending credit to commercial
customers with existing or expandable relationships within our primary markets, although we do engage in
lending opportunities outside our primary markets if we believe that the associated risks are acceptable and
aligned with strategic initiatives.
Substantially all loans categorized as Classified are managed by a specialized group of credit
professionals.
MARKET RISK
Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates,
equity prices, commodity prices and/or other relevant market rates or prices. Modest market risk arises from
trading activities that serve customer needs, including the hedging of interest rate and foreign exchange risk. As
described below, the market risk arising from our non-trading banking activities, such as the origination of loans
and deposit-gathering, is more significant. We have established enterprise-wide policies and methodologies to
identify, measure, monitor and report market risk. We actively manage market risk for both non-trading and
trading activities.
Citizens Financial Group, Inc. | 66
Non-Trading Risk
Our non-trading banking activities expose us to market risk. This market risk is composed of interest rate
risk, as we have no commodity risk and de minimis direct currency and equity risk. We also have market risk
related to capital markets loan originations, as well as the valuation of our MSRs.
Interest Rate Risk
Interest rate risk emerges from the balance sheet after the aggregation of our assets, liabilities and
equity. We refer to this non-trading risk embedded in the balance sheet as “structural interest rate risk” or
“interest rate risk in the banking book.”
A major source of structural interest rate risk is a difference in the repricing of assets relative to
liabilities and equity. There are differences in the timing and drivers of rate changes reflecting the maturity and/
or repricing of assets and liabilities. For example, the rate earned on a commercial loan may reprice monthly
with changes in the benchmark rate, while the rate paid on debt or certificates of deposit may be fixed for a
longer period. There may also be differences in the drivers of rate changes. Loans may be tied to a specific index
rate such as SOFR or Prime, while deposits may not be as correlated with such rates and more dependent upon
competitive demand. Due to these basis differences, net interest income is sensitive to changes in spreads
between certain indices or repricing rates.
A primary source of our structural interest rate risk relates to faster repricing of floating-rate loans
relative to core deposit funding. This source of asset sensitivity is more biased toward the short end of the yield
curve.
The secondary source of our interest rate risk is driven by longer term rates comprising the rollover or
reinvestment risk on fixed-rate loans, as well as prepayment risk on mortgage-related loans and securities funded
by non-rate sensitive deposits and equity.
Another important source of structural interest rate risk relates to the potential exercise of explicit or
embedded options. For example, most consumer loans can be prepaid without penalty and most consumer
deposits can be withdrawn without penalty. The exercise of such options by customers can exacerbate the timing
differences discussed above.
The primary goal of interest rate risk management is to control exposure to interest rate risk within
policy limits approved by our Board. These limits and guidelines reflect our tolerance for interest rate risk over
both short-term and long-term horizons. To ensure that exposure to interest rate risk is managed within our risk
appetite, we measure the exposure and hedge it, as necessary. The Treasury Asset and Liability Management
team is responsible for measuring, monitoring and reporting on our structural interest rate risk position. These
exposures are reported on a monthly basis to the Asset Liability Committee and at Board meetings.
We measure structural interest rate risk through a variety of metrics intended to quantify both short-
term and long-term exposures. The primary method we use to quantify interest rate risk is simulation analysis in
which we model net interest income from assets, liabilities and hedge derivative positions under various interest
rate scenarios over a three-year horizon. Exposure to interest rate risk is reflected in the variation of forecasted
net interest income across these scenarios.
Key assumptions in this simulation analysis relate to the behavior of interest rates and spreads, changes
in product balances and the behavior of our loan and deposit customers in different rate environments. Repricing
characteristics and balance fluctuations of deposits with indeterminate (i.e., non-contractual) maturities, as well
as the pace of mortgage prepayments are the most significant behavioral assumptions. We utilize product level
models that consider specific product characteristics and composition of the deposit portfolio, along with current
and forward-looking market dynamics, to project deposit rates. Similarly, we employ dynamic prepayment and
mortgage rate models to project prepayment behaviors specific to each of our product offerings. These models
are developed based on internal performance data over prior interest rate cycles and calibrated to our
experience and outlook for rates across a diverse set of market environments. We assess our models and
assumptions periodically by running sensitivity analyses to determine the impact of changes to inputs or
assumptions on our risk results, which are reported to the Asset Liability Committee.
Citizens Financial Group, Inc. | 67
Since we cannot predict the future path of interest rates, we use simulation analysis to project net
interest income under various interest rate scenarios including a “most likely” (implied forward) scenario, as well
as a variety of extreme and unlikely scenarios. These scenarios may assume gradual ramping of the overall level
of interest rates, immediate shocks to the level of rates and various yield curve twists in which movements in
short- or long-term rates predominate. Generally, projected net interest income in any interest rate scenario is
compared to net interest income in a base case where market-forward rates are realized.
The table below reports net interest income exposures against a variety of interest rate scenarios. Our
policies involve measuring exposures as a percentage change in net interest income over the next year due to
either instantaneous or gradual parallel changes in rates relative to the market implied forward yield curve. As
the following table illustrates, our balance sheet is marginally asset-sensitive; net interest income would benefit
from an increase in interest rates, while exposure to a decline in interest rates is within limits established and
monitored by senior management. While an instantaneous and severe shift in interest rates is included in this
analysis, we believe that any actual shift in interest rates would be more gradual and, therefore, have a more
modest impact.
The table below presents the sensitivity of net interest income to various parallel yield curve shifts from
the market implied forward yield curve:
Table 27: Sensitivity of Net Interest Income
Basis points
Instantaneous Change in Interest Rates
+200
+100
-100
-200
Gradual Change in Interest Rates
+200
+100
-100
-200
Estimated % Change in
Net Interest Income over
12 Months
December 31,
2023
2022
— %
0.5
(1.5)
(3.0)
0.4 %
0.5
(1.0)
(1.9)
4.8%
2.4
(2.5)
(5.6)
2.7%
1.4
(1.4)
(3.0)
We continue to manage asset sensitivity within the scope of our policy, changing market conditions and
changes in our balance sheet. The Company’s base case net interest income assumes the forward-rate path
implied by the yield curve is realized, which reflects a Fed Funds rate of 4.25% at the end of 2024, reflecting five
25 basis point reductions beginning in the second quarter of 2024. The rate risk exposure is then measured based
on assumed changes from that base case rate path.
As of December 31, 2023, our asset sensitivity has shifted to a more neutral position compared to 2022.
This reflects the impacts of changes in our balance sheet mix, including securities, loans, deposits, borrowed
funds and ongoing hedge activity, which is primarily comprised of received fixed swaps that offset our naturally
asset-sensitive balance sheet. Our sensitivity profile exhibits asymmetry for up and down rate scenarios as we
expect to see incremental deposit migration to higher rate products in response to rising rate scenarios compared
to declining rate scenario.
We use a valuation measure of exposure to structural interest rate risk, EVE, as a supplement to net
interest income simulations. EVE complements net interest income simulation analysis as it estimates risk
exposure over a long-term horizon. EVE measures the extent to which the economic value of assets, liabilities
and off-balance sheet instruments may change in response to fluctuations in interest rates. This analysis is highly
dependent upon assumptions applied to assets and liabilities with non-contractual maturities. We employ
sophisticated models for prepayments and deposit pricing and attrition, which provide a granular view of cash
flows based on the unique characteristics of the underlying products and customer segments. The change in value
is expressed as a percentage of regulatory capital.
Citizens Financial Group, Inc. | 68
We use interest rate contracts as part of our ALM strategy to manage exposure to the variability in the
interest cash flows on our floating-rate assets and wholesale funding, the variability in the fair value of AFS
securities, and to hedge market risk on fixed-rate capital markets debt issuances.
The following table presents interest rate derivative contracts that we have entered into as of December
31, 2023 and 2022.
Table 28: Interest Rate Derivative Contracts Used to Manage Non-Trading Interest Rate Exposure
December 31, 2022
December 31, 2023
Weighted Average
Weighted Average
Notional
Amount
Maturity
(Years)
Fixed
Rate
Reset
Rate
Notional
Amount
Maturity
(Years)
Fixed
Rate
Reset
Rate
$5,365
6.2
3.8 %
5.4 %
$—
—
— %
— %
—
500
5,865
—
1.9
—
2.6
—
5.6
1,000
—
1,000
1.6
—
2.7
—
4.7
—
(dollars in millions)
Fair value hedges:
Asset conversion swaps:
AFS securities:
Pay fixed/receive SOFR
Liability conversion swaps:
Long-term borrowed funds:
Receive fixed/pay 3-month LIBOR
Receive fixed/pay SOFR
Total fair value hedges
Cash flow hedges:
Asset conversion swaps:
Loans:
Swaps
Receive fixed/pay SOFR
Receive fixed/pay SOFR - forward-starting
Receive fixed/pay 1-month LIBOR
Receive fixed/pay 1-month LIBOR - forward-
starting
17,780
31,250
—
—
0.8
2.9
—
—
Basis swaps
Receive SOFR/pay 1-month term SOFR
5,000
1.0
Receive SOFR/pay 1-month term SOFR -
forward-starting
14,000
2.7
4.0
3.3
—
—
—
—
5.4
4.6
—
—
500
13,500
15,250
2.7
3.2
3.8
3.5
3.0
1.8
2,000
5.2
2.9
5.3/5.3
—
—
5.2/5.1
7,000
3.3
—
—
4.3
4.5
4.3
4.9
—
4.4/4.4
Floor
Rate
Cap
Rate
Floor
Rate
Cap
Rate
Options
Interest rate collars(1)
Interest rate collars - forward-starting(1)
Floor spreads - forward-starting(2)
Total cash flow hedges
Total hedges
1,000
500
2,500
1.5
2.5
2.8
2.5
2.7
2.2/3.2
3.7
4.4
—
—
1,500
—
—
2.8
—
—
2.6
—
—
3.9
—
72,030
$77,895
39,750
$40,750
(1) Weighted average floor and cap rates represent strike rates through which CFG will receive interest if the SOFR rate falls below the floor strike rate and pay
interest if the SOFR rate exceeds the cap strike rate.
(2) Weighted average floor rate represents strike rates for the short and long interest rate floors, respectively. CFG will receive interest if the SOFR rate falls
below the upper strike rate and pay interest if the SOFR rate falls below the lower strike rate, effectively hedging the corridor between the two strike rates.
The structure also includes a short cap and a long floor which are utilized to neutralize the initial premium.
Citizens Financial Group, Inc. | 69
The following table presents the average active notional amounts for our interest rate derivatives, based
on contract effective date, for the next five years:
Table 29: Average Active Notional for Interest Rate Derivative Contracts
(dollars in millions)
Fair value hedges
Pay fixed/receive SOFR(1)
Receive fixed/pay SOFR(2)
Cash flow hedges
Receive fixed/pay SOFR(2)
Receive SOFR/pay 1-month term SOFR
Interest rate collars
Floor spreads
Total
Weighted average receive fixed rate
Weighted average pay fixed rate
2024
2025
2026
2027
2028
Year Ended
$5,365
$5,359
$5,131
$4,275
$4,143
500
441
—
—
25,783
12,186
1,260
1,488
30,094
13,052
1,001
2,500
21,900
8,847
240
1,467
7,589
1,952
—
460
—
210
—
—
—
$46,582
$52,447
$37,585
$14,276
$4,353
3.2 %
3.8
3.2 %
3.8
3.5 %
3.7
3.7 %
3.7
2.6 %
3.7
(1) Pay fixed rate leg of the interest rate derivative contract is included in the computation of the weighted average pay fixed rate.
(2) Receive fixed rate leg of the interest rate derivative contract is included in the computation of the weighted average receive fixed rate.
Table 30: Pre-Tax Gains (Losses) Recorded in the Consolidated Statements of Operations and the
Consolidated Statements of Comprehensive Income on Cash Flow Hedges
(dollars in millions)
Amount of pre-tax net gains (losses) recognized in OCI
Amount of pre-tax net gains (losses) reclassified from AOCI into interest income
Amount of pre-tax net gains (losses) reclassified from AOCI into interest expense
Year Ended December 31,
2023
2022
($145)
(596)
—
($1,806)
(111)
(4)
Using the interest rate curve at December 31, 2023, we estimate that approximately $914 million in pre-
tax net losses related to cash flow hedge strategies will be reclassified from AOCI to net interest income over the
next 12 months, including $460 million from terminated swaps. This amount could differ from amounts actually
recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent
to December 31, 2023.
LIBOR Transition
In July 2017, the United Kingdom’s FCA announced that it would no longer require banks to submit LIBOR
rates after 2021. On March 5, 2021, the FCA formally announced the future cessation of 1-week and 2-month U.S.
Dollar LIBOR rates as of December 31, 2021, with all other U.S. Dollar LIBOR tenors ceasing as of June 30, 2023.
In the United States, the Alternative Reference Rates Committee, a group of private-market participants
convened to help ensure a successful transition away from U.S. Dollar LIBOR, identified SOFR as its recommended
alternative rate.
On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) was signed into law, with
the FRB adopting its final rule, effective February 27, 2023, to implement the LIBOR Act on December 16, 2022.
The final rule addresses references to LIBOR in contracts that (i) are governed by U.S. law; (ii) will not mature
before June 30, 2023; and (iii) lack fallback provisions providing for a clearly defined and practical replacement
for LIBOR. The Company assessed the impact of this legislation and applied its provisions accordingly to transition
its LIBOR contracts to an alternative rate.
As of June 30, 2023, the Company’s transition and remediation efforts were complete, with ongoing
monitoring for LIBOR-based financial instruments that will transition to alternative rates at their next interest
rate reset date.
Citizens Financial Group, Inc. | 70
Capital Markets
A key component of our capital markets activities is the underwriting and distribution of corporate credit
facilities to finance merger and acquisition transactions for our clients. We have a rigorous risk management
process around these activities, including a limit structure capping our underwriting risk, potential loss, and sub-
limits for specific asset classes. Further, the ability to approve underwriting exposure is delegated only to senior
level individuals in the credit risk management and capital markets organizations with each transaction
adjudicated in the Loan Underwriting Approval Committee.
Mortgage Servicing Rights
We have market risk associated with the value of residential MSRs, which are impacted by various types
of inherent risks, including duration, basis, convexity, volatility and yield curve.
As part of our overall risk management strategy we enter into various free-standing derivatives, such as
interest rate swaps, interest rate swaptions, interest rate futures and forward contracts to purchase mortgage-
backed securities to economically hedge the change in fair value of our MSRs. As of December 31, 2023 and 2022,
the fair value of our MSRs was $1.6 billion and $1.5 billion, respectively, and the total notional amount of related
derivative contracts was $15.1 billion and $12.9 billion, respectively. Gains and losses on MSRs and the related
derivatives used for hedging are included in mortgage banking fees in the Consolidated Statements of Operations.
As with our traded market risk-based activities, earnings at risk excludes the impact of MSRs. MSRs are
captured under our single price risk management framework that is used for calculating a management value at
risk consistent with the definition used by banking regulators.
Trading Risk
We are exposed to market risk primarily through client facilitation activities including derivatives and
foreign exchange products as well as underwriting and market making activities. Exposure is created as a result
of changes in interest rates and related basis spreads and volatility, foreign exchange rates, equity prices, and
credit spreads on a select range of interest rates, foreign exchange, commodities, equity securities, corporate
bonds and secondary loan instruments. These securities underwriting and trading activities are conducted
through CBNA and Citizens JMP Securities, LLC.
Client facilitation activities consist primarily of interest rate derivatives, financially settled commodity
derivatives and foreign exchange contracts where we enter into offsetting trades with a separate counterparty or
exchange to manage our market risk exposure. In addition, we operate trading desks covering secondary loans,
corporate bonds, and equity securities, with the objective of meeting secondary liquidity needs of our issuing
clients’ transactions and investor clients. We do not engage in any trading activities to benefit from short-term
price differences.
Market Risk Governance
The process of setting our market risk limit is established in accordance with the formal enterprise risk
appetite process and policy, which reflects the strategic and enterprise level articulation of opportunities for
creating franchise value set to the boundaries of how much market risk to assume. Dealing authorities represent
the key control tool in the management of market risk that allows the cascading of the risk appetite throughout
the enterprise. A dealing authority sets the operational scope and tolerances within which a business and/or
trading desk is permitted to operate, which is reviewed annually at a minimum. Dealing authorities are
structured to accommodate client facing trades and hedges needed to manage the risk profile, with responsibility
for remaining within established tolerances residing with the business. Key risk indicators, including VaR, open
foreign currency positions and single name risk are monitored daily and reported against tolerances consistent
with our risk appetite and business strategy to the appropriate business line management and risk counterparts.
Market Risk Measurement
We use VaR as a statistical measure for estimating potential exposure of our traded market risk in normal
market conditions. Our VaR framework for risk management and regulatory reporting is the same. Risk
management VaR is based on a one-day holding period to a 99% confidence level and regulatory VaR is based on a
ten-day holding period to the same confidence level. In addition to VaR, non-statistical measurements for
measuring risk such as sensitivity analysis, market value and stress testing are employed.
Citizens Financial Group, Inc. | 71
Our market risk platform and associated market risk and valuation models capture correlation effects
across all our “covered positions” and allow for aggregation of market risk across products, risk types, business
lines and legal entities. We measure, monitor and report market risk for management and regulatory capital
purposes.
VaR Overview
The market risk measurement model is based on historical simulation. The VaR measure estimates the
extent of any fair value losses on trading positions that may occur due to broad market movements (General VaR)
such as changes in the level of interest rates, foreign exchange rates, equity prices and commodity prices. It is
calculated on the basis that current positions remain relatively unaltered over the course of a given holding
period with the assumption that markets are sufficiently liquid to allow the business to close its positions, if
required, within this holding period. Based on the composition of our “covered positions,” we also use a
standardized add-on approach for the loan trading and high yield bond desks’ Specific Risk capital, which
estimates the extent of any losses that may occur from factors other than broad market movements. The General
VaR approach is expressed in terms of a confidence level over the past 500 trading days. The internal VaR
measure, used as the basis of the main VaR trading limits, is a 99% confidence level with a one-day holding
period, indicating that a loss greater than the VaR is expected to occur, on average, on only one day in 100
trading days (i.e., 1% of the time). Theoretically, there should be a loss event greater than VaR two to three
times per year. The regulatory measure of VaR is a 99% confidence level with a ten-day holding period. The
historical market data applied to calculate the VaR is updated on a two-business day lag. Refer to “Market Risk
Regulatory Capital” below for details of our ten-day VaR metrics for the quarters ended December 31, 2023 and
2022.
Market Risk Regulatory Capital
The U.S. banking regulators’ “Market Risk Rule” covers the calculation of market risk capital. Under this
rule all of our client facing trades and associated hedges maintain a net low risk and qualify as “covered
positions.” The internal management VaR measure is calculated based on the same population of trades that is
utilized for regulatory VaR.
Table 31: Results of Modeled and Non-Modeled Measures for Regulatory Capital Calculations
(dollars in millions)
Market Risk Category
Interest Rate
Foreign Exchange Currency Rate
Credit Spread
Commodity
General VaR
Specific Risk VaR
Total VaR
Stressed General VaR
Stressed Specific Risk VaR
Total Stressed VaR
Market Risk Regulatory Capital
Specific Risk Not Modeled Add-on
de Minimis Exposure Add-on
Total Market Risk Regulatory Capital
Market Risk-Weighted Assets
For the Three Months Ended
December 31, 2023
For the Three Months Ended
December 31, 2022
Period
End
Average
High
Low
Period
End
Average
High
Low
$3
—
1
—
4
—
$4
$4
—
$4
$33
17
1
$51
$3
$5
$2
$3
$2
$3
$1
—
2
—
3
—
$3
$10
—
$10
—
2
—
5
—
$5
$15
—
$15
—
2
—
2
—
$2
$6
—
$6
—
1
—
4
—
$4
$7
—
$7
2
2
—
6
—
$6
$14
—
$14
—
1
—
3
—
$3
$3
—
$3
—
2
—
5
—
$5
$12
—
$12
$39
20
—
$59
$643
$739
Citizens Financial Group, Inc. | 72
Stressed VaR
SVaR is an extension of VaR and utilizes a longer historical look-back horizon, fixed from January 3, 2005,
to identify headline risks from more volatile periods and to provide a counterbalance to VaR, which may be low
during periods of low volatility. The holding period for profit and loss determination is ten days. In addition to its
utilization for risk management purposes, SVaR is a component of market risk regulatory capital. We calculate
SVaR daily under its own dynamic window regime whereby values of the ten-day, 99% VaR are calculated over all
260-day periods that can be obtained from the complete historical data set. Refer to “Market Risk Regulatory
Capital” above for SVaR metrics.
Sensitivity Analysis
Sensitivity analysis is the measure of exposure to a single risk factor, such as a one basis point change in
rates or credit spread. We conduct and monitor sensitivity on interest rates, basis spreads, foreign exchange
exposures, option prices and credit spreads. Since VaR is based on previous moves in market risk factors over
recent periods, it may not be an accurate predictor of future market moves. Sensitivity analysis complements
VaR as it provides an indication of risk relative to each factor irrespective of historical market moves and is an
effective tool in evaluating the appropriateness of hedging strategies and concentrations.
Stress Testing
Conducting a stress test of a portfolio consists of running risk models with the inclusion of key variables
that simulate various historical or hypothetical scenarios. For historical stress tests, profit and loss results are
simulated for select time periods corresponding to the most volatile underlying returns, while hypothetical stress
tests aim to consider concentration risk, illiquidity under stressed market conditions and risk arising from our
trading activities that may not be fully captured by our other risk-measurement methodologies. Hypothetical
scenarios also assume that market moves occur simultaneously and no repositioning or hedging activity takes
place to mitigate losses as market events unfold. Stress tests of our trading positions are generated daily.
VaR Model Review and Validation
Our market risk measurement models are independently reviewed and subject to ongoing performance
analysis by the model owners. This independent review and validation focuses on model methodology, market
data and performance and is the responsibility of Citizens’ Model Risk Management and Validation team. This
team challenges the assumptions used and quantitative techniques employed, including the theoretical
justification supporting them, and performs an assessment of the soundness of the required data over time. The
quantitative impact of the major underlying modeling assumptions is estimated (e.g., through developing
alternative models), if possible. The market risk models may be periodically enhanced due to changes in market
price levels and price action regime behavior. The Market Risk Management and Validation team conducts
internal validation before a new or changed model element is implemented and before a change is made to
market data mapping.
VaR Backtesting
Backtesting is one form of validation of the VaR model and is run daily. The Market Risk Rule requires a
comparison of our internal VaR measure to the actual net trading revenue (excluding fees, commissions,
reserves, intra-day trading and net interest income) for each day over the preceding year (the most recent 250
business days). Any observed loss in excess of the VaR number is taken as an exception. The level of exceptions
determines the multiplication factor used to derive the VaR and SVaR-based capital requirement for regulatory
reporting purposes, when applicable. We perform sub-portfolio backtesting as required under the Market Risk
Rule, using models approved by our banking regulators for interest rate, credit spread and foreign exchange
positions.
Citizens Financial Group, Inc. | 73
The following graph shows our daily net trading revenue and total internal, modeled VaR for the year
ended December 31, 2023.
Citizens Financial Group, Inc. | 74
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
For more information on the computation of non-GAAP financial measures, see “Introduction — Non-GAAP
Financial Measures,” included in this Report. The following table presents computations of non-GAAP financial
measures representing our “Underlying” results used in the MD&A:
Table 32: Reconciliations of Non-GAAP Measures
(dollars in millions, except per share data)
Noninterest income, Underlying:
Noninterest income (GAAP)
Less: Notable items
Noninterest income, Underlying (non-GAAP)
Total revenue, Underlying:
Total revenue (GAAP)
Less: Notable items
Total revenue, Underlying (non-GAAP)
Noninterest expense, Underlying:
Noninterest expense (GAAP)
Less: Notable items
Noninterest expense, Underlying (non-GAAP)
Pre-provision profit:
Total revenue (GAAP)
Less: Noninterest expense (GAAP)
Pre-provision profit (non-GAAP)
Pre-provision profit, Underlying:
Total revenue, Underlying (non-GAAP)
Less: Noninterest expense, Underlying (non-GAAP)
Pre-provision profit, Underlying (non-GAAP)
Provision (benefit) for credit losses, Underlying:
Provision (benefit) for credit losses (GAAP)
Less: Notable items
Provision (benefit) for credit losses, Underlying (non-GAAP)
Income before income tax expense, Underlying:
Income before income tax expense (GAAP)
Less: Income (expense) before income tax expense (benefit) related to notable items
Income before income tax expense, Underlying (non-GAAP)
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP)
Less: Income tax expense (benefit) related to notable items
Income tax expense, Underlying (non-GAAP)
Effective income tax rate (GAAP)
Effective income tax rate, Underlying (non-GAAP)
Net income, Underlying:
Net income (GAAP)
Add: Notable items, net of income tax benefit
Net income, Underlying (non-GAAP)
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)
Add: Notable items, net of income tax benefit
Net income available to common stockholders, Underlying (non-GAAP)
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)
Return on average common equity
Return on average common equity, Underlying (non-GAAP)
Year Ended December 31,
Ref.
2023
2022
A
B
C
D
E
F
C
E
D
F
G
H
I
J
I/G
J/H
K
L
M
N
O
M/O
N/O
$1,983
—
$1,983
$8,224
—
$8,224
$5,507
506
$5,001
$8,224
5,507
$2,717
$8,224
5,001
$3,223
$687
—
$687
$2,030
(506)
$2,536
$422
(149)
$571
20.76 %
22.48
$1,608
357
$1,965
$1,491
357
$1,848
$2,009
(31)
$2,040
$8,021
(31)
$8,052
$4,892
262
$4,630
$8,021
4,892
$3,129
$8,052
4,630
$3,422
$474
169
$305
$2,655
(462)
$3,117
$582
(110)
$692
21.93 %
22.19
$2,073
352
$2,425
$1,960
352
$2,312
$21,592
$21,724
6.90 %
8.56
9.02 %
10.64
Citizens Financial Group, Inc. | 75
(dollars in millions, except per share data)
Return on average tangible common equity and return on average tangible common equity,
Underlying:
Average common equity (GAAP)
Less: Average goodwill (GAAP)
Less: Average other intangibles (GAAP)
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)
Average tangible common equity
Return on average tangible common equity
Return on average tangible common equity, Underlying (non-GAAP)
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)
Return on average total assets
Return on average total assets, Underlying (non-GAAP)
Return on average total tangible assets and return on average total tangible assets,
Underlying:
Average total assets (GAAP)
Less: Average goodwill (GAAP)
Less: Average other intangibles (GAAP)
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)
Average tangible assets
Return on average total tangible assets
Return on average total tangible assets, Underlying (non-GAAP)
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio
Efficiency ratio, Underlying (non-GAAP)
Noninterest income as a % of total revenue, Underlying:
Noninterest income as a % of total revenue
Noninterest income as a % of total revenue, Underlying (non-GAAP)
Operating leverage and operating leverage, Underlying:
Increase in total revenue
Increase in noninterest expense
Operating Leverage
Increase in total revenue, Underlying (non-GAAP)
Increase in noninterest expense, Underlying (non-GAAP)
Operating Leverage, Underlying (non-GAAP)
Tangible book value per common share:
Common shares - at period end (GAAP)
Common stockholders’ equity (GAAP)
Less: Goodwill (GAAP)
Less: Other intangible assets (GAAP)
Add: Deferred tax liabilities related to goodwill and other intangible assets (GAAP)
Tangible common equity
Tangible book value per common share
Net income per average common share - basic and diluted and net income per average
common share - basic and diluted, Underlying:
Average common shares outstanding - basic (GAAP)
Average common shares outstanding - diluted (GAAP)
Net income per average common share - basic (GAAP)
Net income per average common share - diluted (GAAP)
Net income per average common share-basic, Underlying (non-GAAP)
Net income per average common share-diluted, Underlying (non-GAAP)
Year Ended December 31,
Ref.
2023
2022
O
P
M/P
N/P
Q
K/Q
L/Q
$21,592
8,184
177
422
$21,724
7,872
181
413
$13,653
$14,084
10.92 %
13.53
13.91 %
16.41
$222,221
$215,061
0.72 %
0.88
0.96 %
1.13
Q
$222,221
$215,061
R
K/R
L/R
E/C
F/D
A/C
B/D
8,184
177
422
7,872
181
413
$214,282
$207,421
0.75 %
0.92
66.97 %
60.81
24.12 %
24.12
2.53 %
12.58
(10.05) %
2.13 %
8.00
(5.87) %
1.00 %
1.17
60.99 %
57.51
25.04 %
25.33
20.68%
19.88
0.80 %
21.15 %
16.46
4.69 %
S
466,418,055
492,282,158
$22,329
8,188
157
433
$14,417
$30.91
$21,676
8,173
197
422
$13,728
$27.88
475,089,384
475,959,815
476,693,148
477,803,142
$3.14
3.13
3.89
3.88
$4.12
4.10
4.86
4.84
T
T/S
U
V
M/U
M/V
N/U
N/V
Citizens Financial Group, Inc. | 76
(dollars in millions, except per share data)
Dividend payout ratio and dividend payout ratio, Underlying:
Cash dividends declared and paid per common share
Dividend payout ratio
Dividend payout ratio, Underlying (non-GAAP)
Year Ended December 31,
Ref.
2023
2022
W
W/(M/U)
W/(N/U)
$1.68
$1.62
54 %
43
39 %
33
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are presented in the “Market Risk” section of
Part II, Item 7 and is incorporated herein by reference.
Citizens Financial Group, Inc. | 77
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Management on Internal Control Over Financial Reporting ....................................................................
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements
(PCAOB ID No. 34) .................................................................................................................................................................
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting ...
Consolidated Balance Sheets ..............................................................................................................................................
Consolidated Statements of Operations ..........................................................................................................................
Consolidated Statements of Comprehensive Income ...................................................................................................
Consolidated Statements of Changes in Stockholders’ Equity ...................................................................................
Consolidated Statements of Cash Flows ..........................................................................................................................
Notes to Consolidated Financial Statements ..................................................................................................................
Note 1 - Significant Accounting Policies ..........................................................................................................................
Note 2 - Acquisitions ............................................................................................................................................................
Note 3 - Cash and Due from Banks ...................................................................................................................................
Note 4 - Securities ................................................................................................................................................................
Note 5 - Loans and Leases ..................................................................................................................................................
Note 6 - Credit Quality and the Allowance for Credit Losses ....................................................................................
Note 7 - Premises, Equipment and Software .................................................................................................................
Note 8 - Mortgage Banking and Other ..............................................................................................................................
Note 9 - Leases ......................................................................................................................................................................
Note 10 - Goodwill and Intangible Assets ........................................................................................................................
Note 11 - Variable Interest Entities ..................................................................................................................................
Note 12 - Deposits .................................................................................................................................................................
Note 13 - Borrowed Funds ..................................................................................................................................................
Note 14 - Derivatives ...........................................................................................................................................................
Note 15 - Employee Benefit Plans ....................................................................................................................................
Note 16 - Accumulated Other Comprehensive Income (Loss) ...................................................................................
Note 17 - Stockholders’ Equity ..........................................................................................................................................
Note 18 - Share-Based Compensation ..............................................................................................................................
Note 19 - Commitments and Contingencies ...................................................................................................................
Note 20 - Fair Value Measurements .................................................................................................................................
Note 21 - Noninterest Income ............................................................................................................................................
Note 22 - Other Operating Expense .................................................................................................................................
Note 23 - Income Taxes .......................................................................................................................................................
Note 24 - Earnings Per Share .............................................................................................................................................
Note 25 - Regulatory Matters .............................................................................................................................................
Note 26 - Business Operating Segments ..........................................................................................................................
Note 27 - Parent Company Financials ............................................................................................................................
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Citizens Financial Group, Inc. | 78
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining an adequate system of internal control over financial
reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. The Company’s system of internal
control over financial reporting is designed, under the supervision of the Chief Executive Officer and the Chief
Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s system of internal control over financial reporting as of
December 31, 2023 based on the framework set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control — Integrated Framework (2013). Based on that assessment,
management concluded that, as of December 31, 2023, the Company’s internal control over financial reporting is
effective.
The Company’s internal control over financial reporting as of December 31, 2023 has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their accompanying report appearing
on page 83, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
Citizens Financial Group, Inc. | 79
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Citizens Financial Group, Inc.
Providence, Rhode Island
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Citizens Financial Group, Inc. and its
subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of
operations, comprehensive income, changes in stockholders' equity, and cash flows, for each of the three years in
the period ended December 31, 2023, and the related notes (collectively referred to as the "consolidated
financial statements"). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2023, in conformity
with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based
on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 16, 2024, expressed an unqualified
opinion on the Company's internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate
to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any
way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures
to which they relate.
Citizens Financial Group, Inc. | 80
Allowance for Credit Losses - Refer to Note 6 to the consolidated financial statements
Critical Audit Matter Description
The Company’s estimate of expected credit losses in its loan and lease portfolios is recorded in the ACL. The ACL
is maintained at a level the Company believes to be appropriate to absorb expected lifetime credit losses over
the contractual life of a loan or lease and on the unfunded lending commitments. The determination of the ACL
is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments that are not
unconditionally cancellable. A number of relevant underlying factors, including key assumptions and evaluation
of quantitative and qualitative information, are considered.
Key assumptions used in the ACL measurement process include the use of a two-year reasonable and supportable
economic forecast period followed by a one-year reversion period to historical credit loss information.
The quantitative evaluation of the adequacy of the ACL utilizes a single economic forecast as its foundation and
is primarily based on econometric models that use known or estimated data as of the balance sheet date and
forecasted data over the reasonable and supportable period. Known and estimated data include current PD, LGD
and EAD for commercial loans, timing and amount of expected draws for unfunded lending commitments, FICO,
LTV, and term for retail loans. The mix and level of loan balances, delinquency levels, assigned risk ratings,
previous loss experience, current business conditions, amounts and timing of expected future cash flows, and
factors particular to specific commercial credits such as competition, business and management performance are
also considered. Forward-looking economic assumptions include real gross domestic product, unemployment rate,
interest rate curve, and changes in collateral values. This data is accumulated to estimate expected credit losses
over the contractual life of the loans and leases, adjusted for expected prepayments. Historical information,
such as financial statements for commercial customers or consumer credit ratings, may not be as important to
estimating future expected losses as forecasted inputs to the models during volatile economic time periods.
The ACL may also be affected by a variety of qualitative factors that the Company considers that are not
measured in the statistical procedures including uncertainty related to the economic forecasts, loan growth,
backtesting results, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons.
The qualitative allowance is further affected by sensitivity analysis for certain industry sectors or loan classes,
including CRE office.
Given the size of the loan and lease portfolios and unfunded commitments and the subjective nature of
estimating the ACL, including the estimated impact of the factors noted above and related economic forecasting
uncertainty, auditing the ACL involved a high degree of auditor judgment and an increased extent of effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the ACL for the loan and lease portfolios and unfunded commitments included
the following, among others:
• We tested the effectiveness of controls over the (i) selection of the economic forecasts, (ii) development,
execution. and monitoring of the econometric models, (iii) estimation of management’s adjustments to the
modeled reserves in the industry sectors facing challenges in the current macroeconomic environment, (iv)
determination of the qualitative allowance, and (v) overall calculation and disclosure of the ACL.
• With the assistance of credit specialists, we (i) evaluated the reasonableness of the econometric models and
related assumptions, (ii) assessed the reasonableness of design, theory, and logic of the econometric models
for estimating expected credit losses, (iii) tested the accuracy of the data input into the econometric
models, and (iv) tested the arithmetic accuracy of the models’ calculations of the expected credit losses.
• We (i) evaluated the appropriateness and relevance of the qualitative factors, including management’s
consideration of the economic forecasting uncertainty and adjustments to the modeled reserves for the
industry sectors facing challenges in the current macroeconomic environment, (ii) tested the accuracy and
evaluated the relevance of the historical loss data used in determining the qualitative allowance, (iii)
evaluated the reasonableness of the Company’s assessment and determination of the qualitative factors and
related impact on the estimation of the qualitative allowance and (iv) tested the arithmetic accuracy of the
calculation of the qualitative allowance.
• We tested the arithmetic accuracy of the calculation of the overall ACL and assessed the reasonableness of
the related disclosures.
Citizens Financial Group, Inc. | 81
Goodwill – Refer to Note 10 to the consolidated financial statements
Critical Audit Matter Description
Management has identified and assigned goodwill to two reporting units, Consumer Banking and Commercial
Banking.
Management reviews the goodwill of each reporting unit for impairment on an annual basis as of October 31st or
more frequently if events or circumstances change that indicate an impairment may exist.
Management performed a quantitative goodwill impairment test due to a triggering event in the third quarter of
2023 in addition to performing a quantitative impairment test associated with its annual assessment date. In both
instances, the fair value of the Company’s reporting units was determined using a combination of income and
market-based approaches. Under the income approach, key assumptions included cash flow projections based on
multi-year forecasts, long-term earnings growth rate, and discount rates. Under the market-based approach, key
assumptions included determination of comparable public companies, valuation multiples, and utilization of a
market control premium associated with cost synergies and other cash flow benefits that arise from obtaining
control over a reporting unit, and guideline transactions, when applicable.
We identified the goodwill impairment tests as a critical audit matter because these fair value determinations
require management to make significant estimates and assumptions. Performing audit procedures to evaluate the
reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased
extent of effort, including the involvement of our valuation specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of the Company’s reporting units included the following, among
others:
• We tested the design, implementation, and operating effectiveness of internal controls over the goodwill
impairment tests, including controls over the (i) accounting and valuation conclusions reached by
management, (ii) relevant business and valuation assumptions, and (iii) determination of its operating
segments and reporting units.
• With the assistance of internal valuation specialists, we (i) evaluated the appropriateness of the valuation
methodology used and the reasonableness of the valuation and business assumptions, including the selection
of discount rates, market multiples, and long-term earnings growth rate, (ii) assessed the mathematical
accuracy of the valuation calculations, and (iii) assessed the reasonableness of the consolidated Company
valuation in comparison to the Company’s market capitalization.
• We tested the completeness and accuracy of the data used in the valuation of the commercial and consumer
reporting units.
• We tested the reasonableness of Management’s forecast used in the valuation of the commercial and
consumer reporting units.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 16, 2024
We have served as the Company's auditor since 2000.
Citizens Financial Group, Inc. | 82
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Citizens Financial Group, Inc.
Providence, Rhode Island
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Citizens Financial Group, Inc. and its subsidiaries
(the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued
by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023,
of the Company and our report dated February 16, 2024, expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of consolidated financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
consolidated financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 16, 2024
Citizens Financial Group, Inc. | 83
CONSOLIDATED BALANCE SHEETS
December 31,
2023
2022
(dollars in millions, except par value)
ASSETS:
Cash and due from banks(1)
Interest-bearing cash and due from banks
Interest-bearing deposits in banks(1)
Debt securities available for sale, at fair value (including $110 and $270 pledged to creditors,
respectively)(2)
Debt securities held to maturity (fair value of $8,350 and $9,042, respectively, and including
$204 and $110 pledged to creditors, respectively)(2)
Loans held for sale, at fair value
Other loans held for sale
Loans and leases
Less: Allowance for loan and lease losses
Net loans and leases(1)
Derivative assets
Premises and equipment, net
Bank-owned life insurance
Goodwill
Other intangible assets(3)
Other assets(1)
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing
Interest-bearing
Total deposits
Short-term borrowed funds
Derivative liabilities
Long-term borrowed funds(1)
Other liabilities(1)
TOTAL LIABILITIES
Commitments and Contingencies (refer to Note 19)
STOCKHOLDERS’ EQUITY:
Preferred Stock:
$1,794
9,834
405
29,777
9,184
676
103
145,959
(2,098)
143,861
440
895
3,291
8,188
157
13,359
$221,964
$37,107
140,235
177,342
505
1,562
13,467
4,746
197,622
$1,489
9,058
303
24,007
9,834
774
208
156,662
(1,983)
154,679
842
844
3,236
8,173
197
13,089
$226,733
$49,283
131,441
180,724
3
1,909
15,887
4,520
203,043
$25.00 par value,100,000,000 shares authorized; 2,050,000 shares issued and outstanding at
December 31, 2023 and 2022
2,014
2,014
Common stock:
$0.01 par value, 1,000,000,000 shares authorized; 647,829,720 shares issued and
466,418,055 shares outstanding at December 31, 2023 and 645,220,018 shares issued and
492,282,158 shares outstanding at December 31, 2022
Additional paid-in capital
Retained earnings
Treasury stock, at cost, 181,411,665 and 152,937,860 shares at December 31, 2023 and 2022,
respectively
Accumulated other comprehensive income (loss)
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
(1) Includes amounts in consolidated VIEs. See Note 11 for additional information.
(2) Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.
(3) Excludes MSRs, which are reported in Other assets.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
6
22,250
9,816
(5,986)
(3,758)
24,342
$221,964
6
22,142
9,159
(5,071)
(4,560)
23,690
$226,733
Citizens Financial Group, Inc. | 84
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
INTEREST INCOME:
Interest and fees on loans and leases
Interest and fees on loans held for sale
Interest and fees on other loans held for sale
Investment securities
Interest-bearing deposits in banks
Total interest income
INTEREST EXPENSE:
Deposits
Short-term borrowed funds
Long-term borrowed funds
Total interest expense
Net interest income
Provision (benefit) for credit losses
Net interest income after provision (benefit) for credit losses
NONINTEREST INCOME:
Service charges and fees
Capital markets fees
Card fees
Trust and investment services fees
Mortgage banking fees
Foreign exchange and derivative products
Letter of credit and loan fees
Securities gains, net
Other income
Total noninterest income
NONINTEREST EXPENSE:
Salaries and employee benefits
Equipment and software
Outside services
Occupancy
Other operating expense
Total noninterest expense
Income before income tax expense
Income tax expense
NET INCOME
Net income available to common stockholders
Weighted-average common shares outstanding:
Basic
Diluted
Per common share information:
Basic earnings
Diluted earnings
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Year Ended December 31,
2023
2022
2021
$8,489
$5,968
$4,253
73
29
1,162
451
67
57
840
128
82
13
487
16
10,204
7,060
4,851
3,145
43
775
3,963
6,241
687
5,554
410
319
296
259
242
183
168
28
78
651
23
374
1,048
6,012
474
5,538
420
368
273
249
261
188
159
9
82
160
1
178
339
4,512
(411)
4,923
409
428
250
239
434
120
156
10
89
1,983
2,009
2,135
2,599
2,549
2,132
756
687
492
973
5,507
2,030
422
$1,608
$1,491
648
700
410
585
4,892
2,655
582
$2,073
$1,960
610
595
333
411
4,081
2,977
658
$2,319
$2,206
475,089,384 475,959,815 425,669,451
476,693,148 477,803,142 427,435,818
$3.14
3.13
$4.12
4.10
$5.18
5.16
Citizens Financial Group, Inc. | 85
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
Net income
Other comprehensive income (loss):
Net unrealized derivative instruments gains (losses) arising during the periods, net of income
taxes of ($39), ($466) and ($17), respectively
Reclassification adjustment for net derivative (gains) losses included in net income, net of
income taxes of $161, $30 and ($34), respectively
Net unrealized debt securities gains (losses) arising during the periods, net of income taxes of
$119, ($868) and ($172), respectively
Reclassification of net debt securities (gains) losses to net income, net of income taxes of $28,
($2) and ($2), respectively
Employee benefit plans:
Year Ended December 31,
2023
2022
2021
$1,608
$2,073
$2,319
(106)
(1,340)
(49)
435
85
(101)
350
(2,608)
(528)
83
(7)
(8)
Actuarial gain (loss), net of income taxes of $15, ($15) and $19, respectively
28
(37)
Reclassification of actuarial (gain) loss to net income, net of income taxes of $5, $2 and $7,
respectively
12
12
55
26
Total other comprehensive income (loss), net of income taxes
Total comprehensive income (loss)
802
(3,895)
(605)
$2,410
($1,822)
$1,714
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 86
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(dollars and shares in millions)
Preferred Stock
Shares Amount
Common Stock Additional
Shares Amount
Paid-in
Capital
Retained
Earnings
Treasury
Stock, at
Cost
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance at January 1, 2021
2 $1,965
427
$6 $18,940 $6,445 ($4,623)
($60) $22,673
Dividends to common stockholders
Dividends to preferred stockholders
Preferred stock issued
Preferred stock redemption
Treasury stock purchased
Share-based compensation plans
Employee stock purchase plan
Total comprehensive income (loss):
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
—
—
—
—
—
—
—
—
—
—
—
—
296
(247)
—
—
—
—
—
—
—
—
—
—
(6)
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
43
22
(670)
(113)
—
(3)
—
—
—
—
—
—
2,319
—
2,319
—
—
—
—
(295)
—
—
—
—
—
—
—
—
—
—
—
—
(670)
(113)
296
(250)
(295)
43
22
—
2,319
(605)
(605)
(605)
1,714
Balance at December 31, 2021
2 $2,014
422
$6 $19,005 $7,978 ($4,918)
($665) $23,420
Dividends to common stockholders
Dividends to preferred stockholders
Issuance of common stock - business
acquisition
Treasury stock purchased
Share-based compensation plans
Employee stock purchase plan
Total comprehensive income (loss):
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
72
(4)
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(779)
(113)
3,036
—
77
24
—
—
—
—
—
—
—
2,073
—
2,073
—
—
—
(153)
—
—
—
—
—
—
—
—
—
—
—
(779)
(113)
3,036
(153)
77
24
—
2,073
(3,895)
(3,895)
(3,895)
(1,822)
Balance at December 31, 2022
2 $2,014
492
$6 $22,142 $9,159 ($5,071)
($4,560) $23,690
Dividends to common stockholders
Dividends to preferred stockholders
Treasury stock purchased
Share repurchase excise tax
Share-based compensation plans
Employee stock purchase plan
Cumulative effect of change in
accounting principle
Total comprehensive income (loss):
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(29)
—
2
1
—
—
—
—
—
—
—
—
—
—
81
27
(808)
(117)
—
—
—
—
—
—
(906)
(9)
—
—
—
—
—
—
—
—
(808)
(117)
(906)
(9)
81
27
—
—
—
(26)
—
—
(26)
—
—
—
—
—
—
—
—
—
1,608
—
1,608
—
—
—
—
1,608
802
802
802
2,410
Balance at December 31, 2023
2 $2,014
466
$6 $22,250 $9,816 ($5,986)
($3,758) $24,342
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 87
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net change in cash due to operating activities:
Provision (benefit) for credit losses
Net change in loans held for sale, at fair value
Depreciation, amortization and accretion
Deferred income tax expense (benefit)
Share-based compensation
Net gain on sale of assets
Net (increase) decrease in other assets
Net increase (decrease) in other liabilities
Net change due to operating activities
INVESTING ACTIVITIES
Investment securities:
Purchases of debt securities available for sale
Proceeds from maturities and paydowns of debt securities available for sale
Proceeds from sales of debt securities available for sale
Proceeds from maturities and paydowns of debt securities held to maturity
Net (increase) decrease in interest-bearing deposits in banks
Acquisitions, net of cash acquired(1)
Purchases of loans
Sales of loans
Net (increase) decrease in loans and leases
Capital expenditures, net
Purchases of bank-owned life insurance
Other
Net change due to investing activities
FINANCING ACTIVITIES
Net increase (decrease) in deposits
Net increase (decrease) in short-term borrowed funds
Proceeds from issuance of long-term borrowed funds
Repayments of long-term borrowed funds
Treasury stock purchased
Net proceeds from issuance of preferred stock
Redemption of preferred stock
Dividends paid to common stockholders
Dividends paid to preferred stockholders
Premium paid to exchange debt
Other
Net change due to financing activities
Net change in cash and cash equivalents(2)
Cash and cash equivalents at beginning of period(2)
Cash and cash equivalents at end of period(2)
Year Ended December 31,
2023
2022
2021
$1,608
$2,073
$2,319
687
98
478
(242)
87
(28)
612
474
(411)
1,733
1,085
565
57
84
(9)
625
(429)
59
(11)
(1,894)
(1,719)
(339)
2,961
1,036
4,119
757
2,275
(10,087)
(10,776)
(12,406)
2,001
2,941
761
(102)
—
—
3,422
1,178
1,035
13
(255)
7,810
790
1,006
(10)
(165)
(1,007)
(3,778)
2,793
2,677
934
7,174
(7,927)
(3,177)
(172)
—
(61)
(126)
(100)
(771)
(124)
(1,050)
(316)
5,248
(12,637)
(10,486)
(3,382)
6,146
7,197
502
(95)
(154)
25,983
24,617
—
(28,418)
(19,691)
(1,352)
(906)
(153)
—
—
(808)
(120)
—
21
—
—
(779)
(113)
—
(25)
(295)
296
(250)
(670)
(113)
(1)
(22)
(7,128)
9,907
4,636
1,081
1,389
(3,575)
10,547
9,158
12,733
$11,628 $10,547
$9,158
Citizens Financial Group, Inc. | 88
(dollars in millions)
Supplemental disclosures:
Interest paid
Income taxes paid
Non-cash items:
Transfer of loans from portfolio to LHFS
Transfer of securities from AFS to HTM
Loans securitized and transferred to securities AFS
Investors Acquisition:
Fair value of assets acquired, excluding cash and cash equivalents
Goodwill and other intangible assets
Fair value of liabilities assumed
Common stock issued
Replacement equity awards
Year Ended December 31,
2023
2022
2021
$3,640
375
$989
183
$347
1,247
$2,617
$—
—
8,563
103
143
—
—
—
—
—
27,113
992
24,982
3,036
19
$—
—
260
—
—
—
—
—
(1) Primarily includes cash paid of $355 million to acquire Investors less $287 million in cash acquired, and $143 million and $23 million of cash paid for the HSBC
transaction and acquisition of DH Capital, LLC, respectively, for the year ended December 31, 2022.
(2) Cash and cash equivalents include cash and due from banks and interest-bearing cash and due from banks as reflected on the Consolidated Balance Sheets.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is a regional bank holding company organized under Delaware law and headquartered in
Providence, Rhode Island. Through its bank subsidiary, CBNA, the Company provides a broad range of retail and
commercial banking products and services to individuals, small businesses, middle-market companies, large
corporations and institutions. The Company’s retail branch network is primarily located in the New England, Mid-
Atlantic and Midwest regions, with certain lines of business serving national markets.
Basis of Presentation
The Consolidated Financial Statements include the accounts of Citizens and its subsidiaries, including
VIEs in which Citizens is a primary beneficiary, and are presented in accordance with GAAP. Investments in VIEs
in which the Company does not have the ability to exercise significant influence are not consolidated. All
intercompany transactions and balances have been eliminated in consolidation.
During the third quarter of 2023, the Company’s indirect auto and certain purchased consumer loan
portfolios were transferred from the Consumer Banking segment into a new Non-Core segment to reflect the
manner in which management is currently assessing performance and allocating resources. Prior period results
have been revised to conform to the new segment presentation. See Note 26 for additional information.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. Material estimates that are particularly susceptible to
significant change include the determination of the ACL, fair value measurements and the evaluation and
measurement of goodwill impairment.
Significant Accounting Policies
The following table identifies the Company’s significant accounting policies and the Note and Page where
a detailed description of each policy can be found.
Note
Page
Cash and Due From Banks
Securities
Loans and Leases
Allowance for Credit Losses and FDMs
Premises, Equipment and Software
Mortgage Servicing Rights
Leases
Goodwill and Intangible Assets
Variable Interest Entities
Derivative Instruments
Employee Benefits
Treasury Stock
Employee Share-Based Compensation
Fair Value Measurement
Revenue Recognition
Income Taxes
Earnings Per Share
3
4
5
6
7
8
9
10
11
14
15
17
18
20
21
23
24
96
96
100
102
116
117
118
120
121
126
129
132
133
136
142
144
147
Citizens Financial Group, Inc. | 90
Accounting Pronouncements Adopted in 2023
Pronouncement
Troubled Debt Restructurings
and Vintage Disclosures
Issued March 2022
Fair Value Hedging - Portfolio
Layer Method
Issued March 2022
Accounting for Investments in
Tax Credit Structures Using the
Proportional Amortization
Method
Issued March 2023
Summary of Guidance
Effects on Financial Statements
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Effective date: January 1, 2023.
Eliminates the separate recognition and
measurement guidance for TDRs.
Requires evaluation of all modifications to
borrowers experiencing financial difficulty (or
FDMs) to determine whether the modification
results in a new loan or continuation of an
existing loan.
Requires expected credit losses measured
under a discounted cash flow method to be
determined using an effective interest rate
based on the modified (not original)
contractual terms of the loan.
Enhances disclosures by creditors for
modifications of receivables from borrowers
experiencing financial difficulty in the form of
principal forgiveness, an interest rate
reduction, an other-than-insignificant payment
delay or a term extension.
Requires disclosure of current period gross
charge-offs by vintage year for loans and net
investments in leases.
Transition is prospective, with an option to
adopt the recognition and measurement
guidance for TDRs on a modified retrospective
basis, resulting in a cumulative-effect
adjustment to retained earnings in the period
of adoption.
Effective date: January 1, 2023.
Replaces the ‘last-of-layer’ method.
Allows the designation of multiple layers in a
closed portfolio of financial assets.
Permits hedging of non-prepayable and
prepayable assets.
Prohibits the consideration of basis
adjustments when measuring expected credit
losses of assets in the closed portfolio or
determining whether an AFS security is
impaired.
The guidance on hedging multiple layers in a
closed portfolio is applied prospectively. The
guidance on the accounting for fair value basis
adjustments is applied on a modified
retrospective basis.
Effective date: January 1, 2024.
Permits use of the proportional amortization
method of accounting for all tax equity
investments provided that certain conditions
are met.
Proportional amortization method is elected on
a tax-credit-program-by-tax-credit-program
basis.
Permits adoption under the modified
retrospective method or retrospective method
through a cumulative-effect adjustment to
retained earnings as of the beginning of the
current period or first period presented,
respectively. Early adoption is permitted.
The Company adopted the new
standard on January 1, 2023, and
elected to apply the new
measurement and recognition
guidance for legacy TDRs under the
modified retrospective transition
method.
Adoption did not have a material
impact on the Company’s
Consolidated Financial Statements.
Required disclosures and discussion
of significant accounting policies for
modifications to borrowers
experiencing financial difficulty are
included in Note 6.
The Company adopted the new
standard on January 1, 2023.
Adoption did not have a material
impact on the Company’s
Consolidated Financial Statements.
The Company adopted the new
standard on January 1, 2023 for
renewable energy and new markets
tax credit investments under the
modified retrospective approach.
Adoption resulted in a cumulative-
effect reduction of $26 million, net
of taxes, to retained earnings and a
corresponding reduction to other
assets of $101 million and other
liabilities of $75 million, reflecting
the elimination of deferred tax
liabilities associated with renewable
energy investments that qualify for
the proportional amortization
method of accounting.
•
Refer to Note 11 for additional
information.
Citizens Financial Group, Inc. | 91
NOTE 2 - ACQUISITIONS
Acquisition of HSBC
On February 18, 2022, CBNA closed on its HSBC transaction, which included 66 branches in the New York
City metropolitan area, 9 branches in the Mid-Atlantic/Washington D.C. area, and 5 branches in Southeast
Florida. The acquired liabilities and assets included approximately $6.3 billion in deposits and $1.5 billion in
loans. The transaction resulted in an increase to goodwill of $120 million, which was allocated to the Consumer
business segment as of December 31, 2022.
The impact of the HSBC transaction, along with supplemental pro forma information as if the HSBC
transaction had occurred on January 1, 2021, are not material to the Company’s Consolidated Statements of
Operations.
The HSBC transaction was accounted for as a business combination. Accordingly, the assets acquired and
liabilities assumed from HSBC were recorded at fair value as of the transaction date. The determination of fair
value requires management to make estimates about discount rates, future expected cash flows, market
conditions and other future events that are highly subjective in nature and are subject to change. The fair value
of the assets acquired and liabilities assumed from HSBC were deemed final as of June 30, 2022 and are not
material to the Company’s Consolidated Balance Sheet.
Investors Acquisition
On April 6, 2022, Citizens completed its Investors acquisition pursuant to an agreement and plan of
merger entered into on July 28, 2021. Pursuant to the terms of the agreement, Investors merged with Citizens,
with Citizens as the surviving corporation, and Investors Bank, a New Jersey state-chartered bank and wholly-
owned subsidiary of Investors, merged with CBNA, with CBNA as the surviving bank. The Investors acquisition
built Citizens’ physical presence in the Mid-Atlantic region with the addition of 154 branches located in the
greater New York City and Philadelphia metropolitan areas and across New Jersey.
Upon closing of the acquisition, each share of Investors common stock was converted into 0.297 of a
share of the Company’s common stock. This conversion, coupled with the conversion of equity awards noted
below under “Share-Based Compensation Activity”, resulted in an increase of approximately 73.6 million basic
and diluted shares. The Company also paid $1.46 in cash to shareholders of Investors for each share they owned.
The Investors acquisition was accounted for as a business combination. Accordingly, the assets acquired
and liabilities assumed from Investors were recorded at fair value as of the closing date. The determination of
fair value requires management to make estimates about discount rates, future expected cash flows, market
conditions and other future events that are highly subjective in nature and are subject to change. Fair value
estimates related to the assets acquired and liabilities assumed from Investors were subject to adjustment for up
to one year after the closing date as new information was obtained about facts and circumstances that existed as
of the closing date that, if known, would have affected the measurement of the amounts recognized as of that
date.
Share-Based Compensation Activity
Under the terms of the merger agreement with Investors, stock options and restricted shares granted by
Investors that were outstanding as of April 6, 2022 were converted into CFG awards and remained subject to
their original terms and conditions. Citizens issued 1,151,301 stock options and 259,316 restricted shares in
connection with the transaction.
Citizens Financial Group, Inc. | 92
The following table includes an allocation of the consideration paid for the fair value of the identifiable
tangible and intangible assets acquired and liabilities assumed from Investors:
(dollars in millions, except per share data)
Consideration
CFG common shares issued
CFG share price on April 6, 2022
Fair value of consideration for outstanding common stock
Cash paid
Consideration related to equity awards
Fair value of merger consideration
Assets acquired
Cash and equivalents
Investment securities
Loans held for sale
Net loans and leases
Premises and equipment
Core deposit intangible and other intangible assets
Other assets(1)
Total assets acquired
Liabilities assumed
Deposits
Borrowed funds
Other liabilities(1)
Total liabilities assumed
Less: Net assets
Goodwill(1)
(1) Reflects purchase accounting adjustments made during 2023.
April 6, 2022
72,148,855
$42.08
$3,036
355
19
3,410
287
3,826
2,162
20,139
62
119
919
27,514
20,217
4,097
677
24,991
2,523
$887
Goodwill of $887 million recorded in connection with the acquisition resulted from the expected
synergies, operational efficiencies and expertise of Investors. The amount of goodwill recorded reflected the
increased market share and related synergies that resulted from the acquisition, and represents the excess
purchase price over the estimated fair value of the net assets acquired from Investors. The goodwill was
allocated to the Company’s Commercial Banking and Consumer Banking business operating segments and is not
deductible for income tax purposes.
Intangible assets from the Investors acquisition consisted of core deposits and naming rights. For
additional information regarding the Company’s goodwill and intangible assets see Note 10.
The following table includes the fair value and unpaid principal balance of the loans acquired from
Investors:
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Other retail
Total retail
Net loans and leases
April 6, 2022
Unpaid Principal
Balance
Fair Value
$3,021
13,310
9
16,340
3,949
267
4
4,220
$20,560
$2,899
13,065
9
15,973
3,889
273
4
4,166
$20,139
Citizens Financial Group, Inc. | 93
Fair value as of April 6, 2022 reflected a credit mark of $101 million on PCD funded loans recorded
through purchase accounting, and an accretable discount of $320 million comprised of $179 million in interest
rate mark and $141 million in non-PCD credit mark.
The following is a description of the methods used to determine the fair value of significant assets and
liabilities:
Cash and Equivalents
The carrying amount of cash and cash equivalents is a reasonable estimate of fair value based on the
short-term nature of these assets.
Investment Securities
Fair value estimates for AFS securities were determined by third-party pricing vendors. The third-party
vendors use a variety of methods when pricing securities that incorporate relevant market data to arrive at an
estimate of what a buyer in the marketplace would pay for a security under current market conditions. These
methods include the use of quoted prices for an identical or similar security and an alternative market-based or
income approach like the discounted cash flow pricing model. Substantially all of the investment securities
acquired in connection with the Investors acquisition were sold subsequent to closing to align with Citizens’
portfolio management strategy.
Loans held for sale
Loans held for sale are valued based on quoted market prices, where available, prices for other traded
loans with similar characteristics, and purchase commitments and bid information from market participants. The
prices are adjusted as necessary to take into consideration the specific characteristics of certain loans that are
priced based on the pricing of similar loans.
Loans and Leases
Fair values for loans and leases are based on a discounted cash flow methodology that considered factors
including type of loan and lease and related collateral, fixed or variable interest rate, term, amortization status,
credit loss and prepayment expectations, market interest rates and other market factors (e.g., liquidity) from
the perspective of a market participant. Loans and leases were grouped together according to similar
characteristics when applying various valuation techniques. The discount rates used are based on current market
rates for new originations of comparable loans and leases and include adjustments for liquidity. The probability
of default, loss given default, exposure at default and prepayment assumptions are the key factors driving credit
losses which are embedded into the estimated cash flows.
Premises and Equipment
Fair value of premises is based on a market approach using third-party appraisals and broker opinions of
value for land, office and branch space.
Core Deposit Intangible
Fair value of core deposit intangible represents the value of certain client deposit relationships,
estimated utilizing the favorable source of funds method. Appropriate consideration was given to deposit costs
including servicing costs, client retention and alternative funding source costs at the time of acquisition. The
discount rate used was derived taking into account the estimated cost of equity, risk-free return rate and risk
premium for the market, and specific risk related to the asset’s cash flows. The core deposit intangible is being
amortized over 10 years using an accelerated depreciation methodology.
Deposits
Fair value of time deposits was estimated by discounting contractual cash flows using current market
rates for instruments with similar maturities. For deposits with no defined maturity, carrying value approximates
fair value.
Borrowed Funds
The fair value of borrowed funds was estimated using a discounted cash flow methodology based on
current incremental borrowing rates for similar types of instruments.
Citizens Financial Group, Inc. | 94
The following table presents the financial results of Investors from the date of acquisition through
December 31, 2022. Investors was fully integrated into the Company’s processes and systems during the first
quarter of 2023; therefore, standalone financial results for Investors are no longer available.
(dollars in millions)
Net interest income
Noninterest income
Net income
April 6, 2022 through
December 31, 2022
$627
37
287
The following table presents unaudited supplemental pro forma financial information as if the Investors
acquisition had occurred on January 1, 2021 and includes the impact of (i) amortizing and accreting fair value
adjustments associated with loans and leases, (ii) the amortization of recognized intangible assets and the
elimination of Investors’ historical amortization of these assets, (iii) the elimination of Investors’ historical
accretion and amortization of deferred fees and costs on loans and leases, (iv) the elimination of Investors’
historical accretion and amortization of discounts and premiums on loans and leases, debt securities and long-
term borrowed funds and (v) the related estimated income tax effects. The pro forma financial information does
not necessarily reflect the results that would have occurred had Citizens acquired Investors on January 1, 2021.
(dollars in millions)
Net interest income
Year Ended
December 31,
2022
2021
$6,226
$5,342
Noninterest income
Net income(1)
(1) Excludes the acceleration of one-time executive compensation and Employee Stock Ownership Plan expenses of $122 million incurred by Investors in the first
2,055
2,408
2,168
2,376
quarter of 2022.
In addition, the supplemental pro forma financial information includes non-recurring acquisition-related
costs of $335 million incurred during the year ended December 31, 2022, as summarized in the following table.
These costs, along with the $13 million incurred during 2021, are included in the first quarter of 2021 for the
purpose of reporting supplemental pro forma financial information presented above.
(dollars in millions)
Provision for credit losses(1)
Salaries and employee benefits(2)
Outside services(3)
Mark-to-market losses on LHFS portfolio(4)
Other operating expense
Total acquisition-related costs
Year Ended
December 31, 2022
$145
83
61
31
15
$335
(1) Represents the initial provision for credit losses also recognized through a fair value mark as required by purchase accounting.
(2) Comprised primarily of severance and employee retention costs.
(3) Comprised primarily of technology, legal, advisory, and other professional related fees.
(4) Represents mark-to-market losses on loans acquired from Investors classified as LHFS.
Under CECL, the Company is required to determine whether purchased loans held for investment have
experienced more-than-insignificant deterioration in credit quality since origination. A variety of factors are
considered in connection with the identification of more-than-insignificant deterioration in credit quality
including, but not limited to, nonperforming status, delinquency, risk ratings, TDR classification, FICO scores and
other qualitative factors. The amortized cost of a PCD loan is initially measured by adding the acquisition date
estimate of expected credit losses to the loan's purchase price. The initial ALLL for PCD loans of $101 million was
established through an adjustment to the Investors loan balance and related purchase accounting mark. Non-PCD
loans and PCD loans had a fair value of $15.6 billion and $4.5 billion at the acquisition date and unpaid principal
balance of $15.9 billion and $4.7 billion, respectively. In accordance with U.S. GAAP there was no carryover of
the ACL that was previously recorded by Investors. Subsequent to the acquisition, an ACL on non-PCD loans of
$145 million was recorded through provision expense for credit losses.
Citizens Financial Group, Inc. | 95
The following table presents PCD loan activity at the date of acquisition:
(dollars in millions)
Principal balance
ALLL at acquisition
Non-credit discount
Purchase price
April 6, 2022
$4,685
(101)
(72)
$4,512
NOTE 3 - CASH AND DUE FROM BANKS
For the purpose of reporting cash flows, cash and cash equivalents have original maturities of three
months or less and include cash and due from banks and interest-bearing cash and due from banks. The Company
had no material restrictions on the use or availability of its cash as of December 31, 2023 or 2022.
NOTE 4 - SECURITIES
Investments include debt, equity and other securities. Citizens classifies debt securities as AFS, HTM, or
trading based on management’s intent to hold to maturity at the time of purchase. Management reserves the
right to change the initial classification of a security based on its intent to hold to maturity or as permitted by
periodic changes in accounting guidance. Equity securities are recorded at fair value or at cost if there is not a
readily determinable fair value.
Debt securities that will be held for indefinite periods of time and may be sold in response to changes in
interest rates or prepayment risk, among other factors, are classified as AFS and reported at fair value, with
unrealized gains and losses, net of taxes, reported in AOCI as a separate component of stockholders’ equity.
Gains and losses on the sale of AFS securities are recognized in noninterest income in the Consolidated
Statements of Operations and are computed using the specific identification method.
Debt securities for which the Company has the ability and intent to hold to maturity are classified as HTM
and reported at amortized cost. Transfers of debt securities to the HTM classification are recognized at fair value
at the date of transfer.
Interest income for AFS and HTM debt securities is recorded on the accrual basis including the
amortization of premiums and the accretion of discounts utilizing the effective interest method over the
estimated lives of the individual securities. Citizens uses actual prepayment experience and estimates of future
prepayments to determine the constant effective yield necessary to apply the effective interest method of
income recognition. Estimates of future prepayments are based on the underlying collateral characteristics of
each security and are derived from market sources. Judgment is involved in making determinations about
prepayment expectations and in changing those expectations in response to changes in interest rates and
macroeconomic conditions. The amortization of premiums and the accretion of discounts associated with
mortgage-backed securities may be significantly impacted by changes in prepayment assumptions.
Securities classified as trading are held principally for sale in the near-term and carried at fair value,
with changes in fair value recognized in earnings. Realized and unrealized gains and losses on such securities are
reported in noninterest income in the Consolidated Statements of Operations.
Equity securities primarily consist of FHLB and FRB stock carried at cost and money market mutual fund
investments held by the Company’s broker-dealers carried at fair value with changes in fair value recognized in
noninterest income. Equity securities are recorded in other assets on the Consolidated Balance Sheets, with those
carried at cost reviewed at least annually for impairment. Valuation adjustments, to the extent necessary, are
reported in noninterest income in the Consolidated Statements of Operations.
Citizens Financial Group, Inc. | 96
The following table presents the major components of securities at amortized cost and fair value:
(dollars in millions)
U.S. Treasury and other
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government
sponsored entities
Other/non-agency
Total mortgage-backed
securities
Collateralized loan obligations
Total debt securities available for sale,
at fair value
Mortgage-backed securities:
Federal agencies and U.S. government
sponsored entities
Total mortgage-backed securities
Asset-backed securities
December 31, 2023
December 31, 2022
Amortized
Cost(1)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$4,493
$26
($139) $4,380
$3,678
1
—
—
1
2
$1
—
($193) $3,486
—
2
26,289
279
26,568
667
45
—
45
—
(1,857) 24,477
21,250
(24)
255
280
(1,881) 24,732
(3)
664
21,530
1,248
10
—
10
—
(2,198) 19,062
(29)
251
(2,227) 19,313
(42)
1,206
$31,729
$71
($2,023) $29,777
$26,458
$11
($2,462) $24,007
$8,696
8,696
488
$9
9
—
($818) $7,887
(818)
7,887
(25)
463
$9,253
9,253
581
$4
4
—
($751) $8,506
(751)
8,506
(45)
536
Total debt securities held to maturity
Equity securities, at cost(2)
Equity securities, at fair value(2)
(1) Excludes portfolio level basis adjustments of $60 million for securities designated in active fair value hedge relationships. The basis adjustments represent a
($796) $9,042
($843) $8,350
$— $1,058
$9,834
$1,058
$9,184
$869
153
173
$869
$—
$—
$—
$9
$4
173
153
—
—
—
—
reduction to the amortized cost of the securities being hedged.
(2) Included in other assets in the Consolidated Balance Sheets.
Accrued interest receivable on debt securities totaled $125 million and $107 million as of December 31,
2023 and 2022, respectively, and is included in other assets in the Consolidated Balance Sheets.
Citizens Financial Group, Inc. | 97
The following table presents the amortized cost and fair value of debt securities by contractual maturity
as of December 31, 2023. Expected maturities may differ from contractual maturities because issuers may have
the right to call or prepay obligations with or without incurring penalties.
(dollars in millions)
Amortized cost:
U.S. Treasury and other
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Other/non-agency
Collateralized loan obligations
Total debt securities available for sale
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Asset-backed securities
Total debt securities held to maturity
Total amortized cost of debt securities
Fair value:
U.S. Treasury and other
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Other/non-agency
Collateralized loan obligations
Total debt securities available for sale
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities
Asset-backed securities
Total debt securities held to maturity
Total fair value of debt securities
Distribution of Maturities
After 1
Year
through 5
Years
1 Year
or Less
After 5
Years
through 10
Years
After 10
Years
Total
$—
—
—
—
—
—
—
—
—
$3,015
$1,478
$—
$4,493
—
—
1
1
1,599
2,157
22,533
26,289
—
—
—
100
279
567
279
667
4,614
3,735
23,380
31,729
—
488
488
—
—
—
8,696
8,696
—
488
8,696
9,184
$—
$5,102
$3,735
$32,076 $40,913
$—
—
—
—
—
—
—
—
—
$2,906
$1,474
$—
$4,380
—
—
1
1
1,539
2,049
20,889
24,477
—
—
—
100
255
564
255
664
4,445
3,623
21,709
29,777
—
463
463
—
—
—
7,887
7,887
—
463
7,887
8,350
$—
$4,908
$3,623
$29,596 $38,127
Taxable interest income from investment securities as presented in the Consolidated Statements of
Operations was $1.2 billion, $840 million and $487 million for the years ended December 31, 2023, 2022 and
2021, respectively.
The following table presents realized gains and losses on sale of securities:
(dollars in millions)
Gains
Losses
Securities gains, net
Year Ended December 31,
2023
2022
2021
$36
$13
(8)
(4)
$28
$9
$15
(5)
$10
Citizens Financial Group, Inc. | 98
The following table presents the amortized cost and fair value of debt securities pledged:
(dollars in millions)
Pledged against derivatives, to qualify for fiduciary powers, or to secure public and
other deposits as required by law
Pledged as collateral for FHLB borrowing capacity
Pledged against repurchase agreements
December 31, 2023
December 31, 2022
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
$5,619
$5,305
$3,966
$3,527
242
—
220
—
244
—
217
—
The Company regularly enters into security repurchase agreements with unrelated counterparties, which
involves the transfer of a security from one party to another, and a subsequent transfer of substantially the same
security back to the original party. These repurchase agreements are typically short-term in nature and are
accounted for as secured borrowed funds in the Company’s Consolidated Balance Sheets. The Company
recognized no offsetting of short-term receivables or payables as of December 31, 2023 or 2022.
Securitizations of mortgage loans retained in the investment portfolio for the years ended December 31,
2023 and 2022 were $102 million and $143 million, respectively. These securitizations include a substantive
guarantee by a third party. The guarantors were FNMA and FHLMC in 2023 and 2022. The debt securities received
from the guarantors are classified as AFS.
Impairment
Upon purchase of HTM investment securities and at each subsequent measurement date, Citizens is
required to evaluate the securities for risk of loss over their life and, if necessary, establish an associated
reserve. Recognition of a reserve for expected credit losses is not required if the amount the Company expects to
realize is zero (commonly referred to as “zero expected credit losses”). The Company evaluated its existing HTM
portfolio as of December 31, 2023 and concluded that 95% of HTM securities met the zero expected credit loss
criteria and, therefore, no ACL was recognized. Lifetime expected credit losses on the remainder of the HTM
portfolio were determined to be insignificant based on the modeling of the Company’s credit loss position in the
securities. The Company monitors the credit exposure through the use of credit quality indicators. For these
securities, the Company uses external credit ratings or an internally derived credit rating when an external rating
is not available. All securities were determined to be investment grade at December 31, 2023.
Citizens reviews its AFS debt securities for impairment at the individual security level on a quarterly
basis, or more frequently if a potential loss triggering event occurs. The initial indicator of impairment for AFS
debt securities is a decline in fair value below its amortized cost basis. The Company recognizes an impairment
loss for any security that has declined in fair value below its amortized cost basis if management has the intent
to sell the security or if it is more likely than not it will be required to sell the security before recovery of its
amortized cost basis.
Estimating the recovery of the amortized cost basis of a debt security is based on an assessment of the
cash flows expected to be collected. If the present value of the cash flows expected to be collected, discounted
at the security’s original effective yield, is less than the amortized cost basis, impairment equal to the shortfall
in cash flows has occurred and Citizens must evaluate whether any impairment is attributable to credit-related
factors. If credit-related factors exist, a credit-related impairment has occurred regardless of the Company’s
intent to hold the security until it recovers.
The credit-related portion of impairment is recognized as provision expense through the establishment of
an allowance for AFS securities, to the extent the allowance does not reduce the carrying value of the AFS
security below its current fair value. The remaining non-credit related portion of impairment is recognized in
OCI. Improvement in credit losses in subsequent periods results in a reversal of the allowance for AFS securities
and a corresponding decrease to provision expense, to the extent the allowance does not become negative.
Accrued interest receivable on AFS debt securities is excluded from the balances used to calculate the allowance
for AFS securities. All accrued and uncollected interest is immediately reversed against interest income when it is
deemed uncollectible.
Citizens Financial Group, Inc. | 99
The following tables present AFS debt securities with fair values below their respective carrying values,
separated by the duration the securities have been in a continuous unrealized loss position:
(dollars in millions)
U.S. Treasury and other
Mortgage-backed securities:
December 31, 2023
Less than 12 Months
12 Months or Longer
Total
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
$49
$—
$3,245
($139)
$3,294
($139)
Federal agencies and U.S. government sponsored entities
2,939
(24)
16,398
(1,833)
19,337
(1,857)
Other/non-agency
Total mortgage-backed securities
Collateralized loan obligations
Total
—
—
255
(24)
255
(24)
2,939
(24)
16,653
(1,857)
19,592
(1,881)
56
—
607
(3)
663
(3)
$3,044
($24) $20,505
($1,999) $23,549
($2,023)
(dollars in millions)
U.S. Treasury and other
Mortgage-backed securities:
December 31, 2022
Less than 12 Months
12 Months or Longer
Total
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
$3,356
($193)
$—
$—
$3,356
($193)
Federal agencies and U.S. government sponsored entities
13,353
(1,136)
5,042
(1,062)
18,395
(2,198)
Other/non-agency
Total mortgage-backed securities
Collateralized loan obligations
80
(8)
171
(21)
251
(29)
13,433
(1,144)
5,213
(1,083)
18,646
(2,227)
785
(26)
421
(16)
1,206
(42)
Total
$17,574
($1,363)
$5,634
($1,099) $23,208
($2,462)
Citizens does not currently have the intent to sell these debt securities, and it is not more likely than not
that the Company will be required to sell these debt securities prior to recovery of their amortized cost bases.
Citizens has determined that credit losses are not expected to be incurred on the AFS debt securities identified
with unrealized losses as of December 31, 2023. The unrealized losses on these debt securities reflect non-credit-
related factors driven by changes in interest rates. Therefore, the Company has determined that these debt
securities are not impaired.
NOTE 5 - LOANS AND LEASES
Loans are classified as held for investment when management has the intent and ability to hold the loan
for the foreseeable future, or until maturity or payoff. Loans held for investment are reported at the amount of
their outstanding principal, net of charge-offs, unearned income, deferred loan origination fees and costs, and
unamortized premiums and discounts on purchased loans. Deferred loan origination fees and costs and premiums
and discounts on purchased loans are amortized as an adjustment of yield over the life of the loan using the
effective interest method. Unamortized amounts that remain when a loan is prepaid or sold are recorded as
interest income or gain (loss) on sale, respectively. Credit card receivables include billed and uncollected
interest and fees.
Interest income on loans is determined using the effective interest method, which calculates periodic
interest income at a constant effective yield on the net investment in the loan, providing a constant rate of
return over the loan term. Loans accounted for using the fair value option are measured at fair value with
corresponding changes reported in mortgage banking fees for residential mortgage LHFS and in capital markets
fees for commercial LHFS in the Consolidated Statements of Operations.
Commitment fees for loans that are likely to be drawn down, along with other credit-related fees, are
deferred and recognized as an adjustment to the effective interest rate over the loan term. Commitment fees
are recognized over the commitment period on a straight-line basis if it is unlikely that a loan will be drawn down
and are reported in letter of credit and loan fees in the Consolidated Statements of Operations.
Loans and leases are disclosed in portfolio segments and classes. The Company’s loan and lease portfolio
segments are commercial and retail. The classes of loans and leases are: commercial and industrial, commercial
real estate, leases, residential mortgages, home equity, automobile, education and other retail.
Citizens Financial Group, Inc. | 100
The following table presents loans and leases, excluding LHFS:
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total loans and leases
December 31,
2023
2022
$43,826
$51,836
29,471
1,148
74,445
31,332
15,040
8,258
11,834
5,050
71,514
28,865
1,479
82,180
29,921
14,043
12,292
12,808
5,418
74,482
$145,959
$156,662
Accrued interest receivable on loans and leases held for investment totaled $875 million and $820 million
as of December 31, 2023 and 2022, respectively, and is included in other assets in the Consolidated Balance
Sheets.
Loans pledged as collateral for FHLB borrowing capacity, primarily residential mortgages and home
equity products, totaled $36.0 billion and $38.4 billion at December 31, 2023 and 2022, respectively. Loans
pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, were
primarily comprised of education, automobile, commercial and industrial, and commercial real estate loans, and
totaled $31.9 billion and $34.8 billion at December 31, 2023 and 2022, respectively.
Loans are classified as held for sale when management does not have the intent and ability to hold the
loan for the foreseeable future. LHFS for which the fair value option is not elected are carried at the lower of
amortized cost or fair value less costs to sell, with any write-downs or subsequent recoveries recognized in other
income in the Consolidated Statements of Operations. Citizens has elected to account for residential mortgage
LHFS and certain commercial LHFS at fair value. See Note 20 for additional information.
The following table presents the composition of LHFS:
(dollars in millions)
Loans held for sale at fair value
Other loans held for sale
December 31, 2023
December 31, 2022
Residential
Mortgages(1)
Commercial(2)
Total
Residential
Mortgages(1)
Commercial(2)
Total
$614
—
$62
103
$676
103
$666
—
$108
208
$774
208
(1) Residential mortgage LHFS are originated for sale.
(2) Commercial LHFS at fair value consist of loans managed by the Company’s commercial secondary loan desk. Other commercial LHFS primarily consist of loans
associated with the Company’s syndication business.
Citizens leases equipment for commercial use with a primary focus on middle-market and mid-corporate
clients for large capital equipment acquisitions including railcars, trucks and trailers, and other equipment. The
determination of whether an arrangement is a lease and the related lease classification are made at lease
inception. Lease terms predominantly range from three to ten years and may include options to purchase the
leased property prior to the end of the lease term. The Company does not have lease agreements that contain
both lease and non-lease components.
A lessee is evaluated from a credit perspective using the same underwriting standards and procedures for
a loan borrower. A lessee is expected to make rental payments based on its cash flows and the viability of its
operations. Leases are not typically evaluated as collateral-based transactions and, therefore, the lessee’s
overall financial strength is the most important credit evaluation factor.
Citizens Financial Group, Inc. | 101
The components of the net investment in direct financing and sales-type leases, before ALLL, are
presented below:
(dollars in millions)
Total future minimum lease rentals
Estimated residual value of leased equipment (non-guaranteed)
Initial direct costs
Unearned income
Total leases
December 31,
2023
December 31,
2022
$942
322
5
(121)
$1,193
413
5
(132)
$1,148
$1,479
Interest income on direct financing and sales-type leases for the years ended December 31, 2023, 2022
and 2021 was $46 million, $46 million and $49 million, respectively, and is reported within interest and fees on
loans and leases in the Consolidated Statements of Operations.
A maturity analysis of direct financing and sales-type lease receivables at December 31, 2023 is
presented below:
Year
2024
2025
2026
2027
2028
Thereafter
Total undiscounted future minimum lease rentals
NOTE 6 - CREDIT QUALITY AND THE ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses
(dollars in millions)
$258
213
156
133
84
98
$942
The Company’s estimate of expected credit losses in its loan and lease portfolios is recorded in the ACL
and considers extensive historical loss experience, including the impact of loss mitigation and restructuring
programs that the Company offers to borrowers experiencing financial difficulty, as well as projected loss
severity as a result of loan default. The ACL is maintained at a level the Company believes to be appropriate to
absorb expected lifetime credit losses over the contractual life of a loan or lease and on unfunded lending
commitments. The determination of the ACL is based on periodic evaluation of loan and lease portfolios and
unfunded lending commitments that are not unconditionally cancellable. A number of relevant underlying
factors, including key assumptions and the evaluation of quantitative and qualitative information, are
considered.
Key assumptions used in the ACL measurement process include the use of a two-year reasonable and
supportable economic forecast period followed by a one-year reversion period to historical credit loss
information. The evaluation of quantitative and qualitative information is performed by assessing groups of assets
that share similar risk characteristics and certain individual loans and leases that do not share similar risk
characteristics with the collective group. Loans are generally grouped by product type (e.g., commercial and
industrial, commercial real estate, residential mortgage), and significant loan portfolios are assessed for credit
losses using econometric models.
The quantitative evaluation of the adequacy of the ACL utilizes a single economic forecast as its
foundation and is primarily based on econometric models that use known or estimated data as of the balance
sheet date and forecasted data over the reasonable and supportable period. Known and estimated data include
current PD, LGD and EAD for commercial loans, timing and amount of expected draws for unfunded lending
commitments, FICO, LTV, and term for retail loans. The mix and level of loan balances, delinquency levels,
assigned risk ratings, previous loss experience, current business conditions, amount and timing of expected
future cash flows, and factors specific to commercial credits such as competition, business and management
performance are also considered. Forward-looking economic assumptions include real GDP, unemployment rate,
interest rate curve, and changes in collateral values. This data is accumulated to estimate expected credit losses
over the contractual life of the loans and leases, adjusted for expected prepayments. Historical information,
such as financial statements for commercial customers or consumer credit ratings, may not be as important to
estimating future expected losses as forecasted inputs to the models during volatile economic time periods.
Citizens Financial Group, Inc. | 102
The ACL may also be affected by a variety of qualitative factors that the Company considers that are not
measured in the statistical procedures including uncertainty related to economic forecasts, loan growth,
backtesting results, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons.
The qualitative allowance is further affected by sensitivity analysis for certain industry sectors or loan classes,
including CRE office.
The measurement process results in specific or pooled allowances for loans, leases and unfunded lending
commitments, and qualitative allowances that are determined and applied across the portfolio.
Certain loan portfolios don’t require an econometric model to calculate expected credit losses. For these
portfolios, approaches that are less data intensive and non-modeled are utilized to estimate credit losses as they
are considered more efficient and practical for portfolios that have outstanding balances that are not material
(e.g., runoff or closed portfolios, new products or products that are not significant to the Company’s overall
credit risk exposure).
Loans and leases that do not share similar risk characteristics are individually assessed for expected
credit losses. Nonaccrual commercial and industrial, and commercial real estate loans with an outstanding
balance of $5 million or greater are assessed on an individual loan level basis. Generally, measurement of the
ACL on an individual loan or lease is the present value of its future cash flows or the fair value of its underlying
collateral, if the loan or lease is collateral dependent.
A loan is considered to be collateral dependent when repayment of the loan is expected to be provided
substantially through the operation or sale of the underlying collateral, rather than by cash flows from the
borrower’s operations, income or other resources. Generally, this occurs when cash flows to repay the loan from
all other available sources, including guarantors, are expected to be no more than nominal. Loans that are
deemed to be collateral dependent are written down to the fair value, less costs to sell, as of the evaluation
date and are reassessed each subsequent period, which may result in an increase or decrease to the ACL based
on a corresponding change in the fair value of the collateral during the period. Any decrease to the ACL would be
limited to the total amount previously written off for a given loan or lease.
Collateral values for residential mortgage and home equity loans are based on appraisals, which are
updated every 90 days at a minimum, less estimated costs to sell. At December 31, 2023 and 2022, the Company
had collateral-dependent residential mortgage and home equity loans totaling $556 million and $561 million,
respectively.
Commercial loans are secured by various types of collateral, including real estate, inventory, equipment,
accounts receivable, securities and cash, among others. Collateral values are generally based on appraisals for
commercial real estate loans, which are updated based on management judgment on a case-by-case basis.
At December 31, 2023 and 2022, the Company had collateral-dependent commercial loans totaling $233
million and $21 million, respectively.
The amortized cost basis of mortgage loans collateralized by residential real estate for which formal
foreclosure proceedings were in-process was $336 million and $250 million as of December 31, 2023 and 2022,
respectively.
Expected recoveries are considered in management’s estimate of the ACL and may result in a reduction
to the ACL balance. A negative ACL for a collateral dependent loan exists if the fair value of the collateral
increases in a subsequent reporting period and cannot exceed the total amount previously charged off. Accrued
interest receivable on loans and leases is excluded from asset balances used to calculate the ACL.
The Company estimates expected credit losses associated with off-balance sheet financial instruments
such as standby letters of credit, financial guarantees and unfunded loan commitments that are not
unconditionally cancellable. Off-balance sheet financial instruments are subject to individual reviews and are
analyzed and segregated by risk according to the Company’s internal risk rating scale. These risk classifications,
in conjunction with historical loss experience, current and future economic conditions, timing and amount of
expected draws, and performance trends within specific portfolio segments, are considered to estimate the
allowance for unfunded lending commitments. The Company does not recognize a reserve for future draws from
credit lines that are unconditionally cancellable (e.g., credit cards).
The ALLL and the allowance for unfunded lending commitments are reported in the allowance for loan
and lease losses and other liabilities, respectively, in the Consolidated Balance Sheets . The provision for credit
losses related to loan and lease portfolios and unfunded lending commitments is reported in provision (benefit)
for credit losses in the Consolidated Statements of Operations.
Citizens Financial Group, Inc. | 103
Loan Charge-Offs
Commercial loans are charged-off when available information indicates that a loan, or portion thereof, is
determined to be uncollectible. The determination of whether to recognize a charge-off involves many factors,
including the prioritization of the Company’s claim in bankruptcy, workout/restructuring expectations of the loan
and valuation of the borrower’s equity or loan collateral.
Retail loans are generally fully charged-off or written down to the net realizable value of the underlying
collateral, with an offset to the ALLL, upon reaching specified stages of delinquency in accordance with
standards established by the FFIEC. Residential real estate, credit card and unsecured open-end loans are
generally charged-off in the month when the account becomes 180 days past due. Auto, education and unsecured
closed-end loans are generally charged off in the month when the account becomes 120 days past due. Certain
retail loans will be charged-off or written down to their net realizable value earlier in the following
circumstances:
•
•
FDMs that are determined to be collateral dependent.
Loans to borrowers who have experienced an event (e.g., bankruptcy) that suggests a loss is either known
or highly certain.
◦
◦
◦
Residential real estate and auto loans are written down to fair value less costs to sell within 60
days of receiving notification of the bankruptcy filing, unless repayment is likely to occur, or
when the loan subsequently becomes 60 days past due.
Credit card loans are fully charged-off within 60 days of receiving notification of the bankruptcy
filing or other event.
Education loans are generally charged-off when the loan becomes 60 days past due after
receiving notification of a bankruptcy.
•
Auto loans are written down to fair value less costs to sell upon repossession of the collateral.
The following table presents a summary of changes in the ACL for the year ended December 31, 2023:
(dollars in millions)
Allowance for loan and lease losses, beginning of period
Charge-offs
Recoveries
Net charge-offs
Provision expense (benefit) for loans and leases
Allowance for loan and lease losses, end of period
Allowance for unfunded lending commitments, beginning of period
Provision expense (benefit) for unfunded lending commitments
Allowance for unfunded lending commitments, end of period
Year Ended December 31, 2023
Commercial
Retail
Total
$1,060
$923
$1,983
(285)
18
(267)
457
1,250
207
(32)
175
(472)
130
(342)
267
848
50
(5)
45
(757)
148
(609)
724
2,098
257
(37)
220
Total allowance for credit losses, end of period
$1,425
$893
$2,318
During the year ended December 31, 2023, net charge-offs of $609 million and a provision for expected
credit losses of $687 million resulted in an increase of $78 million to the ACL.
Our ACL as of December 31, 2023 accounts for an economic forecast over our two-year reasonable and
supportable period with peak unemployment of approximately 5% and peak-to-trough GDP decline of
approximately 0.4%. This forecast reflects a mild recession over the two-year reasonable and supportable period.
Citizens Financial Group, Inc. | 104
The following tables present a summary of changes in the ACL for the years ended December 31, 2022
and 2021:
(dollars in millions)
Allowance for loan and lease losses, beginning of period
Allowance on PCD loans and leases at acquisition
Charge-offs(1)
Recoveries
Net charge-offs
Provision expense (benefit) for loans and leases(2)
Allowance for loan and lease losses, end of period
Allowance for unfunded lending commitments, beginning of period
Provision expense (benefit) for unfunded lending commitments
Allowance on PCD unfunded lending commitments at acquisition
Allowance for unfunded lending commitments, end of period
Year Ended December 31, 2022
Commercial
Retail
Total
$821
$937
$1,758
99
(70)
18
(52)
192
1,060
153
53
1
207
2
(364)
146
(218)
202
923
23
27
—
50
101
(434)
164
(270)
394
1,983
176
80
1
257
Total allowance for credit losses, end of period
$1,267
$973
$2,240
(1) Excludes $34 million of charge-offs previously taken by Investors or recognized upon completion of the Investors acquisition under purchase accounting for the
year ended December 31, 2022. The initial allowance for loan and lease losses on PCD assets included these amounts and, after charging these amounts off
upon acquisition, the net impact for PCD assets was $101 million of additional allowance for loan and lease losses.
(2) Includes $169 million of initial provision expense related to non-PCD loans and leases acquired from HSBC and Investors for the year ended December 31, 2022.
(dollars in millions)
Allowance for loan and lease losses, beginning of period
Charge-offs
Recoveries
Net charge-offs
Provision expense (benefit) for loans and leases
Allowance for loan and lease losses, end of period
Allowance for unfunded lending commitments, beginning of period
Provision expense (benefit) for unfunded lending commitments
Allowance for unfunded lending commitments, end of period
Total allowance for credit losses, end of period
Credit Quality Indicators
Year Ended December 31, 2021
Commercial
Retail
Total
$1,233
$1,210
$2,443
(218)
54
(164)
(248)
821
186
(33)
153
(321)
160
(161)
(112)
937
41
(18)
23
(539)
214
(325)
(360)
1,758
227
(51)
176
$974
$960
$1,934
The Company presents loan and lease portfolio segments and classes by credit quality indicator and
vintage year. Citizens defines the vintage date for the purpose of this disclosure as the date of the most recent
credit decision. Renewals are categorized as new credit decisions and reflect the renewal date as the vintage
date, except for renewals of loans modified for borrowers experiencing financial difficulty, or FDMs, which are
presented in the original vintage.
Citizens utilizes internal risk ratings to monitor credit quality for commercial loans and leases. These
ratings are assigned at loan origination and are periodically reevaluated utilizing a risk-based approach, annually
at a minimum, or any time management becomes aware of information affecting a borrower’s ability to fulfill
their obligations. The reevaluation process considers both quantitative and qualitative factors. The following
categories are utilized to develop the ACL:
•
•
•
•
Pass - includes obligations where the probability of default is considered low and repayment in full is
expected in accordance with the contractual loan terms;
Special Mention - includes obligations that have potential weakness that, if left uncorrected, may
result in deterioration of the Company’s credit position at some future date;
Substandard Accrual - includes obligations that have well-defined weaknesses that could hinder
normal repayment or collection of the debt, but are currently performing;
Nonaccrual - includes obligations where management has determined that full payment of principal
and interest is in doubt. For more information on nonaccrual loans and leases see “Nonaccrual and
Past Due Assets” below.
Citizens Financial Group, Inc. | 105
For commercial and industrial loans, the performance of the borrower is monitored in a disciplined and
regular manner based upon the level of credit risk inherent in the loan. To evaluate the level of credit risk, an
internal risk rating is assigned reflecting the borrower’s PD and LGD. This two-dimensional credit risk rating
methodology provides granularity in the risk monitoring process. These ratings are generally reviewed annually at
a minimum. The combination of the PD and LGD assigned ratings, which reflect credit quality characteristics as
of the reporting date and are used as inputs into the loss forecasting process, capture both the expectation of
default and loss severity in the event of default. Each loan is periodically reviewed by management based on the
amount of the lending arrangement and risk rating assessment, with priority given to those loans which are
perceived to be of higher risk, or loans for which credit quality is weakening (e.g., payment delinquency). Loans
are proactively managed by utilizing various procedures that are customized to the risk of a given loan, including
ongoing outreach to the borrower, assessment of the borrower’s financial condition and appraisal of the
collateral.
Credit risk associated with commercial real estate loans is managed similar to commercial and industrial
loans by evaluating PD and LGD. Risks associated with commercial real estate activities are typically correlated
to the loan structure, collateral location, project progress and business environment. As a result, these attributes
are monitored and utilized in assessing credit risk. Periodic reviews are also performed to assess market/
geographic risk and business unit/industry risk, which may result in increased scrutiny on loans that are perceived
to be of higher risk, had adverse changes in risk ratings and/or areas that concern management. These reviews
are designed to assess risk and facilitate actions to mitigate such risks.
Credit risk associated with leases is managed similar to commercial and industrial loans by evaluating PD
and LGD. Reviews are generally performed annually based upon the dollar amount of the lease and the level of
credit risk, and may be more frequent if circumstances warrant. The review process includes analysis of the
following factors: equipment value/residual value, exposure levels, jurisdiction risk, industry risk, guarantor
requirements, and regulatory compliance as applicable.
Commercial loans with renewal terms in the original contract are recognized as current year originations
upon renewal unless the loan automatically renewed without a new credit decision. Citizens generally reserves
the right to not renew the loan or lease until current underwriting is completed and approved.
Citizens Financial Group, Inc. | 106
—
8
—
—
—
8
—
—
—
—
—
—
—
121
24,486
1,992
2,516
477
29,471
164
1,072
31
42
3
1,148
—
61
66,000
—
3,188
11
4,483
6
774
The following table presents the amortized cost basis of commercial loans and leases by vintage date and
internal risk rating as of December 31, 2023, and gross charge-offs by vintage date for the year ended December
31, 2023:
(dollars in millions)
2023
2022
2021
2020
2019
Prior to
2019
Within the
Revolving
Period
Converted
to Term
Total
Term Loans by Origination Year
Revolving Loans
Commercial and industrial
Pass
Special Mention
Substandard Accrual
Nonaccrual
$3,599
$6,338
$5,049
$1,254
$1,085
$2,031
$21,033
$53
$40,442
59
5
1
194
175
72
354
325
51
29
212
4
48
121
5
113
284
102
368
792
53
—
1,165
11
1,925
6
294
Total commercial and industrial
3,664
6,779
5,779
1,499
1,259
2,530
22,246
70
43,826
Gross charge-offs
Commercial real estate
Pass
Special Mention
Substandard Accrual
Nonaccrual
1
3
34
4
1
34
44
1,906
5,791
6,062
2,555
2,294
3,895
1,975
—
—
1
713
277
66
539
203
2
222
469
23
183
528
144
260
939
238
75
100
3
Total commercial real estate
1,907
6,847
6,806
3,269
3,149
5,332
2,153
Gross charge-offs
Leases
Pass
Special Mention
Substandard Accrual
Nonaccrual
Total leases
Gross charge-offs
Total commercial
Pass
Special Mention
Substandard Accrual
Nonaccrual
Total commercial(1)
Gross charge-offs
—
95
—
3
—
98
—
—
—
56
174
27
14
—
215
—
282
1
12
3
298
—
191
1
6
—
198
—
13
62
2
4
—
68
—
95
268
—
3
—
271
—
—
—
—
—
—
—
—
5,600
12,303
11,393
4,000
3,441
6,194
23,008
59
8
2
934
466
138
894
540
56
252
687
27
233
653
149
373
1,226
340
443
892
56
$5,669
$13,841
$12,883
$4,966
$4,476
$8,133
$24,399
$78
$74,445
$1
$3
$34
$60
$14
$129
$44
$—
$285
(1) In the fourth quarter of 2023, the Company revised its presentation of commercial loans and leases by vintage date and internal risk rating to reflect how the
Company currently manages the commercial credit portfolio. The Company now reports Substandard Accrual and Nonaccrual ratings, replacing previously
reported ratings of Substandard and Doubtful, respectively. The prior period presentation was revised to conform to the new presentation. For more
information regarding the Company’s internal risk ratings, see “Credit Quality Indicators” above.
Citizens Financial Group, Inc. | 107
Leases
Pass
Special Mention
Substandard Accrual
Nonaccrual
Total leases
Total commercial
Pass
Special Mention
Substandard Accrual
Nonaccrual
Total commercial(1)
The following table presents the amortized cost basis of commercial loans and leases by vintage date and
internal risk rating as of December 31, 2022:
(dollars in millions)
2022
2021
2020
2019
2018
Prior to
2018
Within the
Revolving
Period
Converted
to Term
Total
Term Loans by Origination Year
Revolving Loans
Commercial and industrial
Pass
Special Mention
Substandard Accrual
Nonaccrual
$8,304
$8,469
$2,224
$2,074
$1,334
$1,952
$24,211
$148
$48,716
124
148
12
189
210
22
120
194
10
74
254
6
48
97
43
153
330
33
364
554
119
—
1,072
12
1,799
4
249
Total commercial and industrial
8,588
8,890
2,548
2,408
1,522
2,468
25,248
164
51,836
Commercial real estate
Pass
Special Mention
Substandard Accrual
Nonaccrual
5,767
6,442
3,639
3,066
2,145
3,536
1,888
1
91
1
119
15
5
103
75
13
390
248
60
99
346
4
113
591
20
62
23
—
Total commercial real estate
5,860
6,581
3,830
3,764
2,594
4,260
1,973
263
363
250
4
—
—
5
4
—
2
3
—
99
6
3
—
128
345
1
—
—
3
—
—
267
372
255
108
129
348
—
—
—
—
—
3
—
—
—
3
—
—
—
—
—
26,486
887
1,389
103
28,865
1,448
21
10
—
1,479
14,334
15,274
6,113
5,239
3,607
5,833
26,099
151
76,650
129
239
13
313
229
27
225
272
23
470
505
66
148
443
47
269
921
53
426
577
119
—
1,980
12
3,198
4
352
$14,715
$15,843
$6,633
$6,280
$4,245
$7,076
$27,221
$167
$82,180
(1) In the fourth quarter of 2023, the Company revised its presentation of commercial loans and leases by vintage date and internal risk rating to reflect how the
Company currently manages the commercial credit portfolio. The Company now reports Substandard Accrual and Nonaccrual ratings, replacing previously
reported ratings of Substandard and Doubtful, respectively. The prior period presentation was revised to conform to the new presentation. For more
information regarding the Company’s internal risk ratings, see “Credit Quality Indicators” above.
For retail loans, Citizens utilizes FICO credit scores and the loan’s payment and delinquency status to
monitor credit quality. Management believes FICO scores are the strongest indicator of credit losses over the
contractual life of the loan and assist management in predicting the borrower’s future payment performance.
Scores are based on current and historical national industry-wide consumer level credit performance data.
Citizens Financial Group, Inc. | 108
The following table presents the amortized cost basis of retail loans by vintage date and current FICO
score as of December 31, 2023, and gross charge-offs by vintage date for the year ended December 31, 2023:
(dollars in millions)
Residential mortgages
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total residential mortgages
Gross charge-offs
Home equity
800+
740-799
680-739
620-679
<620
Total home equity
Gross charge-offs
Automobile
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total automobile
Gross charge-offs
Education
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total education
Gross charge-offs
Other retail
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total other retail
Gross charge-offs
Total retail
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total retail
Gross charge-offs
Term Loans by Origination Year
Revolving Loans
2023
2022
2021
2020
2019
Prior to
2019
Within the
Revolving
Period
Converted
to Term
Total
$889
1,333
367
54
9
1
2,653
$3,067
1,940
631
135
48
—
$5,172
2,560
758
165
104
2
$3,117
1,411
466
90
95
1
$1,131
592
266
121
161
3
$3,125
1,625
873
445
561
14
5,821
8,761
5,180
2,274
6,643
—
—
—
1
—
—
1
—
81
134
147
94
44
—
500
3
296
368
143
30
5
10
852
—
183
258
214
118
31
7
811
49
1,449
2,093
872
296
89
18
—
4
1
1
1
2
9
—
539
671
577
316
232
—
2,335
34
671
694
289
65
18
—
1,737
5
70
87
76
48
35
1
317
24
4,351
3,393
1,574
565
335
1
—
4
2
1
1
1
9
—
1,062
1,038
708
345
291
—
3,444
41
1,637
1,050
333
68
25
1
3,114
19
38
46
39
23
18
—
164
8
7,913
4,696
1,839
602
439
3
1
1
1
2
2
1
7
—
368
375
252
112
100
—
1,207
14
1,418
850
273
58
23
—
2,622
25
35
45
39
19
14
1
153
8
4,939
2,682
1,032
281
233
2
1
4
3
5
8
10
30
—
162
165
118
65
66
—
576
12
600
369
134
32
15
—
1,150
17
16
21
18
6
4
—
65
11
4
91
82
93
77
80
423
3
47
52
39
26
32
—
196
9
1,185
678
298
107
55
36
2,359
45
18
19
11
4
2
—
54
9
1,913
1,150
541
232
256
3
4,466
2,456
1,314
659
730
50
$—
—
—
—
—
—
—
—
5,078
4,708
2,693
718
332
$—
—
—
—
—
—
—
—
222
241
202
137
230
$16,501
9,461
3,361
1,010
978
21
31,332
6
5,404
5,038
2,998
944
656
13,529
1,032
15,040
8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
500
963
973
419
251
373
3,479
121
5,578
5,671
3,666
1,137
583
373
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
2
2
2
—
7
—
12
2,259
2,435
1,841
958
765
—
8,258
113
5,807
4,009
1,470
360
141
47
11,834
111
860
1,440
1,372
639
357
382
5,050
230
222
242
204
139
232
—
30,831
22,383
11,042
3,911
2,897
450
$4,817
$10,219
$15,492
$9,169
$4,095
$9,675
$17,008
$1,039
$71,514
$52
$63
$68
$48
$41
$70
$129
$1
$472
(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).
Citizens Financial Group, Inc. | 109
The following table presents the amortized cost basis of retail loans by vintage date and current FICO
score as of December 31, 2022:
(dollars in millions)
Residential mortgages
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total residential mortgages
Home equity
800+
740-799
680-739
620-679
<620
Total home equity
Automobile
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total automobile
Education
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total education
Other retail
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total other retail
Total retail
800+
740-799
680-739
620-679
<620
No FICO available(1)
Total retail
Term Loans by Origination Year
Revolving Loans
2022
2021
2020
2019
2018
Prior to
2018
Within the
Revolving
Period
Converted
to Term
Total
$2,132
$4,943
$3,143
$1,180
$363
$3,081
$—
$—
$14,842
2,376
2,991
1,660
769
125
17
2
899
168
68
2
502
135
77
2
638
308
138
165
3
257
149
99
147
2
1,635
851
422
455
17
5,421
9,071
5,519
2,432
1,017
6,461
4
2
1
—
—
7
650
962
920
554
188
2
5
2
1
1
—
9
1,453
1,606
1,187
586
309
—
2
1
1
2
2
8
584
649
460
205
130
—
5
4
6
9
12
36
324
343
254
133
106
—
3,276
5,141
2,028
1,160
548
735
363
54
6
6
1,720
1,351
423
76
16
—
1,567
1,126
356
62
20
—
694
486
170
38
12
—
6
6
11
16
18
57
120
134
102
62
56
—
474
410
267
103
29
11
—
110
97
114
93
82
496
54
56
44
28
31
—
213
1,068
609
288
102
50
42
1,712
3,586
3,131
1,400
820
2,159
182
230
175
108
35
12
742
3,516
4,305
2,228
841
246
22
105
134
109
65
30
1
444
8,226
6,084
2,619
896
423
3
93
121
103
52
25
3
397
5,389
3,557
1,422
456
254
5
48
68
52
18
9
—
195
2,251
1,539
790
336
304
3
25
31
21
8
4
—
89
924
695
386
214
236
2
27
25
14
4
2
—
72
4,340
2,422
1,311
649
620
59
—
—
—
—
—
—
4,958
4,350
2,296
558
178
—
—
—
—
—
—
267
274
234
143
172
9,557
3,478
1,087
929
28
29,921
5,357
4,736
2,664
822
464
12,340
1,090
14,043
—
—
—
—
—
—
—
—
—
—
—
—
—
—
491
974
993
435
190
380
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
4
4
6
1
3,185
3,750
2,967
1,568
820
2
12,292
6,007
4,574
1,703
361
115
48
12,808
971
1,584
1,471
694
301
397
3,463
16
5,418
5,449
5,324
3,289
993
368
380
267
275
238
147
178
1
30,362
24,201
12,283
4,532
2,629
475
$11,158
$18,251
$11,083
$5,223
$2,457
$9,401
$15,803
$1,106
$74,482
(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).
Citizens Financial Group, Inc. | 110
Nonaccrual and Past Due Assets
Nonaccrual loans and leases are those on which accrual of interest is suspended. Loans, other than
certain retail loans insured by U.S. government agencies, are placed on nonaccrual status when full payment of
principal and interest is in doubt, unless the loan is both well-secured and in the process of collection.
When a loan is placed on nonaccrual status the accrued interest receivable is reversed against interest
income and the amortization of any net deferred fees is suspended. Interest collected on nonaccrual loans and
leases for which the ultimate collectability of principal is uncertain are generally applied to reduce the carrying
value of the asset first. Otherwise, interest income may be recognized to the extent of the cash received if the
loan is deemed fully collectible. A loan or lease may be returned to accrual status if:
•
•
•
no principal and interest payments are due and unpaid, and repayment of the remaining contractual
principal and interest is expected;
the loan or lease has otherwise become well-secured and in the process of collection; or
the borrower has made regularly scheduled payments in full for the prior six months and it is
reasonably assured that the loan or lease will be brought current within a reasonable period.
Commercial and industrial loans, commercial real estate loans, and leases are generally placed on
nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the
probability of collection is insufficient to warrant further accrual. Some of these loans and leases may remain on
accrual status when contractually past due 90 days or more if management considers the loan collectible.
Residential mortgages are generally placed on nonaccrual status when past due 120 days, or sooner if
determined to be collateral dependent, unless repayment of the loan is fully or partially guaranteed by the FHA,
VA or USDA. Credit card balances are placed on nonaccrual status when past due 90 days or more and are
restored to accrual status if they subsequently become less than 90 days past due. All other retail loans are
generally placed on nonaccrual status when past due 90 days or more, or earlier if management believes that the
probability of collection is insufficient to warrant further accrual. Loans less than 90 days past due may be placed
on nonaccrual status due to the death of the borrower, fraud or bankruptcy.
The following tables present an aging analysis of accruing loans and leases, and nonaccrual loans and
leases as of December 31, 2023 and 2022:
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages(1)
Home equity
Automobile
Education
Other retail
Total retail
December 31, 2023
Days Past Due and Accruing
Current
30-59
60-89
90+
Nonaccrual
Total
Nonaccrual
with no
related ACL
$43,447
28,745
1,144
73,336
30,499
14,640
8,005
11,732
4,899
69,775
$61
150
1
212
282
82
144
49
49
606
$18
59
—
77
118
33
48
23
34
256
$6
40
—
46
256
—
—
2
29
287
$294
$43,826
477
3
774
177
285
61
28
39
590
29,471
1,148
74,445
31,332
15,040
8,258
11,834
5,050
71,514
$30
71
—
101
144
198
7
3
—
352
Total
Guaranteed residential mortgages(1)
(1) Guaranteed residential mortgages represent loans fully or partially guaranteed by the FHA, VA and USDA, and are included in the amounts presented for
$143,111
$145,959
$1,364
$1,122
$243
$128
$818
$333
$333
$675
$76
$453
$—
$—
Residential mortgages.
Citizens Financial Group, Inc. | 111
(dollars in millions)
Commercial and industrial
Commercial real estate
Leases
Total commercial
Residential mortgages(1)
Home equity
Automobile
Education
Other retail
Total retail
December 31, 2022
Days Past Due and Accruing
Current
30-59
60-89
90+
Nonaccrual
Total
Nonaccrual
with no
related ACL
$51,389
$152
$25
28,665
1,475
81,529
29,228
13,719
12,039
12,718
5,294
72,998
51
4
207
95
64
152
36
44
391
45
—
70
45
19
45
17
30
156
$21
1
—
22
319
—
—
4
22
345
$249
$51,836
103
—
352
234
241
56
33
28
592
28,865
1,479
82,180
29,921
14,043
12,292
12,808
5,418
74,482
$64
7
—
71
187
185
9
3
1
385
Total
Guaranteed residential mortgages(1)
(1) Guaranteed residential mortgages represent loans fully or partially guaranteed by the FHA, VA and USDA, and are included in the amounts presented for
$154,527
$156,662
$1,196
$944
$367
$226
$598
$316
$789
$57
$34
$456
$—
$—
Residential mortgages.
Loan Modifications to Borrowers Experiencing Financial Difficulty
Effective January 1, 2023, the Company adopted accounting guidance that eliminates the separate
recognition and measurement of TDRs. Upon adoption of this guidance, all loan modifications to borrowers
experiencing financial difficulty, or FDMs, are evaluated to determine whether the modification should be
accounted for as a new loan or a continuation of the existing loan. The existing loan is derecognized and the
restructured loan is accounted for as a new loan if the effective yield on the restructured loan is at least equal to
the effective yield for comparable loans with similar collection risk and the modification to the original loan is
more than minor. Any unamortized fees and costs from the original loan are recognized in interest income when
the new loan is granted. If a loan restructuring does not meet these conditions, the existing loan’s amortized cost
basis is carried forward and the modified loan is accounted for as a continuation of the existing loan. FDMs are
generally accounted for as a continuation of the existing loan given the terms are typically not at market rates.
The Company offers loan modifications to retail and commercial borrowers as a result of its loss
mitigation activities that may result in a payment delay, interest rate reduction, term extension, principal
forgiveness, or combination thereof. Payment delays consist of modifications that result in a delay of contractual
amounts due greater than three months over a rolling 12-month period.
Commercial loan modifications are offered on a case-by-case basis and generally include a payment
delay, term extension and/or interest rate reduction. The Company does not typically offer principal forgiveness
for commercial loans. Retail loan modifications are offered through structured loan modification programs, which
are summarized below.
•
Forbearance programs provide borrowers experiencing some form of hardship a period of time during
which their contractual payment obligations are suspended, resulting in a payment delay and/or term
extension.
• Other repayment plans are offered due to hardship and include an interest rate reduction and/or term
extension designed to enable the borrower to return the loan to current status in an expeditious manner.
•
•
Settlement agreements may be executed with borrowers experiencing a long-term hardship or who are
delinquent, resulting in principal forgiveness. Upon fulfillment of the terms of the settlement agreement,
the unpaid principal amount is forgiven resulting in a charge-off of the outstanding principal balance.
Certain reorganization bankruptcy judgments may result in any one of the four modification types or
some combination thereof.
Citizens Financial Group, Inc. | 112
Retail and commercial loans whose contractual terms have been modified in a FDM and are current at the
time of the modification may remain on accrual status if there is demonstrated performance prior to the
modification and payment in full under the modified terms is expected. Cash receipts on nonaccrual impaired
loans, including nonaccrual loans involved in FDMs, are generally applied to reduce the unpaid principal balance.
Certain FDMs that are current in payment status are classified as nonaccrual in accordance with regulatory
guidance. Nonaccrual FDMs that meet the guidelines above for accrual status can be returned to accruing if
supported by a well-documented evaluation of the borrowers’ financial condition, and if they have been current
for at least six months.
The following table presents the period-end amortized cost of loans to borrowers experiencing financial
difficulty that were modified during the year ended December 31, 2023, disaggregated by class of financing
receivable and modification type. The modification type reflects the cumulative effect of all FDMs received
during the indicated period.
Year Ended December 31, 2023
Interest
Rate
Reduction
$1
—
1
8
2
—
9
11
30
Term
Extension
Payment
Delay
Principal
Forgiveness
$252
$69
$—
522
774
77
5
—
—
—
82
—
69
3
—
—
31
—
34
—
—
—
—
—
—
—
—
Interest
Rate
Reduction
and Term
Extension
Term
Extension
and
Payment
Delay
Total as a %
of Loan
Class(1)
Total
$1
70
71
20
8
—
—
—
28
$2
$325
0.74 %
1
3
1
—
—
—
—
1
593
918
109
15
—
40
11
175
2.01
1.23
0.35
0.10
—
0.34
0.22
0.24
(dollars in millions)
Commercial and industrial
Commercial real estate
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total(2)
(1) Represents the total amortized cost as of period-end divided by the period-end amortized cost of the corresponding loan class. Accrued interest receivable is
$1,093
$103
$856
0.75 %
$99
$31
$—
$4
excluded from amortized cost and is immaterial.
(2) Excludes borrowers that had their debt discharged by means of a Chapter 7 bankruptcy filing.
The following table presents the financial effect of loans to borrowers experiencing financial difficulty
that were modified during the year ended December 31, 2023, disaggregated by class of financing receivable.
Commercial and industrial
Commercial real estate
Residential mortgages
Home equity
Automobile
Education
Other retail
Year Ended December 31, 2023
Weighted-Average
Interest Rate
Reduction(1)(5)
Weighted-Average
Term Extension
(in Months)(2)(5)
Weighted-Average
Payment
Deferral(3)(5)
Amount of
Principal
Forgiven(4)
2.02 %
0.59
1.58
2.64
3.60
4.76
18.68
15
11
50
120
18
—
—
$562,777
30,821
—
1,366
1,245
6,134
—
$—
—
—
—
—
—
5
(1) Represents the weighted-average reduction of the loan’s interest rate.
(2) Represents the weighted-average extension of a loan’s maturity date.
(3) Represents the weighted-average amount of payments delayed as a result of the loan modification. Amounts are reported in whole dollars.
(4) Amounts are recorded as charge-offs and are reported in millions.
(5) Weighted based on period-end amortized cost.
Citizens Financial Group, Inc. | 113
The following table presents an aging analysis of the period-end amortized cost of loans to borrowers
experiencing financial difficulty that were modified during the year ended December 31, 2023, disaggregated by
class of financing receivable. A loan in a forbearance or repayment plan is reported as past due according to its
contractual terms until contractually modified. Subsequent to modification, it is reported as past due based on
its restructured terms.
(dollars in millions)
Commercial and industrial
Commercial real estate
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total
December 31, 2023
Days Past Due and Accruing
Current
30-59
60-89
90+
Nonaccrual
Total
$211
402
613
61
5
—
37
8
111
$724
$—
7
7
11
—
—
1
1
13
$20
$—
—
—
7
—
—
—
1
8
$8
$—
26
26
17
—
—
—
—
17
$43
$114
158
272
13
10
—
2
1
26
$325
593
918
109
15
—
40
11
175
$298
$1,093
The following table presents the period-end amortized cost of loans to borrowers experiencing financial
difficulty that were modified on or after January 1, 2023 that subsequently defaulted during the year ended
December 31, 2023, disaggregated by class of financing receivable and modification type. The modification type
reflects the cumulative effect of all FDMs at the time of default. A loan is considered to be in default if,
subsequent to modification, it becomes 90 or more days past due or is placed on nonaccrual status.
(dollars in millions)
Commercial and industrial
Commercial real estate
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total
Year Ended December 31, 2023
Interest
Rate
Reduction
Term
Extension
Payment
Delay
Interest
Rate
Reduction
and Term
Extension
Total
$—
—
—
1
—
—
—
—
1
$1
$—
102
102
9
1
—
—
—
10
$112
$43
—
43
—
—
—
1
—
1
$—
—
—
5
2
—
—
—
7
$44
$7
$43
102
145
15
3
—
1
—
19
$164
Unfunded commitments related to loans modified during the year ended December 31, 2023 were $221
million at December 31, 2023.
Troubled Debt Restructuring - Prior to the Adoption of ASU 2022-02
In situations where, for economic or legal reasons related to the borrower’s financial difficulties, the
Company grants a concession to the borrower that it would not otherwise consider, the related loan is classified
as a TDR. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a
portion of principal, extending the loan term, lowering scheduled payments for a specified period of time,
waiving or delaying a scheduled payment of principal or interest for other than an insignificant time period, or
capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market
rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans may also involve
creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a
performance-based fee. In some cases, a TDR may involve multiple concessions.
Citizens Financial Group, Inc. | 114
Cash receipts on nonaccrual impaired loans, including nonaccrual loans involved in TDRs, are generally
applied to reduce the unpaid principal balance. Certain TDRs that are current in payment status are classified as
nonaccrual in accordance with regulatory guidance. Nonaccrual TDRs may be returned to accruing if supported by
a well-documented evaluation of the borrowers’ financial condition, and if they have been current for at least six
months.
The ACL for loans previously identified as TDRs is measured at the product level based on post-
modification credit attributes and use of an econometric model or at the fair value of collateral less costs to sell,
if less than the loan’s amortized cost basis. Any portion of the loan’s amortized cost basis the Company does not
expect to collect as a result of the modification is charged off at the time of modification. For retail TDR
accounts assessed based on the fair value of collateral, any portion of the loan’s recorded investment in excess
of the collateral value less costs to sell is charged off at the time of modification or at the time of subsequent
and regularly recurring valuations.
The following tables summarize loans modified during the year ended December 31, 2022. The balances
represent the post-modification outstanding amortized cost basis and may include loans that became TDRs during
the period and were subsequently paid off in full, charged off, or sold prior to period end. Pre-modification
balances for modified loans approximate the post-modification balances shown.
(dollars in millions)
Commercial and industrial
Total commercial
Residential mortgages
Home equity
Automobile
Education
Other retail
Total retail
Total
December 31, 2022
Amortized Cost Basis
Number of
Contracts
29
29
1,884
381
601
631
2,320
5,817
5,846
Interest Rate
Reduction(1)
$—
Maturity
Extension(2)
$26
—
52
4
2
—
10
68
$68
26
96
2
—
—
—
98
$124
Other(3)
Total
$—
—
260
19
4
25
1
309
$309
$26
26
408
25
6
25
11
475
$501
(1) Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.
(2) Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate
reduction).
(3) Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal
forgiveness, and capitalizing arrearages. The following are also included: deferrals, trial modifications, certain bankruptcies, loans in forbearance and
prepayment plans. Modifications can include the deferral of accrued interest resulting in post-modification balances being higher than pre-modification.
Modified TDRs resulted in charge-offs of $3 million for the year ended December 31, 2022. Unfunded
commitments related to TDRs were $81 million at December 31, 2022.
The following table provides a summary of TDRs that defaulted (became 90 days or more past due) within
12 months of their modification date:
(dollars in millions)
Commercial
Retail(1)
Total
Year Ended December 31, 2022
$—
242
$242
(1) Includes $187 million of loans fully or partially government guaranteed by the FHA, VA, and USDA.
Concentrations of Credit Risk
The Company’s lending activity is geographically well diversified with an emphasis in our core markets
located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets
including real estate, inventory, accounts receivable, other personal property and investment securities. As of
December 31, 2023 and 2022, there were no material concentration risks within the commercial or retail loan
portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral
supporting loans, which may not perform according to contractual agreements. The Company’s policy is to
collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the
financial strength of the applicant and the facts surrounding the transaction.
Citizens Financial Group, Inc. | 115
NOTE 7 - PREMISES, EQUIPMENT AND SOFTWARE
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized over the life of the lease, including renewal options if exercise of
those options is reasonably assured, or their estimated useful life, whichever is shorter.
Additions to premises and equipment are recorded at cost. The cost of major additions and
improvements is capitalized. Repairs and maintenance and other costs that do not improve the property, extend
the useful life or otherwise do not meet capitalization criteria are charged to expense as incurred. Citizens
evaluates premises and equipment for impairment when events or circumstances indicate that the carrying value
of such assets may not be recoverable.
A summary of the carrying value of premises and equipment is presented below:
(dollars in millions)
Land and land improvements
Buildings and leasehold improvements
Furniture, fixtures and equipment
Construction in progress
Total premises and equipment, gross
Accumulated depreciation and amortization
Total premises and equipment, net
Useful Lives
(years)
10 - 75
5 - 60
4 - 20
December 31,
2023
2022
$143
$144
875
613
77
879
622
61
1,708
1,706
(813)
(862)
$895
$844
Depreciation charged to noninterest expense totaled $115 million, $107 million and $98 million for the
years ended December 31, 2023, 2022 and 2021, respectively, and is presented in the Consolidated Statements of
Operations in either occupancy or equipment expense, as applicable.
Software
Costs related to computer software developed or obtained for internal use are capitalized if the projects
improve functionality and provide long-term future operational benefits. Capitalized costs are amortized using
the straight-line method over the asset’s expected useful life, which is based on the basic pattern of
consumption and economic benefits provided by the asset. The amortization of software commences when the
asset, or identifiable component of the asset, is substantially complete and ready for its intended use. All other
costs incurred in connection with an internal-use software project are expensed as incurred. Capitalized software
is included in other assets in the Consolidated Balance Sheets.
Citizens had capitalized software assets of $2.6 billion and related accumulated amortization of $1.7
billion as of December 31, 2023 and 2022. Amortization expense was $254 million, $243 million and $235 million
for the years ended December 31, 2023, 2022 and 2021, respectively.
The estimated future amortization expense for capitalized software assets is presented below.
Year
2024
2025
2026
2027
2028
Thereafter
Total(1)
(1) Excludes $215 million of in-process software at December 31, 2023.
(dollars in millions)
$237
199
136
79
23
—
$674
Citizens Financial Group, Inc. | 116
NOTE 8 - MORTGAGE BANKING AND OTHER SERVICED LOANS
The Company sells residential mortgages into the secondary market and retains no beneficial interest in
these sales, but may retain the servicing rights for the loans sold. The Company may exercise its option to
repurchase eligible government guaranteed residential mortgages or may be obligated to subsequently
repurchase a loan if the purchaser discovers a representation or warranty violation such as noncompliance with
eligibility or servicing requirements, or customer fraud that should have been identified in a loan file review.
Mortgage loans held for sale are accounted for at fair value on an individual loan basis. Changes in the
fair value and realized gains and losses on the sales of mortgage loans, are reported in mortgage banking fees.
The following table summarizes activity related to residential mortgage loans sold with servicing rights
retained:
(dollars in millions)
Year Ended December 31,
2023
2022
2021
Cash proceeds from residential mortgage loans sold with servicing retained
Repurchased residential mortgages(1)
Gain on sales(2)
Contractually specified servicing, late and other ancillary fees(2)
(1) Includes government insured or guaranteed loans repurchased through the exercise of the Company’s removal of account provision option.
(2) Reported in mortgage banking fees in the Consolidated Statements of Operations.
$9,124
309
72
—
$17,025
$37,039
1,381
382
247
87
86
287
The Company recognizes the right to service residential mortgage loans for others, or MSRs, when
purchased or when servicing is contractually separated from the underlying mortgage loans sold with servicing
rights retained. MSRs are reported in other assets in the Consolidated Balance Sheets. MSRs are measured using
the fair value method, with any change in fair value during the period recorded in mortgage banking fees in the
Consolidated Statements of Operations. The unpaid principal balance of residential mortgage loans related to our
MSRs was $97.4 billion and $96.7 billion at December 31, 2023 and 2022, respectively. The Company manages the
risk associated with changes in the value of the MSRs with an active economic hedging strategy, which includes
the purchase of freestanding derivatives.
The following table summarizes changes in MSRs recorded using the fair value method:
(dollars in millions)
Fair value as of beginning of the period
Amounts capitalized
Servicing rights acquired
Changes in unpaid principal balance during the period(1)
Changes in fair value during the period(2)
Fair value at end of the period
As of and for the Year
Ended December 31,
2023
2022
$1,530
$1,029
127
—
(166)
61
279
16
(137)
343
$1,552
$1,530
(1) Represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial
paydowns, and ii) loans that paid off during the period.
(2) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of
Operations.
The fair value of MSRs is estimated by using the present value of estimated future net servicing cash
flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates,
contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors,
which are determined based on current market interest rates. The valuation does not attempt to forecast or
predict the future direction of interest rates.
Citizens Financial Group, Inc. | 117
The sensitivity analysis below presents the impact of an immediate 10% and 20% adverse change in key
economic assumptions to the current fair value of MSRs. These sensitivities are hypothetical, with the effect of a
variation in a particular assumption on the fair value of the MSRs calculated independently without changing any
other assumption. Changes in one factor may result in changes in another (e.g., changes in interest rates, which
drive changes in prepayment rates, could result in changes in discount rates), which may amplify or counteract
the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the
underlying mortgage loans serviced, which is largely dependent upon movements in market interest rates.
(dollars in millions)
Fair value
Weighted average life (years)
Weighted average constant prepayment rate
Decline in fair value from 10% adverse change
Decline in fair value from 20% adverse change
Weighted average option adjusted spread
Decline in fair value from 10% adverse change
Decline in fair value from 20% adverse change
December 31, 2023
December 31, 2022
$1,552
8.8
7.2%
$37
$71
630 bps
$43
$87
$1,530
9.1
6.8%
$34
$66
629 bps
$43
$86
The Company’s mortgage banking derivatives include commitments to originate mortgages held for sale,
certain loan sale agreements, and other financial instruments that meet the definition of a derivative. Refer to
Note 14 for additional information.
Other Serviced Loans
Citizens engages in other servicing relationships from time to time. The following table presents the
unpaid principal balance of other serviced loans:
(dollars in millions)
Education
Commercial and industrial(1)
(1) Represents the government guaranteed portion of SBA loans sold to outside investors.
NOTE 9 - LEASES
Citizens as Lessee
December 31,
2023
December 31,
2022
$502
94
$602
91
The Company determines if an arrangement is a lease at inception and records a right-of-use asset and a
corresponding lease liability. A right-of-use asset represents the value of the Company’s contractual right to use
an underlying leased asset and a lease liability represents the Company’s contractual obligation to make
payments on the same asset. Operating and finance lease right-of-use assets and liabilities are recognized at the
commencement date based on the present value of the lease payments over the non-cancelable lease term. In
instances where the lease does not specify an implicit rate, the Company utilizes an incremental borrowing rate
based on information available at the lease commencement date to determine the present value of the lease
payments. The Company evaluates right-of-use assets for impairment when events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable.
The Company leases both equipment and real estate, including office and branch space, in the normal
course of business. Lease terms predominantly range from one year to ten years and may include options to
extend the lease, terminate the lease, or purchase the underlying asset at the end of the lease. Certain lease
agreements include rental payments based on an index or are adjusted periodically for inflation. Lease
components are accounted for as a single lease component when lease agreements contain lease and non-lease
components and for certain real estate leases.
Leases with an initial term of 12 months or less are not recorded in the Company’s Consolidated Balance
Sheets and are recognized in occupancy expense in the Company’s Consolidated Statements of Operations on a
straight-line basis over the lease term. The Company may also enter into subleases with third parties for certain
leased real estate properties that are no longer occupied.
Citizens Financial Group, Inc. | 118
The components of operating lease cost are presented below.
(dollars in millions)
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total
Year Ended December 31,
2023
2022
2021
$221
2
5
(1)
$227
$216
2
7
(1)
$224
$161
1
8
(4)
$166
Operating lease cost is recognized on a straight-line basis over the lease term and is recorded in
occupancy and equipment and software in the Consolidated Statements of Operations.
Supplemental information related to the Company’s operating lease arrangements is presented in the
tables below:
(dollars in millions)
Operating lease right-of-use assets
Operating lease liabilities
Weighted average remaining lease term (years)
Weighted average discount rate
(dollars in millions)
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases
December 31,
2023
December 31,
2022
Affected Line Item in
Consolidated Balance Sheets
$885
977
7
3.10 %
$1,019
1,066
7
2.74 %
Other assets
Other liabilities
—
—
Year Ended December 31,
2023
2022
2021
$232
$219
$163
Supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets:
Right-of-use assets in exchange for new operating lease liabilities
64
408
79
Lease liabilities maturing under non-cancelable operating leases are presented below as of December 31,
2023.
Year
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
Citizens as Lessor
(dollars in millions)
$210
201
161
140
111
262
1,085
108
$977
Operating lease assets where Citizens was the lessor totaled $254 million and $260 million as of
December 31, 2023 and 2022, respectively. Operating lease rental income associated with these assets is
recognized in other income in the Consolidated Statements of Operations on a straight-line basis over the lease
term.
Depreciation expense associated with operating lease assets is recorded on a straight-line basis over their
estimated useful life and is included in other operating expense in the Consolidated Statements of Operations.
Operating lease assets are reviewed for impairment on a periodic basis, with an impairment loss recognized in
other operating expense if the carrying amount of the leased asset exceeds its fair value and is not recoverable.
The carrying amount of a leased asset is not recoverable if its carrying value exceeds the sum of the
undiscounted cash flows expected to result from the lease payments and the estimated residual value of the
asset.
For a discussion of direct finance and sales-type leases where Citizens is the lessor, see Note 5.
Citizens Financial Group, Inc. | 119
NOTE 10 - GOODWILL AND INTANGIBLE ASSETS
Goodwill is the purchase premium associated with the acquisition of a business and is assigned to the
Company’s reporting units at the acquisition date. A reporting unit is a business operating segment or a
component of a business operating segment. The Company has identified and assigned goodwill to two reporting
units, Consumer Banking and Commercial Banking, based upon reviews of the structure of the Company’s
executive team and supporting functions, resource allocations and financial reporting processes. Goodwill no
longer retains its association with a particular acquisition once assigned to a reporting unit, and all of the
activities within a reporting unit, whether acquired or organically grown, are available to support the value of
the goodwill.
Goodwill is subject to an annual impairment test and not amortized. Goodwill is reviewed for impairment
annually as of October 31st and in interim periods when events or changes indicate the carrying value of one or
more reporting units may not be recoverable. The Company has the option of performing a qualitative
assessment of goodwill to determine whether it is more likely than not that the fair value of each reporting unit
is less than the carrying value. If it is more likely than not that the fair value exceeds the carrying value, then no
further testing is necessary; otherwise, a quantitative assessment of goodwill must be performed.
The Company may elect to bypass the qualitative assessment and perform a quantitative assessment,
which is used to identify potential impairment and involves comparing each reporting unit’s fair value to its
carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value inclusive of
goodwill, applicable goodwill is deemed not to be impaired. If the carrying value of the reporting unit inclusive of
goodwill exceeds fair value, an impairment loss is recognized for the excess, establishing a new basis in the
goodwill, and cannot exceed the amount of goodwill assigned to the reporting unit. Subsequent reversal of
goodwill impairment losses is not permitted.
The fair value of the Company’s reporting units is determined using a combination of income and market-
based approaches. The Company relies on several assumptions to estimate the fair value of its reporting units
under the income-based approach including discount rate, projected loan losses, income tax and capital
retention rates.
The Company performed a quantitative goodwill impairment assessment in the fourth quarter of 2023 as
part of its annual impairment assessment. Based on this quantitative assessment, the Company concluded that
the estimated fair value of the Consumer Banking and Commercial Banking reporting units exceeded their
carrying value; therefore, the Company determined that there was no impairment to the carrying value of its
goodwill as of December 31, 2023. The Commercial Banking reporting unit’s fair value exceeded its carrying
value by approximately 10%.
The Company monitored events and circumstances during the period from October 31, 2023 through
December 31, 2023, including macroeconomic and market factors, industry and banking sector events, Company-
specific performance indicators, a comparison of the Company’s forecast and assumptions to those used in its
October 31, 2023 quantitative impairment test, and the sensitivity of the October 31, 2023 quantitative test
results to changes in assumptions through December 31, 2023. Based on these considerations, the Company
concluded that it was not more-likely-than-not that the fair value of either of its reporting units is below its
respective carrying amount as of December 31, 2023.
Citizens Financial Group, Inc. | 120
Changes in the carrying value of goodwill for the years ended December 31, 2023 and 2022 are presented
below.
(dollars in millions)
Balance at December 31, 2021
Business acquisitions
Balance at December 31, 2022
Business acquisitions
Balance at December 31, 2023
Consumer
Banking
Commercial
Banking
Total
$2,258
415
$2,673
5
$2,678
$4,858
642
$5,500
10
$5,510
$7,116
1,057
$8,173
15
$8,188
Accumulated impairment losses related to the Consumer Banking and Commercial Banking reporting units
totaled $5.9 billion and $50 million, respectively, at December 31, 2023 and 2022. No impairment was recorded
for the years ended December 31, 2023, 2022 or 2021.
Other Intangibles
Other intangible assets are recognized separately from goodwill if the asset arises as a result of
contractual rights or if the asset is capable of being separated and sold, transferred or exchanged. These assets
are amortized on a straight-line basis with the exception of core deposits, which are amortized using an
accelerated methodology, and are subject to an annual impairment evaluation. Amortization expense is recorded
in other operating expense in the Consolidated Statements of Operations.
A summary of the carrying value of intangible assets is presented below.
(dollars in millions)
Core deposits
Acquired technology
Acquired relationships
Naming Rights
Other
Total
December 31, 2023
December 31, 2022
Amortizable
Lives (years)
Gross
Accumulated
Amortization
Net
Gross
Accumulated
Amortization
Net
10
5 - 7
2 - 15
5 - 10
2 - 8
$144
$44
$100
$144
$20
$124
23
52
33
18
21
26
12
10
2
26
21
8
23
54
33
17
19
21
7
7
4
33
26
10
$270
$113
$157
$271
$74
$197
As of December 31, 2023, all of the Company’s intangible assets were being amortized. Amortization
expense recognized on intangible assets was $42 million, $41 million and $11 million for the years ended
December 31, 2023, 2022 and 2021, respectively. The Company’s projection of amortization expense is based on
balances as of December 31, 2023. Future amortization expense may vary from these projections.
Estimated intangible asset amortization expense for the next five years is as follows:
Year
2024
2025
2026
2027
2028
(dollars in millions)
$35
32
28
24
17
NOTE 11 - VARIABLE INTEREST ENTITIES
Citizens, in the normal course of business, engages in a variety of activities with entities that are
considered VIEs, as defined by GAAP, with its variable interest arising from contractual, ownership or other
monetary interests in the entity. A VIE typically does not have sufficient equity at risk to finance its activities
without additional subordinated financial support from other parties. Citizens is the primary beneficiary of a VIE,
and must consolidate it, if its variable interest provides it with the power to direct the activities that
significantly impact the VIE and it has the right to receive benefits, or the obligation to absorb losses, that could
potentially be significant to the VIE. Citizens considers both qualitative and quantitative factors regarding the
nature, size and form of its involvement with the VIE to determine whether or not a variable interest held is
significant to the VIE. Citizens assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis.
Citizens Financial Group, Inc. | 121
Transfers of financial assets in which the Company has not surrendered control over the transferred
assets are accounted for as a secured borrowing with a pledge of collateral. Control is generally considered
surrendered when 1) the transferred assets are legally isolated from the Company and its creditors, even in
bankruptcy, 2) the transferee has the right to pledge or exchange the transferred assets it received, with no
condition that constrains the transferee from taking advantage of this right or that provides more than a trivial
benefit to the Company, and 3) the Company does not maintain effective control over the transferred financial
assets. Judgment is required to assess whether the Company maintains effective control over transferred
financial assets.
Consolidated VIEs
The Company has consolidated VIEs related to secured borrowings collateralized by auto loans. The
following table summarizes the carrying amount of assets and liabilities for the Company’s consolidated VIEs:
(dollars in millions)
Assets:
Cash and due from banks
Interest-bearing deposits in banks
Net loans and leases
Other assets
Total assets
Liabilities:
Long-term borrowed funds
Other liabilities
Total liabilities
Secured Borrowings
December 31,
2023
$13
106
3,194
14
$3,327
$2,692
8
$2,700
Citizens utilizes a portion of its auto loan portfolio to support certain secured borrowing arrangements,
which provide a source of funding for the Company and involves the transfer of auto loans to bankruptcy remote
special purpose entities (“SPEs”). These SPEs then issue asset-backed notes to third-parties collateralized by the
transferred loans. Citizens holds certain residual interests in the loans and, therefore, has a right to receive
benefits or the obligation to absorb losses that could potentially be significant to the SPEs. In addition, the
Company retains servicing for the transferred loans and, therefore, holds the power to direct the most significant
activities that impact the economic performance of the SPEs. As a result, the Company concluded that it is the
primary beneficiary of these SPEs and, accordingly, consolidates these VIEs.
The assets of a particular VIE are the primary source of funds to settle its obligations. Creditors of these
VIEs do not have recourse to the general credit of the Company. The performance of the loans transferred to the
SPEs is the most significant driver impacting the economic performance of the VIEs.
Unconsolidated VIEs
Citizens is involved with various VIEs that are not consolidated, including investments in entities that
sponsor affordable housing, renewable energy and economic development projects, and asset-backed securities.
In addition, Citizens provides lending facilities to special purpose entities. Citizens’ maximum exposure to loss as
a result of its involvement with these entities is limited to the balance sheet carrying amount of its investments,
unfunded commitments, and the outstanding principal balance of loans to special purpose entities.
A summary of these investments is presented below:
(dollars in millions)
Lending to special purpose entities included in loans and leases
LIHTC investment included in other assets
LIHTC unfunded commitments included in other liabilities
Asset-backed investments included in HTM securities
Renewable energy investments included in other assets
NMTC investments included in other assets
December 31,
2023
2022
$4,760
2,444
1,025
488
314
3
$4,578
2,230
1,046
581
374
4
Citizens Financial Group, Inc. | 122
Lending to Special Purpose Entities
Citizens provides lending facilities to third-party sponsored special purpose entities. Because the sponsor
for each respective entity has the power to direct how proceeds from the Company are utilized and maintains
responsibility for any associated servicing commitments, Citizens is not the primary beneficiary of these entities.
Accordingly, Citizens does not consolidate these VIEs. As of December 31, 2023 and 2022, the lending facilities
had undrawn commitments to extend credit of $2.7 billion and $2.4 billion, respectively. For more information
on commitments to extend credit see Note 19.
Asset-backed securities
The Company’s investments in asset-backed securities are collateralized by education loans sold to a
third-party sponsored VIE. Citizens acts as the primary servicer for the sold loans and receives a servicing fee. A
third-party servicer is responsible for all loans that become significantly delinquent.
The Company’s investment in asset-backed securities, as well as the primary servicing fee, are
considered variable interests in the VIE since some of the losses of the VIE could be absorbed by the Company’s
interest in the asset-backed securities or the primary servicing fee. However, Citizens did not control the
determination of the assets purchased by the VIE and does not control the servicing activities on significantly
delinquent loans. Since these activities significantly impact the economic performance of the VIE, the Company
has concluded that it is not the primary beneficiary of this VIE. Accordingly, Citizens does not consolidate the
VIE.
Low Income Housing Tax Credit Partnerships
The purpose of the Company’s LIHTC investments is to assist in achieving the goals of the CRA and to
earn an adequate return of capital. LIHTC partnerships are managed by unrelated general partners that have the
power to direct the activities which most significantly affect the performance of the partnerships and, therefore,
Citizens is not the primary beneficiary of these partnerships. Accordingly, Citizens does not consolidate these
VIEs.
Renewable Energy Entities
The Company’s investments in certain renewable energy entities provide benefits from government
incentives and other tax attributes (e.g., tax depreciation). As a tax equity investor, Citizens does not have the
power to direct the activities which most significantly affect the performance of these entities and, therefore, is
not the primary beneficiary of these entities. Accordingly, Citizens does not consolidate these VIEs.
Contingent commitments related to the Company’s renewable energy investments were $67 million at
December 31, 2023, and are expected to be paid in varying amounts through 2026. These payments are
contingent upon the level of electricity production attained by the renewable energy entity relative to its
targeted threshold and changes in the production tax credit rates set by the Internal Revenue Service.
New Markets Tax Credit Program
The Company participates in the NMTC program which provides a tax incentive for private sector
investment into economic development projects and businesses located in low-income communities. The United
States Department of the Treasury oversees the program and it is directly administered by the Community
Development Financial Institutions Fund.
The Company’s investments in entities that sponsor economic development projects provide income tax
credits to offset federal taxable income over a specified period of time. Independent third parties manage these
entities and have the power to direct the activities which most significantly affect their performance. Therefore,
Citizens is not the primary beneficiary of these entities and does not consolidate these VIEs as a result.
Citizens Financial Group, Inc. | 123
The Company applies the proportional amortization method to account for its LIHTC investments.
Effective January 1, 2023, the Company made an election to account for its renewable energy and NMTC
investments using the proportional amortization method under newly adopted accounting guidance. Under the
proportional amortization method, the Company applies a practical expedient for its LIHTC and NMTC
investments and amortizes the initial cost of qualifying investments in proportion to the income tax credits
received in the current period as compared to the total income tax credits expected to be received over the life
of the investment. For renewable energy investments, the Company amortizes the initial cost of qualifying
investments in proportion to the income tax credits and other income tax benefits received in the current period
as compared to the total income tax credits and other income tax benefits expected to be received over the life
of the investment. The net amortization and income tax credits and other income tax benefits received are
included as a component of income tax expense (benefit).
The following table summarizes the impact to the Consolidated Statements of Operations relative to the
Company’s tax credit programs for which it has elected to apply the proportional amortization method of
accounting:
(dollars in millions)
Tax credits recognized
Other tax benefits recognized
Amortization
Net benefit (expense) included in income tax expense
Other income
Allocated income (loss) on investments
Net benefit (expense) included in noninterest income
Net benefit (expense) included in the Consolidated Statements of Operations(1)
Year Ended December 31,
2023
2022
2021
$334
71
$236
59
(320)
(247)
85
5
(10)
(5)
$80
48
—
—
—
$48
$202
48
(208)
42
—
—
—
$42
(1) Includes the impact of tax credit investments when the election to apply the proportional amortization method was in effect during the periods presented. For
2023, this includes LIHTC, renewable energy and NMTC investments, and for 2022 and 2021, includes LIHTC investments.
The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income
tax credits or other circumstances during the years ended December 31, 2023, 2022 and 2021.
NOTE 12 - DEPOSITS
The following table presents the major components of deposits:
(dollars in millions)
Demand
Money market
Checking with interest
Savings
Term
Total deposits
December 31,
2023
2022
$37,107
$49,283
53,812
31,876
27,983
26,564
49,905
39,721
29,805
12,010
$177,342
$180,724
The following table presents the maturity distribution of term deposits by year as of December 31, 2023:
Year
2024
2025
2026
2027
2028
2029 and thereafter
Total
(dollars in millions)
$25,529
866
74
59
33
3
$26,564
Citizens Financial Group, Inc. | 124
The following table presents the remaining maturities of term deposits with a denomination of $250,000
or more as of December 31, 2023:
(dollars in millions)
Three months or less
After three months through six months
After six months through twelve months
After twelve months
Total term deposits
NOTE 13 - BORROWED FUNDS
Short-term borrowed funds
$2,559
1,527
1,358
229
$5,673
The following table presents a summary of the Company’s short-term borrowed funds:
(dollars in millions)
Other short-term borrowed funds
Total short-term borrowed funds
Long-term borrowed funds
December 31,
2023
2022
$505
$505
$3
$3
The following table presents a summary of the Company’s long-term borrowed funds:
(dollars in millions)
Parent Company:
3.750% fixed-rate subordinated debt, due July 2024
4.023% fixed-rate subordinated debt, due October 2024
4.350% fixed-rate subordinated debt, due August 2025
4.300% fixed-rate subordinated debt, due December 2025
2.850% fixed-rate senior unsecured notes, due July 2026
2.500% fixed-rate senior unsecured notes, due February 2030
3.250% fixed-rate senior unsecured notes, due April 2030
3.750% fixed-rate reset subordinated debt, due February 2031
4.300% fixed-rate reset subordinated debt, due February 2031
4.350% fixed-rate reset subordinated debt, due February 2031
2.638% fixed-rate subordinated debt, due September 2032
5.641% fixed-rate reset subordinated debt, due May 2037
CBNA’s Global Note Program:
3.700% senior unsecured notes, due March 2023(1)
5.676% floating-rate senior unsecured notes, due March 2023(1)(2)
2.250% senior unsecured notes, due April 2025
4.119% fixed/floating-rate senior unsecured notes, due May 2025
6.064% fixed/floating-rate senior unsecured notes, due October 2025
5.284% fixed/floating-rate senior unsecured notes, due January 2026
3.750% senior unsecured notes, due February 2026
4.575% fixed/floating-rate senior unsecured notes, due August 2028
December 31,
2023
2022
$90
17
133
336
499
298
746
69
135
60
563
398
—
—
749
649
599
349
483
798
$90
17
133
336
498
298
746
69
135
61
556
397
497
250
748
648
598
—
475
797
Additional Borrowings by CBNA and Other Subsidiaries:
Federal Home Loan Bank advances, 5.570% weighted average rate, due through 2041(3)
Secured borrowings, 6.026% weighted average rate, due through 2030(3)(4)
Other
Total long-term borrowed funds
(1) Notes were redeemed on February 27, 2023.
(2) Rate disclosed reflects the floating rate as of December 31, 2023, or final floating rate as applicable.
(3) Rate disclosed reflects the weighted average rate as of December 31, 2023.
(4) Collateralized by auto loans. See Note 11 for additional information.
3,786
2,692
18
8,519
—
19
$13,467
$15,887
Citizens Financial Group, Inc. | 125
At December 31, 2023, the Company’s long-term borrowed funds include principal balances of $13.6
billion, unamortized debt issuance costs and discounts of $74 million, and hedging basis adjustments of ($17)
million. At December 31, 2022, the Company’s long-term borrowed funds include principal balances of $16.0
billion, unamortized debt issuance costs and discounts of $85 million, and hedging basis adjustments of ($27)
million. See Note 14 for further information about the Company’s hedging of certain long-term borrowed funds.
Advances, lines of credit and letters of credit from the FHLB are collateralized primarily by residential
mortgages and home equity products sufficient to satisfy the collateral maintenance level established by the
FHLB. The utilized FHLB borrowing capacity, primarily for advances and letters of credit, was $9.2 billion and
$15.7 billion at December 31, 2023 and 2022, respectively. The Company’s available FHLB borrowing capacity
was $15.9 billion and $11.5 billion at December 31, 2023 and 2022, respectively. Citizens can also borrow from
the FRB discount window to meet short-term liquidity requirements. Collateral, including certain loans, is
pledged to support this borrowing capacity. At December 31, 2023, the Company’s unused secured borrowing
capacity was approximately $69.0 billion, which includes unencumbered securities, FHLB borrowing capacity, and
FRB discount window capacity.
The following table presents a summary of maturities for the Company’s long-term borrowed funds at
December 31, 2023:
(dollars in millions)
Year
2024
2025
2026
2027
2028
2029 and thereafter
Total
NOTE 14 - DERIVATIVES
Parent
Company
CBNA and
Other
Subsidiaries
Consolidated
$107
469
499
—
—
2,269
$363
5,771
2,019
5
1,745
220
$470
6,240
2,518
5
1,745
2,489
$3,344
$10,123
$13,467
In the normal course of business, Citizens enters into derivative transactions to meet the financing and
hedging needs of its customers and reduce its own exposure to fluctuations in interest rates and foreign currency
exchange rates. These transactions include interest rate swap contracts, interest rate options, foreign exchange
contracts, residential loan commitment rate locks, interest rate future contracts, swaptions, certain
commodities, forward commitments to sell TBAs, forward sale contracts and purchase options. The Company
does not use derivatives for speculative purposes.
The Company’s derivative instruments are reported at fair value in the Consolidated Balance Sheets as
derivative assets and derivative liabilities. Certain derivatives are cleared through central clearing houses.
Cleared derivatives represent contracts executed bilaterally with counterparties in the OTC market that are
novated to central clearing houses that become our counterparty. OTC-cleared derivative instruments are
typically settled in cash each day based on their value from the previous day. Information regarding the valuation
methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in
Note 20.
Derivative assets and liabilities are netted by counterparty in the Consolidated Balance Sheets if a “right
of setoff” is established in a master netting agreement between the Company and the counterparty. This netted
derivative asset or liability position is also netted against the fair value of any cash collateral that is pledged or
received in accordance with a master netting agreement.
Citizens Financial Group, Inc. | 126
The following table presents derivative instruments included in the Consolidated Balance Sheets:
(dollars in millions)
Derivatives designated as hedging instruments:
December 31, 2023
December 31, 2022
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Notional
Amount
Derivative
Assets
Derivative
Liabilities
Interest rate contracts
$86,895
$173
$44
$42,250
$16
$53
Derivatives not designated as hedging instruments:
Interest rate contracts
Foreign exchange contracts
Commodities contracts
TBA contracts
Other contracts
Total derivatives not designated as hedging instruments
Total gross derivatives
Less: Gross amounts offset in the Consolidated Balance
Sheets(1)
Less: Cash collateral applied(1)
Total net derivatives presented in the Consolidated
Balance Sheets
185,993
32,528
1,251
2,337
549
291
434
685
3
7
222,658
309,553
1,420
1,593
1,105
174,384
378
640
16
—
2,139
2,183
29,475
1,103
2,370
913
208,245
250,495
(471)
(682)
(471)
(150)
331
527
953
7
5
1,579
519
942
14
4
1,823
1,839
3,058
3,111
(623)
(374)
(623)
(579)
$440
$1,562
$842
$1,909
(1) Amounts represent the impact of enforceable master netting agreements that allow the Company to net settle positive and negative positions, as well as
collateral paid and received.
The Company’s derivative transactions are internally divided into three sub-groups: institutional,
customer facilitation and residential loan. Certain derivative transactions within these sub-groups are designated
as fair value or cash flow hedges, as described below:
Derivatives Designated As Hedging Instruments
The Company’s institutional derivatives qualify for hedge accounting treatment. The net interest accruals
on interest rate swaps designated in a fair value or cash flow hedge relationship are treated as an adjustment to
interest income or interest expense of the item being hedged. All hedging relationships are formally documented
at inception, as well as risk management objectives and strategies for undertaking various accounting hedges. In
addition, the effectiveness of hedge relationships is monitored during the duration of the hedge period. The
methods utilized to assess hedge effectiveness vary based on the hedge relationship and each relationship is
monitored to ensure that management’s initial intent continues to be satisfied. Hedge accounting treatment is
discontinued when the derivative is terminated or when it is determined that a derivative is not expected to be,
or has ceased to be, effective as a hedge. Changes in the fair value of a derivative are reflected in earnings after
termination of the hedge relationship.
Fair Value Hedges
In a fair value hedge, changes in the fair value of both the derivative instrument and the hedged asset or
liability attributable to the risk being hedged are recognized in the same income statement line item in the
Consolidated Statements of Operations when the changes in fair value occur. During 2023, the Company entered
into fair value hedges to manage interest rate risk within the AFS securities portfolio.
Citizens Financial Group, Inc. | 127
The following table presents the change in fair value of interest rate contracts designated as fair value
hedges, as well as the change in fair value of the related hedged items attributable to the risk being hedged,
included in the Consolidated Statements of Operations:
Year Ended December 31,
(dollars in millions)
2023
2022
2021
Affected Line Item in the Consolidated
Statements of Operations
Interest rate swaps hedging long-term borrowed funds
$10
($69)
($72) Interest expense - long-term borrowed funds
Hedged long-term borrowed funds attributable to the
risk being hedged
Interest rate swaps hedging LHFS
Hedged LHFS attributable to the risk being hedged
Interest rate swaps hedging debt securities available
for sale
Hedged debt securities available for sale attributable
to risk being hedged
(10)
—
—
68
13
71 Interest expense - long-term borrowed funds
— Interest and fees on other loans held for sale
(13)
— Interest and fees on other loans held for sale
(48)
29
68 Interest income - investment securities
50
(29)
(68) Interest income - investment securities
The following table reflects amounts recorded in the Consolidated Balance Sheets related to cumulative
basis adjustments for fair value hedges:
(dollars in millions)
Carrying amount of hedged assets
Carrying amount of hedged liabilities
Cumulative amount of fair value hedging adjustments included in the
carrying amount of the hedged items
December 31, 2023
December 31, 2022
Debt securities
available for
sale(1)
Long-term
borrowed
funds
Debt securities
available for
sale
Long-term
borrowed
funds
$7,253
—
60
$—
483
(17)
$—
—
—
$—
972
(27)
(1) Includes the amortized cost basis of closed portfolios used to designate hedging relationships under the portfolio layer method. The hedged item is a layer of
the closed portfolio which is expected to be remaining at the end of the hedging relationship. As of December 31, 2023, the amortized cost basis of the closed
portfolios used in these hedging relationships was $5.9 billion, including associated cumulative basis adjustments of $39 million, and the amount of the
designated hedging instruments was $4.0 billion.
Cash Flow Hedges
In a cash flow hedge the entire change in the fair value of the interest rate swap included in the
assessment of hedge effectiveness is initially recorded in OCI and is subsequently reclassified from AOCI to
current period earnings (net interest income) in the same period that the hedged item affects earnings.
Citizens has entered into interest rate swap agreements designed to hedge a portion of the Company’s
floating-rate assets and liabilities. All of these swaps are deemed highly effective cash flow hedges. The
Company has also entered into certain interest rate option agreements that utilize interest rate floors and caps,
or some combination thereof, providing the ability to hedge the variability in cash flows within different interest
rate bands. Option premiums paid and received are excluded from the assessment of hedge effectiveness and are
amortized over the life of the instruments.
The following table presents the pre-tax net gains (losses) recorded in the Consolidated Statements of
Operations and in the Consolidated Statements of Comprehensive Income related to derivative instruments
designated as cash flow hedges:
(dollars in millions)
Amount of pre-tax net gains (losses) recognized in OCI
Amount of pre-tax net gains (losses) reclassified from AOCI into interest income
Amount of pre-tax net gains (losses) reclassified from AOCI into interest expense
Year Ended December 31,
2023
2022
2021
($145)
(596)
—
($1,806)
(111)
(4)
($66)
183
(48)
Using the interest rate curve at December 31, 2023 with respect to cash flow hedge strategies, the
Company estimates that approximately $914 million in pre-tax net losses will be reclassified from AOCI to net
interest income over the next 12 months, including $460 million related to terminated swaps. This amount could
differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition
of other hedges subsequent to December 31, 2023.
Citizens Financial Group, Inc. | 128
Derivatives not designated as hedging instruments
The Company offers derivatives to customers in connection with their risk management needs. These
derivatives primarily consist of interest rate, foreign exchange and commodity derivative contracts. Market risk
exposure from customer transactions is primarily managed by entering into a variety of hedging transactions with
third-party dealers. Gains and losses on customer-related derivatives are reported in foreign exchange and
derivatives products in the Consolidated Statements of Operations.
Residential mortgage loans that will be sold in the secondary market and the related loan commitments,
which are considered derivatives, are accounted for at fair value. Changes in the fair value of the loans and
related commitments due to interest rate risk are hedged with forward contracts to sell mortgage-backed
securities. Gains and losses on the loans and related commitments, and the derivatives used to economically
hedge them, are reported in mortgage banking fees in the Consolidated Statements of Operations.
Residential MSRs are accounted for at fair value. Derivatives utilized to hedge the fair value of
residential MSRs include interest rate futures, swaps, options, and forward contracts to purchase mortgage-
backed securities. Gains and losses on residential MSRs and the related derivatives are reported in mortgage
banking fees in the Consolidated Statements of Operations.
The following table presents the effect of economic hedges on noninterest income:
(dollars in millions)
Economic hedge type:
Amounts Recognized in
Noninterest Income for the Year
Ended December 31,
2023
2022
2021
Affected Line Item in the Consolidated
Statements of Operations
Customer interest rate contracts
($505)
($2,027)
($374) Foreign exchange and derivative products
Derivatives hedging interest rate risk
Customer foreign exchange contracts
Derivatives hedging foreign exchange risk
551
94
14
2,090
401 Foreign exchange and derivative products
(180)
(207) Foreign exchange and derivative products
313
305 Foreign exchange and derivative products
Customer commodity contracts
(900)
1,121
779 Foreign exchange and derivative products
Derivatives hedging commodity price risk
941
(1,097)
(770) Foreign exchange and derivative products
Residential loan commitments
(34)
(284)
(208) Mortgage banking fees
Derivatives hedging residential loan commitments and
mortgage LHFS, at fair value
25
489
152 Mortgage banking fees
Derivative contracts used to hedge residential MSRs
(33)
(313)
(150) Mortgage banking fees
Total
$153
$112
($72)
NOTE 15 - EMPLOYEE BENEFIT PLANS
Pension and Other Postretirement Plans
Citizens maintains a non-contributory pension plan (the “Citizens Qualified Plan”) that was closed to new
hires and re-hires effective January 1, 2009, and frozen to all participants effective December 31, 2012. Benefits
under the Citizens Qualified Plan are based on employees’ years of service and highest 5-year average of eligible
compensation. The Citizens Qualified Plan is funded on a current basis, in compliance with the requirements of
the Employee Retirement Income Security Act of 1974.
In connection with the Investors acquisition, effective June 30, 2022, the Company withdrew from a
multi-employer plan and transferred the plan assets into a newly established defined benefit pension plan
sponsored by Citizens (the “Investors Qualified Plan”). The Investors Qualified Plan was closed to new hires and
re-hires effective December 1, 2015, and future benefit accruals were frozen to all participants effective
December 31, 2016.
The Citizens Qualified Plan and the Investors Qualified Plan are collectively referred to as the Company’s
“Qualified Plans.”
Citizens also provides an unfunded, non-qualified supplemental retirement plan which was closed and
frozen effective December 31, 2012, as well as postretirement benefit plans. As part of the Investors acquisition
in 2022, the Company also obtained other frozen, non-qualified supplemental retirement and postretirement
benefit plans. These plans are collectively referred to as the Company’s “Non-Qualified Plans.”
Citizens Financial Group, Inc. | 129
The Company’s Qualified Plans and Non-Qualified Plans are collectively referred to as the Company’s
“Pension Plans.” The Pension Plans’ investments include equity-oriented and fixed income-oriented investments
including, but not limited to, government obligations, corporate bonds, and common and collective equity and
fixed income funds.
The following table presents changes in the fair value of the Company’s Pension Plan assets, projected
benefit obligation, funded status, and accumulated benefit obligation:
(dollars in millions)
Fair value of plan assets as of January 1
Return on plan assets
Employer contributions
Benefits and administrative expenses paid
Fair value of plan assets from Investors acquisition
Fair value of plan assets as of December 31
Projected benefit obligation
Pension asset (obligation)
Accumulated benefit obligation
Year Ended December 31,
Qualified Plans
Non-Qualified Plans
2023
2022
2023
2022
$1,182
$1,390
169
—
(262)
—
$—
—
5
(70)
(76)
(5)
—
1,281
880
$401
$880
130
1,182
868
$314
$868
—
—
99
($99)
($94)
$99
$94
$—
—
8
(8)
—
—
94
Actuarial losses related to the Pension Plans recognized in AOCI at December 31, 2023 and 2022 were
$446 million and $504 million, respectively.
In 2024, Citizens does not plan to contribute to the Qualified Plans and expects to contribute $10 million
to the Non-Qualified Plans.
The following table presents the components of net periodic benefit cost (income) and other changes in
plan assets and benefit obligations recognized in OCI for the Company’s Pension Plans:
(dollars in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Settlement
Net periodic benefit cost (income)(1)
Net actuarial loss (gain)
Amortization of actuarial loss
Settlement
Total recognized in OCI
Year Ended December 31,
Qualified Plans
Non-Qualified Plans
Total
2023
2022
2021
2023
2022
2021
2023
2022
2021
$—
$—
$—
$4
46
$3
34
$3
31
(92)
(93)
(85)
15
11
—
—
14
15
(27)
(45)
(22)
(44)
71
(73)
(15)
(11)
(14)
—
—
(15)
(59)
60 (102)
5
—
2
—
7
1
(2)
—
(1)
3
—
3
—
6
3
—
3
—
6
$4
51
$3
37
$3
34
(92)
(93)
(85)
17
14
—
—
(20)
(39)
17
15
(16)
(74)
(17)
(15)
(19)
(1)
(43)
52
(3)
—
(3)
(17)
(14)
—
—
—
(22)
(4)
(60)
38 (106)
Total recognized in net periodic benefit cost (income) and OCI
($86)
$15 ($124)
$6 ($16)
$2
($80)
($1) ($122)
(1) In the Consolidated Statements of Operations, service cost is presented in salaries and employee benefits and all other components of net periodic benefit cost
(income) are presented in other operating expense.
Costs under the Company’s Pension Plans are actuarially computed and include current service costs and
amortization of prior service costs over the participants’ average future working lifetime. The actuarial cost
method used in determining the net periodic benefit cost is the projected unit method. During 2021, lump sum
payments made under the Citizens Qualified Plan triggered settlement accounting. In accordance with the
applicable accounting guidance for defined benefit plans, the Company performed a remeasurement of the
Citizens Qualified Plan and recognized a settlement loss.
Citizens Financial Group, Inc. | 130
The following table presents the expected future benefit payments for the Company’s Pension Plans:
Expected benefit payments by fiscal year ending:
December 31, 2024
December 31, 2025
December 31, 2026
December 31, 2027
December 31, 2028
December 31, 2029 - 2033
401(k) Plan
(dollars in millions)
$73
74
75
75
75
366
Citizens sponsors a 401(k) Plan under which employee contributions are matched by the Company dollar
for dollar up to 4% after the employee completes of one year of service. In addition, substantially all employees
will receive an additional 1.5% of their eligible earnings after completion of one year of service, subject to limits
set by the Internal Revenue Service. Amounts expensed by the Company were $78 million in 2023 compared to
$86 million in 2022 and $63 million in 2021.
NOTE 16 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the changes in the balances, net of income taxes, of each component of
AOCI:
(dollars in millions)
Balance at January 1, 2021
Other comprehensive income (loss) before reclassifications
Amounts reclassified to the Consolidated Statements of Operations
Net other comprehensive income (loss)
Balance at December 31, 2021
Other comprehensive income (loss) before reclassifications
Net
Unrealized
Gains
(Losses) on
Derivatives
Net
Unrealized
Gains
(Losses) on
Debt
Securities
Employee
Benefit
Plans
Total AOCI
($11)
(49)
(101)
(150)
$380
($429)
(528)
(8)
(536)
—
81
81
($60)
(577)
(28)
(605)
($161)
($156)
($348)
($665)
(1,340)
(2,608)
(37)
(3,985)
Amounts reclassified to the Consolidated Statements of Operations
85
(7)
12
90
Net other comprehensive income (loss)
Balance at December 31, 2022
Other comprehensive income (loss) before reclassifications
Amounts reclassified to the Consolidated Statements of Operations
Net other comprehensive income (loss)
Balance at December 31, 2023
(1,255)
(2,615)
(25)
(3,895)
($1,416)
($2,771)
($373)
($4,560)
(106)
435
329
350
83
433
28
12
40
272
530
802
($1,087)
($2,338)
($333)
($3,758)
Primary location in the Consolidated Statements of Operations of amounts
reclassified from AOCI
Net interest
income
Securities
gains, net
and Net
interest
income
Other
operating
expense
Citizens Financial Group, Inc. | 131
NOTE 17 - STOCKHOLDERS’ EQUITY
Preferred Stock
The following table summarizes the Company’s preferred stock:
(dollars in millions, except per share data)
Authorized ($25 par value per share)
Issued and outstanding:
Series B
Series C
Series D
Series E
Series F
Series G
Total
December 31,
2023
2022
Liquidation
value per
share
Preferred
Shares
100,000,000
Carrying
Amount
Preferred
Shares
Carrying
Amount
100,000,000
$1,000
1,000
1,000 (1)
1,000 (1)
1,000
1,000
300,000
300,000
300,000 (2)
450,000 (3)
400,000
300,000
$296
297
293
437
395
296
300,000
300,000
300,000
450,000
400,000
300,000
$296
297
293
437
395
296
2,050,000
$2,014
2,050,000
$2,014
(1) Equivalent to $25 per depositary share.
(2) Represented by 12,000,000 depositary shares each representing a 1/40th interest in the Series D Preferred Stock.
(3) Represented by 18,000,000 depositary shares each representing a 1/40th interest in the Series E Preferred Stock.
The following table provides information related to the Company’s preferred stock outstanding as of
December 31, 2023:
Preferred
Stock(1)
Series B
Issue Date
May 24, 2018
Number of
Shares
Issued
300,000
Series C
October 25, 2018
300,000
Dividend Dates(2)
Semi-annually beginning January 6, 2019 until
July 6, 2023
Quarterly beginning October 6, 2023
Quarterly beginning January 6, 2019 until April
6, 2024
Quarterly beginning July 6, 2024
Series D
January 29, 2019 300,000(4) Quarterly beginning April 6, 2019 until April 6,
2024
Quarterly beginning July 6, 2024
Annual Per Share Dividend
Rate
6.000% until July 6, 2023
Optional
Redemption
Date(3)
July 6, 2023
3 Mo. CME Term SOFR plus
3.265% beginning July 6,
2023(6)
6.375% until April 6, 2024
3 Mo. CME Term SOFR plus
3.419% beginning April 6,
2024(6)
6.350% until April 6, 2024
3 Mo. CME Term SOFR plus
3.904% beginning April 6,
2024(6)
5.000%
April 6, 2024
April 6, 2024
January 6, 2025
October 6, 2025
October 6, 2026
Series E
Series F
October 28, 2019 450,000(5) Quarterly beginning January 6, 2020
June 4, 2020
400,000
Quarterly beginning October 6, 2020 until
October 6, 2025
5.650% until October 6,
2025
Quarterly beginning January 6, 2026
Series G
June 11, 2021
300,000
Quarterly beginning October 6, 2021 until
October 6, 2026
Quarterly beginning January 6, 2027
5 Yr. US Treasury rate plus
5.313% beginning October 6,
2025
4.000% until October 6,
2026
5 Yr. US Treasury rate plus
3.215% beginning October 6,
2026
(1) Series B through D are non-cumulative fixed-to-floating rate perpetual preferred stock, Series E is non-cumulative fixed-rate perpetual preferred stock, and
Series F and G are non-cumulative fixed-rate reset perpetual preferred stock. Except in limited circumstances, each series of preferred stock does not have
voting rights.
(2) Dividends are payable when declared by the Company’s Board of Directors or an authorized committee thereof.
(3) Redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after the date stated, or in whole but not in part, at any time
within 90 days following a regulatory capital treatment event as defined in the applicable certificate of designations, in each case at a redemption price equal
to $1,000 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Under current rules, any redemption is subject
to approval by the FRB.
(4) Represented by 12,000,000 depositary shares each representing a 1/40th interest in the Series D Preferred Stock.
(5) Represented by 18,000,000 depositary shares each representing a 1/40th interest in the Series E Preferred Stock.
(6) Effective July 1, 2023, Series B through D transitioned from three-month USD LIBOR to three-month CME Term SOFR, plus a tenor spread adjustment of
0.26161%, as their benchmark replacement rate during their respective floating-rate periods due to the cessation of LIBOR on June 30, 2023.
Citizens Financial Group, Inc. | 132
Dividends
The following tables summarize the Company’s dividend activity for the years ended December 31, 2023,
2022 and 2021.
(dollars in millions,
except per share data)
Common stock
Preferred stock
Series A
Series B
Series C
Series D
Series E
Series F
Series G
Year Ended December 31,
2023
2022
2021
Dividends
Declared
per Share
Dividends
Declared
Dividends
Paid
Dividends
Declared
per Share
Dividends
Declared
Dividends
Paid
Dividends
Declared
per Share
Dividends
Declared
Dividends
Paid
$1.68
$808
$808
$1.62
$779
$779
$1.56
$670
$670
$—
74.49
63.75
63.50
50.00
56.50
40.00
$—
22
19
19
22
23
12
$—
25
19
19
22
23
12
$—
60.00
63.75
63.50
50.00
56.50
40.00
$—
18
19
19
22
23
12
$—
18
19
19
22
23
12
$20.99
60.00
63.75
63.50
50.00
56.50
22.78
$5
18
19
18
23
23
7
$8
18
19
18
23
23
4
Total preferred stock
$117
$120
$113
$113
$113
$113
Treasury Stock
The purchase of the Company’s common stock is recorded at cost. Upon retirement, or if subsequently
reissued, treasury stock is reduced by the cost of such stock on a first-in, first-out basis with differences
recorded in additional paid-in capital or retained earnings, as applicable.
During the years ended December 31, 2023 and 2022, the Company repurchased $906 million, or
28,473,805 shares, and repurchased $153 million, or 3,815,922 shares, respectively, of its outstanding common
stock, which are held in treasury stock.
NOTE 18 - SHARE-BASED COMPENSATION
Citizens has share-based employee compensation plans as outlined below, pursuant to which awards are
granted to employees and non-employee directors. The Company has granted time-based restricted stock units
and performance-based restricted stock units, which represent the right to receive shares of stock on a future
date subject to applicable vesting conditions.
Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan. The Company grants select employees time-
based restricted stock units and performance-based restricted stock units under this plan. Time-based restricted
stock units generally become vested ratably over a 3-year period and performance-based restricted stock units
generally become vested in a single installment at the end of a 3-year performance period, depending on the
level of performance achieved during such period relative to established targets. If a dividend is paid on shares
underlying the awards prior to the date such shares are distributed, those dividends will be distributed following
vesting in the same form as the dividend that was paid to common stockholders generally.
Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan. The Company grants
time-based restricted stock units to non-employee directors as compensation for their services under this plan.
Restricted stock units granted to directors are fully vested on the grant date, with settlement of the awards
deferred until a director’s cessation of service. If a dividend is paid on the shares underlying the awards prior to
the date such shares are distributed, they are reinvested into additional restricted stock units.
Citizens Financial Group, Inc. 2014 Employee Stock Purchase Plan. This plan provides eligible employees
an opportunity to purchase CFG common stock at a 10% discount. Participants may contribute up to 10% of
eligible compensation to the ESPP and may purchase up to $25,000 worth of stock in any calendar year. Offering
periods under the ESPP are quarterly, with shares of CFG common stock purchased on the last day of each
quarter at a 10% discount from the fair market value, defined as the closing price on the day of purchase. Prior
to the date the shares are purchased, participants have no rights or privileges as a stockholder with respect to
shares purchased at the end of the offering period.
Citizens Financial Group, Inc. | 133
Restricted Stock Unit Activity
The following table presents the activity related to the Company’s restricted stock unit activity:
2023
2022
2021
Units
Weighted-Average
Grant Price
Units
Weighted-Average
Grant Price
Units
Weighted-Average
Grant Price
Year Ended December 31,
Outstanding, January 1
3,876,601
$43.06
3,502,956
$38.23
3,496,231
Assumed
Granted
—
2,575,234
Vested & Distributed
(1,729,136)
Forfeited
(149,042)
—
39.88
40.84
42.92
—
1,844,352
(1,359,543)
(111,164)
—
48.12
37.47
43.36
82,013
1,417,370
(1,400,722)
(91,936)
Outstanding, December 31
4,573,657
$42.23
3,876,601
$43.06
3,502,956
$34.37
49.95
44.97
38.88
35.00
$38.23
There are 40,750,357 shares of common stock available for awards to be granted under the Omnibus Plan
and Directors Plan. In addition, there are 2,991,009 shares available for issuance under the ESPP. Upon
settlement of share-based awards, the Company generally issues new shares, but may also issue shares from
treasury stock.
Compensation Expense
Citizens measures compensation expense related to stock awards based upon the fair value of the awards
on the grant date. Compensation expense is adjusted for forfeitures as they occur. The related expense is
charged to earnings on a straight-line basis over the requisite service period (i.e., vesting period) of the award.
With respect to performance-based stock awards, compensation expense is adjusted upward or downward based
upon the probability of achievement of performance. Awards that continue to vest after retirement are expensed
over the shorter of the period of time from grant date to the final vesting date or from the grant date to the date
when an employee is retirement eligible. Awards granted to employees who are retirement eligible at the grant
date are generally expensed immediately.
Share-based compensation expense was $87 million, $84 million and $59 million for the years ended
December 31, 2023, 2022 and 2021, respectively. At December 31, 2023, the total unrecognized compensation
expense for unvested awards granted was $76 million. This expense is expected to be recognized over a
weighted-average period of approximately two years.
Citizens recognized income tax benefits related to share-based compensation arrangements of $16
million, $19 million and $12 million for the years ended December 31, 2023, 2022 and 2021, respectively.
NOTE 19 - COMMITMENTS AND CONTINGENCIES
A summary of outstanding off-balance sheet arrangements is presented below:
(dollars in millions)
Commitments to extend credit
Letters of credit
Loans sold with recourse
Marketing rights
Risk participation agreements
Total
Commitments to Extend Credit
December 31,
2023
2022
$94,201
$96,076
1,977
2,119
96
18
3
92
23
4
$96,295
$98,314
Commitments to extend credit are agreements to lend to customers in accordance with conditions
contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination
clauses and may require payment of a fee. Since many of these commitments are expected to expire without
being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.
Citizens Financial Group, Inc. | 134
Letters of Credit
Letters of credit in the table above reflect commercial, standby financial and standby performance
letters of credit. Financial and performance standby letters of credit are issued by the Company for the benefit
of its customers. They are used as conditional guarantees of payment to a third party in the event the customer
either fails to make specific payments (financial) or fails to complete a specific project (performance). The
Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above
instruments is represented by the contractual amount of those instruments. Generally, letters of credit are
collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters
of credit is considered in determining the appropriate amount of allowances for unfunded commitments. Standby
letters of credit and commercial letters of credit are issued for terms of up to two years and one year,
respectively.
Other Commitments
Citizens has additional off-balance sheet arrangements that are summarized below:
• Marketing Rights - During 2003, Citizens entered into a 25-year agreement to acquire the naming and
marketing rights of a baseball stadium in Pennsylvania.
•
•
Loans sold with recourse - Citizens is an originator and servicer of residential mortgages and routinely
sells such mortgage loans in the secondary market and to GSEs. In the context of such sales, the Company
makes certain representations and warranties regarding the characteristics of the underlying loans and,
as a result, may be contractually required to repurchase such loans or indemnify certain parties against
losses for certain breaches of those representations and warranties. The Company also sells the
government guaranteed portion of certain SBA loans to outside investors, for which it retains the
servicing rights.
Risk Participation Agreements - RPAs are guarantees issued by the Company to other parties for a fee,
whereby the Company agrees to participate in the credit risk of a derivative customer of the other party.
The current amount of credit exposure is spread out over multiple counterparties. At December 31, 2023,
the remaining terms on these RPAs ranged from less than one year to ten years.
Contingencies
The Company operates in a legal and regulatory environment that exposes it to potentially significant
risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other
businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject
of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations which,
in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, and mortgage-related
issues. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on
a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in
investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages,
fines, penalties, public or private censure, increased costs, required remediation, restrictions on business
activities, or other impacts on the Company.
In these disputes and proceedings, the Company contests liability and the amount of damages as
appropriate. Given their complex nature, and based on the Company's experience, it may be years before some
of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim,
numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and
determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the
proceedings in question. The Company cannot predict with certainty if, how, or when such claims will be
resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims
that are at an early stage in their development or where claimants seek substantial or indeterminate damages.
The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice,
it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings,
however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss.
Based on information currently available, the advice of legal counsel and other advisers, and established
reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings
will not have a materially adverse effect on the Company’s Consolidated Financial Statements.
Citizens Financial Group, Inc. | 135
NOTE 20 - FAIR VALUE MEASUREMENTS
Citizens measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on
a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of
accounting. Fair value is also used on a nonrecurring basis to evaluate assets for impairment or for disclosure
purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market
accounting or write-downs of individual assets. Fair value measurement guidance is also applied to determine
amounts reported for certain disclosures in this Note for assets and liabilities that are not required to be
reported at fair value in the financial statements.
Fair Value Option
Citizens elected to account for residential mortgage LHFS and certain commercial and industrial, and
commercial real estate LHFS at fair value. The election of the fair value option for financial assets and liabilities
is optional and irrevocable. Applying fair value accounting to residential mortgage LHFS better aligns the
reported results of the economic changes in the value of these loans and their related economic hedge
instruments. Certain commercial and industrial, and commercial real estate LHFS are managed by a commercial
secondary loan desk that provides liquidity to banks, finance companies and institutional investors. Fair value
accounting is applied to these loans since the Company holds these loans with the intent to sell them in the near-
term.
The following table presents the difference between the aggregate fair value and the aggregate unpaid
principal balance of LHFS measured at fair value:
(dollars in millions)
December 31, 2023
December 31, 2022
Aggregate
Fair Value
Aggregate
Unpaid
Principal
Aggregate
Fair Value
Greater (Less)
Than
Aggregate
Unpaid
Principal
Aggregate
Fair Value
Aggregate
Unpaid
Principal
Aggregate
Fair Value
Greater (Less)
Than
Aggregate
Unpaid
Principal
Residential mortgage LHFS, at fair value
$614
$593
$21
$666
$656
Commercial and industrial, and commercial real
estate LHFS, at fair value
62
69
(7)
108
127
$10
(19)
Residential Mortgage Loans Held for Sale
The fair value of residential mortgage LHFS is derived from observable mortgage security prices and
includes adjustments for loan servicing value, agency guarantee fees, and other loan level attributes which are
observable in the marketplace. Credit risk does not have a significant impact on the valuation of these loans as
they are sold shortly after origination. Residential mortgage LHFS are classified as Level 2 in the fair value
hierarchy given the observable market inputs utilized to value these loans.
Residential mortgage loans accounted for under the fair value option are initially measured at fair value
when the financial asset is originated or purchased. Subsequent changes in fair value are recognized in mortgage
banking fees in the Consolidated Statements of Operations.
Interest income on residential mortgage loans held for sale is calculated based on the contractual
interest rate of the loan and is recorded in interest income in the Consolidated Statements of Operations.
Commercial and Industrial, and Commercial Real Estate Loans Held for Sale
The fair value of commercial and industrial, and commercial real estate LHFS is estimated using
observable prices of similar loans that transact in the marketplace. External pricing services that provide fair
value estimates based on quotes from various dealers transacting in the market, sector curves or benchmarking
techniques are also utilized. Commercial and industrial, and commercial real estate loans managed by the
commercial secondary loan desk are classified as Level 2 in the fair value hierarchy given the observable market
inputs utilized to value these loans.
Citizens Financial Group, Inc. | 136
These commercial loans accounted for under the fair value option are initially measured at fair value
when the financial asset is recognized. Subsequent changes in fair value are recognized in capital markets fees in
the Consolidated Statements of Operations. Changes in the fair value of the commercial trading portfolio are due
to changes in credit risk since the portfolio is comprised of floating-rate obligations only. These credit-related
changes may include observed changes in overall credit spreads and/or changes to the creditworthiness of an
individual borrower.
Interest income on commercial and industrial, and commercial real estate LHFS is calculated based on
the contractual interest rate of the loan and is recorded in interest income in the Consolidated Statements of
Operations.
Recurring Fair Value Measurements
Fair value is measured using the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. Fair value is based upon
quoted market prices in an active market, if available, or observable market-based inputs or independently
sourced parameters if quoted prices are not available. Inputs may include prices for similar assets or liabilities,
yield curves, interest rates, prepayment speeds, and foreign exchange rates.
The Company carries certain assets and liabilities at fair value, including AFS securities, derivative
instruments and other investment securities. In addition, the Company has elected to account for its residential
mortgage LHFS and loans managed by the commercial secondary loan trading desk at fair value. Assets and
liabilities carried at fair value are classified in accordance with the three-level valuation hierarchy:
•
•
•
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar instruments,
quoted prices in markets that are not active, or other inputs that are observable or can be corroborated
by market data for substantially the full term of the asset or liability.
Level 3. Unobservable inputs that are supported by little or no market information and that are
significant to the fair value measurement.
Classification in the hierarchy is based upon the lowest level input that is significant to the fair value
measurement of the asset or liability. For instruments classified in Levels 1 and 2 where inputs are primarily
based upon observable market data, there is less judgment applied in arriving at the fair value. For instruments
classified in Level 3, management judgment is more significant due to the lack of observable market data.
Fair value hierarchy classifications are reviewed and updated on a quarterly basis. Changes related to the
observability of inputs in fair value measurements may result in a reclassification between the fair value
hierarchy levels and are recognized based on period-end balances.
A variety of valuation techniques are utilized to measure the Company’s assets and liabilities at fair value
on a recurring basis, with those utilized for significant assets and liabilities presented below:
Debt securities available for sale
AFS debt securities are classified as Level 1 in the fair value hierarchy if quoted prices in active markets
are available. Classes of securities that are valued using this market approach include debt securities issued by
the U.S. Treasury. The fair value of a security is estimated under the market or income approach using pricing
models if quoted market prices are not available. These securities are classified as Level 2 since they trade in
active markets and the inputs to their valuations are observable. The pricing models used to value securities
generally commence with market prices, or rates, for similar instruments, with adjustments made based on the
characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the
sensitivity of each security’s value to changes in interest rates and prepayment speeds. Classes of securities that
are valued using this market approach include pooled mortgage “pass-through” securities, collateralized loan
obligations, and other debt securities issued by U.S. GSEs and state and political subdivisions. The pricing models
used to value securities under the income approach generally commence with the contractual cash flows of each
security, with adjustments made based on forecasted prepayment speeds, default rates, and other market-
observable information. The adjusted cash flows are then discounted at a rate derived from observed rates of
return for comparable assets or liabilities that are traded in the market. Classes of instruments that are valued
using this market approach include residential and commercial CMOs.
Citizens Financial Group, Inc. | 137
A majority of the Company’s Level 1 and 2 debt securities are priced using an external pricing service.
The pricing accuracy of this service is verified on a quarterly basis and involves the use of a secondary external
vendor to provide valuations for the Company’s securities portfolio for comparison purposes. Any valuation
discrepancies exceeding a certain threshold are researched and, if necessary, corroborated by an independent
outside broker.
In certain cases where there is limited activity or less transparency around inputs to the valuation model,
securities are classified as Level 3.
Mortgage Servicing Rights
MSRs do not trade in an active market with readily observable prices and, therefore, are classified as
Level 3 since their valuation utilizes significant unobservable inputs. The fair value is determined using a
discounted cash flow model, which includes assumptions associated with weighted-average life, prepayment
speed, and weighted-average option adjusted spread. The underlying assumptions and estimated values are
corroborated by values received from independent third parties based on their review of the servicing portfolio
and comparisons to market transactions. Refer to Note 8 for more information.
Derivatives
The Company’s interest rate derivatives are traded in OTC markets where quoted market prices are not
readily available. Fair value is determined through models that primarily use market observable inputs, such as
swap rates and yield curves. These pricing models determine the sum of each instrument’s fixed and variable
cash flows, which are then discounted using an appropriate yield curve (i.e., Overnight Index Swap curve) to
arrive at the fair value of each derivative instrument. The pricing models do not contain a high level of
subjectivity as the methodologies used do not require significant judgment. Certain adjustments to the modeled
price that market participants would make when pricing each instrument are also considered, including a credit
valuation adjustment that reflects the credit quality of the derivative counterparty. The effect of exposure to a
particular counterparty’s credit is incorporated by netting their derivative contracts with the available collateral
and calculating a credit valuation adjustment on the basis of the net position with the counterparty where
permitted. This adjustment requires judgment on behalf of Company management; however, the total amount of
this portfolio-level adjustment is not material to the total fair value of the interest rate derivative portfolio.
Therefore, interest rate derivatives are classified as Level 2 in the fair value hierarchy.
The fair value of commodity derivatives uses the mid-point of market observable quoted prices as an
input into the fair value model. These observed market prices, combined with other market observed inputs to
derive the fair value of the instrument, generally classifies the commodity derivative as a Level 2 instrument.
The fair value of foreign exchange derivatives uses the mid-point of daily quoted currency spot prices.
The valuation model estimates fair value based on these quoted prices along with interest rate yield curves and
forward currency rates. Since all of these inputs are observable in the market, foreign exchange derivatives are
classified as Level 2 in the fair value hierarchy.
The fair value of TBA contracts is estimated using observable prices of similar loan pools that transact in
the marketplace, as well as sector curves and benchmarking techniques. Therefore, the TBA contracts are
classified as Level 2 in the fair value hierarchy given the observable market inputs.
Other contracts primarily consist of interest rate lock commitments, which are valued utilizing loan
closing rate assumptions that are internally generated. These assumptions are a significant unobservable input
and, therefore, interest rate lock commitments are classified as Level 3 in the fair value hierarchy.
Citizens Financial Group, Inc. | 138
Equity Securities, at fair value
The fair value of money market mutual fund investments is determined based on unadjusted quoted
market prices and is considered a Level 1 fair value measurement.
The following table presents assets and liabilities measured at fair value, including gross derivative assets
and liabilities, on a recurring basis at December 31, 2023:
(dollars in millions)
Debt securities available for sale:
Mortgage-backed securities
Collateralized loan obligations
State and political subdivisions
U.S. Treasury and other
Total debt securities available for sale
Loans held for sale, at fair value:
Residential loans held for sale
Commercial loans held for sale
Total loans held for sale, at fair value
Mortgage servicing rights
Derivative assets:
Interest rate contracts
Foreign exchange contracts
Commodities contracts
TBA contracts
Other contracts
Total derivative assets
Equity securities, at fair value(1)
Total assets
Derivative liabilities:
Interest rate contracts
Foreign exchange contracts
Commodities contracts
TBA contracts
Other contracts
Total derivative liabilities
Total liabilities
Total
Level 1
Level 2
Level 3
$24,732
$—
$24,732
$—
664
1
4,380
29,777
—
—
4,380
4,380
664
1
—
25,397
614
62
676
1,552
464
434
685
3
7
1,593
115
—
—
—
—
—
—
—
—
—
—
115
614
62
676
—
464
434
685
3
—
1,586
—
—
—
—
—
—
—
—
1,552
—
—
—
—
7
7
—
$33,713
$4,495
$27,659
$1,559
$1,149
$—
$1,149
$—
378
640
16
—
2,183
$2,183
—
—
—
—
—
378
640
16
—
2,183
—
—
—
—
—
$—
$2,183
$—
(1) Excludes investments of $58 million included in other assets in the Consolidated Balance Sheets that are measured at fair value using the net asset value per
share (or its equivalent) practical expedient. These investments include capital contributions to private investment funds and have unfunded capital
commitments of $28 million at December 31, 2023, which may be called at any time during prescribed time periods. The credit exposure is generally limited to
the carrying amount of investments made and unfunded capital commitments.
Citizens Financial Group, Inc. | 139
The following table presents assets and liabilities measured at fair value, including gross derivative assets
and liabilities, on a recurring basis at December 31, 2022:
(dollars in millions)
Debt securities available for sale:
Mortgage-backed securities
Collateralized loan obligations
State and political subdivisions
U.S. Treasury and other
Total debt securities available for sale
Loans held for sale, at fair value:
Residential loans held for sale
Commercial loans held for sale
Total loans held for sale, at fair value
Mortgage servicing rights
Derivative assets:
Interest rate contracts
Foreign exchange contracts
Commodities contracts
TBA contracts
Other contracts
Total derivative assets
Equity securities, at fair value(1)
Total assets
Derivative liabilities:
Interest rate contracts
Foreign exchange contracts
Commodities contracts
TBA contracts
Other contracts
Total derivative liabilities
Total liabilities
Total
Level 1
Level 2
Level 3
$19,313
1,206
2
3,486
24,007
666
108
774
1,530
347
527
953
7
5
1,839
110
$—
$19,313
$—
—
—
3,486
3,486
1,206
2
—
20,521
—
—
—
—
—
—
—
—
—
—
110
666
108
774
—
347
527
953
7
—
1,834
—
—
—
—
—
—
—
—
1,530
—
—
—
—
5
5
—
$28,260
$3,596
$23,129
$1,535
$1,632
$—
$1,632
519
942
14
4
3,111
$3,111
—
—
—
—
—
519
942
14
—
3,107
$—
$3,107
$—
—
—
—
4
4
$4
(1) Excludes investments of $43 million included in other assets in the Consolidated Balance Sheets that are measured at fair value using the net asset value per
share (or its equivalent) practical expedient. These investments include capital contributions to private investment funds and have unfunded capital
commitments of $42 million at December 31, 2022, which may be called at any time during prescribed time periods. The credit exposure is generally limited to
the carrying amount of investments made and unfunded capital commitments.
The following table presents a roll forward of the balance sheet amounts for assets measured at fair
value on a recurring basis and classified as Level 3:
(dollars in millions)
Beginning balance
Issuances
Acquisitions(1)
Settlements(2)
Changes in fair value during the period recognized in
earnings(3)
Ending balance
For the Year Ended December 31,
2023
2022
Mortgage
Servicing Rights
Other Derivative
Contracts
Mortgage
Servicing Rights
Other Derivative
Contracts
$1,530
127
—
(166)
61
$1,552
$1
64
—
(24)
(34)
$7
$1,029
279
16
(137)
343
$1,530
$38
93
—
154
(284)
$1
(1) Represents MSRs acquired as part of the Investors acquisition.
(2) For MSRs, represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and
partial paydowns, and ii) loans that paid off during the period. For other derivative contracts, represents the closeout of interest rate lock commitments.
(3) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of
Operations.
Citizens Financial Group, Inc. | 140
The following table presents quantitative information about the Company’s Level 3 assets, including the
range and weighted-average of the significant unobservable inputs used to fair value these assets, as well as
valuation techniques used.
Valuation Technique
Unobservable Input
Range (Weighted Average)
Range (Weighted Average)
As of December 31, 2023
As of December 31, 2022
Mortgage servicing rights Discounted Cash Flow
Other derivative
contracts
Internal Model
Constant prepayment rate 6.70-14.55% CPR (7.23% CPR)
6.19-17.80% CPR (6.80% CPR)
Option adjusted spread
398-1,058 bps (630 bps)
398-1,058 bps (629 bps)
Pull through rate
24.90-99.70% (80.34%)
28.62-99.90% (83.71%)
MSR value
(8.90)-141.24 bps (88.04 bps)
(1.60)-144.84 bps (95.80 bps)
Nonrecurring Fair Value Measurements
Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure
purposes. The following valuation techniques are utilized to measure significant assets for which the Company
utilizes fair value on a nonrecurring basis:
Collateral-Dependent Loans
The carrying amount of collateral-dependent loans is compared to the appraised value of the collateral
less costs to dispose and is classified as Level 2. Any excess of the carrying amount over the appraised value is
charged to the ALLL.
The following table presents losses on assets measured at fair value on a nonrecurring basis and recorded
in earnings:
(dollars in millions)
Collateral-dependent loans
Year Ended December 31,
2023
2022
2021
($138)
($4)
($27)
The following table presents assets measured at fair value on a nonrecurring basis:
(dollars in millions)
Collateral-dependent loans
Fair Value of Financial Instruments
December 31, 2023
December 31, 2022
Total
Level 1 Level 2 Level 3
Total
Level 1 Level 2 Level 3
$789
$—
$789
$—
$582
$—
$582
$—
The following tables present the estimated fair value for financial instruments not recorded at fair value
in the Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets
under the indicated captions:
(dollars in millions)
Financial assets:
Total
Level 1
Level 2
Level 3
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
December 31, 2023
Debt securities held to maturity
$9,184
$8,350
Other loans held for sale
Net loans and leases(1)
Other assets
Financial liabilities:
Deposits
103
103
143,861
140,504
869
869
177,342
177,096
Short-term borrowed funds
505
505
Long-term borrowed funds
13,467
13,012
$—
—
—
—
—
—
—
—
—
—
—
—
—
$—
$8,696
$7,887
—
789
851
$488
103
$463
103
—
789
143,072
139,715
851
18
18
177,342
177,096
505
505
13,467
13,012
—
—
—
—
—
—
Citizens Financial Group, Inc. | 141
(dollars in millions)
Financial assets:
Total
Level 1
Level 2
Level 3
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
December 31, 2022
Debt securities held to maturity
$9,834
$9,042
Other loans held for sale
Net loans and leases(1)
Other assets
Financial liabilities:
Deposits
208
208
154,679
151,601
1,058
1,058
180,724
180,566
Short-term borrowed funds
3
3
Long-term borrowed funds
15,887
15,469
$—
—
—
—
—
—
—
$—
$9,253
$8,506
—
582
$581
208
$536
208
—
582
154,097
151,019
1,038
1,038
20
20
180,724
180,566
3
3
15,887
15,469
—
—
—
—
—
—
—
—
—
—
—
—
(1) During 2023, the Company revised its presentation of the loans and leases portfolio from a gross to net basis to better align with its presentation on the
Consolidated Balance Sheets. The prior period presentation was revised to conform to the new presentation.
NOTE 21 - NONINTEREST INCOME
Revenues from Contracts with Customers
Revenue from contracts with customers is recognized based on the amount of consideration expected to
be received upon the transfer of control of a good or service. The timing of recognition is dependent on whether
a performance obligation is satisfied by transferring control of the product or service to a customer over time or
at a point in time. Judgments made include the timing of when performance obligations are satisfied and
determination of the transaction price.
The following tables present the components of revenue from contracts with customers disaggregated by
revenue stream and business operating segment:
(dollars in millions)
Service charges and fees
Card fees
Capital markets fees
Trust and investment services fees
Other banking fees
Total revenue from contracts with customers
Total revenue from other sources(1)
Total noninterest income
(dollars in millions)
Service charges and fees
Card fees
Capital markets fees
Trust and investment services fees
Other banking fees
Total revenue from contracts with customers
Total revenue from other sources(1)
Total noninterest income
Year Ended December 31, 2023
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$277
244
—
259
3
$783
284
$1,067
$131
47
293
—
11
$482
302
$784
$—
—
—
—
—
$—
—
$—
$1
—
—
—
—
$1
131
$409
291
293
259
14
$1,266
717
$132
$1,983
Year Ended December 31, 2022
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$291
228
—
249
1
$769
294
$1,063
$124
43
341
1
17
$526
319
$845
$—
—
—
—
—
$—
—
$—
$3
—
—
—
1
$4
97
$418
271
341
250
19
$1,299
710
$101
$2,009
Citizens Financial Group, Inc. | 142
(dollars in millions)
Service charges and fees
Card fees
Capital markets fees
Trust and investment services fees
Other banking fees
Total revenue from contracts with customers
Total revenue from other sources(1)
Total noninterest income
Year Ended December 31, 2021
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$302
216
—
239
—
$757
466
$1,223
$105
32
419
—
12
$568
241
$809
$—
—
—
—
—
$—
—
$—
$—
$407
—
—
—
—
$—
103
248
419
239
12
$1,325
810
$103
$2,135
(1) Includes bank-owned life insurance income of $93 million, $88 million and $67 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Citizens does not have any material contract assets, liabilities, or other receivables recorded on its
Consolidated Balance Sheets related to revenues from contracts with customers as of December 31, 2023.
Citizens has elected to exclude disclosure of unsatisfied performance obligations for contracts with an original
expected length of one year or less and contracts for which the Company recognized revenue at the amount to
which the Company has the right to invoice for services performed.
A description of the above components of revenue from contracts with customers is presented below:
Service Charges and Fees
Service charges and fees include fees earned from deposit products in lieu of compensating balances,
service charges for deposit transactions performed by customers, and fees earned for cash management
activities. Service charges on deposit products are recognized over the period in which the related service is
provided and at a point in time upon completion of the requested service transaction. Fees on cash management
products and servicing fees on loans sold without recognition of a servicing right are recognized over time as the
services are provided.
Card Fees
Card fees include interchange income from credit and debit card transactions and are recognized upon
settlement by the association network. Interchange rates are generally set by the association network based on
purchase volume and other factors. Other card-related fees are recognized upon completion of the transaction.
Costs related to card reward programs are recognized in current earnings as the rewards are earned by the
customer and are presented as a reduction to card fees in the Consolidated Statements of Operations.
Capital Markets Fees
Capital markets fees include fees received from leading or participating in loan syndications, bond and
equity underwriting services, and advisory fees. Loan syndication and underwriting fees are recognized as
revenue when the Company has rendered all services to, and is entitled to collect the fee from, the borrower or
the issuer, and there are no significant contingencies associated with the fee. Underwriting expenses passed
through from the lead underwriter are recognized within other operating expense in the Consolidated Statements
of Operations. Advisory fees for mergers and acquisitions are recognized over time, while valuation services and
fairness opinions are recognized upon completion of the advisory service.
Trust and Investment Services Fees
Trust and investment services fees include fees from investment management and brokerage services.
Fees from investment management services are based on asset market values and are recognized over the period
in which the related service is provided. Brokerage services include custody fees, commission income, trailing
commissions and other investment services. Custody fees are recognized on a monthly basis and commission
income is recognized on trade date. Trailing commissions, such as 12b-1 fees, insurance renewal income, and
income based on asset or investment levels in future periods are recognized when the asset balance is known, or
the renewal occurs and the income is no longer constrained. For the years ended December 31, 2023, 2022 and
2021, the Company recognized trailing commissions of $15 million, $15 million and $16 million, respectively,
related to ongoing commissions from previous investment sales. Fees from other investment services are
recognized upon completion of the service.
Citizens Financial Group, Inc. | 143
Other Banking Fees
Other banking fees include fees for various banking transactions such as letter of credit fees, foreign wire
transfers and other services. These fees are recognized in a manner that reflects the timing of when transactions
occur and as services are provided.
Revenue from Other Sources
Letter of Credit and Loan Fees
Letter of credit and loan fees primarily include fees received from letter of credit agreements as well as
loan fees received from lending activities that cannot be deferred. These fees are recognized upon execution of
the contract.
Foreign Exchange and Derivative Products
Foreign exchange and derivative products primarily include fees received from foreign exchange and
interest rate derivative contracts executed with customers to meet their hedging and financing needs. These fees
are generally recognized upon execution of the contracts. Foreign exchange and derivative products also include
mark-to-market gains and losses recognized on these customer contracts and offsetting derivative contracts that
are executed with external counterparties to hedge the foreign exchange and interest rate risk associated with
the customer contracts.
Mortgage Banking Fees
Mortgage banking fees primarily include gains, or losses, on the sale of residential mortgages originated
with the intent to sell and servicing fees on mortgages serviced by the Company. Mortgage banking fees also
include valuation adjustments for mortgage LHFS that are measured at the lower of cost or fair value, as well as
mortgage loans originated with the intent to sell that are measured at fair value under the fair value option.
Changes in the value of MSRs are reported in mortgage fees and related income. For a further discussion of MSRs,
see Note 8.
Other Income
Bank-owned life insurance is stated at its cash surrender value. Citizens is the beneficiary of life
insurance policies on current and former officers of the Company. Net changes in the carrying amount of the cash
surrender value are an adjustment of premiums paid in determining the expense or income recognized under the
life insurance policy for the period.
NOTE 22 - OTHER OPERATING EXPENSE
The following table presents the details of other operating expense:
(dollars in millions)
Marketing
Deposit insurance
Other
Other operating expense
NOTE 23 - INCOME TAXES
Year Ended December 31,
2023
2022
2021
$187
390
396
$973
$166
96
323
$585
$111
66
234
$411
Income taxes are accounted for under the asset and liability method, resulting in two components of
income tax expense: current and deferred. Current income tax expense approximates taxes to be paid or
refunded for the current period while deferred income tax expense results from changes in gross deferred tax
assets and liabilities between periods. Gross deferred tax assets and liabilities represent changes in taxes
expected to be paid in the future due to the reversal of temporary differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax bases.
Citizens assesses the probability that positions taken, or expected to be taken, in its income tax returns
will be sustained by taxing authorities. A “more likely than not” (i.e., more than 50 percent) recognition
threshold must be met before a tax benefit can be recognized. Tax positions that are more likely than not to be
sustained are reflected in the Company’s Consolidated Financial Statements.
Citizens Financial Group, Inc. | 144
The following table presents total income tax expense:
(dollars in millions)
Income tax expense
Tax effect of changes in OCI
Total comprehensive income tax expense (benefit)
The following table presents the components of income tax expense:
(dollars in millions)
Year Ended December 31, 2023
U.S. federal
State and local
Total
Year Ended December 31, 2022
U.S. federal
State and local
Total
Year Ended December 31, 2021
U.S. federal
State and local
Total
Year Ended December 31,
2023
2022
2021
$422
$582
$658
289
(1,319)
(199)
$711
($737)
$459
Current Deferred
Total
$497
($135)
$362
167
(107)
60
$664
($242)
$422
$355
$88
$443
170
(31)
139
$525
$57
$582
$871
($345)
$526
216
(84)
132
$1,087
($429)
$658
The following table presents a reconciliation between the U.S. federal income tax rate and the
Company’s effective income tax rate:
(dollars in millions)
Amount
Rate
Amount
Rate
Amount
Rate
U.S. federal income tax expense and tax rate
$426
21.0 %
$558
21.0 %
$625
21.0 %
Year Ended December 31,
2023
2022
2021
Increase (decrease) resulting from:
State and local income taxes (net of federal
benefit)
Bank-owned life insurance
Tax-exempt interest
Tax advantaged investments (including related
credits)
Other tax credits
Adjustments for uncertain tax positions
Non-deductible FDIC insurance premiums
Legacy tax matters
Other
58
(20)
(12)
(77)
(3)
5
35
—
10
2.9
(1.0)
(0.6)
(3.8)
(0.1)
0.2
1.7
—
0.5
133
(19)
(8)
(102)
(9)
1
20
3
5
5.0
(0.7)
(0.3)
(3.8)
(0.3)
—
0.7
0.1
0.2
126
(14)
(7)
(95)
(7)
3
14
—
13
4.2
(0.5)
(0.2)
(3.2)
(0.2)
0.1
0.5
—
0.4
Total income tax expense and effective tax rate
$422
20.8 %
$582
21.9 %
$658
22.1 %
Citizens Financial Group, Inc. | 145
The following table presents the significant components of the Company’s deferred tax assets and
liabilities:
(dollars in millions)
Deferred tax assets:
Other comprehensive income
Allowance for credit losses
Federal and state net operating and capital loss carryforwards
Accrued expenses
Investment and other tax credit carryforwards
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Leasing transactions
Amortization of intangibles
Depreciation
Pension and other employee compensation plans
Partnerships
Deferred Income
MSRs
Total deferred tax liabilities
Net deferred tax asset (liability)
December 31,
2023
2022
$1,291
$1,546
555
79
1,152
130
9
511
77
863
131
19
3,216
3,147
(137)
(133)
3,079
3,014
297
421
532
130
12
3
252
287
413
470
128
87
12
203
1,647
$1,432
1,600
$1,414
Deferred tax assets are recognized for net operating loss carryforwards, capital loss carryforwards and
tax credit carryforwards. Valuation allowances are recorded, as necessary, to reduce deferred tax assets to the
amount that management concludes is more likely than not to be realized.
At December 31, 2023, the Company had federal and state tax net operating loss carryforwards of $651
million and capital loss carryforwards of $152 million. The majority of the federal and state tax net operating loss
carryforwards, if not utilized, will expire in varying amounts through 2042, while the capital loss and tax credit
carryforwards expire in varying amounts through 2027 and 2030, respectively. Limitations on the ability to realize
these carryforwards are reflected in the associated valuation allowance. At December 31, 2023, the Company
had a valuation allowance of $137 million against various deferred tax assets related to federal and state net
operating losses, capital losses and state tax credits, as the Company’s current assessment is that it is more likely
than not that a portion of the deferred tax assets related to these items will not be realized.
Effective with the fiscal year ended September 30, 1997, the reserve method for bad debts was no longer
permitted for tax purposes. The repeal of the reserve method required the recapture of the reserve balance in
excess of certain base year reserve amounts attributable to years ended prior to 1988. At December 31, 2023,
the Company’s base year loan loss reserves attributable to years ended prior to 1988, for which no deferred
income taxes have been provided, was $557 million. This base year reserve may become taxable if certain
distributions are made with respect to the stock of the Company or if CBNA ceases to qualify as a bank for tax
purposes. No actions are planned that would cause any portion of this reserve to become taxable.
The Company files income tax returns in the U.S. federal jurisdiction and in various state and local
jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal or state and local income tax
examinations by major tax authorities for years before 2016.
Citizens Financial Group, Inc. | 146
The following table presents a reconciliation of the beginning and ending amount of unrecognized tax
benefits:
(dollars in millions)
Balance at the beginning of the year
Gross increase for tax positions related to current year
Gross increase for tax positions related to prior years
Decrease for tax positions as a result of the lapse of the statutes of limitations
Decrease for tax positions related to settlements with taxing authorities
Balance at end of year
December 31,
2023
2022
2021
$6
1
1
—
$7
—
—
—
(1)
(1)
$7
$6
$4
1
3
(1)
—
$7
Tax positions are measured as the largest amount of tax benefit that has a greater than 50 percent
likelihood of being realized upon settlement with a taxing authority. The difference between the benefit
recognized and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit. Any
adjustment to unrecognized tax benefits is recorded in income tax expense in the Consolidated Statements of
Operations. The Company does not expect the balance of unrecognized tax benefits to significantly change in the
next twelve months.
Interest and penalties related to unrecognized tax benefits are reported in income tax expense in the
Consolidated Statements of Operations. The Company’s liability for accrued interest related to unrecognized tax
benefits was $4 million as of December 31, 2023 and immaterial as of December 31, 2022. In addition, the
income tax expense recognized for interest related to unrecognized tax benefits was $3 million for the year
ended December 31, 2023 and immaterial for the years ended December 31, 2022 and 2021. No amounts were
accrued for penalties as of December 31, 2023 and 2022, and no penalties were recognized in income tax
expense during the years ended December 31, 2023, 2022 and 2021.
NOTE 24 - EARNINGS PER SHARE
Basic EPS is computed by dividing net income available to common stockholders by the weighted-average
number of common shares outstanding during each period. Net income available to common stockholders
represents net income less preferred stock dividends. Diluted EPS is computed by dividing net income available
to common stockholders by the weighted-average number of common shares outstanding during each period,
inclusive of potential dilutive shares such as share-based payment awards and warrants using the treasury stock
method.
(dollars in millions, except per share data)
Numerator (basic and diluted):
Net income
Less: Preferred stock dividends
Net income available to common stockholders
Denominator:
Year Ended December 31,
2023
2022
2021
$1,608
117
$1,491
$2,073
113
$1,960
$2,319
113
$2,206
Weighted-average common shares outstanding - basic
475,089,384
475,959,815
425,669,451
Dilutive common shares: share-based awards
1,603,764
1,843,327
1,766,367
Weighted-average common shares outstanding - diluted
476,693,148
477,803,142
427,435,818
Earnings per common share:
Basic
Diluted(1)
$3.14
3.13
$4.12
4.10
$5.18
5.16
(1) Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. Excluded from the
computation of diluted EPS were weighted-average antidilutive shares totaling 2,210,857, 949,606 and 2,929 for the years ended December 31, 2023, 2022 and
2021, respectively.
Citizens Financial Group, Inc. | 147
NOTE 25 - REGULATORY MATTERS
As a BHC and FHC, the Company is subject to regulation and supervision by the FRB. Our banking
subsidiary, CBNA, is a national banking association primarily regulated by the OCC.
Under the current U.S. Basel III capital framework, the Company and CBNA must meet the following
specific minimum requirements: CET1 capital ratio of 4.5%, tier 1 capital ratio of 6.0%, total capital ratio of 8.0%
and tier 1 leverage ratio of 4.0%. As a BHC, the Company’s SCB of 4.0% is imposed on top of the three minimum
risk-based capital ratios listed above and a CCB of 2.5% is imposed on top of the three minimum risk-based
capital ratios listed above for CBNA. The Company’s SCB will be re-calibrated with each biennial supervisory
stress test and updated annually to reflect the Company’s planned common stock dividends. In addition, the
Company must not be subject to a written agreement, order or capital directive with any of its regulators.
Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken,
could have a material effect on the Company’s Consolidated Financial Statements.
The following table presents the regulatory capital ratios for the Company and CBNA under the U.S. Basel
III Standardized rules. The Company and CBNA have both declared as an “AOCI opt-out” institution, which means
they are not required to recognize the AOCI impact of net unrealized gains and losses on debt securities and
accumulated net gains and losses on cash flow hedges and certain defined benefit pension plan assets in
regulatory capital. In addition, both entities elected to delay the estimated impact of CECL on regulatory capital
for a two-year period ending December 31, 2021, followed by a three-year transition period ending December 31,
2024, to phase-in the aggregate amount of the capital benefit provided during the initial two-year delay.
(dollars in millions)
As of December 31, 2023
CET1 capital
CFG
CBNA
Tier 1 capital
CFG
CBNA
Total capital
CFG
CBNA
Tier 1 leverage
CFG
CBNA
As of December 31, 2022
CET1 capital
CFG
CBNA
Tier 1 capital
CFG
CBNA
Total capital
CFG
CBNA
Tier 1 leverage
CFG
CBNA
Actual
Required Minimum
Capital
Amount
Ratio
Amount
Ratio(1)
$18,358
19,411
10.6 %
$14,671
11.3
12,047
8.5 %
7.0
20,372
19,411
23,608
22,453
20,372
19,411
11.8
11.3
13.7
13.0
9.3
8.9
17,260
14,628
20,712
18,070
8,784
8,759
10.0
8.5
12.0
10.5
4.0
4.0
$18,574
20,669
10.0 %
$14,633
11.2
12,935
7.9 %
7.0
20,588
20,669
23,755
23,534
20,588
20,669
11.1
11.2
12.8
12.7
9.3
9.4
17,411
15,706
21,116
19,402
8,831
8,807
9.4
8.5
11.4
10.5
4.0
4.0
(1) Represents minimum requirement under the current capital framework plus the SCB of 4.0% and CCB of 2.5% for CFG and CBNA, respectively. The SCB and CCB
are not applicable to the Tier 1 leverage ratio.
Citizens Financial Group, Inc. | 148
The Company’s capital distributions are subject to the oversight of the FRB. Under the FRB’s SCB
framework, failure to maintain risk-based capital ratios above the respective minimum requirements including
the SCB would result in graduated restrictions on the Company’s ability to make certain discretionary bonus
payments and capital distributions, including common stock dividends and share repurchases. The timing and
amount of future dividends and share repurchases will depend on various factors, including the Company’s
capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory
considerations. All future capital distributions are subject to consideration and approval by the Board of Directors
prior to execution. See Note 17 for more information regarding the Company’s common stock repurchases and
dividends.
Dividends payable by CBNA, as a national bank subsidiary, are limited to the lesser of the amount
calculated under a “recent earnings” test and an “undivided profits” test. Under the recent earnings test, a
dividend may not be paid if the total of all dividends declared during any calendar year exceeds the sum of
current year net income and retained net income of the two preceding years, less any required transfers to
surplus, unless the national bank obtains the approval of the OCC. Under the undivided profits test, a dividend
may not be paid in excess of the entity’s “undivided profits” (generally accumulated net profits that have not
been paid out as dividends or transferred to surplus). Federal banking regulatory agencies have issued policy
statements that provide that FDIC-insured depository institutions and their holding companies should generally
pay dividends only out of current operating earnings.
NOTE 26 - BUSINESS OPERATING SEGMENTS
Citizens is managed by its Chief Executive Officer on a segment basis. The Company’s three business
operating segments are Consumer Banking, Commercial Banking, and Non-Core. The business operating segments
are determined based on the products and services provided, or the type of customer served. Each business
operating segment has a segment head who reports directly to the Chief Executive Officer, who has final
authority over resource allocation decisions and performance assessment. The business operating segments
reflect this management structure and the manner in which financial information is currently evaluated by the
Chief Executive Officer.
Developing and applying methodologies used to allocate items among the business operating segments is
a dynamic process. Accordingly, financial results may be revised periodically as management systems are
enhanced, methods of evaluating performance or product lines are updated, or our organizational structure
changes.
See Note 1 for a description of segment changes made during 2023.
Reportable Segments
Segment results are determined based upon the Company’s organizational and management structure,
with balance sheet and statement of operations items assigned to each of the business segments. The results are
not necessarily comparable with similar information reported by other financial institutions. A description of
each reportable business operating segment is presented below:
Consumer Banking
The Consumer Banking segment serves consumer customers and small businesses with annual revenues of
up to $25 million. It offers traditional banking products and services including deposits, mortgage and home
equity lending, credit cards, business loans, education loans, point-of-sale finance loans, and wealth
management and investment services. Citizens Private Bank, launched during 2023, integrates wealth
management and banking services to serve high net-worth individuals and families, as well as businesses.
The segment’s distribution channels include a branch network, ATMs and a workforce of experienced
specialists covering lending, savings and investment needs as well as a broad range of small business products and
services. The Company’s Consumer Banking value proposition is based on providing simple, easy to understand
product offerings and a convenient banking experience with a more personalized approach.
Citizens Financial Group, Inc. | 149
Commercial Banking
The Commercial Banking segment primarily serves companies and institutions with annual revenues of
$25 million to more than $3.0 billion and strives to be a trusted advisor to its clients and preferred provider for
their banking needs. A broad complement of financial products and solutions are offered, including lending and
leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk
management solutions, as well as syndicated loans, corporate finance, mergers and acquisitions, and debt and
equity capital markets capabilities.
The segment focuses on middle-market companies, large corporations and institutions and has dedicated
teams with industry and product expertise in Aerospace, Defense and Government Services, Communications,
Transportation and Logistics, Food and Restaurants, Human Capital Management, and Gaming. While the
segment’s business development efforts are predominantly focused in the Company’s footprint, some of its
specialized industry businesses also operate on a national basis. A key component of Commercial Banking’s
growth strategy is to present clients with ideas that help their businesses thrive and, in doing so, expand the
breadth and depth of our banking relationship with them.
Non-Core
The Non-Core segment includes the Company’s indirect auto and certain purchased consumer loan
portfolios that were transferred from the Consumer Banking segment into this newly created segment during
2023. This new segment reflects the manner in which management is currently assessing performance and
allocating resources and aligns with the Company’s recently announced balance sheet optimization strategy to
discontinue the origination of certain non-strategic lending portfolios.
Non-segment Operations
Other
Non-segment operations are classified as Other and include assets, liabilities, capital, revenues, provision
(benefit) for credit losses, expenses and income tax expense not attributed to the Company’s Consumer Banking,
Commercial Banking, or Non-Core segments as well as treasury and community development.
Management accounting practices utilized by the Company to measure the performance and produce the
results of its segments include the following:
Funds Transfer Pricing
The Company’s FTP, a component of net interest income, ensures consistent business segment pricing
behavior by removing interest rate risk from business performance. This risk is centrally managed within the
Treasury function and reported in Other non-segment operations. Business operating segments are provided an
interest credit for funding it generates and an interest charge for assets it holds. The sum of interest income/
expense and FTP charges/credits for each business operating segment is its designated net interest income. The
offset to FTP charges and credits is recorded in Other non-segment operations.
The Company employs a matched maturity FTP methodology for the Consumer Banking and Commercial
Banking business operating segments with rates based on a product’s repricing frequency and interest sensitivity,
as well as other factors. The FTP charge for the Non-Core business operating segment is based on an implied
reference pool of high-cost funding sources. This method applies a waterfall marginal funding approach
referencing the Company’s secured borrowings collateralized by auto loans, FHLB advances, and various other
higher-cost deposit sources required to fully debt-fund the assets.
Provision for credit losses
The provision for credit losses for each business operating segment is based on actual net charge-offs
recognized by the business operating segment. The difference between the consolidated provision for credit
losses and total net charge-offs for all business operating segments is reflected in Other non-segment operations.
Income taxes
Income taxes are assessed to each business operating segment at a standard tax rate with the residual
tax expense or benefit to arrive at the consolidated effective tax rate included in Other non-segment operations.
Citizens Financial Group, Inc. | 150
Expenses
Noninterest expenses incurred by centrally-managed operations or business lines that directly support the
operations of another business line are charged to the applicable business line based on its utilization of those
services.
Goodwill
Goodwill is allocated to the Consumer Banking and Commercial Banking business operating segments for
impairment testing purposes.
Substantially all revenues generated and long-lived assets held by the Company’s business operating
segments are derived from customers that reside in the United States. No business operating segment earns
revenue from a single external customer that represents ten percent or more of the Company’s total revenues.
(dollars in millions)
Net interest income
Noninterest income
Total revenue
Noninterest expense
Profit (loss) before provision (benefit) for credit losses
Provision (benefit) for credit losses
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Total average assets
(dollars in millions)
Net interest income
Noninterest income
Total revenue
Noninterest expense
Profit (loss) before provision (benefit) for credit losses
Provision (benefit) for credit losses
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Total average assets
(dollars in millions)
Net interest income
Noninterest income
Total revenue
Noninterest expense
Profit (loss) before provision (benefit) for credit losses
Provision (benefit) for credit losses
Income (loss) before income tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Total average assets
Year Ended December 31, 2023
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$4,187
$2,292
($129)
($109)
$6,241
1,067
5,254
3,542
1,712
280
1,432
373
784
3,076
1,295
1,781
250
1,531
378
—
(129)
123
(252)
78
(330)
(86)
132
23
547
(524)
79
(603)
(243)
1,983
8,224
5,507
2,717
687
2,030
422
$1,059
$72,693
$1,153
$76,028
($244)
($360)
$1,608
$13,745
$59,755
$222,221
Year Ended December 31, 2022
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$3,649
$2,103
$378
($118)
$6,012
1,063
4,712
3,255
1,457
174
1,283
328
$955
$68,027
845
2,948
1,223
1,725
46
1,679
375
—
378
136
242
52
190
48
101
(17)
278
(295)
202
(497)
(169)
2,009
8,021
4,892
3,129
474
2,655
582
$1,304
$74,919
$142
($328)
$2,073
$18,121
$53,994
$215,061
Year Ended December 31, 2021
Consumer
Banking
Commercial
Banking
Non-Core
Other
Consolidated
$2,943
$1,706
$594
($731)
$4,512
1,223
4,166
2,857
1,309
162
1,147
292
$855
$57,916
809
2,515
973
1,542
156
1,386
300
$1,086
$57,617
—
594
130
464
23
441
112
$329
103
(628)
121
(749)
(752)
3
(46)
$49
2,135
6,647
4,081
2,566
(411)
2,977
658
$2,319
$17,592
$51,981
$185,106
Citizens Financial Group, Inc. | 151
NOTE 27 - PARENT COMPANY FINANCIALS
Condensed Balance Sheets
(dollars in millions)
ASSETS:
Cash and due from banks
Loans and advances to:
Bank subsidiary
Nonbank subsidiaries
Investments in subsidiaries:
Bank subsidiary
Nonbank subsidiaries
Other assets
Total assets
LIABILITIES:
Long-term borrowed funds
Other liabilities
Total liabilities
Total stockholders’ equity
Total liabilities and stockholders’ equity
Condensed Statements of Operations
(dollars in millions)
OPERATING INCOME:
Income from bank subsidiaries, excluding equity in undistributed income:
Dividends
Interest
Management and service fees
Income from nonbank subsidiaries, excluding equity in undistributed income:
Dividends
Interest
All other operating income
Total operating income
OPERATING EXPENSE:
Salaries and employee benefits
Interest expense
All other expenses
Total operating expense
Income (loss) before taxes and undistributed income
Income tax expense (benefit)
Income before undistributed income of subsidiaries
Equity in undistributed income (losses) of subsidiaries:
Bank
Nonbank
Net income
Total other comprehensive income (loss), net of income taxes(1)
Total comprehensive income (loss)
(1) See Consolidated Statements of Comprehensive Income for comprehensive income (loss) detail.
December 31,
2023
December 31,
2022
$2,864
$1,821
1,152
154
1,153
135
23,289
23,674
291
194
302
182
$27,944
$27,267
$3,344
258
3,602
24,342
$3,336
241
3,577
23,690
$27,944
$27,267
Year Ended December 31,
2023
2022
2021
$2,875
$450
$1,120
43
69
—
8
1
39
69
43
3
1
35
64
57
2
1
2,996
605
1,279
39
129
31
199
2,797
43
125
28
196
409
36
119
28
183
1,096
(13)
(13)
(16)
2,810
422
1,112
(1,163)
1,724
1,188
(39)
(73)
19
$1,608
$2,073
$2,319
802
(3,895)
(605)
$2,410
($1,822)
$1,714
In accordance with federal and state banking regulations, dividends paid by CBNA to the Company are
subject to certain limitations. See Note 25 for more information. Also, see Note 17 for more information
regarding the Company’s common and preferred stock dividends.
Citizens Financial Group, Inc. | 152
Condensed Cash Flow Statements
(dollars in millions)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net change in cash due to operating activities:
Deferred income tax expense (benefit)
Equity in undistributed (income) losses of subsidiaries
Other, net
Net increase (decrease) in other liabilities
Net (increase) decrease in other assets
Net change due to operating activities
INVESTING ACTIVITIES
Investments in and advances to subsidiaries
Repayment of investments in and advances to subsidiaries
Acquisitions, net of cash acquired
Other investing, net
Net change due to investing activities
FINANCING ACTIVITIES
Proceeds from issuance of long-term borrowed funds
Repayments of long-term borrowed funds
Treasury stock purchased
Net proceeds from issuance of preferred stock
Redemption of preferred stock
Dividends paid to common stockholders
Dividends paid to preferred stockholders
Other financing, net
Net change due to financing activities
Net change in cash and due from banks
Cash and due from banks at beginning of year
Cash and due from banks at end of year
Year Ended December 31,
2023
2022
2021
$1,608
$2,073
$2,319
(4)
(11)
—
1,202
(1,651)
(1,207)
96
(17)
17
2,902
92
(7)
(44)
67
34
12
452
1,225
(76)
(156)
30
—
—
(46)
—
—
(906)
—
—
(808)
(120)
21
121
(23)
(1)
(59)
414
(182)
(153)
—
—
(779)
(113)
(25)
(196)
125
(165)
(1)
(237)
—
(350)
(295)
296
(250)
(670)
(113)
(20)
(1,813)
(838)
(1,402)
1,043
1,821
$2,864
(445)
(414)
2,266
$1,821
2,680
$2,266
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures designed to ensure that information
required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms. The design of any
disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule
13a-15(b) of the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K, an
evaluation was carried out under the supervision and with the participation of the Company’s management,
including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and
procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this
Annual Report on Form 10-K, were effective to provide reasonable assurance that information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms and is accumulated and
communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.
Citizens Financial Group, Inc. | 153
There were no changes in our internal control over financial reporting identified in management's
evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Annual
Report on Form 10-K that materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting, the Report of the Independent
Registered Public Accounting Firm on the Consolidated Financial Statements and the Report of the Independent
Registered Public Accounting Firm on Internal Control over Financial Reporting are included in Item 8.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
In Part III of this Report we refer to relevant sections of our 2024 Proxy Statement for the 2024 annual
meeting of shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days of the close
of our 2023 fiscal year. Portions of our 2024 Proxy Statement, including the sections we refer to in this Report,
are incorporated by reference into this Report.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this item is presented under the captions “Corporate Governance Matters” —
“Director Nominees” and “Board Structure and Oversight Responsibilities” — “Corporate Governance Guidelines”,
“Committees of the Board”, “Code of Business Conduct and Ethics” and “Other Items” - “Delinquent Section
16(a) Reporting” of our 2024 Proxy Statement, which is incorporated by reference into this item.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is presented under the captions “Executive Compensation Matters” —
“Compensation Discussion and Analysis,” “Compensation and HR Committee Report”, “Executive Compensation
Tables”, “Termination of Employment and Change of Control”, “Role of Risk Management in Compensation”,
“Dodd Frank Compensation Disclosure” — “CEO Pay Ratio” and “Pay Versus Performance”, and “Corporate
Governance Matters” - “Director Compensation” of our 2024 Proxy Statement, which is incorporated by reference
into this item.
Citizens Financial Group, Inc. | 154
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this item regarding security ownership of certain beneficial owners and
management is presented under the caption “Other Items” - “Security Ownership of Certain Beneficial Owners
and Management” in our 2024 Proxy Statement, which is incorporated by reference into this item.
Information regarding our compensation plans under which CFG equity securities are authorized for
issuance is included in the table below. Additional information regarding these plans is included in Note 18 in
Item 8.
Equity Compensation Plan Information
At December 31, 2023
Plan Category
Number of securities to
be issued upon
exercise of outstanding
options, warrants and
rights (#)(3)
Weighted-average
exercise price of
outstanding
options, warrants
and rights ($)(4)
Number of securities
remaining available
(excluding securities
reflected in first
column) (#)(5)
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
4,567,994
—
—
—
43,741,366
—
Total(1)(2)
(1) Excludes securities subject to the Investors Bancorp, Inc. 2006 Equity Incentive Plan and the Investors Bancorp, Inc. 2015 Equity Incentive Plan (“Investors
Plans”). Although equity-based awards granted under the Investors Plans were converted into CFG awards and assumed in connection with the Investors
acquisition in 2022, CFG does not intend to grant any awards under the Investors Plans. As of December 31, 2023, 393,426 stock options with a weighted-
average exercise price of $38.35 and 18,509 restricted shares were outstanding under the Investors Plans.
4,567,994
43,741,366
—
(2) Excludes securities subject to the JMP Group LLC Amended and Restated Equity Incentive Plan (“JMP Plan”). Although equity-based awards granted under the
JMP Plan were converted into CFG awards and assumed in connection with the JMP acquisition in 2021, CFG does not intend to grant any awards under the JMP
Plan. As of December 31, 2023, 214,601 stock options with a weighted-average exercise price of $19.45 and 5,663 restricted stock units were outstanding under
the JMP Plan.
(3) Represents the number of shares of common stock associated with outstanding time-based and performance-based restricted stock units.
(4) Other than the stock options assumed in connection with the JMP and Investors acquisitions, CFG had no outstanding stock options.
(5) Represents the number of shares remaining available for future issuance under the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (39,532,535
shares), the Citizens Financial Group, Inc. 2014 Employee Stock Purchase Plan (2,991,009 shares), and the Citizens Financial Group, Inc. 2014 Non-Employee
Directors Compensation Plan (1,217,822 shares).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this item is set forth under the captions “Corporate Governance Matters” —
“Board Governance and Oversight” — “Director Nominees” - “Director Independence” and “Related Person
Transactions” of our 2024 Proxy Statement, which is incorporated by reference into this item.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this item is presented under the captions “Audit Matters” — “Pre-approval of
Independent Auditor Services” and “Independent Registered Public Accounting Firm Fees” of our 2024 Proxy
Statement, which is incorporated by reference into this item.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
PART IV
The following report of our independent registered public accounting firm and the consolidated financial
statements of Citizens Financial Group, Inc. are included in Item 8 of this Form 10-K:
•
•
•
•
•
•
•
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements;
Consolidated Balance Sheets as of December 31, 2023 and 2022;
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021;
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and
2021;
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2023,
2022 and 2021;
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021; and
Notes to Consolidated Financial Statements.
Citizens Financial Group, Inc. | 155
(a)(2) Financial Statement Schedules
All required financial statement schedules for the Registrant are included in the audited Consolidated
Financial Statements or related footnotes in Item 8.
(a)(3) Exhibits
2.1 Agreement and Plan of Merger, dated July 28, 2021, by and between Citizens Financial Group, Inc. and
Investors Bancorp, Inc. (incorporated herein by reference to Exhibit 2.1 of the Current Report on Form 8-
K, filed July 30, 2021)
3.1 Amended and Restated Certificate of Incorporation of the Registrant as in effect on the date hereof, as
filed with the Secretary of State of the State of Delaware and effective April 28, 2022 (incorporated
herein by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed April 29, 2022)
3.2 Amended and Restated Bylaws of the Registrant (as amended and restated on February 16, 2023)
(incorporated herein by reference to Exhibit 3.2 of the Annual Report on Form 10-K, filed February 17,
2023)
4.1 Senior Debt Indenture between the Company and The Bank of New York Mellon dated as of October 28,
2015 (incorporated herein by reference to Exhibit 4.1 of Registration Statement on Form S-3, filed
October 29, 2015)
4.2 Subordinated Indenture between the Company and The Bank of New York Mellon dated as of September
28, 2012 (incorporated herein by reference to Exhibit 4.2 of the Registration Statement on Form S-1,
filed July 28, 2015)
4.3 Form of Certificate representing the Series B Preferred Stock (incorporated herein by reference to Exhibit
4.2 of the Current Report on Form 8-K, filed May 24, 2018)
4.4 Form of Deposit Agreement, by and among the Company, Computershare Inc. and Computershare Trust
Company, N.A., jointly as depositary, and the holders from time to time of the depositary receipts
described therein (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form
8-A, filed October 25, 2019)
4.5 Form of Depositary Receipt (incorporated herein by reference as Exhibit A to Exhibit 4.2 of the Current
Report on Form 8-K, filed January 29, 2019)
4.6 Description of the Securities Registered Pursuant to Section 12 of the Securities Act of 1934*
4.7 Agreement to furnish to the SEC upon request a copy of instruments defining the rights of holders of
certain long-term debt of the registrant and consolidated subsidiaries*
10.1 Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (incorporated herein by reference to Exhibit
10.11 of the Quarterly Report on Form 10-Q, filed November 14, 2014)†
10.2 Amended and Restated Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan as of June 23, 2016
(incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed August 5,
2016)†
10.3 Amended and Restated Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan as of June 20, 2019
(incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed August 6,
2019)†
10.4 Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan Form of Restricted Stock Unit Award
Agreement†*
Citizens Financial Group, Inc. | 156
10.5 Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan Restricted Stock Unit Award Agreement for
Bruce Van Saun Relating to Annual Awards (incorporated herein by reference to Exhibit 10.11 of the
Annual Report on Form 10-K, Filed February 24, 2017)†
10.6 Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan Form of Performance Stock Unit Award
Agreement†*
10.7 Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan Performance Stock Unit Award Agreement for
Bruce Van Saun Relating to Annual Awards (incorporated herein by reference to Exhibit 10.15 of the
Annual Report on Form 10-K, Filed February 24, 2017)†
10.8 Citizens Financial Group, Inc. 2014 Employee Stock Purchase Plan (incorporated herein by reference to
Exhibit 99.3 of the Registration Statement on Form S-8, filed September 26, 2014)†
10.9 Citizens Financial Group, Inc. Non-Employee Directors Compensation Policy, as amended April 25, 2019
(incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed August 6,
2019)†
10.10 Citizens Financial Group, Inc. Non-Employee Directors Compensation Policy, amended and effective April
22, 2021 (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed
August 3, 2021)†
10.11 Citizens Financial Group, Inc. Non-Employee Directors Compensation Policy, amended and effective April
28, 2022 (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed
August 3, 2022)†
10.12 Citizens Financial Group, Inc. Non-Employee Directors Compensation Policy, amended and effective April
27, 2023 (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed
August 8, 2023)†
10.13 Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan (incorporated herein by
reference to Exhibit 99.2 of the Registration Statement on Form S-8, filed September 26, 2014)†
10.14 Amended and Restated Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan as
of June 23, 2016 (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q,
filed August 5, 2016)†
10.15 Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan Form of Restricted Stock
Unit Award Agreement (incorporated herein by reference to Exhibit 10.19 of the Annual Report on Form
10-K, filed February 26, 2016)†
10.16 Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan Form of Restricted Stock
Unit Award Agreement (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form
10-Q, Filed August 3, 2017)†
10.17 Amended and Restated Deferred Compensation Plan for Directors of Citizens Financial Group, Inc.,
effective January 1, 2009 (incorporated herein by reference to Exhibit 10.19 of Amendment No. 2 to
Registration Statement on Form S-1, filed August 15, 2014)†
10.18 Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.5 of Amendment No.
3 to Registration Statement on Form S-1, filed September 8, 2014)†
10.19 Amended and Restated CFG Voluntary Executive Deferred Compensation Plan, effective January 1, 2009
and amended and restated on September 1, 2014 (incorporated herein by reference to Exhibit 10.21 of
the Annual Report on Form 10-K, filed March 3, 2015)†
Citizens Financial Group, Inc. | 157
10.20 First Amendment to the CFG Voluntary Executive Deferred Compensation Plan dated March 1, 2019
(incorporated herein by reference to Exhibit 10.26 of the Annual Report on Form 10-K, filed February 24,
2020)†
10.21 Second Amendment to the CFG Voluntary Executive Deferred Compensation Plan dated December 9, 2019
(incorporated herein by reference to Exhibit 10.27 of the Annual Report on Form 10-K, filed February 24,
2020)†
10.22 Third Amendment to the CFG Voluntary Executive Deferred Compensation Plan dated March 4, 2020
(incorporated herein by reference to Exhibit 10.27 of the Annual Report on Form 10-K, filed February 23,
2021)†
10.23 Fourth Amendment to the CFG Voluntary Executive Deferred Compensation Plan dated January 1, 2022
(incorporated herein by reference to Exhibit 10.21 of the Annual Report on Form 10-K, filed February 23,
2022)†
10.24 Fifth Amendment to the CFG Voluntary Executive Deferred Compensation Plan dated January 1, 2024†*
10.25 Amended and Restated Citizens Financial Group, Inc. Deferred Compensation Plan, effective January 1,
2009 (incorporated herein by reference to Exhibit 10.20 of Amendment No. 2 to Registration Statement
on Form S-1, filed August 15, 2014)†
10.26 Citizens Financial Group, Inc. Form of Deferred Cash Award Agreement†*
10.27 Citizens Financial Group, Inc. Executive Severance Practice (incorporated herein by reference to Exhibit
10.21 of Amendment No. 2 to Registration Statement on Form S-1, filed August 15, 2014)†
10.28 Amended and Restated Executive Employment Agreement, dated May 5, 2016, between the Registrant
and Bruce Van Saun (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form
10-Q, filed May 9, 2016)†
10.29 Addendum to Amended and Restated Executive Employment Agreement, dated as of June 25, 2021
between the Registrant and Bruce Van Saun (incorporated herein by reference to Exhibit 10.2 of the
Quarterly Report on Form 10-Q, filed August 3, 2021)†
10.30 Executive Employment Agreement, dated March 23, 2015, between the Registrant and Donald H. McCree
III and subsequent addendum dated August 2, 2017 (incorporated herein by reference to Exhibit 10.7 of
the Quarterly Report on Form 10-Q, filed August 3, 2017)†
10.31 Executive Employment Agreement, dated September 6, 2014, between the Registrant and Malcolm Griggs
and subsequent addendum dated August 14, 2017 (incorporated herein by reference to Exhibit 10.41 of
the Annual Report on Form 10-K, filed February 21, 2019)†
10.32 Executive Employment Agreement, dated December 13, 2016, between the Registrant and John F. Woods
and subsequent addendum dated August 2, 2017 (incorporated herein by reference to Exhibit 10.8 of the
Quarterly Report on Form 10-Q, filed August 3, 2017)†
10.33 Amended and Restated Executive Employment Agreement, dated December 20, 2021, between the
Registrant and Brendan Coughlin (incorporated herein by reference to Exhibit 10.32 of the Annual Report
on Form 10-K, filed February 23, 2022)†
10.34 Investors Bancorp, Inc. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.3 of the
Registration Statement on Form S-8, filed April 7, 2022)†
10.35 Investors Bancorp, Inc. 2015 Equity Incentive Plan Form of Stock Option Agreement (incorporated herein
by reference to Exhibit 10.35 of the Annual Report on Form 10-K, filed February 17, 2023)†
21.1 Subsidiaries of Registrant*
Citizens Financial Group, Inc. | 158
23.1 Consent of Independent Registered Public Accounting Firm*
24.1 Power of Attorney (contained herein on signature pages)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002*
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002*
97.1 Citizens Financial Group, Inc. Clawback Policy, effective December 1, 2023*
101
The following materials from the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated
Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the
Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash
Flows and (vi) the Notes to Consolidated Financial Statements*
104
Cover page interactive data file in inline XBRL format, included in Exhibit 101 to this report*
† Indicates management contract or compensatory plan or arrangement.
* Filed herewith.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
Citizens Financial Group, Inc. | 159
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
February 16, 2024.
SIGNATURES
CITIZENS FINANCIAL GROUP, INC.
(Registrant)
By: /s/ Bruce Van Saun
Name: Bruce Van Saun
Title: Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Citizens Financial Group, Inc. | 160
SIGNATURES
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned, being a director or officer of
Citizens Financial Group, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Bruce
Van Saun, John F. Woods, Polly N. Klane, and C. Jack Read, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her
name, place and stead in any and all capacities, to sign one or more Annual Reports for the Company's fiscal year
ended December 31, 2023 on Form 10-K under the Securities Exchange Act of 1934, as amended, or such other
form as any such attorney-in-fact may deem necessary or desirable, any amendments thereto, and all additional
amendments thereto, each in such form as they or any one of them may approve, and to file the same with all
exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done so that such Annual Report shall comply with the
Securities Exchange Act of 1934, as amended, and the applicable Rules and Regulations adopted or issued
pursuant thereto, as fully and to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitute or
resubstitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature
/s/ Bruce Van Saun
Bruce Van Saun
/s/ John F. Woods
John F. Woods
/s/ C. Jack Read
C. Jack Read
/s/ Lee Alexander
Lee Alexander
/s/ Christine M. Cumming
Christine M. Cumming
/s/ Kevin Cummings
Kevin Cummings
/s/ William P. Hankowsky
William P. Hankowsky
/s/ Edward J. Kelly III
Edward J. Kelly III
/s/ Robert G. Leary
Robert G. Leary
/s/ Terrance J. Lillis
Terrance J. Lillis
/s/ Michele N. Siekerka
Michele N. Siekerka
/s/ Shivan S. Subramaniam
Shivan S. Subramaniam
/s/ Christopher J. Swift
Christopher J. Swift
/s/ Wendy A. Watson
Wendy A. Watson
/s/ Marita Zuraitis
Marita Zuraitis
Title
Date
Chairman of the Board and Chief Executive Officer
February 16, 2024
(Principal Executive Officer and Director)
Vice Chair and Chief Financial Officer
February 16, 2024
(Principal Financial Officer)
Executive Vice President, Chief Accounting Officer and Controller
February 16, 2024
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
Citizens Financial Group, Inc. | 161
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
_________________________________________________________________________________________
I, Bruce Van Saun, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Citizens Financial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal controls over financial reporting.
Date: February 16, 2024
/s/ Bruce Van Saun
Bruce Van Saun
Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
_________________________________________________________________________________________
I, John F. Woods, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Citizens Financial Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal controls over financial reporting.
Date: February 16, 2024
/s/ John F. Woods
John F. Woods
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
_________________________________________________________________________________________
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned Chief Executive Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:
1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (the “Form 10-K”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: February 16, 2024
/s/ Bruce Van Saun
Bruce Van Saun
Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
_________________________________________________________________________________________
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned Chief Financial Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:
1. The Annual Report on Form 10-K of the Company for the year ended December 31, 2023 (the “Form 10-K”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: February 16, 2024
/s/ John F. Woods
John F. Woods
Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.
National Reach
• Deposits in all 50 states with Citizens Access
• Approximately 6 millon retail customers
across all 50 states
Citizens Private Bank current
and future branch locations
Regional branch network
National retail lending and deposits,
and Commercial Banking client coverage
Light branch network
Executive Committee
Bruce Van Saun
Chairman and CEO
Brendan Coughlin
Vice Chair and
Head of Consumer Banking
Beth Johnson
Vice Chair and
Chief Experience Officer
Board of Directors
Bruce Van Saun
Chairman and CEO,
Citizens Financial Group, Inc.
Lee Alexander
Executive Vice President and
Chief Information Officer,
The Clearing House
Polly Klane
Chief Legal Officer and
General Counsel
Susan LaMonica
Chief Human Resources Officer
Donald H. McCree
Vice Chair and Head of
Commercial Banking
Michael Ruttledge
Chief Information Officer and
Head of Enterprise Security
and Technology
Eric Schuppenhauer
Head of Consumer Lending
Richard Stein
Chief Risk Officer
Ted Swimmer
Head of Corporate Finance
and Capital Markets
John F. Woods
Vice Chair and
Chief Financial Officer
Christine M. Cumming
Retired First Vice President
and COO, Federal Reserve
Bank of New York
Kevin Cummings
Former Chairman and CEO,
Investors Bancorp, Inc.
Robert G. Leary
Former CEO, The Olayan Group
Terrance J. Lillis
Retired Chief Financial Officer,
Principal Financial Group, Inc.
Michele N. Siekerka
President and CEO, New Jersey
Business and Industry Association
Shivan S. Subramaniam*
Retired Chairman and CEO,
FM Global
Christopher J. Swift
Chairman and CEO,
The Hartford Financial
Services Group, Inc.
Wendy A. Watson
Retired Executive Vice President,
Global Services, State Street Bank
& Trust Company
Marita Zuraitis
Director, President and CEO,
Horace Mann Educators
Corporation
Tracy A. Atkinson
Retired Executive Vice President
and CAO, State Street Corporation
William P. Hankowsky
Former Chairman, President and
CEO, Liberty Property Trust
Edward J. Kelly III
Former Chairman, Institutional
Clients Group, Citigroup, Inc.
*Shivan S. Subramaniam will retire from the Board after his current term expires at the conclusion of the April 2024 Annual Meeting.
> About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $222.0 billion in assets as of December 31,
2023. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services
to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their
potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer
Banking, Citizens provides an integrated experience that includes mobile and online banking, a full-service customer contact center and
the convenience of approximately 3,200 ATMs and more than 1,100 branches in 14 states and the District of Columbia. Consumer Banking
products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial
Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury
management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate
finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at citizensbank.com or
visit us on X (formerly Twitter), LinkedIn or Facebook.
Transfer Agent
For questions regarding change of address, lost or stolen
certificates, transferring ownership or dividend checks,
please contact the transfer agent.
Computershare Trust Company, N.A.
P.O. Box 43006
Providence, RI 02940-3006
877.373.6374 (U.S., Canada, Puerto Rico)
781.575.2879 (non-U.S.)
computershare.com/investor
Form 10-K
We will send Citizens Financial Group, Inc.’s 2023 Annual Report
on Form 10-K (including the financial statements filed with the
Securities and Exchange Commission) free of charge to any share-
holder who asks for a copy in writing. Shareholders also can ask
for copies of any exhibit to the Form 10-K.
Please send requests to:
Corporate Secretary
Citizens Financial Group, Inc.
600 Washington Blvd. Stamford, CT 06901
Headquarters
Citizens Financial Group, Inc.
One Citizens Plaza
Providence, RI 02903
Contact Citizens for your banking needs
Call 800.922.9999 or visit us online at citizensbank.com
Investor Relations
Additional information about the company, including
annual and quarterly financial information, is available
at investor.citizensbank.com
Inquiries may also be directed to:
CFGInvestorRelations@citizensbank.com
Common Stock
Citizens Financial Group, Inc. is listed on the New York Stock
Exchange under the symbol “CFG.”
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Boston, MA
617.437.2000
IJ Citizens
Financial Group, (cid:2)nc:M
One Citizens Plaza, Providence, Rhode Island 02903