Citizens Financial 10Q 2024 Q3 Quarterly report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2024

☐ 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						05-0412693
(State or other jurisdiction of incorporation or organization)						(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	CFG	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 5.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E	CFG PrE	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 7.375% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series H	CFG PrH	New York Stock Exchange

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	☑	Accelerated filer	☐
Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

There were 440,700,533 shares of the registrant’s common stock ($0.01 par value) outstanding on October 25, 2024.




	Table of Contents


Glossary of Acronyms and Terms		3

Part I. Financial Information		5

Item 1. Financial Statements		39

Consolidated Balance Sheets (unaudited)		40
Consolidated Statements of Operations (unaudited)		41
Consolidated Statements of Comprehensive Income (unaudited)		42
Consolidated Statements of Changes in Stockholders’ Equity (unaudited)		43
Consolidated Statements of Cash Flows (unaudited)		45
Notes to Consolidated Financial Statements (unaudited)		46

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		5

Item 3. Quantitative and Qualitative Disclosures about Market Risk		82

Item 4. Controls and Procedures		82

Part II. Other Information		82

Item 1. Legal Proceedings		82
Item 1A. Risk Factors		82
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		82
Item 3. Defaults Upon Senior Securities		83
Item 4. Mine Safety Disclosures		83
Item 5. Other Information		83
Item 6. Exhibits		83

Signature		84

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GLOSSARY OF ACRONYMS AND TERMS

The following is a list of common acronyms and terms used regularly in our financial reporting:


2023 Form 10-K						Annual Report on Form 10-K for the year ended December 31, 2023
AACL						Adjusted Allowance for Credit Losses
ACL						Allowance for Credit Losses: Allowance for Loan and Lease Losses plus Allowance for Unfunded Lending Commitments
AFS						Available for Sale
ALM						Asset and Liability Management
AOCI						Accumulated Other Comprehensive Income (Loss)
ASU						Accounting Standards Update
ATM						Automated Teller Machine
Board or Board of Directors						The Board of Directors of Citizens Financial Group, Inc.
bps						Basis Points
CBNA						Citizens Bank, National Association
CCAR						Comprehensive Capital Analysis and Review
CCB						Capital Conservation Buffer
CECL						Current Expected Credit Losses (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1						Common Equity Tier 1
CET1 capital ratio						Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Citizens, CFG, the Company, we, us, or our						Citizens Financial Group, Inc. and its Subsidiaries
CLTV						Combined Loan-to-Value
CRE						Commercial Real Estate
EPS						Earnings Per Share
EVE						Economic Value of Equity
Exchange Act						The Securities Exchange Act of 1934, as amended
Fannie Mae (FNMA)						Federal National Mortgage Association
FDIC						Federal Deposit Insurance Corporation
FDM						Financially Distressed Modification
FHA						Federal Housing Administration
FHLB						Federal Home Loan Bank
FICO						Fair Isaac Corporation (credit rating)
FRB or Federal Reserve						Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
Freddie Mac (FHLMC)						Federal Home Loan Mortgage Corporation
FTE						Fully Taxable Equivalent

GAAP						Accounting Principles Generally Accepted in the United States of America
GDP						Gross Domestic Product
Ginnie Mae (GNMA)						Government National Mortgage Association
GSE						Government Sponsored Entity
HTM						Held To Maturity
Investors						Investors Bancorp, Inc. and its subsidiaries
LHFS						Loans Held for Sale
LIHTC						Low Income Housing Tax Credit
M&A						Merger and Acquisition
MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations

Citizens Financial Group, Inc. | 3


Mid-Atlantic						District of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia
Midwest						Illinois, Indiana, Michigan, and Ohio
Modified AACL transition						The Day-1 CECL adoption entry booked to ACL plus 25% of subsequent CECL ACL reserve build
Modified CECL transition						The Day-1 CECL adoption entry booked to retained earnings plus 25% of subsequent CECL ACL reserve build
MSRs						Mortgage Servicing Rights
New England						Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
NMTC						New Markets Tax Credit
OCC						Office of the Comptroller of the Currency
OCI						Other Comprehensive Income (Loss)
Operating Leverage						Period-over-period percent change in total revenue, less the period-over-period percent change in noninterest expense
Parent Company						Citizens Financial Group, Inc. (the Parent Company of Citizens Bank, National Association and other subsidiaries)
PCD						Purchased Credit Deteriorated
ROTCE						Return on Average Tangible Common Equity
RPA						Risk Participation Agreement
RWA						Risk-Weighted Assets
SBA						United States Small Business Administration
SCB						Stress Capital Buffer
SEC						United States Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate

TBAs						To-Be-Announced Mortgage Securities
Tier 1 capital ratio						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 leverage ratio						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
TOP						Tapping Our Potential
Total capital ratio						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
USDA						United States Department of Agriculture
VA						United States Department of Veterans Affairs
VaR						Value at Risk
VIE						Variable Interest Entity

Citizens Financial Group, Inc. | 4

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Citizens Financial Group, Inc. | 5

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 execute on our strategic business initiatives and achieve our financial performance goals across our Consumer and Commercial businesses, including our Private Bank;

•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 as well as new or amended regulations;

•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.

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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 in the “Risk Factors” section in Part I, Item 1A of our 2023 Form 10-K.

INTRODUCTION

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $219.7 billion in assets as of September 30, 2024. 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 3,100 ATMs and more than 1,000 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.

The following MD&A is intended to assist readers in their analysis of the accompanying unaudited interim Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the unaudited interim Consolidated Financial Statements and Notes to Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and our 2023 Form 10-K.

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.”

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FINANCIAL PERFORMANCE

Key Highlights

Net income decreased $48 million and $311 million for the three and nine months ended September 30, 2024, respectively, with earnings per diluted common share down $0.08 to $0.77 and down $0.58 to $2.20 compared to the same periods in 2023.

Results reflect notable items of $10 million or $0.02 per diluted common share, net of tax benefit, for the three months ended September 30, 2024, compared to $18 million or $0.04 per diluted common share, net of tax benefit, for the same period in 2023. For the nine months ended September 30, 2024, notable items were $87 million or $0.19 per diluted common share, net of tax benefit, as compared to $120 million or $0.25 per diluted common share, net of tax benefit, for the same period in 2023.


Table 1: Notable Items
	Three Months Ended September 30, 2024
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment	Underlying results (non-GAAP)

Noninterest income	$532	$—	($2)	$—	$534
Noninterest expense	1,259	2	9	—	1,248
Income tax expense	88	—	(3)	—	91


	Three Months Ended September 30, 2023
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment	Underlying results (non-GAAP)

Noninterest income	$492	$—	$—	$—	$492
Noninterest expense	1,293	8	14	—	1,271
Income tax expense	119	(2)	(2)	—	123


	Nine Months Ended September 30, 2024
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment(3)	Underlying results (non-GAAP)

Noninterest income	$1,602	$—	$5	$—	$1,597
Noninterest expense	3,918	8	84	40	3,786
Income tax expense	272	(2)	(28)	(10)	312


	Nine Months Ended September 30, 2023
		Less: notable items
(dollars in millions)	Reported results (GAAP)	Integration related costs(1)	TOP and other(2)	FDIC special assessment	Underlying results (non-GAAP)

Noninterest income	$1,483	$—	$—	$—	$1,483
Noninterest expense	3,895	99	62	—	3,734
Income tax expense	406	(26)	(15)	—	447

(1) Includes integration related costs associated with acquisitions.

(2) Primarily includes our TOP revenue and efficiency initiatives for the three and nine months ended September 30, 2024 and 2023.

(3) Represents an industry-wide FDIC special assessment. For more information, see “Regulation and Supervision - Deposit Insurance” in our 2023 Form 10-K.

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•Net income available to common stockholders decreased $56 million and $327 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

◦On an Underlying basis, net income available to common stockholders of $354 million and $1.1 billion for the three and nine months ended September 30, 2024, respectively, compared with $418 million and $1.5 billion for the same periods in 2023.

◦On an Underlying basis, earnings per diluted common share of $0.79 and $2.39 for the three and nine months ended September 30, 2024, respectively, compared to $0.89 and $3.03 for the same periods in 2023.

•Total revenue decreased $113 million and $413 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by decreases of 10% and 11%, respectively, in net interest income.

•The efficiency ratio of 66.2% and 67.3% for the three and nine months ended September 30, 2024, respectively, compared to 64.2% and 62.5% for the same periods in 2023.

◦On an Underlying basis, the efficiency ratio of 65.6% and 65.1% for the three and nine months ended September 30, 2024, respectively, compared to 63.1% and 59.9% for the same periods in 2023.

•ROTCE of 9.5% and 9.6% for the three and nine months ended September 30, 2024, respectively, compared to 12.0% and 12.9% for the same periods in 2023.

◦On an Underlying basis, ROTCE of 9.7% and 10.5% for the three and nine months ended September 30, 2024, respectively, compared to 12.5% and 14.1% for the same periods in 2023.

•Tangible book value per common share of $33.54 increased 9% from December 31, 2023.

For additional information regarding our financial performance, see “Results of Operations.”

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RESULTS OF OPERATIONS

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 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 the “Market Risk” and “Risk Governance” sections of our 2023 Form 10-K.

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The following tables present the major components of our net interest income. Average balance represents amortized cost, excluding the unamortized basis adjustments related to the transfer of certain HTM securities from AFS, and LHFS, at fair value. The yield/rate is based on annualized interest income or expense for the periods presented and includes the impact of hedging activities associated with the respective asset and liability categories.


Table 2: Major Components of Net Interest Income
	Three Months Ended September 30,
	2024				2023				Change
(dollars in millions)	Average Balance	Income/ Expense	Yield/ Rate		Average Balance	Income/ Expense	Yield/ Rate		Average Balance	Yield/ Rate (bps)
Assets
Interest-bearing cash and due from banks and deposits in banks	$8,896	$121	5.30	%	$8,005	$111	5.42	%	$891	(12) bps
Taxable investment securities	45,083	423	3.75		39,271	290	2.95		5,812	80
Non-taxable investment securities	1	—	2.60		2	—	2.68		(1)	(8)
Total investment securities	45,084	423	3.75		39,273	290	2.95		5,811	80
Commercial and industrial	44,071	556	4.95		48,908	762	6.10		(4,837)	(115)
Commercial real estate	28,209	452	6.26		29,353	467	6.23		(1,144)	3

Total commercial	72,280	1,008	5.46		78,261	1,229	6.15		(5,981)	(69)
Residential mortgages	32,117	301	3.75		30,838	267	3.46		1,279	29
Home equity	15,733	317	8.02		14,589	286	7.77		1,144	25
Automobile	5,942	64	4.28		9,849	103	4.16		(3,907)	12
Education	11,155	153	5.45		12,147	156	5.11		(992)	34
Other retail	4,776	133	11.04		5,107	125	9.67		(331)	137
Total retail	69,723	968	5.53		72,530	937	5.14		(2,807)	39
Total loans and leases	142,003	1,976	5.50		150,791	2,166	5.66		(8,788)	(16)
Loans held for sale, at fair value	1,108	18	6.31		1,204	20	6.72		(96)	(41)
Other loans held for sale	73	1	5.46		321	8	9.01		(248)	(355)
Interest-earning assets	197,164	2,539	5.09		199,594	2,595	5.13		(2,430)	(4)
Noninterest-earning assets	21,414				20,568				846
Total assets	$218,578				$220,162				($1,584)
Liabilities and Stockholders’ Equity
Checking with interest	$33,090	$131	1.58	%	$33,545	$126	1.49	%	($455)	9
Money market	53,152	444	3.32		52,057	415	3.17		1,095	15
Savings	26,868	128	1.89		29,516	123	1.65		(2,648)	24
Term	24,705	287	4.65		21,604	234	4.29		3,101	36
Total interest-bearing deposits	137,815	990	2.86		136,722	898	2.60		1,093	26
Short-term borrowed funds	150	3	6.06		506	8	6.21		(356)	(15)
Long-term borrowed funds	13,690	177	5.20		13,202	167	5.02		488	18
Total borrowed funds	13,840	180	5.21		13,708	175	5.07		132	14
Total interest-bearing liabilities	151,655	1,170	3.07		150,430	1,073	2.83		1,225	24
Demand deposits	36,236				39,728				(3,492)
Other noninterest-bearing liabilities	6,194				6,813				(619)
Total liabilities	194,085				196,971				(2,886)
Stockholders’ equity	24,493				23,191				1,302
Total liabilities and stockholders’ equity	$218,578				$220,162				($1,584)
Interest rate spread			2.02	%			2.30	%		(28)
Net interest income and net interest margin		$1,369	2.76	%		$1,522	3.03	%		(27)
Net interest income and net interest margin, FTE(1)		$1,373	2.77	%		$1,526	3.03	%		(26)
Memo: Total deposits (interest-bearing and demand)	$174,051	$990	2.26	%	$176,450	$898	2.02	%	($2,399)	24	bps

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	Nine Months Ended September 30,
	2024				2023				Change
(dollars in millions)	Average Balance	Income/ Expense	Yield/ Rate		Average Balance	Income/ Expense	Yield/ Rate		Average Balance	Yield/ Rate (bps)
Assets:
Interest-bearing cash and due from banks and deposits in banks	$9,602	$391	5.35	%	$7,232	$280	5.10	%	$2,370	25 bps
Taxable investment securities	44,561	1,239	3.71		38,742	823	2.83		5,819	88
Non-taxable investment securities	1	—	2.60		2	—	2.68		(1)	(8)
Total investment securities	44,562	1,239	3.71		38,744	823	2.83		5,818	88
Commercial and industrial	44,342	1,795	5.32		51,136	2,286	5.90		(6,794)	(58)
Commercial real estate	28,681	1,376	6.30		29,122	1,328	6.01		(441)	29

Total commercial	73,023	3,171	5.71		80,258	3,614	5.94		(7,235)	(23)
Residential mortgages	31,713	874	3.68		30,496	776	3.39		1,217	29
Home equity	15,387	920	7.99		14,336	790	7.37		1,051	62
Automobile	6,832	218	4.27		10,920	335	4.11		(4,088)	16
Education	11,472	463	5.39		12,455	465	5.00		(983)	39
Other retail	4,866	392	10.76		5,184	365	9.41		(318)	135
Total retail	70,270	2,867	5.45		73,391	2,731	4.97		(3,121)	48
Total loans and leases	143,293	6,038	5.58		153,649	6,345	5.48		(10,356)	10
Loans held for sale, at fair value	952	45	6.29		1,199	55	6.10		(247)	19
Other loans held for sale	152	11	9.39		380	25	8.57		(228)	82
Interest-earning assets	198,561	7,724	5.15		201,204	7,528	4.96		(2,643)	19
Noninterest-earning assets	20,959				20,535				424
Total assets	$219,520				$221,739				($2,219)
Liabilities and Stockholders’ Equity:
Checking with interest	$33,017	$368	1.49	%	$34,693	$333	1.28	%	($1,676)	21
Money market	52,552	1,320	3.35		50,562	1,050	2.78		1,990	57
Savings	27,389	369	1.80		29,539	310	1.40		(2,150)	40
Term	25,274	885	4.68		17,240	478	3.70		8,034	98
Total interest-bearing deposits	138,232	2,942	2.84		132,034	2,171	2.20		6,198	64
Short-term borrowed funds	324	14	5.64		831	36	5.71		(507)	(7)
Long-term borrowed funds	14,147	547	5.15		15,909	568	4.74		(1,762)	41
Total borrowed funds	14,471	561	5.16		16,740	604	4.79		(2,269)	37
Total interest-bearing liabilities	152,703	3,503	3.06		148,774	2,775	2.49		3,929	57
Demand deposits	36,374				42,657				(6,283)
Other noninterest-bearing liabilities	6,544				6,573				(29)
Total liabilities	195,621				198,004				(2,383)
Stockholders’ equity	23,899				23,735				164
Total liabilities and stockholders’ equity	$219,520				$221,739				($2,219)
Interest rate spread			2.09	%			2.47	%		(38)
Net interest income and net interest margin		$4,221	2.84	%		$4,753	3.16	%		(32)
Net interest income and net interest margin, FTE(1)		$4,234	2.85	%		$4,766	3.17	%		(32)
Memo: Total deposits (interest-bearing and demand)	$174,606	$2,942	2.25	%	$174,691	$2,171	1.66	%	($85)	59	bps

(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.

Net interest income decreased $153 million, or 10%, and decreased $532 million, or 11%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, reflecting lower net interest margin and a decline of 1% in average interest-earning assets.

Net interest margin on a FTE basis decreased 26 basis points and 32 basis points for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, reflecting higher funding and swap costs and the impact of building liquidity, partially offset by the benefit of Non-Core portfolio runoff. The decrease during the nine-month period is also partially offset by higher interest-earning-asset yields.

Average interest-earning assets decreased $2.4 billion and $2.6 billion for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by a decline in total loans and leases, partially offset by an increase in investment securities and cash held in interest-bearing deposits.

Citizens Financial Group, Inc. | 12

Average deposits decreased $2.4 billion for the three months ended September 30, 2024 compared to the same period in 2023, driven by a reduction in higher-cost Treasury deposits and rate-driven migration, partially offset by growth in Private Bank deposits. Average deposits were stable for the nine months ended September 30, 2024 compared to the same period in 2023.

Average total borrowed funds increased $132 million and decreased $2.3 billion for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, reflecting a decline in FHLB advances driven by Non-Core portfolio runoff, and a remix of funding to long-term senior debt and secured borrowings collateralized by loans. These factors are largely offsetting during the three-month period, with the decrease during the nine-month period driven by FHLB advances.

Noninterest Income


Table 3: Noninterest Income
	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)	2024	2023	Change	Percent		2024	2023	Change	Percent
Service charges and fees	$109	$105	$4	4	%	$311	$306	$5	2	%
Capital markets fees	94	67	27	40		346	232	114	49
Card fees	93	74	19	26		271	226	45	20
Wealth fees(1)	76	63	13	21		219	191	28	15
Mortgage banking fees	46	69	(23)	(33)		149	185	(36)	(19)
Foreign exchange and derivative products	36	48	(12)	(25)		111	140	(29)	(21)
Letter of credit and loan fees	45	43	2	5		130	126	4	3
Securities gains, net	9	5	4	80		14	19	(5)	(26)
Other income(2)	24	18	6	33		51	58	(7)	(12)
Noninterest income	$532	$492	$40	8	%	$1,602	$1,483	$119	8	%

(1) See Note 1 for information regarding updates to the Consolidated Statements of Operations during the second quarter of 2024.

(2) Includes bank-owned life insurance income and other income for all periods presented.

The primary drivers for the changes in noninterest income for the three and nine months ended September 30, 2024, compared to the same periods in 2023, are highlighted below.

•Capital markets fees increased given higher underwriting and M&A advisory fees. Higher loan syndication fees are also a driver during the nine-month period.

•Card fees increased driven primarily by higher credit card fees, including favorable vendor contract negotiations.

•Wealth fees reflect increased sales activity and higher asset management fees.

•Mortgage banking fees declined reflecting lower production and servicing fees and a decline in MSR valuation, net of hedge impact.

•Foreign exchange and derivative products revenue decreased given reduced client activity related to interest rate and commodities hedging.

Citizens Financial Group, Inc. | 13

Noninterest Expense


Table 4: Noninterest Expense
	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)	2024	2023	Change	Percent		2024	2023	Change	Percent
Salaries and employee benefits	$647	$659	($12)	(2	%)	$1,983	$1,932	$51	3	%
Equipment and software	194	191	3	2		576	541	35	6
Outside services	146	160	(14)	(9)		469	513	(44)	(9)
Occupancy	108	107	1	1		335	367	(32)	(9)
Other operating expense	164	176	(12)	(7)		555	542	13	2
Noninterest expense	$1,259	$1,293	($34)	(3	%)	$3,918	$3,895	$23	1	%

The decrease in noninterest expense for the three months ended September 30, 2024, compared to the same period in 2023, was driven by salaries and employee benefits reflecting lower headcount and other operating expense reflecting lower marketing-related expenses.

The increase in noninterest expense for the nine months ended September 30, 2024, compared to the same period in 2023, was driven by salaries and employee benefits reflecting our Private Bank build-out, equipment and software given technology investments and maintenance, and other operating expense largely associated with FDIC deposit insurance, reflecting an estimate of CBNA’s incremental special assessment of $40 million recognized in 2024. These increases were partially offset by lower marketing and travel-related expenses.

For more information regarding CBNA’s special assessment, see “Regulation and Supervision - Deposit Insurance” in our 2023 Form 10-K.

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 $172 million and $525 million for the three and nine months ended September 30, 2024, respectively, compared to $172 million and $516 million for the same periods in 2023. The provision expense for the three and nine months ended September 30, 2024 reflects higher reserves against the CRE office portfolio primarily driven by elevated interest rates and return-to-office dynamics.

Income Tax Expense

Income tax expense of $88 million and $272 million decreased $31 million and $134 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The effective income tax rate of 18.6% and 19.7% for the three and nine months ended September 30, 2024 decreased from 21.5% and 22.2%, respectively, compared to the same periods in 2023. These decreases reflect a higher benefit from tax-advantaged investments and the favorable impact of certain tax matters. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusting for discrete items that occurred during the period.

Citizens Financial Group, Inc. | 14

Business Operating Segments

We have three business operating segments: Consumer Banking, Commercial Banking, and Non-Core. See Note 16 for more information regarding our business operating segments.

The following tables present 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.


Table 5: Selected Financial Data for Business Operating Segments
	Three Months Ended September 30,
	Consumer Banking		Commercial Banking		Non-Core
(dollars in millions)	2024	2023	2024	2023	2024	2023
Net interest income	$1,156	$1,067	$478	$560	($28)	($41)
Noninterest income	285	278	207	180	—	—
Total revenue	1,441	1,345	685	740	(28)	(41)
Noninterest expense	916	905	300	325	23	30
Profit (loss) before credit losses	525	440	385	415	(51)	(71)
Net charge-offs	84	67	91	67	17	20
Income (loss) before income tax expense (benefit)	441	373	294	348	(68)	(91)
Income tax expense (benefit)	114	97	63	88	(17)	(24)
Net income (loss)	$327	$276	$231	$260	($51)	($67)
Average Balances:
Total assets	$75,392	$72,964	$68,092	$74,997	$8,389	$13,113
Total loans and leases(1)	69,021	66,641	64,974	71,898	8,352	13,010
Deposits	121,899	117,979	44,190	47,221	—	—
Interest-earning assets	69,608	67,273	65,550	72,275	8,352	13,010


	Nine Months Ended September 30,
	Consumer Banking		Commercial Banking		Non-Core
(dollars in millions)	2024	2023	2024	2023	2024	2023
Net interest income	$3,369	$3,101	$1,486	$1,741	($96)	($84)
Noninterest income	820	802	676	588	—	—
Total revenue	4,189	3,903	2,162	2,329	(96)	(84)
Noninterest expense	2,734	2,637	928	971	74	95
Profit (loss) before credit losses	1,455	1,266	1,234	1,358	(170)	(179)
Net charge-offs	249	198	262	185	46	54
Income (loss) before income tax expense (benefit)	1,206	1,068	972	1,173	(216)	(233)
Income tax expense (benefit)	311	278	223	289	(55)	(61)
Net income (loss)	$895	$790	$749	$884	($161)	($172)
Average Balances:
Total assets	$74,510	$72,477	$69,046	$77,130	$9,450	$14,409
Total loans and leases(1)	68,146	66,171	66,048	73,961	9,408	14,332
Deposits	120,803	116,477	44,766	47,221	—	—
Interest-earning assets	68,740	66,823	66,507	74,350	9,408	14,332

(1) Includes LHFS.

Consumer Banking

Net interest income increased $89 million and $268 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by higher net interest margin reflecting higher interest-earning asset yields and growth in average interest-earning assets. These increases were partially offset by higher funding costs.

Noninterest income increased $7 million and $18 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by wealth fees reflecting increased sales activity and higher asset management fees, higher credit card fees, and service charges and fees given higher overdraft and cash management fees. These increases were partially offset by mortgage banking fees reflecting lower production and servicing fees and a decline in MSR valuation, net of hedge impact.

Citizens Financial Group, Inc. | 15

Noninterest expense increased $97 million for the nine months ended September 30, 2024 compared to the same period in 2023, driven primarily by salaries and benefits reflecting our Private Bank build-out. Noninterest expense was stable for the three months ended September 30, 2024 compared to the same period in 2023.

Net charge-offs increased $17 million and $51 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven primarily by other retail and education.

Commercial Banking

Net interest income decreased $82 million and $255 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by lower net interest margin, a decline in average interest-earning assets and higher funding costs.

Noninterest income increased $27 million and $88 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by capital markets fees reflecting higher underwriting and M&A advisory fees. These increases were partially offset by foreign exchange and derivative products revenue given reduced client activity related to interest rate and commodities hedging. Higher loan syndication fees are also a driver during the nine-month period.

Noninterest expense decreased $25 million and $43 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven primarily by salaries and employee benefits reflecting lower headcount.

Net charge-offs increased $24 million and $77 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The increase during the three-month period was driven by the resolution of several nonperforming credits in commercial and industrial, while the increase during the nine-month period was primarily driven by the office segment of CRE, partially offset by a decline in commercial and industrial.

Non-Core

Net interest income decreased $12 million for the nine months ended September 30, 2024 compared to the same period in 2023, driven by the highest-cost implied marginal funding sources during 2024, including secured borrowings collateralized by auto loans and FHLB advances, and a decline in average interest-earning assets.

Average loans and leases decreased $4.7 billion and $4.9 billion for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, driven by planned Non-Core portfolio runoff.

Citizens Financial Group, Inc. | 16

ANALYSIS OF FINANCIAL CONDITION

Securities


Table 6: Amortized Cost and Fair Value of Securities
	September 30, 2024		December 31, 2023
(dollars in millions)	Amortized Cost(1)	Fair Value	Amortized Cost(1)	Fair Value
U.S. Treasury and other	$4,726	$4,689	$4,493	$4,380
State and political subdivisions	1	1	1	1
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	28,995	27,650	26,289	24,477
Other/non-agency	274	261	279	255
Total mortgage-backed securities	29,269	27,911	26,568	24,732

Collateralized loan obligations	234	234	667	664
Total debt securities available for sale	$34,230	$32,835	$31,729	$29,777
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	$8,308	$7,645	$8,696	$7,887

Total mortgage-backed securities	8,308	7,645	8,696	7,887
Asset-backed securities	430	422	488	463
Total debt securities held to maturity	$8,738	$8,067	$9,184	$8,350
Total debt securities available for sale and held to maturity	$42,968	$40,902	$40,913	$38,127
Equity securities, at cost(2)	$732	$732	$869	$869
Equity securities, at fair value(2)	203	203	173	173

(1) Excludes portfolio level basis adjustments of $176 million and $60 million, respectively, for securities designated in active fair value hedge relationships at September 30, 2024 and December 31, 2023.

(2) Included in other assets in the Consolidated Balance Sheets.

The primary objective of our securities portfolio is to provide a readily available 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 September 30, 2024, U.S. Treasuries and mortgage-backed securities issued by GNMA and GSEs represented 98% of the fair value of our debt securities portfolio, with approximately $34.1 billion of unencumbered high-quality liquid securities serving as potential collateral for borrowings from the FHLB, FRB discount window, and the Fixed Income Clearing Corporation bilateral repurchase agreement market.

For further discussion of the use of our securities as liquidity collateral see the “Liquidity Risk Management and Governance” section in this document. For further discussion of liquidity requirements, see “Regulation and Supervision — Liquidity Requirements” in our 2023 Form 10-K.

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 our broader interest rate risk framework and limits. As of September 30, 2024, the portfolio’s average effective duration, including recent hedging actions to reduce duration, was 3.3 years compared with 3.9 years as of December 31, 2023.

Citizens Financial Group, Inc. | 17

Loans and Leases


Table 7: Composition of Loans and Leases, Excluding LHFS
(dollars in millions)	September 30, 2024	December 31, 2023	Change	Percent
Commercial and industrial	$43,825	$44,974	($1,149)	(3)	%
Commercial real estate	27,983	29,471	(1,488)	(5)

Total commercial	71,808	74,445	(2,637)	(4)
Residential mortgages	32,379	31,332	1,047	3
Home equity	15,992	15,040	952	6
Automobile	5,540	8,258	(2,718)	(33)
Education	11,118	11,834	(716)	(6)
Other retail	4,795	5,050	(255)	(5)
Total retail	69,824	71,514	(1,690)	(2)
Total loans and leases	$141,632	$145,959	($4,327)	(3)	%

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

The decrease in total loans and leases as of September 30, 2024 compared to December 31, 2023 reflects a $2.6 billion decrease in commercial given balance sheet optimization actions, paydowns and lower client demand. Retail decreased $1.7 billion, primarily driven by planned Non-Core portfolio runoff, partially offset by growth in home equity and mortgage.

Credit Quality

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

The ACL is a reserve to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see “Critical Accounting Estimates — Allowance for Credit Losses” and Note 4, and Note 6 in our 2023 Form 10-K.

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


Table 8: ACL and Related Coverage Ratios by Portfolio
	September 30, 2024				December 31, 2023
(dollars in millions)	Loans and Leases	Allowance	Coverage		Loans and Leases	Allowance	Coverage
Allowance for Loan and Lease Losses
Commercial and industrial	$43,825	$506	1.15	%	$44,974	$587	1.31	%
Commercial real estate	27,983	681	2.43		29,471	663	2.25

Total commercial	71,808	1,187	1.65		74,445	1,250	1.68
Residential mortgages	32,379	164	0.51		31,332	181	0.58
Home equity	15,992	102	0.64		15,040	100	0.66
Automobile	5,540	29	0.52		8,258	57	0.69
Education	11,118	288	2.59		11,834	259	2.18
Other retail	4,795	309	6.44		5,050	251	4.98
Total retail	69,824	892	1.28		71,514	848	1.19
Total loans and leases	$141,632	$2,079	1.47	%	$145,959	$2,098	1.44	%
Allowance for Unfunded Lending Commitments
Commercial(1)		$164	1.88	%		$175	1.91	%
Retail(2)		43	1.34			45	1.25
Total allowance for unfunded lending commitments		207				220
Allowance for credit losses	$141,632	$2,286	1.61	%	$145,959	$2,318	1.59	%

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

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

Citizens Financial Group, Inc. | 18


Table 9: Nonaccrual Loans and Leases
(dollars in millions)	September 30, 2024		December 31, 2023		Change		Percent
Commercial and industrial	$219		$297		($78)		(26	%)
Commercial real estate	852		477		375		79

Total commercial	1,071		774		297		38
Residential mortgages	169		177		(8)		(5)
Home equity	281		285		(4)		(1)
Automobile	46		61		(15)		(25)
Education	59		28		31		111
Other retail	61		39		22		56
Total retail	616		590		26		4
Nonaccrual loans and leases	$1,687		$1,364		$323		24	%
Nonaccrual loans and leases to total loans and leases	1.19	%	0.93	%	26	bps
Allowance for loan and lease losses to nonaccrual loans and leases	123		154		(31	%)
Allowance for credit losses to nonaccrual loans and leases	136		170		(34	%)


Table 10: Ratio of Net Charge-Offs to Average Loans and Leases
	Three Months Ended September 30,
	2024				2023
(dollars in millions)	Net Charge-Offs	Average Balance	Ratio		Net Charge-Offs	Average Balance	Ratio
Commercial and industrial	$54	$44,071	0.49	%	$22	$48,908	0.18	%
Commercial real estate	44	28,209	0.62		48	29,353	0.65

Total commercial	98	72,280	0.54		70	78,261	0.35
Residential mortgages	—	32,117	—		(1)	30,838	(0.02)
Home equity	(1)	15,733	(0.03)		(3)	14,589	(0.08)
Automobile	13	5,942	0.81		15	9,849	0.60
Education	24	11,155	0.85		22	12,147	0.72
Other retail	58	4,776	4.93		50	5,107	3.95
Total retail	94	69,723	0.54		83	72,530	0.46
Total loans and leases	$192	$142,003	0.54	%	$153	$150,791	0.40	%


	Nine Months Ended September 30,
	2024				2023
(dollars in millions)	Net Charge-Offs	Average Balance	Ratio		Net Charge-Offs	Average Balance	Ratio
Commercial and industrial	$61	$44,342	0.18	%	$85	$51,136	0.22	%
Commercial real estate	218	28,681	1.02		113	29,122	0.52

Total commercial	279	73,023	0.51		198	80,258	0.33
Residential mortgages	1	31,713	—		—	30,496	—
Home equity	(6)	15,387	(0.05)		(9)	14,336	(0.08)
Automobile	31	6,832	0.60		38	10,920	0.47
Education	77	11,472	0.90		62	12,455	0.66
Other retail	175	4,866	4.82		149	5,184	3.87
Total retail	278	70,270	0.53		240	73,391	0.44
Total loans and leases	$557	$143,293	0.52	%	$438	$153,649	0.38	%

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

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

Citizens Financial Group, Inc. | 19

Commercial Loan Asset Quality

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

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

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

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

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


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

Citizens Financial Group, Inc. | 20


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

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

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

Retail Loan Asset Quality

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


Table 13: Retail Loan Portfolio Analysis
	September 30, 2024										December 31, 2023
			Days Past Due and Accruing										Days Past Due and Accruing
	Current		30-59		60-89		90+		Nonaccrual		Current		30-59		60-89		90+		Nonaccrual
Residential mortgages	98.59	%	0.29	%	0.15	%	0.45	%	0.52	%	97.34	%	0.90	%	0.38	%	0.82	%	0.56	%
Home equity	97.49		0.58		0.17		—		1.76		97.34		0.55		0.22		—		1.89
Automobile	96.51		1.97		0.69		—		0.83		96.94		1.74		0.58		—		0.74
Education	98.84		0.39		0.22		0.02		0.53		99.14		0.41		0.19		0.02		0.24
Other retail	97.14		0.92		0.65		0.02		1.27		97.02		0.97		0.67		0.57		0.77
Total retail	98.12	%	0.55	%	0.24	%	0.21	%	0.88	%	97.56	%	0.85	%	0.36	%	0.40	%	0.83	%

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Table 14: Retail Asset Quality Metrics
	September 30, 2024		December 31, 2023
Average refreshed FICO for total portfolio	774		772
CLTV ratio for secured real estate(1)	50	%	50	%

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

For more information on the aging of accruing and nonaccrual retail loans, and the distribution of retail loans by vintage date and FICO score, see Note 4.

Deposits


Table 15: Composition of Deposits
(dollars in millions)	September 30, 2024	% of Total Deposits		December 31, 2023	% of Total Deposits
Demand	$35,978	21	%	$37,107	21	%
Money market	54,654	31		53,812	30
Checking with interest	33,680	19		31,876	18
Savings	26,489	15		27,983	16
Term	24,387	14		26,564	15
Total deposits	$175,188	100	%	$177,342	100	%

Total deposits as of September 30, 2024 decreased compared to December 31, 2023, reflecting a decline in Treasury deposits, partially offset by growth in Private Bank deposits.


Table 16: Uninsured and Insured/Secured Deposits
(dollars in millions)	September 30, 2024		December 31, 2023
Total deposits	$175,188		$177,342

Estimated uninsured deposits(1)	76,311		73,584
Less: Uninsured affiliate deposits eliminated in consolidation	13,334		14,650
Less: Preferred deposits(1)(2)	6,818		7,486
CFG adjusted estimated uninsured deposits, excluding preferred deposits	56,159		51,448
Total estimated insured/secured deposits	$119,029		$125,894
Insured/secured deposits to total deposits	68	%	71	%

(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.

Borrowed Funds

Total borrowed funds of $14.0 billion as of September 30, 2024 decreased $13 million compared to December 31, 2023, driven by a decline of approximately $3.7 billion in FHLB advances, partially offset by the issuance of senior debt and secured borrowings collateralized by loans. For more information regarding our borrowed funds, see “Liquidity” and Note 7.

CAPITAL AND REGULATORY MATTERS

As a bank and financial holding company, 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. See “Regulation and Supervision” in our 2023 Form 10-K for more information.

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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. There have been no significant changes to our capital adequacy risk appetite and risk management framework as described in “Capital and Regulatory Matters” in our 2023 Form 10-K.

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 CCAR supervisory stress test was 4.0%, effective through September 30, 2024, and our SCB associated with the 2024 CCAR supervisory stress test is 4.5%, effective October 1, 2024 through September 30, 2025.

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.

For more information on our capital adequacy process, see “Capital and Regulatory Matters” in our 2023 Form 10-K.

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 bank holding company, our SCB of 4.0% as of September 30, 2024 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.

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For additional discussion of the U.S. Basel III capital framework and its related application, see “Regulation and Supervision” in our 2023 Form 10-K. The table below presents the regulatory capital ratios for CFG and CBNA under the U.S. Basel III Standardized rules:


Table 17: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules
	September 30, 2024			December 31, 2023
(dollars in millions)	Amount	Ratio		Amount	Ratio		Required Minimum Capital Ratio(1)
CET1 capital
CFG	$17,941	10.6	%	$18,358	10.6	%	8.5	%
CBNA	19,908	11.9		19,411	11.3		7.0
Tier 1 capital
CFG	20,053	11.9		20,372	11.8		10.0
CBNA	19,908	11.9		19,411	11.3		8.5
Total capital
CFG	23,352	13.9		23,608	13.7		12.0
CBNA	23,035	13.7		22,453	13.0		10.5
Tier 1 leverage
CFG	20,053	9.4		20,372	9.3		4.0
CBNA	19,908	9.4		19,411	8.9		4.0
Risk-weighted assets
CFG	168,552			172,601
CBNA	167,876			172,094
Quarterly adjusted average assets(2)
CFG	213,274			219,591
CBNA	212,598			218,974

(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 September 30, 2024, CFG’s CET1 capital ratio was stable and its tier 1 capital ratio increased compared to December 31, 2023. Net income and a $4.0 billion decrease in RWA was offset by common share repurchases, dividends, and a decrease in the modified CECL transition amount as we entered the third year of the CECL three-year transition period. Lower auto and commercial loans were the key drivers for the decline in RWA. An increase in preferred stock was also a contributing factor to the tier 1 capital ratio increase.

At September 30, 2024, CBNA’s CET1 and tier 1 capital ratios increased compared to December 31, 2023. Net income and a $4.2 billion decrease in RWA, primarily driven by lower auto and commercial loans, was partially offset by dividend payments to the Parent Company and a decrease in the modified CECL transition amount as we entered the third year of the CECL three-year transition period.

At September 30, 2024, CFG’s and CBNA’s total capital ratios increased compared to December 31, 2023, driven by their respective changes in CET1 and tier 1 capital described above and a reduction in the modified AACL transition amount.

At September 30, 2024, CFG’s and CBNA’s tier 1 leverage ratios increased compared to December 31, 2023, reflecting a decline in quarterly adjusted average assets and their respective changes in tier 1 capital described above.

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Table 18: Capital Composition Under the U.S. Basel III Capital Framework
(dollars in millions)	September 30, 2024	December 31, 2023
Total common stockholders' equity	$22,820	$22,328
Exclusions:
Modified CECL transitional amount	96	192
Net unrealized (gains)/losses recorded in AOCI, net of tax:
Debt securities	1,957	2,338
Derivatives	649	1,087
Unamortized net periodic benefit costs	320	333
Deductions:
Goodwill, net of deferred tax liability	(7,772)	(7,779)
Other intangible assets, net of deferred tax liability	(118)	(134)
Deferred tax assets that arise from tax loss and credit carryforwards	(11)	(7)
Total common equity tier 1 capital	17,941	18,358
Qualifying preferred stock	2,112	2,014
Total tier 1 capital	20,053	20,372
Qualifying subordinated debt(1)	1,297	1,319
Allowance for credit losses	2,286	2,318
Exclusions from tier 2 capital:
Modified AACL transitional amount	(125)	(249)
Allowance on PCD assets	(159)	(152)
Adjusted allowance for credit losses	2,002	1,917
Total capital	$23,352	$23,608

(1) As of September 30, 2024 and December 31, 2023, the amount of non-qualifying subordinated debt excluded from regulatory capital was $419 million and $482 million, respectively. See Note 7 for more details on our outstanding subordinated debt.

Capital Transactions

We completed the following capital transactions during the nine months ended September 30, 2024:

•Repurchased $825 million of our outstanding common stock;

•Issued 400,000 shares of 7.375% fixed-rate non-cumulative perpetual Series H Preferred Stock at an aggregate offering price of $400 million;

•Redeemed all outstanding shares of the 9.205% floating rate non-cumulative perpetual Series D Preferred Stock on July 8, 2024;

•Declared quarterly common stock dividends of $0.42 per share, aggregating to $581 million; and

•Declared preferred stock dividends aggregating to $103 million.

For additional detail regarding our common and preferred stock dividends see Note 10.

On June 28, 2024, our Board of Directors increased the capacity of our common share repurchase program to $1.25 billion, an increase of $656 million above the $594 million of capacity remaining under the prior February 2023 authorization. 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.

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 our 2023 Form 10-K, 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.

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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 19: AOCI Impact on Regulatory Capital
	September 30, 2024
	CFG						CBNA
(dollars in millions)	CET1		Tier 1		Total		CET1		Tier 1		Total
Regulatory capital, including AOCI impact:
Regulatory capital (as reported)	$17,941		$20,053		$23,352		$19,908		$19,908		$23,035
Unrealized gains (losses) on securities and pension	(2,277)		(2,277)		(2,277)		(2,260)		(2,260)		(2,260)
Deferred tax assets - securities and pension AOCI	(12)		(12)		(12)		(12)		(12)		(12)
Regulatory capital, including AOCI impact (non-GAAP)	$15,652		$17,764		$21,063		$17,636		$17,636		$20,763
Risk-weighted assets, including AOCI impact:
Risk-weighted assets (as reported)	$168,552		$168,552		$168,552		$167,876		$167,876		$167,876
Unrealized gains (losses) on securities and pension	(640)		(640)		(640)		(623)		(623)		(623)
Deferred tax assets - securities and pension AOCI	1,919		1,919		1,919		1,901		1,901		1,901
Risk-weighted assets, including AOCI impact (non-GAAP)	$169,831		$169,831		$169,831		$169,154		$169,154		$169,154
Ratio:
Regulatory capital ratio (as reported)	10.6	%	11.9	%	13.9	%	11.9	%	11.9	%	13.7	%
Regulatory capital ratio, including AOCI impact (non-GAAP)	9.2	%	10.5	%	12.4	%	10.4	%	10.4	%	12.3	%

Recent Regulatory Developments

On March 6, 2024, the SEC adopted a final rule to require registrants to disclose certain climate-related information in their registration statements and annual reports. Subsequent to adoption, a number of businesses and business groups filed petitions seeking a judicial review of the final rule, asserting that the SEC does not have the authority to promulgate it. On April 4, 2024, the SEC issued an order staying its final rule pending completion of the judicial review of certain petitions consolidated in the U.S. Court of Appeals for the Eighth Circuit. We will continue to monitor the outcome of this judicial review.

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 relies on wholesale borrowings, uses also include payments of related principal and interest.

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During the nine months ended September 30, 2024, the Parent Company completed the following transactions:

•Issued $1.25 billion of 5.841% fixed-to-floating rate senior notes due 2030;

•Issued $750 million of 6.645% fixed-to-floating rate senior notes due 2035;

•Issued 400,000 shares of 7.375% fixed-rate non-cumulative perpetual Series H Preferred Stock at an aggregate offering price of $400 million;

•Redeemed all outstanding shares of the 9.205% floating rate non-cumulative perpetual Series D Preferred Stock on July 8, 2024; and

•Issued $1.25 billion of 5.718% fixed-to-floating rate senior notes due 2032.

Our Parent Company’s cash and cash equivalents represent a source of liquidity that can be used to meet various needs and totaled $3.1 billion and $2.9 billion as of September 30, 2024 and December 31, 2023, respectively.

During the three months ended September 30, 2024 and 2023, the Parent Company declared dividends on common stock of $190 million and $199 million, respectively, and declared dividends on preferred stock of $38 million and $30 million, respectively.

During the nine months ended September 30, 2024 and 2023, the Parent Company declared dividends on common stock of $581 million and $609 million, respectively, and declared dividends on preferred stock of $103 million and $87 million, respectively.

During the nine months ended September 30, 2024, the Parent Company repurchased $825 million of its outstanding common stock.

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 investment 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 relies on wholesale borrowings, uses also include payments of related principal and interest. For further information on CBNA’s outstanding debt see Note 7.

During the nine months ended September 30, 2024, CBNA completed the following transactions:

•Issued $2.7 billion of secured borrowings collateralized by loans; and

•Redeemed $650 million of 4.119% fixed-to-floating rate senior notes due 2025.

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, deposit maturities and withdrawals, debt service requirements, equipment and premises leases, and other cash commitments, under both normal operating conditions and 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.

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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 20: Credit Ratings

September 30, 2024

Moody’s

Standard &
Poor’s

Fitch

Citizens Financial Group, Inc.:

Long-term issuer

Baa1

BBB+

Short-term issuer

A-2

Subordinated debt

Baa1

BBB

Preferred Stock

Baa3

BB+

Citizens Bank, National Association:

Long-term issuer

A-

BBB+

Short-term issuer

(P) P-2

A-2

Long-term deposits

A-

Short-term deposits

P-1

NR = Not rated

We currently have a “stable” outlook at Standard & Poor’s, a “negative” outlook at Moody’s and a “positive” 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 our 2023 Form 10-K.

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.

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.

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As of September 30, 2024:

•Organically generated deposits continue to be our primary source of funding, resulting in a consolidated period-end loans-to-deposits ratio, excluding LHFS, of 80.8%;

◦Estimated insured/secured deposits comprise 68% of our consolidated deposit base of $175.2 billion.

•Our total available liquidity, comprised of contingent liquidity and available discount window capacity, was approximately $82.1 billion;

◦Contingent liquidity was $64.3 billion, consisting of unencumbered high-quality liquid securities of $34.1 billion, unused FHLB capacity of $20.4 billion, and our cash balances at the FRB of $9.8 billion; and

◦Available discount window capacity was $17.8 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 nine months ended September 30, 2024 and 2023, see the Consolidated Statements of Cash Flows in Item 1.

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.

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 11.

CRITICAL ACCOUNTING ESTIMATES

Our 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 Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on our 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 significant accounting policies and estimates include the ACL, fair value measurements and the evaluation and measurement of goodwill impairment. For additional information regarding fair value measurements, see “Critical Accounting Estimates” in our 2023 Form 10-K.

Allowance for Credit Losses

The ACL of $2.3 billion at September 30, 2024 remained stable compared to December 31, 2023.

As of September 30, 2024, the ACL economic forecast over a two-year reasonable and supportable period was consistent with December 31, 2023, with peak unemployment of approximately 5.1% and start-to-trough real GDP decline of approximately 0.4%. These forecasts reflect a mild recession over the two-year reasonable and supportable period.

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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 with peak unemployment of approximately 6.0% and start-to-trough real GDP decline of approximately 1.9%. Excluding consideration of qualitative adjustments, this scenario would result in a quantitative lifetime loss estimate of approximately 1.2x our modeled period-end ACL, or an increase of approximately $400 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 analysis 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 on our estimation of expected credit losses.

For additional information regarding the ACL, see Note 4 and “Critical Accounting Estimates - Allowance for Credit Losses” and Note 6 in our 2023 Form 10-K.

Goodwill

We review the goodwill of each reporting unit for impairment on an annual basis 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. The process of evaluating the fair value of a reporting unit is subjective, involving management assumptions, estimates and forecasts, and the use of external or internal valuations. Future potential changes in assumptions, estimates or forecasts may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. Additionally, a reporting unit’s fair value could change based on market conditions or other factors, which could impact whether the fair value of a reporting unit is less than its carrying value.

For additional information regarding Goodwill, see “Critical Accounting Estimates - Goodwill” and Note 10 in our 2023 Form 10-K.

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ACCOUNTING AND REPORTING DEVELOPMENTS

Accounting standards issued but not adopted as of September 30, 2024


Pronouncement	Summary of Guidance	Effects on Financial Statements
Improvements to Reportable Segment Disclosures Issued November 2023	•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	•Required effective date: Annual financial statements for the year ending December 31, 2024 and subsequent interim periods beginning in 2025. Early adoption is permitted. •Adoption is not expected to have a material impact on our required segment disclosures in the Consolidated Financial Statements.
Improvements to Income Tax Disclosures Issued December 2023	•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	•Required effective date: Annual financial statements for the year ending December 31, 2025. Early adoption is permitted. •Adoption is expected to have a meaningful impact on our required income tax disclosures in the Consolidated Financial Statements.

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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.

There have been no significant changes in our risk governance practices, risk framework, risk appetite, or credit risk as described in “Risk Governance” in our 2023 Form 10-K.

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.

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. There have been no significant changes in our sources of interest rate risk, interest rate risk practices, risk framework, metrics or assumptions as described in “Market Risk — Non-Trading Risk” in our 2023 Form 10-K.

The table below presents the sensitivity of net interest income to various parallel yield curve shifts from the market implied forward yield curve. 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 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.


Table 21: Sensitivity of Net Interest Income
	Estimated % Change in Net Interest Income over 12 Months
Basis points	September 30, 2024		December 31, 2023
Instantaneous Change in Interest Rates
+200	2.6	%	—	%
+100	1.5		0.5

-100	(1.8)		(1.5)
-200	(4.4)		(3.0)
Gradual Change in Interest Rates
+200	2.1	%	0.4	%
+100	1.0		0.5

-100	(1.1)		(1.0)
-200	(2.4)		(1.9)

Citizens Financial Group, Inc. | 32

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 period-end yield curve is realized. The rate risk exposure is then measured based on assumed changes from that base case rate path.

Our risk position is slightly asset sensitive to a gradual change in rates as of September 30, 2024, compared to our broadly neutral position as of December 31, 2023. Our interest rate sensitivity incorporates the impacts of changes in our balance sheet mix, including securities, loans, deposits, borrowed funds and hedge activity, which is primarily comprised of received fixed swaps that offset our naturally asset-sensitive balance sheet.

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.

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.

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The following table presents interest rate derivative contracts that we have entered into as of September 30, 2024 and December 31, 2023.


Table 22: Interest Rate Hedges Used to Manage Non-Trading Interest Rate Exposure
	September 30, 2024						December 31, 2023
		Weighted Average						Weighted Average
(dollars in millions)	Notional Amount	Maturity (Years)	Fixed Rate		Reset Rate		Notional Amount	Maturity (Years)	Fixed Rate		Reset Rate
Fair value hedges:
Asset conversion swaps:
AFS securities:
Pay fixed/receive SOFR	$8,395	5.0	3.8	%	5.0	%	$5,365	6.2	3.8	%	5.4	%

Liability conversion swaps:
Long-term borrowed funds:
Receive fixed/pay SOFR	500	1.1	2.6		5.2		500	1.9	2.6		5.6
Total fair value hedges	8,895						5,865
Cash flow hedges:
Asset conversion swaps:
Loans:
Swaps
Receive fixed/pay SOFR	25,750	1.9	3.1		5.0		17,780	0.8	4.0		5.4
Receive fixed/pay SOFR - forward-starting	9,000	3.1	4.0		3.3		31,250	2.9	3.3		4.6
Basis swaps
Receive SOFR/pay 1-month term SOFR	11,500	1.8	—		5.0/5.2		5,000	1.0	—		5.3/5.3
Receive SOFR/pay 1-month term SOFR - forward-starting	3,000	2.6	—		3.2/3.1		14,000	2.7	—		5.2/5.1

			Floor Rate		Cap Rate				Floor Rate		Cap Rate
Options
Interest rate collars(1)	—	—	—		—		1,000	1.5	2.5		3.7
Interest rate collars - forward-starting(1)	—	—	—		—		500	2.5	2.7		4.4

Floor spreads - forward-starting(2)	—	—	—		—		2,500	2.8	2.2/3.2		—
Total cash flow hedges	49,250						72,030
Total hedges	$58,145						$77,895

(1) Weighted average floor and cap rates represents 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.

The following table presents the average active notional amounts for our interest rate derivatives, based on contract effective date, during the remainder of 2024 and for the next five years:


Table 23: Average Active Notional for Interest Rate Derivative Contracts
	Year Ended
(dollars in millions)	Q4 2024		2025		2026		2027		2028		2029
Fair value hedges
Pay fixed/receive SOFR(1)	$8,395		$8,389		$8,161		$6,415		$5,553		$3,946
Receive fixed/pay SOFR(2)	500		441		—		—		—		—
Cash flow hedges
Receive fixed/pay SOFR(2)	26,245		28,557		22,401		8,589		1,210		499
Receive SOFR/pay 1-month term SOFR	11,500		12,096		8,847		1,952		—		—


Total	$46,640		$49,483		$39,409		$16,956		$6,763		$4,445
Weighted average receive fixed rate	3.1	%	3.2	%	3.5	%	3.8	%	3.9	%	4.1	%
Weighted average pay fixed rate	3.8		3.8		3.8		3.8		3.7		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.

Citizens Financial Group, Inc. | 34


Table 24: Pre-Tax Gains (Losses) Recorded in the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income on Cash Flow Hedges
	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Pre-tax net gains (losses) recognized in OCI	$613	($326)	($114)	($773)
Pre-tax net gains (losses) reclassified from AOCI into interest income	(276)	(156)	(711)	(420)
Pre-tax net gains (losses) reclassified from AOCI into interest expense	—	(1)	—	—

Using the September 30, 2024 interest rate curve we estimate that $621 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. These losses could differ from amounts recognized due to changes in interest rates, hedge de-designations or the addition of other hedges after September 30, 2024.

Included in AOCI is a net loss from terminated swaps of $868 million that will reduce net interest income by $137 million in the fourth quarter of 2024, $127 million in the first quarter of 2025, $119 million in the second quarter of 2025, $109 million in the third quarter of 2025, and $103 million in the fourth quarter of 2025. The remaining $273 million will reduce net interest income by $230 million in 2026 and $43 million after 2026.

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 changes in fair value of our MSRs. For more information regarding the fair value of our MSRs and associated derivatives see Note 5 and Note 8.

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 from certain derivative and foreign exchange products as well as underwriting and market making activities. Market risk exposure arises from fluctuations in interest rates, basis spreads, volatility, foreign exchange rates, equity prices, and credit spreads across various financial instruments. Securities underwriting and trading activities are conducted through CBNA and Citizens JMP Securities, LLC. There have been no significant changes in our market risk governance, market risk measurement, or market risk practices including VaR, stressed VaR, sensitivity analysis, stress testing, VaR model review and validation, or VaR backtesting as described in “Market Risk — Trading Risk” in our 2023 Form 10-K.

Citizens Financial Group, Inc. | 35

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 25: Results of Modeled and Non-Modeled Measures for Regulatory Capital Calculations
(dollars in millions)	For the Three Months Ended September 30, 2024				For the Three Months Ended September 30, 2023
Market Risk Category	Period End	Average	High	Low	Period End	Average	High	Low
Interest Rate	$2	$2	$4	$1	$5	$3	$5	$2
Foreign Exchange Currency Rate	—	—	—	—	—	—	—	—
Credit Spread	1	2	3	—	1	1	2	1
Commodity	—	—	—	—	—	—	—	—
General VaR	2	3	4	1	5	4	6	3
Specific Risk VaR	—	—	—	—	—	—	—	—
Total VaR	$2	$3	$4	$1	$5	$4	$6	$3
Stressed General VaR	$6	$7	$14	$2	$6	$7	$10	$4
Stressed Specific Risk VaR	—	—	—	—	—	—	—	—
Total Stressed VaR	$6	$7	$14	$2	$6	$7	$10	$4
Market Risk Regulatory Capital	$29				$34
Specific Risk Not Modeled Add-on	23				21
de Minimis Exposure Add-on	1				—
Total Market Risk Regulatory Capital	$53				$55
Market Risk-Weighted Assets	$662				$681

Citizens Financial Group, Inc. | 36

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

For more information on the computation of our non-GAAP financial measures, see the “Non-GAAP Financial Measures” section of the “Introduction” on page 7. The following table presents computations of non-GAAP financial measures representing our “Underlying” results used in the MD&A:


Table 26: Reconciliations of Non-GAAP Measures
		As of and for the Three Months Ended September 30,				As of and for the Nine Months Ended September 30,
(dollars in millions, except per share data)	Ref.	2024		2023		2024		2023
Noninterest income, Underlying:
Noninterest income (GAAP)	A	$532		$492		$1,602		$1,483
Less: Notable items		(2)		—		5		—
Noninterest income, Underlying (non-GAAP)	B	$534		$492		$1,597		$1,483
Total revenue, Underlying:
Total revenue (GAAP)	C	$1,901		$2,014		$5,823		$6,236
Less: Notable items		(2)		—		5		—
Total revenue, Underlying (non-GAAP)	D	$1,903		$2,014		$5,818		$6,236
Noninterest expense, Underlying:
Noninterest expense (GAAP)	E	$1,259		$1,293		$3,918		$3,895
Less: Notable items		11		22		132		161
Noninterest expense, Underlying (non-GAAP)	F	$1,248		$1,271		$3,786		$3,734
Pre-provision profit:
Total revenue (GAAP)	C	$1,901		$2,014		$5,823		$6,236
Less: Noninterest expense (GAAP)	E	1,259		1,293		3,918		3,895
Pre-provision profit (non-GAAP)		$642		$721		$1,905		$2,341
Pre-provision profit, Underlying
Total revenue, Underlying (non-GAAP)	D	$1,903		$2,014		$5,818		$6,236
Less: Noninterest expense, Underlying (non-GAAP)	F	1,248		1,271		3,786		3,734
Pre-provision profit, Underlying (non-GAAP)		$655		$743		$2,032		$2,502




Income before income tax expense, Underlying:
Income before income tax expense (GAAP)	G	$470		$549		$1,380		$1,825
Less: Income (expense) before income tax expense (benefit) related to notable items		(13)		(22)		(127)		(161)
Income before income tax expense, Underlying (non-GAAP)	H	$483		$571		$1,507		$1,986
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP)	I	$88		$119		$272		$406
Less: Income tax expense (benefit) related to notable items		(3)		(4)		(40)		(41)
Income tax expense, Underlying (non-GAAP)	J	$91		$123		$312		$447
Effective income tax rate (GAAP)	I/G	18.56	%	21.51	%	19.69	%	22.24	%
Effective income tax rate, Underlying (non-GAAP)	J/H	18.75		21.69		20.68		22.55
Net income, Underlying:
Net income (GAAP)	K	$382		$430		$1,108		$1,419
Add: Notable items, net of income tax benefit		10		18		87		120
Net income, Underlying (non-GAAP)	L	$392		$448		$1,195		$1,539
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)	M	$344		$400		$1,005		$1,332
Add: Notable items, net of income tax benefit		10		18		87		120
Net income available to common stockholders, Underlying (non-GAAP)	N	$354		$418		$1,092		$1,452
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)	O	$22,380		$21,177		$21,838		$21,721
Return on average common equity	M/O	6.12	%	7.50	%	6.15	%	8.20	%
Return on average common equity, Underlying (non-GAAP)	N/O	6.29		7.82		6.68		8.93

Citizens Financial Group, Inc. | 37


		As of and for the Three Months Ended September 30,				As of and for the Nine Months Ended September 30,
(dollars in millions, except per share data)	Ref.	2024		2023		2024		2023
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP)	O	$22,380		$21,177		$21,838		$21,721
Less: Average goodwill (GAAP)		8,187		8,188		8,187		8,182
Less: Average other intangibles (GAAP)		140		173		146		182
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)		435		422		433		422
Average tangible common equity	P	$14,488		$13,238		$13,938		$13,779
Return on average tangible common equity	M/P	9.45	%	12.00	%	9.63	%	12.93	%
Return on average tangible common equity, Underlying (non-GAAP)	N/P	9.71		12.51		10.46		14.09
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)	Q	$218,578		$220,162		$219,520		$221,739
Return on average total assets	K/Q	0.70	%	0.78	%	0.67	%	0.86	%
Return on average total assets, Underlying (non-GAAP)	L/Q	0.71		0.81		0.73		0.93
Return on average total tangible assets and return on average total tangible assets, Underlying:
Average total assets (GAAP)	Q	$218,578		$220,162		$219,520		$221,739
Less: Average goodwill (GAAP)		8,187		8,188		8,187		8,182
Less: Average other intangibles (GAAP)		140		173		146		182
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)		435		422		433		422
Average tangible assets	R	$210,686		$212,223		$211,620		$213,797
Return on average total tangible assets	K/R	0.72	%	0.81	%	0.70	%	0.89	%
Return on average total tangible assets, Underlying (non-GAAP)	L/R	0.74		0.84		0.75		0.96
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio	E/C	66.23	%	64.21	%	67.28	%	62.45	%
Efficiency ratio, Underlying (non-GAAP)	F/D	65.61		63.08		65.08		59.87
Noninterest income as a % of total revenue, Underlying:
Noninterest income as a % of total revenue	A/C	27.95	%	24.44	%	27.51	%	23.78	%
Noninterest income as a % of total revenue, Underlying (non-GAAP)	B/D	28.05		24.44		27.45		23.78
Operating leverage and operating leverage, Underlying:
(Decrease) increase in total revenue		(5.67)	%	(7.47)	%	(6.65)	%	7.15	%
(Decrease) increase in noninterest expense		(2.69)		4.20		0.57		6.67
Operating leverage		(2.98)	%	(11.67)	%	(7.22)	%	0.48	%
(Decrease) increase in total revenue, Underlying (non-GAAP)		(5.54)	%	(7.47)	%	(6.73)	%	6.58	%
(Decrease) increase in noninterest expense, Underlying (non-GAAP)		(1.75)		6.31		1.38		8.77
Operating leverage, Underlying (non-GAAP)		(3.79)	%	(13.78)	%	(8.11	%)	(2.19)	%
Tangible book value per common share:
Common shares - at period end (GAAP)	S	445,216,549		466,221,795		445,216,549		466,221,795
Common stockholders' equity (GAAP)		$22,820		$20,864		$22,820		$20,864
Less: Goodwill (GAAP)		8,187		8,188		8,187		8,188
Less: Other intangible assets (GAAP)		137		167		137		167
Add: Deferred tax liabilities related to goodwill and other intangible assets (GAAP)		435		421		435		421
Tangible common equity	T	$14,931		$12,930		$14,931		$12,930
Tangible book value per common share	T/S	$33.54		$27.73		$33.54		$27.73
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)	U	446,561,996		469,481,085		453,993,833		478,073,507
Average common shares outstanding - diluted (GAAP)	V	449,913,467		471,183,719		456,461,330		479,733,008
Net income per average common share - basic (GAAP)	M/U	$0.77		$0.85		$2.21		$2.79
Net income per average common share - diluted (GAAP)	M/V	0.77		0.85		2.20		2.78
Net income per average common share - basic, Underlying (non-GAAP)	N/U	0.79		0.89		2.40		3.04
Net income per average common share - diluted, Underlying (non-GAAP)	N/V	0.79		0.89		2.39		3.03
Dividend payout ratio and dividend payout ratio, Underlying:
Cash dividends declared and paid per common share	W	$0.42		$0.42		$1.26		$1.26
Dividend payout ratio	W/(M/U)	55	%	49	%	57	%	45	%
Dividend payout ratio, Underlying (non-GAAP)	W/(N/U)	53		47		53		41

Citizens Financial Group, Inc. | 38

ITEM 1. FINANCIAL STATEMENTS


						Page
Consolidated Balance Sheets (unaudited)						40
Consolidated Statements of Operations (unaudited)						41
Consolidated Statements of Comprehensive Income (unaudited)						42
Consolidated Statements of Changes in Stockholders’ Equity (unaudited)						43
Consolidated Statements of Cash Flows (unaudited)						45
Notes to Consolidated Financial Statements (unaudited)						46
Note 1 - Significant Accounting Policies						46
Note 2 - Securities						47
Note 3 - Loans and Leases						50
Note 4 - Credit Quality and the Allowance for Credit Losses						50
Note 5 - Mortgage Banking and Other						61
Note 6 - Variable Interest Entities						63
Note 7 - Borrowed Funds						65
Note 8 - Derivatives						67
Note 9 - Accumulated Other Comprehensive Income (Loss)						70
Note 10 - Stockholders’ Equity						71
Note 11 - Commitments and Contingencies						72
Note 12 - Fair Value Measurements						74
Note 13 - Noninterest Income						79
Note 14 - Other Operating Expense						80
Note 15 - Earnings Per Share						80
Note 16 - Business Operating Segments						80

Citizens Financial Group, Inc. | 39

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(dollars in millions, except par value)	September 30, 2024	December 31, 2023
ASSETS:
Cash and due from banks(1)	$979	$1,794
Interest-bearing cash and due from banks	9,936	9,834
Interest-bearing deposits in banks(1)	648	405
Debt securities available for sale, at fair value (including $155 and $110 pledged to creditors, respectively)(2)	32,835	29,777
Debt securities held to maturity (fair value of $8,067 and $8,350, respectively, and including $84 and $204 pledged to creditors, respectively)(2)	8,738	9,184
Loans held for sale, at fair value	614	676
Other loans held for sale	49	103
Loans and leases	141,632	145,959
Less: Allowance for loan and lease losses	(2,079)	(2,098)
Net loans and leases(1)	139,553	143,861
Derivative assets	586	440
Premises and equipment, net	862	895
Bank-owned life insurance	3,346	3,291
Goodwill	8,187	8,188
Other intangible assets(3)	137	157
Other assets(1)	13,236	13,359
TOTAL ASSETS	$219,706	$221,964
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing	$35,978	$37,107
Interest-bearing	139,210	140,235
Total deposits	175,188	177,342
Short-term borrowed funds	15	505
Derivative liabilities	1,012	1,562
Long-term borrowed funds(1)	13,944	13,467
Other liabilities(1)	4,615	4,746
TOTAL LIABILITIES	194,774	197,622
Commitments and Contingencies (refer to Note 11)
STOCKHOLDERS’ EQUITY:
Preferred stock:
$25.00 par value,100,000,000 shares authorized; 2,150,000 and 2,050,000 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	2,112	2,014
Common stock:
$0.01 par value, 1,000,000,000 shares authorized; 649,634,774 shares issued and 445,216,549 shares outstanding at September 30, 2024 and 647,829,720 shares issued and 466,418,055 shares outstanding at December 31, 2023	6	6
Additional paid-in capital	22,327	22,250
Retained earnings	10,233	9,816
Treasury stock, at cost, 204,418,225 and 181,411,665 shares at September 30, 2024 and December 31, 2023, respectively	(6,820)	(5,986)
Accumulated other comprehensive income (loss)	(2,926)	(3,758)
TOTAL STOCKHOLDERS’ EQUITY	24,932	24,342
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$219,706	$221,964

(1) Includes amounts in consolidated VIEs. See Note 6 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.

Citizens Financial Group, Inc. | 40

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions, except per share data)	2024	2023	2024	2023
INTEREST INCOME:
Interest and fees on loans and leases	$1,976	$2,166	$6,038	$6,345
Interest and fees on loans held for sale	18	20	45	55
Interest and fees on other loans held for sale	1	8	11	25
Investment securities	423	290	1,239	823
Interest-bearing deposits in banks	121	111	391	280
Total interest income	2,539	2,595	7,724	7,528
INTEREST EXPENSE:
Deposits	990	898	2,942	2,171
Short-term borrowed funds	3	8	14	36
Long-term borrowed funds	177	167	547	568
Total interest expense	1,170	1,073	3,503	2,775
Net interest income	1,369	1,522	4,221	4,753
Provision (benefit) for credit losses	172	172	525	516
Net interest income after provision (benefit) for credit losses	1,197	1,350	3,696	4,237
NONINTEREST INCOME:
Service charges and fees	109	105	311	306
Capital markets fees	94	67	346	232
Card fees	93	74	271	226
Wealth fees(1)	76	63	219	191
Mortgage banking fees	46	69	149	185
Foreign exchange and derivative products	36	48	111	140
Letter of credit and loan fees	45	43	130	126
Securities gains, net	9	5	14	19
Other income	24	18	51	58
Total noninterest income	532	492	1,602	1,483
NONINTEREST EXPENSE:
Salaries and employee benefits	647	659	1,983	1,932
Equipment and software	194	191	576	541
Outside services	146	160	469	513
Occupancy	108	107	335	367
Other operating expense	164	176	555	542
Total noninterest expense	1,259	1,293	3,918	3,895
Income before income tax expense	470	549	1,380	1,825
Income tax expense	88	119	272	406
NET INCOME	$382	$430	$1,108	$1,419
Net income available to common stockholders	$344	$400	$1,005	$1,332
Weighted-average common shares outstanding:
Basic	446,561,996	469,481,085	453,993,833	478,073,507
Diluted	449,913,467	471,183,719	456,461,330	479,733,008
Per common share information:
Basic earnings	$0.77	$0.85	$2.21	$2.79
Diluted earnings	0.77	0.85	2.20	2.78

(1) See Note 1 for information regarding updates to the Consolidated Statements of Operations during the second quarter of 2024.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 41

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Net income	$382	$430	$1,108	$1,419
Other comprehensive income (loss):
Net unrealized gains (losses) on cash flow hedge derivatives arising during the period, net of income taxes of $163, ($78), ($30), and ($193), respectively	450	(248)	(84)	(580)
Reclassification adjustment for net (gains) losses on cash flow hedge derivatives included in net income, net of income taxes of $73, $37, $189, and $105, respectively	203	120	522	315
Net unrealized gains (losses) on AFS securities arising during the period, net of income taxes of $179, ($189), $114, and ($160), respectively	541	(578)	339	(490)
Reclassification of net securities (gains) losses to net income, net of income taxes of $5, $7, $14, and $21, respectively	13	23	42	63
Defined benefit plans:
Actuarial gain (loss) arising during the period, net of income taxes of $—, $—, $1, and $—, respectively	—	—	4	—
Amortization of actuarial (gain) loss to net income, net of income taxes of $1, $2, $3, and $4, respectively	2	3	9	9
Total other comprehensive income (loss), net of income taxes	1,209	(680)	832	(683)
Total comprehensive income (loss)	$1,591	($250)	$1,940	$736

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 42

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock		Common Stock		Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)	Total
(dollars and shares in millions)	Shares	Amount	Shares	Amount
Balance at July 1, 2023	2	$2,014	475	$6	$22,207	$9,655	($5,734)	($4,563)	$23,585
Dividends declared - common stock	—	—	—	—	—	(199)	—	—	(199)
Dividends declared - preferred stock	—	—	—	—	—	(30)	—	—	(30)



Treasury stock purchased	—	—	(9)	—	—	—	(250)	—	(250)
Share repurchase excise tax	—	—	—	—	—	—	(2)	—	(2)
Share-based compensation plans	—	—	—	—	17	—	—	—	17
Employee stock purchase plan	—	—	—	—	7	—	—	—	7

Total comprehensive income (loss):
Net income	—	—	—	—	—	430	—	—	430
Other comprehensive income (loss)	—	—	—	—	—	—	—	(680)	(680)
Total comprehensive income (loss)	—	—	—	—	—	430	—	(680)	(250)
Balance at September 30, 2023	2	$2,014	466	$6	$22,231	$9,856	($5,986)	($5,243)	$22,878
Balance at July 1, 2024	2	$2,112	453	$6	$22,299	$10,079	($6,492)	($4,135)	$23,869
Dividends declared - common stock	—	—	—	—	—	(190)	—	—	(190)
Dividends declared - preferred stock	—	—	—	—	—	(38)	—	—	(38)



Treasury stock purchased	—	—	(8)	—	—	—	(325)	—	(325)
Share repurchase excise tax	—	—	—	—	—	—	(3)	—	(3)
Share-based compensation plans	—	—	—	—	21	—	—	—	21
Employee stock purchase plan	—	—	—	—	7	—	—	—	7

Total comprehensive income (loss):
Net income	—	—	—	—	—	382	—	—	382
Other comprehensive income (loss)	—	—	—	—	—	—	—	1,209	1,209
Total comprehensive income (loss)	—	—	—	—	—	382	—	1,209	1,591
Balance at September 30, 2024	2	$2,112	445	$6	$22,327	$10,233	($6,820)	($2,926)	$24,932

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 43

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock		Common Stock		Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)	Total
(dollars and shares in millions)	Shares	Amount	Shares	Amount
Balance at January 1, 2023	2	$2,014	492	$6	$22,142	$9,159	($5,071)	($4,560)	$23,690
Dividends declared - common stock	—	—	—	—	—	(609)	—	—	(609)
Dividends declared - preferred stock	—	—	—	—	—	(87)	—	—	(87)



Treasury stock purchased	—	—	(29)	—	—	—	(906)	—	(906)
Share repurchase excise tax	—	—	—	—	—	—	(9)	—	(9)
Share-based compensation plans	—	—	3	—	68	—	—	—	68
Employee stock purchase plan	—	—	—	—	21	—	—	—	21
Cumulative effect of change in accounting principle	—	—	—	—	—	(26)	—	—	(26)
Total comprehensive income (loss):
Net income	—	—	—	—	—	1,419	—	—	1,419
Other comprehensive income (loss)	—	—	—	—	—	—	—	(683)	(683)
Total comprehensive income (loss)	—	—	—	—	—	1,419	—	(683)	736
Balance at September 30, 2023	2	$2,014	466	$6	$22,231	$9,856	($5,986)	($5,243)	$22,878
Balance at January 1, 2024	2	$2,014	466	$6	$22,250	$9,816	($5,986)	($3,758)	$24,342
Dividends declared - common stock	—	—	—	—	—	(581)	—	—	(581)
Dividends declared - preferred stock	—	—	—	—	—	(103)	—	—	(103)

Preferred stock issued	—	391	—	—	—	—	—	—	391
Preferred stock redemption	—	(293)	—	—	—	(7)	—	—	(300)
Treasury stock purchased	—	—	(23)	—	—	—	(825)	—	(825)
Share repurchase excise tax	—	—	—	—	—	—	(9)	—	(9)
Share-based compensation plans	—	—	2	—	57	—	—	—	57
Employee stock purchase plan	—	—	—	—	20	—	—	—	20

Total comprehensive income (loss):
Net income	—	—	—	—	—	1,108	—	—	1,108
Other comprehensive income (loss)	—	—	—	—	—	—	—	832	832
Total comprehensive income (loss)	—	—	—	—	—	1,108	—	832	1,940
Balance at September 30, 2024	2	$2,112	445	$6	$22,327	$10,233	($6,820)	($2,926)	$24,932

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 44

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
(dollars in millions)	2024	2023
OPERATING ACTIVITIES
Net income	$1,108	$1,419
Adjustments to reconcile net income to net change due to operating activities:
Provision (benefit) for credit losses	525	516
Net change in loans held for sale, at fair value	62	25
Depreciation, amortization and accretion	374	352
Deferred income tax expense (benefit)	(50)	(61)
Share-based compensation	76	73
Net gain on sale of assets	(14)	(19)
Net (increase) decrease in other assets	(14)	(732)
Net increase (decrease) in other liabilities	(549)	718
Net change due to operating activities	1,518	2,291
INVESTING ACTIVITIES
Investment securities:
Purchases of debt securities available for sale	(6,497)	(5,576)
Proceeds from maturities and paydowns of debt securities available for sale	2,112	1,481
Proceeds from sales of debt securities available for sale	2,080	2,429

Proceeds from maturities and paydowns of debt securities held to maturity	501	597

Net (increase) decrease in interest-bearing deposits in banks	(243)	(21)


Purchases of loans	(517)	—
Sales of loans	186	2,628
Net (increase) decrease in loans and leases	3,860	3,790
Capital expenditures, net	(74)	(124)

Other	(29)	(181)
Net change due to investing activities	1,379	5,023
FINANCING ACTIVITIES
Net increase (decrease) in deposits	(2,154)	(2,527)
Net increase (decrease) in short-term borrowed funds	(490)	229
Proceeds from issuance of long-term borrowed funds	13,185	21,233
Repayments of long-term borrowed funds	(12,741)	(19,766)
Treasury stock purchased	(825)	(906)
Net proceeds from issuance of preferred stock	391	—
Redemption of preferred stock	(300)	—
Dividends paid to common stockholders	(581)	(609)
Dividends paid to preferred stockholders	(96)	(89)

Other	1	(26)
Net change due to financing activities	(3,610)	(2,461)
Net change in cash and cash equivalents(1)	(713)	4,853
Cash and cash equivalents at beginning of period(1)	11,628	10,547
Cash and cash equivalents at end of period(1)	$10,915	$15,400
Non-cash items:
Transfer of loans from loans held for investment to loans held for sale	$249	$2,582

Loans securitized and transferred to AFS securities	181	68

(1) 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. | 45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements and Notes have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and notes included in annual financial statements prepared in accordance with GAAP. The Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the interim period results presented. These unaudited interim financial statements and notes should be read in conjunction with the audited Consolidated Financial Statements and Notes included in the Company’s 2023 Form 10-K. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year.

The unaudited interim Consolidated Financial Statements include the accounts of the Parent Company and its subsidiaries, including VIEs in which the Company is a primary beneficiary. 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 first quarter of 2024, the Company modified the presentation of its loans and leases portfolio to include leases in the commercial and industrial financing receivable class. Prior period results have been revised to conform to the new presentation. See Notes 3 and 4 for additional information relative to the Company’s loans and leases portfolio.

Effective for the second quarter of 2024, Trust and investment services fees was renamed to Wealth fees in the Consolidated Statements of Operations to better reflect the broad range of wealth-related management fees and services provided to customers.

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

For further information regarding the Company’s significant accounting policies, see Note 1 in the Company’s 2023 Form 10-K.

Citizens Financial Group, Inc. | 46

NOTE 2 - SECURITIES

The following table presents the major components of securities at amortized cost and fair value:


	September 30, 2024				December 31, 2023
(dollars in millions)	Amortized Cost(1)	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Amortized Cost(1)	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
U.S. Treasury and other	$4,726	$42	($79)	$4,689	$4,493	$26	($139)	$4,380
State and political subdivisions	1	—	—	1	1	—	—	1
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	28,995	135	(1,480)	27,650	26,289	45	(1,857)	24,477
Other/non-agency	274	—	(13)	261	279	—	(24)	255
Total mortgage-backed securities	29,269	135	(1,493)	27,911	26,568	45	(1,881)	24,732
Collateralized loan obligations	234	—	—	234	667	—	(3)	664
Total debt securities available for sale, at fair value	$34,230	$177	($1,572)	$32,835	$31,729	$71	($2,023)	$29,777
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	$8,308	$2	($665)	$7,645	$8,696	$9	($818)	$7,887
Total mortgage-backed securities	8,308	2	(665)	7,645	8,696	9	(818)	7,887
Asset-backed securities	430	1	(9)	422	488	—	(25)	463
Total debt securities held to maturity	$8,738	$3	($674)	$8,067	$9,184	$9	($843)	$8,350
Equity securities, at cost(2)	$732	$—	$—	$732	$869	$—	$—	$869
Equity securities, at fair value(2)	203	—	—	203	173	—	—	173

(2) Included in other assets in the Consolidated Balance Sheets.

Accrued interest receivable on debt securities totaled $117 million and $125 million as of September 30, 2024 and December 31, 2023, respectively, and is included in other assets in the Consolidated Balance Sheets.

Citizens Financial Group, Inc. | 47

The following table presents the amortized cost and fair value of debt securities by contractual maturity as of September 30, 2024. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.


	Distribution of Maturities
(dollars in millions)	1 Year or Less	After 1 Year through 5 Years	After 5 Years through 10 Years	After 10 Years	Total
Amortized cost:
U.S. Treasury and other	$—	$3,606	$1,120	$—	$4,726
State and political subdivisions	—	—	—	1	1
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—	2,108	1,321	25,566	28,995
Other/non-agency	—	—	—	274	274
Collateralized loan obligations	—	—	—	234	234
Total debt securities available for sale	—	5,714	2,441	26,075	34,230
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—	—	—	8,308	8,308
Asset-backed securities	—	430	—	—	430
Total debt securities held to maturity	—	430	—	8,308	8,738
Total amortized cost of debt securities	$—	$6,144	$2,441	$34,383	$42,968

Fair value:
U.S. Treasury and other	$—	$3,535	$1,154	$—	$4,689
State and political subdivisions	—	—	—	1	1
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—	2,060	1,281	24,309	27,650
Other/non-agency	—	—	—	261	261
Collateralized loan obligations	—	—	—	234	234
Total debt securities available for sale	—	5,595	2,435	24,805	32,835
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—	—	—	7,645	7,645
Asset-backed securities	—	422	—	—	422
Total debt securities held to maturity	—	422	—	7,645	8,067
Total fair value of debt securities	$—	$6,017	$2,435	$32,450	$40,902

Taxable interest income from investment securities as presented in the Consolidated Statements of Operations was $423 million and $290 million for the three months ended September 30, 2024 and 2023, respectively, and $1.2 billion and $823 million for the nine months ended September 30, 2024 and 2023, respectively.

The following table presents realized gains and losses on the sale of securities:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Gains	$9	$9	$14	$27
Losses	—	(4)	—	(8)
Securities gains, net	$9	$5	$14	$19

The following table presents the amortized cost and fair value of debt securities pledged:


	September 30, 2024		December 31, 2023
(dollars in millions)	Amortized Cost	Fair Value	Amortized Cost	Fair Value
Pledged against derivatives, to qualify for fiduciary powers, or to secure public and other deposits as required by law	$6,528	$6,080	$5,619	$5,305
Pledged as collateral for FHLB borrowing capacity	237	226	242	220
Pledged against repurchase agreements	—	—	—	—

Citizens Financial Group, Inc. | 48

The Company enters into security repurchase agreements with unrelated counterparties, which involve 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 short-term receivables or payables associated with security repurchase agreements as of September 30, 2024 or December 31, 2023.

Securitizations of mortgage loans retained in the investment portfolio were $48 million and $181 million for the three and nine months ended September 30, 2024, respectively. Securitizations of mortgage loans retained in the investment portfolio were $65 million for the three and nine months ended September 30, 2023. These securitizations include a substantive guarantee by a third party. The guarantors were FNMA and FHLMC in 2024 and 2023. The debt securities received from the guarantors are classified as AFS.

Impairment

The Company evaluated its existing HTM portfolio as of September 30, 2024 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 September 30, 2024.

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:


	September 30, 2024
	Less than 12 Months		12 Months or Longer		Total
(dollars in millions)	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses
U.S. Treasury and other	$—	$—	$3,310	($79)	$3,310	($79)
State and political subdivisions	—	—	—	—	—	—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	755	(4)	16,244	(1,476)	16,999	(1,480)
Other/non-agency	—	—	260	(13)	260	(13)
Total mortgage-backed securities	755	(4)	16,504	(1,489)	17,259	(1,493)
Collateralized loan obligations	—	—	—	—	—	—
Total	$755	($4)	$19,814	($1,568)	$20,569	($1,572)


	December 31, 2023
	Less than 12 Months		12 Months or Longer		Total
(dollars in millions)	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses	Fair Value	Gross Unrealized Losses
U.S. Treasury and other	$49	$—	$3,245	($139)	$3,294	($139)
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	2,939	(24)	16,398	(1,833)	19,337	(1,857)
Other/non-agency	—	—	255	(24)	255	(24)
Total mortgage-backed securities	2,939	(24)	16,653	(1,857)	19,592	(1,881)
Collateralized loan obligations	56	—	607	(3)	663	(3)
Total	$3,044	($24)	$20,505	($1,999)	$23,549	($2,023)

The Company 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. The Company has determined that credit losses are not expected to be incurred on the AFS debt securities identified with unrealized losses as of September 30, 2024. 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.

Citizens Financial Group, Inc. | 49

NOTE 3 - LOANS AND LEASES

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 or discounts on purchased loans.

The following table presents loans and leases, excluding LHFS:


(dollars in millions)	September 30, 2024	December 31, 2023
Commercial and industrial	$43,825	$44,974
Commercial real estate	27,983	29,471

Total commercial	71,808	74,445
Residential mortgages	32,379	31,332
Home equity	15,992	15,040
Automobile	5,540	8,258
Education	11,118	11,834
Other retail	4,795	5,050
Total retail	69,824	71,514
Total loans and leases	$141,632	$145,959

Accrued interest receivable on loans and leases held for investment totaled $862 million and $875 million as of September 30, 2024 and December 31, 2023, 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 $37.9 billion and $36.0 billion at September 30, 2024 and December 31, 2023, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, were primarily comprised of education, commercial and industrial, and commercial real estate loans, and totaled $27.2 billion and $31.9 billion at September 30, 2024 and December 31, 2023, respectively.

Interest income on direct financing and sales-type leases is reported within interest and fees on loans and leases in the Consolidated Statements of Operations, and was $11 million and $12 million for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, this interest income was $31 million and $36 million, respectively.

The following table presents the composition of LHFS:


	September 30, 2024			December 31, 2023
(dollars in millions)	Residential Mortgages(1)	Commercial(2)	Total	Residential Mortgages(1)	Commercial(2)	Total
Loans held for sale at fair value	$573	$41	$614	$614	$62	$676
Other loans held for sale	—	49	49	—	103	103

(1) Residential mortgage LHFS at fair value 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.

NOTE 4 - CREDIT QUALITY AND THE ALLOWANCE FOR CREDIT LOSSES

Allowance for Credit Losses

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.

For a detailed discussion of the ACL reserve methodology and estimation techniques as of December 31, 2023, see Note 6 in the Company’s 2023 Form 10-K. There were no significant changes to the ACL reserve methodology during the nine months ended September 30, 2024.

Citizens Financial Group, Inc. | 50

The following table presents a summary of changes in the ACL for the three and nine months ended September 30, 2024:


	Three Months Ended September 30, 2024			Nine Months Ended September 30, 2024
(dollars in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$1,282	$843	$2,125	$1,250	$848	$2,098



Charge-offs	(106)	(125)	(231)	(308)	(377)	(685)
Recoveries	8	31	39	29	99	128
Net charge-offs	(98)	(94)	(192)	(279)	(278)	(557)
Provision expense (benefit) for loans and leases	3	143	146	216	322	538
Allowance for loan and lease losses, end of period	1,187	892	2,079	1,187	892	2,079
Allowance for unfunded lending commitments, beginning of period	147	34	181	175	45	220


Provision expense (benefit) for unfunded lending commitments	17	9	26	(11)	(2)	(13)

Allowance for unfunded lending commitments, end of period	164	43	207	164	43	207
Total allowance for credit losses, end of period	$1,351	$935	$2,286	$1,351	$935	$2,286

During the nine months ended September 30, 2024, net charge-offs of $557 million and a provision for expected credit losses of $525 million resulted in a decrease of $32 million to the ACL.

The following table presents a summary of changes in the ACL for the three and nine months ended September 30, 2023:


	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
(dollars in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$1,157	$887	$2,044	$1,060	$923	$1,983



Charge-offs	(74)	(117)	(191)	(212)	(339)	(551)
Recoveries	4	34	38	14	99	113
Net charge-offs	(70)	(83)	(153)	(198)	(240)	(438)
Provision expense (benefit) for loans and leases	146	43	189	371	164	535
Allowance for loan and lease losses, end of period	1,233	847	2,080	1,233	847	2,080
Allowance for unfunded lending commitments, beginning of period	213	42	255	207	50	257


Provision expense (benefit) for unfunded lending commitments	(21)	4	(17)	(15)	(4)	(19)

Allowance for unfunded lending commitments, end of period	192	46	238	192	46	238
Total allowance for credit losses, end of period	$1,425	$893	$2,318	$1,425	$893	$2,318

Credit Quality Indicators

The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year and 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.

The Company utilizes internal risk ratings to monitor credit quality for commercial loans and leases. For more information on these ratings see Note 6 in the Company’s 2023 Form 10-K.

Citizens Financial Group, Inc. | 51

The following table presents the amortized cost basis of commercial loans and leases by vintage date and internal risk rating as of September 30, 2024:


	Term Loans and Leases by Origination Year						Revolving Loans
(dollars in millions)	2024	2023	2022	2021	2020	Prior to 2020	Within the Revolving Period	Converted to Term	Total
Commercial and industrial
Pass	$4,147	$2,910	$4,856	$3,430	$1,095	$2,266	$21,931	$71	$40,706
Special Mention	6	71	104	271	27	38	310	—	827
Substandard Accrual	3	60	259	344	151	292	950	14	2,073
Nonaccrual	—	23	55	17	5	65	48	6	219
Total commercial and industrial	4,156	3,064	5,274	4,062	1,278	2,661	23,239	91	43,825
Commercial real estate
Pass	1,599	1,326	5,695	5,806	1,990	4,690	1,411	4	22,521
Special Mention	1	—	1,013	428	160	485	129	—	2,216
Substandard Accrual	—	6	326	347	455	1,121	135	4	2,394
Nonaccrual	—	—	86	38	91	635	2	—	852
Total commercial real estate	1,600	1,332	7,120	6,619	2,696	6,931	1,677	8	27,983






Total commercial
Pass	5,746	4,236	10,551	9,236	3,085	6,956	23,342	75	63,227
Special Mention	7	71	1,117	699	187	523	439	—	3,043
Substandard Accrual	3	66	585	691	606	1,413	1,085	18	4,467
Nonaccrual	—	23	141	55	96	700	50	6	1,071
Total commercial	$5,756	$4,396	$12,394	$10,681	$3,974	$9,592	$24,916	$99	$71,808

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:


	Term Loans and Leases by Origination Year						Revolving Loans
(dollars in millions)	2023	2022	2021	2020	2019	Prior to 2019	Within the Revolving Period	Converted to Term	Total
Commercial and industrial
Pass	$3,694	$6,512	$5,331	$1,445	$1,147	$2,299	$21,033	$53	$41,514
Special Mention	59	221	355	30	50	113	368	—	1,196
Substandard Accrual	8	189	337	218	125	287	792	11	1,967
Nonaccrual	1	72	54	4	5	102	53	6	297
Total commercial and industrial	3,762	6,994	6,077	1,697	1,327	2,801	22,246	70	44,974
Commercial real estate
Pass	1,906	5,791	6,062	2,555	2,294	3,895	1,975	8	24,486
Special Mention	—	713	539	222	183	260	75	—	1,992
Substandard Accrual	—	277	203	469	528	939	100	—	2,516
Nonaccrual	1	66	2	23	144	238	3	—	477
Total commercial real estate	1,907	6,847	6,806	3,269	3,149	5,332	2,153	8	29,471






Total commercial
Pass	5,600	12,303	11,393	4,000	3,441	6,194	23,008	61	66,000
Special Mention	59	934	894	252	233	373	443	—	3,188
Substandard Accrual	8	466	540	687	653	1,226	892	11	4,483
Nonaccrual	2	138	56	27	149	340	56	6	774
Total commercial	$5,669	$13,841	$12,883	$4,966	$4,476	$8,133	$24,399	$78	$74,445

For retail loans, the Company 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. | 52

The following table presents the amortized cost basis of retail loans by vintage date and current FICO score as of September 30, 2024:


	Term Loans by Origination Year						Revolving Loans
(dollars in millions)	2024	2023	2022	2021	2020	Prior to 2020	Within the Revolving Period	Converted to Term	Total
Residential mortgages
800+	$884	$1,295	$3,276	$5,165	$2,962	$3,952	$—	$—	$17,534
740-799	1,268	930	1,659	2,279	1,359	2,009	—	—	9,504
680-739	304	292	579	702	430	988	—	—	3,295
620-679	26	57	122	151	84	506	—	—	946
<620	6	35	73	147	95	726	—	—	1,082
No FICO available(1)	—	—	—	1	1	16	—	—	18
Total residential mortgages	2,488	2,609	5,709	8,445	4,931	8,197	—	—	32,379
Home equity
800+	1	—	3	4	1	80	5,414	204	5,707
740-799	—	—	2	2	1	70	5,102	227	5,404
680-739	—	—	1	—	2	78	2,895	185	3,161
620-679	—	1	4	1	2	66	734	139	947
<620	—	2	5	3	1	65	433	264	773
No FICO available(1)	—	—	—	—	—	—	—	—	—
Total home equity	1	3	15	10	7	359	14,578	1,019	15,992
Automobile
800+	—	72	420	762	226	84	—	—	1,564
740-799	—	101	488	685	220	88	—	—	1,582
680-739	—	102	397	458	144	65	—	—	1,166
620-679	—	60	214	229	67	40	—	—	610
<620	—	47	210	237	73	51	—	—	618
No FICO available(1)	—	—	—	—	—	—	—	—	—
Total automobile	—	382	1,729	2,371	730	328	—	—	5,540
Education
800+	184	377	665	1,560	1,291	1,544	—	—	5,621
740-799	223	379	598	850	691	859	—	—	3,600
680-739	84	159	243	276	222	358	—	—	1,342
620-679	19	48	58	60	54	120	—	—	359
<620	3	12	21	28	24	65	—	—	153
No FICO available(1)	12	—	—	—	—	31	—	—	43
Total education	525	975	1,585	2,774	2,282	2,977	—	—	11,118
Other retail
800+	150	104	41	19	16	14	491	—	835
740-799	228	141	50	22	20	14	907	1	1,383
680-739	181	120	43	20	15	11	877	1	1,268
620-679	83	65	29	12	9	4	354	1	557
<620	19	35	35	16	9	4	236	1	355
No FICO available(1)	13	—	—	—	—	—	384	—	397
Total other retail	674	465	198	89	69	47	3,249	4	4,795
Total retail
800+	1,219	1,848	4,405	7,510	4,496	5,674	5,905	204	31,261
740-799	1,719	1,551	2,797	3,838	2,291	3,040	6,009	228	21,473
680-739	569	673	1,263	1,456	813	1,500	3,772	186	10,232
620-679	128	231	427	453	216	736	1,088	140	3,419
<620	28	131	344	431	202	911	669	265	2,981
No FICO available(1)	25	—	—	1	1	47	384	—	458
Total retail	$3,688	$4,434	$9,236	$13,689	$8,019	$11,908	$17,827	$1,023	$69,824

(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).

Citizens Financial Group, Inc. | 53

The following table presents the amortized cost basis of retail loans by vintage date and current FICO score as of December 31, 2023:


	Term Loans by Origination Year						Revolving Loans
(dollars in millions)	2023	2022	2021	2020	2019	Prior to 2019	Within the Revolving Period	Converted to Term	Total
Residential mortgages
800+	$889	$3,067	$5,172	$3,117	$1,131	$3,125	$—	$—	$16,501
740-799	1,333	1,940	2,560	1,411	592	1,625	—	—	9,461
680-739	367	631	758	466	266	873	—	—	3,361
620-679	54	135	165	90	121	445	—	—	1,010
<620	9	48	104	95	161	561	—	—	978
No FICO available(1)	1	—	2	1	3	14	—	—	21
Total residential mortgages	2,653	5,821	8,761	5,180	2,274	6,643	—	—	31,332
Home equity
800+	—	4	4	1	4	91	5,078	222	5,404
740-799	—	1	2	1	3	82	4,708	241	5,038
680-739	1	1	1	2	5	93	2,693	202	2,998
620-679	—	1	1	2	8	77	718	137	944
<620	—	2	1	1	10	80	332	230	656
No FICO available(1)	—	—	—	—	—	—	—	—	—
Total home equity	1	9	9	7	30	423	13,529	1,032	15,040
Automobile
800+	81	539	1,062	368	162	47	—	—	2,259
740-799	134	671	1,038	375	165	52	—	—	2,435
680-739	147	577	708	252	118	39	—	—	1,841
620-679	94	316	345	112	65	26	—	—	958
<620	44	232	291	100	66	32	—	—	765
No FICO available(1)	—	—	—	—	—	—	—	—	—
Total automobile	500	2,335	3,444	1,207	576	196	—	—	8,258
Education
800+	296	671	1,637	1,418	600	1,185	—	—	5,807
740-799	368	694	1,050	850	369	678	—	—	4,009
680-739	143	289	333	273	134	298	—	—	1,470
620-679	30	65	68	58	32	107	—	—	360
<620	5	18	25	23	15	55	—	—	141
No FICO available(1)	10	—	1	—	—	36	—	—	47
Total education	852	1,737	3,114	2,622	1,150	2,359	—	—	11,834
Other retail
800+	183	70	38	35	16	18	500	—	860
740-799	258	87	46	45	21	19	963	1	1,440
680-739	214	76	39	39	18	11	973	2	1,372
620-679	118	48	23	19	6	4	419	2	639
<620	31	35	18	14	4	2	251	2	357
No FICO available(1)	7	1	—	1	—	—	373	—	382
Total other retail	811	317	164	153	65	54	3,479	7	5,050
Total retail
800+	1,449	4,351	7,913	4,939	1,913	4,466	5,578	222	30,831
740-799	2,093	3,393	4,696	2,682	1,150	2,456	5,671	242	22,383
680-739	872	1,574	1,839	1,032	541	1,314	3,666	204	11,042
620-679	296	565	602	281	232	659	1,137	139	3,911
<620	89	335	439	233	256	730	583	232	2,897
No FICO available(1)	18	1	3	2	3	50	373	—	450
Total retail	$4,817	$10,219	$15,492	$9,169	$4,095	$9,675	$17,008	$1,039	$71,514

(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).

Citizens Financial Group, Inc. | 54

The following tables present gross charge-offs by vintage date for the Company’s loan and lease portfolios:


	Nine Months Ended September 30, 2024
	Term Loans and Leases by Origination Year						Revolving Loans
(dollars in millions)	2024	2023	2022	2021	2020	Prior to 2020	Within the Revolving Period	Converted to Term	Total
Commercial and industrial	$—	$—	$15	$22	$1	$15	$32	$—	$85
Commercial real estate	—	—	1	22	98	102	—	—	223

Total commercial	—	—	16	44	99	117	32	—	308
Residential mortgages	—	—	—	—	—	4	—	—	4
Home equity	—	—	—	—	—	3	8	1	12
Automobile	—	5	23	23	7	4	9	1	72
Education	—	2	6	18	21	46	—	—	93
Other retail	25	10	7	12	2	8	132	—	196
Total retail	25	17	36	53	30	65	149	2	377
Total loans and leases	$25	$17	$52	$97	$129	$182	$181	$2	$685


	Nine Months Ended September 30, 2023
	Term Loans and Leases by Origination Year						Revolving Loans
(dollars in millions)	2023	2022	2021	2020	2019	Prior to 2019	Within the Revolving Period	Converted to Term	Total
Commercial and industrial	$—	$1	$32	$4	$1	$24	$35	$—	$97
Commercial real estate	—	—	—	51	11	53	—	—	115

Total commercial	—	1	32	55	12	77	35	—	212
Residential mortgages	—	—	—	—	1	2	—	—	3
Home equity	—	—	—	—	—	2	6	—	8
Automobile	—	24	31	11	9	7	—	—	82
Education	—	3	12	16	10	35	—	—	76
Other retail	36	22	7	6	8	7	84	—	170
Total retail	36	49	50	33	28	53	90	—	339
Total loans and leases	$36	$50	$82	$88	$40	$130	$125	$—	$551

Citizens Financial Group, Inc. | 55

Nonaccrual and Past Due Assets

The following tables present an aging analysis of accruing and nonaccrual loans and leases as of September 30, 2024 and December 31, 2023:


	September 30, 2024
		Days Past Due and Accruing
(dollars in millions)	Current	30-59	60-89	90+	Nonaccrual	Total	Nonaccrual with no related ACL
Commercial and industrial	$43,542	$54	$5	$5	$219	$43,825	$48
Commercial real estate	26,961	72	83	15	852	27,983	64

Total commercial	70,503	126	88	20	1,071	71,808	112
Residential mortgages	31,923	93	48	146	169	32,379	129
Home equity	15,591	93	27	—	281	15,992	186
Automobile	5,347	109	38	—	46	5,540	5
Education	10,989	43	25	2	59	11,118	2
Other retail	4,658	44	31	1	61	4,795	1
Total retail	68,508	382	169	149	616	69,824	323
Total	$139,011	$508	$257	$169	$1,687	$141,632	$435
Guaranteed residential mortgages(1)	$830	$54	$29	$145	$—	$1,058	$—


	December 31, 2023
		Days Past Due and Accruing
(dollars in millions)	Current	30-59	60-89	90+	Nonaccrual	Total	Nonaccrual with no related ACL
Commercial and industrial	$44,591	$62	$18	$6	$297	$44,974	$30
Commercial real estate	28,745	150	59	40	477	29,471	71

Total commercial	73,336	212	77	46	774	74,445	101
Residential mortgages	30,499	282	118	256	177	31,332	144
Home equity	14,640	82	33	—	285	15,040	198
Automobile	8,005	144	48	—	61	8,258	7
Education	11,732	49	23	2	28	11,834	3
Other retail	4,899	49	34	29	39	5,050	—
Total retail	69,775	606	256	287	590	71,514	352
Total	$143,111	$818	$333	$333	$1,364	$145,959	$453
Guaranteed residential mortgages(1)	$675	$128	$76	$243	$—	$1,122	$—

(1) Guaranteed residential mortgages represent loans fully or partially guaranteed by the FHA, VA, and USDA, and are included in the amounts presented for Residential mortgages.

At September 30, 2024 and December 31, 2023, the Company had collateral-dependent residential mortgage and home equity loans totaling $529 million and $556 million, respectively, and collateral-dependent commercial loans totaling $607 million and $233 million, respectively.

The amortized cost basis of mortgage loans collateralized by residential real estate for which formal foreclosure proceedings were in-process was $319 million and $336 million as of September 30, 2024 and December 31, 2023, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company offers loan modifications, characterized as FDMs, to retail and commercial borrowers experiencing financial difficulty 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.

Citizens Financial Group, Inc. | 56

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.

The following tables present the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and 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.


	Three Months Ended September 30, 2024
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Principal Forgiveness	Interest Rate Reduction and Term Extension	Term Extension and Payment Delay	Total	Total as a % of Loan Class(1)
Commercial and industrial	$—	$75	$25	$—	$1	$3	$104	0.24	%
Commercial real estate	—	156	23	—	67	94	340	1.22
Total commercial	—	231	48	—	68	97	444	0.62
Residential mortgages	1	15	1	—	4	1	22	0.07
Home equity	2	1	—	—	4	—	7	0.04
Automobile	—	—	—	—	—	—	—	—
Education	3	1	16	—	—	—	20	0.18
Other retail	5	—	—	—	—	—	5	0.10
Total retail	11	17	17	—	8	1	54	0.08
Total	$11	$248	$65	$—	$76	$98	$498	0.35	%


	Three Months Ended September 30, 2023
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Principal Forgiveness	Interest Rate Reduction and Term Extension	Term Extension and Payment Delay	Total	Total as a % of Loan Class(1)
Commercial and industrial	$—	$148	$47	$—	$—	$1	$196	0.42	%
Commercial real estate	—	131	—	—	37	1	169	0.57
Total commercial	—	279	47	—	37	2	365	0.47
Residential mortgages	2	25	—	—	6	—	33	0.11
Home equity	1	1	—	—	1	—	3	0.02
Automobile	—	—	—	—	—	—	—	—
Education	3	—	1	—	—	—	4	0.03
Other retail	3	—	—	—	—	—	3	0.06
Total retail	9	26	1	—	7	—	43	0.06
Total	$9	$305	$48	$—	$44	$2	$408	0.27	%

Citizens Financial Group, Inc. | 57


	Nine Months Ended September 30, 2024
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Principal Forgiveness	Interest Rate Reduction and Term Extension	Term Extension and Payment Delay	Interest Rate Reduction, Term Extension and Payment Delay	Total	Total as a % of Loan Class(1)
Commercial and industrial	$—	$179	$86	$—	$1	$23	$—	$289	0.66	%
Commercial real estate	—	505	100	—	130	144	—	879	3.14
Total commercial	—	684	186	—	131	167	—	1,168	1.63
Residential mortgages	4	63	9	—	8	1	1	86	0.27
Home equity	3	2	—	—	9	—	—	14	0.09
Automobile	—	—	—	—	—	—	—	—	—
Education	9	2	39	—	—	—	—	50	0.45
Other retail	13	—	—	—	—	—	—	13	0.27
Total retail	29	67	48	—	17	1	1	163	0.23
Total	$29	$751	$234	$—	$148	$168	$1	$1,331	0.94	%


	Nine Months Ended September 30, 2023
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Principal Forgiveness	Interest Rate Reduction and Term Extension	Term Extension and Payment Delay	Total	Total as a % of Loan Class(1)
Commercial and industrial	$—	$263	$78	$—	$1	$2	$344	0.74	%
Commercial real estate	—	454	—	—	37	1	492	1.67
Total commercial	—	717	78	—	38	3	836	1.08
Residential mortgages	6	59	—	—	16	—	81	0.26
Home equity	1	4	—	—	5	—	10	0.07
Automobile	—	—	—	—	—	—	—	—
Education	7	—	2	—	—	—	9	0.07
Other retail	8	—	—	—	—	—	8	0.16
Total retail	22	63	2	—	21	—	108	0.15
Total	$22	$780	$80	$—	$59	$3	$944	0.63	%

(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 excluded from amortized cost and is immaterial.

The following tables present the financial effect of loans to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and 2023, disaggregated by class of financing receivable.


	Three Months Ended September 30, 2024
(dollars in millions)	Weighted-Average Interest Rate Reduction(1)		Weighted-Average Term Extension (in Months)(1)	Weighted-Average Payment Deferral(1)	Amount of Principal Forgiven(2)
Commercial and industrial	3.62	%	14	$11	$—
Commercial real estate	4.31		9	1	—
Residential mortgages	1.52		94	—	—
Home equity	4.32		51	—	—
Automobile	—		—	—	—
Education	4.44		24	—	—
Other retail	20.79		—	—	1

Citizens Financial Group, Inc. | 58


	Three Months Ended September 30, 2023
(dollars in millions)	Weighted-Average Interest Rate Reduction(1)		Weighted-Average Term Extension (in Months)(1)	Weighted-Average Payment Deferral(1)	Amount of Principal Forgiven(2)
Commercial and industrial	2.32	%	17	$—	$—
Commercial real estate	1.25		7	—	—
Residential mortgages	0.98		47	—	—
Home equity	2.51		133	—	—
Automobile	—		—	—	—
Education	4.95		—	—	—
Other retail	18.86		—	—	1


	Nine Months Ended September 30, 2024
(dollars in millions)	Weighted-Average Interest Rate Reduction(1)		Weighted-Average Term Extension (in Months)(1)	Weighted-Average Payment Deferral(1)	Amount of Principal Forgiven(2)
Commercial and industrial	3.72	%	15	$3	$—
Commercial real estate	2.83		17	1	—
Residential mortgages	1.59		92	—	—
Home equity	4.03		75	—	—
Automobile	—		—	—	—
Education	4.42		24	—	—
Other retail	20.23		—	—	5


	Nine Months Ended September 30, 2023
(dollars in millions)	Weighted-Average Interest Rate Reduction(1)		Weighted-Average Term Extension (in Months)(1)	Weighted-Average Payment Deferral(1)	Amount of Principal Forgiven(2)
Commercial and industrial	2.95	%	14	$1	$—
Commercial real estate	1.25		8	—	—
Residential mortgages	1.55		48	—	—
Home equity	2.24		127	—	—
Automobile	3.47		20	—	—
Education	4.97		—	—	—
Other retail	18.45		—	—	4

(1) Weighted based on period-end amortized cost.

(2) Amounts are recorded as charge-offs.

The following tables present an aging analysis of the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the twelve month period ending September 30, 2024 and the nine month period ending September 30, 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.


	September 30, 2024
		Days Past Due and Accruing
(dollars in millions)	Current	30-59	60-89	90+	Nonaccrual	Total
Commercial and industrial	$211	$35	$1	$—	$54	$301
Commercial real estate	590	30	63	—	287	970
Total commercial	801	65	64	—	341	1,271
Residential mortgages	73	6	4	16	12	111
Home equity	11	—	—	—	8	19
Automobile	—	—	—	—	—	—
Education	34	1	—	—	35	70
Other retail	12	1	1	—	1	15
Total retail	130	8	5	16	56	215
Total	$931	$73	$69	$16	$397	$1,486

Citizens Financial Group, Inc. | 59


	September 30, 2023
		Days Past Due and Accruing
(dollars in millions)	Current	30-59	60-89	90+	Nonaccrual	Total
Commercial and industrial	$262	$—	$—	$—	$82	$344
Commercial real estate	262	55	—	—	175	492
Total commercial	524	55	—	—	257	836
Residential mortgages	52	—	5	13	11	81
Home equity	3	—	—	—	7	10
Automobile	—	—	—	—	—	—
Education	8	—	—	—	1	9
Other retail	6	1	—	—	1	8
Total retail	69	1	5	13	20	108
Total	$593	$56	$5	$13	$277	$944

The following tables present the period-end amortized cost of loans to borrowers experiencing financial difficulty that defaulted during the period presented and were modified within the previous 12 months preceding the default, 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.


	Three Months Ended September 30, 2024
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Term Extension and Payment Delay	Total
Commercial and industrial	$1	$3	$—	$15	$19
Commercial real estate	—	75	21	—	96
Total commercial	1	78	21	15	115
Residential mortgages	—	11	—	—	11
Home equity	—	—	—	—	—
Automobile	—	—	—	—	—
Education	1	—	—	—	1
Other retail	1	—	—	—	1
Total retail	2	11	—	—	13
Total	$3	$89	$21	$15	$128


	Three Months Ended September 30, 2023
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Interest Rate Reduction and Term Extension	Total
Commercial and industrial	$—	$—	$—	$—	$—
Commercial real estate	—	41	—	—	41
Total commercial	—	41	—	—	41
Residential mortgages	1	6	—	5	12
Home equity	—	1	—	2	3
Automobile	—	—	—	—	—
Education	—	—	1	—	1
Other retail	—	—	—	—	—
Total retail	1	7	1	7	16
Total	$1	$48	$1	$7	$57

Citizens Financial Group, Inc. | 60


	Nine Months Ended September 30, 2024
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Interest Rate Reduction and Term Extension	Term Extension and Payment Delay	Total
Commercial and industrial	$1	$3	$—	$—	$15	$19
Commercial real estate	—	141	21	—	—	162
Total commercial	1	144	21	—	15	181
Residential mortgages	—	22	1	1	1	25
Home equity	—	—	—	1	—	1
Automobile	—	—	—	—	—	—
Education	4	—	12	—	—	16
Other retail	1	—	—	—	—	1
Total retail	5	22	13	2	1	43
Total	$6	$166	$34	$2	$16	$224


	Nine Months Ended September 30, 2023
(dollars in millions)	Interest Rate Reduction	Term Extension	Payment Delay	Interest Rate Reduction and Term Extension	Total
Commercial and industrial	$—	$3	$—	$—	$3
Commercial real estate	—	67	—	—	67
Total commercial	—	70	—	—	70
Residential mortgages	1	6	—	5	12
Home equity	—	1	—	2	3
Automobile	—	—	—	—	—
Education	—	—	1	—	1
Other retail	—	—	—	—	—
Total retail	1	7	1	7	16
Total	$1	$77	$1	$7	$86

Unfunded commitments related to loans modified during the nine months ended September 30, 2024 were $75 million at September 30, 2024. Unfunded commitments related to loans modified during the year ended December 31, 2023 were $221 million at December 31, 2023.

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 September 30, 2024 and December 31, 2023, 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.

NOTE 5 - 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.

Citizens Financial Group, Inc. | 61

The following table summarizes activity related to residential mortgage loans sold with servicing rights retained:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Cash proceeds from residential mortgage loans sold with servicing retained	$2,137	$3,270	$5,432	$7,358

Gain on sales(1)	17	19	47	60
Contractually specified servicing, late and other ancillary fees(1)	79	76	235	230

(1) Reported in mortgage banking fees in the Consolidated Statements of Operations.

The unpaid principal balance of residential mortgage loans related to our MSRs was $96.1 billion and $97.4 billion at September 30, 2024 and December 31, 2023, 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:


	As of and for the Three Months Ended September 30,		As of and for the Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Fair value as of beginning of the period	$1,568	$1,524	$1,552	$1,530


Amounts capitalized	28	47	71	104

Changes in unpaid principal balance during the period(1)	(46)	(42)	(135)	(124)
Changes in fair value during the period(2)	(49)	91	13	110
Fair value at end of the period	$1,501	$1,620	$1,501	$1,620

(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.

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)	September 30, 2024	December 31, 2023
Fair value	$1,501	$1,552
Weighted average life (years)	8.3	8.8
Weighted average constant prepayment rate	8.3%	7.2%
Decline in fair value from 10% adverse change	$40	$37
Decline in fair value from 20% adverse change	$76	$71
Weighted average option adjusted spread	634 bps	630 bps
Decline in fair value from 10% adverse change	$42	$43
Decline in fair value from 20% adverse change	$85	$87

The Company has mortgage banking derivatives, which 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 8 for additional information.

Citizens Financial Group, Inc. | 62

Other Serviced Loans

The Company engages in other servicing relationships from time to time. The following table presents the unpaid principal balance of other serviced loans:


(dollars in millions)	September 30, 2024	December 31, 2023
Education	$437	$502
Commercial and industrial(1)	95	94

(1) Represents the government guaranteed portion of SBA loans sold to outside investors.

NOTE 6 - VARIABLE INTEREST ENTITIES

The Company, 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.

For more details regarding the Company’s involvement with VIEs see Note 11 in the Company’s 2023 Form 10-K.

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)	September 30, 2024	December 31, 2023
Assets:
Cash and due from banks	$—	$13
Interest-bearing deposits in banks	209	106
Net loans and leases	4,432	3,194

Other assets	26	14
Total assets	$4,667	$3,327
Liabilities:
Long-term borrowed funds	$3,801	$2,692
Other liabilities	10	8
Total liabilities	$3,811	$2,700

Secured Borrowings

The Company 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.

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.

Citizens Financial Group, Inc. | 63

Unconsolidated VIEs

The Company is involved with various VIEs that are not consolidated including lending to special purpose entities, investments in asset-backed securities and investments in entities that sponsor affordable housing, renewable energy and economic development projects. The Company’s maximum exposure to loss resulting from 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)	September 30, 2024	December 31, 2023
Lending to special purpose entities included in loans and leases	$3,988	$4,760
LIHTC investments included in other assets	2,483	2,444
LIHTC unfunded commitments included in other liabilities	975	1,025
Asset-backed investments included in HTM securities	430	488
Renewable energy investments included in other assets	268	314
NMTC investments included in other assets	2	3

Lending to Special Purpose Entities

The Company provides lending facilities to third-party sponsored special purpose entities. As of September 30, 2024 and December 31, 2023, the lending facilities had undrawn commitments to extend credit of $3.1 billion and $2.7 billion, respectively. For more information on commitments to extend credit see Note 11.

Asset-backed securities

The Company’s investments in asset-backed securities are collateralized by education loans sold to a third-party sponsored VIE. The Company 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.

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s LIHTC investments is to assist in achieving the goals of the Community Reinvestment Act and to earn an adequate return of capital.

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).

Contingent commitments related to the Company’s renewable energy investments were $61 million at September 30, 2024, 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.

Citizens Financial Group, Inc. | 64

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:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Tax credits recognized	$99	$76	$290	$250
Other tax benefits recognized	21	17	68	55
Amortization	(88)	(71)	(276)	(237)
Net benefit (expense) included in income tax expense	32	22	82	68
Other income	1	1	4	4
Allocated income (loss) on investments	(3)	(1)	(9)	(7)
Net benefit (expense) included in noninterest income	(2)	—	(5)	(3)
Net benefit (expense) included in the Consolidated Statements of Operations(1)	$30	$22	$77	$65

(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 2024 and 2023, this includes LIHTC, renewable energy and NMTC investments.

The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three and nine months ended September 30, 2024 and 2023.

NOTE 7 - BORROWED FUNDS

Short-term borrowed funds

Short-term borrowed funds were $15 million and $505 million as of September 30, 2024 and December 31, 2023, respectively.

Citizens Financial Group, Inc. | 65

Long-term borrowed funds

The following table presents a summary of the Company’s long-term borrowed funds:


(dollars in millions)	September 30, 2024	December 31, 2023
Parent Company:
3.750% fixed-rate subordinated debt, due July 2024	$—	$90
4.023% fixed-rate subordinated debt, due October 2024	17	17
4.350% fixed-rate subordinated debt, due August 2025	133	133
4.300% fixed-rate subordinated debt, due December 2025	336	336
2.850% fixed-rate senior unsecured notes, due July 2026	499	499
5.841% fixed/floating-rate senior unsecured notes, due January 2030	1,245	—
2.500% fixed-rate senior unsecured notes, due February 2030	299	298
3.250% fixed-rate senior unsecured notes, due April 2030	747	746
3.750% fixed-rate reset subordinated debt, due February 2031	69	69
4.300% fixed-rate reset subordinated debt, due February 2031	135	135
4.350% fixed-rate reset subordinated debt, due February 2031	60	60
5.718% fixed/floating-rate senior unsecured notes, due July 2032	1,243	—
2.638% fixed-rate subordinated debt, due September 2032	568	563
6.645% fixed/floating-rate senior unsecured notes, due April 2035	745	—
5.641% fixed-rate reset subordinated debt, due May 2037	398	398
CBNA’s Global Note Program:
2.250% senior unsecured notes, due April 2025	749	749
4.119% fixed/floating-rate senior unsecured notes, due May 2025(1)	—	649
6.064% fixed/floating-rate senior unsecured notes, due October 2025	600	599
5.284% fixed/floating-rate senior unsecured notes, due January 2026	350	349
3.750% senior unsecured notes, due February 2026	491	483
4.575% fixed/floating-rate senior unsecured notes, due August 2028	798	798
Additional Borrowings by CBNA and Other Subsidiaries:
Federal Home Loan Bank advances, 4.864% weighted average rate, due through 2043(2)	553	3,786
Secured borrowings, 5.785% weighted average rate, due through 2030(2)(3)	3,887	2,692
Other	22	18
Total long-term borrowed funds	$13,944	$13,467

(1) Notes were redeemed on May 23, 2024.

(2) Rate disclosed reflects the weighted average rate as of September 30, 2024.

(3) Collateralized by loans. See Note 6 for additional information.

At September 30, 2024, the Company’s long-term borrowed funds include principal balances of $14.0 billion, unamortized debt issuance costs and discounts of $90 million, and hedging basis adjustments of ($8) million. 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. See Note 8 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 $5.5 billion and $9.2 billion at September 30, 2024 and December 31, 2023, respectively. The Company’s available FHLB borrowing capacity was $20.4 billion and $15.9 billion at September 30, 2024 and December 31, 2023, respectively. The Company 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 September 30, 2024, the Company’s unused secured borrowing capacity was approximately $72.3 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.

Citizens Financial Group, Inc. | 66

The following table presents a summary of maturities for the Company’s long-term borrowed funds at September 30, 2024:


(dollars in millions)	Parent Company	CBNA and Other Subsidiaries	Consolidated
Year
2024	$17	$—	$17
2025	469	1,476	1,945
2026	499	2,831	3,330
2027	—	8	8
2028	—	2,696	2,696
2029 and thereafter	5,509	439	5,948
Total	$6,494	$7,450	$13,944

NOTE 8 - DERIVATIVES

In the normal course of business, the Company 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. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 20 in the Company’s 2023 Form 10-K.

The following table presents derivative instruments included in the Consolidated Balance Sheets:


	September 30, 2024			December 31, 2023
(dollars in millions)	Notional Amount	Derivative Assets	Derivative Liabilities	Notional Amount	Derivative Assets	Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts	$58,145	$327	$50	$86,895	$173	$44
Derivatives not designated as hedging instruments:
Interest rate contracts	183,770	338	690	185,993	291	1,105
Foreign exchange contracts	31,579	371	306	32,528	434	378
Commodities contracts	1,136	536	476	1,251	685	640
TBA contracts	3,357	3	12	2,337	3	16
Other contracts	853	6	9	549	7	—
Total derivatives not designated as hedging instruments	220,695	1,254	1,493	222,658	1,420	2,139
Total gross derivatives	278,840	1,581	1,543	309,553	1,593	2,183
Less: Gross amounts offset in the Consolidated Balance Sheets(1)		(405)	(405)		(471)	(471)
Less: Cash collateral applied(1)		(590)	(126)		(682)	(150)
Total net derivatives presented in the Consolidated Balance Sheets		$586	$1,012		$440	$1,562

(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.

Citizens Financial Group, Inc. | 67

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. The Company has entered into fair value hedges to manage interest rate risk within its AFS securities and long-term borrowed funds portfolios.

The following table presents the effect of fair value hedges on the Consolidated Statements of Operations and the respective line items affected for each hedged item:


	Location and Amount of Gains (Losses) Recognized
	Interest Income	Interest Expense
(dollars in millions)	Investment Securities	Long-Term Borrowed Funds
Three Months Ended September 30, 2024
Gains (losses) on fair value hedges recognized on:
Hedged items	$302	($8)
Derivatives	(306)	8
Amounts related to interest settlements on derivatives	34	(4)
Total net interest income recognized on fair value hedges	$30	($4)
Three Months Ended September 30, 2023
Gains (losses) on fair value hedges recognized on:
Hedged items	($16)	$1
Derivatives	16	(1)
Amounts related to interest settlements on derivatives	3	(4)
Total net interest income recognized on fair value hedges	$3	($4)
Nine Months Ended September 30, 2024
Gains (losses) on fair value hedges recognized on:
Hedged items	$128	($8)
Derivatives	(127)	8
Amounts related to interest settlements on derivatives	87	(11)
Total net interest income recognized on fair value hedges	$88	($11)
Nine Months Ended September 30, 2023
Gains (losses) on fair value hedges recognized on:
Hedged items	($28)	$—
Derivatives	28	—
Amounts related to interest settlements on derivatives	4	(12)
Total net interest income recognized on fair value hedges	$4	($12)

Citizens Financial Group, Inc. | 68

The following table reflects amounts recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges:


(dollars in millions)	September 30, 2024		December 31, 2023
	Debt securities available for sale(1)	Long-term borrowed funds		Debt securities available for sale(1)	Long-term borrowed funds
Carrying amount of hedged assets	$10,510	$—		$7,253	$—
Carrying amount of hedged liabilities	—	491		—	483
Cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged items	176	(8)		60	(17)

(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 September 30, 2024 and December 31, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $6.7 billion and $5.9 billion, respectively, including associated cumulative basis adjustments of $95 million and $39 million, respectively. The amount of the designated hedging instruments was $4.8 billion and $4.0 billion at September 30, 2024 and December 31, 2023, respectively.

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 into earnings in the period during which the hedged item affects earnings.

The Company has entered into interest rate swap agreements designed to hedge a portion of its floating-rate assets and liabilities. All of these swaps are deemed highly effective cash flow hedges. From time to time, the Company may also enter into certain interest rate option agreements that utilize interest rate floors and/or caps. 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:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Pre-tax net gains (losses) recognized in OCI	$613	($326)	($114)	($773)
Pre-tax net gains (losses) reclassified from AOCI into interest income	(276)	(156)	(711)	(420)
Pre-tax net gains (losses) reclassified from AOCI into interest expense	—	(1)	—	—

Using the September 30, 2024 interest rate curve the Company estimates that $621 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. These losses could differ from amounts recognized due to changes in interest rates, hedge de-designations or the addition of other hedges after September 30, 2024.

Derivatives Not Designated As Hedging Instruments

The Company offers derivatives to customers in connection with their risk management needs consisting primarily of interest rate, foreign exchange and commodity 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. Forward contracts to sell mortgage-backed securities are utilized to hedge the fair value of the loans and related commitments. 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.

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The following table presents the effect of economic hedges on noninterest income:


	Amounts Recognized in Noninterest Income for the
	Three Months Ended September 30,		Nine Months Ended September 30,		Affected Line Item in the Consolidated Statements of Operations
(dollars in millions)	2024	2023	2024	2023
Economic hedge type:
Customer interest rate contracts	$474	($448)	($209)	($1,028)	Foreign exchange and derivative products
Derivatives hedging interest rate risk	(467)	460	233	1,068	Foreign exchange and derivative products
Customer foreign exchange contracts	151	(77)	18	(72)	Foreign exchange and derivative products
Derivatives hedging foreign exchange risk	(195)	141	(13)	121	Foreign exchange and derivative products
Customer commodity contracts	(193)	168	(126)	(401)	Foreign exchange and derivative products
Derivatives hedging commodity price risk	198	(158)	141	430	Foreign exchange and derivative products
Residential loan commitments	9	(21)	2	(39)	Mortgage banking fees
Derivatives hedging residential loan commitments and mortgage loans held for sale, at fair value	(24)	30	(15)	45	Mortgage banking fees
Derivative contracts used to hedge residential MSRs	47	(76)	(9)	(91)	Mortgage banking fees
Total	$—	$19	$22	$33

NOTE 9 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the balances, net of income taxes, of each component of AOCI:


	As of and for the Three Months Ended September 30,
(dollars in millions)	Net Unrealized Gains (Losses) on Cash Flow Hedges	Net Unrealized Gains (Losses) on Investment Securities	Defined Benefit Plans	Total AOCI
Balance at July 1, 2023	($1,553)	($2,643)	($367)	($4,563)
Other comprehensive income (loss) before reclassifications	(248)	(578)	—	(826)
Amounts reclassified to the Consolidated Statements of Operations	120	23	3	146
Net other comprehensive income (loss)	(128)	(555)	3	(680)
Balance at September 30, 2023	($1,681)	($3,198)	($364)	($5,243)
Balance at July 1, 2024	($1,302)	($2,511)	($322)	($4,135)
Other comprehensive income (loss) before reclassifications	450	541	—	991
Amounts reclassified to the Consolidated Statements of Operations	203	13	2	218
Net other comprehensive income (loss)	653	554	2	1,209
Balance at September 30, 2024	($649)	($1,957)	($320)	($2,926)
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

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	As of and for the Nine Months Ended September 30,
(dollars in millions)	Net Unrealized Gains (Losses) on Cash Flow Hedges	Net Unrealized Gains (Losses) on Investment Securities	Defined Benefit Plans	Total AOCI
Balance at January 1, 2023	($1,416)	($2,771)	($373)	($4,560)
Other comprehensive income (loss) before reclassifications	(580)	(490)	—	(1,070)

Amounts reclassified to the Consolidated Statements of Operations	315	63	9	387
Net other comprehensive income (loss)	(265)	(427)	9	(683)

Balance at September 30, 2023	($1,681)	($3,198)	($364)	($5,243)
Balance at January 1, 2024	($1,087)	($2,338)	($333)	($3,758)
Other comprehensive income (loss) before reclassifications	(84)	339	4	259
Amounts reclassified to the Consolidated Statements of Operations	522	42	9	573
Net other comprehensive income (loss)	438	381	13	832

Balance at September 30, 2024	($649)	($1,957)	($320)	($2,926)
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

NOTE 10 - STOCKHOLDERS’ EQUITY

Preferred Stock

The following table summarizes the Company’s preferred stock:


			September 30, 2024			December 31, 2023
(dollars in millions, except per share data)	Liquidation value per share		Preferred Shares		Carrying Amount	Preferred Shares		Carrying Amount
Authorized ($25 par value per share)			100,000,000			100,000,000
Issued and outstanding:
Series B	$1,000		300,000		$296	300,000		$296
Series C	1,000		300,000		297	300,000		297
Series D	1,000	(1)	—		—	300,000	(2)	293
Series E	1,000	(1)	450,000	(3)	437	450,000		437
Series F	1,000		400,000		395	400,000		395
Series G	1,000		300,000		296	300,000		296
Series H	1,000	(1)	400,000	(4)	391	—		—
Total			2,150,000		$2,112	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.

(4) Represented by 16,000,000 depositary shares each representing a 1/40th interest in the Series H Preferred Stock.

On May 23, 2024, the Company issued $400 million, or 400,000 shares, of 7.375% fixed-rate non-cumulative perpetual Series H Preferred Stock, par value of $25.00 per share with a liquidation preference of $1,000 per share (the “Series H Preferred Stock”). As a result of this issuance, the Company received net proceeds of $391 million after underwriting fees and other expenses. The Series H Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company. The Series H Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after July 6, 2029 or, in whole but not in part, at any time within the 90 days following a regulatory capital treatment event at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends. The Company may not redeem shares of the Series H Preferred Stock without the prior approval of the FRB or other appropriate federal banking agency as required under applicable capital rules. Except in limited circumstances or otherwise required by law, holders of the Series H Preferred Stock do not have any voting rights.

On July 8, 2024, the Company redeemed all outstanding shares of the 9.205% floating rate non-cumulative perpetual Series D Preferred Stock.

For further detail regarding the terms and conditions of the Company’s preferred stock, see Note 17 in the Company’s 2023 Form 10-K.

Citizens Financial Group, Inc. | 71

Dividends

The following tables summarize the Company’s dividend activity for the three and nine months ended September 30, 2024 and 2023.


	Three Months Ended September 30, 2024			Three Months Ended September 30, 2023
(dollars in millions, except per share data)	Dividends Declared per Share	Dividends Declared	Dividends Paid	Dividends Declared per Share	Dividends Declared	Dividends Paid
Common stock	$0.42	$190	$190	$0.42	$199	$199
Preferred stock
Series B	$21.68	$6	$7	$21.81	$7	$9
Series C	22.07	6	6	15.93	4	4
Series D	—	—	7	15.88	4	4
Series E	12.50	6	6	12.50	6	6
Series F	14.13	6	6	14.13	6	6
Series G	10.00	3	3	10.00	3	3
Series H	27.25	11	—	—	—	—
Total preferred stock		$38	$35		$30	$32


	Nine Months Ended September 30, 2024			Nine Months Ended September 30, 2023
(dollars in millions, except per share data)	Dividends Declared per Share	Dividends Declared	Dividends Paid	Dividends Declared per Share	Dividends Declared	Dividends Paid
Common stock	$1.26	$581	$581	$1.26	$609	$609
Preferred stock
Series B	$65.06	$19	$20	$51.81	$16	$18
Series C	60.54	18	16	47.81	14	14
Series D	39.66	12	17	47.63	14	14
Series E	37.50	17	17	37.50	17	17
Series F	42.38	17	17	42.38	17	17
Series G	30.00	9	9	30.00	9	9
Series H	27.25	11	—	—	—	—
Total preferred stock		$103	$96		$87	$89

Treasury Stock

During the nine months ended September 30, 2024 and 2023, the Company repurchased $825 million, or 23,006,560 shares, and $906 million, or 28,472,450 shares, respectively, of its outstanding common stock, which are held in treasury stock.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

A summary of outstanding off-balance sheet arrangements is presented below. For more information on these arrangements, see Note 19 in the Company’s 2023 Form 10-K.


(dollars in millions)	September 30, 2024	December 31, 2023
Commitments to extend credit	$91,728	$94,201
Letters of credit	1,796	1,977
Loans sold with recourse	96	96
Marketing rights	15	18
Risk participation agreements	11	3
Total	$93,646	$96,295

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. These commitments generally 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.

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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. Letters of credit are generally 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

The Company has additional off-balance sheet arrangements that are summarized below:

•Marketing Rights - During 2003, the Company entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania.

•Loans sold with recourse - the Company 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 September 30, 2024, the remaining terms on these RPAs ranged from less than one year to nine 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 unaudited interim Consolidated Financial Statements.

Citizens Financial Group, Inc. | 73

NOTE 12 - FAIR VALUE MEASUREMENTS

The Company 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

The Company elected to account for residential mortgage LHFS and certain commercial and industrial, and commercial real estate LHFS at fair value. The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of LHFS measured at fair value:


	September 30, 2024			December 31, 2023
(dollars in millions)	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 loans held for sale, at fair value	$573	$558	$15	$614	$593	$21
Commercial and industrial, and commercial real estate loans held for sale, at fair value	41	47	(6)	62	69	(7)

For more information on the election of the fair value option for these assets see Note 20 in the Company’s 2023 Form 10-K.

Recurring Fair Value Measurements

The Company utilizes a variety of valuation techniques to measure its assets and liabilities at fair value on a recurring basis. For more information on the valuation techniques utilized to measure fair value on a recurring basis, see Note 20 in the Company’s 2023 Form 10-K.

Short-term investments

Short-term investments include corporate bonds and U.S. Treasury securities managed by the Company’s trading desks. U.S. Treasury securities are classified as Level 1 in the fair value hierarchy as quoted prices in active markets are readily available. The fair value of corporate bonds is estimated using a combination of direct market quotes for a particular bond, or a comparable bond if recent market data is not available, and a discounted cash flow model that incorporates certain credit attributes of the bond issuer. External pricing services are utilized to corroborate the fair value of corporate bonds, which may result in an adjustment to the underlying bond’s valuation if price differences exceed certain thresholds. Corporate bonds are classified as Level 2 in the fair value hierarchy given the observable market inputs utilized to value these instruments. Short-term investments are included in interest-bearing deposits in banks in the Consolidated Balance Sheets.

Short-term borrowed funds

Short-term borrowed funds include short positions in corporate bonds held by the Company’s trading desks and are classified as Level 2 in the fair value hierarchy. See “Short-term investments” above for more information regarding the valuation techniques utilized to value corporate bonds.

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The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities, on a recurring basis at September 30, 2024:


(dollars in millions)	Total	Level 1	Level 2	Level 3
Debt securities available for sale:
Mortgage-backed securities	$27,911	$—	$27,911	$—

Collateralized loan obligations	234	—	234	—
State and political subdivisions	1	—	1	—
U.S. Treasury and other	4,689	4,689	—	—
Total debt securities available for sale	32,835	4,689	28,146	—
Loans held for sale, at fair value:
Residential loans held for sale	573	—	573	—
Commercial loans held for sale	41	—	41	—
Total loans held for sale, at fair value	614	—	614	—
Mortgage servicing rights	1,501	—	—	1,501
Derivative assets:
Interest rate contracts	665	—	665	—
Foreign exchange contracts	371	—	371	—
Commodities contracts	536	—	536	—
TBA contracts	3	—	3	—
Other contracts	6	—	—	6
Total derivative assets	1,581	—	1,575	6
Equity securities, at fair value(1)	145	145	—	—
Short-term investments	69	40	29	—
Total assets	$36,745	$4,874	$30,364	$1,507
Derivative liabilities:
Interest rate contracts	$740	$—	$740	$—
Foreign exchange contracts	306	—	306	—
Commodities contracts	476	—	476	—
TBA contracts	12	—	12	—
Other contracts	9	—	—	9
Total derivative liabilities	1,543	—	1,534	9
Short-term borrowed funds	15	—	15	—
Total liabilities	$1,558	$—	$1,549	$9

(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 $24 million at September 30, 2024, 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.

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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)	Total	Level 1	Level 2	Level 3
Debt securities available for sale:
Mortgage-backed securities	$24,732	$—	$24,732	$—
Collateralized loan obligations	664	—	664	—
State and political subdivisions	1	—	1	—
U.S. Treasury and other	4,380	4,380	—	—
Total debt securities available for sale	29,777	4,380	25,397	—
Loans held for sale, at fair value:
Residential loans held for sale	614	—	614	—
Commercial loans held for sale	62	—	62	—
Total loans held for sale, at fair value	676	—	676	—
Mortgage servicing rights	1,552	—	—	1,552
Derivative assets:
Interest rate contracts	464	—	464	—
Foreign exchange contracts	434	—	434	—
Commodities contracts	685	—	685	—
TBA contracts	3	—	3	—
Other contracts	7	—	—	7
Total derivative assets	1,593	—	1,586	7
Equity securities, at fair value(1)	115	115	—	—

Total assets	$33,713	$4,495	$27,659	$1,559
Derivative liabilities:
Interest rate contracts	$1,149	$—	$1,149	$—
Foreign exchange contracts	378	—	378	—
Commodities contracts	640	—	640	—
TBA contracts	16	—	16	—
Other contracts	—	—	—	—
Total derivative liabilities	2,183	—	2,183	—

Total liabilities	$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.

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The following tables present a roll forward of the balance sheet amounts for assets and liabilities measured at fair value on a recurring basis and classified as Level 3:


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
(dollars in millions)	Mortgage Servicing Rights	Other Derivative Contracts	Mortgage Servicing Rights	Other Derivative Contracts
Beginning balance	$1,568	$6	$1,552	$7
Issuances	28	18	71	47

Settlements(1)	(46)	(27)	(135)	(50)
Changes in fair value during the period recognized in earnings(2)	(49)	—	13	(7)
Ending balance	$1,501	($3)	$1,501	($3)


	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
(dollars in millions)	Mortgage Servicing Rights	Other Derivative Contracts	Mortgage Servicing Rights	Other Derivative Contracts
Beginning balance	$1,524	$6	$1,530	$1



Issuances	47	17	104	52

Settlements(1)	(42)	1	(124)	(11)
Changes in fair value during the period recognized in earnings(2)	91	(21)	110	(39)
Ending balance	$1,620	$3	$1,620	$3

(1) 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.

(2) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees and other income in the Consolidated Statements of Operations.

The following table presents quantitative information about significant unobservable inputs utilized to measure the fair value of Level 3 assets and liabilities.

As of September 30, 2024

As of December 31, 2023

Financial Instrument(1)

Valuation Technique

Unobservable Input

Range (Weighted Average)

Mortgage servicing rights

Discounted Cash Flow

Constant prepayment rate

6.81-18.55% CPR (8.30% CPR)

6.70-14.55% CPR (7.23% CPR)

Option adjusted spread

398-1,058 bps (634 bps)

398-1,058 bps (630 bps)

Other derivative contracts

Internal Model

Pull through rate

9.42-99.91% (81.65%)

24.90-99.70% (80.34%)

MSR value

(17.99)-162.51 bps (105.41 bps)

(8.90)-141.24 bps (88.04 bps)

(1) Disclosures related to the fair value measurement of financial instruments deemed immaterial are not included.

Nonrecurring Fair Value Measurements

Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure purposes. For more information on the valuation techniques utilized to measure fair value on a nonrecurring basis, see Note 20 in the Company’s 2023 Form 10-K.

The following table presents losses on assets measured at fair value on a nonrecurring basis and recorded in earnings:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Collateral-dependent loans	($36)	($40)	($156)	($108)

The following table presents assets measured at fair value on a nonrecurring basis:


	September 30, 2024				December 31, 2023
(dollars in millions)	Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3
Collateral-dependent loans	$1,136	$—	$1,136	$—	$789	$—	$789	$—

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Fair Value of Financial Instruments

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:


	September 30, 2024
	Total		Level 1		Level 2		Level 3
(dollars in millions)	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value
Financial assets:
Debt securities held to maturity	$8,738	$8,067	$—	$—	$8,308	$7,645	$430	$422
Other loans held for sale	49	49	—	—	—	—	49	49
Net loans and leases	139,553	139,662	—	—	1,136	1,136	138,417	138,526
Other assets	732	732	—	—	710	710	22	22
Financial liabilities:
Deposits	175,188	175,061	—	—	175,188	175,061	—	—

Long-term borrowed funds	13,944	13,977	—	—	13,944	13,977	—	—


	December 31, 2023
	Total		Level 1		Level 2		Level 3
(dollars in millions)	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value
Financial assets:
Debt securities held to maturity	$9,184	$8,350	$—	$—	$8,696	$7,887	$488	$463
Other loans held for sale	103	103	—	—	—	—	103	103
Net loans and leases	143,861	140,504	—	—	789	789	143,072	139,715
Other assets	869	869	—	—	851	851	18	18
Financial liabilities:
Deposits	177,342	177,096	—	—	177,342	177,096	—	—
Short-term borrowed funds	505	505	—	—	505	505	—	—
Long-term borrowed funds	13,467	13,012	—	—	13,467	13,012	—	—

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NOTE 13 - NONINTEREST INCOME

Revenues from Contracts with Customers

The following tables present the components of revenue from contracts with customers disaggregated by revenue stream and business operating segment:


	Three Months Ended September 30, 2024
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Service charges and fees	$75	$34	$—	$—	$109
Card fees	73	12	—	6	91
Capital markets fees	—	88	—	—	88
Wealth fees(1)	76	—	—	—	76
Other banking fees	1	2	—	—	3
Total revenue from contracts with customers	$225	$136	$—	$6	$367
Total revenue from other sources(2)	60	71	—	34	165
Total noninterest income	$285	$207	$—	$40	$532


	Three Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Service charges and fees	$73	$31	$—	$1	$105
Card fees	62	12	—	—	74
Capital markets fees	—	64	—	—	64
Wealth fees(1)	62	1	—	—	63
Other banking fees	1	3	—	—	4
Total revenue from contracts with customers	$198	$111	$—	$1	$310
Total revenue from other sources(2)	80	69	—	33	182
Total noninterest income	$278	$180	$—	$34	$492


	Nine Months Ended September 30, 2024
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Service charges and fees	$213	$97	$—	$—	$310
Card fees	213	40	—	13	266
Capital markets fees	—	330	—	—	330
Wealth fees(1)	219	—	—	—	219
Other banking fees	2	8	—	1	11
Total revenue from contracts with customers	$647	$475	$—	$14	$1,136
Total revenue from other sources(2)	173	201	—	92	466
Total noninterest income	$820	$676	$—	$106	$1,602


	Nine Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Service charges and fees	$206	$98	$—	$1	$305
Card fees	188	35	—	—	223
Capital markets fees	—	211	—	—	211
Wealth fees(1)	190	1	—	—	191
Other banking fees	2	10	—	—	12
Total revenue from contracts with customers	$586	$355	$—	$1	$942
Total revenue from other sources(2)	216	233	—	92	541
Total noninterest income	$802	$588	$—	$93	$1,483

(1) See Note 1 for information regarding updates to the Consolidated Statements of Operations during the second quarter of 2024.

(2) Includes bank-owned life insurance income of $26 million and $24 million for the three months ended September 30, 2024 and 2023, respectively, and $80 million and $70 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company recognized trailing commissions of $4 million for the three months ended September 30, 2024 and 2023, and $11 million for the nine months ended September 30, 2024 and 2023 related to ongoing commissions from previous investment sales.

Citizens Financial Group, Inc. | 79

NOTE 14 - OTHER OPERATING EXPENSE

The following table presents the details of other operating expense:


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions)	2024	2023	2024	2023
Marketing	$40	$48	$124	$142
Deposit insurance(1)	40	42	162	121
Other	84	86	269	279
Other operating expense	$164	$176	$555	$542

(1) Includes an industry-wide FDIC special assessment of $40 million for the nine months ended September 30, 2024.

NOTE 15 - EARNINGS PER SHARE


	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in millions, except per share data)	2024	2023	2024	2023
Numerator (basic and diluted):
Net income	$382	$430	$1,108	$1,419
Less: Preferred stock dividends	38	30	103	87

Net income available to common stockholders	$344	$400	$1,005	$1,332
Denominator:
Weighted-average common shares outstanding - basic	446,561,996	469,481,085	453,993,833	478,073,507
Dilutive common shares: share-based awards	3,351,471	1,702,634	2,467,497	1,659,501
Weighted-average common shares outstanding - diluted	449,913,467	471,183,719	456,461,330	479,733,008
Earnings per common share:
Basic	$0.77	$0.85	$2.21	$2.79
Diluted(1)	0.77	0.85	2.20	2.78

(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 141,698 and 2,566,762 for the three months ended September 30, 2024 and 2023, respectively, and 409,167 and 2,391,244 for the nine months ended September 30, 2024 and 2023, respectively.

NOTE 16 - BUSINESS OPERATING SEGMENTS

The Company 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 that 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 organizational structure changes occur.

For more information on the Company’s business operating segments, as well as Other non-segment operations, see Note 26 in the Company’s 2023 Form 10-K.

Citizens Financial Group, Inc. | 80


	Three Months Ended September 30, 2024
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$1,156	$478	($28)	($237)	$1,369
Noninterest income	285	207	—	40	532
Total revenue	1,441	685	(28)	(197)	1,901
Noninterest expense	916	300	23	20	1,259
Profit (loss) before provision (benefit) for credit losses	525	385	(51)	(217)	642
Provision (benefit) for credit losses	84	91	17	(20)	172
Income (loss) before income tax expense (benefit)	441	294	(68)	(197)	470
Income tax expense (benefit)	114	63	(17)	(72)	88
Net income (loss)	$327	$231	($51)	($125)	$382
Total average assets	$75,392	$68,092	$8,389	$66,705	$218,578


	Three Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$1,067	$560	($41)	($64)	$1,522
Noninterest income	278	180	—	34	492
Total revenue	1,345	740	(41)	(30)	2,014
Noninterest expense	905	325	30	33	1,293
Profit (loss) before provision (benefit) for credit losses	440	415	(71)	(63)	721
Provision (benefit) for credit losses	67	67	20	18	172
Income (loss) before income tax expense (benefit)	373	348	(91)	(81)	549
Income tax expense (benefit)	97	88	(24)	(42)	119
Net income (loss)	$276	$260	($67)	($39)	$430
Total average assets	$72,964	$74,997	$13,113	$59,088	$220,162


	Nine Months Ended September 30, 2024
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$3,369	$1,486	($96)	($538)	$4,221
Noninterest income	820	676	—	106	1,602
Total revenue	4,189	2,162	(96)	(432)	5,823
Noninterest expense	2,734	928	74	182	3,918
Profit (loss) before provision (benefit) for credit losses	1,455	1,234	(170)	(614)	1,905
Provision (benefit) for credit losses	249	262	46	(32)	525
Income (loss) before income tax expense (benefit)	1,206	972	(216)	(582)	1,380
Income tax expense (benefit)	311	223	(55)	(207)	272
Net income (loss)	$895	$749	($161)	($375)	$1,108
Total average assets	$74,510	$69,046	$9,450	$66,514	$219,520


	Nine Months Ended September 30, 2023
(dollars in millions)	Consumer Banking	Commercial Banking	Non-Core	Other	Consolidated
Net interest income	$3,101	$1,741	($84)	($5)	$4,753
Noninterest income	802	588	—	93	1,483
Total revenue	3,903	2,329	(84)	88	6,236
Noninterest expense	2,637	971	95	192	3,895
Profit (loss) before provision (benefit) for credit losses	1,266	1,358	(179)	(104)	2,341
Provision (benefit) for credit losses	198	185	54	79	516
Income (loss) before income tax expense (benefit)	1,068	1,173	(233)	(183)	1,825
Income tax expense (benefit)	278	289	(61)	(100)	406
Net income (loss)	$790	$884	($172)	($83)	$1,419
Total average assets	$72,477	$77,130	$14,409	$57,723	$221,739

Citizens Financial Group, Inc. | 81

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk are presented in the “Market Risk” section of Part I, Item 2 and is incorporated herein by reference.

ITEM 4. 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 quarterly report on Form 10-Q, 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 quarterly report on Form 10-Q, 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.

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 quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information required by this item is presented in Note 11 and is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Report, you should consider the risks described under Item 1A “Risk Factors” in the Company’s 2023 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Details of the repurchases of the Company’s common stock during the three months ended September 30, 2024 are included below:


Period	Total Number of Shares Repurchased(1)	Average Price Paid Per Share	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)
July 1, 2024 - July 31, 2024	7,309,783	$40.58	7,309,755	$953,373,396
August 1, 2024 - August 31, 2024	71	$42.67	—	$953,373,396
September 1, 2024 - September 30, 2024	696,518	$40.74	696,045	$925,000,000

(1) Includes 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 June 28, 2024, the Company announced that its Board of Directors increased the capacity under its common share repurchase program by an additional $656 million, which was incremental to the $594 million of capacity remaining under the prior February 2023 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.

Citizens Financial Group, Inc. | 82

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

3.1 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 July 8, 2024 (incorporated herein by reference to Exhibit 3.2 of the Current Report on Form 8-K, filed July 9, 2024)

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)

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*

101 The following materials from the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, formatted in inline 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*

* Filed herewith.

Citizens Financial Group, Inc. | 83

SIGNATURE

Pursuant to the requirements 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 November 4, 2024.


CITIZENS FINANCIAL GROUP, INC.
(Registrant)

By:			/s/ John F. Woods
			Name: John F. Woods
			Title: Chief Financial Officer
			(Principal Financial Officer)

Citizens Financial Group, Inc. | 84

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Citizens Financial (CFG) 10-Q2024 Q3 Quarterly report

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