CITIZENS FINANCIAL GROUP INC / RI DISCUSSION AND ANALYSIS BY THE MANAGEMENT OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)


Page
Forward-Looking Statements                                                        7
  Introduction                                                                    8

  Financial Performance                                                           10
Selected Consolidated Financial Data                                             13
Results of Operations                                                            15

  Net Interest Income                                                            15
  Noninterest Income                                                             19
  Noninterest Expense                                                            20
  Provision for Credit Losses                                                    21
  Income Tax Expense                                                             22
  Business Operating Segments                                                    22
Analysis of Financial Condition                                                  25
  Securities                                                                     25
  Loans and Leases                                                               26
  Allowance for Credit Losses and Nonaccru    al     Loans and Leases            26
  Deposits                                                                       32
  Borrowed Funds                                                                 33
  Capital and Regulatory Matters                                                 33
  Liquidity                                                                      37
  Off-Balance Sheet Arrangements                                                 40
  Critical Accounting Estimates                                                  41

  Risk Governance                                                                42
  Market Risk                                                                    42
  Non-GAAP Financial Measures and Reconciliations                                47



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FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements regarding potential
future share repurchases and future dividends as well as the potential effects
of the COVID-19 pandemic and associated lockdowns on our business, operations,
financial performance and prospects, are forward-looking statements. Also, 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 and political conditions that adversely affect the general
economy, housing prices, the job market, consumer confidence and spending habits
which may affect, among other things, the level of nonaccrual assets,
charge-offs and provision expense;
•The rate of growth in the economy and employment levels, as well as general
business and economic conditions, and changes in the competitive environment;
•Our ability to implement our business strategy, including the cost savings and
efficiency components, and achieve our financial performance goals, including
through the integration of Investors and the HSBC branches;
•The COVID-19 pandemic and associated lockdowns and their effects on the
economic and business environments in which we operate;
•Our ability to meet heightened supervisory requirements and expectations;
•Liabilities and business restrictions resulting from litigation and regulatory
investigations;
•Our capital and liquidity requirements under regulatory capital standards and
our ability to generate capital internally or raise capital on favorable terms;
•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;
•The effect of changes in the level of checking or savings account deposits on
our funding costs and net interest margin;
•Financial services reform and other current, pending or future legislation or
regulation that could have a negative effect on our revenue and businesses;
•A failure in or breach of our operational or security systems or
infrastructure, or those of our third party vendors or other service providers,
including as a result of cyber-attacks;
•An inability to complete the acquisitions of Investors or the HSBC branches, or
changes in the current anticipated timeframe, terms or manner of such
acquisitions;
•Greater than expected costs or other difficulties related to the integration of
our business and that of Investors and HSBC branches;
•The inability to retain existing Investors or HSBC clients and employees
following the closings of the Investors and HSBC branch acquisitions;
                                              Citizens Financial Group, Inc. | 7
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•The occurrence of any event change or other circumstance that could give rise
to the right of one or both parties to terminate (i) the agreement to acquire
Investors or (ii) the agreement to acquire HSBC branches; and
•Management's ability to identify and manage these and other risks.
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,
risk-weighted assets, capital impacts of strategic initiatives, market
conditions and regulatory and accounting 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. Further, statements about the
effects of the COVID-19 pandemic and associated lockdowns on our business,
operations, financial performance and prospects may constitute forward-looking
statements and are subject to the risk that the actual impacts may differ,
possibly materially, from what is reflected in those forward-looking statements
due to factors and future developments that are uncertain, unpredictable and in
many cases beyond our control, including the scope and duration of the pandemic,
actions taken by governmental authorities in response to the pandemic, and the
direct and indirect impact of the pandemic on our customers, third parties and
us. In addition, statements about our net charge-off guidance constitute
forward-looking statements and are subject to the risk that the actual
charge-offs may differ, possibly materially, from what is reflected in those
statements due to, among other potential factors, the impact of the COVID-19
pandemic and the effectiveness of stimulus and forbearance programs in response,
changes in economic conditions, and idiosyncratic events affecting our
commercial loans. Statements about Citizens' agreement to acquire Investors and
CBNA's agreement to acquire HSBC branches also constitute forward-looking
statements and are subject to the risk that actual results could be materially
different from those expressed in those statements, including if either of both
transactions are not consummated in a timely manner or at all, or if integration
is more costly or difficult than expected.
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 2020 Form 10-K as well
as Part II, Item 1A of our Form 10-Q for the quarter ended June 30, 2021.
INTRODUCTION
Citizens Financial Group, Inc. is one of the nation's oldest and largest
financial institutions with $187.0 billion in assets as of September 30, 2021.
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 to offer tailored advice, ideas, and solutions. In Consumer Banking, we
provide an integrated experience that includes mobile and online banking, a 24/7
customer contact center, the convenience of approximately 3,000 ATMs and
approximately 1,000 branches in 11 states in the New England, Mid-Atlantic, and
Midwest regions. Consumer Banking products and services include a full range of
banking, lending, savings, wealth management and small business offerings. In
Commercial Banking, we offer a broad complement of financial products and
solutions, including lending and leasing, deposit and treasury management
services, foreign exchange, interest rate and commodity risk management
solutions, as well as loan syndication, corporate finance, merger and
acquisition, and debt and equity capital markets capabilities. More information
is available at www.citizensbank.com.
On May 26, 2021, CBNA entered into an agreement to acquire 80 East Coast
branches and the national online deposit business from HSBC for an approximate
2.0% premium paid on deposits at closing. The HSBC acquisition provides an
attractive entry into important metro markets and supports our national
expansion strategy. The branch purchase includes 66 locations in the New York
City Metro area, 9 locations in the Mid-Atlantic/Washington D.C. area, and 5
locations in Southeast Florida. As of September 30, 2021, there were
approximately $8.4 billion in deposits and $1.9 billion in loans. The
transaction is expected to close in the first quarter of 2022, subject to
customary closing terms and conditions and regulatory approvals.
On July 28, 2021 Citizens entered into a definitive agreement and a plan of
merger under which we will acquire all of the outstanding shares of Investors
for a combination of stock and cash. Pursuant to the terms of the agreement,
Investors shareholders will receive 0.297 of a share of the Company's common
stock and $1.46 in cash for each share of Investors they own. The acquisition of
Investors enhances Citizens' banking franchise, adding an attractive middle
market, small business and consumer customer base while building our physical
presence in the northeast with the addition of 154 branches located in the
greater New York City and Philadelphia metropolitan areas and across New Jersey.
As of September 30, 2021, Investors disclosed that it had total assets of $27.3
billion, including $21.6 billion of loans, $24.5 billion of liabilities,
including $20.4 billion of
                                              Citizens Financial Group, Inc. | 8
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deposits, and $2.8 billion of stockholders' equity. The merger is expected to
close in early second quarter 2022, subject to approval by the shareholders of
Investors, regulatory approvals, and other customary closing conditions.
On August 5, 2021, Citizens entered into a definitive agreement to acquire
Willamette, a valuation consulting and forensic analysis firm with offices in
Chicago, Atlanta, and Portland, Oregon. This transaction further strengthens our
growing corporate financial advisory capabilities. The acquisition was completed
on September 1, 2021.
On September 8, 2021, Citizens entered into a definitive agreement to acquire
JMP in an all-cash transaction. This acquisition further strengthens Citizens'
corporate finance and strategic advisory capabilities. Under the agreement, JMP
shareholders will receive $7.50 for each common share of JMP they own, or
approximately $149 million in cash. This transaction is targeted to close in
mid-fourth quarter 2021, subject to approval by the shareholders of JMP and
other customary closing conditions.
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 the unaudited
interim Consolidated Financial Statements in Part I, Item 1, as well as other
information contained in this document and our 2020 Form 10-K.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures denoted as "Underlying",
"excluding PPP loans", as well as other results excluding the impact of certain
items. 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 or results excluding the impact of
certain items in any given reporting period reflect our on-going financial
performance and increase comparability of period-to-period results, and useful
to consider in addition to our GAAP financial results.
Other companies may use similarly titled non-GAAP financial measures that are
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 or identified as excluding the impact of certain items. Where there
is a reference to these metrics in that paragraph, all measures that follow are
on the same basis when applicable. For more information on the computation of
non-GAAP financial measures, see "-Non-GAAP Financial Measures and
Reconciliations."
                                              Citizens Financial Group, Inc. | 9
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FINANCIAL PERFORMANCE
Quarterly Results - Key Highlights

Net result of $ 530 million increased by 69% compared to $ 314 million in the third quarter of 2020, with diluted earnings per common share of $ 1.18, up $ 0.50 of
$ 0.68 per diluted ordinary share in the third quarter of 2020. ROTCE of 13.7% compared to 8.3% in the third quarter of 2020.

  Third quarter 2021 results reflect $16 million of expenses, net of tax
benefit, or $0.04 per diluted common share, from notable items compared to $24
million of expenses, net of tax benefit, or $0.05 per diluted common share, from
notable items in third quarter of 2020. On an Underlying basis, which excludes
notable items, net income available to common stockholders of $520 million
compared with $313 million in the third quarter of 2020. Underlying EPS of $1.22
compared to $0.73 in the third quarter of 2020. Underlying ROTCE of 14.2%
compared with 9.0% in third quarter of 2020.
Table 1: Notable Items
                                                                                      Three Months Ended September 30,
                                                                    2021                                                                                2020
(in millions)                         Noninterest expense                      Income tax expense          Net Income                        Noninterest expense                 Income tax expense          Net Income
Reported results (GAAP):                    $1,011                                    $151                    $530                                          $988                         $61                    $314
Less notable items:
Total integration costs                          4                                      (1)                     (3)                                            2                           -                      (2)
Other notable items(1)                          19                                      (6)                    (13)                                           29                          (7)                    (22)
Total notable items                             23                                      (7)                    (16)                                           31                          (7)                    (24)
Underlying results (non-GAAP)                 $988                                    $158                    $546                                          $957                         $68                    $338

(1) Other notable items for Q3 2021 include a pension settlement expense and compensation related tax credit as well as TOP 6 transformation and revenue and efficiency initiatives. The third quarter of 2020 includes our TOP 6 transformation, revenue and efficiency initiatives.

•Total revenue of $1.7 billion decreased $132 million, or 7%, from the third
quarter of 2020, driven by a decrease of 21% in noninterest income, partially
offset by a 1% increase in net interest income.
•Net interest income of $1.1 billion increased 1% compared to the third quarter
of 2020 reflecting 4% growth in interest-earning assets, largely offset by lower
net interest margin.
•Net interest margin of 2.72% decreased 10 basis points compared to 2.82% in the
third quarter of 2020, primarily reflecting the impact of elevated cash balances
and the lower rate environment, partly offset by improved funding mix and
deposit pricing and the benefit of accelerated PPP loan forgiveness.
-Net interest margin on a FTE basis of 2.72% decreased 11 basis points compared
to 2.83% in the third quarter of 2020.
-Average loans and leases of $122.6 billion decreased $2.3 billion, or 2%, from
$124.9 billion in the third quarter of 2020, driven by a $5.2 billion decrease
in commercial reflecting payoffs and a $1.9 billion decrease in PPP loans. The
decrease in commercial was partially offset by a $2.9 billion increase in retail
driven by growth in education, residential mortgage and automobile, partially
offset by planned runoff of personal unsecured installment loans and a decrease
in home equity.
-Average deposits of $151.9 billion increased $10.5 billion, or 7%, from $141.4
billion in the third quarter of 2020, reflecting an increase in demand deposits,
money market accounts, savings and checking with interest, partially offset by a
decrease in term deposits.
•Noninterest income of $514 million decreased $140 million, or 21%, from the
third quarter of 2020, driven by a decline in mortgage banking fees and other
income, partially offset by higher capital markets, service charges, card and
trust and investment services fees.
•Noninterest expense of $1.0 billion was stable compared to the third quarter of
2020.
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•On an Underlying basis, noninterest expense of $988 million increased $31
million, or 3%, from the third quarter of 2020, given higher salaries and
employee benefits, outside services and other operating expense.
•The efficiency ratio of 60.9% compared to 55.2% in the third quarter of 2020.
•On an Underlying basis, the efficiency ratio of 59.5% compared to 53.4% in the
third quarter of 2020.
•Credit provision benefit of $33 million compares with a $428 million credit
provision expense in the third quarter of 2020, reflecting strong credit
performance across the retail and commercial loan portfolios and improvement in
the macroeconomic outlook.
Year to Date and Period End - Key Highlights
Net income of $1.8 billion increased $1.2 billion from the first nine months of
2020, with earnings per diluted common share of $3.99, up $2.76 from $1.23 per
diluted common share in the first nine months of 2020. ROTCE of 16.1% increased
from 5.1% in the first nine months of 2020. Improved results primarily reflect
the impact of the COVID-19 pandemic and associated lockdowns in the first nine
months of 2020, resulting in a significant ACL reserve build during this period.
In the first nine months of 2021, results reflect $39 million of expenses, net
of tax benefit, or $0.10 per diluted common share, from notable items compared
to $59 million of expenses, net of tax benefit, or $0.14 per diluted common
share, from notable items in the first nine months of 2020.
Table 2: Notable Items
                                                                                   Nine Months Ended September 30,
                                                                     2021                                                                          2020
                                                                                                                                                 Noninterest
(in millions)                             Noninterest expense                      Income tax expense          Net Income                         
expense                  Income tax expense          Net Income
Reported results (GAAP)                         $3,020                                    $504                  $1,789                            $2,979                           $126                    $601
Less notable items:
Total integration costs                              6                                      (2)                     (4)                                8                             (2)                     (6)
Other notable items(1)                              48                                     (13)                    (35)                               75                            (22)                    (53)
Total notable items                                 54                                     (15)                    (39)                               83                            (24)                    (59)
Underlying results (non-GAAP)                   $2,966                                    $519                  $1,828                            $2,896                           $150                    $660


(1) For the nine months ended September 30, 2021, Other notable items include a
pension settlement charge and a compensation-related credit as well as our TOP 6
transformational and revenue and efficiency initiatives. Other notable items for
the nine months ended September 30, 2020 includes our TOP 6 transformational and
revenue and efficiency initiatives as well as an income tax benefit related to
legacy tax matters.
•Net income available to common stockholders of $1.7 billion increased $1.2
billion, compared to $526 million in the first nine months of 2020.
•On an Underlying basis, which excludes notable items, net income available to
common stockholders of $1.7 billion compared with $585 million in the first nine
months of 2020.
•On an Underlying basis, EPS of $4.09 compared to $1.37 in the first nine months
of 2020.
•Total revenue of $4.9 billion decreased $271 million, or 5%, from the first
nine months of 2020, driven by declines of 11% and 2% in noninterest income and
net interest income, respectively.
•Net interest income of $3.4 billion decreased 2% given lower net interest
margin, partially offset by 5% growth in interest-earning assets.
•Net interest margin of 2.73% decreased 20 basis points from 2.93% in the first
nine months of 2020, reflecting the impact of a lower rate environment, lower
interest-earning asset yields and elevated cash balances, partly offset by
improved funding mix and deposit pricing and the benefit of accelerated PPP loan
forgiveness.
-Net interest margin on a FTE basis of 2.73% decreased 20 basis points, compared
to 2.93% in the first nine months of 2020.
-Average loans and leases of $123.0 billion decreased $1.9 billion, or 2%, from
$124.9 billion in the first nine months of 2020, driven by a $3.5 billion
decrease in commercial reflecting line of credit repayments and net payoffs,
partially offset by an increase in PPP loans. The decrease in commercial was
partially offset by a $1.6 billion increase in retail driven by
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growth in education, residential mortgage and automobile, partially offset by
planned run-off of personal unsecured installment loans and a decrease in home
equity.
-Period-end loans increased $228 million from the fourth quarter of 2020,
reflecting 5% growth in retail and a 5% decline in commercial.
-Average deposits of $149.6 billion increased $13.1 billion, or 10%, from $136.5
billion in the first nine months of 2020, reflecting an increase in demand
deposits, money market accounts, savings and checking with interest, partially
offset by a decrease in term deposits.
-Period-end deposit growth of $5.1 billion, or 3%, from the fourth quarter of
2020, reflecting elevated liquidity tied to government stimulus associated with
the COVID-19 disruption.
•Noninterest income of $1.5 billion decreased $200 million, or 11%, from the
first nine months of 2020, driven by a decline in mortgage banking fees
partially offset by improved capital markets, trust and investment services,
letter of credit and loan, card and service charges and fees.
•Noninterest expense of $3.0 billion was stable compared to the first nine
months of 2020.
•On an Underlying basis, noninterest expense increased 2% from the first nine
months of 2020, reflecting higher outside services, equipment and software
expense, and salaries and employee benefits, partially offset by a decrease in
other operating expense.
•The efficiency ratio of 61.3% compared to 57.3% for the first nine months of
2020, and ROTCE of 16.1% compared to 5.1%.
•On an Underlying basis, the efficiency ratio of 60.2% compared to 55.7% for the
first nine months of 2020, and ROTCE of 16.5% compared to 5.7%.
•Credit provision benefit of $386 million compares with a $1.5 billion credit
provision expense for the first nine months of 2020, reflecting strong credit
performance across the retail and commercial loan portfolios and improvement in
the macroeconomic outlook.
•Tangible book value per common share of $34.44 increased 7% from the first nine
months of 2020. Fully diluted average common shares outstanding was stable over
the same period.
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SELECTED CONSOLIDATED FINANCIAL DATA
The summary of the Consolidated Operating Data for the three and nine months
ended September 30, 2021 and 2020 and the summary Consolidated Balance Sheet
data as of September 30, 2021 and December 31, 2020 are derived from our
unaudited interim Consolidated Financial Statements, included in Part I, Item 1.
Our historical results are not necessarily indicative of the results expected
for any future period.
Table 3: Summary of Consolidated Operating Data
                                                         Three Months Ended September 30,           Nine Months Ended September 30,
(dollars in millions, except per share amounts)              2021                 2020                 2021                 2020
OPERATING DATA:
Net interest income                                          $1,145               $1,137               $3,386               $3,457
Noninterest income                                              514                  654                1,541                1,741
Total revenue                                                 1,659                1,791                4,927                5,198
Provision for credit losses                                     (33)                 428                 (386)               1,492
Noninterest expense                                           1,011                  988                3,020                2,979
Income before income tax expense                                681                  375                2,293                  727
Income tax expense                                              151                   61                  504                  126
Net income                                                     $530                 $314               $1,789                 $601
Net income available to common stockholders                    $504                 $289               $1,708                 $526
Net income per common share - basic                           $1.18                $0.68                $4.01                $1.23
Net income per common share - diluted                         $1.18                $0.68                $3.99                $1.23
OTHER OPERATING DATA:
Return on average common equity                                9.39  %              5.60  %             10.91  %              3.45  %
Return on average tangible common equity                      13.71                 8.33                16.08                 5.15
Return on average total assets                                 1.13                 0.70                 1.30                 0.46
Return on average total tangible assets                        1.17                 0.73                 1.35                 0.48
Efficiency ratio                                              60.92                55.18                61.30                57.31
Operating leverage                                            (9.64)                7.77                (6.59)                2.95
Net interest margin, FTE(1)                                    2.72                 2.83                 2.73                 2.93
Effective income tax rate                                     22.35                16.10                22.01                17.27


(1) The net interest margin is presented on an FTE basis using the federal statutory tax rate of 21%.

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Table 4: Summary of Consolidated Balance Sheet data
(dollars in millions)                                               September 30, 2021         December 31, 2020
BALANCE SHEET DATA:
Total assets                                                                $187,007                   $183,349
Loans held for sale, at fair value                                             3,177                      3,564
Other loans held for sale                                                         93                        439
Loans and leases                                                             123,318                    123,090
Allowance for loan and lease losses                                           (1,855)                    (2,443)
Total securities                                                              28,107                     26,847
Goodwill                                                                       7,065                      7,050
Total liabilities                                                            163,584                    160,676
Total deposits                                                               152,221                    147,164
Short-term borrowed funds                                                          8                        243
Long-term borrowed funds                                                       6,947                      8,346
Total stockholders' equity                                                    23,423                     22,673
OTHER BALANCE SHEET DATA:
Asset Quality Ratios:
Allowance for loan and lease losses to loans and leases                         1.50  %                    1.98  %
Allowance for credit losses to loans and leases                                 1.63                       2.17

Provision for credit losses on loans and leases, excluding the impact of PPP loans (1)

                                                          1.65                       2.24

Provision for losses on loans and leases on unrecognized loans and leases

      248                        240
Allowance for credit losses to nonaccrual loans and leases                       268                        262
Nonaccrual loans and leases to loans and leases                                 0.61                       0.83
Capital Ratios:
CET1 capital ratio                                                              10.3  %                    10.0  %
Tier 1 capital ratio                                                            11.6                       11.3
Total capital ratio                                                             13.4                       13.4
Tier 1 leverage ratio                                                            9.7                        9.4


(1) For more information on the computation of non-GAAP financial measures, see
"-Introduction - Non-GAAP Financial Measures" and "-Non-GAAP Financial Measures
and Reconciliations."


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RESULTS OF OPERATIONS
Net Interest Income
The following table presents a five quarter trend of our Net interest margin,
FTE and Net interest income:
                     [[Image Removed: cfg-20210930_g2.jpg]]

Third quarter 2021 versus second quarter 2021: Net interest income of $1.1
billion was up 2% given higher day count and interest-earning asset growth, with
stable net interest margin. Net interest margin on a FTE basis of 2.72% reflects
the benefit of accelerated PPP forgiveness, improved funding mix, and deposit
pricing, partially offset by higher cash balances and lower earning-asset
yields. Interest-bearing deposit costs of 14 basis points decreased 2 basis
points.

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Table 5: Main components of net interest income, quarterly cumulative

Three months ended September 30,

                                                                        2021                                                2020                                         Change
                                                         Average         Income/       Yields/               Average         Income/       Yields/              Average          Yields/
(dollars in millions)                                   Balances         Expense        Rates               Balances         Expense        Rates              Balances        Rates (bps)
Assets
Interest-bearing cash and due from banks and
deposits in banks                                          $13,749          $6            0.16  %               $6,250          $2            0.10  %           $7,499            6 bps
Taxable investment securities                               27,466         116            1.69                  24,654         121            1.95               2,812                   (26)
Non-taxable investment securities                                2           -            2.60                       4           -            2.60                  (2)                     -
Total investment securities                                 27,468         116            1.69                  24,658         121            1.95               2,810                   (26)
Commercial and industrial                                   42,330         362            3.36                  46,844         383            3.20              (4,514)                    16
Commercial real estate                                      14,656          96            2.56                  14,644          96            2.57                  12                    (1)
Leases                                                       1,695          12            2.72                   2,373          16            2.65                (678)                     7
Total commercial loans and leases                           58,681         470            3.14                  63,861         495            3.03              (5,180)                    11
Residential mortgages                                       20,834         157            3.01                  19,427         153            3.15               1,407                   (14)
Home equity                                                 11,829          92            3.08                  12,416         100            3.21                (587)                  (13)
Automobile                                                  13,136         126            3.83                  12,019         128            4.23               1,117                   (40)
Education                                                   12,707         134            4.19                  10,929         130            4.74               1,778                   (55)

Other retail                                                 5,454          99            7.15                   6,260         114            7.22                (806)                   (7)
Total retail loans                                          63,960         608            3.78                  61,051         625            4.08               2,909                   (30)
Total loans and leases                                     122,641       1,078            3.47                 124,912       1,120            3.54              (2,271)                   (7)
Loans held for sale, at fair value                           3,299          21            2.51                   3,295          21            2.60                   4                    (9)
Other loans held for sale                                      112           1            3.98                   1,061          16            6.02                (949)                 (204)
Interest-earning assets                                    167,269       1,222            2.89                 160,176       1,280            3.15               7,093                   (26)

Noninterest-earning assets                                  18,839                                              17,499                                           1,340
Total assets                                              $186,108                                            $177,675                                          $8,433
Liabilities and Stockholders' Equity
Checking with interest                                     $27,965          $7            0.09  %              $26,638          $8            0.13  %           $1,327             (4)
Money market accounts                                       49,159          18            0.14                  45,187          33            0.28               3,972            (14)
Regular savings                                             20,803           5            0.09                  16,902          10            0.24               3,901            (15)
Term deposits                                                6,071           5            0.43                  12,032          38            1.25              (5,961)           (82)
Total interest-bearing deposits                            103,998          35            0.14                 100,759          89            0.35               3,239            (21)

Short-term borrowed funds                                       23           -            2.06                     240           -            0.13                (217)            193
Long-term borrowed funds                                     6,956          42            2.38                   9,196          54            2.35              (2,240)             3
Total borrowed funds                                         6,979          42            2.38                   9,436          54            2.30              (2,457)             8
Total interest-bearing liabilities                         110,977          77            0.28                 110,195         143            0.52                 782            (24)
Demand deposits                                             47,873                                              40,608                                           7,265
Other liabilities                                            3,904                                               4,374                                            (470)
Total liabilities                                          162,754                                             155,177                                           7,577
Stockholders' equity                                        23,354                                              22,498                                             856
Total liabilities and stockholders' equity                $186,108                                            $177,675                                          $8,433
Interest rate spread                                                                      2.61  %                                             2.63  %                              (2)
Net interest income and net interest margin                             $1,145            2.72  %                           $1,137            2.82  %                             (10)
Net interest income and net interest margin, FTE(1)                     $1,147            2.72  %                           $1,140            2.83  %                             (11)

Memo: Total deposits (interest bearing and on demand) $ 151,871 $ 35

            0.09  %             $141,367         $89            0.25  %  

$ 10,504 (16) basis points


(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.
Third quarter 2021 vs third quarter 2020: Net interest income of $1.1 billion
increased 1% from the third quarter of 2020 reflecting 4% growth in
interest-earning assets, largely offset by lower net interest margin.
Net interest margin on a FTE basis of 2.72% decreased 11 basis points compared
to 2.83% in the third quarter of 2020, primarily reflecting the impact of
elevated cash balances and the lower rate environment, partially offset by an
improved funding mix, deposit pricing, and the benefit of accelerated PPP loan
forgiveness. Interest-bearing deposit costs decreased 21 basis points. Average
interest-earning asset yields of 2.89% decreased 26 basis points from 3.15% in
the third quarter of 2020, while average interest-bearing liability costs of
0.28% decreased 24 basis points from 0.52% in the third quarter of 2020.
  Average interest-earning assets of $167.3 billion increased $7.1 billion, or
4%, from the third quarter of 2020, as elevated liquidity drove a $7.5 billion
increase in cash held in interest-bearing deposits, and a $2.8 billion increase
in investments. Loans and loans held for sale decreased $3.2 billion, or 2%,
with a $5.2 billion decrease in average commercial reflecting line of credit
repayments and net payoffs and a 1.9 billion decrease in
                                             Citizens Financial Group, Inc. | 16
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PPP loans. Retail loans increased $2.9 billion driven by growth in education,
residential mortgage, and automobile, partially offset by planned run-off of
personal unsecured installment loans and a decrease in home equity. Loans held
for sale decreased $945 million, driven by education.
  Average deposits of $151.9 billion increased $10.5 billion, or 7%, from the
third quarter of 2020, reflecting an increase in demand deposits, money market
accounts, savings and checking with interest, partially offset by a decrease in
term deposits. Average total borrowed funds of $7.0 billion decreased $2.5
billion from the third quarter of 2020, as strong customer deposit inflows
enabled the pay down of senior debt and short-term borrowings. Total borrowed
funds costs of $42 million decreased $12 million from the third quarter of 2020.
The total borrowed funds cost of 2.38% increased 8 basis points from 2.30% in
the third quarter of 2020.
Table 6: Major Components of Net Interest Income, Year-to-Date
                                                                            

Nine months ended September 30,

                                                                        2021                                                2020                                         Change
                                                         Average         Income/       Yields/               Average         Income/       Yields/              Average          Yields/
(dollars in millions)                                   Balances         Expense        Rates               Balances         Expense        Rates              Balances        Rates (bps)
Assets:
Interest-bearing cash and due from banks and
deposits in banks                                          $11,967         $12            0.13  %               $4,453          $8            0.24  %           $7,514          (11) bps
Taxable investment securities                               27,366         368            1.79                  25,056         398            2.12               2,310                   (33)
Non-taxable investment securities                                3           -            2.60                       4           -            2.60                  (1)                     -
Total investment securities                                 27,369         368            1.79                  25,060         398            2.12               2,309                   (33)
Commercial and industrial                                   43,661       1,054            3.19                  46,813       1,212            3.40              (3,152)                  (21)
Commercial real estate                                      14,601         285            2.57                  14,354         341            3.12                 247                   (55)
Leases                                                       1,800          37            2.73                   2,427          50            2.74                (627)                   (1)
Total commercial loans and leases                           60,062       1,376            3.02                  63,594       1,603            3.31              (3,532)                  (29)
Residential mortgages                                       20,160         459            3.03                  19,056         467            3.27               1,104                   (24)
Home equity                                                 11,884         279            3.14                  12,730         363            3.81                (846)                  (67)
Automobile                                                  12,634         376            3.98                  12,063         388            4.30                 571                   (32)
Education                                                   12,593         403            4.28                  10,908         424            5.19               1,685                   (91)

Other retail                                                 5,659         304            7.18                   6,556         369            7.51                (897)                  (33)
Total retail loans                                          62,930       1,821            3.87                  61,313       2,011            4.38               1,617                   (51)
Total loans and leases                                     122,992       3,197            3.45                 124,907       3,614            3.84              (1,915)                  (39)
Loans held for sale, at fair value                           3,435          63            2.45                   2,635          56            2.85                 800                   (40)
Other loans held for sale                                      242           9            4.88                     791          32            5.32                (549)                  (44)
Interest-earning assets                                    166,005       3,649            2.92                 157,846       4,108            3.45               8,159                   (53)

Noninterest-earning assets                                  18,386                                              17,046                                           1,340
Total assets                                              $184,391                                            $174,892                                          $9,499
Liabilities and Stockholders' Equity:
Checking with interest                                     $27,126         $18            0.09  %              $25,857         $56            0.29  %           $1,269            (20)
Money market accounts                                       49,362          61            0.16                  43,411         165            0.51               5,951            (35)
Regular savings                                             19,839          15            0.10                  15,667          43            0.37               4,172            (27)
Term deposits                                                7,195          33            0.64                  15,692         176            1.49              (8,497)           (85)
Total interest-bearing deposits                            103,522         127            0.16                 100,627         440            0.58               2,895            (42)

Short-term borrowed funds                                       80           -            0.74                     368           1            0.53                (288)            21
Long-term borrowed funds                                     7,570         136            2.38                  11,660         210            2.39              (4,090)            (1)
Total borrowed funds                                         7,650         136            2.36                  12,028         211            2.33              (4,378)             3
Total interest-bearing liabilities                         111,172         263            0.32                 112,655         651            0.77              (1,483)           (45)
Demand deposits                                             46,120                                              35,922                                          10,198
Other liabilities                                            4,166                                               4,172                                              (6)
Total liabilities                                          161,458                                             152,749                                           8,709
Stockholders' equity                                        22,933                                              22,143                                             790
Total liabilities and stockholders' equity                $184,391                                            $174,892                                          $9,499
Interest rate spread                                                                      2.61  %                                             2.68  %                              (7)
Net interest income and net interest margin                             $3,386            2.73  %                           $3,457            2.93  %                             (20)
Net interest income and net interest margin, FTE(1)                     $3,393            2.73  %                           $3,467            2.93  %                             (20)

Memo: Total deposits (interest bearing and on demand) $ 149,642 $ 127

            0.11  %             $136,549        $440            0.43  % 

$ 13,093 (32) basis points


(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.
First nine months 2021 versus first nine months 2020: Net interest income of
$3.4 billion decreased 2% from the first nine months of 2020, reflecting 5%
growth in interest-earning assets, largely offset by lower net interest margin.
                                             Citizens Financial Group, Inc. | 17
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Net interest margin on a FTE basis of 2.73% decreased 20 basis points compared
to 2.93% in the first nine months of 2020, primarily reflecting the impact of a
lower rate environment, and elevated cash balances given strong deposit flows,
partially offset by the benefit of accelerated PPP loan forgiveness, improved
funding mix, and deposit pricing. Average interest-earning asset yields of 2.92%
decreased 53 basis points from 3.45% in the first nine months of 2020, while
average interest-bearing liability costs of 0.32% decreased 45 basis points from
0.77% in the first nine months of 2020.
Average interest-earning assets of $166.0 billion increased $8.2 billion, or 5%,
from the first nine months of 2020, as elevated liquidity drove a $7.5 billion
increase in cash held in interest-bearing deposits and a $2.3 billion, or 9%,
increase in investments. Results also reflected a $1.7 billion, or 1%, decrease
in average loans and leases and LHFS with a $3.5 billion decrease in average
commercial loans and leases reflecting payoffs, partially offset by a $1.3
billion increase in PPP loans. Furthermore, average retail loans increased $1.6
billion, driven by growth in education, residential mortgage, and automobile,
partially offset by decreases in home equity and other retail given run-off of
personal unsecured installment loans. Loans held for sale increased $251
million, reflecting mortgage originations.
Average deposits of $149.6 billion increased $13.1 billion, or 10%, from the
first nine months of 2020, reflecting growth in demand deposits, money market
accounts, savings, and checking with interest, partially offset by a decline in
term deposits. Average total borrowed funds of $7.7 billion decreased $4.4
billion from the first nine months of 2020, given the pay down of senior debt
and short-term borrowings. Total borrowed funds costs of $136 million decreased
$75 million from the first nine months of 2020. The total borrowed funds cost of
2.36% increased 3 basis points from 2.33% in the first nine months of 2020.
                                             Citizens Financial Group, Inc. | 18
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Non-interest income

The following table shows a five-quarter trend in our non-interest income:

                     [[Image Removed: cfg-20210930_g3.jpg]]
Third quarter 2021 versus second quarter 2021: Noninterest income of $514
million increased $29 million, or 6%, from the second quarter of 2021. Results
reflect higher mortgage banking fees, service charges and fees, card fees and
other income, partially offset by lower capital markets fees.
•Mortgage banking fees increased driven by strong origination levels, the
benefit of lower agency fees and improved MSR hedge results.
•Services charges and fees and card fees increased reflecting seasonality and
the benefit of economic recovery.
•Other income increased reflecting the benefit of higher community
development-related income and a seasonal improvement in tax-advantaged
investments.
•Capital markets fees declined from record levels reflecting seasonally lower
activity, primarily in syndication fees, partially offset by higher merger and
acquisition advisory fees.
Table 7: Noninterest Income
                                   Three Months Ended September 30,                                                        Nine Months Ended September 30,
(in millions)                       2021                        2020             Change            Percent                2021                          2020              Change            Percent
Mortgage banking fees              $108                          $287           ($179)                (62  %)             $358                            $722           ($364)                (50  %)
Service charges and fees            110                            97              13                  13                  309                             299              10                   3
Capital markets fees                 72                            58              14                  24                  244                             162              82                  51
Card fees                            66                            57               9                  16                  185                             161              24                  15
Trust and investment services
fees                                 61                            53               8                  15                  179                             151              28                  19
Letter of credit and loan fees       39                            37               2                   5                  115                             102              13                  13
Foreign exchange and interest
rate products                        29                            27               2                   7                   85                              85               -                   -
Securities gains, net                 3                             1               2                 200                    9                               4               5                 125
Other income(1)                      26                            37             (11)                (30)                  57                              55               2                   4
Noninterest income                 $514                          $654           ($140)                (21  %)           $1,541                          $1,741           ($200)                (11  %)

(1) Includes income from life insurance held by banks and other miscellaneous income for all periods presented.

Third quarter 2021 versus third quarter 2020: Noninterest income decreased $140
million, or 21%, from the third quarter of 2020. Results reflect lower mortgage
banking fees and other income, partially offset by higher capital markets,
service charges, card and trust and investment services fees.
•Mortgage banking fees decreased driven by lower gain-on-sale margins and
production volumes.
•Capital markets fees increased driven by loan syndication and merger and
acquisition advisory fees.
•Service charges and fees increased reflecting recovery from COVID-19 impacts.
•Card fees increased reflecting higher debit and credit card volumes given
economic recovery.
                                             Citizens Financial Group, Inc. | 19
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•Other income decreased largely tied to a gain on the sale of education loans in
the third quarter of 2020.
•Trust and investment services fees increased driven by an increase in assets
under management from higher equity market levels and strong inflows.
First nine months 2021 versus first nine months 2020: Noninterest income
decreased $200 million, or 11%, from the first nine months of 2020. Results
reflect lower mortgage banking fees partially offset by improved capital
markets, trust and investment services, letter of credit and loan, card and
service charges and fees.
•Mortgage banking fees decreased reflecting increased industry capacity and
heightened competition resulting in lower gain-on-sale margins and production
volumes.
•Capital markets fees increased driven by loan syndication, underwriting, and
merger and acquisition advisory fees.
•Trust and investment services fees increased driven by an increase in assets
under management from higher equity market levels and strong inflows.
•Letter of credit and loan fees increased reflecting higher commitment fees.
•Card fees and service charges and fees increased largely tied to economic
recovery.
Noninterest Expense

The following table shows a five-quarter trend in our non-interest expenses:

                     [[Image Removed: cfg-20210930_g4.jpg]]

Third quarter 2021 compared to second quarter 2021: Non-interest expenses of $ 1.0 billion, Where $ 988 million on an underlying basis increased slightly, reflecting strong spending discipline and the benefit of efficiency initiatives. Table 8: Non-interest charges

                                    Three Months Ended September 30,                                                       Nine Months Ended September 30,
(in millions)                        2021                         2020             Change           Percent               2021                          2020            Change           Percent
Salaries and employee benefits       $509                          $524            ($15)                (3  %)          $1,581                         $1,586            ($5)                  -  %
Equipment and software                157                           149               8                  5                 464                            424             40                   9
Outside services                      144                           139               5                  4                 420                            405             15                   4
Occupancy                              77                            81              (4)                (5)                247                            247              -                   -
Other operating expense               124                            95              29                 31                 308                            317             (9)                 (3)
Noninterest expense                $1,011                          $988             $23                  2  %           $3,020                         $2,979            $41                   1  %


Third quarter 2021 versus third quarter 2020: Noninterest expense increased $23
million, or 2%, compared to the third quarter of 2020 and remains
well-controlled. Salaries and employee benefits were lower as a result of a
compensation-related credit associated with the CARES Act. Other operating
expenses increased reflecting a pension settlement charge. On an Underlying
basis, noninterest expense of $988 million increased $31 million, or 3%,
compared to $957 million given higher salaries and employee benefits, outside
services and other operating expense.
•Higher salaries and employee benefits reflect revenue-based compensation and
merit increases.
                                             Citizens Financial Group, Inc. | 20
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•Outside services increased largely tied to growth initiatives.
•Other operating expense increased reflecting higher travel and advertising
costs.
First nine months 2021 versus first nine months 2020: Noninterest expense
increased $41 million, or 1%, and was stable with the first nine months of 2020.
On an Underlying basis, noninterest expense of $3.0 billion increased $70
million, or 2%, given higher salaries and employee benefits and outside services
due to the reasons stated above and higher equipment and software expense. These
increases were partially offset by a decline in other operating expense.
•Equipment and software expense increased reflecting higher technology spend.
•Other operating expense decreased reflecting lower travel and advertising
costs.
Provision for Credit Losses
The following table presents a five quarter trend of our provision for credit
losses, net charge-offs and net charge-off ratio:

                     [[Image Removed: cfg-20210930_g5.jpg]]
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 - Allowance for Credit Losses and
Nonaccrual Loans and Leases" for more information.
Third quarter 2021 versus second quarter 2021: In the third quarter of 2021,
strong credit performance across the retail and commercial loan portfolios and
improvement in the macroeconomic outlook resulted in a credit provision benefit
of $33 million. This compared to a credit provision benefit of $213 million in
the second quarter of 2021.
Third quarter 2021 versus third quarter 2020: The credit provision benefit was
$33 million in the third quarter of 2021, compared with a $428 million credit
provision expense in the third quarter of 2020. The credit provision expense in
2020 reflects the adverse impacts from the COVID-19 pandemic and associated
lockdowns, while the credit provision benefit in 2021 reflects strong credit
performance and improving macroeconomic outlook.
First nine months 2021 versus first nine months 2020: The credit provision
benefit was $386 million in the first nine months of 2021. This compared to a
credit provision expense of $1.5 billion in the first nine months of 2020, which
reflected the adverse impacts from the COVID-19 pandemic and associated
lockdowns.
                                             Citizens Financial Group, Inc. | 21
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Income Tax Expense
The following table presents a five quarter trend of our income tax expense and
effective income tax rate:
                     [[Image Removed: cfg-20210930_g6.jpg]]
Third quarter 2021 versus third quarter 2020: Income tax expense increased $90
million from the third quarter of 2020 due to increased taxable income. The
effective income tax rate increased to 22.4% from 16.1% in the third quarter of
2020, driven by the decreased benefit of tax advantaged investments on higher
pre-tax income.
First nine months 2021 versus first nine months 2020: Income tax expense for the
first nine months of 2021 was $504 million compared to $126 million in the first
nine months of 2020. Income tax expense increased $378 million from the first
nine months of 2020 due to increased taxable income. The effective income tax
rate increased to 22.0% from 17.3% in the first nine months of 2020 driven by
the decreased benefit of tax advantaged investment on higher pre-tax income.
Business Operating Segments
We have two business operating segments: Consumer Banking and Commercial
Banking. Segment results are derived by specifically attributing managed assets,
liabilities, capital and related revenues, provision for credit losses, which,
at the segment level, is equal to net charge-offs, and other expenses.
Non-segment operations are classified as Other, which includes assets,
liabilities, capital, revenues, provision for credit losses, expenses and income
tax expense not attributed to our Consumer or Commercial Banking segments as
well as treasury and community development. In addition, Other includes goodwill
not directly allocated to a business operating segment and any associated
goodwill impairment charges. For impairment testing purposes, we allocate all
goodwill to our Consumer Banking and/or Commercial Banking reporting units.
There have been no significant changes in our methodologies used to allocate
items to our business operating segments as described in "-Results of Operations
- Business Operating Segments" in our 2020 Form 10-K.
                                             Citizens Financial Group, Inc. | 22
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The following table presents certain financial data of our business operating
segments. Total business operating segment financial results differ from total
consolidated financial results. These differences are reflected in Other
non-segment operations. See Note 16 in Item 1 for further information.
Table 9: Selected Financial Data for Business Operating Segments, Quarter-to-Date
                                                                      Consumer Banking                                                        Commercial Banking
                                                              Three Months Ended September 30,                                         Three Months Ended September 30,
(dollars in millions)                                  2021                                      2020                                    2021                      2020
Net interest income                                       $919                                      $845                                    $428                      $421
Noninterest income                                         315                                       495                                     168                       144
Total revenue                                            1,234                                     1,340                                     596                       565
Noninterest expense                                        749                                       742                                     226                       210
Profit before credit losses                                485                                       598                                     370                       355
Net charge-offs                                             35                                        55                                      15                       161
Income before income tax expense                           450                                       543                                     355                       194
Income tax expense                                         114                                       136                                      81                        41
Net income                                                $336                                      $407                                    $274                      $153
Average Balances:
Total assets                                           $75,070                                   $73,605                                 $56,702                   $60,889
Total loans and leases(1)(2)                            70,984                                    69,719                                  53,815                    57,796
Deposits                                               100,968                                    94,212                                  45,465                    41,393
Interest-earning assets                                 71,879                                    69,925                                  54,177                    58,177


(1) Includes LHFS.
(2) The majority of PPP loans are reflected in Consumer Banking in accordance
with how they are managed.
Consumer Banking
Net interest income increased $74 million, or 9%, from the third quarter of
2020, reflecting the benefit of accelerated PPP loan forgiveness and a $1.3
billion increase in average loans led by education, residential mortgage, and
automobile, partially offset by a decline in other retail consistent with
planned run-off of personal unsecured installment loans. In addition, higher
deposit volumes, reflecting improved funding mix and deposit pricing,
contributed to higher net interest income. Noninterest income decreased $180
million, or 36%, from the third quarter of 2020, driven by lower mortgage
banking fees resulting from lower gain-on-sale margins and production volumes,
and a decline in other income largely tied to a gain on the sale of education
loans in the third quarter of 2020. These decreases were partially offset by
recovery in service charges and fees from deposit products, card, as well as
trust and investment services, reflecting an increase in assets under
management. Noninterest expense was stable compared to the third quarter of
2020. Net charge-offs of $35 million decreased $20 million, or 36%, driven by
the impact of U.S. Government stimulus programs and strong collateral values in
automobile and residential real estate.

Commercial Bank

  Net interest income of $428 million was stable compared to the third quarter
of 2020. Noninterest income of $168 million increased $24 million, or 17%, from
$144 million in the third quarter of 2020, driven by strength in capital markets
due to higher loan syndication and merger and acquisition advisory fees,
reflecting favorable market conditions and a strong pipeline. Noninterest
expense of $226 million increased $16 million, or 8%, from $210 million in the
third quarter of 2020, largely tied to increased technology spend as well as
higher salaries and employee benefits. Net charge-offs of $15 million decreased
$146 million from the third quarter of 2020 reflecting the stabilization from
effects of the COVID-19 pandemic and associated lockdowns.
                                             Citizens Financial Group, Inc. | 23
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Table 10: Selected Financial Data for Business Operating Segments, Year-to-Date
                                                                    Consumer Banking                                                     Commercial Banking
                                                            Nine Months Ended September 30,                                        Nine Months Ended September 30,
(dollars in millions)                                 2021                                    2020                                  2021                     2020
Net interest income                                   $2,679                                  $2,452                                 $1,268                   $1,205
Noninterest income                                       949                                   1,280                                    516                      413
Total revenue                                          3,628                                   3,732                                  1,784                    1,618
Noninterest expense                                    2,250                                   2,215                                    679                      644
Profit before credit losses                            1,378                                   1,517                                  1,105                      974
Net charge-offs                                          139                                     232                                    150                      274
Income before income tax expense                       1,239                                   1,285                                    955                      700
Income tax expense                                       315                                     322                                    205                      147
Net income                                              $924                                    $963                                   $750                     $553
Average Balances:
Total assets                                         $75,317                                 $71,227                                $57,318                  $61,722
Total loans and leases(1)(2)                          70,857                                  67,763                                 54,459                   58,784
Deposits                                              99,708                                  90,377                                 44,501                   38,905
Interest-earning assets                               71,777                                  67,866                                 54,828                   59,201


(1) Includes LHFS.
(2) The majority of PPP loans are reflected in Consumer Banking in accordance
with how they are managed.
Consumer Banking
Net interest income of $2.7 billion increased $227 million, or 9%, from the
first nine months of 2020, driven by the benefit of accelerated PPP loan
forgiveness, loan and deposit growth, as well as improved funding mix, and
deposit pricing. Average loans increased $3.1 billion led by education,
residential mortgage, and automobile, partially offset by a decline in other
retail given planned run-off of personal unsecured installment loans. Deposits
increased $9.3 billion, or 10%, as a result of elevated liquidity tied to
government stimulus associated with the COVID-19 disruption. Noninterest income
decreased $331 million, or 26%, from the first nine months of 2020, driven by
lower mortgage banking fees as increased industry capacity and heightened
competition resulted in lower gain-on-sale margins and production volumes. This
decrease was partially offset by higher trust and investment services fees
driven by an increase in assets under management, and higher card fees and
service charges and fees, reflecting continued volume recovery from COVID-19
impacts. Noninterest expense increased $35 million, or 2%, from the first nine
months of 2020, reflecting higher salaries and employee benefits tied to higher
revenue-based compensation, combined with higher equipment and software expense
and outside services resulting from increased technology spend and growth
initiatives. Net charge-offs of $139 million decreased $93 million, or 40%,
driven by the impact of U.S. Government stimulus and forbearance, as well as
strong collateral values in automobile and residential real estate.
Commercial Banking
Net interest income of $1.3 billion increased $63 million, or 5%, from $1.2
billion in the first nine months of 2020, driven by higher deposit volumes
reflecting improved funding mix and deposit pricing. Noninterest income of $516
million increased $103 million, or 25%, from $413 million in the first nine
months of 2020, driven by strength in capital markets from higher loan
syndication and merger and acquisition advisory fees, in addition to higher
letter of credit and loan fees. Noninterest expense of $679 million increased
$35 million, or 5%, from $644 million in the first nine months of 2020, largely
tied to growth initiatives, increased technology spends, and higher salaries and
employee benefits. Net charge-offs of $150 million decreased $124 million, or
45%, from the first nine months of 2020, reflecting the stabilization from
effects of the COVID-19 pandemic and associated lockdowns.
                                             Citizens Financial Group, Inc. | 24
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ANALYSIS OF FINANCIAL CONDITION
Securities
Table 11: Amortized Cost and Fair Value of AFS and HTM Securities
                                                                  September 30, 2021                         December 31, 2020
                                                            Amortized                                 Amortized
(in millions)                                                 Cost              Fair Value              Cost                 Fair Value
U.S. Treasury and other                                          $11               $11                    $11                     $11
State and political subdivisions                                   2                 2                      3                       3
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities       23,838            23,840                 21,954                  22,506
Other/non-agency                                                 280               291                    396                     422
Total mortgage-backed securities                              24,118            24,131                 22,350                  22,928

Collateralized loan obligations                                  767               767                      -                       -

Total debt securities available for sale, at fair value $ 24,898

    $24,911                $22,364                 $22,942
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities       $1,705            $1,778                 $2,342                  $2,464

Total mortgage-backed securities                               1,705             1,778                  2,342                   2,464
Asset-backed securities                                          787               789                    893                     893
  Total debt securities held to maturity                      $2,492            $2,567                 $3,235                  $3,357

Total debt securities available for sale and held to maturity

                                                     $27,390           $27,478                $25,599                 $26,299
Equity securities, at cost                                      $616              $616                   $604                    $604
Equity securities, at fair value                                  88                88                     66                      66


Our securities portfolio is managed to maintain prudent levels of liquidity,
credit quality, and market risk while achieving returns that align with our
overall portfolio management strategy. The portfolio primarily includes high
quality, highly liquid investments reflecting our ongoing commitment to maintain
strong contingent liquidity levels and pledging capacity. U.S.
government-guaranteed notes and GSE-issued mortgage-backed securities represent
93% of the fair value of our debt securities portfolio holdings. Holdings backed
by mortgages dominate our portfolio and facilitate our ability to pledge those
securities to the FHLB for collateral purposes. For further discussion of the
liquidity coverage ratios, see "Regulation and Supervision - Liquidity
Requirements" in our 2020 Form 10-K.
The fair value of the AFS debt securities portfolio of $24.9 billion at
September 30, 2021 increased $2.0 billion from $22.9 billion at December 31,
2020, including $2.5 billion in portfolio growth, offset by a $566 million
reduction in unrealized gains driven by a steepening yield curve. The decline in
the fair value of the HTM debt securities portfolio of $790 million was
primarily attributable to portfolio run-off. For further information, see Note
2.
As of September 30, 2021, the portfolio's average effective duration was 3.9
years compared with 2.7 years as of December 31, 2020, as higher long-term rates
drove a decrease in both actual and projected securities prepayment speeds. We
manage our securities portfolio duration and convexity risk through asset
selection and securities structure, and maintain duration levels within our risk
appetite in the context of the broader interest rate risk framework and limits.
                                             Citizens Financial Group, Inc. | 25
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Loans and leases Table 12: Composition of loans and leases, excluding LHFS (in millions)

                                           September 30, 2021             December 31, 2020             Change               Percent
Commercial and industrial(1)                                      $41,854                   $44,173                 ($2,319)                    (5) %
Commercial real estate                                             14,508                    14,652                    (144)                    (1)
Leases                                                              1,593                     1,968                    (375)                   (19)
Total commercial                                                   57,955                    60,793                  (2,838)                    (5)
Residential mortgages(2)                                           21,513                    19,539                   1,974                     10
Home equity                                                        11,889                    12,149                    (260)                    (2)
Automobile                                                         13,492                    12,153                   1,339                     11
Education                                                          13,000                    12,308                     692                      6
Other retail                                                        5,469                     6,148                    (679)                   (11)
Total retail                                                       65,363                    62,297                   3,066                      5
Total loans and leases                                           $123,318                  $123,090                    $228                      -  %


(1) Includes PPP loans fully guaranteed by the SBA of $1.9 billion at September
30, 2021 and $4.2 billion at December 31, 2020.
(2) Includes fully or partially guaranteed FHA, VA and USDA loans of
$1.4 billion at September 30, 2021 and $249 million at December 31, 2020,
including loans acquired through the exercise of the GNMA early buyout option.
Total loans and leases increased $228 million from $123.1 billion as of December
31, 2020, reflecting a $3.1 billion increase in retail driven by mortgage,
automobile, and education, and a $2.8 billion decrease in commercial driven by
payoffs and a decrease in PPP loans.
Allowance for Credit Losses and Nonaccrual Loans and Leases
The ACL is created through charges to the provision for credit losses in order
to provide appropriate reserves to absorb estimated future credit losses in
accordance with GAAP. For additional information regarding the ACL, see Note 4
of this report, and "Critical Accounting Estimates" and Note 5 in the Company's
2020 Form 10-K.
The ACL of $2.0 billion as of September 30, 2021 compared with the ACL of $2.7
billion as of December 31, 2020, reflecting a reserve release of $666 million.
For further information, see Note 4.
                                             Citizens Financial Group, Inc. | 26
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Table 13: ACL and associated coverage ratios by portfolio

                                                               September 30, 2021                                       December 31, 2020
(in millions)                                   Loans and Leases      Allowance       Coverage           Loans and Leases    Allowance       Coverage
Allowance for Loan and Lease Losses
Commercial and industrial                                $41,854         $592              1.41  %              $44,173         $821              1.86  %
Commercial real estate                                    14,508          212              1.46                  14,652          360              2.46
Leases                                                     1,593           63              3.92                   1,968           52              2.67
Total commercial                                          57,955          867              1.50                  60,793        1,233              2.03
Residential mortgages                                     21,513          141              0.65                  19,539          141              0.72
Home equity                                               11,889           92              0.78                  12,149          134              1.10
Automobile                                                13,492          165              1.22                  12,153          200              1.65
Education                                                 13,000          332              2.56                  12,308          361              2.93
Other retail                                               5,469          258              4.72                   6,148          374              6.07
Total retail                                              65,363          988              1.51                  62,297        1,210              1.94
Total loans and leases                                  $123,318       $1,855              1.50  %             $123,090       $2,443              1.98  %
Allowance for Unfunded Lending Commitments
Commercial(1)                                                            $130              1.72  %                              $186              2.33  %
Retail(2)                                                                  19              1.54                                   41              2.01
   Total allowance for unfunded lending
commitments                                                               149                                                    227
Allowance for credit losses(3)                          $123,318       $2,004              1.63  %             $123,090       $2,670              

2.17%


(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.
(3) Excluding the impact of PPP loans, the ACL Coverage Ratio would have been
1.65% and 2.24% for September 30, 2021 and December 31, 2020, respectively. For
more information on the computation of non-GAAP financial measures, see
"-Introduction - Non-GAAP Financial Measures" and "-Non-GAAP Financial Measures
and Reconciliations."
Table 14: Nonaccrual Loans and Leases
(dollars in millions)                            September 30, 2021       December 31, 2020             Change                Percent
Commercial and industrial                                   $170                    $280                ($110)                    (39  %)
Commercial real estate                                        98                     176                  (78)                    (44)
Leases                                                         1                       2                   (1)                    (50)
Total commercial                                             269                     458                 (189)                    (41)
Residential mortgages(1)                                     164                     167                   (3)                     (2)
Home equity                                                  216                     276                  (60)                    (22)
Automobile                                                    55                      72                  (17)                    (24)
Education                                                     23                      18                    5                      28
Other retail                                                  20                      28                   (8)                    (29)
Total retail                                                 478                     561                  (83)                    (15)
Nonaccrual loans and leases                                 $747                  $1,019                ($272)                    (27  %)
Nonaccrual loans and leases to total loans and
leases                                                      0.61  %                 0.83  %               (22   bps)
Allowance for loan and lease losses to
nonaccrual loans and leases                                  248                     240                    8  %
Allowance for credit losses to nonaccrual loans
and leases                                                   268                     262                    6  %


(1) Loans fully or partially guaranteed by the FHA, VA and USDA are classified
as accruing.
NPLs of $747 million as of September 30, 2021 decreased $272 million, or 27%,
from December 31, 2020, reflecting a $189 million decrease in commercial and a
$83 million decrease in retail. Commercial NPLs decreased through loan sale
activity, repayments, and charge-offs.
                                             Citizens Financial Group, Inc. | 27
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Table 15: Net expenses and expense ratios, quarterly cumulative

                                                                                                                                                                           Three Months Ended September
                                                                                                Three Months Ended September 30,                                                        30,
(dollars in millions)                                                                                                        2021             2020            Change                            2021               2020               Change
Commercial and industrial                                                                                                      $10             $80             ($70)                             0.09  %            0.68  %            (59   bps)
Commercial real estate                                                                                                           5              42              (37)                             0.12               1.13              (101)
Leases                                                                                                                          (1)             48              (49)                            (0.22)              7.99              (821)
Total commercial                                                                                                                14             170             (156)                             0.09               1.06               (97)
Residential mortgages                                                                                                            -               -                -                                 -                  -                 -
Home equity                                                                                                                    (12)             (2)             (10)                            (0.42)             (0.10)              (32)
Automobile                                                                                                                       2               7               (5)                             0.06               0.24               (18)
Education                                                                                                                       13               5                8                              0.41               0.21                20
Other retail                                                                                                                    27              39              (12)                             1.99               2.46               (47)
Total retail                                                                                                                    30              49              (19)                             0.19               0.32               (13)
Total net charge-offs                                                                                                          $44            $219            ($175)                             0.14  %            0.70  %            (56   bps)


Third quarter 2021 NCOs of $44 million decreased $175 million, or 80%, from $219
million in the third quarter of 2020, driven by decreases in commercial and
retail of $156 million and $19 million, respectively. Third quarter 2021
annualized net charge-offs of 0.14% of average loans and leases were down 56
basis points from the third quarter of 2020. The overall improvement in the
macroeconomic environment and post-pandemic reopening drove the significant
decline in commercial NCOs. Retail NCOs remained low driven by continued benefit
to consumers from government stimulus and strong collateral values in
residential real estate and automobile.

Table 16: Net expenses and expense ratios, year to date

                                                                                                                                                                                               Nine Months Ended September
                                                                                                                    Nine Months Ended September 30,                                                        30,
(dollars in millions)                                                                                                                           2021             2020            Change                            2021               2020               Change
Commercial and industrial                                                                                                                        $115            $189             ($74)                             0.35  %            0.54  %            (19   bps)
Commercial real estate                                                                                                                             31              42              (11)                             0.28               0.39               (11)
Leases                                                                                                                                             13              54              (41)                             1.01               2.99              (198)
Total commercial                                                                                                                                  159             285             (126)                             0.35               0.60               (25)
Residential mortgages                                                                                                                              (2)              1               (3)                            (0.01)              0.01                (2)
Home equity                                                                                                                                       (29)             (7)             (22)                            (0.33)             (0.08)              (25)
Automobile                                                                                                                                         11              54              (43)                             0.12               0.60               (48)
Education                                                                                                                                          33              29                4                              0.35               0.36                (1)
Other retail                                                                                                                                      108             141              (33)                             2.55               2.88               (33)
Total retail                                                                                                                                      121             218              (97)                             0.26               0.48               (22)
Total net charge-offs                                                                                                                            $280            $503            ($223)                             0.30  %            0.54  %            (24   bps)


First nine months 2021 NCOs of $280 million decreased $223 million, or 44%, from
$503 million in the first nine months of 2020, driven by decreases in commercial
and retail of $126 million and $97 million, respectively. First nine months 2021
annualized net charge-offs of 0.30% of average loans and leases were down 24
basis points from first nine months of 2020.
Retail and commercial NCOs were down in the first nine months of 2021 as
compared to the first nine months of 2020. The decline in retail NCOs is
primarily due to U.S. Government stimulus programs and forbearance, as well as
strong collateral values in residential real estate and automobile. The decrease
in commercial NCOs reflects the economic recovery following the COVID-19
pandemic and associated lockdowns. We continue to assess risks to the recovery,
including potential for continuing impacts from COVID-19 variants, challenges in
the global supply chain and recent inflationary trends, as well as potential
impacts from ending monetary and fiscal stimulus programs. We have maintained a
variety of measures to identify and monitor areas of potential risk, including
direct outreach to commercial clients and close monitoring of retail credit
metrics.
Commercial Loan Asset Quality
Our commercial loan and lease portfolio consists of traditional commercial and
industrial loans, commercial leases and commercial real estate loans. The
portfolio is predominantly focused on customers in our footprint and adjacent
states in which we have a physical presence where our local delivery model
provides for
                                             Citizens Financial Group, Inc. | 28
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strong client connectivity. Additionally, we also do business in certain
specialized industry sectors on a national basis. As discussed in our 2020 Form
10-K, for commercial loans and leases, we utilize regulatory classification
ratings to monitor credit quality.
As of September 30, 2021, commercial NPLs of $269 million decreased $189 million
from $458 million as of December 31, 2020, representing 0.5% and 0.8% of the
commercial loan and lease portfolio as of September 30, 2021 and December 31,
2020, respectively.
Table 17: Commercial Loans and Leases by Regulatory Classification
                                                                                                 September 30, 2021
                                                                                                        Criticized
(in millions)                                                        Pass  

Special Mention Unhealthy Doubtful Total Commercial and industrial (1)

$39,218                 $1,115          $1,386            $135         $41,854
Commercial real estate                                                 13,146                    616             735              11          14,508
Leases                                                                  1,519                     49              24               1           1,593
Total commercial                                                      $53,883                 $1,780          $2,145            $147         $57,955



                                                                                         December 31, 2020
                                                                                              Criticized
(in millions)                                                Pass        

Special Mention Unhealthy Doubtful Total Commercial and industrial (1)

                                $40,878          $1,583                $1,464            $248        $44,173
Commercial real estate                                       13,356             804                   416              76         14,652
Leases                                                        1,922              33                    12               1          1,968
Total commercial                                            $56,156          $2,420                $1,892            $325        $60,793


(1) Includes $1.9 billion and $4.2 billion of PPP loans designated as pass that
are fully guaranteed by the SBA as of September 30, 2021 and December 31, 2020,
respectively.
Total commercial criticized balances of $4.1 billion as of September 30, 2021
decreased $565 million compared with December 31, 2020. Commercial criticized as
a percent of total commercial of 7.0% at September 30, 2021 decreased from 7.6%
at December 31, 2020.
Commercial and industrial criticized balances of $2.6 billion, or 6.3% of the
total commercial and industrial loan portfolio as of September 30, 2021,
decreased from $3.3 billion, or 7.5%, as of December 31, 2020. The decrease was
primarily driven by net repayments and charge-offs. Commercial and industrial
criticized loans represented 65% of total criticized loans as of September 30,
2021 compared to 71% as of December 31, 2020.
Commercial real estate criticized balances of $1.4 billion, or 9.4% of the
commercial real estate portfolio, was stable compared to December 31, 2020 at
$1.3 billion, or 8.8%. Commercial real estate accounted for 33% of total
criticized loans as of September 30, 2021 compared to 28% as of December 31,
2020.
                                             Citizens Financial Group, Inc. | 29
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Table 18: Commercial loans and leases by sector of activity

                                                                      September 30, 2021                     December 31, 2020
                                                                                      % of                                   % of
                                                                                  Total Loans                            Total Loans
(dollars in millions)                                               Balance        and Leases              Balance        and Leases
Finance and insurance                                                  $7,939              6  %               $6,473              5  %
Health, pharma, and social assistance                                   2,914              2                   3,253              3
Accommodation and food services                                         3,083              3                   3,159              3
Professional, scientific, and technical services                        2,542              2                   2,804              2
Other manufacturing                                                     3,708              3                   3,686              3
Technology                                                              3,822              3                   3,546              3
Retail trade                                                            2,258              2                   2,312              2
Energy and related                                                      1,971              2                   2,237              2
Wholesale trade                                                         2,261              2                   1,976              2
Arts, entertainment, and recreation                                       902              1                   1,383              1
Other services                                                          1,845              1                   1,360              1
Administrative and waste management services                            1,226              1                   1,327              1
Transportation and warehousing                                          1,092              1                   1,169              1
Consumer products manufacturing                                         1,160              1                   1,078              1
Automotive                                                              1,000              1                   1,057              1
Educational services                                                      597              -                     844              -
Chemicals                                                                 717              -                     736              -
Real estate and rental and leasing                                        886              1                     734              -
All other(1)                                                               28              -                     884              1
Total commercial and industrial                                        39,951             32                  40,018             32
Real estate and rental and leasing                                     12,984             11                  13,167             11
Accommodation and food services                                           819              1                     749              1
Finance and insurance                                                     560              -                     498              -
All other(1)                                                              145              -                     238              -
Total commercial real estate                                           14,508             12                  14,652             12
Total leases                                                            1,593              1                   1,968              2
Total commercial(2)                                                   $56,052             45  %              $56,638             46  %


(1) Deferred fees and costs are reported in All other.
(2) Excludes PPP loans of $1.9 billion and $4.2 billion as of September 30, 2021
and December 31, 2020, respectively.
Retail Loan Asset Quality
For retail loans, we utilize credit scores provided by FICO, which generally
refresh on a quarterly basis, and a loan's payment and delinquency status to
monitor credit quality. Management believes FICO credit scores are the strongest
indicator of credit losses over the contractual life of a loan as the scores are
based on current and historical national industry-wide consumer level credit
performance data. These scores assist management in predicting the borrower's
future payment performance. The largest portion of the retail portfolio is
represented by borrowers located in the New England, Mid-Atlantic, and Midwest
regions, although we have continued to lend selectively in areas outside the
footprint primarily in automobile, education and point-of-sale financing.
                                             Citizens Financial Group, Inc. | 30
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Table 19: Aging of Retail Loans as a Percentage of Loan Category

                                                                   September 30, 2021                                  December 31, 2020
                                                                      Days Past Due                                      Days Past Due
                                                       Current-29        30-59      60-89        90+                                                   Current-29      30-59      60-89        90+

Residential mortgages(1)                                      96.97  %    0.72  %    0.26  %    2.05  %                                                     98.73  %    0.30  %    0.11  %    0.86  %
Home equity                                                   98.03       0.29       0.13       1.55                                                        97.53       0.50       0.23       1.74
Automobile                                                    98.71       0.87       0.31       0.11                                                        97.93       1.40       0.53       0.14
Education                                                     99.55       0.25       0.11       0.09                                                        99.56       0.27       0.11       0.06
Other retail                                                  98.21       0.71       0.51       0.57                                                        98.36       0.62       0.47       0.55
Total retail                                                  98.14  %    0.58  %    0.24  %    1.04  %                                               

98.47% 0.58% 0.25% 0.70%


(1) 90+ day past due includes $289 million and $44 million of loans fully or
partially guaranteed by the FHA, VA, and USDA at September 30, 2021 and December
31, 2020, respectively.

For more information on the age of accrued and non-accrued retail loans, see note 4.

Table 20: Retail asset quality indicators

                                               September 30, 2021      

December 31, 2020

 Average refreshed FICO for total portfolio                 768             

771

 CLTV ratio for secured real estate(1)                       57  %          

60%

 Nonaccrual retail loans to total retail                   0.73             

0.90


(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.
                             Three Months Ended September 30,                                                   Nine Months Ended September 30,
(dollars in millions)             2021                2020              
Change               Percent               2021                2020               Change               Percent
Net charge-offs                      $30                $49               ($19)                  (39  %)              $121               $218               ($97)                  (44  %)
Annualized net charge-off
rate                                0.19  %            0.32  %             (13)  bps                                  0.26  %            0.48  %             (22)  bps


Retail asset quality continues to reflect a stronger economic outlook. The
retail annualized net charge-off rate decreased to 0.19% for the third quarter
of 2021 from 0.32% in the third quarter of 2020. The net charge-off rate of
0.26% for the nine months ended September 30, 2021 reflected a decrease of 22
basis points from the nine months ended September 30, 2020, driven by the
forbearance and stimulus programs stemming from the COVID-19 pandemic and
associated lockdowns, as well as strong collateral values in automobile and
residential real estate.
Troubled Debt Restructurings
In the first quarter of 2020, we adopted the CARES Act and interagency guidance
issued by the bank regulatory agencies which provide that COVID-19-related
modifications to retail and commercial loans that met certain eligibility
criteria are exempt from classification as a TDR. We generally do not consider
payment deferrals and forbearance plans established due to the COVID-19 pandemic
to be TDRs.
For additional information regarding TDRs, see Note 5 in our 2020 Form 10-K.
                                             Citizens Financial Group, Inc. | 31
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Table 21: Restructuring of bad debts accumulated and not accumulated

                                                                                       September 30, 2021
                                                                           As a % of Accruing TDRs
                                                                       30-89 Days          90+ Days Past
(dollars in millions)                           Accruing                Past Due                Due                Nonaccrual               Total
Commercial and industrial                             $161                      -  %                 -  %               $70                   $231
Commercial real estate                                   -                      -                    -                    9                      9
Total commercial                                       161                      -                    -                   79                    240
Residential mortgages(1)                               339                    3.9                  9.8                   39                    378
Home equity                                            198                    0.5                    -                   74                    272
Automobile                                               8                    0.1                    -                   28                     36
Education                                              112                    0.4                  0.1                   12                    124
Other retail                                            21                    0.2                    -                    2                     23
Total retail                                           678                    5.1                  9.9                  155                    833
Total                                                 $839                    5.1  %               9.9  %              $234                 $1,073


                                                                                          December 31, 2020
                                                                              As a % of Accruing TDRs
                                                                          30-89 Days          90+ Days Past
(dollars in millions)                              Accruing                Past Due                Due                Nonaccrual              Total
Commercial and industrial                                $134                    0.1  %                 -  %               $97                 $231
Commercial real estate                                     26                      -                    -                    -                   26
Total commercial                                          160                    0.1                    -                   97                  257
Residential mortgages(1)                                  172                    2.1                  2.0                   43                  215
Home equity                                               221                    1.0                    -                   83                  304
Automobile                                                 13                    0.4                    -                   33                   46
Education                                                 116                    0.5                  0.3                   10                  126
Other retail                                               25                    0.2                    -                    2                   27
Total retail                                              547                    4.2                  2.3                  171                  718
Total                                                    $707                    4.3  %               2.3  %              $268                 $975


(1) Includes $82 million and $14 million in 90+ days past due and accruing that
are fully or partially guaranteed by the FHA, VA, and USDA at September 30, 2021
and December 31, 2020, respectively.
Deposits
Table 22: Composition of Deposits
(in millions)                                      September 30, 2021           December 31, 2020            Change              Percent
Demand                                                  $48,184                     $43,831                  $4,353                   10  %
Checking with interest                                   27,985                      27,204                     781                    3
Regular savings                                          21,166                      18,044                   3,122                   17
Money market accounts                                    48,935                      48,569                     366                    1
Term deposits                                             5,951                       9,516                  (3,565)                 (37)
Total deposits                                         $152,221                    $147,164                  $5,057                    3  %



Total deposits as of September 30, 2021 increased $5.1 billion, or 3%, to $152.2
billion, from $147.2 billion as of December 31, 2020, as a result of elevated
liquidity tied to government stimulus associated with the COVID-19 disruption.
Citizens Access®, our national digital platform, ended the quarter with $4.6
billion of deposits, down from $5.9 billion as of December 31, 2020, primarily
due to rate reduction strategies that resulted in a decrease in term deposits.
                                             Citizens Financial Group, Inc. | 32
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Borrowed Funds
Total borrowed funds as of September 30, 2021 decreased $1.6 billion from
December 31, 2020, driven by a $235 million and $1.4 billion decrease in
short-term and long-term borrowed funds, respectively. Strong deposit growth
enabled the paydown of senior debt.
  Long-term borrowed funds
Table 23: Summary of Long-Term Borrowed Funds
(in millions)                                                    September 30, 2021               December 31, 2020
Parent Company:
2.375% fixed-rate senior unsecured debt, due July 2021(1)                    $-                            $350
4.150% fixed-rate subordinated debt, due September 2022(2)                  168                             182
3.750% fixed-rate subordinated debt, due July 2024(2)                        90                             159
4.023% fixed-rate subordinated debt, due October 2024(2)                     17                              25
4.350% fixed-rate subordinated debt, due August 2025(2)                     133                             193
4.300% fixed-rate subordinated debt, due December 2025(2)                   336                             450
2.850% fixed-rate senior unsecured notes, due July 2026                     497                             497
2.500% fixed-rate senior unsecured notes, due February 2030                 298                             297
3.250% fixed-rate senior unsecured notes, due April 2030                    745                             745
3.750% fixed-rate reset subordinated debt, due February                      69                               -

2031 (2)

4.300% fixed-rate reset subordinated debt, due February                     135                               -

2031 (2)

4.350% fixed-rate reset subordinated debt, due February                      61                               -

2031 (2)

2.638% fixed-rate subordinated debt, due September 2032                     548                             543

CBNA Global Ticket Program:

2.550% senior unsecured notes, due May 2021                                   -                           1,003
3.250% senior unsecured notes, due February 2022                            704                             716

Senior unsecured notes at 0.845% variable rate, due February 2022(3)

                                                                     300                             299
0.932% floating-rate senior unsecured notes, due May 2022(3)                250                             250
2.650% senior unsecured notes, due May 2022                                 505                             510
3.700% senior unsecured notes, due March 2023                               517                             527
1.082% floating-rate senior unsecured notes, due March                      250                             249

2023 (3)

2.250% senior unsecured notes, due April 2025                               746                             746
3.750% senior unsecured notes, due February 2026                            533                             551

Additional loans from the CBNA and other subsidiaries:
Federal mortgage bank advances, 0.864% weighted average

                     19                              19
rate, due through 2041
Other                                                                        26                              35
Total long-term borrowed funds                                           $6,947                          $8,346


(1) Notes were redeemed on June 28, 2021.
(2) The September 30, 2021 balances reflect the results of the February 2021
subordinated debt private exchange offers. See "Capital and Regulatory
Matters-Regulatory Capital Ratios and Capital Composition" for additional
information.
(3) Rate disclosed reflects the floating rate as of September 30, 2021.
The Parent Company's long-term borrowed funds as of September 30, 2021 and
December 31, 2020 included principal balances of $3.2 billion and $3.5 billion,
respectively, and unamortized deferred issuance costs and/or discounts of $82
million and $90 million, respectively. CBNA and other subsidiaries' long-term
borrowed funds as of September 30, 2021 and December 31, 2020 included principal
balances of $3.8 billion and $4.8 billion, respectively, with unamortized
deferred issuance costs and/or discounts of $8 million and $11 million,
respectively, and hedging basis adjustments of $63 million and $112 million,
respectively. See Note 8 for further information about our hedging of certain
long-term borrowed funds. For information regarding our liquidity and available
borrowing capacity, see "-Liquidity" and Note 7.
CAPITAL AND REGULATORY MATTERS
As a bank holding company and a financial holding company, we are subject to
regulation and supervision by the FRB. Our banking subsidiary, CBNA, is a
national banking association whose primary federal regulator is the OCC. Our
regulation and supervision continues to evolve as the legal and regulatory
frameworks governing our operations continue to change. For more information,
see "Regulation and Supervision" in our 2020 Form 10-K.
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Tailoring of Prudential Requirements
Under the FRB's Tailoring Rules, Category IV firms, such as us, are subject to
biennial supervisory stress testing and are exempt from company-run stress
testing and related disclosure requirements. The FRB supervises Category IV
firms on an ongoing basis, including evaluation of the capital adequacy and
capital planning processes during off-cycle years. We are also required to
develop, maintain and submit to the FRB an annual capital plan, which must be
reviewed and approved by our board of directors or one of its committees. On
April 2, 2021, we submitted our 2021 Capital Plan to the FRB under the FRB's
2021 CCAR process. For more information, see the "Tailoring of Prudential
Requirements" section in item 1 of our 2020 Form 10-K.
Under the FRB's Capital Plan Rule, a firm must update and resubmit its capital
plan prior to the next annual submission date under certain circumstances, which
includes a material change in the firm's risk profile, financial condition or
corporate structure since its last capital plan submission. On July 28, 2021, we
announced an agreement to acquire Investors, which required us to resubmit our
capital plan to the FRB, which was submitted on September 15, 2021.
Under the stress capital buffer ("SCB") framework, the FRB will not object to
capital plans on quantitative grounds and each firm is required to maintain
capital ratios above the sum of its minimum and SCB requirements to avoid
restrictions on capital distributions and discretionary bonus payments. On
October 1, 2020, our SCB of 3.4% became effective and applied to our capital
actions through September 30, 2021.
On February 3, 2021, the FRB adopted a final rule effective April 5, 2021 to
tailor the requirements of its Capital Plan Rule, specifically modifying capital
planning, regulatory reporting and stress capital buffer requirements to be
consistent with the Tailoring Rules framework. Under the final rule, for
Category IV firms, like us, the SCB will be re-calibrated with each biennial
supervisory stress test and updated annually to reflect our planned common stock
dividends. In addition, Category IV firms have the ability to elect to
participate in the supervisory stress test and receive an updated SCB
requirement in a year in which they are not subject to the supervisory stress
test. We did not elect to participate in the 2021 supervisory stress test. On
August 5, 2021, the FRB announced that our SCB will remain unchanged at 3.4%
from October 1, 2021 through September 30, 2022.

In light of the heightened uncertainty related to the COVID-19 pandemic and
associated lockdowns, the FRB took certain actions to preserve capital at banks.
Among those actions, the FRB imposed certain limitations on firms for the third
and fourth quarters of 2020, including mandatory suspension of share repurchases
and limiting common stock dividends to existing rates and the average quarterly
net income over the prior four quarters. The FRB modified its limitations on
capital distributions for the first and second quarters of 2021 such that firms
that participate in CCAR, like us, may resume share repurchases provided that
the aggregate of share repurchases and common stock dividends for the applicable
quarter did not exceed average quarterly net income for the trailing four
quarters. Beginning July 1, 2021, the FRB lifted the temporary additional
restrictions on capital distributions and authorized firms, like us, that are on
a two-year cycle and not subject to supervisory stress testing this year to make
capital distributions that are consistent with the regulatory capital rules,
including normal restrictions under the FRB stress capital buffer framework. In
addition, we temporarily suspended share repurchases in connection with entering
into the agreement to acquire Investors, and are poised to resume share
repurchases after the Investors shareholder vote scheduled for November 19,
2021. In January 2021, our board of directors authorized us to repurchase up to
$750 million of our common stock, of which $655 million is available as of
September 30, 2021. 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,
risk-weighted assets, capital impacts of strategic initiatives, market
conditions and regulatory considerations.

Regulations relating to capital planning, regulatory reporting and SCB
requirements applicable to firms like us are subject to ongoing 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, see "Regulation and Supervision" and "-Capital and
Regulatory Matters" in our 2020 Form 10-K.
Capital Framework
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 3.4% is
imposed on top of
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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
our banking subsidiary.
Under the U.S. Basel III rules, the CET1 deduction threshold for MSRs, certain
deferred tax assets and significant investments in the capital of unconsolidated
institutions is 25%. As of September 30, 2021, we did not meet the threshold for
these additional capital deductions. MSRs or deferred tax assets not deducted
from CET1 capital are assigned a 250% risk weight and significant investments in
the capital of unconsolidated financial institutions not deducted from CET1
capital are assigned an exposure category risk weight.

In reaction to the COVID-19 pandemic, the FRB and the other federal banking
regulators adopted a final rule relative to regulatory capital treatment of ACL
under CECL. This rule allowed electing banking organizations to delay the
estimated impact of CECL on regulatory capital for a two-year period ending
January 1, 2022, followed by a three-year transition period ending January 1,
2025 to phase-in the aggregate amount of the capital benefit provided during the
initial two-year delay. As of September 30, 2021, $401 million of the capital
benefit has been accumulated for application to the three-year transition
period.

For additional discussion of the U.S. Basel III capital framework and its
related application, see "Regulation and Supervision" in our 2020 Form 10-K. The
table below presents our actual regulatory capital ratios under the U.S. Basel
III Standardized rules:
Table 24: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules

                                                     September 30, 2021                       December 31, 2020            Required Minimum plus
                                                                                                                             Required CCB for
(in millions, except ratio data)                   Amount            Ratio                 Amount            Ratio        Non-Leverage Ratios(1)
  CET1 capital                                       $15,584            10.3  %              $14,607            10.0  %                      7.9  %
  Tier 1 capital                                      17,598            11.6                  16,572            11.3                         9.4
  Total capital                                       20,295            13.4                  19,602            13.4                        11.4
  Tier 1 leverage                                     17,598             9.7                  16,572             9.4                         4.0
  Risk-weighted assets                               151,796                                 146,781
  Quarterly adjusted average assets                  180,528                                 175,370


(1) Required "Minimum Capital ratios" are: CET1 capital of 4.5%; Tier 1 capital
of 6.0%; Total capital of 8.0%; and Tier 1 leverage of 4.0%. "Minimum Capital
ratios" also include a SCB of 3.4%; N/A to Tier 1 leverage.
At September 30, 2021, our CET1 capital, tier 1 capital and total capital ratios
were 10.3%, 11.6% and 13.4%, respectively, as compared with 10.0%, 11.3% and
13.4%, respectively, as of December 31, 2020. The CET1 capital ratio increased
as net income for the nine months ended September 30, 2021 was partially offset
by dividends and common share repurchases as described in "-Capital
Transactions" below, $5.0 billion of risk-weighted asset ("RWA") growth and a
decrease in the modified CECL transitional amount. The tier 1 capital ratio
increased due to the changes in the CET1 capital ratio described above and the
issuance of Series G Preferred Stock, partially offset by the redemption of
Series A Preferred Stock as described in "-Capital Transactions" below. The
total capital ratio increased as the changes in the CET1 and tier 1 capital
ratios described above combined with the subordinated debt exchange offer in the
first quarter of 2021, as described in the "Regulatory Capital Ratios and
Capital Composition" section below, were partially offset by the reduction in
the net AACL impact and a decrease in qualifying subordinated debt. At
September 30, 2021, our CET1 capital, tier 1 capital and total capital ratios
were approximately 240 basis points, 220 basis points and 200 basis points,
respectively, above their regulatory minimums plus our SCB. All ratios remained
well above the U.S. Basel III minimums.
Regulatory Capital Ratios and Capital Composition
CET1 capital under U.S. Basel III Standardized rules totaled $15.6 billion at
September 30, 2021, an increase of $977 million from $14.6 billion at December
31, 2020, largely driven by net income for the nine months ended September 30,
2021, partially offset by dividends, a decrease in the modified CECL
transitional amount and common share repurchases. Tier 1 capital at
September 30, 2021 totaled $17.6 billion, reflecting a $1.0 billion increase
from $16.6 billion at December 31, 2020, driven by the changes in CET1 capital
and the issuance of Series G Preferred Stock, partially offset by the redemption
of Series A Preferred Stock. Total capital of $20.3 billion at September 30,
2021 increased $693 million from December 31, 2020, driven by the changes in
CET1 and tier 1 capital and an increase in qualifying subordinated debt,
partially offset by the reduction in the net AACL impact.
RWA totaled $151.8 billion at September 30, 2021, based on U.S. Basel III
Standardized rules, up $5.0 billion from December 31, 2020, driven by higher
automobile loans, commercial commitments, MSRs, agency
                                             Citizens Financial Group, Inc. | 35
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securities, education loans, bank-owned life insurance and retail commitments
partially offset by lower commercial and other retail loans.
As of September 30, 2021, the tier 1 leverage ratio was 9.7%, up from 9.4% at
December 31, 2020, driven by higher tier 1 capital, partially offset by the $5.2
billion increase in quarterly adjusted average assets.

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