CITIZENS FINANCIAL GROUP INC/RI MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Page

       Forward-Looking Statements                                              7
       Introduction                                                            8
       Financial Performance                                                  9
       Results of Operations                                                  11
       Net Interest Income                                                    11
       Noninterest Income                                                     13
       Noninterest Expense                                                    14
       Provision for Credit Losses                                            14
       Income Tax Expense                                                     14
       Business Operating Segments                                            14
       Analysis of Financial Condition                                        16
       Securities                                                             16
       Loans and Leases                                                       17
       Allowance for Credit Losses and Nonaccrual Loans and Leases            17
       Deposits                                                               23
       Borrowed Funds                                                         23
       Capital and Regulatory Matters                                         23
       Liquidity                                                              26
       Critical Accounting Estimates                                          29
       Accounting and Reporting Developments                                  31
       Risk Governance                                                        31
       Market Risk                                                            32
       Non-GAAP Financial Measures and Reconciliations                        36



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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 disruption and Russia's invasion of Ukraine 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 disruption and its effects on the economic and business
environments in which we operate;


•The impact of Russia's invasion of Ukraine and the imposition of sanctions on
Russia and other actions in response, including on economic and market
conditions, inflationary pressures and the interest rate environment, commodity
price and foreign exchange rate volatility, and heightened cybersecurity risks;

•Our ability to 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;

•Greater than expected costs or other difficulties related to the integration of
our business and that of Investors and the relevant HSBC branches;

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•The inability to retain existing Investors or HSBC clients and employees
following the closing of the Investors acquisition and HSBC transaction; 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, receipt of required regulatory approvals and other 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 pandemic and Russia's invasion of
Ukraine 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 and Russia's invasion of Ukraine, actions
taken by governmental authorities in response to the pandemic and Russia's
invasion of Ukraine, and the direct and indirect impact of the pandemic and
Russia's invasion of Ukraine on our customers, third parties and us.

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 2021 Form 10-K as well
as Part II, Item 1A of our Form 10-Q for the quarter ended March 31, 2022.

INTRODUCTION


Citizens Financial Group, Inc. is one of the nation's oldest and largest
financial institutions, with $226.7 billion in assets as of June 30, 2022.
Headquartered in Providence, Rhode Island, we offer a broad range of retail and
commercial banking products and services to individuals, small businesses,
middle-market companies, large corporations and institutions. We help our
customers reach their potential by listening to them and by understanding their
needs in order to offer tailored advice, ideas and solutions. In Consumer
Banking, we provide an integrated experience that includes mobile and online
banking, a full-service customer contact center and the convenience of
approximately 3,300 ATMs and more than 1,200 branches in 14 states and the
District of Columbia. Consumer Banking products and services include a full
range of banking, lending, savings, wealth management and small business
offerings. In Commercial Banking, we offer a broad complement of financial
products and solutions, including lending and leasing, deposit and treasury
management services, foreign exchange, interest rate and commodity risk
management solutions, as well as loan syndication, corporate finance, merger and
acquisition, and debt and equity capital markets capabilities. More information
is available at www.citizensbank.com.

On February 18, 2022, CBNA completed the acquisition of the HSBC East Coast
branches and national online deposit business. The transaction extends our
physical presence and adds customers in several attractive markets, accelerating
our national expansion strategy. The transaction includes 66 branches in the New
York City metropolitan area, 9 branches in the Mid-Atlantic/Washington D.C.
area, and 5 branches in Southeast Florida.

On April 6, 2022, Citizens completed the acquisition of all outstanding shares
of Investors for a combination of stock and cash. The acquisition enhances
Citizens' banking franchise, adding an attractive middle market, small business
and consumer customer base while building our physical presence in the
Mid-Atlantic region with the addition of 154 branches located in the greater New
York City and Philadelphia metropolitan areas and across New Jersey.

On June 8, 2022, Citizens completed the acquisition of DH Capital, a private
investment banking firm serving companies in the internet infrastructure,
software, IT services and communications sectors. This acquisition further
strengthens our growing corporate advisory capabilities.

For additional information regarding these acquisitions see Note 2.


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 2021 Form 10-K.

                                              Citizens Financial Group, Inc. | 8
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Non-GAAP Financial Measures


This document contains non-GAAP financial measures denoted as "Underlying"
results. Underlying results for any given reporting period exclude certain items
that may occur in that period which management does not consider indicative of
our on-going financial performance. We believe these non-GAAP financial measures
provide useful information to investors because they are used by management to
evaluate our operating performance and make day-to-day operating decisions. In
addition, we believe our Underlying results in any given reporting period
reflect our on-going financial performance, increase comparability of
period-to-period results, and are 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. 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."

FINANCIAL PERFORMANCE

Key Highlights


Net income decreased $284 million to $364 million and decreased $475 million to
$784 million, with earnings per diluted common share of $0.67, down $0.77 from
$1.44, and $1.58, down $1.23 from $2.81, for the three and six months ended June
30, 2022, respectively, compared to the same periods in 2021.

Results reflect notable items of $231 million or $0.47 per diluted common share,
net of tax benefit, for the three months ended June 30, 2022, compared to $8
million or $0.02 per diluted common share, net of tax benefit, for the same
period in 2021. For the six months ended June 30, 2022, notable items were $287
million or $0.63 per diluted common share, net of tax benefit, as compared to
$23 million or $0.06 per diluted common share, net of tax benefit, for the same
period in 2021.

Table 1: Notable Items
                                                                                        Three Months Ended June 30, 2022
                                                                                                  Less: notable items
                                                                              Integration related                                            Underlying results
(in millions)                                     Reported results (GAAP)          costs(1)           TOP and other(2)      Provision(3)         

(non-GAAP)

Provision (benefit) for credit losses                        $216                             $-              $-                 $145                  $71
Noninterest income                                            494                            (31)              -                    -                  525
Noninterest expense                                         1,305                            104              21                    -                1,180
Income tax expense                                            114                            (28)             (5)                 (37)                 184


                                                                                       Three Months Ended June 30, 2021
                                                                                                 Less: notable items
                                                                              Integration related                                          Underlying results
(in millions)                                     Reported results (GAAP)          costs(1)           TOP and other(2)      Provision          (non-GAAP)
Provision (benefit) for credit losses                       ($213)                            $-              $-                  $-               ($213)
Noninterest income                                            485                              -               -                   -                 485
Noninterest expense                                           991                              2               9                   -                 980
Income tax expense                                            183                             (1)             (2)                  -                 186


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                                                                                     Six Months Ended June 30, 2022
                                                                                             Less: notable items
                                                                              Integration                                           Underlying results
(in millions)                                     Reported results (GAAP)   

related costs(1) TOP and other(2) Provision(3) (non-GAAP)
Provision (benefit) for credit losses

                        $219                      $-              $-               $169                  $50
Noninterest income                                            992                     (31)              -                  -                1,023
Noninterest expense                                         2,411                     141              32                  -                2,238
Income tax expense                                            230                     (38)             (5)               (43)                 316


                                                                                    Six Months Ended June 30, 2021
                                                                                            Less: notable items
                                                                              Integration                                         Underlying results
(in millions)                                     Reported results (GAAP)  

related costs(1) TOP and other(2) Provision (non-GAAP)
Provision (benefit) for credit losses

                       ($353)                     $-              $-                $-               ($353)
Noninterest income                                          1,027                       -               -                 -               1,027
Noninterest expense                                         2,009                       2              29                 -               1,978
Income tax expense                                            353                      (1)             (7)                -                 361


(1) Includes integration related costs associated with acquisitions for the
three and six months ended June 30, 2022 and 2021, and mark-to-market losses on
loans acquired from Investors classified as LHFS for the three and six months
ended June 30, 2022.
(2) Includes our TOP transformational and revenue and efficiency initiatives for
the three and six months ended June 30, 2022 and 2021, and income tax impacts
related to legacy tax matters for the six months ended June 30, 2022.
(3) Includes the initial provision for credit losses of $145 million and
$169 million for the three and six months ended June 30, 2022, respectively,
tied to the Investors acquisition and the HSBC transaction. As required by
purchase accounting, a fair value mark for performing loans including both
credit and interest rate components is recorded in addition to the provision for
credit losses expense, thus the credit exposure has been "double counted".

•Net income available to common stockholders decreased $284 million to $332
million and decreased $476 million to $728 million for the three and six months
ended June 30, 2022, respectively, compared to the same periods in 2021.

•On an Underlying basis, which excludes notable items, net income available to
common stockholders of $563 million and $1.0 billion for the three and six
months ended June 30, 2022, respectively, compared with $624 million and $1.2
billion for the same periods in 2021.

•On an Underlying basis, earnings per diluted common share of $1.14 and $2.21
for the three and six months ended June 30, 2022, respectively, compared to
$1.46 and $2.87 for the same periods in 2021.


•Total revenue increased $390 million to $2.0 billion and increased $376 million
to $3.6 billion for the three and six months ended June 30, 2022, respectively,
compared to the same periods in 2021, driven by increases of 34% and 18%,
respectively, in net interest income, including the impact of the Investors
acquisition and the HSBC transaction.

•The efficiency ratio of 65.3% and 66.2% for the three and six months ended June
30, 2022
, respectively, compared to 61.6% and 61.5% for the same periods in
2021.


•On an Underlying basis, the efficiency ratio of 58.2% and 60.9% for the three
and six months ended June 30, 2022, respectively, compared to 60.9% and 60.6%
for the same periods in 2021.

•ROTCE of 9.1% and 10.2% for the three and six months ended June 30, 2022,
respectively, compared to 17.5% and 17.3% for the same periods in 2021.

•On an Underlying basis, ROTCE of 15.5% and 14.2% for the three and six months
ended June 30, 2022, respectively, compared to 17.7% for both periods in 2021.

•Tangible book value per common share of $29.14 decreased 16% from December 31,
2021
.

For additional information regarding our financial performance, see “-Results of
Operations” included in this report.



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RESULTS OF OPERATIONS

Net Interest Income


Net interest income is our largest source of revenue and is the difference
between the interest earned on interest-earning assets (generally loans, leases
and investment securities) and the interest expense incurred in connection with
interest-bearing liabilities (generally deposits and borrowed funds). The level
of net interest income is primarily a function of the difference between the
effective yield on our average interest-earning assets and the effective cost of
our interest-bearing liabilities. These factors are influenced by the pricing
and mix of interest-earning assets and interest-bearing liabilities which, in
turn, are impacted by external factors such as local economic conditions,
competition for loans and deposits, the monetary policy of the FRB and market
interest rates. For further discussion, refer to "-Market Risk - Non-Trading
Risk," and "-Risk Governance" as described in our 2021 Form 10-K.

Table 2: Major Components of Net Interest Income

                                                                                       Three Months Ended June 30,
                                                                        2022                                                2021                                           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                                           $4,630         $13            1.06  %              $11,259          $3            0.12  %             ($6,629)                94 bps
Taxable investment securities                               35,900         201            2.25                  27,597         124            1.80                  8,303                45
Non-taxable investment securities                                3           -            2.62                       3           -            2.60                      -                 2
Total investment securities                                 35,903         201            2.25                  27,600         124            1.80                  8,303                45
Commercial and industrial                                   50,517         418            3.28                  44,388         345            3.08                  6,129                20
Commercial real estate                                      27,592         243            3.48                  14,473          95            2.58                 13,119                90
Leases                                                       1,575          10            2.61                   1,792          12            2.76                   (217)              (15)
Total commercial loans and leases                           79,684         671            3.33                  60,653         452            2.96                 19,031                37
Residential mortgages                                       28,486         221            3.10                  20,242         154            3.04                  8,244                 6
Home equity                                                 12,811         105            3.27                  11,825          92            3.13                    986                14
Automobile                                                  14,172         127            3.60                  12,526         125            4.00                  1,646               (40)
Education                                                   13,144         137            4.18                  12,632         135            4.26                    512                (8)
Other retail                                                 5,557         109            7.87                   5,612         100            7.13                    (55)               74
Total retail loans                                          74,170         699            3.77                  62,837         606            3.86                 11,333                (9)
Total loans and leases                                     153,854       1,370            3.55                 123,490       1,058            3.42                 30,364                13
Loans held for sale, at fair value                           1,937          17            3.60                   3,751          24            2.55                 (1,814)              105
Other loans held for sale                                    2,353          25            4.21                     233           2            2.99                  2,120               122
Interest-earning assets                                    198,677       1,626            3.26                 166,333       1,211            2.90                 32,344                36
Noninterest-earning assets                                  22,290                                              18,123                                              4,167
Total assets                                              $220,967                                            $184,456                                            $36,511
Liabilities and Stockholders' Equity
Checking with interest                                     $38,747         $15            0.16  %              $27,278          $5            0.08  %             $11,469                 8
Money market                                                48,795          23            0.19                  49,394          21            0.17                   (599)                2
Savings                                                     27,661           9            0.14                  20,077           5            0.10                  7,584                 4
Term                                                         6,970           7            0.31                   6,970          11            0.61                      -               (30)
Total interest-bearing deposits                            122,173          54            0.18                 103,719          42            0.16                 18,454                 2
Short-term borrowed funds                                    3,995          10            0.98                      69           -            0.87                  3,926                11
Long-term borrowed funds                                    10,222          57            2.26                   7,434          45            2.41                  2,788               (15)
Total borrowed funds                                        14,217          67            1.90                   7,503          45            2.40                  6,714               (50)
Total interest-bearing liabilities                         136,390         121            0.36                 111,222          87            0.31                 25,168                 5
Demand deposits                                             54,189                                              46,630                                              7,559
Other noninterest-bearing liabilities                        5,991                                               3,741                                              2,250
Total liabilities                                          196,570                                             161,593                                             34,977
Stockholders' equity                                        24,397                                              22,863                                              1,534
Total liabilities and stockholders' equity                $220,967                                            $184,456                                            $36,511
Interest rate spread                                                                      2.90  %                                             2.59  %                                    31
Net interest income and net interest margin                             $1,505            3.04  %                           $1,124            2.71  %                                    33
Net interest income and net interest margin, FTE(1)                     $1,507            3.04  %                           $1,126            2.72  %                                    32
Memo: Total deposits (interest-bearing and demand)        $176,362         $54            0.12  %             $150,349         $42            0.11  %             $26,013                 1   bp


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                                                                                 Six Months Ended June 30,
                                                                 2022                                                  2021                                           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                               $6,333          $17             0.52  %              $11,061           $6            0.11  %             ($4,728)                41 bps
Taxable investment securities                       32,591          339             2.08                  27,316          252            1.84                  5,275               24
Non-taxable investment securities                        2            -             2.61                       3            -            2.60                     (1)               1
Total investment securities                         32,593          339             2.08                  27,319          252            1.84                  5,274               24
Commercial and industrial                           47,747          746             3.11                  44,338          692            3.10                  3,409                1
Commercial real estate                              20,867          333             3.17                  14,574          189            2.58                  6,293               59
Leases                                               1,568           21             2.71                   1,852           25            2.73                   (284)              (2)
Total commercial loans and leases                   70,182        1,100             3.12                  60,764          906            2.97                  9,418               15
Residential mortgages                               25,987          390             3.00                  19,817          302            3.05                  6,170               (5)
Home equity                                         12,469          195             3.15                  11,912          187            3.16                    557               (1)
Automobile                                          14,352          254             3.58                  12,378          250            4.07                  1,974              (49)
Education                                           13,091          268             4.13                  12,534          269            4.32                    557              (19)
Other retail                                         5,492          211             7.75                   5,765          205            7.19                   (273)              56
Total retail loans                                  71,391        1,318             3.71                  62,406        1,213            3.91                  8,985              (20)
Total loans and leases                             141,573        2,418             3.42                 123,170        2,119            3.44                 18,403               (2)
Loans held for sale, at fair value                   2,150           33             3.11                   3,535           42            2.40                 (1,385)              71
Other loans held for sale                            1,409           32             4.48                     348            8            4.48                  1,061                -
Interest-earning assets                            184,058        2,839             3.09                 165,433        2,427            2.94                 18,625               15
Noninterest-earning assets                          20,674                                                18,085                                               2,589
Total assets                                      $204,732                                              $183,518                                             $21,214
Liabilities and Stockholders' Equity:
Checking with interest                             $34,605          $20             0.12  %              $26,700          $11            0.09  %              $7,905                3
Money market                                        48,012           35             0.15                  49,465           43            0.17                 (1,453)              (2)
Savings                                             25,758           14             0.11                  19,348           10            0.10                  6,410                1
Term                                                 5,976           10             0.30                   7,767           28            0.73                 (1,791)             (43)
Total interest-bearing deposits                    114,351           79             0.14                 103,280           92            0.18                 11,071               (4)
Short-term borrowed funds                            2,023           10             1.00                     109            -            0.59                  1,914               41
Long-term borrowed funds                             8,155           98             2.40                   7,882           94            2.38                    273                2
Total borrowed funds                                10,178          108             2.13                   7,991           94            2.36                  2,187              (23)
Total interest-bearing liabilities                 124,529          187             0.30                 111,271          186            0.34                 13,258               (4)
Demand deposits                                     51,430                                                45,230                                               6,200
Other noninterest-bearing liabilities                5,073                                                 4,297                                                 776
Total liabilities                                  181,032                                               160,798                                              20,234
Stockholders' equity                                23,700                                                22,720                                                 980
Total liabilities and stockholders' equity        $204,732                                              $183,518                                             $21,214
Interest rate spread                                                                2.79  %                                              2.60  %                                   19
Net interest income and net interest margin                      $2,652             2.91  %                            $2,241            2.73  %                                   18
Net interest income and net interest
margin, FTE(1)                                                   $2,656             2.91  %                            $2,246            2.74  %                                   17
Memo: Total deposits (interest-bearing and
demand)                                           $165,781          $79             0.10  %             $148,510          $92            0.12  %             $17,271               (2)  bps

(1) Net interest income and net interest margin is presented on a FTE basis
using the federal statutory tax rate of 21%. The FTE impact is predominantly
attributable to commercial and industrial loans for the periods presented.


Net interest income increased $381 million, or 34%, and increased $411 million,
or 18%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, reflecting growth of 19% and 11%, respectively, in
interest-earning assets and a higher net interest margin.

Net interest margin on a FTE basis increased 32 basis points to 3.04%, and
increased 17 basis points to 2.91%, for the three and six months ended June 30,
2022, respectively, compared to the same periods in 2021, reflecting higher
earning-asset yields given higher market interest rates, the impact of the HSBC
transaction and Investors acquisition, and the deployment of cash into loan
growth, partially offset by increased funding costs. Average interest-earning
asset yields increased 36 basis points to 3.26%, and increased 15 basis points
to 3.09%, while average interest-bearing liability costs increased 5 basis
points to 0.36%, and decreased 4 basis points to 0.30%, respectively, compared
to the same periods.

Average interest-earning assets increased $32.3 billion, or 19%, and increased
$18.6 billion, or 11%, for the three and six months ended June 30, 2022,
respectively, compared to the same periods in 2021. An increase


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in loans, primarily reflecting the impact of the HSBC transaction and Investors
acquisition, and investments was partially offset by a decrease in cash held in
interest-bearing deposits from the partial deployment of elevated liquidity.

Average deposits increased $26.0 billion, or 17%, and increased $17.3 billion,
or 12%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, primarily attributable to the HSBC transaction and
Investors acquisition. Average total borrowed funds increased $6.7 billion and
increased $2.2 billion, respectively, compared to the same periods, given an
increase in long-term and short-term FHLB advances and subordinated debt,
partially offset by a decrease in senior debt.

Noninterest Income

Table 3: Noninterest Income
                                    Three Months Ended June 30,                                                        Six Months Ended June 30,
(in millions)                      2022                      2021            Change            Percent              2022                       2021              Change            Percent
Capital markets fees                $88                      $91              ($3)                 (3  %)           $181                       $172                $9                   5  %
Service charges and fees            108                      100                8                   8                206                        199                 7                   4
Mortgage banking fees                72                       85              (13)                (15)               141                        250              (109)                (44)
Card fees                            71                       64                7                  11                131                        119                12                  10
Trust and investment services
fees                                 66                       60                6                  10                127                        118                 9                   8
Letter of credit and loan fees       40                       38                2                   5                 78                         76                 2                   3
Foreign exchange and
derivative products                  60                       28               32                 114                111                         56                55                  98
Securities gains, net                 1                        3               (2)                (67)                 5                          6                (1)                (17)
Other income(1)                     (12)                      16              (28)                     NM             12                         31               (19)                (61)
Noninterest income                 $494                     $485               $9                   2  %            $992                     $1,027              ($35)                 (3  %)


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


Noninterest income increased $9 million, or 2%, and decreased $35 million, or
3%, for the three and six months ended June 30, 2022, respectively, compared to
the same periods in 2021, highlighted by the following significant changes.

•The changes in capital markets fees reflect lower bond underwriting fees and
higher merger and acquisition advisory and loan syndication fees.

•Service charges and fees increased driven by the Investors acquisition and HSBC
transaction.

•Mortgage banking fees declined given lower gain-on-sale margins and production
volumes.

•Card fees increased driven by higher debit and credit card volumes.

•Trust and investment services fees increased driven by higher annuity and
assets under management fees.


•Foreign exchange and derivative products revenue increased reflecting growth in
client hedging activity across foreign exchange, interest rate and commodity
products.

•The decrease in other income was driven by $31 million of mark-to-market losses
on loans acquired from Investors classified as LHFS, partially offset by higher
bank-owned life insurance income.

                                             Citizens Financial Group, Inc. | 13
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Noninterest Expense

Table 4: Noninterest Expense
                                     Three Months Ended June 30,                                                         Six Months Ended June 30,
(in millions)                       2022                       2021             Change           Percent               2022                      2021              Change           Percent
Salaries and employee benefits       $683                     $524              $159                  30  %          $1,277                    $1,072              $205                  19  %
Equipment and software                169                      155                14                   9                319                       307                12                   4
Outside services                      189                      137                52                  38                358                       276                82                  30
Occupancy                             111                       82                29                  35                194                       170                24                  14
Other operating expense               153                       93                60                  65                263                       184                79                  43
Noninterest expense                $1,305                     $991              $314                  32  %          $2,411                    $2,009              $402                  20  %


Noninterest expense increased $314 million, or 32%, and increased $402 million,
or 20%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021. The increases in three and six month expense were
driven primarily by $104 million and $141 million, respectively, of
integration-related costs, higher salaries and employee benefits as well as
other operating expense associated with FDIC insurance, travel and advertising
costs, partially offset by the benefit of efficiency initiatives.

Provision for Credit Losses


The provision for credit losses is the result of a detailed analysis performed
to estimate our ACL. The total provision for credit losses includes the
provision for loan and lease losses and the provision for unfunded commitments.
Refer to "-Analysis of Financial Condition - Allowance for Credit Losses and
Nonaccrual Loans and Leases" for more information.

Credit provision expense of $216 million and $219 million for the three and six
months ended June 30, 2022, respectively, compared to a credit provision benefit
of $213 million and $353 million for the same periods in 2021. The credit
provision includes the "double count" of the non-PCD loan CECL provision expense
of $145 million and $169 million for the three and six months ended June 30,
2022, respectively, tied to the Investors acquisition and the HSBC transaction.
The increased provision expense reflects loan growth, including the Investors
acquisition and a slight deterioration in the macroeconomic outlook, partially
offset by strong credit performance across retail and commercial.

Income Tax Expense


Income tax expense of $114 million and $230 million decreased $69 million and
$123 million for the three and six months ended June 30, 2022, respectively,
compared to the same periods in 2021, driven by decreased taxable income. The
effective income tax rate of 23.8% and 22.7% for the same periods increased from
22.0% and 21.9%, respectively, compared to the same periods in 2021, primarily
driven by higher state taxes and nondeductible expenses related to recent
acquisitions, partially offset by the increased benefit of tax-advantaged
investments.

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. The residual
difference between the consolidated provision for credit losses and the business
operating segments' net charge-offs is reflected in Other.

Non-segment operations are classified as Other and include 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, for impairment testing
purposes, we allocate all goodwill to our Consumer Banking and 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 2021 Form 10-K other than the change
relative to our FTP methodology. See Note 18 for additional information.

                                             Citizens Financial Group, Inc. | 14
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The following tables present certain financial data of our business operating
segments. Total business operating segment financial results differ from total
consolidated financial results. These differences are reflected in Other
non-segment operations. See Note 18 for additional information.

Table 5: Selected Financial Data for Business Operating Segments

                                                                    Consumer Banking                                                  Commercial Banking
                                                               Three Months Ended June 30,                                        Three Months Ended June 30,
(dollars in millions)                                   2022                                 2021                                2022                      2021
Net interest income                                        $995                                 $897                                $534                      $419
Noninterest income                                          280                                  283                                 221                       178
Total revenue                                             1,275                                1,180                                 755                       597
Noninterest expense                                         881                                  751                                 308                       226
Profit before credit losses                                 394                                  429                                 447                       371
Net charge-offs                                              39                                   45                                  10                        34
Income before income tax expense                            355                                  384                                 437                       337
Income tax expense                                           90                                   98                                  96                        72
Net income                                                 $265                                 $286                                $341                      $265
Average Balances:
Total assets                                            $88,881                              $75,600                             $78,638                   $57,527
Total loans and leases(1)                                83,248                               71,389                              74,172                    54,758
Deposits                                                118,482                              100,933                              51,575                    44,049
Interest-earning assets                                  84,026                               72,308                              74,422                    55,143


                                                                Consumer Banking                                         Commercial Banking
                                                            Six Months Ended June 30,                                 Six Months Ended June 30,
(dollars in millions)                                  2022                             2021                     2022                            2021
Net interest income                                     $1,852                           $1,760                     $950                            $840
Noninterest income                                         537                              634                      434                             348
Total revenue                                            2,389                            2,394                    1,384                           1,188
Noninterest expense                                      1,665                            1,501                      580                             453
Profit before credit losses                                724                              893                      804                             735
Net charge-offs                                             88                              104                       22                             135
Income before income tax expense                           636                              789                      782                             600
Income tax expense                                         162                              201                      170                             124
Net income                                                $474                             $588                     $612                            $476
Average Balances:
Total assets                                           $83,247                          $75,443                  $69,927                         $57,632
Total loans and leases(1)                               78,268                           70,792                   66,134                          54,786
Deposits                                               111,610                           99,067                   48,067                          44,012
Interest-earning assets                                 79,067                           71,725                   66,412                          55,159


(1) Includes LHFS.

Consumer Banking

Net interest income increased $98 million, or 11%, and increased $92 million, or
5%, for the three and six months ended June 30, 2022, respectively, compared to
the same periods in 2021, driven by higher net interest margin and growth in
interest-earning assets, including the impact of the HSBC transaction and
Investors acquisition. This increase was partially offset by a reduction in PPP
loans. Average loans increased $11.9 billion and increased $7.5 billion for the
same periods, reflecting the impact of the Investors acquisition and HSBC
transaction, partially offset by a decline in PPP loans and planned runoff of
personal unsecured installment loans. Deposits increased $17.5 billion, or 17%,
and increased $12.5 billion, or 13%, for the same periods, including the impact
of the HSBC transaction and Investors acquisition.

Noninterest income decreased $3 million, or 1%, and decreased $97 million, or
15%, for the three and six months ended June 30, 2022, respectively, compared to
the same periods in 2021, driven by lower mortgage banking fees reflecting lower
gain-on-sale margins and production volumes, and lower service charges and fees.
This decrease was partially offset by higher trust and investment services fees
reflecting higher annuity and management fees, and higher card fees driven by
debit and credit card volumes.

                                             Citizens Financial Group, Inc. | 15
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Noninterest expense increased $130 million, or 17%, and increased $164 million,
or 11%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, reflecting higher salaries and employee benefits
and other operating expense associated with increased travel and advertising
costs, partially offset by the benefit of efficiency initiatives.

Net charge-offs decreased $6 million, or 13%, and decreased $16 million, or 15%,
for the three and six months ended June 30, 2022, respectively, compared to the
same periods in 2021, as consumers continued to maintain a savings cushion, the
economy approached full employment and residential mortgage and auto loan
collateral values remained elevated.

Commercial Banking


Net interest income increased $115 million, or 27%, and increased $110 million,
or 13%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, driven by higher net interest margin and growth in
interest-earning assets, including the impact of the Investors acquisition.

Noninterest income increased $43 million, or 24%, and increased $86 million, or
25%, for the three and six months ended June 30, 2022, respectively, compared to
the same periods in 2021, driven by higher foreign exchange and derivative
products revenue, reflecting increased client activity across foreign exchange,
interest rate and commodity products, partially offset by lower capital markets
fees driven by lower bond underwriting fees.

Noninterest expense increased $82 million, or 36%, and increased $127 million,
or 28%, for the three and six months ended June 30, 2022, respectively, compared
to the same periods in 2021, reflecting higher salaries and employee benefits
and other operating expense associated with increased travel and advertising
costs, partially offset by the benefit of efficiency initiatives.

Net charge-offs decreased $24 million, or 71%, and decreased $113 million, or
84%, for the three and six months ended June 30, 2022, respectively, compared to
the same periods in 2021, as credit performance remained strong.

ANALYSIS OF FINANCIAL CONDITION

Securities

Table 6: Amortized Cost and Fair Value of AFS and HTM Securities

                                                                    June 30, 2022                            December 31, 2021
                                                            Amortized                                 Amortized
(in millions)                                                 Cost              Fair Value              Cost                 Fair Value
U.S. Treasury and other                                       $3,455            $3,408                    $11                     $11
State and political subdivisions                                   3                 3                      2                       2
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities       21,568            20,089                 24,607                  24,442
Other/non-agency                                                 281               261                    397                     405
Total mortgage-backed securities                              21,849            20,350                 25,004                  24,847

Collateralized loan obligations                                1,248             1,200                  1,208                   1,207

Total debt securities available for sale, at fair value $26,555

    $24,961                $26,225                 $26,067
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities       $8,921            $8,747                 $1,505                  $1,557

Total mortgage-backed securities                               8,921             8,747                  1,505                   1,557
Asset-backed securities                                          646               614                    737                     732
  Total debt securities held to maturity                      $9,567            $9,361                 $2,242                  $2,289

Total debt securities available for sale and held to
maturity

                                                     $36,122           $34,322                $28,467                 $28,356
Equity securities, at cost                                    $1,162            $1,162                   $624                    $624
Equity securities, at fair value                                 138               138                    109                     109


                                             Citizens Financial Group, Inc. | 16
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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. As of June 30, 2022,
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 2021 Form 10-K.

The fair value of the debt securities portfolio increased $6.0 billion from
December 31, 2021, driven in large part by $3.8 billion from the Investors
acquisition as well as net securities purchases. This increase was partially
offset by the impact of higher interest rates driving a $2.8 billion increase in
unrealized losses.

The amortized cost basis of the HTM portfolio increased $7.3 billion due to the
transfer of $7.8 billion from the AFS portfolio during the second quarter of
2022, offset in part by paydowns. The ratio of HTM securities to total
securities increased to approximately 27% as of June 30, 2022.

As of June 30, 2022, the portfolio's average effective duration was 5.7 years
compared with 4.3 years as of December 31, 2021, 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.

Loans and Leases

Table 7: Composition of Loans and Leases, Excluding LHFS
(in millions)

                                               June 30, 2022               December 31, 2021            Change               Percent
Commercial and industrial                                           $51,801                 $44,500                  $7,301                     16  %
Commercial real estate                                               28,070                  14,264                  13,806                     97
Leases                                                                1,574                   1,586                     (12)                    (1)
Total commercial                                                     81,445                  60,350                  21,095                     35
Residential mortgages                                                29,088                  22,822                   6,266                     27
Home equity                                                          13,122                  12,015                   1,107                      9
Automobile                                                           13,868                  14,549                    (681)                    (5)
Education                                                            13,141                  12,997                     144                      1
Other retail                                                          5,508                   5,430                      78                      1
Total retail                                                         74,727                  67,813                   6,914                     10
Total loans and leases                                             $156,172                $128,163                 $28,009                     22  %

Total loans and leases increased $28.0 billion from $128.2 billion as of
December 31, 2021, primarily driven by the Investors acquisition and the HSBC
transaction, resulting in growth in commercial and retail of 35% and 10%,
respectively.

Allowance for Credit Losses and Nonaccrual Loans and Leases


The ACL is a reserve to absorb estimated future credit losses in accordance with
GAAP. For additional information regarding the ACL, see "-Critical Accounting
Estimates - Allowance for Credit Losses" and Note 5 of this report, and
"-Critical Accounting Estimates - Allowance for Credit Losses" and Note 6 in our
2021 Form 10-K.

The ACL of $2.1 billion at June 30, 2022 compared with the ACL of $1.9 billion
as of December 31, 2021, reflecting a reserve increase of $213 million. For
further information, see Note 5.


                                             Citizens Financial Group, Inc. | 17
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Table 8: ACL and Related Coverage Ratios by Portfolio

                                                                 June 30, 2022                                          December 31, 2021
(in millions)                                   Loans and Leases      Allowance       Coverage           Loans and Leases    Allowance       Coverage
Allowance for Loan and Lease Losses
Commercial and industrial                                $51,801         $608              1.17  %              $44,500         $555              1.25  %
Commercial real estate                                    28,070          350              1.25                  14,264          220              1.54
Leases                                                     1,574           29              1.87                   1,586           46              2.92
Total commercial                                          81,445          987              1.21                  60,350          821              1.36
Residential mortgages                                     29,088          196              0.67                  22,822          144              0.63
Home equity                                               13,122           96              0.73                  12,015           82              0.69
Automobile                                                13,868          145              1.04                  14,549          154              1.05
Education                                                 13,141          287              2.18                  12,997          308              2.37
Other retail                                               5,508          253              4.59                   5,430          249              4.59
Total retail                                              74,727          977              1.31                  67,813          937              1.38
Total loans and leases                                  $156,172       $1,964              1.26  %             $128,163       $1,758              1.37  %
Allowance for Unfunded Lending Commitments
Commercial(1)                                                            $166              1.42  %                              $153              1.61  %
Retail(2)                                                                  17              1.33                                   23              1.42
   Total allowance for unfunded lending
commitments                                                               183                                                    176
Allowance for credit losses                             $156,172       $2,147              1.37  %             $128,163       $1,934              1.51  %

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


Table 9: Nonaccrual Loans and Leases
(dollars in millions)                              June 30, 2022        December 31, 2021            Change               Percent
Commercial and industrial                                 $202                    $171                 $31                      18  %
Commercial real estate                                      37                      11                  26                     236
Leases                                                       -                       1                  (1)                   (100)
Total commercial                                           239                     183                  56                      31
Residential mortgages(1)                                   253                     201                  52                      26
Home equity                                                240                     220                  20                       9
Automobile                                                  50                      55                  (5)                     (9)
Education                                                   31                      23                   8                      35
Other retail                                                26                      20                   6                      30
Total retail                                               600                     519                  81                      16
Nonaccrual loans and leases                               $839                    $702                $137                      20  %
Nonaccrual loans and leases to total loans and
leases                                                    0.54  %                 0.55  %               (1   bp)
Allowance for loan and lease losses to nonaccrual
loans and leases                                           234                     251                 (17  %)
Allowance for credit losses to nonaccrual loans
and leases                                                 256                     276                 (20  %)


(1) Loans fully or partially guaranteed by the FHA, VA and USDA are classified
as accruing.


The increase in nonaccrual loans and leases is primarily due to the impact of
the Investors acquisition.

                                             Citizens Financial Group, Inc. | 18
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Table 10: Ratio of Net Charge-Offs to Average Loans and Leases

                                                                                        Three Months Ended June 30,
                                                                  2022                                                             2021
(dollars in millions)                      Net Charge-Offs      Average Balance       Ratio                 Net Charge-Offs        Average Balance       Ratio
Commercial and industrial                              $10         $50,517               0.08  %                          $28         $44,388               0.25  %
Commercial real estate                                   -          27,592                  -                               -          14,473                  -
Leases                                                   -           1,575              (0.05)                             13           1,792               2.97
Total commercial                                        10          79,684               0.05                              41          60,653               0.27
Residential mortgages                                   (1)         28,486              (0.01)                             (1)         20,242              (0.03)
Home equity                                             (9)         12,811              (0.27)                            (10)         11,825              (0.33)
Automobile                                               6          14,172               0.16                              (2)         12,526              (0.04)
Education                                               11          13,144               0.34                              13          12,632               0.40
Other retail                                            32           5,557               2.25                              37           5,612               2.63
Total retail                                            39          74,170               0.21                              37          62,837               0.24
Total loans and leases                                 $49        $153,854               0.13  %                          $78        $123,490               0.25  %


Second quarter 2022 NCOs decreased $29 million, or 37%, compared to the second
quarter of 2021, driven by a decrease in commercial of $31 million. Second
quarter 2022 annualized net charge-offs of 0.13% of average loans and leases
were down 12 basis points from the second quarter of 2021.

Table 11: Ratio of Net Charge-Offs to Average Loans and Leases

                                                                                         Six Months Ended June 30,
                                                                  2022                                                             2021
(dollars in millions)                      Net Charge-Offs      Average Balance       Ratio                 Net Charge-Offs        Average Balance       Ratio
Commercial and industrial                              $21         $47,747               0.09  %                         $105         $44,338               0.48  %
Commercial real estate                                   -          20,867                  -                              26          14,574               0.36
Leases                                                   -           1,568               0.03                              14           1,852               1.58
Total commercial                                        21          70,182               0.06                             145          60,764               0.48
Residential mortgages                                   (1)         25,987              (0.01)                             (2)         19,817              (0.02)
Home equity                                            (18)         12,469              (0.30)                            (17)         11,912              (0.29)
Automobile                                              12          14,352               0.17                               9          12,378               0.15
Education                                               27          13,091               0.41                              20          12,534               0.32
Other retail                                            67           5,492               2.43                              81           5,765               2.82
Total retail                                            87          71,391               0.24                              91          62,406               0.29
Total loans and leases                                $108        $141,573               0.15  %                         $236        $123,170               0.39  %

First half 2022 NCOs decreased $128 million, or 54%, from the first half of
2021, driven by decreases in commercial and retail of $124 million and $4
million
, respectively. First half 2022 annualized net charge-offs of 0.15% of
average loans and leases were down 24 basis points from first half of 2021.


Retail NCOs reflected modest improvement for the three and six months ended June
30, 2022 compared to the same periods in 2021, as consumers continued to
maintain a savings cushion, the economy approached full employment and
residential mortgage and automobile loan collateral values remained elevated.
Commercial NCOs decreased for the three and six months ended June 30, 2022
compared to the same periods in 2021, as credit performance remained strong.

Commercial Loan Asset Quality


Our commercial 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 strong
client connectivity. Additionally, we also do business in certain specialized
industry sectors on a national basis. As discussed in our 2021 Form 10-K, we
utilize regulatory classification ratings to monitor credit quality for
commercial loans and leases.

                                             Citizens Financial Group, Inc. | 19
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Table 12: Commercial Loans and Leases by Regulatory Classification

                                                                                              June 30, 2022
                                                                                                  Criticized
(in millions)                                                  Pass            Special Mention       Substandard       Doubtful          Total
Commercial and industrial                                       $49,353                   $813         $1,479             $156          $51,801
Commercial real estate                                           26,410                    561          1,087               12           28,070
Leases                                                            1,557                      9              8                -            1,574
Total commercial                                                $77,320                 $1,383         $2,574             $168          $81,445



                                                                                      December 31, 2021
                                                                                          Criticized
(in millions)                                           Pass          Special Mention       Substandard        Doubtful          Total
Commercial and industrial                               $42,254             $809               $1,294             $143          $44,500
Commercial real estate                                   13,319              406                  528               11           14,264
Leases                                                    1,512               49                   24                1            1,586
Total commercial                                        $57,085           $1,264               $1,846             $155          $60,350


Total commercial criticized balances of $4.1 billion as of June 30, 2022
increased $860 million compared with December 31, 2021, primarily driven by the
Investors acquisition. Commercial criticized as a percent of total commercial of
5.1% at June 30, 2022 decreased from 5.4% at December 31, 2021, given
improvements in loan mix.

Commercial and industrial criticized balances of $2.4 billion, or 4.7% of the
total commercial and industrial loan portfolio as of June 30, 2022, increased
from $2.2 billion, or 5.0%, as of December 31, 2021, primarily driven by the
Investors acquisition. The percentage decrease was primarily driven by an
improved loan mix. Commercial and industrial criticized loans represented 59% of
total criticized loans as of June 30, 2022 compared to 69% as of December 31,
2021.

Commercial real estate criticized balances of $1.7 billion, or 5.9% of the
commercial real estate portfolio, increased from $945 million, or 6.6% as of
December 31, 2021, primarily driven by the Investors acquisition. Commercial
real estate accounted for 40% of total criticized loans as of June 30, 2022,
compared to 29% as of December 31, 2021.

                                             Citizens Financial Group, Inc. | 20
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Table 13: Commercial Loans and Leases by Industry Sector

                                                                          June 30, 2022                          December 31, 2021
                                                                                          % of                                   % of
                                                                                      Total Loans                            Total Loans
(dollars in millions)                                                 Balance          and Leases              Balance        and Leases
Finance and insurance                                                     $11,542              7  %               $9,301              7  %
Health, pharma, and social assistance                                       3,136              2                   2,912              2
Accommodation and food services                                             3,716              2                   3,438              3
Professional, scientific, and technical services                            3,009              2                   2,665              2
Other manufacturing                                                         4,481              3                   4,087              3
Technology                                                                  4,822              3                   4,220              3
Retail trade                                                                2,779              2                   2,237              2
Energy and related                                                          2,156              1                   2,017              2
Wholesale trade                                                             3,104              2                   2,358              2
Arts, entertainment, and recreation                                         1,372              1                   1,189              1
Other services                                                              2,192              2                   2,051              2
Administrative and waste management services                                1,494              1                   1,396              1
Transportation and warehousing                                              1,078              1                   1,147              1
Consumer products manufacturing                                             1,434              1                   1,192              1
Automotive                                                                  1,437              1                   1,172              1
Educational services                                                          659              -                     573              -
Chemicals                                                                   1,161              1                     896              1
Real estate and rental and leasing                                          1,436              1                     739              -
All other(1)                                                                  506              -                     123              -
Total commercial and industrial                                            51,514             33                  43,713             34
Real estate and rental and leasing                                         25,774             17                  12,773             10
Accommodation and food services                                               623              -                     605              -
Finance and insurance                                                         798              1                     624              1
Other services(2)                                                             312              -                      45              -
Health, pharma, and social assistance(2)                                      273              -                      14              -
All other(1)                                                                  290              -                     203              -
Total commercial real estate                                               28,070             18                  14,264             11
Total leases                                                                1,574              1                   1,586              1
Total commercial(3)                                                       $81,158             52  %              $59,563             46  %

(1) Deferred fees and costs are reported in All other.
(2) Sector was added in the second quarter of 2022. Prior period has been
adjusted to conform with the current period presentation.
(3) Excludes PPP loans of $287 million and $787 million as of June 30, 2022 and
December 31, 2021, respectively.

Retail Loan Asset Quality


For retail loans, we utilize credit scores provided by FICO and the loan's
payment and delinquency status to monitor credit quality. Management believes
FICO credit scores are the strongest indicator of potential credit losses over
the contractual life of the loan. These scores represent current and historical
national industry-wide consumer level credit performance data, which management
considers to predict a 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. However, we do lend selectively in
areas outside the footprint, primarily in automobile finance and education
lending.

                                             Citizens Financial Group, Inc. | 21
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Table 14: Retail Loan Portfolio Analysis

                                                             June 30, 2022                                                                 December 31, 2021
                                                     Days Past Due and Accruing                                                     Days Past Due and Accruing
(dollars in millions)              Current        30-59        60-89         90+          Nonaccrual               Current       30-59        60-89         90+          Nonaccrual
Residential mortgages(1)              96.67  %      0.20  %      0.12  %      2.14  %             0.87  %            96.03  %      0.45  %      0.23  %      2.41  %             0.88  %
Home equity                           97.81         0.27         0.09            -                1.83               97.75         0.32         0.10            -                1.83
Automobile                            98.50         0.87         0.27            -                0.36               98.45         0.90         0.27            -                0.38
Education                             99.44         0.20         0.10         0.02                0.24               99.45         0.26         0.10         0.01                0.18
Other retail                          98.20         0.64         0.44         0.25                0.47               98.18         0.74         0.42         0.29                0.37
Total retail                          97.81  %      0.37  %      0.16  %      0.86  %             0.80  %            97.69  %      0.51  %      0.20  %      0.83  %             0.77  %


(1) 90+ days past due and accruing includes $623 million and $544 million of
loans fully or partially guaranteed by the FHA, VA, and USDA at June 30, 2022
and December 31, 2021, respectively.

For more information on the aging of accruing and nonaccrual retail loans, see
Note 5.

Table 15: Retail Asset Quality Metrics

                                                                   June 30, 2022         December 31, 2021
Average refreshed FICO for total portfolio                                  768                      768
CLTV ratio for secured real estate(1)                                        53  %                    56  %
Nonaccrual retail loans as a percentage of total retail                    0.80  %                  0.77  %


(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.

Troubled Debt Restructurings


In the first quarter of 2020, the CARES Act and interagency guidance exempted
from TDR classification COVID-19-related modified retail and commercial loans
that met certain eligibility criteria. We generally do not consider modified
loans that met eligibility criteria under the CARES Act to be TDRs. On December
31, 2021, relief provisions granted under the CARES Act expired, including the
TDR classification exemption.

For additional information regarding TDRs, see Note 6 in our 2021 Form 10-K.

Table 16: Accruing and Nonaccrual Troubled Debt Restructurings

                                                                                            June 30, 2022
                                                                              As a % of Accruing TDRs
                                                                          30-89 Days           90+ Days Past
(dollars in millions)                            Accruing                  Past Due                 Due                Nonaccrual               Total
Commercial and industrial                                $195                      -  %                  -  %               $89                   $284
Commercial real estate                                      1                      -                     -                    9                     10
Total commercial                                          196                      -                     -                   98                    294
Residential mortgages(1)                                  524              
     2.2                  24.0                   86                    610
Home equity                                               162                    0.3                     -                   88                    250
Automobile                                                  8                    0.2                     -                   13                     21
Education                                                 100                    0.4                   0.2                   20                    120
Other retail                                               17                    0.2                     -                    3                     20
Total retail                                              811                    3.3                  24.2                  210                  1,021
Total                                                  $1,007                    3.3  %               24.2  %              $308                 $1,315


                                             Citizens Financial Group, Inc. | 22
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                                                                                           December 31, 2021
                                                                              As a % of Accruing TDRs
                                                                          30-89 Days           90+ Days Past
(dollars in millions)                              Accruing                Past Due                 Due                Nonaccrual               Total
Commercial and industrial                                $196                      -  %                  -  %               $74                   $270
Commercial real estate                                      1                      -                     -                    9                     10
Total commercial                                          197                      -                     -                   83                    280
Residential mortgages(1)                                  295              
     2.9                  12.0                   42                    337
Home equity                                               183                    0.6                     -                   74                    257
Automobile                                                  8                    0.2                     -                   22                     30
Education                                                 112                    0.5                   0.1                   11                    123
Other retail                                               20                    0.2                     -                    2                     22
Total retail                                              618                    4.5                  12.1                  151                    769
Total                                                    $815                    4.5  %               12.1  %              $234                 $1,049


(1) Includes $242 million and $98 million in 90+ days past due and accruing that
are fully or partially guaranteed by the FHA, VA, and USDA at June 30, 2022 and
December 31, 2021, respectively.

Deposits


Table 17: Composition of Deposits
(in millions)                                         June 30, 2022            December 31, 2021            Change              Percent
Demand                                                  $54,169                    $49,443                  $4,726                   10  %
Money market                                             48,063                     47,216                     847                    2
Checking with interest                                   39,611                     30,409                   9,202                   30
Savings                                                  27,959                     22,030                   5,929                   27
Term                                                      9,123                      5,263                   3,860                   73
Total deposits                                         $178,925                   $154,361                 $24,564                   16  %


The increase in total deposits as of June 30, 2022 compared to December 31, 2021
is driven by $25.8 billion of period-end balances from the Investors acquisition
and the HSBC transaction.

Borrowed Funds

Total borrowed funds of $18.2 billion as of June 30, 2022 increased $11.2
billion from December 31, 2021, driven by an increase in FHLB borrowings. The
FHLB borrowings increased due to the advances acquired from Investors and the
funding of loan and security growth. For more information regarding our borrowed
funds, see "-Liquidity" and Note 9.

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 primarily regulated by the OCC. Our regulation and
supervision continues to evolve as the legal and regulatory frameworks governing
our operations continue to change. For more information, see "Regulation and
Supervision" in our 2021 Form 10-K.

Capital Adequacy Process


Our assessment of capital adequacy begins with our Board-approved risk appetite
and risk management framework. This framework provides for the identification,
measurement and management of material risks. There have been no significant
changes to our capital adequacy risk appetite and risk management framework as
described in "-Capital and Regulatory Matters" in our 2021 Form 10-K.

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. Annually, the FRB requires us
to submit a capital plan approved by our Board of Directors or one of its
committees. Our annual capital plan is due each year in April. We submitted our
2022 Capital Plan to the FRB on April 4, 2022. For more information, see the
"Tailoring of Prudential Requirements" section in Item 1 of our 2021 Form 10-K.

                                             Citizens Financial Group, Inc. | 23
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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.


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. Our SCB requirement through September 30, 2022, is 3.4%. On June 23,
2022, the FRB notified us that based on the results of the 2022 CCAR supervisory
stress tests, our preliminary SCB effective October 1, 2022 through September
30, 2023, will remain at 3.4%, with the FRB providing us with a final SCB by
August 31, 2022. To incorporate the effects of the Investors acquisition on our
capital requirements, the FRB will require that we participate in the 2023 CCAR
supervisory stress tests.

Regulations relating to capital planning, regulatory reporting, stress testing
and capital buffer requirements applicable to firms like us are presently
subject to rule-making and potential further guidance and interpretation by the
applicable federal regulators. We will continue to evaluate the impact of these
and any other prudential regulatory changes, including their potential resultant
changes in our regulatory and compliance costs and expenses.

For more information, see the “Regulation and Supervision” and “-Capital and
Regulatory Matters” sections in our 2021 Form 10-K.

Regulatory Capital Ratios and Capital Composition


Under the current U.S. Basel III capital framework, we and our banking
subsidiary, CBNA, must meet the following specific minimum requirements: CET1
capital ratio of 4.5%, tier 1 capital ratio of 6.0%, total capital ratio of 8.0%
and tier 1 leverage ratio of 4.0%. As a bank holding company, our SCB of 3.4% is
imposed on top of the three minimum risk-based capital ratios listed above and a
CCB of 2.5% is imposed on top of the three minimum risk-based capital ratios
listed above for our banking subsidiary.

Under the U.S. Basel III rules, the CET1 deduction threshold for MSRs, certain
deferred tax assets and investments in the capital of unconsolidated financial
institutions is 25%. As of June 30, 2022, we did not meet the threshold for
these additional capital deductions. MSRs or certain deferred tax assets not
deducted from CET1 capital are assigned a 250% risk weight and 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 allows electing banking organizations to delay the
estimated impact of CECL on regulatory capital for a two-year period ending
December 31, 2021, followed by a three-year transition period ending December
31, 2024. The three-year transition period will phase-in the aggregate amount of
capital benefit provided during the initial two-year delay. On December 31,
2021, the aggregate amount of capital benefit was $384 million. The reduction in
the capital benefit in 2022 is $96 million, or 5 basis points.

For additional discussion of the U.S. Basel III capital framework and its
related application, see "Regulation and Supervision" in our 2021 Form 10-K. The
table below presents our actual regulatory capital ratios under the U.S. Basel
III Standardized rules:

Table 18: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules

                                                           June 30, 2022                            December 31, 2021            Required Minimum
(in millions, except ratio data)                       Amount              Ratio                  Amount            Ratio        Capital Ratios(1)
  CET1 capital                                             $17,946             9.6  %               $15,656             9.9  %                7.9  %
  Tier 1 capital                                            19,960            10.6                   17,670            11.1                   9.4
  Total capital                                             23,184            12.3                   20,244            12.7                  11.4
  Tier 1 leverage                                           19,960             9.3                   17,670             9.7                   4.0
  Risk-weighted assets                                     187,727                                  158,831
  Quarterly adjusted average assets                        215,727                                  181,800


(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.
                                             Citizens Financial Group, Inc. | 24
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At June 30, 2022, our CET1 capital, tier 1 capital and total capital ratios were
9.6%, 10.6% and 12.3%, respectively, as compared with 9.9%, 11.1% and 12.7%,
respectively, as of December 31, 2021. The CET1 and tier 1 capital ratios
decreased largely driven by $28.9 billion of RWA growth, higher estimated
goodwill and intangibles related to the Investors acquisition and the HSBC
transaction, dividends as described in "-Capital Transactions" below and a
decrease in the modified CECL transition amount as a result of entering the CECL
three-year transition period, partially offset by the common stock issued in
connection with the Investors acquisition and net income for the six months
ended June 30, 2022. The total capital ratio decreased due to the changes in the
CET1 capital ratio described above, partially offset by increases in
subordinated debt as described in "-Capital Transactions" below and higher AACL
related to the Investors acquisition and a reduction in the modified AACL
transition amount as a result of entering the CECL three-year transition period.
At June 30, 2022, our CET1 capital, tier 1 capital and total capital ratios were
approximately 170 basis points, 120 basis points and 90 basis points,
respectively, above their regulatory minimums plus our SCB. All ratios remained
well above the U.S. Basel III minimums.

Both the Company and CBNA are subject to the standardized approach for
determining RWA. At June 30, 2022, RWA totaled $187.7 billion, up $28.9 billion
from December 31, 2021, largely driven by the Investors acquisition and includes
higher CRE, commercial and residential mortgage loans, home equity lines, MSRs,
CRE commitments and loans held for sale.

As of June 30, 2022, the tier 1 leverage ratio was 9.3%, down from 9.7% at
December 31, 2021, driven by an increase in quarterly adjusted average assets of
$33.9 billion, partially offset by higher tier 1 capital.

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